Consumer packaged goods companies are in stealth mode waiting to capitalize on CBD the moment the regulatory fog clears. Here to tell us about it is Justin Singer of Caliper Foods.
Learn more at https://www.caliperfoods.life
- Justin’s background in cannabis and how he came to start Caliper Foods
- How Justin’s core brand Ripple has become the best-selling soluble cannabinoid powder in the US
- Why consumer packaged goods companies (CPGs) are waiting for regulatory clarity in the CBD industry
- How Caliper Foods provides soluble CBD ingredients at scale to some of the nation’s largest food, beverage, and supplement companies
- Where Justin sees CBD heading as an active ingredient comparable to caffeine
- An inside look at Caliper Foods and how it provides soluble CBD ingredients at scale to CPG manufacturers
- Caliper Foods’ research on how the solubility of CBD affects onset and impact
- Where Caliper Foods currently is in the capital-raising process
Matthew Kind: 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 dot com. Now, here's your program. Consumer packaged goods companies or CPGs are in stealth mode waiting to capitalize on CBD the moment the regulatory fog clears. Here to tell us more about it is Justin Singer of Caliper Foods. Justin, welcome back to CannaInsider.
Justin Singer: Great to be back. Thanks for having me.
Matthew: Give us a sense of geography. Where are you in the world today?
Justin: Beautiful Boulder, Colorado, sitting at a desk looking out over my backyard, and really just enjoying the fact that I'm not going to quarantine in my grad school apartment in New York City.
Matthew: What is Caliper Foods on a higher level?
Justin: We're a functional food company that specializes in cannabinoids. We've got three core business lines today, we have a consumer CBD products line that sells dissolvable powders in 20-milligram packets that you can buy at trycaliper.com, and soon, we'll be in brick and mortar retail outlets, coming towards the end of the year. We also sell B2B soluble ingredients to national food-beverage supplement and topical brands with a focus on offering regulation-ready ingredients that are backed by robust clinical data. Finally, we've got a consumer THC products business in Colorado under the brand name Stillwater in the product line of Ripple.
Matthew: Okay, that's a lot of stuff you have going on.
Justin: It is, but we have different exposures to the cannabinoid opportunity. At the end of the day, we believe cannabinoids represent a new category of functional ingredients. Unfortunately, the regulatory space is very crowded, even though the IP is very similar across all of them. To one degree or another, we have had to diversify our business lines, but we have tried to keep headcount low and be very careful as we explore those lines and wait for regulations to unlock the greater opportunity that makes it worth really investing heavily in any of them.
Matthew: You were on the show a year or two ago talking about your consumer-focused brand Ripple. Can you tell us about how Ripple and your business has evolved and changed since then?
Justin: Yes, Ripple has been a tremendous success in Colorado. I think it's got a really good brand awareness, really good net promoter. Consumers love it. The way that people describe it has to do with consistency, reliability. The dose levels are functional. It's just been a really successful product. It's still to this day, sort of the only unique in the national market. We love that product. We're also really excited, just this week, we're actually launching and addition to that product line called Ripple QuickSticks.
The idea there is that you can tear open the packet and pour it directly on your tongue. There's some flavoring to assuage the bitterness of THC and CBD, and you can just have a nice instant, consistent experience with no muss, no fuss. That came after we saw some consumer survey data saying that people were doing that by themselves. We had tried that and we were like, "Yes, this isn't an optimal experience. I bet we can make this into a product that people actually love instead of something they just tolerate because they don't have water around."
We also at the same time, rebranded our gummy lines which used to be sold under Stillwater Gummy Supplements as Ripple Gummies. Again, the whole point here was we wanted to really standardize for consumers the three different dose levels across all our product lines, we have a THC only, a balanced one to one ratio of CBD and THC, and a high CBD skew in each product line. We have three different products, and they all use the same Ripple technology, soluble cannabinoids that we have done clinical research to prove will be absorbed faster and not create that [unintelligible [00:04:06] experience that everybody is so scared of.
Matthew: That's kind of your consumer-focused product. Glad that's going well. That's an interesting take you've made. You mentioned that you got some feedback that gave you the idea for QuickSticks that people were taking the water-soluble Ripple brand and just putting it right on their mouth. How do you get that feedback?
Justin: We're pretty religious about running consumer surveys. We put a little card in every box we sell. We offer sweepstakes entries to try and get people to come in and fill out some questions about the products, how they bought it, why they chose the dispenser they did, what drove them to buy that product, and we get some fantastic information out of it, and not the least of which is how people are actually consuming the products.
I think every new product starts out with a lot of hypotheses. A lot of ideas around how people might use it, how people you think should use it, but at the end of the day, you really got to listen to your customers, and see how they're using it, then try and serve those needs and expand upon them.
Matthew: Let's talk a little bit more about the B2B side of the business here. When you talk about regulatory clarity in the CPG companies or the consumer packaged goods companies waiting for regulatory clarity, what exactly does that mean to these big enterprise companies?
Justin: For them, it means-- Let's start with the threshold question. Threshold is, what is a regulation? Something that's operable, consistent, and written down. It's not just something that's ephemeral, up in the air, and subject to interpretation or reading of tea leaves. FDA needs to say, they need to write that non-drug consumers CBD products are legal to sell in any store. They need to hold manufacturers liable for inaccurate labels. They need to tell retailers that carrying these products won't imperil their business licenses. They need to set clear standards of identity for CBD and other cannabinoids so consumers aren't confused by undefined terms and ambiguous terms like full and broad-spectrum.
They need to enforce consistently against unimproved disease claims that brands make so that good actors have incentives to continue acting good and aren't outrun by bad actors. They need to kick bad actors out of the market and reinstill trust that what's on the label is what's in the product. This is the premise of all of our food safety laws going back to 1906. It's crazy to me that we aren't applying them to CBD when 20 million Americans a day are consuming these products. It's the Wild West and the Wild West only got so far. Before it can really come to society, you need law.
Matthew: I often wonder what would happen in the absence of these regulatory bodies if there would be consumer reports for drugs and for foods where people would pay some nominal amount to get access to independent research that's not biased and things like that. It's really hard for us to conceive of that now because we're so deep down this one direction, but I do think about that sometimes because there are some industries that self-regulate. That's hard to do, but then when the consumer is empowered to seek out some third party that has no other thought but the best interest of their subscriber like consumer reports, then there's those possibilities.
Justin: I'm an ex-attorney. I spent a lot of law school looking at regulatory frameworks, market frameworks. At that time, telecom was a big thing. I have certainly since starting this business, looked all around the world trying to figure out if there is a model of government where self-regulation actually works, and my answer is no. It augments, but at the end of the day, and it's useful for distinguishing things, but it doesn't protect from latent defects. Like I said, the 1906 Pure Food and Drug Act came about because of the jungle, because of Upton Sinclair's book, and he has this famous quote where he says, "I was aiming at their heads and I hit their stomach," or, "aiming at their hearts and hit their stomach."
He thought that he was writing this treatise that would get people to rise up in support of workers. Instead, they were like, "Wait a second, you're telling me that my ground beef has dead human body parts in it, and there's absolutely no way for me to tell that ahead of time?" No, that's where the government has to step in. You need a body that ultimately has the ability to put liability onto manufacturers and hold them accountable. The only body that really does that in any way that saves people before the fact is the government.
If you really want a true free market, I always advise people, go to Russia. That's a true free market where just the strongest, loudest person wins. Everybody else operates under rules of law and markets, even markets that are ostensibly self-regulated, have the rule of law underpinning them that says, "This is what the truth is. This is what the fact is. This is what--" They define what the terms are. They define property rights. They define all these things that make markets possible.
I don't know, it's like asking to like, "Can you do pickup soccer?" "Yes, absolutely." You don't need a rulebook to put a bunch of guys in the field and to run pickup soccer. Do you want to run a World Cup? You need rules, or else nobody's going to participate in that.
Matthew: Good points. Who are these CPG companies? If you can't name names, just give us an idea of what they do and how big they are and their geographies.
Justin: They all are national and international. You're talking some of the nation's premier tea brands, some of the nation's premier craft brewers, premier juice and beverage brands, and other RTD beverages. In other words, I think the commonality amongst our core customer set is there are companies with compliance departments, with quality programs that carry complete insurance, often with their own manufacturing, often with their own distribution infrastructure. They are enterprises. They see the value in a bioactive like this with the safety profile that it has in getting it out into the larger marketplace and providing relief to millions and millions of consumers and the incremental revenue that brings.
Matthew: Do you think we're moving to CBD as an active ingredient so much, or is it a benefit? I know you mentioned the active ingredient, but in the consumer's mind, the active ingredient has something it does for them, so maybe that's one and the same, but talk about that a little bit.
Justin: I see CBD as caffeine's doppelganger. Instead of amping you up, it calms you down, but it has a better safety profile and no risk of addiction. I will fully admit that today's formulations, tinctures, and dose levels. Those tinctures, you're talking oil-based products at low-dose levels, the effects, the dose-response curve of those products today, I would bet a small proportion of people actually are sensitive enough to CBD to really get the effects they want out of that from a physiological perspective.
There's a lot of things around anxiety where that are placebo psychosomatic, and that's real. The placebo effect is real. If you're taking something and it is making you feel better, you're feeling better. That's not what's going to keep people going forever. It needs to have that bioactive effect that they can really get behind. I don't think we're that far away, to be honest. I think the standard serving in today's market is 20 milligrams.
You put solubility in there, so you get better absorption. Then, maybe you amp it up to 30 or 40, and now, suddenly, I think you're somewhere in the 40% to 50%, the median range of that bell curve of dose-response where it's undeniable that people are experiencing true relief effects from this, not for chronic disease or anything that would run afoul of FDA.
Just the same reason why I drink a cup of coffee to wake up a little in the morning, I can have a cup of CBD, of the Caliper CBD to just feel a little more relaxed before I walk into a meeting that I know is going to make me irritated, or If I'm just feeling irritable and want to go play with my kid and not take that out on him, a little bit of CBD really helps to just tamp that down and put you back in the right headspace. It goes beyond the belief into feeling, again, at slightly higher dose levels than I think we've seen so far, but also products that are more attuned to getting the CBD into your bloodstream.
Matthew: For your clients and prospects for Caliper, they already have their own brands, their own manufacturing facilities, supply chains, compliance departments as you mentioned, you're focused on adding value in one precise point in their workflow or process. Just talk about that a little bit.
Justin: Yes. I don't know if it's one precise point because it starts at one precise point. We think that infusing CBD products for credible brands should be as easy as infusing any other active. They have invested heavily in their manufacturing processes. They've invested heavily in their supply and in their distribution. Why should they build up something new around that when they can add this in right on top of it and take advantage of their existing infrastructure?
The CPG supply chain is the largest, most robust supply chain in the history of the world as far as I am aware in my research. Why would we want not to live on that? Yes, we're trying to just pick the leverage point that opens up optionality for our customers as much as possible so that they can be creative, and not tied into what works for us. We really need to create that thing that is enough of a commonplace that they can make it into something that their customers really will get excited about.
Matthew: What was the light bulb moment where you decided to pursue Caliper, and why?
Justin: I don't know that there was a light bulb moment. We were a company that was founded on food science. That's always been our mantra. We are a food company that happens to work with and specialize in cannabinoids. We are not a cannabis company that thought it'd be fun to bring in some food people. We have always looked at this as a food problem. Our very first director of R&D came to us from the health and nutrition venture group at M&M Mars where he was working on cocoa flavanols and all sorts of science about functional ingredients.
That was just core to our DNA from the beginning. At first, we were just trying to solve this problem for ourselves with actually the Stillwater tea, which is a micro-dose tea product. That was the first thing we launched on the THC side. We were trying to do 2.5 milligrams of THC in a format that didn't require elderly, and seniors, and boomers to self-identify as drug users when they were consuming it. Teas are something that people understand for function, and nobody really thinks poorly of themselves for consuming. The problem at that point was nobody had [unintelligible [00:15:17] anything. Everyone was just cooking in butter.
We started with the first soluble products back in 2016, just to get them into a tea. Then, through a series of just evolutions, we started seeing that the powder product that we were using to infuse the tea had a bunch of fines that we were throwing out, and it was screwing our yields. We thought, "Hey, maybe this is releasable as a product on its own." That's what became Ripple. It was just the refuse of the tea product. Then, that took on a life of its own and became the core product itself.
At some point in 2018, we were approached by somebody who was trying to launch his own CBD beverage in RTD format. He had called up people who claim to have water-soluble, and everything he got was terrible. He then took our high CBD Ripple packet and bought those in bulk and started using those to prototype. He approached us and said, "Hey, I would love to buy this as an ingredient." That was something we had always thought about. We certainly believe that our business was really indexed to this space, so opportunities could arise both on the consumer and wholesale side, but we weren't set up to do it at that point.
There were legal issues around selling CBD to a non-licensed vendor out of a THC facility, but we really liked the opportunity. We believed in the concept enough that we went ahead and invested in building a new space, new business entity, new manufacturing facility, devoted 100% to CBD, and then the Farm Bill happened.
We started seeing that this was an opportunity to bring cannabinoids or just this whole new category of functional ingredient with true bioactivity and wonderful safety profiles into the mainstream, where they have always existed in the mainstream, they just have existed underground. The strategy here is taking something that is more or less has broad demand. It's clear, its extent, and bring it into the light in a regulated manner. We saw the opportunity to do that at the federal level with CBD, so we ran at it.
Matthew: What's the sales cycle like for Caliper clients? They probably have a lot of questions. There's a lot of back and forth. They want some surety about your processes internally and ingredients and everything. How long does that back and forth dance take?
Justin: Very long. It hasn't even wrapped up for almost any of them because they don't have regulation. This is a business that is very oriented in the long-term. We are not a white labeler for people who are just trying to get out and make a quick buck. We are very focused on enterprise and people who don't want to even start until they have some sort of regulatory clarity. To that end, I have a saying here which is that enterprise buys process, not product.
If you are a large company, you have a lot of equities to balance in an internal sale. They want to know that you have partners that you can invest in and rely on because you have to go sell those partners around to compliance, to quality, to manufacturing, to procurement, to legal, all of it. SMEs want price and some suitable level of quality that they don't really know how to define because they don't necessarily have the resources to that quality and claims.
We've recognized that there's a big difference between saying you care about quality and actually investing in quality. For that to be a worthwhile investment, you need to find customers who are willing, and not just willing, but obligated to do the diligence to distinguish between people who are saying they're doing things and people who are actually doing things. What does that process look like?
We encourage people, "Come out here and see it for yourself. See your competitors for yourselves. See everybody for yourselves with your own two eyes. You can't just trust anybody's word in this space. Send out your quality team. Go over all of our quality processes. Make sure that they are in accordance with yours. Look at our insurance. Make sure that it fits with what you need. Talk to our lawyers. Make sure that you like how we have approached claims, and that you think that there are learnings that are things that make sense to you."
We encourage people to always do full product trials. Do your benchtops actually to formulate the products. Do it across multiple batches that we give you because there are still inconsistencies despite everything we've worked on, and you need to understand what the limits are of certain products. Then run your shelf stability studies. Don't run accelerated trials. Don't skip steps. This is a novel science. Everything is new. You've got to run every experiment. You've got to sit it on a shelf and see how it's going to work, and how it's going to perform. Then, you got a subject its analytical. Then, you've got to actually to work around the lab side. Labs, there's a lot of work still to be done.
On the analytical side, lab variance is a real thing. Even the highest quality labs like Eurofins on the food side are taking time to get up to speed on the cannabinoid potency especially in a complex matrix. You got to do some work with them to help them put a validated method in place so they can test consistently. It's just really checking all of these boxes one after another so that the company feels comfortable with the fact that, "Yes. We are taking some regulatory risk, but we're not taking undue risk. We're not taking execution risk. We're not taking food safety risks. We're not taking quality risk."
It's really important if you're a company to pay attention to what risks you're taking because the return here that you're betting on that people are going to buy this can be blown up in a heartbeat if you make that bet in the presence of a vendor who's been hiding a latent defect from you like what the actual ingredient deck says or what the shelf stability really might be.
Matthew: You invest so much in the upfront knowing that if you get a key relationship with an enterprise client, that it could potentially, you become part of their process, then it could go on for years with huge scale.
Justin: Very much so. I think the ability to scale with one of these national brands. What are they scaling to? They're scaling to what they already have on all their other brands. They're not figuring out how to build new partnerships and expand their brand portfolio across geographies. They've already done that. This is just leveling in. You look at some of those technology adoption curves that VCs pass around on Twitter every so often, they're like, "Man, look at how much more quickly refrigerators were adopted than electricity." It's like, "Yes, well refrigerators depend on electricity so that makes a bit of sense."
Matthew: You mentioned your Ripple product and the QuickSticks. I'm curious. Are there any studies out there or research you're doing on how solubility affects onset and impact?
Justin: Yes. We work with a couple different public universities, our main ones are CSU and Rutgers. We're running human pharmacokinetic trials on all of our individual formulations at ends that we find statistically significant in well-designed studies to demonstrate the pharmacokinetic differences between soluble formulations, specifically, our soluble formulations and things like oil-based tinctures, and they're really significant. We're also running Rutgers trials on skin penetration to actually see how deep does CBD get into the skin, into the dermal layer.
There's lots of people with interest of CBD as something to help with sore muscles in a topical application. That's only a sensible application if CBD can actually get to that level. First, you've got to prove that it can get to that level before you can even start thinking about what effect it has when it reaches that level. It's similar with ingestibles. You can sit around and talk about what effects CBD might have in high doses, but until you standardize your understanding of how much is actually absorbed into the bloodstream, then you're still looking at the world through a mirror, and you really would much prefer direct observation.
That's been our strategy around clinicals is strong academic partners, really credible third-party research, everything should be publishable in a peer-reviewed study, which our most recent PK study was. That was a scoping study. It was published in the Journal of Phytotherapy. You've just got to stand up to the scrutiny because substantiation in a space like this is enormously important. I keep talking about what it's like to operate under regulation and not regulation.
In an unregulated market, you can say this is fast-acting because a bunch of people reported it to me when they sat around the table and I was paying them. In a regulated market that doesn't fly. You've got to be able to say, "I have direct quantitative evidence that is not subject to respondent bias that shows that X amount absorbs in Y minutes." That is something that a large company with attorneys and an asset base to protect can get on board with. The former one? That's only for people who are fly-by-night or really have nothing to lose.
Matthew: The difference in absorption between a tincture and water-soluble form of CBD as you mentioned can be significant. How significant are we talking here?
Justin: Massively so. The first formulation we tested, we were seeing 550% better absorption in the first 15 minutes and 450% percent bioavailability overall. You're talking four to six times as absorptive. That's just a different product in terms of efficacy, in terms of effect. Look, CBD is poorly water-soluble. You look at the WHO's clinical review, they were reporting numbers of bioavailability in oil-based ingestion form as low as 6%. That's not going to do you much. Before we can even talk about whether CBD has to affect, we got to talk about whether CBD was actually absorbed.
I think it really is going to come down to water solubles, not just for the functional effect, also for the benefits for which products you can put them in. There's only so much market space for a dropper tincture that's oily. I think when you look at powders, when you look at supplements, when you look at foods, you need something water-based and low fat.
Matthew: Where are you in the capital-raising process, Justin?
Justin: We raised capital late last year again, and we are really stable right now. I'm proud to say we got through lockdown without any layoffs, furloughs, or cuts. We have always positioned our company for the worst-case scenario. I'm not going to pretend like we predicted global pandemic, but I think we were at least closer to being ready than any people who were for preparing for the most optimistic scenarios. That said, this is a company built on the catalyst of regulation. We need regulation to become what we hope to be so we've just got to survive till then.
In the meantime, we are focusing on the fundamental research, on the basic science, really crossing our T's, dotting our I's, getting all of those things in order that larger CPGs will need to feel comfortable digging into such a new space very quickly. We can do that full speed ahead right now, and we are.
Matthew: Justin, since you've been on the show before, I like to ask some personal development questions, but I've got some different ones for you since you've answered the previous ones. Did you have any personal discoveries, difficulties, or pleasant surprises in your work or personal life during the COVID-19 self-quarantine period that you'd like to share?
Justin: I feel a little bad, everybody seems to have an epiphany moment in quarantine, I don't. The greatest thing is I love my backyard, I love watching my kid and my dog run around it. I'm just, again, so glad this didn't happen when I was stacked four people-deep in a tiny New York City apartment, but I've got a two-year-old. During quarantine, I've gotten to watch him really start to become a human which has just been wonderful to see up-close because I would have gotten much less of this if I were in the office every day.
Matthew: Good. You got a dog to act as a shepherd and keep the two-year-old busy so they wear each other out.
Justin: I'm looking forward to those days. Right now, she just annoys the two-year-old by trying to steal his milk, and he just freaks out about it, but I really want them to start playing together because-- Yes. Exactly, tire each other out.
Matthew: What is the most interesting thing going on in cannabis or hemp apart from what you're doing?
Justin: The stuff going on in extraction is fascinating. I don't know how necessary it all is going to be in terms of the broad spectrum chromatography. I think really the most sustainable way to move forward is isolating individual cannabinoids unless you're talking about more of a processed product. If you want the plant chemistry to be a locus of scientific investigation, and I think it clearly deserves to be, then you need to standardize the process by which it's put out so that that becomes the sole focus.
Right now, we talk a lot about CBD and cannabinoids, and those are ingredients like alcohol or caffeine. They can be isolated, and they should be because that way, they can be controlled in a lot of end products, but there are other products like whiskey that we don't regulate the end content except in a range, but really, we're much more focused on the process. You have to use barrels of a certain wood, and they have to be in there for a certain period of time.
The whole goal there is that what you're left with is a quality parameter that's built around the agricultural side. I think if you want tinctures to have that, or if you want hemp to have a full robust market that is built around the agricultural side, then what you need to do is regulate the tincture process and say, "A tincture is something that is full-spectrum that uses cold pressing only, only this specific solvent, and has a CBD's content of X to Y, and a max THC content of Z. Now, tinctures are compared more dependent on the inputs than on the process itself, and then it really becomes around the plant science which, like I said, is fascinating. I would love to see really evolve.
Matthew: What is one thought you have that most people would disagree with you on?
Justin: I touched on it earlier. There's no such thing as a free market. All markets are built on regulation of some sort, whether it's the rule of law or actual rules. Sometimes, regulations can go too far, yes, but we really need a common foundation to grow and thrive from. I've been saying way too often lately that 22 guys beating the hell out of each other in a field doesn't spontaneously evolve into the NFL. You need to put a rulebook in place. You need to put referees on the field. You need to contract. All of these things are what's required to actually take just a wild game and turn it into an organized industry.
Matthew: Justin, as we close, if there's a CPG company listening that would like to learn more about what you're doing with Caliper. How can they find you? For people that are interested in learning more about Ripple products also, please let us know how to find those.
Justin: Yes, so three quick plugs then, trycaliper.com if you're interested in the Caliper packets or the soon to launch Caliper QuickSticks that will be CBD-only drop on your tongue. That'll be out in a couple of months, caliperingredients.com if you are a CPG company interested in discussing CBD, all of its potentials and pitfalls. Then, stillwater.life if you're looking for Ripple products like QuickSticks in Colorado, and hopefully, by the end of the year, coming soon to a state on the East Coast. Oh, I was going to say Instagram, trycaliper, and stillwater.life.
Matthew: Justin, thanks so much for coming on the show. Good luck to you with all you're doing. You've got a lot going on. I'm curious to see how all of these balls in the air are going to augur for you here in the next weeks, and months, and years. Keep in touch with us.
Justin: Me too. I appreciate the talk and looking forward to talking soon.
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