Regulations surrounding the legal sale of cannabis can be byzantine, to say the least. In North America alone, 33 U.S. states have their own rules about legal use of marijuana, albeit medicinal or recreational, while the plant remains illegal at the federal level. That is unless it contains less than 0.3% tetrahydrocannabinol (THCa), in which case it qualifies as hemp and is open to interstate commerce as of the start of 2019. Canada has made marijuana legal across the country, but only in flower and oil form, while it still works to hammer out legislation allowing edibles and other cannabis-based products.
Regardless of legislation, there is a common thread across cannabis and hemp in both countries: testing. Testing is at the root of the industry as guidelines lay out strict rules for potency and safety to protect the consumer. The problem is that the testing industry is highly fragmented with varying protocols delivering inconsistent results, an issue that can frustrate the complete supply chain from cultivator to consumer, as well as those providing oversight along the way.
FluroTech Ltd. (TSX-V: TEST) (OTCQB: FLURF) is pioneering new technology addressing this nagging issue by bringing consistent testing in-house, a practice that can save resources and improve the bottom line. Using fluorescence spectroscopy and accompanying software, FluroTech’s CompleTest is a portable, accurate and cost effective method for cannabis and hemp testing that can shave result times down to hours rather than days or weeks. Furthermore, the technology is user friendly and doesn’t require highly trained scientists to perform the tests and analyze the results.
THC and CBD First
FluroTech co-founder and CEO Danny Dalla-Longa recently told CFN Media’s Laura Albers in an interview at MJ Micro Conference that the company has begun marketing its award-winning CompleTest for THC and cannabidiol (CBDa) with plans to “shortly” be expanding into testing of hemp.
THC and CBD are the two best-known components, called cannabinoids, of cannabis. THC is responsible for the “high” synonymous with ingesting marijuana, while CBD has been widely hailed for a bevy of therapeutic benefits ranging from reducing anxiety to treating difficult diseases like epilepsy and cancer.
Despite these two cannabinoids being at the core of the market, getting repeatable, reliable and accurate test results has been an industry challenge, even with today’s machines costing up to $500,000.
Consider a study conducted by Washington Cannabis Farmers Council analyzing THC content in a cannabis strain across eight different labs.
The highest reported level (26.90%) was more than twice that of the lowest level (13.37%).
Obviously, the implications regarding potency are clear enough from a consumer standpoint. But, what about the cultivator? In Canada, many licensed producers model a 1% increase in potency leading to an additional 80 cents per gram in selling price. Using an average of, say, $10 per gram, that’s an 8% increase in margin.
On that note, a recent study showed that growers using CompleTest were able to identify lighting solutions that increased potency by 50 percent. This was attainable owing to the ease of use to perform repeated tests and monitor the plant’s qualities.
The savings and profits resonate with respect to ROI for the $18,000 investment for the CompleTest system unit (plus any costs for additional scopes and test kits). This goes without putting a figure on the price of confidence in product and potential expenses related to any undiscovered contaminants or inaccurate product labeling that can earn the ire of regulators and customers.
In a Class By Itself
Dalla-Longa is another example of a successful businessman (a partner at a large accounting firm in fact) that ventured into the cannabis space because of the opportunity. He teamed up with FluroTech CTO Dr. Elmar Prenner, a specialist in fluorescence spectroscopy and the brains behind the CompleTest technology, to address unmet needs in testing, which he identifies as accuracy, cost, timeliness and format.
“No one is really a competitor to us now because we’re going to be offering a service to cannabis and hemp companies where they can do their own in-house testing such that as the plant is growing they will be able to test it, determine which inputs will give them the highest value for their crops,” said Dalla-Longa in the interview. He continued, “Then when they have to go to the certified labs, or the outside verification, they will know what they’ve got when they get there.”
Biomarker, People Testing and More
Without accounting for sales that are getting underway, Dalla-Longa says that the company has enough cash on hand to operate for about one year. However, part of the reason for presenting at the MJ Micro show was to speak with potential joint venture partners and align to raise capital for upcoming developments that will continue to differentiate the company from any potential future competition.
On the immediate agenda for FluroTech is finishing development of the cannabis testing technology for detecting pesticides, chemicals, mold and heavy metals, which is almost complete. The company also is working on cutting-edge biomarker technology where nanoparticles will be absorbed through a plant’s root system and carried throughout the entire cannabis or hemp plant, effectively implanting a specific biological marker that will uniquely identify that plant throughout its entire life cycle.
Finally, FluroTech is working on what it simply calls “people testing.” This is addressing different market segments for testing to identify consumer usage in environments such as roadside stops and work settings.
A Big Niche
Some may consider testing a niche as part of the massive cannabis market. Fair enough, but it is a very big niche already projected at $2.75 billion that is part and parcel to the business. FluroTech Ltd. (TSX-V: TEST) (OTCQB: FLURF) is in the catbird’s seat on this front with a first mover advantage and technology that is faster, more reliable/repeatable, accurate, and cost effective than traditional laboratory testing.
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