By Eric Peterson | Jun 17, 2020
Grand Junction, Colorado
Softgel and tincture manufacturing services
Kester relocated to Grand Junction for a job as a nutritionist in 2011 after he went to grad school at Colorado State University.
He got his start in CBD manufacturing with another company in 2015 before launching Elevated Softgels with co-founders Chris Fagan and TM Mahlum, now the company's respective chairman and CEO. "For me, it was about quality control, just trying to elevate the standards of the industry and GMP compliance," says Kester of the impetus for the new company.
Elevated Softgels commenced production at a 15,000-square-foot facility on the Colorado River in fall 2019. "We spent hundreds of thousands of dollars upgrading the building, building out production rooms in a previous warehouse to GMP-compliant standards," says Kester.
The company now manufactures tinctures and softgels for a variety of customers across the U.S. "It runs the gamut," says Kester. "Our largest customer is in the Northwest, and they're a huge mail-order company. . . . We also do stuff for your smaller mom-and-pop folks." Orders range up to the hundreds of thousands of softgels.
Kester notes that the hemp industry lacks "a solid definition for what quality means," but Elevated Softgels is aiming to help cement the meaning by requiring high standards from its customers. "On the foundational level, [quality] means any material is going to be free of pesticides, residual solvents, heavy metals, microbial contamination, mycotoxins, those types of things," he explains. "We require all of our customers send us certificates of analysis for all of those different tests on the material, and we actually won't run it or release it for anything until we see the results of those tests."
Elevated Softgels is focused on professionalization of processes and high standards as the company works towards GMP certification by the end of 2020. "We would say we're GMP-compliant," says Kester. "We're continuously working with Allay Consulting to make sure all of our SOPs are up to snuff."
He points to two key reasons for certification. "One of the very legitimate criticisms of the hemp industry in the past couple of years has been lack of regulation and quality control. If we want people to take this more seriously and have trust in the product, having that out there as a product differentiator is going to be very important."
The second piece of it is "the increased quality control that comes with GMP practices. having checklists and writing things down so often prevents needless mistakes."
Tincture manufacturing involves a mixing tank and pneumatic pump filler, but softgels are trickier. "Of all the dietary supplement categories, manufacturing softgels is probably the most complex," says Kester. "Compared to two-piece capsules or other pill forms, there are a lot of moving parts."
A ribbon of material is made in a dedicated mixing tank with glycerin, water, and starch, then injected with the active ingredients and carrier oils as it's pinched into the finished product. "A lot can go wrong, so we've done a fair amount of time troubleshooting . . . to make sure all the parameters were dialed in," says Kester.
Most customers send hemp extracts, but Elevated Softgels can provide brands with CBD and other oils. "We try to be sort of a buffet-style contract manufacturer," says Kester. "We even have wholesale products that we stock in-house with our-in-house carrier oil and in-house extracts."
Maximum capacity is 1.5 million softgels per 24-hour period. "We're definitely not at capacity," says Kester. "We can increase the speed of the machine to do more. We're basically running one long shift for a softgel-run day."
Kester credits Mahlum's marketing outreach for a quick liftoff. "She's been hitting the ground with trade shows starting last spring ," he says. "She's been devoting a lot of time to business development, customer acquisition."
Challenges: COVID-19 is the big one. "Navigating the uncertain times," says Kester.
Controlling the costs of carrier oils has also proven challenging, he adds. As the price of hemp extract has plummeted, the cost of carrier oils "has steadily increased over the past few years. We go through hempseed and coconut oils like water around here, so figuring out a way to make sure we're accurately pricing our products is interesting."
"Getting the finished dose within the acceptable range," says Kester. "It's not necessarily complicated math, but you need to account for the product densities, the density of the hemp extract, the carrier oil, and any other flavoring agents that you may be adding to the mix."
He adds, "Knowing how to hit a target dose is something I think we do really well."
Opportunities: Elevated Softgels will have the capability to make vegan softgels in summer 2020. "Vegan is going to be huge," says Kester. "We have a lot of orders on hold that are waiting for the vegan products to be available."
He also sees potential in marketing high-quality, Colorado-grown and -processed hemp extracts to customers. "I think there is a desire with customers wanting a hemp product that has good genetics that has diverse cannabinoid and terpene profiles," he explains. "Colorado is obviously a pioneer in this space, and people recognize that and want products that are made here."
Needs: Kester says he anticipates hiring employees in the near term to support production needs.
Elevated Softgels is also exploring investing in production equipment as well as quality assurance automation. "Just trying to expand our product portfolio and manufacturing capabilities," says Kester, highlighting two-piece capsules, nanoemulsions, and topical products.
Softgels will remain front and center. "There's a rationale for 'stick to what you're good at,'" says Kester.