Cirona Labs is a “premier innovator in cannabinoid science” from upstate New York that just announced a deal with Cookies to “help reformulate certain on-shelf Cookies products and develop new…
The post Cirona Labs Steps It Up With Cookies Deal appeared first on Cannabis Business Executive – Cannabis and Marijuana industry news.
Cirona Labs is a “premier innovator in cannabinoid science” from upstate New York that just announced a deal with Cookies to “help reformulate certain on-shelf Cookies products and develop new ones to expand Cookies’ footprint in hemp-derived cannabinoids.” A statement released this week further detailed, “Later this Fall, Cookies will launch a variety of infused products including capsules, beverages, topicals, and tinctures featuring an array of cannabinoids and terpenes. Each product is formulated for fast onset, high bioavailability, and great taste, supported by Cirona’s vast R&D library of emulsions and powders. The Cookies products will be available across the United States, as well as online at Cookies Store.”
Needless to say, the deal is a significant milestone for Cirona, which was formed in 2019 as a collaborative venture between four co-founders with just the right combination of intersecting experience and expertise. CBE talked recently with one of the co-founders, CEO Hunter Friedland, who first conceived the core idea for Cirona while still in college, and X’Zavierr Garland, Cirona’s Director of Business Development & Social Impact, about the Cookies deal and Cirona Labs’ singular vision for how to remain an innovative force in the industry.
“We formed the company a little over three years ago, but it’s really ramped-up over the past year and a half,” said Friedland of the company’s founding. “X joined 13 and a half months ago. We have definitely been scaling since then, and now are about to take it to the next level of growth with New York coming online and us being one of the first licensed operators in the state.” Cirona was awarded an adult use conditional cultivator (AUCC) license by New York.
“I went to Cornell,” added Friedland. “I started the business while I was a student there, got involved in the hemp industry, started working with some professors from the university, and ultimately did a research study, which is how I jumped into the space. I worked with the National Science Foundation conducting a study of hemp farmers. processors, and brands to kind of see where the industry is and where the opportunities were. I thought at the time that the big opportunity was in extraction. This is late 2018, right before the farm bill passed. After the farm bill passed and we did that study, I applied for one of the first research partnership agreement licenses on the hemp side of things in New York and won that license in March or April 2019. I graduated, started going to different conferences and building up the business plan, initially around extraction, making isolate and distillate. But I pretty quickly saw that it was a commodity business and started to pivot into formulation and adding value-added services to partners, and then partnering at a deeper level than just as a commodity extract provider. I saw the big need there, and that’s when the co-founding team came together.
“There are four of us total,” he continued. “Nick [Jackowetz], our Chief Science Officer, is a PhD from Cornell. After his PhD, he went to work at Constellation Brands for about eight years, and then after Constellation he went over to Canopy Growth and really ran the R&D department. He did that for about three years with all their kind of Cannabis 2.0 projects. He was also a Cornell alum, and Alan [Davis] joined around the same time, late 2019, early 2020. He’s our COO, with a food, beverage and alcohol, contract manufacturing background working for one of the biggest copackers in New York called Lidestri. He ended up running close to a half billion-dollar division there working with major CPGs and commercializing the product. And then LJ [Buffardi], who is also a board member, joined right after, and his background is candy and confections. His family was the Ferrara Candy Company. So, brands like Lemonheads, Fireball, Totally Gummy Bear, that was a family business for over 100 years before they exited in 2017.
“That’s our background,” he concluded. “We have a strong commitment to operations and science and building out the most innovative products this space will continue to see over the coming years. We’re super excited about the manufactured product side of things, particularly when it comes to brands and creating brand ownership. But that’s how we came to be, focusing on formulation work and developing industry leading water-soluble pack and taking the approach of a custom service provider. We saw a lot of operators in the space offering the same ingredients to every different client. We saw a need for larger companies that wanted to have almost an outsourced R&D
arm. That’s what we’re doing with Cookies, really as much more than just an ingredient supplier, but working with them to come up with concepts and bring them from concept to reality.”
What mostly differentiates the various formulators? Is it their technology, or are there other factors? “The technology is extremely important to a degree,” said Friedland. “We’ve developed a great moat around our IP and the value that brings to any infused product, but I think our value prop goes a lot deeper than that. It goes to a deeper partnership and going beyond just ingredients provider, to really being the service provider. Even down to the ingredient level, when we look at our ingredient tech, there’s the IP but there’s also our trade secrets, which revolve around working with our clients and creating a specific solution for their products. A syrup-type product may have a different need for a beverage-type product and even within the beverage world, coffee is going to take a different solution to orange juice or soda-based products. That’s where we’ve been pushing this deeper than just creating a water-soluble product, by looking at the end solution and then filling the gap in-between to ultimately drive the best products into the marketplace.”
“I think, just to add on a little bit there,” said X’Zavierr, “authenticity matters, and I think with Cookies in particular, when they looked at this deal, and they looked at us, authenticity was first, efficacy was second, and then it all just came together with the creativity that we brought to the table.”
The Cookies deal is so fresh that many of the details are still being fleshed out or are not ready to be announced. “Obviously, we are just at the beginning stages, so I don’t want to talk about the different products that we’re launching with them,” said Friedland, who added of the Cirona Labs business model, “We license our technology, we produce all of our hemp-derived ingredients out of our facility in New York and ship them across the U.S. wherever it’s legal. We’re currently in California through a licensing deal, we bring our technology and provide SOPs and consistent input for providers in a variety of markets, and we also just licensed our technology to Thailand. So, we’re aggressively expanding our reach in THC markets through licensing of our technology, which allows us to provide our partners with the same impact in different markets, and we’re working with the Cookies team on a variety of different cannabis 3.0 products.”
Regarding how Cirona Lab’s process works, “It depends,” said Friedland. “With CBD, we produce everything in-house, and we develop a similar process that we work with our licensing partners on in markets that we don’t want to have infrastructure. So, we’re aggressively pushing forward with licensing our technology into new markets, not only nationally, but globally.
“In a market like New York, where we are a licensed operator,” he added, “we provide active ingredients within that state. We cannot obviously ship that product out of state, but it’s a state where on the THC side of the business, we will be a provider for partners. On the CBD side of the market, wherever CBD has legal framework, we’re providing and actually selling the active CBD ingredients, and then in markets that we have partnerships in, we’re working with our partners to create a consistent stream of products in their marketplace by actually infusing the active [ingredients] in the state at the licensed facility.”
The company has manufacturing capability in the Empire State and elsewhere. “In New York and in certain markets, we will be and are building infrastructure and taking that next step beyond just an ingredient supplier,” said Friedland. “We have remained hyper-focused on R&D and getting our ingredient technology figured out and building industry leading solutions over the past couple of years, but we’ve seen that partners want a lot more than just the ingredient, so yes, we have manufacturing capacity as a licensed operator in New York state.”
As far as other client/partners go, most have thus-far been on the CBD side of the business. “On the ingredients side of the business, we’re only servicing CBD clients,” said Friedland. “We just closed the deal in the California market with PhenoTech slash, who are the partners we’re working with there to bring our technology to the marketplace. We’re providing inputs for their beverage products, and we are starting to launch our ingredient portfolio into the California market.”
Are Cirona’s products affordable for smaller companies? “That’s really a two-part question,” said Friedland. “We’re really built to provide a very tailored solution to large customers that get a full service from us. We work for months on projects to get these launched, and we work really closely and spend a lot of time not only on the business and sales side, but also on the technical side, to get things done. That being said, when we’re looking at more basic products and teams that want that, we’re always interested, and we’ll talk to everybody. We do provide that extra service to companies, and we are built to provide the best service, and that is inherently for more well-capitalized companies that, that have their plan, but at the same time, we’re always excited to back founders with the right vision and the right experience, and we’ll bet on those companies to be large customers in the future.”
With minimal capex to contend with, the company invests in people. “People is the number one thing for any business and particularly this business,” said Friedland. “It’s important because when people come to the team, that diversity of skillsets, of mindsets and backgrounds, where people come from, I think is what’s helped us become successful and helped us build our base here. So, people are always number one, but capex in certain markets. To be a manufacturing company in New York is capex-intensive. That’s why we created the licensing model, so we don’t have to own and operate facilities in every single market but can still provide consistent ingredients in a variety of different market. So, it depends, market-by-market, what side of the business we’re talking about, but people are definitely the number one investment for us.”
He had mentioned Thailand. Are other countries in play, such as Germany? “We worked on the Thailand deal for a while. It took well over a year to close, and we’re just getting started in that marketplace. We’re super excited that Thailand has a clearer regulatory structure for CBD and hemp products than the U.S. We didn’t necessarily go there seeking that deal, but it just kind of happened, the puzzle pieces came together, and it all fell into place. We’re definitely excited and looking at new market, but I’d say from an expansion point of view, we are focusing on the U.S. and expanding into multiple markets over the coming 18 months. Germany is a market that we’re excited about. We haven’t heavily looked into it, but I’m excited to see how that plays out for the recreational market.”
The bleeding edge of the formulations side of the industry is starting to play with effects-based products. Is that where Cirona plans to exceed? “That is where we see the industry going longer term, utilizing cannabinoids to drive mood state, and not only cannabinoids but the convergence of cannabinoids with a variety of other functional ingredients, creating products that are specified for sleep or creating, relaxation,” said Friedland. “At this point, you can’t make claims due to regulations and the FDA, but in the long term, as more research comes out and as we learn more about all of these different ingredients and how they work together and interact with the human body, that is where things will go, and yes, as a formulator and product developer, that’s what we’re focused on, being that innovation partner with leading brands.”
Will Cirona ever create or co-brand any of its own products? “I think our strategy is ever-evolving and will continue to develop,” said Friedland. “Like any emerging market, you’ve got to go with the flow as the industry moves forward, but we really see our place as kind of the Intel Inside model, powering leading brands, and then in some markets actually manufacturing products.”
How truly competitive is this space? “It’s definitely a competitive marketplace, with a few key players,” he replied. “I think what separates the leaders in this industry really comes down to quality product. There are a lot of bad products in this market that just don’t work, that separate, that tastes bad. As we get deeper and look at the top players in the market and what differentiates us from them, it’s having consistent quality of products, being a custom service provider, and going above and beyond for clients and not just dropping them off at their doorstep and letting them figure it out but being across the whole product development journey with them. That’s what differentiates us compared to our competition.
“But also, data,” he added. “We’ve invested heavily in pharmacokinetic studies and shelf-stability studies. These are things that we are able to show to prove that our ingredients work and are better and have high bioavailability. These are the same things that you’ve heard before talking to different providers to the state, so I think the data is an extremely important aspect of what differentiates the top players. But really, it comes down to, can you provide the right service to these demanding clients?”
There are brands that do all of this in-house. I just interviewed one. “There are a few companies we know of in the space that do it themselves,” said Friedland. “I think it comes down to quality and focus. We spent years developing and commercializing our technology. It is the pure focus of what we do. I think, for the most part, all the people that I’ve seen do it themselves, it may work and get the job done, but it’s not like they are going to be able to outcompete players that are wholly focused on the development of these products. So, it’s out there, it’s a part of the competitive landscape, but ultimately, I think as the space evolves, you’re going to start to see specialists coming in that put a lot of resources and time behind developing innovative solutions.”
What is Cirona Labs’ specialty? “Product formulations and ingredient technology is our core focus today,” said Friedland, “but as mentioned, we’re heavily moving into the manufacturing side of the business of bringing quality products to market, so I think that’s the basis of what we do in addition to that happy mix between science and culture. But that’s definitely critical to who we are, bringing quality backed, culture-driven products to market are kind of our base?”
“I think it was incredibly important that I knew how to speak Cookie’s language, and also that I knew how to speak to their audience, so I knew what they were looking for,” added X’Zavierr. “Obviously, they are a large global player, but they have to evolve with the market especially as consumer tastes shift to more ingestible products and manufactured products. So, knowing how to connect with that audience, and then meshing that with what we bring to the table on the technical side I think it made it a match made in heaven.”
What, if anything, is Cirona Labs looking for as a company? “We’re always interested in talking with great people,” said Friedland. “Partnerships across this industry are kind of just getting started, and we want to align ourselves with people that think about this industry the same way and have a similar vision of where we see this going. We’re an open book. I am usually accessible on LinkedIn or through our website. So, from everything from partnerships and beyond, we’re excited to talk, and we’re just a message away.”
“We’re interested in working with people who have put in real footwork into this industry,” added X’Zavierr. “We want to partner with them to bring innovative products to markets. We’re also really betting big on culture, and we have a few social impact initiatives that we’re going to be launching in the coming month. That’s really exciting for us, and it gives us an opportunity to reinvest in local communities, and also pour resources into those that are underrepresented in this industry. So, I’m really excited about that. I cannot speak too much to it, but more to come.”
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