What will you do with the cannabis you produce? Currently, most growers and prospective growers think in terms of marijuana, the raw constituents—the leaves and flowers, or buds—of the plant. In emerging markets this is a viable path, but as production increases and markets become super-saturated with product, as in California, the tendency increasingly will be to isolate the active ingredients and beneficial components of the cannabis plant into concentrated forms via extraction. In the future, only about 10 percent of the cannabis produced will be sold as flowers or buds. The remaining 90 percent will be extracted and formulated into concentrates of many forms. Here’s why.
As the industry progresses, production costs will fall, and supply will become ever more plentiful—increasing competition. As seen in many states, this leads to refinement of mid- and lower-grade cannabis—product that is not necessarily bad, just not visually appealing—that can be sold at lower, more competitive prices. Some states that “come online” will mandate “vertical integration,” meaning growers must also operate dispensaries. Other growers, in states that have legalized medical cannabis with only low levels of tetrahydrocannabinol (THC) and high levels of cannabidiol (CBD), are required to produce plants with those properties. Those plants ultimately will be refined into concentrates.
Concentrated forms of cannabis currently represent from 20-percent to 60-percent of sales for dispensaries in various states:
- 40 percent of dispensary sales for TruMed Arizona;
- 22 percent of sales for Berkeley Patients Group in California;
- 40 to 60 percent of sales for The Bakeréé in Washington; and
- 30 percent of sales for Livegreen Cannabis in Colorado.
These, however, are refined forms, not typically super-refined forms. (More on this in a bit.)
The Science Behind the Future
Cannabis contains hundreds of chemicals. In his paper “Chemistry and Analysis of Phytocannabinoids and Other Cannabis Constituents,” Rudolf Brenneisen states that although many remain unidentified, a significant number of the 483 compounds identified are unique to cannabis. Of those, 66 cannabinoids (the active chemical components) have been identified, as well as more than 140 different terpenoids (also classified as terpenes).
The terpenes make up the essential volatile oils that are responsible for cannabis’ scent. These, however, are a small fraction of the total composition of the cannabis flower or bud, and as research and development continues to advance, we can anticipate that other constituents may also become more important.
The purpose of refinement is to eliminate undesirable components, including cellulose and fibrous, green vegetative material, waxes, fats, carbohydrates, chlorophyll, (some) lipids, amino acids, carbolic acid and caramelized plant sugars. The resulting refined extract is classified as a Botanical Drug Substance (BDS) and comprises a whole plant extract (in that it contains all desirable compounds combined).
What Is Super-Refined?
Super-refined extracts are separated and isolated, single, pharmaceutical-grade compounds. The main compounds are THCA and THC, CBDA and CBD, CBN, CBG and THCV, as well as the previously mentioned terpenoids, all of which can be further fractionated or isolated into purified compounds.
Many studies have concluded that terpenes are compounds that contribute to the relief and control of pain.
THC is partly responsible for the euphoric effect, or “high,” induced by cannabis. The terpenoids modulate the THC activity—referred to as the synergistic effect, or the Entourage Effect. THCA will not deliver the same euphoric effect, as it first must be converted by heat in a process known as decarboxylation.
Both cannabinoids and terpenoids are very complex, and an incredible amount of research on the isolated compounds of cannabis still is needed.
Science and Your Cannabis Crop
So what does this mean for the cannabis cultivator of the future? Tomorrow’s corporate entities will want only super-refined, pharmaceutical-grade isolates/compounds or active ingredients, rather than simple refinements or BDS extracts. They will want to buy ready-made extracts they can use in mass-market medicines or consumables.
By consumables, I mean edible products and oils for vape pens, products that require refined cannabis and represent an enormous percentage of the future market. But pharmaceutical-grade, isolated compounds, or “super-refinements,” will constitute the largest percentage of sales.
The bottom line, as it pertains to cannabis cultivation, is that the market potential is expected to be limitless.
This must be considered carefully when planning your operations. How and what you cultivate, how you process your cannabis for refinement or super-refinement, and how you refine it all become paramount.
The legal cannabis industry is just getting its sea legs, but research on cannabis compounds has been conducted for decades.
The Research Institute of Pharmaceutical Sciences (RIPS) has been in existence for more than 30 years and has spent billions of dollars exploring and researching every compound isolate of the cannabis plant. Some of this research, in conjunction with that of ElSohly Laboratories Inc. (a privately held Mississippi corporation registered with the DEA and FDA) and Mahmoud ElSohly of the University of Mississippi, inevitably will help formulate cannabis-based pharmaceuticals in the future.
The Research Triangle Institute also has been involved in cannabis research for more than 30 years, as has GW Pharmaceuticals (UK), which cultivates, extracts and refines cannabis for pharmaceutical applications—e.g., Sativex, which is undergoing clinical trials. And the International Cannabinoid Research Institute (ICRS) has been in existence for 20-plus years. (These organizations have limited access to cannabis research materials obtained from the University of Mississippi with DEA approval.)
The common denominator of these institutions is that none of them wants to cultivate, process, refine or super-refine cannabis to produce research compounds or active ingredients. Therefore, as research and formulation of cannabis-derived pharmaceuticals expand, so does the emerging opportunity for future cannabis cultivators.
In a 2013 Expert Opinion Paper, “Terpenes and Derivatives as a New Perspective for Pain Treatment: A Patent Review,” authors Adriana G. Guimarães, Mairim R. Serafini and Lucindo J. Quintans-Júnior report findings that further illuminate the dynamic potential of the cannabis industry.
In the paper’s introduction, the authors explain:
“Terpenes are natural compounds found in several organisms belonging to the animal and plant kingdoms. They constitute the largest class of natural products with more than 55,000 known compounds. Several studies have attributed to this big family of compounds a range of pharmaceutical properties such as anticancer, antimicrobial, antifungal, antiviral, antihyperglycemic, analgesic, anti-inflammatory and antiparasitic.”
The paper focuses on terpene compounds' potential to become candidates for new pain-controlling drugs. It points out that plant-derived substances have been important sources of medical products for millennia, employed in the fields of medicine, pharmacy and general biology:
“… natural products continue to contribute to the development of clinically important agents against various diseases—HIV/AIDS, Alzheimer’s Disease, malaria and cancer … For this reason, it is believed that nature will continue to be a major source of new structural leads, and effective drug development depends on multidisciplinary collaborations, such as botanical, phytochemical, biological and molecular techniques. It is logical to assume this will only continue, with cannabis and its terpenoids front and center.”
Global sales of non-cannabis derived terpene-based pharmaceuticals were about $12 billion in 2002, when the study for this paper was conducted. And, as the authors explain, the search for new therapeutic options for chronic pain control will not end:
“The incessant search for new therapeutic options for chronic pain control is based on the fact that [pain] is the most prevalent human health problem, affecting over one quarter of the world’s population.”
“… The incessant search for new therapeutic options for chronic pain control is based on the fact that [pain] is the most prevalent human health problem, affecting over one-quarter of the world’s population. Besides, the incidence of the number of people with chronic pain is increasing as the population ages and other chronic pain disorders such as cancer arise, whereas therapeutic resources ... are limited …
The continued high prevalence of pain worldwide … drives the pharmaceutical market. Furthermore, with intensive incentive for research and development, it is expected that the analgesic drug market is going to be dynamic and commercially promising in the years ahead.”
The bottom line, as it pertains to cannabis cultivation, is that, the market potential is expected to be limitless.
If that’s not enough of a case, think about this: Dr. Raphael Mechoulam, Organic Chemist and Professor of Medical Chemistry at the University of Jerusalem in Israel, co-discovered the THC molecule more than 50 years ago. He summed up his life’s work in a quote to National Geographic in June: “We have just scratched the surface,” he said. “And I greatly regret that I don’t have another lifetime to devote to this field, for we may well discover that cannabinoids are involved in some way in all human diseases.”
(To understand the passion of Dr. Mechoulam and the cannabis industry, I highly recommend you watch the documentary “The Scientist” on YouTube. It is absolutely amazing. Visit: http://bit.ly/1hgdTX2.)
So I ask myself: Who will cultivate, process, refine and super-refine the isolated compounds to create the pharmaceuticals of the future? Will it be you?