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Cannabis testing is becoming a big business and for good reason. As companies compete to have the best, safest and cleanest cannabis they are searching for testing protocols that will help. That is why I’ve asked Eric Lachance of Pathogen DX onto CannaInsider today to help us understand the latest in cannabis testing. Eric, welcome to CannaInsider.
Eric: Thank you for having me.
Matthew: Eric, to give us a sense of geography can you tell us where you are in the world today?
Eric: Yeah we’re in Phoenix, Arizona. Our corporate headquarters is in the Scottsdale area, and our lab is down in Tuscan.
Matthew: Okay. And what’s your background? How did you find yourself in this business?
Eric: Actually my background I served in the military for 20 years and involved in a lot of research and development. And the cannabis business frankly is an exciting, new area into research and development which is why when I met my team, the CEO Milan Patel and Chief Scientist Mike Hogan, it was just a path to continue what I have a lot of passion for.
Matthew: Okay. What is Pathogen DX do exactly?
Eric: So Pathogen DX has developed a test, a DNA based test for tracking or finding pathogens that are inside of the cannabis product whether it’s the flower, the edibles or the oil. We’re based on a human diagnostic testing. We were spin off from a company that has a lot of years of NIH grand funding work.
Matthew: When you say DNA based, can you just familiarize us with exactly what that means?
Eric: Yes so let’s just think about this terms of the CSI which we’re all familiar with on TV. In CSI you use DNA to find who the bad guy is. In this case we do the same thing since fungi, mold, bacteria are all living organisms they have DNA. And so we find that DNA inside the test when we’re conducting the test. Much like you see in any forensic lab.
Matthew: And who are clients? Labs or individuals or who are your clients?
Eric: Right now our primary client is the labs because each state has requirements for testing cannabis for pathogens and other things and so they have a third party requirement which is the lab which is who we sell our test to.
Matthew: Okay, can you give us a snapshot of the lab requirement and the biggest markets in the United States?
Eric: Yes, sure, absolutely. So you know the testing market in 2020 is supposed to be about $850 million market and of that probably about a third of that if not more is pathogen testing. Each state requires, not each state, a majority of the states require testing for molds, yeast, mildews on your cannabis product. Now each state is a little bit different, but in general they all test for (4.05 unclear) mode, e-coli and salmonella.
Matthew: Okay, and what’s an acceptable amount? I mean is there a minimum threshold. I mean because this probably occurs in nature pretty often and it’s not always a cause of concern is that right?
Eric: That’s correct. So there’s a threshold for e-coli and salmonella which is 1CFU. So if you can pick up one colony for (4.32 unclear) of e-coli and salmonella, then it is fail. On total yeast and mold, total of aerobic bacteria and others there’s a level that’s 10 to 4th if I remember correctly CFUs and that’s really to allow for that natural occurring fungi/mold in the environment.
Matthew: So CFUs is that in layman’s term kind of the ability to create more of whatever the pathogen is so it’s something to look out for.
Eric: Right so each colony, so if you think back in the day of the Petri dish when you put your material on a Petri dish, when it grows it grows in little colonies and you count the colonies and that’s the measure, the unit of measure of Colony Forming Unit.
Matthew: Okay. And when you grow say organically versus conventionally, do you see more pathogens or is there any correlation there?
Eric: You would expect to see organic grow more pathogens such as pseudomonas and xanthomonas but those are healthy pathogens out there and that’s the one thing about our test that allows us to do is decipher between the healthy and the unhealthy pathogens. So we test, when we go out and do our testing we provide the labs to do the testing they can differentiate between the good and the bad pathogens.
Matthew: Okay. So apart from DNA what is the key differentiator for Pathogen DX as a testing medium than compared to other testing companies would you say?
Eric: Honestly that’s truly where we provide a lot of value. You can complete our test in six hours. So in other words from start, from receipt of the sample, running through the process six hours later you will have results back unlike the two current methods of Petri dish which can take on around 48 hours to 96 hours or real-time PCR which takes 48 hours approximately. You can get our test back, our test in one day.
Matthew: Is it all done online or when you say you get your results back how is it typically delivered?
Eric: So the process is the grower or the distributor will take his product to the lab, the sample. The lab, from the start that they receive that sample and they start doing the test they will then run through our process and we use our software as a SASS model which is online. So you run it through the scanner, scanner shoots up to our software as a service and then it provides back the report giving what CFUs were found in that sample.
Matthew: So let’s say we find some colony forming units in a sample do we have to throw everything away or is there a mitigation plan or does it vary state by state?
Eric: It varies state-by-state. Some states are far more stringent where you could lose your entire harvest. Other states are you can take that and turn it into oils and other states if you just mitigate that mold with a spray or a fungicide, you can do that as well. The challenge with doing that, with just doing the spray is you can’t be sure you got it. So that truly is a challenge because remember you’re only doing a sample and if you find it in that sample, that means your whole product has got that e-coli or salmonella. The best way honestly, which we find a lot of growers are doing today or wanting to do today I should say, is test their product throughout the life cycle, through that 12 week life cycle of the plant prior to harvest. And by catching it early enough then you can get rid of the fungus early in the process prior to harvesting your flower.
Matthew: So you’re saying that if you can test early on in the grow cycle and see something that may not be visible at all but it comes back positive in a test, it’s much easier to manage and solve that particular pathogen problem early on.
Eric: Exactly. That’s exactly, and where we’re going to is, because remember pathogens also hurt your yield in your crop. So by being able to test throughout the cycle you can reduce any loss of yield thereby returning a higher value per plant.
Matthew: You mentioned that sometimes if your test comes back and there’s a pathogen in there the plant might be acceptable for oil but maybe not for dry flower. Why is that? Is there some way that it’s salvageable and there’s no harm passed on once a conversion to oil is made.
Eric: Yes and now we’re really going a little bit farther past my knowledge. I can tell you that one of the things we have seen is that if you take and inhale a flower, smoke it, put it in your lungs and it’s an aspergillus for example, you can cause yourself to have lung damage and so you really don’t want to do that. The oil process allows you to kill a majority of all of that fungus. The challenge is you still have that DNA in there and it can’t be guaranteed that it’s completely safe. Much like you would have if you think about Blue Bell or Chipotle or any of those things like that where they actually cook the food and yet when they cook the food they don’t kill everything, and people still get sick.
Matthew: Yeah. Gosh I have no idea if this is true but I’ve heard there’s some speculation about sabotage in Chipotle, again total hearsay and opinion, but who knows there. I mean there’s some pretty powerful forces that don’t want the GMO movement to thrive and some speculate that that’s how that happened, but again total speculation. Don’t know if any of that is true. Certainly it could be a form of effective corporate sabotage because it’s certainly taken the wind out of Chipotle’s sales when they get salmonella problems all throughout the country which stinks because it does have a huge impact on psychology which I guess is a lesson for growers and cultivators to take away is that it’s such a huge hit to your reputation when you know the public gets wind of the fact that you have salmonella or e-coli that’s at a dangerous level and has caused harm. So I guess that’s a takeaway there.
Eric: Exactly and just think about it this way. The cannabis community is a very tight community and it really cares for its clients, but the problem is outside the cannabis community there’s the world of naysayers that do not believe in the value of the product. So if you have a tragedy happen where some young or some man or woman who has cancer who is taking cannabis because it alieves five separate distinct symptoms as a result of chemotherapy and they pass away due to an e-coli poisoning, could you imagine the impact across the industry because now we’ve just added ammunition to those naysayers and this industry cannot afford that because it has such huge value to its client base.
Matthew: Which is crazy because you think of all the people that die of alcohol issues every day but that doesn’t get highlighted or you think about the slow death of the way the modern diet is and it really doesn’t get that much attention. It’s starting to get more attention now, but you’re right it would be a devastating blow to have that happen. You mentioned that growers are kind of using this as a tool or considering using it as a tool in the 12 weeks or so from when they start to when they harvest. Is there any other motivations that you see for the testing other than just trying to catch things early?
Eric: In reality when I talk to growers it’s been because they want to make sure that they provide the best quality product for the client, the best medicine possible. And one thing I absolutely love about this industry is everybody loves to make a profit, but nobody as I’ve met in this industry takes profit over responsibility to the client. That to me is what truly what makes this industry so special which is why we see growers wanting to talk to us about either doing some sort of testing their plants early. We’ve even had growers come and talk to us about testing, environmental testing because the way our test works it doesn’t have to be a plant, it can be a tape hole off of your HVAC system, your ventilation system. It could be pulling water out of your water distribution system inside your grow. It could be taking soil samples and us doing testing on soil samples.
All of those things all provide great benefits to the growers. Our test luckily, not luckily, it has the ability to test for pathogens no matter what the medium. The medium being a flower, the medium being soil, the medium being water. It does not matter. We can test for those pathogens because we’re a DNA based test.
Matthew: Okay. Where do you see the evolution of testing going in the next few years. I mean it sounds like you have a pretty sophisticated testing protocol here that goes beyond what most people have probably heard, but as everybody see, you know, technology changes so rapidly. How do you see it evolving over the next few years?
Eric: I see testing becoming far more important not only in the cannabis business but frankly because of Chipotle and the food and agricultural business and the water business. And who knew this, the Dial Soap business because people realize that introduction of these harmful pathogens into your body can cause massive amounts of value loss whether it’s a young kid getting and dad or mom having to stay home from work or it’s god forbid somebody passes away. Those kinds of things are making testing becoming a value contractor but a value add to the clients that we’re supporting.
Matthew: Yeah there’s a liability issue there for sure.
Eric: Absolutely and even the liability piece is not even as prevalent now. It’s I need to keep my team, my clients happy because of not the law suit per se but the loss, as you so correctly put, the loss of value to Chipotle because of a pathogen event.
Matthew: What’s the ballpark figure on cost. I mean I’m sure it varies state by state and there’s variables involved. But I mean for people listening they don’t have a ballpark idea. Is there anything you could tell us?
Eric: Yes so for our test we charge, we sell to the labs and the growers it ranges depending on which state because of the number of pathogens that get tested but it ranges between $20 and $30 and also if there’s a larger volume people get kind of a scale discount but that’s truly all it costs. Competitors charge, our competition charges about $5 to $7 per pathogen. Our test is below depending on the number but is around $4 a test per pathogen.
Matthew: What about the requirements in terms of what’s a sufficient sample size? If you have a harvest that’s 100 pounds let’s say for easy numbers, what percentage has to be tested?
Eric: That’s a great questions and it’s actually by state and there’s still a lot out there. I think if I remember correctly Colorado requires a sample for every five pounds and it might be multiple samples for five pounds. Of the top of my head I can’t remember, but it’s usually one or two samples per five pounds. When we look at the sample is for us we need one gram. Yeah so our labs need one gram to do all the pathogen testing using our product.
Matthew: Well Eric I have a personal question for you before we close. Is there a book that has had a big impact on your life as you look back that you would suggest listeners take a look at?
Eric: Absolutely. So you will have to excuse my military background, but one of the things I’m big on is a book called a Passion for Leadership. It’s by Robert Gates, and he really talks about how to institute change across large organizations whether it’s universities or the Army, the military or other such size organizations and making sure to really establish collaboration amongst your subordinates and your teams so you get really outside and progressive thinking on solving problems which is something we have had amazing, which really has led to me in this industry because this industry is so collaborative. I have had nothing but great response from growers, they’re collaborating with us, providing product or (19.30 unclear) who really are helping us with free labor and free support that’s just been uncanny. Again, (19.41 unclear) is an ability to collaborate.
Matthew: Now in your mind do you have a mental model of what leadership is in terms of how you work with a team? Like one or two things, little pearl of wisdom in terms of how you think about relating with people in a way that moves the ball forward and aligns everybody with a common goal.
Eric: Absolutely. So for me it’s first having everybody understand what the mission is or the vision for that group is and then for me as a leader what I like to think about is everybody in that group has value. From the janitor on up, everybody has value in this team and I will relate it to a story I had back when I was a young lieutenant in the Army when we had a very big problem and a young soldier gave me a suggestion and I dismissed his suggestion because of his rank. My lesson learned was, and his suggestion was spot on. It was exactly right, and I thought about it that night and I came back I realized and I pulled him up in front of all of his peers and said hey, you made this suggestion yesterday. I apologize to you and I was the one in charge. I apologize to you for discounting what you said and discounting your opinion. Great job we’re going to implement what you did. That to me is kind of the basis of all leadership is that you recognize value across all of your people because without them you’re just one person standing in the middle of a dorm.
Matthew: Yeah I hear humility in that story, recognition, good ideas can come from anywhere and it’s so true. Everybody has different life experiences and backgrounds and they look at things in different ways and they could have a different lens on a problem that can lead to a breakthrough.
Eric: Absolutely, absolutely.
Matthew: Well Eric as we close, can you tell listeners how to find you online?
Eric: Absolutely. You can go to www.pathogendx.com. And so you’ll find all of our information there at our website. And if you would like to contact us we have a contact link there as well.
Matthew: Are you looking for investors at all?
Eric: We are. We currently have a round open right now and we’ve raised about $575,000 and we’re looking to get another $500,000.
Matthew: Okay and so if investors want to reach out to you, I’m assuming accredited investors, they can just do it through your website.
Eric: That’s correct or email myself. My email is on the website but it’s email@example.com.
Matthew: Great. Well Eric thanks so much for coming on CannaInsider and briefing us on testing we really appreciate it.
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Eric Lachance of PathogenDx discusses pathogens in cannabis, how to test for it and mitigate it.
[1:22] – Eric’s background
[1:54] – What is Pathogen DX
[2:32] – Eric explains what DNA based means
[3:31] – Lab requirements and the biggest markets in the United States
[4:23] – Minimum testing thresholds for substances found
[5:36] – Correlation between growing organically and conventionally
[7:43] – What if CFUs are found
[9:52] – Using the plant for oil if a pathogen is found
[13:32] – Eric talks about motivations for the testing
[15:17] – Eric talks about the testing technology evolving
[17:41] – Testing amounts
[18:28] – Eric’s book recommendation
[21:49] – Pathogen DX contact information
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What are the five trends that will disrupt the cannabis market in the next five years?
Find out with your free guide at: http://www.cannainsider.com/trends