Cannacurio Podcast Episode 21 with Mark Diener of JULABO

In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss license updates coming to the Cannabiz Media License Database, including Oregon cannabis licenses, Louisiana CBD licenses, and Pennsylvania, Ohio, Montana and South Carolina hemp licenses. We also speak with Mark Diener, Senior Product Manager of JULABO USA, which manufactures liquid temperature control instrumentation for the cannabis and hemp industries as well as for research, science, laboratories, pilot plants, and industrial processes.

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Cannacurio Podcast Episode 21 Transcript

Amanda Guerrero: Welcome to the Cannacurio podcast powered by Cannabiz Media. We're your hosts, Amanda Guerrero and Ed Keating. On today's show, we're joined by Mark Diener, senior product manager of JULABO USA.

JULABO is a longtime friend and subscriber of the Cannabiz Media platform and team, and we're so excited to have them on the show. Mark does have quite a bit to share with us, but as always, we're going to check in with Ed to see what he's uncovered this week from the data vault. Ed?

Ed Keating: Hi Amanda. A couple of things that we've been working on, just published the fourth blog post that came out of the software stack report that we've touched on in the last couple of weeks. This one was on the advisory sector, which focuses on consultants as well as essentially data analytics firms, so that was fun to dig back into that.

And then I'm also working on a blog post that covers regulators across the US. One of our research team leaders put together all the regulators that manage these licenses that we have, so I'm doing a look to see who is the biggest regulator in the land.

Amanda Guerrero: Ooh. Any hypothesis? Any predictions here, Ed?

Ed Keating: Yeah, all roads lead to Oklahoma, I think. OMMA, I think, has 9,000 plus licenses, so that pretty much puts them at the top of the heap, I think.

Amanda Guerrero: All right. Well, definitely looking forward to reading more about that in the next week or so. As always, thank you for the update, Ed. When we come back, we'll be joined by Mark Diener of JULABO USA. Stay tuned.

Welcome back, everybody. As mentioned, we will be joined with Mark Diener of JULABO USA. Mark is on the show with us today. Thanks for joining. Welcome, Mark.

Mark Diener: Thank you, Amanda. Great to be here.

Amanda Guerrero: We're so happy to have you. Tell us a little bit about yourself, Mark. How long have you been with JULABO?

Mark Diener: Well, I have an interesting story with JULABO. I'm an organic chemist by degree and in the late nineties, I left the lab to go work for an instrumentation company. And as they developed products for synthesis, they needed units that could heat or cool, and so we became an OEM partner of JULABO's back in 1998.

I was the person in the field doing pre- and post-sales support and installation, so I got to know the JULABO team at that time. And then fast forward, I stayed in the industry and sell JULABO at all the trade shows, so they created a position for me in 2008 and I've been with them ever since.

Amanda Guerrero: That's wonderful. I love it. JULABO as a company is interesting in the sense that they don't just work within the cannabis industry and didn't start within the cannabis space. Can you tell us a little bit more about their entrance and when they joined?

Mark Diener: Yeah. This is an interesting story. It raised a lot of curiosity when the western states were the first to legalize recreational. We started to get some notice about it. “Hey, is this a market for us?”

And then, as those western states matured a little bit and then some events started happening for exhibits and the like, we sent a couple of people to scope it out back in around 2014 and 2015. And then we discovered that, “Hey, this is a really viable market for us,” and so we've been in the space ever since.

Ed Keating: One of the things that we've seen is that for companies like yours that are in the hard goods space, if you will, they also have a giant portfolio in other more traditional industries, like let's say automotive or whatnot. I'm curious, how is the cannabis division looked upon within JULABO because it's probably different than the other spaces that the company has been in historically?

Mark Diener: Yeah, that's a good point, Ed. At first, there was a lot of skepticism. We're like, is this real? Because back then, at the start, banking was a big issue and it was a whole cash only thing, and our finance people were like, how are we going to handle this?And then there was also the legal aspect of from a corporate perspective, “Can we really sell to the segment? What's our liability with respect to that?” Thankfully, all of those things have matured and the market really now is just another market segment for our business.

Ed Keating: Yeah, that makes sense. I think back to when Larry and I started this business. We'd tell people what we're doing and the first thing they do is tell a joke, then they'd laugh and they'd be like, “Oh, wait a minute. That's actually a pretty good idea.”

And I could see certainly your technology really fits into the space very well. In looking at your space within this marketplace, could you help our listeners understand what are the points of differentiation for you in this space? Is it cost savings, increased sales, less waste, safety, all the above?

Mark Diener: Pretty much all of the above. We are a German manufacturer, so we pride ourselves in having high quality, high precision temperature control units. I guess the best analogy would be to look at the automotive industry. Our markets are kind of like Mercedes, BMW, or Audi.

We are not the lowest cost product on the market, but in the cannabis space, from an extraction perspective when you're going from plant material to high purity isolate, time is money. You want to have a high quality product that's highly reliable, minimal downtime, because if a unit goes down, the process stops, then that affects the throughput and cash flow for the extractor.

Ed Keating: Yeah. That makes a lot of sense. Now, in terms of the product portfolio that you had, once again going back to an existing business with other industries, did you have to overhaul the product portfolio to make it fit within cannabis? Was it an easy, smooth transition? What was that like?

Mark Diener: For the most part, it was a pretty smooth transition. Some of our partners who were already selling and making equipment for the petrochemical industry for distillation applications, they just simply transferred into the cannabis space and our units on those products fit in fine.

But now that extraction has really matured, they want lower, colder temperatures with high power, at minus 40 C for example. That's really not much different than what we experienced in the pharmaceutical industry on controlling glass reactor temperatures for running chemistry reactions.

So from that perspective, it's been a pretty easy transition. Some cases we might have to do some minimal customization depending on the application, but by and large, for the most part, all of our products have made a pretty simple transition into the cannabis space.

Ed Keating: And how do you go about reaching the marketplace? Obviously you work with other podcast guests we have, Precision Extraction, and I was curious, do you have a direct sales? Is it a VAR channel? What is your way into this marketplace?

Mark Diener: It's a varied approach. We work with partners or distributors that focus on the cannabis space. The majority of our sales to end users go through that channel. But we do have some people that come to us direct as well. So it's really, three-pronged - OEMs, distribution, and direct sales.

Ed Keating: When you're going through somebody else, is there a big build-out happening and you're a component? So a giant company is going to say, “All right, we want to use JULABO for this and it's part of a gigantic creation of a facility,” as opposed to let's say a tuck-in, like, “Oh, we need a piece of this equipment?”

Mark Diener: Yeah, it's actually both, Ed. Some of these newer states, like you were mentioning before we started about Oklahoma, there are a lot of places going up there, and so they might have a specific design in mind for certain products and we work with their engineering team to pair our units with theirs.

In some cases, it could be nontraditional. It's not something that, hey, they're going to company X that has been in the market selling extraction equipment for this whole time. But most customers are typically going to an equipment provider and purchasing an existing piece of extraction equipment.

Ed Keating: Got it, got it. And one last question I want to ask is, how does your firm segment the market? Traditionally, as people look across the United States, there are medical states, there are rec states, there's combinations. Does any of that come into play or when you get down to the extraction, it doesn't matter because an extract is an extract is an extract?

Mark Diener: Yeah, it really doesn't matter. But to talk about the medical versus adult, obviously the growth driver for the market is when a state does become recreationally legal because then that in history has shown, and you can look at the data in your platform, that the sales are quickly surpassed the medicinal market.

And then respect to hemp, that's a whole different ball game because so much acreage has been planted, there are so many more products being developed, and that scale for hemp extraction has gone industrial. That's gotten huge. But the big, big question about the hemp market is, what is the FDA going to do? And now the DEA just recently poked their head into that too, so I think there's a lot of question marks for both cultivators and processors with respect to hemp.

Ed Keating: Yeah. Well, it's a great point. The federalization in that space has been welcomed by some because a few have opined that this may give us some insights as to how cannabis may someday be regulated, but yeah, on the CBD side, it's definitely getting a little bit more interesting and then certainly with the feds approving hemp plant.

But I was curious, one thing that I hear a lot when we talk to folks on the hemp side is that there's way too much cultivation going on and not enough processing. Are you seeing that where you've got a backlog of processor orders because people really need to be able to work with hemp?

Mark Diener: Yeah. And then what processors are there? It's driving the price of CBD isolate down to the point where they're having issues with profitability, so there's got to be some market stabilization. I think once the FDA issues some guidelines, it can get rid of a lot of that snake oil that's on the market and then I think things will turn around.

Ed Keating: Yeah, that's a good point because I know in just attending sessions pre-COVID and a few post-COVID that many have pointed out that there's still a lot of 2019 crops sitting in farms and warehouses and drying out as opposed to making it to the marketplace. Hopefully, as you said, we'll get a reckoning of the supply and demand before too long.

Amanda Guerrero: Mark, excuse me, you guys recently were published in a Cannabis & Tech Today article, and it mentioned that JULABO uses several technologies to support the cannabis extraction business. Can you elaborate a little bit on what types of technologies you utilize?

Mark Diener: Certainly, Amanda. Well, given the fact that we're still working from home and that restrictions for travel are still in place, one of the issues is that we can't go to customer sites to assist with installation and training. So we have a product we call vDelivery. It's just enabling us to do video con by whatever platform to actually be there to walk the customer through the setup and operation of the unit. Normally, we would charge a fee for that, but during the COVID situation we're offering that for free.

Mark Diener: Additionally, from a post-sales support perspective, we have a product called LucaVision. This is a virtual reality product that we can use from a service perspective to expedite servicing of units in the field.

And we also developed an app. We are pretty proud of that. We just launched a new version of that earlier in the year where a user can go on there and actually run a calculation to determine how much heating or cooling power they need [crosstalk 00:00:13:19]. Yeah, it's pretty cool. In addition, they have all of our product portfolio on there, and then there are also is a page for instructive videos and information that might be helpful for customers.

Amanda Guerrero: And what's the reception been like for new customers, existing customers? How have they responded to your guys' adaption to the post-COVID world?

Mark Diener: They've been very receptive to it. We've done a number of the vDelivery installations, if you will. And in our discussions with partners and end users, they really like the fact that we have an app because there are very few instrumentation companies that have that available. We're looking to actually roll out another module this fall, which will also add a service component to our mobile app.

Amanda Guerrero: That's very exciting. Now, going back to what you guys have done this summer, I know that you also published a Cannabis 101 white paper. Can you tell us a little bit more about what we will find in that white paper?

Mark Diener: Sure. Thanks, Amanda. That's a basic overview of what our products do in the extraction workflow, from extraction, whether it be hydrocarbon ethanol or CO2, all the way to distillation to make a high purity isolate. It's just a nice little entry-level document to provide basic education for people who are curious about the cannabis extraction industry.

Amanda Guerrero: Our Cannacurious folks, absolutely.

Mark Diener: Yes.

Ed Keating: Yeah, I read it and I definitely was smarter after I got through it, so thanks for putting that together, Mark.

Amanda Guerrero: Same.

Mark Diener: Don't worry, I don't have a quiz.

Ed Keating: In a looking ahead sense, there are a number of states contemplating cannabis legalization at the next election, and I'm curious, what does that mean for you and your team in terms of planning? How early does that matter to you in terms of, where you're going to put salespeople or how you're going to start trying to figure out what the market opportunity is?

Mark Diener: Yeah, that's a great point, Ed, because there are a number of states during the election that will be considering either medicinal or recreational, but I think that's what a great, powerful tool Cannabiz Media is. It's because once the election ends and we know what's happening, we can then monitor the license information in your database and then we can notify our account managers accordingly as to, “Hey, this company is opening up a facility in this state.”

The frustrating thing, though, can be how long it takes from the resolution passing to actual implementation, seeing what's happened in other states. Massachusetts really took forever. Michigan was a little better, but hopefully some of these states that are anticipating passage have everything lined up now to implement once they get the word, instead of just starting from ground zero at the beginning.

Ed Keating: Yeah, there definitely is this lag that you've touched upon. A few states have done it well. I think Missouri issued a plan, came up with it, published their deadlines, “Here's when we hope to hit it,” and then, I think they did a very good job of staying on schedule and actually shared with us who applied for the licenses so that you could even get in there earlier.

But a lot of other states have let this process go on for a really long time. Maine comes to mind where I think it's been four years since the ballot was passed and they're still trying to figure out how to get licenses out, which ones are provisional, which ones are active. It's definitely going to be interesting to see how the states react, but at least they have a lot of other states to look at from a historical perspective to see who did well and who did poorly.

Amanda Guerrero: Well, Mark, it was a pleasure speaking with you on today's show. We very much enjoyed learning more about JULABO, yourself, and just the extraction process in and of itself. Thank you so much for joining us and we hope to see you guys soon, maybe at a trade show, maybe not. We'll see, but thanks, Mark.

Mark Diener: Very good. Thank you so much, Amanda and Ed.

Amanda Guerrero: All right, Ed. I definitely feel more intelligent regarding extraction process. I don't know how you feel, but let's take a look ahead and see what license and data updates you have for us.

Ed Keating: Yeah. Right now the data team and the data science team is really working to bring in a lot of new information we have. We're doing updates on Oregon cannabis, Pennsylvania hemp, Louisiana CBD licenses, as well as Ohio, Montana, and South Carolina hemp, so just a lot of information flowing into the system over the next week.

Amanda Guerrero: It seems like it's a lot of hemp information.

Ed Keating: Yeah. Yeah. And we thought hemp season was over in terms of licenses, but some of the states issue licenses year round, instead of just focusing on the agricultural season because we're moving in a harvest in some states.

It's definitely slowing down a bit, but we want to make sure that we have information that is accurate, timely, and comprehensive. So we keep going back to the states to try and make sure we have all the information that we can get for our customers.

Amanda Guerrero: Wonderful. Well, I'm very much, as always, looking forward to what you and the data team can present to us. Thank you for that update and we'll speak soon.

Everyone, thank you so much for joining us on today's podcast. We're your hosts, Amanda Guerrero and Ed Keating. Stay tuned for more updates from the data vault.

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