Industry: Cannabis & Hemp
Products: Wholesale CBD products
CEO Kashif Shan's global CBD play is gaining momentum as the company brings a 120,000-square-foot facility online and new molecules like CBG and CBN to market.
As the use of CBD becomes more mainstream, Folium Biosciences is positioning itself to dominate the supply chain for products that relieve pain, reduce anxiety, and help insomnia.
The Colorado Springs-based company has about 6,000 acres of hemp under cultivation across the United States and in Canada, where it recently acquired 10 acres in Medicine Hat, Alberta, and is building a 220,000-square-foot facility that handles extraction, bulk ingredient manufacturing, and making finished consumer-facing products ready for labels.
Of the 137 molecules in cannabis, only THC is psychoactive, Shan notes. Folium's target for extraction is CBD and the other 135 non-psychoactive molecules for use in products ranging from dog treats to pain-relieving balms to cosmetics.
Under the 2018 Farm Bill, hemp is allowed to contain up to 0.3 percent of THC. Folium Biosciences' unique extraction process removes THC to a non-detectable level of 0.0 percent while preserving other components like minor cannabinoids, terpenes, and flavonoids, which makes its products more attractive to mainstream retailers, large pharmaceutical companies, and countries that have zero tolerance for goods containing THC.
"Other people can do this, but to do it at industrial scale is a whole different kettle of fish," says Shan. "We're the only ones doing this at scale."
Folium's customer base falls into two categories: companies that have their own formulating capacity and buy hemp products in bulk, and brands that buy its finished consumer products and distribute them to retailers.
The bulk products Folium sells to companies that make their own products include Hydro PCR, a bulk delivery system of CBD designed for the beverage market, and water soluble powder that's used for food or cosmetics.
Shan predicts that CBD products will become more mainstream as more retailers such as CVS, Walgreens, Walmart, and Costco begin stocking their shelves with them. Even big pharmaceutical companies like GlaxoSmithKline and Pfizer are entering the market. The two companies have formed a venture to launch a CBD line of products to remain on the leading edge of consumer pain relief.
"You'll see a migration of CBD to more traditional companies trying to bring CBD into retail and start driving brands that consumers will recognize," says Shan. "Consumers are desperately looking for solutions that can provide relief to very real issues they're dealing with, whether its chronic pain, anxiety or sleep disorders. They're looking for more of these products to come to market from brands they can trust."
By the end of 2019, Folium Biosciences will have more than 300,000 square feet of manufacturing space in southern Colorado that supports processing, extraction and purification operations. In addition to growing hemp in Pueblo and Alberta, it has farms in Minnesota, North Carolina, Arizona, Oklahoma, Oregon, and Kentucky. The company's 22 refrigerated 18-wheeler trucks pick up harvests from around the country and return to Pueblo where the hemp is processed.
Folium also ships to 23 countries, including Japan, Malaysia, and South Korea, with several others getting on board. Shan says there are plans to open a plant in Europe in 2021.
"We're making significant investments to build out capacity," he adds. "We have a high level of confidence in the regulatory environment. We're looking at it from a global perspective."
Challenges: "Our biggest challenge is waiting for FDA clarification on CBD as an ingredient for food and supplements," says Shan. "We fully expect that to be aligned with the business that we're building, but the sooner the better. Regulatory guidance will help enforcement generally with managing some bad actors in the marketplace as well."
Opportunities: "We have new markets we're opening all the time and new molecules we're bringing to the market," says Shan. "2020 will bring CBG and CBN to the market at an industrial scale, so we're excited about it."
Products with high concentrations of these cannabinoids are currently available at boutique shops, he adds, but "we look at how we can bring this to the large CBD companies of the world."
He sees big consumer brands bringing CBD brands to the mass market in 2020 as large retailers introduce private-label products.
Needs: Employees for its new location in Pueblo West, featuring 120,000 square feet of refrigerated storage space in a former produce warehouse. "We're going to be hiring 140 people in the Pueblo West area in the next six months," says Shan. "We're on track to have our new facility come online in December."
Shan says he expects for 1.8 million pounds of biomass to be processed into an active output of about 40,000 pounds per month. "It's our first stepping stone to a continuously operating facility -- it's automated," he says.
The trick is integrating all four phases -- hemp decortication, extraction, winterization, and purification -- into a seamless manufacturing operation. "All of those have to be scaled to match each other," says Shan.