James Slatic is well known and respected pioneer and thought leader recognized by the Huffington Post as one of top five Cannabis industry movers and shakers. As the former CEO of Med-West, James led and grew to be a $12M a year California infused products company. James is an active industry advocate and has sat on the boards of the California & Nevada Cannabis Associations and the Marijuana Policy Project providing James with a deep understanding of regulatory markets and frameworks.
Listen in as James discusses his most recent move into automation and robotics in the cannabis industry.
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Matthew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider.com. Now here's your program. Robotic automation is making its way into the cannabis industry. Here to tell us about it is James Slatic of Todaro Robotics. James, welcome back to CannaInsider.
James: Thanks, Matt. Nice to be with you.
Matthew: Give us a sense of geography. Where are you in the world today?
James: I'm in Carlsbad, California, beautiful sunny San Diego area.
Matthew: Oh, that is a beautiful town. And I am in Lisbon, Portugal today. Tell me, what is Todaro Robotics at a high level?
James: At a high level, it's automation solutions for laboratories and biotech companies. We are specializing in laboratories that handle cannabis testing.
Matthew: Okay. This is really cool because it's finally we're starting to see some applications of robotics and automation in the cannabis industry. But it sounds like you're also dovetailing with some adjacent industries. I wanna dig into more of that. But first give us a little background on what you've been doing the last few years. I know you have had a run-in with the authorities on something and you've got a deep history in the cannabis industry. So why don't you tell us a little bit about that.
James: Sure. I started back in 2009. I stumbled into the industry and did packaging at popbottles.com and then that morphed into the V-pen business and O-pen and then I was a California licensee for O-pen and Bang and built a large distribution company and had 35 employeesMatthew: Yeah. Let's talk about what you're doing with robotics, and specifically, what's the problem that you're trying to solve with the use of robotics here? Maybe you can frame the discussion for us.
James: Sure. In any other industry in biotech and pharma, they would come up with automated solutions to the most repetitive and time-consuming tasks just because of efficiency and preciseness. Cannabis by its nature has been undercapitalized and as testing protocols have developed, it's been easier to throw say a technician at the sample prep part of testing as opposed to automated.
Matthew: Okay. So for a business owner or someone that might be in need of a system like you have, your automation system, can you describe what it would look like if they were looking over your shoulder and you are showing them how it works?
James: Sure. This is also... we have YouTubes on our website at Todarorobotics.bom. But basically, it is to automate the preparation of the samples. There are many things that are being tested. But if we were gonna talk specifically about flour, which most people are familiar with, it's going to take the sample and it's usually in a 50-milliliter conical tube and it's going to take that. It's going to put in some solution into it. It's going to agitate it with what's called a bead shaker and then it's going to pipette that into a... it's called a 96-hole plate. And then it's gonna barcode that and have that ready to go into the actual testing equipment whether it's a high-pressure liquid chromatography or gas chromatograph. So it's a sample prep system.
Matthew: Okay. Is this being used a lot by... or the idea being welcomed by brands that say, "Hey, wouldn't it be great if we could do some testing preliminary before we even send it out to a lab?" Because a lab is really just something for government officials or for the public to see like, "Hey, we have a third party in between us that verifies." But it's nice to know where you stand just in-house. So is that...or are you seeing labs welcome this where the labs are the ones doing this all day long?
James: The testing is mandated by state law. You have to use the third-party lab. Our systems which start at about $200,000 are more geared for commercial testing labs that are doing large volume of samples. So even a large edible manufacturer, they might be doing a preliminary test to see what things are on potency and so forth. There are other ways to do that to get sort of some preliminary data. Ours is for real sort of high volume and needing very precise measurements. So ours is more geared for the commercial market, which is between Canada and the United States, is probably about 100 testing labs right now.
Matthew: Okay. And for listeners, I'll put a link in the show notes for this video so you can see how this works. But essentially, it's like an articulating arm that's moving around taking samples and putting in places. James, you mentioned about a 200K initial investment. Where's the ROI come in for, the return on investment come in for a business owner or a lab or a brand that's looking to invest in this type of thing? How do they kind of pencil out how they make their money back?
James: Well, that's a great question. And the reason, there's two really sides to it. One is the cost and the other is the time. At best, we can estimate there's gonna be about 350,000 tests needed this year in California. And the license testing labs now in California, which I believe the last time we checked, there were 33 licensed labs but only 21 operating. They only had the capacity to do about 150,000 or a 175,000 tests, so roughly half of what we're projecting or needed to just support the California cannabis industry.
So we went to the regulators and said, "Hey, there's not enough labs and these tests are required. How are they gonna get them?" And they looked at us and they go, "Yeah, we don't know." And so we see that there's a real capacity issue. So a regular technician doing a sample and grinding it up and pipetting it and putting it in a plate and bar coding it and weighing it and doing the steps necessary, you know, they can do maybe about five to seven samples per hour sort of at best. The robot can do about 50 samples an hour.
So just from a capacity standpoint, it's a productivity tool that heretofore the labs have just thrown labor at the issue of getting samples ready because the machines themselves, the actual testing machines, they can handle quite a bit of volume. But getting the sample ready to go into the machine is really the linchpin of capacity. So having 10 guys sitting there on tables grinding samples and putting them in solution and pipetting them into the arrays to be tested has been the...besides the other things, which is it's kind of grunt work so to speak and people get repetitive stress injuries and it's actually they tell me the least desirable part of the lab work that people are least enthusiastic about doing.
Matthew: Yeah. And can this be done then with no humans there like say throughout the night? Can you leave the robot running or how does that work?
James: Yeah. So could you do it? No. The nice thing about it is you would have one person here. You have to sort of load it and you would actually have to take the trays at the end and put them into the next part of the daisy chain. But let's say you're working a dayshift and you had 10 guys working versus having the robot running all night. You could say have one person that was checking it, moving the trays to the HPLC or the other part of the thing or loading the cannabis for the next batch of samples. These things do run 24 hours a day. And as the CFO for one of the lab companies said, "We love the robot because it doesn't call in sick and doesn't mind working weekends and holidays." There is that efficiency side to it. I don't think it's designed to work autonomously. Its procedures are. It needs to be sort of loaded and unloaded.
Matthew: Okay. Yeah, you could probably reduce turnover somewhat here too because people don't see much future in just doing that type of labor. It's kind of grunt work. I remember in high school stuffing envelopes and doing things like that and like you go into like a quasi, like a twilight sleep just doing it because it's so repetitive.
James: And the other thing is that the repetitive side is also where your mistakes and your imprecision come in. The robot does it exactly the same way every single time. There's no variance. And this is used in DNA and all sorts of very precise things. It can do a level of quality and exactness that is really not replicatable by a human. So that allows the protocols and the measurements and the TQM procedures or whatever to be done and documented at a very high level. So this thing doesn't get sleepy and put in an extra half a milliliter of solution or something like that. It's very precise. And as we do these volumes of testing and the results being so critical for sales, you know, if you were to mess up a test and show somebody positive for a pathogen or something under many of the state's laws that the product has to be destroyed. You're really talking about a very high-value product and you wanna be as precise as possible.
Matthew: So how long does it take to get the robotic solution kind of programmed and ready for the specific use case of a lab? I mean, you're already working with some customers so I guess it's just kind of customizing it a little bit. But how long does that take from taking one of these units and putting it into a lab type setting before it's ready to roll?
James: Well, the installation and training part is about seven days. So we usually do like a Monday through Friday. We do what's called a factory acceptance test. We get the unit installed and start running it, that it's getting the measurements that everybody's agreed to and what we call the statement of work, the labs measurements, because what we have found is that everybody does it at least slightly different. And so the way that we actually handle the samples has been different for each person. So it's about a week inside. So from the ordering, it's about four to six weeks for us to assemble and get the various components in. Put it together in our San Diego facility then shipping and then about five to seven days there, which two days would be training of the personnel on site.
Matthew: And what about maintenance? Is there routine maintenance and what does that look like?
James: Yeah. So these system are unbelievably robust. My partner, the technical guy, Tom Todaro is the former chief robotics company for a biotech company here. He's been doing it about 20-25 years. And he tells about robots that he's had that have worked 24 hours a day, seven days a week for eight years without maintenance. So these things are unbelievably robust. Yes, things can happen, but they are not maintenance intensive.
Matthew: Okay. And how about financing because I know for some businesses, that $200,000 is a big chunk to swallow. What do you have to say there?
James: Yeah, that's something that could be done over time. But we still have this issue that when we're going to CannaTech Solutions or whatever, people are reticent to provide financing, banking and all the other problems that we know about cannabis. So right now, we're doing a 50% down, 25% on shipping and 25% on signing off the site acceptance test. So right now, you have to have your own ability to finance, which most of these labs have been doing it with outside investors.
Matthew: Yeah, I was gonna say there's an opportunity there for someone that wants to provide maybe some higher interest rate type of financing. I could see where that would be attractive to certain accredited investors perhaps.
James: I think it is a good idea. We've seen this in the extract business that people will finance, you know, CO2 machines or alcohol extraction machines or qualified companies. And they just provide a higher interest rate sort of private financing for these. And we have seen that going on.
Matthew: Yeah, because it's a little different there because it's collateralized with the robot.
James: Actual machine, yes.
Matthew: Yeah. Okay.
James: Yeah, the machine itself has got a lot of value just in the equipment.
Matthew: Have you tinkered with the idea of like creating a machine that could maybe give you a shoulder rub or something like that?
James: Well, it's certainly a variable machine. So let's just say it does lend itself well to some good joking around the office.
Matthew: Okay. And how do you see the robotic solutions helping the cannabis industry more in the years ahead and even outside of lab testing?
James: Well, there are so many other applications. So whether it's cultivation, we've spoken with some of the big clone manufacturers and then we've also spoken to some of the companies like Phylos Biosciences and Rev Genomics that are doing a lot of genetic research and marker-assisted breeding. These are things that need very precise, very measured tests, and even output. So we expected it to kind of dovetail into the general growth of the cannabis industry and to other scientific applications. Right now, those are in small volumes to where they're only doing 20 a week. They don't need a 2 or $250,000 robot. But once they're doing 200 a week or 2,000 a week, then these type of automation systems, you know, it's just part of the general evolution. When I got into packaging, people were vending their cannabis at dispensaries in baggies or all kinds of stuff. And we came up with professional packaging. And it wasn't really prolific back even 10 years ago. And so just like this industry in general, you're going to see it absorbing the methods of what's gone before them, which is pharma and biotech where they look at an automated solution wherever possible.
Matthew: So I just wanna circle back. You mentioned Phylos Bioscience, and so they do genetic research and also gender or sex, they test the sex of plants, I believe. And so something like that you're saying like perhaps tissue samples of a plant for the cannabis biome type projects and also for perhaps even the sex of a plant. You think that's a possibility?
James: Oh, absolutely. All you have to do is go into the pharma side of the industry or biotech, with San Diego as a big hub for that and you see all of that being done with robotics. We're going to be the same thing as the industry goes from the roughly 7 billion that it is now to the reported 20 billion over the next two or three years, all of those ancillary supportive. A lot of these companies are raising money. A lot of the Canadian pubcos are investing. One of the big lab companies in Canada, Anandia Labs was just purchased by Aurora Cannabis, the second largest public Canadian company. And so they're investing hundreds of millions of dollars into the technical side of cannabis. And so you just see that proliferating, not just in here in North America but also in Europe and South America.
Matthew: I think one of the leaps that might be coming next too is you can create...you can have a camera, a high-fidelity camera and look at flower as it goes by, connect that to an AI algorithm that looks at flowers, looks for patterns of mold ,or even just organizes flower by premium flower versus non-premium flower, over-cured flower, and then the robotic arm moves these things into different batches as they pass by. So it's kind of combining the AI, machine learning, pattern recognition with the robotic arm. I can see those things, that mirroring happen too.
James: Oh, absolutely. The whole AI world, machine learning AI world is changing all of our lives and it's going to do it in this industry as well. That's like almost a whole another discussion to get into where that's gonna go. I mean, I heard yesterday of a grow being done in Canada that's 800,000 square feet. Now you're getting things into the size and scope where you're gonna have to do automation. Some cultivators have already talked to us about sort of robotic systems that will go down sort of from a gantry almost down their line of plants and do things like that, infrared photography of the top of the plants and getting data points and so forth. You know, because of the high value of this crop per square foot, you're gonna see that more and more. I mean, these investments are just unbelievably big. So you're gonna need to support it with the technology.
Matthew: Yeah, it's really fascinating. You're a serial entrepreneur. You started a lot of businesses and had a lot of success. I mean, this is obviously a really interesting project. At the same time, if you had to do anything else in the industry and couldn't be involved in robotics, I'm sure in the back of your mind you're like, "Oh, this would be a good business. This would be a good business." They probably just fall out of your pocket all these ideas all the time because you have a good vantage point on the industry and a very entrepreneurial mindset. What kind of businesses do you think are gonna thrive in the years ahead either ancillary or even touch the plant?
James: Well, I'm involved in other companies and cannabis besides robotics. And one of the areas that I really like now is what we call the special events side. And I'm an investor, an advisor in another company called Regulated Solutions, and it has a special events license and is partnering with concert promoters and music venues to provide sort of the beer garden concept of cannabis. This has now been allowed by a new law here in California called AB 2020 that just passed and is on the governor's desk for signature now. So imagine going to your...say we have this festival coming up here in San Diego called KAABOO this weekend, imagine a tented-off area for 21 and over where instead of having Corona beer, you have say five cannabis brands and you're able to be educated, learn about them, be exposed to them, purchase and consume cannabis products just at a concert venue, so no more sneaking in your joint in your sock. You can just come in and enjoy adult-use cannabis just like regular people in this adult-use legal market.
Matthew: Yeah, I've actually used the shoe technique myself a few times in the past. I'm glad.
James: Who hasn't?
Matthew: Yeah. You think, "Oh, this is such an original idea." It's like, no, it's not original.
Matthew: Well, James, I wanna ask a few personal development questions to help listeners get a better sense of who you are personally. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
James: Well, I'm a meditator so I picked up the book by Paramahansa Yogananda "Autobiography of a Yogi" many years ago and along with people like George Harrison and The Beatles and so forth that had been transformative to me. That's something that I started meditating and espousing this type of philosophy. So I'd recommend "Autobiography of a Yogi" to anybody that want to sort of look at the other side of life and consciousness.
Matthew: Yeah, that's interesting. Did The Beatles go visit, was it Ramana Maharshi? Do I have that right or it is the one that you just mentioned, the gentleman they want to go visit in India?
James: No, they did go to Ramana Maharishi in India. Yogananda had left his body off when the Beatles were little kids way back in 1952. So he wasn't available to visit with them at that time.
Matthew: Okay. I've, over the years, looked at YouTube clips of Yogi's and see translations where they talk about it. And it almost seems like universally, there's this idea that were this reality or is not. It's like a projection or something like that. These really enlightened beings seem to say that. And then we have Elon Musk on the Joe Rogan podcast recently that said kind of a simulation theory as well. Do you ever get into the deep states of meditation and ponder things like that?
James: Well, I've been meditating for about 30 years. They call it practicing meditation for a reason. It's like the rubber band that can be stretched to infinity so you never go. Certainly, at times, you will get into a state where you really are 100% convinced in the heart of mind and soul that the senses aren't giving us the truth that there is something deep, something eternal, something beyond this physical body and our five senses that maybe some people would call the soul or the inner being and you can actually do techniques and see that light of the spiritual eye. When you see that or you hear the great Om vibration or the Amen in Christian religion, when you do that, then you're pretty convinced that there's something beyond these little bodies and our day-to-day lives.
Matthew: That's cool stuff. Is there a tool you consider vital to your productivity you'd like to share?
James: Well, I'm as low-tech as they come. So the only thing that jumped out at me is that I recently switched over from 18 years of the hell of Verizon to Google Project Fi. So my cell phone, my internet, everything has been switched over and I'm paying $30 a month instead of $180 a month. And I'm getting better service and quality and then last month I got a $20 referral bonus for referring a friend. And so my monthly data phone, everything was 10 bucks. As an entrepreneur, the fact that I'm saving like $2,000 a year and with a better thing, I thought that was kind of...our tech guy here at work said, "Hey, you should try this." And I did and it's been really, really good. So, Google gets another feather in their cap and I was able to tell Verizon to get lost.
Matthew: Yeah. In the circles I run in, that Google Fi is really popular too because you can go anywhere in the world without roaming charges. Did you know that?
James: Well, that's the reason I left Verizon as I went to Canada, and I even had the international plan and they still gave me $397 worth of international charges. I was like, "Wait a minute. This was supposed to be in my regular plan," and took hours and hours on the phone and they wouldn't take the bill off. They just have these duopolies and there's just no other choice. And now Google has given us a choice, and I was very happy to make that switch and it's been working out well.
Matthew: Well, that's great. That's a great suggestion. I encourage more people to do that because we need to give AT&T and Verizon the message that that model is not really friendly anymore.
James: Boy, I'll say.
Matthew: Well, James, thanks so much for coming on the show and telling us about robotics in the cannabis industry. That's really a fascinating subject. And when you have more applications, feel free to come back on the show and tell us more. And before we close, can you tell listeners again how to reach out and connect with you if they're interested in robotic solution for their business.
James: Sure. Just go on to our website Todaro, T-O-D-A-R-O robotics.com and take a look and hit our Contact Us if we could be of any assistance and we're happy to talk to you.
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