By Eric Peterson | Aug 31, 2021
Austin, Texas / Missoula, Montana
Hemp-derived cannabinoid ingredients and private-label CBD products
With headquarters in Austin, Texas, and a processing facility in Missoula, Montana, Socati has come a long way in its first three years.
"As the 2018 Farm Bill legalized hemp and hemp-derived products at the federal level, Socati's team of scientific researchers completed a multi-year project to develop a chromatography process that could reduce THC to non-detectable levels more effectively than existing processes and do it at much higher speed and volume," says Chief Revenue Officer Mark Elfenbein. "Initially a hemp manufacturing company that launched with our now flagship broad-spectrum oil, we now offer a catalog of ingredients, formulation services, and finished goods."
In 2021, Socati was acquired by Yooma, a Canada-based wellness company that is publicly traded. Socati's offerings now include hemp-derived cannabinoid ingredients, including CBD, CBG, and CBN, in extract form (or oil) as well as in water-dispersible powders and liquids.
The company's broad-spectrum extract contains non-detectable levels of THC. "Socati's standard broad-spectrum materials contain less than 0.05 percent THC," notes Elfenbein. "Socati's most popular broad-spectrum extract is called B8G and contains a standardized 80-plus percent CBD with 8-plus percent CBG."
Elfenbein highlights other Socati products containing different ratios of minor cannabinoid content, including the company's water-dispersible powder with non-detectable THC. "To create this product, Socati puts our B8G Oil through a process called microencapsulation whereby the material is blended with an emulsifier to create a water-dispersible powder. This material blends well in a variety of products including beverage additives, direct-to-mouth applications, capsules, and more. The process renders the material virtually tasteless and odorless."
Socati's most popular powder is called WD25G and contains a standardized 25 percent CBD with 1.5 percent CBG. "We are now offering a CBN-forward blend for restfulness applications called WD5-25N with 25 percent CBN and 5-plus percent CBD," says Elfenbein.
Socati's new water-dispersible liquid emulsion "is a liquid dispersible product designed for beverage applications, especially canned beverages," he says. "The product is called EMU10 and contains 10 percent CBD with roughly 1 percent CBG."
The company also makes organic broad- and full-spectrum extracts; with the latter, the THC has not been reduced to non-detectable levels, but remains below the legal threshold of 0.3 percent. "Socati is one of a handful of ingredient manufacturers in the hemp industry that has received USDA Organic certification, which is a strong differentiating factor for us," notes Elfenbein. "Interestingly, having the designation is just as important to our non-organic customers as this seal indicates a higher standard of quality when it comes to Socati in general."
Socati also provides its customers with private-label finished goods, including tinctures, gummies, and flavored crystal powder stick packs. "We prepare a number of unique products tailored to our customers' demands," says Elfenbein. "These products all feature Socati's ingredients . . . and benefit from our industry-leading quality and safety programs."
Of the powder sticks, he adds, "Think of a Crystal Light pouch, this is a convenient delivery system for CBD products as they come in small packs and can be carried easily. This product can be formulated with an endless amount of flavor and functional ingredient options." The powder can be consumed directly from the packs or used as an additive for hot or cold beverages.
Socati employs a formulation development team that can work with brands of all sizes on new products. "Led by a 20-year veteran of food, beverage and nutraceutical product development, Socati is helping to usher in a new standard for CBD-infused products," says Elfenbein. "These engagements allow clients to work with Socati's team from ideation through to shipping its finished product. It is a truly white-glove operation allowing our customers to operate on par with any major nutraceutical brand."
He continues, "Currently our expertise in formulating CBD with other functional ingredients has proven beneficial to our customers. From there, we work with a network of manufacturing partners who are already in the CPG space to deliver finished goods, managing the entire process for our customers."
Elfenbein says the supply chain is of prime importance, and third-party certifications include ISO, cGMP, and SQF. "We work with organic and organic practicing farmers that deliver high-quality hemp extracts with traceability back to the seed," he explains. "We further refine the extract in our SQF and cGMP facility to produce high-quality CBD ingredients."
Despite a steep decline in hemp prices since 2019, Elfenbein says the company has managed to increase overall revenues by adding new product lines and the ability to formulate end-to-end products that incorporate functional ingredients. "Socati supplies products to over 50 percent of the top 10 CBD brands," he notes.
Challenges: "Two things come to mind: the continuing lack of clear regulatory guidelines hamper the growth of the industry and a growing need for an industry-wide agreement on best practices for lab analytics," says Elfenbein.
Opportunities: "We see significant growth opportunities in the finished goods and product formulation categories," says Elfenbein. "Socati has always been a leader in product innovation, and the launch of our formulations division earlier this year has resulted in the development and launch of several new products featuring not only CBD, but other unique functional ingredients that meet with the needs and interests of consumers in 2021 and beyond."
Needs: Elfenbein points to talented employees: "Socati is dedicated to delivering the best CBD products through innovation and an unparalleled commitment to quality, so our needs are often workforce-related as we work hard to recruit and retain the best and most capable talent in the industry."