Containing Cannabis Odor to Avoid Fines and Scrutiny

Dan Gustafik of Hybrid Tech

Dan Gusafik was recently featured in Rolling Stone magazine because he has developed a specialty in containing the scent of cannabis. It turns out local governments have created extremely harsh fines and can even close down your grow or extraction facility if the odor is too much. Listen in as Dan explains how to prevent odor and optimize your grow and extraction facility.

Learn more:
http://hybridtech.us/

Key Takeaways:

– How to contain cannabis odor to avoid fines
– The trade-offs of using different types of extraction
– The cost per square foot for grows and extraction facilities
– Why extractors do better than cultivators during gluts
– Best practices when designing a grow and extraction facility
– Creating two-tier grows

Important:
What are the 5 Trends Disrupting The Cannabis Industry?
Find out with your free cheat sheet at
https://www.cannainsider.com/trends

Read Full Transcript

One particularly vexing problem for cannabis cultivators is odor control regulations from city and municipal governments. One engineering firm in the cannabis space has made a name for itself in its ability to help their clients deal with the odor from cannabis and improve the efficiency of their grow. I am pleased to welcome Dan Gustafik, President of Hybrid Tech to tell us more. Dan, welcome to CannaInsider.

Dan: Thanks, Matt.

Mathew: Give us a sense of geography. Where are you in the world today?

Dan: Right now we're in a suburb of lovely, sunny Portland, Oregon.

Mathew: Great. And all the sunshine in Portland comes in the summertime. The rest of U.S. is kind of rainy. Is that right?

Dan: Yeah. That's pretty accurate. So we got a happier rain. It's not as heavy rain as Humboldt County, but it's pretty rainy. And the rest of the year is just glorious right around 75, 80 degrees. But, yeah, just perfect weather for kayaking and every other fun activity you can dream of.

Mathew: Oh, good. And what is Hybrid Tech at a high level?

Dan: That's a good question. So we're what's called an A&E firm which stands for Architectural and Engineering. And we are one of the few firms specializing in the cannabis sector. We also do Hemo, and currently we're leveraged across multiple different states. We've got 37 states licensed, and we've got multiple provinces up in Canada. And we tend to do mainly what we call construction drawings, which are basically drawings designed to go through permitting and get client's approval. We also novel systems, novel approaches like multi-layer cannabis and, obviously, the scent control piece we're talking about [inaudible 00:02:07] complex closest in greenhouse designs. But, yeah, that's generally our main thing.

Mathew: Can you tell us a little bit about your journey, what you were doing before Hybrid Tech, and how you came to start Hybrid Tech?

Dan: Yeah, absolutely. Well, Hybrid Tech's technically the third version of the kind of the company that I've been working with which is, we started off as a contractor, design-build, way back in the day with BGR Builders, started in 2000. And then from there we changed to another company called Synergy, basically doing the same things. We actually started out in, believe it or not, grow rooms. So about 20 years ago, I helped design and then build the first grow room that I've ever been in, which just kind of happened. And then from there, it turns out those people knew more people and more people. So, the contracting design-build companies evolved for the need to service the industry. But, technically, I've been doing more cannabis systems than anything else.

I did take a little hiatus for a while due to some work at Intel, some other companies. And then I kind of came back when the new recreational wave hit. Maybe with Canada, it came back with a very large Canadian project, filed some patents and the new name was Hybrid Tech. Now four years now we've have this new version. But, yeah, I've actually been in cannabis for technically the majority of my career which is kind of odd.

Mathew: Well, how many projects would you say you've worked on in the cannabis space?

Dan: Oh, me personally? I actually lost count. The new version, the Hybrid Tech, we actually think we have a tracker. So I know we're about 140 products in right now. The old version? I'd say below 200, but I don't have an accurate number anymore as it's been so long and, yeah, just we've done a lot of projects, right? Me, personally, throughout those three different companies, have done quite a few projects. So, yeah, general ballpark.

Mathew: And what buckets do those projects typically fall in most of the time?

Dan: Oh, well, across the board. So, in the beginning, lots of different kind of commercial and off-grid systems, specialization in like photovoltaics or, I'm sorry, solar panels for off-grid greenhouse systems. Obviously lots of internal indoor smaller grow operations, you know, less than a hundred lights, and then we started expanding from there to larger, and larger, and larger, more complex systems. And then, of course, more recently, now we're not exclusively larger systems, but, in general, we tend to get more complicated projects that are harder for others to complete, lots of extraction projects. About half our products are large scale extraction. I'm talking, you know, a ton a day of volume coming in. So we tend to focus more on those. In fact, we're MEP-focused, which is Mechanical, Electrical, Plumbing is our main background as well as my personal background.

Mathew: Okay. And, can you tell us a little bit more about the municipal and city ordinances that govern scents or odor? The nuisance laws, those things?

Dan: Oh yeah, absolutely. This is a kind of a misunderstood concept for the scent and odor pieces. So, a lot of people think that they're intentionally being levied at the cannabis sector, which, in some ways, they slightly are, the new ordinances. But the existing ones, actually, are not. They were originally designed for mainly agricultural, for swine, for avian, different operations that are, if they move next to your house, you'd be very unhappy and your home value would decrease, and it creates a whole lot of problems. So the nuisance ordinances were originally designed for those sectors, but they're now being re-utilized or re-targeted, I guess, towards the cannabis sector, and in some ways some disastrous results.

So, some people have been, due to their scents, it sounds like been shut down or sued. I don't have the exact information on how many times that has happened, but there was an article that came out which we were quoted in where this is actually happening, reoccurring. In more recent times, the new ordinances are basically written off of the state template. So, every state that has a recreational initiative being passed, they will normally have written into it some very vague language like, "All operations will control their scents." And that's the extent of it. And then their job's done. Now all of the local authorities having jurisdiction, which are normally gonna be counties or, in some cases, larger cities, they now have to write some method. And that's where the scent control ordinances you see today have emerged from, is they're more precise talking about directly cannabis and having exact requirements you have to meet.

They've now been replicated in multiple states, and, obviously, that trend will just continue because once one municipality [SP] has written, there'll be more and more, and more, just regurgitating that with the information.

Matthew: Okay. And how did this become one of your specialties figuring out how to control the scent or odor of cannabis plants?

Dan: That's actually kind of a funny story. Like many of the things in the cannabis sector, we are extremely flexible. So unlike, kind of, other more stoic engineering firms, when some new problem present itself, the very first thing we do is figure out exactly how to address this problem and then normally write up a template for addressing it. So, the ordinance originally emerged from Clackamas County, at least in Oregon. It's one of the first more aggressive and restrictive scent control ordinances we'd actually heard of. It was about two and a half something years ago that that got written, and at the time, the Commissioner, Ben Blessing, basically just had this ordinance. It got written. We didn't actually get requested for comment on it, which he said was unfortunate, but, oh, well. So they came out, we had to comply, and we immediately called his office. We had a project right away that needed to comply and we set up a template.

And then our template's very streamlined. So from there on I guess we did a quarter of the applications in the state of Oregon, just because he got them down pat, we got them down fast. And so we did acoustic and scent combined, which I know we weren't talking about acoustic. But that was part of the ordinance requirement. You had to comply with both. So we did a bunch of those packages, and I think they call them "land use compatibility statements," and those are required to get your State Recreational License. It's, kind of, one of those documents you must have to actually have a completed application.

Mathew: Okay. I've been in smaller grows, not the commercial grows you're talking about here, but some small scale commercial grows that use can fans and things like that. And those work really well. It's amazing how well they work. Can you go over some of the specifics of, you know, the equipment in design that you use that helps control the scent?

Dan: Sure. Actually, we still have can fans. So, some of those [inaudible 00:09:43] products were actually, you know, very small, a couple thousand square feet, and if they're small enough, we would immediately go to the inexpensive fallback like the can fan, because it's just, you know, it's an in-line fan with soft ducting, which is, again, very easy to install, very inexpensive to install. And then, of course, after that you tend to have some sort of activated charcoal filter, which is normally an inexpensive piece of equipment. They have a lot of problems though, but they are very cost-effective. So, on small operations, we still deploy those. On larger operations though, you can graduate to something that's way easier to clean and service, which is normally gonna be an actual fan with a filter bank. And the filter bank is the box that you could open up, pull out the actual filters, clean off the filters, put them back in, have a nice pre-filter that extends the life of the filter.

It also can all be done normally standing up on a ladder. You don't have to take down the equipment, whereas, the in-line can fan is legendary for having to be removed to replace the pre-filter service that's [inaudible 00:10:52] they weigh a decent amount. So, tends to be a lot of pain and suffering with servicing the in-line filter systems. And having the upgrade to actually like a fan, you know, where the filter bank is, it's a pretty large leap. That's what most commercial systems use. So we tend to have...and they call them "gas phase absorption," just basically a snappy way of saying that they're exchanging gas particles which are the scent profile, the little particles in the air. Normally with activated charcoal within them is kind of how they're doing the exchange because they're very porous.

So, of course all of the particles are slotting into those pores, and that's how you're exchanging the gas in the air. And at the end, you're left with far fresher air. And one of the keys is, of course, putting the room under a mild vacuum so that the particles aren't escaping through all the cracks and crevasses.

Matthew: Okay. And I'm sure you get a lot of clients when they call you asking about, "Hey, how much is it gonna cost, you know, dollars per square foot?" Or what's their total capital investment required to build out a grow? What do you tell them there?

Dan: Well, that's a very good question. Normally, it depends on the client for one. So depending on their size and the complexity of their project, a lot of people think that they can get something built for about...like, you know, a $100 a square foot is a very common number that we hear from medical states that are transitioning to recreational. Once you're actually going for recreational and you tend to have the requirements of having a licensed contractor pick up all the permits, having to have an entire construction drawing set done professionally and stamped, and, of course, the big one is meeting all of the applicable codes, suddenly, the dollar per square foot, it shifts drastically. So, on average, it's about $250 a square foot for an indoor grow operation. If you're going multi-layer, LED, it tends to ratchet up to over $300.

But that seems to be the good ballpark, $250, $350. That's a shocking number to most people, and we've actually had a lot of calls end with that information, saying, "Oh, my God. You guys are crazy." And they start talking to people and they finally get contractor quotes, and they go all the way to the end and find out, actually, no. You can't have it for less unless you actually are able to pull some amazing rabbits out of a hat. But, yeah, that's the grow operation number. And then the extraction number is even higher, of course, because the extraction number includes extremely expensive extraction equipment, whether they be pressure vessels for CO2, or, like I said, more pressure vessels for ethanol. You've also got lots of process typing, very often high hazard sprinkler systems.

So extraction areas tend to be even higher than that. And we've had them go as high as six to eight, depending upon the area, but then again those are smaller, much smaller regions, basically built to laboratory-grade standards. And, you know, we've got [inaudible 00:13:59] coming in with fifteen-thousand-something plus gallons of ethanol. So I guess that's some very massive hazard mitigation technique to deploy that level. But that's actually what you need when you're trying to process a couple tons of hemp.

Mathew: Tell me, what is a discovery in repair project, and why do you do these?

Dan: Oh, that's a good question. That's a new phenomenon, and it's exciting and terrifying at the same time. We get a lot of requests for those. So they are all these recreational states that have passed, Wichita's coursed down quite a few, have sizable operations that very often the original engineers, either they didn't get the right information or they designed it incorrectly. And very often, it's a combination of the two. It's not always at the original engineer's record. We're bad engineers, of course. It's very often they didn't receive the kind of information that they needed, and they just don't have the experience to know what to ask for. So, unfortunately, you have these very sizable systems sometimes that are not working. And they can be not working for a myriad of reasons, but, normally, it's most of the time something involving moisture control, pest mitigation, odor.

Generally, they're all kind of focused on different aspects of the mechanical systems not functioning. Sometimes plumbing is included as well. So our team is basically going out and reviewing this during the discovery phase, and we're discovering what's not working. And from there, after discovering what's not working, we're then gonna transition to a solution phase where we actually then do an engineering fix of the problem. And some of these fixes are really fun. Sometimes we have, like a project we've just finished, went from a single layer high pressure sodium grow to a triple layer LED. That was a very fun project. We worked on it for quite a few months. And that just went up. I think about last month they fully completed it. It looks fantastic. It's got a little lovely Codema robot in there that comes and grabs the trays, and just a very, very clean operation.

So things like that are very entertaining. Other ones are not as entertaining, and sometimes they've gotten literally busted by the fire marshall or the jurisdiction having authority, someone came in there and went, "What are you doing? Code violation, code violation, red flag, red flag." So, other discovery ones are less entertaining. It's more of they were told to cease and desist, and our team has to go in and troubleshoot what violations were committed where, how we can mitigate them without, of course, costing an arm and a leg. Those ones are a lot harder, but we've enjoyed both. And the good thing on the end is that we normally have a client who's extremely happy since now the system's actually working the way that they want it to be and they're a returncustomer for their next state project.

Mathew: Okay. You talked about extraction a little bit. When we're talking about extraction, do you have any recent customers or clients that you did a build-out for or an engineering work for that you can kind of walk us through what it looked like and what you did?

Dan: Oh, sure. Yeah. Well, technically, half of our work load's extraction. So, that one's pretty easy. So, yeah, we had a couple projects. So we complete an extraction. One of them actually was smaller, kind of like a micro-extraction system, and it was basically an ethanol combination system. And the reason why I'm talking about ethanol and CO2 and now I'm gonna talk about butane and propane real quickly is it is exceedingly important to the fire marshall the method that you're using to extract. In fact, it's the most important thing. And getting the fire marshall approval is technically the hardest part about extraction. So that tends to be a big governing input when we first come in on, "Hey, how are you doing this extraction process that you're currently doing? And how can we, you know, maybe help you make it better?"

In this case, the smaller one was we ended up using a paint booth which is, as it sounds, it's a large booth that they use for painting vehicles. And that allows us to pretty easily put in a structure that we can then fit in, in this case, I think they had a 300-liter ethanol skid, fit that unit inside of this paint booth, therefore, mitigating its requirements for building a special room that's kind of an explosion proof room. And then we had a couple other rooms. They were a lower hazard requirements. They were also built up a total of three. And one is the distillation room, isolation room, and the final one was actually just a packaging area, which still I'm a little unaware of why that one they want classified. I think it was mainly so they could do an upgrade in the future and expand a little bit.

A lot of these extraction facilities we will work on, we tend to actually start trying to fit in additional equipment for a future expansion effort. So very often, there's a...you know, if you have one 300-liter skid here, you can transition to a total of two shifts per day. And then after that you could actually drop another one if we located on the opposing side of the paint booth, something like that. So they have a lot of room for expansion because most of the time when extraction kicks off and it starts working, the investors realize [crosstalk 00:19:39]...

Mathew: "Holy cow. We've got a golden goose here."

Dan: Exactly, especially when there's an outdoor glut. Like right now in Oregon, there is an outdoor glut that's just...that is the golden time for extraction to come in and say, "Great. I will pick up those pounds for $50 a piece," or some ridiculous amount. That's too low. That's not a real number. I think the lowest I heard of was $150, which is still shockingly low for outdoor.

Mathew: That is shockingly low.

Dan: And then from there, they were able to say, "Okay. I'm gonna bag this whole lot, put it in shipping containers, put it in our main loading dock, and feed those machines." And suddenly, they're doing 24-hour shifts and just that extra space that we planned out normally isn't enough. Now, it's time to have three or four more slots. So that was one project. Anyway, it was very small. So the entire facility was only about 4,000 square feet, but they had the ability to process a pretty massive amount of product with that small facility. On the alternate site, we had a much larger one. It's more complicated. I don't know if you want me to go down that entire thing, but it had a lot more systems inside of it, all ethanol, no specialized butane mitigation process.

Mathew: I think it might be helpful for people to just understand some of the tradeoffs between, like, a CO2 or butane extraction, or ethanol, and what the tradeoffs and pros and cons of each of those are.

Dan: Okay. That's actually a great call. Well, before you even select systems, the big thing to know is CO2 is normally selected as CO2 allows you to avoid most of the fire marshall's concerns. So, when you're dealing with CO2 a system, you're dealing with a system that is fully closed and using, of course, CO2 to actually remove or extract the active ingredient. It normally has less throughput which is basically the amount of [inaudible 00:21:32] material you're putting into it. And the quantity and, of course, potency of the material coming out is gonna be lower than ethanol, butane or even propane. So that's the big benefit of CO2 systems is that it's [inaudible 00:21:48] fire marshall the fact you don't have to have classified areas.

The negatives are it is power-intensive, requires a lot of compression, requires a dedicated chiller-boiler system, which, again, eats up a lot of energy. And they also, of course, still have to have some sort of ethanol for the final phase. They're good at making crude but they can't go all the way to define big [SP] products or the edible products. So they have to have some method of further distilling that crude oil, which is one of the main outputs of the extraction machines. If you switch to ethanol, which is kind of the industry standard for a large scale is you have a massive amount of throughput, but you have to have, again, have a massive amount of ethanol being stored, which creates huge hazard classification problems with figuring out how to store that much ethanol, having containment systems, fire suppression systems normally of a higher requirement, having certified rooms, classified areas.

Just it gets very complicated very quickly. Giving it up, however the rewards, are quite massive since it is one of the lower cost methods of having a massive amount of throughput. It doesn't require as much energy since it's mainly just some high pressure pumps. And it has, again, a much, much higher throughput. So you're getting more percentage of recoverable final crude versus CO2.

Last two are, I kept these kind of in the end for a reason, butane and propane. They are very difficult to deal with. We've had a couple projects with them. In fact, one, we just had very recently with butane and propane. Because they're gases, it's an extremely high hazard situation where we have a hard time mitigating them. We tend to have these specialized things called gas cabinets which have ridiculous ventilation requirements. We tend to have classified areas, and even with classified areas you still can't have that much of these compounds because they're actually in a very high hazard classification, which makes sense. It's a gas. If it leaks, it can fill the entire facility, and, you know, one spark and the whole facility goes up in flames, which is kind of what they're known for.

Also from the fire marshall standpoint, I had a direct conversation with the Deputy Fire Marshall, I believe, of Oregon. We talked about, initially, this happened a couple of years ago, and they asked us to cite precedent for butane and propane extraction being used in other industries. And we said, "Oh, we'll get back to you on that" We did look it up and we could actually find no precedent, which means there's no other industry that uses this, so it's hard to argue against the Code Official that it's a safe method when you can't cite some other application it's being used at. And that tends to be where you get on shaky ground. And once you're on shaky ground with the fire marshall, it's normally not a good side.

So those are difficult projects to deal with, and depending upon their size, they're normally smaller. So we don't take as many of those. We tend to focus more on the larger, more established ones that's generally are using either CO2 or ethanol.

Mathew: Yeah. I know that some people swear that the butane extracted oils taste the best, and that they've figured out ways to get any of the residual butane or propane out. And I believe that that might be true. I just, I don't know how it's true. And, you know, looking at some of the tradeoffs here, it's like, "Why would I ever want a butane or propane just because of the explosion risk?" It's like, things probably will go wrong if you follow the safety procedures, but at the same time, if they do go wrong, literally, it's like your whole place explodes. It's like, "I don't know if I would want to take that risk. But at same time, I haven't heard of any really exploding. Maybe one. I've heard of really just one exploding.

Dan: Well, they're not gonna explode. That's the thing is after we've mitigated it fully and it's, you know, approved, it will not explode because it actually has ventilation systems that go, you know, three cubic feet per minute of air flow. So, if a tornado of air picking up all the gas and exhausting it immediately, you have a interlock of your mechanical system that shut down all of your process gases and close all the cabinets, everything is gonna be explosion-proof rated. So after you're done to proof the facility, it won't blow up. It's just that you've now paid quite a bit for your systems and you also just have less ability to actually extract because you have less volume of propane and butane.

So, technically, if you go all the way up to a high hazard classification, you can store an unlimited quantity of ethanol because ethanol has a lower flammability, like a type 1B flammability, whereas propane and butane gas are in the higher classification. And at that point, I think you're stuck with, I think it's 480 or some very small quantity of gallons. And at that point, you just don't have the ability to actually have as large as the extraction facility using those methods. So, part of it is just how international fire code is written. Because those are higher hazard requirements, they're making people stick to having less of them. So I think you're gonna see...I don't think those [inaudible 00:27:16] those methods. I just think you're gonna see them just being smaller in more niche projects, products. And the larger systems are probably pivoting more towards ethanol and CO2, and some [inaudible 00:27:29] method, which is, of course, just a giant hydraulic press. We just don't see as many of those projects since they're not as difficult to get permitted to try in a hydraulic press.

So, most people, you know, or normal engineering team can deal with those. But, yeah, we've had a couple of those that's gets thrown on print sometimes at the very end. But they're not a very difficult to actually get a permit when you have just a giant hydraulic press. You know, you're pressing the plant for its extract.

Mathew: Okay. So, it sounds like ethanol, like when all the variables are weighed, you know, a lot of business owners who are newly licensed or they're expanding to other footprints are choosing ethanol.

Dan: In general, we tend to have a divide, I'll be honest. So, like even some of our largest hemp clients, one is squarely MV CO2 camp, and the other one is squarely in ethanol camp. And, yeah, they're both happy with, you know, how they're doing. It's just that they have very different methods. But, in general, it seems like the ethanol is [crosstalk 00:28:39]. Yeah. When you see the final throughput, it's pretty massive differential. But then again, the other companies have ways...they're just dropping more skids.

Mathew: So, if you were to say that, what you just said to me, to someone who has a CO2 extraction set up, what would they say, "Well, that's true, but the positive to the CO2 extraction method that ethanol doesn't have is this," what would those be?

Dan: Oh, oh, yeah. There are some extremely specialized machines, fabulous systems, from even waters that allow you to actually select and extract precise terpene profiles. You could actually get a perfect flavor profile. You can actually capture the flavors at different temperatures flawlessly. And then, of course, add those into new mixes. So CO2 does have some special...

Mathew: So, control, nuanced control and subtleties to customed flavor and terpene profiles.

Dan: Yes. And with the ethanol systems, you can get close to that, but not quite. They're mainly designed to basically push a pretty massive, you know, volume of ethanol through your finely ground material, and then extract, you know, whatever is actually in your base material in full. Whereas with CO2, you can, kind of, modulate. In fact, a lot of those machines are really made for full modulation. So you can actually target a very precise temperature range, which is targeting a very precise type of terpene profile that you're actually looking at capturing and putting into an extract. Or recombining into an extract, excuse me. That'd be one argument for that. For smaller operators, too, it's easier to get CO2 permitted than ethanol. I think there's a cost factor for smaller operations leaning them towards CO2.

Mathew: Now, you have a bit of a unique insight about which cannabis companies survive because you've seen it firsthand and you've talked about the glut in Oregon. And you think extraction companies survive, like we talked about, because they can endure the glut of cannabis. What does that mean exactly and why should we think about that? I mean, why is that true? And maybe, why doesn't the rest of the cannabis community really understand that at a deeper level?

Dan: That's another very good question. Well, in all honesty, there's this conception that is a misconception, I would actually honestly say, that seems to be slightly eroding. But for the longest time, basically the cultivation piece of cannabis was the leading defining aspect of all operations. So everyone must focus on the cultivation, cultivation, cultivation. And of the cultivation, the, you know, grade A flower was the primary focus. Grade A flower requires a massive intensity of light, a high level of CO2, flawless temperature, and, of course, humidity control capabilities. So that being said, it's obviously cost-intensive. That has been the focus for a long time. However, as the market seem to mature, which we've been on every [inaudible 00:31:59] wave so far it's happened. We've been a part of that process, obviously working on projects within those waves. We know it's a trend. From the beginning, you see a lot of grade A flower indoor operations [inaudible 00:32:11] first ones who fire off.

If they're not vertically integrated with cultivation mixed with retail, mixed with extraction, after that initial wave, the glut tends to hit, which is it happens pretty quickly. Some state just takes, you know, just one or so, one and a half years. Some states it takes two. But sooner or later the state has an over-production wave, which normally coincide with the mass amount of outdoor. It seems like the clients who didn't diversify and are just indoor because their cost of goods sold are much higher start having some hard times getting rid of that product. Unless they have, of course, the [inaudible 00:32:53] that they've also owned, or unless they have an extraction center they also own, which they're able to run through. And we've noticed that in the wave where people seem to be going unfortunately out of business, we've seen the extraction people come in and purchased [inaudible 00:33:09] operations, re-target them for everything going into extraction, and suddenly, kind of lift the business up with a profitable model.

That has happened over and over again. We've also seen extraction basically just let them die, which sounds terrible, then set up gigantic greenhouses where the, you know, volume and the production of the actual crop is incredibly cost-effective, run all of that volume straight to extraction where you, of course, equalize the net effect from Class A flower basically removed. So now you can actually have outdoor class C, even not light dep, you know, lower classification or lower quality cannabis that's steel grown. And from there... In fact, we probably should back up. I know I'm using a couple of classification terms. So real quick, let me go back to that just real quick. I don't know if you know the classification system. That's kind of an internal thing too that we made up. But we've talked to a lot of people, it seems to hold true when they use these different terms.

So class A flower, indoor quality with light-assisted CO2 or extremely high tech green house with, you know, blackout curtains which are light dep systems, [inaudible 00:34:25]. And then Class B Flower tends to be when you have less light available, which is normally gonna be a greenhouse and you have probably no CO2. And then when we say like class C, we're talking about basically steel grown or extremely low tech greenhouse. There's no light, very little temperature humidity control. There's a huge cost difference between making those different classification to flower, and a lot of people when they come in, and, again, I'm kind of pivoting back now to the extraction discussion, when they come in at the end to clean up, it turns out that the class C, since it's so incredibly cheap to make, you are able to funnel quite a bit of this product into the extraction machines for an incredibly low, you know, dollar amount. And from there, the profit margin tends to be extremely high.

So those are the ones we see that tend to be winning in the end as those that are producing the most product for the lowest cost, and then basically equalizing that product through the extraction process to then make edibles or vape pens or whatever the case may be. And the difference is kind of shocking because it's the same, you know, [inaudible 00:35:43] vape pen between the difference in class A flower and a class C, they won't know the difference. It's blue dream here and blue dream there. It's the same strain, and the same others after they're fully extracted, the effects basically seems to be almost the same. At least this is what we've heard from all the different consultants we've talked to. Of course, we're not the expert in all things cannabis and we do not claim to be in any way, shape or form. There's, you know, a lot of very gifted people who know far more when it comes to the actual products being consumed. But this is just something that we've noticed occurring since we've been actually building and designing the systems for them.

Mathew: Okay. Now, we've talked before, and you had mentioned that you don't think a lot of cannabis businesses or cultivators use on-demand services as much as they could. Can you talk a little bit about, you know, onsite harvesting, drying, curing, trimming services, packaging, and how can you maybe just focus on one thing and use these on-demand services and why that's important?

Dan: Oh, yeah, absolutely. Yeah, that was actually a novel little piece that came out. So, we actually figured out just last season for one of our clients, a full temporary plug-and-play curing and drying complex. And it may not sound revolutionary from the outside, but what it ends up being is, they had to just build the building, standard steel, you know, pre-fab building, so very cheap construction. After they built the building, they were out of time. They didn't have enough time to get the utility, electrical service delivered. They didn't have enough time to actually get all the HVAC specified, permitted and delivered, which creates some problems when you have, in their case, five acres of cannabis coming to fruition.

So, we had to think fast and design a different system, which we've actually done before. We call them, you know, temporary systems, which it's all rentable components. The system was delivered, actually hilariously enough, one week after it was designed which is great. It involves a temporary genset under a temporary permit, which is, of course, legally allowable in almost every jurisdiction. It gives you a one year rating as long as it has appropriate grounding and bonding. That went in and once the genset was connected, after that came in the HVAC, of course, which involved some pretty massive humidity rule components. And then from there we actually had the system, kind of, up and running, with again about a week later. And they were actually curing and drying about 12,000 pounds of cannabis every 7 days straight for extraction, which is why they were able to cure and dry in 7 days. So it's a very brittle product at the end.

That's one application. We had another client who ended up setting up some rolling company. Actually, that's in Oregon. And interestingly enough, this company would show up with a, kind of, expensive pre-roll machine. It just makes those perfect pre-rolls. And they would show up at a farm and part of their services were rather than you training your staff or hiring up people and, of course, buying those machines, since you only need them for just, you know, one month, with that you basically have the service show up and they would basically roll out your entire line into perfect joints, and then charge you a per joint fee. So a lot of companies are realizing rather than investing all this, which very intensive level of capital, all they have to do is basically think of some of these temporary resources focused just on cultivating, you know, high quality, in this case, we're talking about outdoor cannabis.

And at the end of the harvest cycle, basically getting these temporary systems in place for their mission-critical, high energy, technically, high permitting requirement items, and then those items disappear. So from their capital investment piece, it's highly novel, again, very profitable, and that tends to be far less than actually the cost of purchasing.

Mathew: Okay. Interesting. Is there any advancements in growing tech you see coming down the line that gets you excited?

Dan: Oh yeah. Yeah, definitely. Well, honestly, extraction currently is probably the most exciting for us. Cultivation is still exciting in a lot of ways, just the most advancements appear to be happening in extraction technologies rapidly. So we're seeing new machines probably every three to six month appearing. This is also just not just extraction vessels, but it also goes all the way down to the actual, you know, post process equipment, which is when you're finally distilling the product into more of a fine liquid, that's where you actually will see...more often than not you're gonna have specialized components like the white film extractors is one of the kind of newer items. Short path distillation units used to be one of the newer items. And then at the beginning it was things called [inaudible 00:40:52], one of the first items.

But it's basically they're refining more, and more, and more to higher performance items that are basically distilling the product further into a finer isolate for [inaudible 00:41:07] or whatever, you know, your end product use might be. That's one of the biggest exciting pieces we've seen. Also, people are getting more and more comfortable with LEDs on cultivation. That part is exciting since it allows us to do things like multilayered canopies, which we're not legally able to do with standard high pressure sodium grows. And multi-layer is...you know, vertical farming is...

Mathew: What was the reason for that? Why couldn't you do multi-layer with a high pressure sodium?

Dan: Code violation. Yeah, we discovered that one in Washington where the electron inspectors are very, very qualified, fantastic individuals. I can't say enough good things about them. Those people know their codebook. It turns out that the light fixture right beneath your ebb and flow tray, logically, would be have to classified as a wet location fixture. It must be splash-rated. Now, if you know anything about high pressure sodium bulbs, if you get any water on them, they're not just resistant to it, they actually explode, because they're running at 498 degrees. So they're definitely not wet location-rated, so you have to transition your multi-layered canopy to some fixture whether it be like a T5 that's basically resistant to, well, splash, or you have to transition to one of these lovely LED products which, of course, are also resistant to splash.

And that's where you've seen this massive emergence in LEDs is mainly in the multi-layer category, which grants a lot of benefits. It also makes it easier to deal with the amount of heat the cannabis is putting off, which it is putting off quite a bit of heat.

Mathew: Okay. I wanted you to transition to some personal development questions to help listeners get a better sense of who you are personally. With that, is there a book that has had a big impact on your life or way of thinking that you'd like to share?

Dan: This is actually an interesting question. A book that had a large impact. Honestly, I unfortunately have to say that, and this is gonna sound horrible, but it's just true, some of the code books that we have are, kind of, like, well, version of the Bible which is, kind of, hilarious sounding, but...

Mathew: I might have to issue my first nerd alert here on CannaInsider. Nerd alert, nerd alert.

Dan: Yeah, it's true.

Mathew: I read code books for fun.

Dan: International building code, international fire code. I have to admit, I have had to bone up on international fire code, and it's been an invaluable volume. It sounds horrible but with extraction there's just so many landmines mainly in the fire mitigation, fire classification, category. Just, you have to know the book inside and outside and know all the exemptions to make sure you don't have to build complex, extremely costly systems. I hate to say it, but it's just, it sounds terrible, the code book is probably have the most impact. From a philosophical perspective, I think that maybe...I feel like you're kind of reaching for more on a personal side. I don't really have anything in that category that I can kind of readily pull out. I guess probably because I've been doing this for nearly 20 years, so I have had the...it's not like I woke up one day and went, "I'm gonna go work in cannabis." That just didn't happen.

So I don't have some inspirational, you know, book that changed my life forever. It was actually kind of the opposite. I just basically walked into a grow room because one of my friends got one of the first cards in California on Medical Prop 215 and wanted to set up his basement. I feel like I've more stumbled into the cannabis sector than, you know, had an awakening and a change I guess than other people might have, if that helps.

Mathew: Okay. And, is there a tool, web-based or otherwise, that you consider vital to your productivity or your company's productivity?

Dan: Yeah, you might have to issue a second nerd alert.

Mathew: Okay. I'm ready.

Dan: Yeah, actually, technically, Revit is our kind of become our backbone. So Revit is like Autocad, which is, you know, one of the modelling programs. A while back, Revit is basically a 3D modeling program, and it is...well, it's basically overtaken Autocad. And it's something that's absolutely critical to absolutely everything we do. We literally now do calculations inside of it. There's custom code we have written for it. We have a huge amount of custom calculators for calculating, you know, actual water usage, which is kinda the largest piece when cultivation operation gets wrong. And in the end, you end up with a bunch of outputs which are all 3D models of the actual highly complicated systems, which is critical because without those actual 3D models, you'd never know if you had conflicts.

It also allows us to have all of our stuff basically on the web. We have engineers currently all over the actual world technically, who work and crack into the system, and after they log in, they're actually able to check out one of these Revit keys and start working on a project, which...

Mathew: Interesting.

Dan: They sometimes do in unique locations. So, actually, yeah, one of our team members just left for a month in Europe, and he's still working while he's gone. That's perfectly fine, and it's allowed us to be a lot more flexible at the company , have talents, higher level of talent than I think other firms that wanna lock you down to a desk would be able to acquire, which we need. We need people who enjoy being on the tip of the spear, which is normally a terrifying place for most engineers to be. Whereas, with our team, that's kind of where we thrive.

Mathew: How do you spell that software package name? I've not heard about it.

Dan: Oh, Revit, R-E-V-I-T.

Mathew: Okay, great. Well, Dan, let's wrap up here, and let everybody know how they can find you and connect with you, especially if they have a project and just follow your work with Hybrid Tech

Dan: Absolutely. We've got our website, the main, easy way in on there. We've got, you know, bots that actually help people. And it's hybridtech.us. You can actually go log on there. We've got a bunch of nifty pictures, a bunch of, you know, how we do things. We've got a huge amount of videos, and then from there you can get a look through those resources. And, normally, I think there's a couple of chat bots that chat you up right away should you want to actually schedule a half hour kind of consult, and from there we give out half our consults actually every week with one of our design professionals, which very often I take those consults myself and talk about the potential of the project, and see if, you know, we're a good fit for their team.

Mathew: Have you tried to game your chat bots at all and see if you can get them to answer strange questions or is that not a possibility? That's where my mind goes instantly.

Dan: We actually have. And the chat bots are actually monitored by live people. So, part of the thing is if chat bot runs into something that doesn't make any sense, it immediately actually pings an actual live person which we have that, of course, checks on that and goes up, so that's giving the real answer. But, yeah, we have kind of a funny amount of bots actually that currently we've deployed in different categories that I don't think most firms would actually use, but being that we are who we are, it's kind of one of those things that just evolved and we went, "Hey, we need a little bit more help here, so we can either, you know, hire people just to sit here and monitor this, or we can use some of the technology that's available," so we opted for the latter.

Mathew: Okay, cool. Well, Dan, thanks so much for coming on the show today and educating us about odor control, engineering of the grow room extraction. We covered a lot of ground here and good luck with everything you're doing.

Dan: Yeah, thank you, Matthew. Really appreciate it and thanks for your time.

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