Industry: Cannabis & Hemp
Founder and CEO Scott Holden produces aromatic terpenes for not only cannabis manufacturers, but a host of other industries as well.
Terpenes are the aroma molecules within plants. Through steam distillation, Lab Effects separates these compounds from plant material, and then the company distills those terpenes down even further into a purer form, preparing them afterward in a variety of ways so that they can be added to different types of products.
"We focus primarily on assisting manufacturers make more efficacious products by introducing terpenes -- and different [terpene] profiles -- [into] different formats," says Holden.
For example, the company sells formulations of terpenes that are able to be introduced into drinks, tablets, capsules, sublingual drops, topicals, and vape pens and cartridges. (It white labels some vaporizer products.) The company's terpenes are used by food and beverage manufacturers, nutraceutical brands, and especially cannabis companies -- since the cannabis industry prizes terpenes for their odoriferous scents and for their ability to boost the "entourage effect," which is described on Lab Effects' web site as nature's way of "amplifying [cannabinoids'] therapeutic value."
Holden not only speaks to terpenes' efficacy in providing aromas and flavorings, but also to their reported health benefits, as well. Here are just three examples of the 120 terpenes that the company distills from plant materials: there's alpha-pinene found within pine needles -- and the company's website notes that particular terpene's anti-inflammatory properties; linalool is derived from lavender, and it can result in a sedative-like effect on people; limonene -- which is found in the citrus peels of tangerines, grapefruits, lemons, and limes -- can help relieve anxiety. Notes Holden: "Those are terpenes which can be found in different strains of cannabis" as well.
Holden's company lists on its website around 30 different popular strains of cannabis -- e.g., Chocolate Thai, Lemon Haze, and Sour Diesel -- which it has run analyses on, profiling their terpene contents. Any one of those individual strains might contain between 30 to 60 different terpenes within them. If a cannabis company which specializes in carbon dioxide extraction -- a process which often strips away those important terpenes in the process of concentrating the plant's potent cannabinoids, resulting in something which Holden likens to a "dead oil" -- wants to replicate the terpenes of that strain of cannabis destined for its vape cartridges, Lab Effects can supply a blend derived from other plant sources which closely matches the cannabis strain's original ratio of terpenes.
The company also produces a hemp-derived cannabis essential oil. "It's that coveted aroma of cannabis without any of the cannabinoids in there," Holden says. It's more costly, though, than aromas distilled by Lab Effects from other plant sources.
Among the company's more novel formats are its water-miscible terpenes -- in other words, they'll mix with liquids due to, as stated on the company's website, "an advanced nano-emulsified microencapsulation technique." There are static-free powders that are "ideal for machine-filling applications such as capsules or pill press tablets," according to Lab Effects' web site, as well. And there's a product called The Cut: an unscented terpene (yes, those actually exist in nature, too) that can be mixed with cannabis oil extracts -- thus preparing, Holden says, a "more workable, flowable" mix for vape pens and cartridges. A company can save money using The Cut, Holden adds, because its cannabis extract doesn't have to undergo "winterization," which is an extra step that's often employed to remove the waxes from cannabis extracts to make them better suited for vape pens and cartridges.
Lab Effects (a division of Denver-based CBD Global Extracts) boasts of being the "first company to offer terpenes in the cannabis industry." For its first seven years, the company existed relatively under the radar, doing business with in-the-know customers. "We have always made the decision to focus on solving technical problems before talking about things," says Holden. But he adds, "A lot of companies that we've worked with for many years still don't understand the breadth and depth of the services that we offer." And competition has increased, as well -- although Holden says that, unlike Lab Effects, other companies are often cutting their terpenes sometimes by more than half with fillers like MCT oil or propylene glycol.
Now out in the open with its marketing, Holden predicts business "could be magnitudes of order greater" than it is now. The company has worked with "several hundred customers" domestically and internationally already, and Holden says, "We about triple in size every year."
Holden says the company's Golden lab is a GMP (Good Manufacturing Practice) facility. Also, it operates within established fire and safety codes, as well, given that terpenes in concentrated form are hydrocarbons -- "volatile, flammable, combustible substances," he says.
Holden has degrees in biochemistry and molecular biology, and once worked as an emergency medical technician. After deciding not to pursue studies in order to become a physician, he wound up working in software sales and marketing for IBM. Holden now talks about introducing blockchain technology that will make "transactions streamlined" for Lab Effects, given that the underwriting departments at banks often frown upon working with companies that do business with cannabis-related concerns.
Through the use of terpenes, Holden says he's helped people experiencing a wide range of health conditions -- including his father, who'd been diagnosed with a rare form of leukemia. Lab Effects sells Therapeutic Terpene Blends with formulation names such as Oncology, Relax/Sleep, Pain/Inflammation, and Focus/Active/ADHD.
Holden says that the Oncology blend, for example, consists of "a set of terpenes that have been identified to help as anti-proliferators, and have anti-tumor properties. So, they work on -- and bind with -- the same receptors as cannabinoids; terpenes are classified as terpenoids, because they work with the endocannabinoid system just the same [as cannabinoids]. That's why they're so beneficial [as part of] that entourage effect."
Holden says working with therapeutic terpenes is his dream job. "What I do isn't work anymore, by any means -- I don't consider it work," he explains. "I'm very lucky to do what I do, and very excited to get up every day to do it."
Challenges: Holden says that there are still social hurdles to navigate: "The market still needs a massive amount of education -- and it's not just for consumers and businesses and manufacturers, but the regulators and the banks and everyone that offers ancillary services to any [cannabis] business." Holden says that terpenes are still considered a "squirrelly sister or cousin to the cannabinoids" and that businesses like banks "don't necessarily know how to handle" a business like his company which interfaces with cannabis companies.
And then there's shipping cannabis-derived terpenes to other states. Is it legal? "When it comes to the terpenes," Holden says, "that is just uncharted territory." He says most regulators "don't think they have enough awareness of [the issue] yet to have the conversation," adding, "We make that decision [on where to ship] based on how states handle cannabinoids themselves" -- even though there are no cannabinoids within Lab Effects' cannabis-derived terpenes.
Opportunities: Reaching customers beyond the cannabis industry, says Holden. "It's the new formats that we are turning these terpenes into -- it's opening up opportunity outside of our industry and more people are getting involved." For instance, he says that breweries and distilleries have expressed interest in using water-miscible terpenes in their products: "We actively work with both [of those types of companies]," he says.
Needs: "I hope an educated workforce catches up to the industry," says Holden. "We have to do all of our training from the ground up. It's difficult when you're a new industry -- not a lot of people have industry experience."