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With Its Fast-Onset Formulations, Time is on Azuca’s Side

tomhymes

Founded in 2018, Azuca is one of a handful of companies offering cutting-edge delivery systems to edibles manufacturers in the cannabis industry. The brainchild of founder and Chief Creative Officer Ron Silver, who also is the chef-owner of Bubby’s

 restaurant, which he founded in 1990 in New York City, Azuca also has corporate offices in New Mexico. Azuca is known for fast-onset delivery, which was created by Chef Silver and is powered by the company’s patent-pending Azuca Time Infusion process. Per the company, the process “encapsulates individual cannabinoid molecules, making them ‘water-friendly,’ for a predictable and controllable experience every time,” and is “available in dozens of SKU’s, including Wana Quick gummies and a line of products from Columbia Care. Azuca’s branded and co-branded THC products are available in select dispensaries across the US and Canada.”

Azuca President and CEO Kim Sanchez Rael and Silver spoke recently with CBE about the company, advances in the sector, and the different paths they took that brought them to the cannabis industry. “Ron and I arrived at this kind of very interesting point in time together from very different perspectives,” said Rael. “I had been a longtime entrepreneur and investor in startup companies, all in the tech world, and had decided that I wanted to pivot out of tech and into the wellness sector. Lo and behold, I ended up in cannabis.

“I was introduced to Ron in early 2017 and sampled the product and was pretty blown away and felt like this was going to be a game changer for all kinds of consumers,” she added. “I agreed to partner up with Ron and get his wonderful formulation launched as a company. We started working on that in late 2017, and we formally launched Azuca in 2018, when we raised some seed capital and launched our first products, some CBD products. It was kind of a lean-in to the THC market, and we launched our first THC product in the second half of 2018.”

Silver’s start in cannabis goes much farther back. “Well, to go way, way back,” he said, “I’ve been a chef all my life, and I’ve been using cannabis all my life, since I was a kid. I have always been weirdly good at cannabis, even though at a certain point I wasn’t considered to be good at anything as much as causing trouble. But, in hindsight, I was super-interested in cannabis in all kinds of ways. It was probably around 2013 that I became aware that the cannabis industry was forming, and I started talking to people who seemed like they were going to be involved in it. I started understanding that the perception of people in the newly formed cannabis industry was that the biggest problem was a controllable dosed edible, so I set out directly to understand that problem and to come up with solutions.”

Was dosing the first challenge to conquer? “First dosing,” he said, “and then quickly, within the first year, I started to become aware of how to get things to onset quicker, but both of those came out of the same series of thought experiments.”

Did he also grow? “My first job out of high school was growing cannabis in Mendocino,” said Silver. “I’ve owned Bubby’s since 1990, and even as early as 1991 or 2, High Times magazine would come and ask me to make like 500 brownies for them. I’ve always been vaguely interested in all types of cannabis consumption. I’ve made Green Dragon and every kind of thing that you can imagine with cannabis, trying to figure out how to serve it to people.”

If he had access to High Times back in the day, Silver also had to have access to decent weed. “I’ve always had access to decent weed,” he assured me. “I could literally walk into any city in the world and find weed within seven minutes. Except for Paris.”

Silver grew up in Utah. The day after high school graduation, he hitchhiked to California. When asked when the restaurant bug bit him, he replied, “Well, I opened Bubby’s in 1990. I was 27, and I would say that what bit me was the realization that I’m unemployable.”

Picking up the Azuca timeline, I asked him about the science behind his process, and if he had leapfrogged over the nano-technologies. “I don’t know if I would put it as leapfrogging over as much as doing a lot of research, doing a lot of reading, and trying to ascertain the best path forward to make a controllable doseable, understandable onset edible,” he said. “One of the main things that drove my thinking is that when problems arise they need to be solved. So, Kim and I have conversations about what kind of things need to be done in the industry. And initially, it was just me in the laboratory, but now we have a team that really figures things out, and we have iterations coming down the pike. One of the things that people want now is a whole-strain, full-entourage edible, which kind of exists and kind of doesn’t. We have a really good way of addressing that, which is coming out later this year. So, mostly I’ve been driven by trying to solve problems.”

For Rael, Azuca is leading the charge. “We’re what I call the fifth generation of cannabis edibles, and this broad bucket of what’s called nano is the fourth generation,” she explained. “We don’t like to use the term nano, because it means a lot of different things in the industry. Therefore, to me, it doesn’t really mean much, because if someone says they’ve got a nano process, it could mean many different approaches. I think of it this way: first generation edibles are putting plant material directly into something to eat, a brownie or whatever. Second generation is the canna butters and those kinds of formulations. Third generation is the shift to most edibles being made with distillate and extract. Fourth generation is the broad bucket of nano-emulsions and all of the things that you’ve heard of.

“Then, when we talk about Ron’s Time Infusion formulations, we are beyond nano,” she added. “But to Ron’s point, it wasn’t about leapfrogging nano. We never really thought about it that way to begin with. It was Ron setting out to solve these problems with edibles from the consumer’s perspective, and we’ve also solved problems for the manufacturer. The dosing and onset were the first challenge, and now we’ve made manufacturing these fast-acting cannabis edibles very easy and scalable for manufacturing partners who licensed our formulas. So, that’s what we’re doing today with Time Infusion as the fifth generation of cannabis edibles, and what Ron is sort of hinting at is what I would call a sixth generation of cannabis edibles, or ingestibles, coming out from us later this fall, which is this full entourage, whole-plant version of ingestible products.”

I asked if the differences in the generations are contained in the active ingredients used in these products. “There are two different buckets of ingredients at the very top level,” said Rael. “You have your active ingredient, which is what is carrying the THC or CBD or the other cannabinoids, and then you have what you are using to enhance the active ingredients and make them fast-acting and predictable. In our case, our formulations can use distillate, live resin, live rosin, any extract, and then the ingredients that are advanced formulations are a proprietary blend of plant-derived modified foods, starches, and gums. So, it’s partially the ingredients and then a lot of our intellectual property is centered around what we do with those ingredients, and how we combine them creates what we call the magic sauce, so to speak. We’re very much an intellectual property focused company, and we’ve filed… actually, to be honest with you, I’ve lost track of how many applications we have in the patent process.”

The Azuca website has a recipes page featuring a variety of foods, including lots of baked goods and beverages, and a smattering of entrees. As delicious as everything looks, the chef said it is not their priority. “I look at cannabis as medicine,” said Silver. “People can use it in cooking if they want to, but it is not the thing that is on our mind. First and foremost, is a controllable dose, to allow people to understand exactly what they’re taking so that they know what they’re doing, just like if you’re consuming alcohol or prescription drugs. So, from my point of view, to throw it into entrees is not always the best way to do that.”

For Rael, it is also a crucial option people should have access to. “I agree with Ron from a product perspective,” she said. “From a business perspective and a product perspective more broadly, what we want to do is enable people to have something we call building blocks to use these infused fast-acting precisely dosed ingredients in whatever way they choose. So, for example, you mentioned entrées. That certainly is an option if that’s what someone wants to do with their cannabis. On the beverage side, I think that’s a really interesting opportunity, especially as the world gets more thoughtful about alcohol versus cannabis. Alcohol is a poison to the body and cannabis is actually a medicinal plant. So, in the beverage sector, we’ve got some formulations we’re working on right now with several partners that we expect to see in the market in the next couple of months in terms of ready-to-drink beverages. We’ll also be at a couple of cannabis beverage shows this summer and have got some exciting stuff to showcase there, too.

“We also have in the market one of the most interesting, flexible, and ubiquitous products, which is a Azuca Simple Syrup,” she added. “If you think of any mixologist on the planet, one of the first tools in their toolbox is a simple syrup for alcoholic cocktails.Our cannabis-infused Azuca Simple Syrup can be put into any beverage that you would otherwise make with alcohol. For example, my favorite is a Mojito with no alcohol, just made with our Simple Syrup, lime, mint, and sparkling water. It’s the best summer drink on the planet, and you can dose it at any level you want. If you want something light and sessionable, use two milligrams, five milligrams; if you’re a higher-dose person and you want a 10 milligram or higher dosed drink, you can make that. Part of our vision is that that product becomes a ubiquitous tool in the toolkit for anybody who wants to craft beverages, and the sky’s the limit. If you see some of the mocktails on our website, there are a million more. What we really want to do is empower people to use these cannabis-infused ingredients in whatever way is exciting to them.”

Azuca does have its own branded products on the market, but they mostly embrace what Rael refers to as the “Intel Inside” model. “Like for Wana, Azuca Time Infusion is the fast-acting solution that makes the Wana Quick gummies fast acting,” she explained. “So, it’s that fast-acting solution inside of your brand. We license the formulation, we work with brands on education, on formulation support, et cetera, and that is our primary business model. Some partners also are interested in licensing some products we’ve created. One is the Azuca Simple Syrup I mentioned. That product is currently on the market in New Mexico through a licensed partner, so you can buy THC-infused AZUCA Simple Syrup right now. So, we do both; we will license products but primarily we license formulations and the ingredients.”

Simple Licensing

Rather than engage in complicated licensing deals, Azuca prefers to keep them straightforward. “We try to be very simple and helpful and transparent in how we do our licensing agreements,” said Rael. “Let’s say you want to launch a fast-acting gummy in Wyoming, or any state, and you come to us and say, ‘I’m interested in learning about your process. I want to do a fast-acting gummy.’ What we will do is sit on a Zoom call with your team and talk about the benefits of our product both from a consumer and a manufacturing perspective. For the consumer, fast onset, great-tasting, easily digestible. And then for the manufacturer, we reduce manufacturing waste, we’re completely scalable, with no capital equipment investment. So essentially, if you have an edible facility, you can make our product and it is very kitchen friendly. And what we like to say – which is also a differentiator from the other solutions we talked about like some of the nano-infusions – is that you don’t have to buy some crazy piece of equipment that a chemist has to run, or that only seven people on the planet know how to fix. We have very straightforward chef-created kitchen-friendly procedures, and we can onboard a new team, and train them to do our process in a couple of hours. We really made it very simple.

“So, we do a big orientation for a new partner,” she continued, “and then we enter into what we call a phase one agreement, and in a phase one agreement, it is kind of like a miniature license. Again, we don’t want customers to feel as though they have to sign some expensive or long-term agreement before they can use our formulations in their products. We want them to try it because it’s such a great solution and so scalable and great tasting that it kind of sells itself once you try it in your edibles kitchen. So, we do this mini-license agreement. It is very low cost and essentially covers our travel costs, so it’s not a big upfront fee. We go onsite to your facility and run a sample batch of your target product with our infusion. So again, your gummies recipe with our fast-acting solution, and our team shows your team how to run it through your process.

“Then,” she added, “if you use focus groups or an executive team to evaluate the process, and then say, ‘Yes, we love this, and we want to do a license agreement,’ that is when we enter into a full commercial license agreement, and all of our license agreements have no big upfront licensing fee. They are a pay-as-you-go model, and we price the license agreement on a per milligram of THC process, so you don’t have to make a big upfront commitment, and you don’t have to buy a bunch of capital equipment. We don’t do a revenue share, we don’t do a royalty, we don’t do any weird accounting tricks; you license the intellectual property, you licensed the SOPs, the batch calculators, all of the documentation that goes along with that, and then as part of that license agreement you purchase the activator, which is the non-infused precursor, from us at the rate at which you use it in your production, and we just ship it to you. We ship usually within two to three days of an order, and we can do that at any volume. So that’s it. Very, very, very simple.”

Is it cost-effective for a startup? “Absolutely,” said Rael. “Because you don’t have to spend $50,000 on equipment to do our formulation.

Are they speaking with all sizes and types of manufacturers within the industry? “We are,” she said. “We’re talking to everything from a startup micro enterprise that wants to do an edibles line or wants to do an enhancement to an existing edibles line all the way up to the largest brands and MSOs.”

No matter who comes looking, Azuca can accommodate their needs, added Rael. “I would say we are designed for scale and right now we can handle any scale of business or demand that comes our way,” she said. “I come from a manufacturing background; I grew up at Intel, manufacturing semiconductors during the 1990s, when that industry was ‘how fast can you go?’ So, we’re positioned to scale at any level.”

“I put out 1100 brunches out of 100 seats every Saturday and Sunday,” added Silver. “That’s my scaling.” Having worked in many restaurants, I could not argue with that.

What about purpose-driven edibles, now all the rage? Are they on the Azuca menu? “100 percent,” said Silver. “We work with the top people in the industry that think about these things, and we definitely participate in how to facilitate making those happen. We already do that a lot. Wana has their effects-based gummies that are doing really well, and we’re helping them with those.”

Does that mean working with the range of cannabinoids? “We already do,” said Rael. “Some of the formulations in the market work with a number of cannabinoids, and then as Ron was saying, we have a number of partners who are working with advanced terpene blends – 30-plus terpenes blended in a product for specific effects – so our formulations are nicely suited to partner with those types of product formulations.”

Is there any limit to their reach, including international licensing or sales? “Our ambition is to be the ubiquitous cannabis enhancing ingredient,” said Rael. “We want everybody to have the best cannabis ingestible experience that they can possibly have. I have a chart that I use in some of our business decks, and it basically shows the conversion in the world from dialup internet to broadband, which was something that took about 13 years. So, as we sit here today, would you ever use dialup internet? Right, because broadband is available.

“I believe that within a couple of years, the category of slow onset, two-hours-to-kick-in edibles will be dead, just like dialup internet is dead,” she added. “And I think consumers will demand predictable fast onset ingestible cannabis, and our ambition is to be – and I think we are achieving that ambition – the dominant solution in that category of fast onset, predictability, and great taste. We are working with a couple of international organizations right now on licensing agreements and are absolutely interested in expanding internationally. The product that we ship, which is called Activator, is non-infused, so we can ship that anywhere in the world.”

Rael further described the role of the activator in their process. “In our ‘Activate our Solution’ space for manufacturers, they are branded Azuca,” she explained. “These are the ingredients that make your cannabinoids in your product fast-acting. Right now, in the market, we have three SKUs. We’ve got Activator D1, for distillate first generation, and that activator has a loading capacity of 10 milligrams of active THC or other cannabinoids per gram of carrier ingredients. For example, if you’re making a gummy, you would infuse sugar at 10-milligrams per gram of sugar and then put that into your gummy recipe.

“Our second SKU is called D2, for distillate generation two, and that activator has 30-milligrams per gram, so three times the loading capacity for the fast-onset cannabinoids in that second generation,” she continued. “And then we’ve launched a third activator, called Chocolate Activator, and that’s for chocolate products like tempered chocolate that cannot have any water in it, so it’s an activator for fast-acting chocolate. So, if you’re making a ganache, you can use traditional activators; if you’re making a chocolate bar, you want to use the Chocolate Activator.

“Those are the SKUs from an ingredient perspective that are commercially in the market,” she concluded. “They are for manufacturers; the consumer would never buy them, because they’re to enable manufacturers to make the best fast-acting product. Then, as Ron stated, we’ve got a couple of next-generation activators and processes that will be released later this year., and those are going to be around whole-plant full-entourage, fast-acting ingestible cannabis. So, we sell non-infused ingredients that we then ship anywhere, and then onsite, our manufacturing partners infuse their THC distillate, in most cases, into our activator and then put it into their final product.”

As mentioned, there are a few Azuca-branded SKUs available for consumers in New Mexico. “There are three syrups that are currently on the market,” said Rael. “There’s Azuca Simple Syrup, an AZUCA Pomegranate Syrup, and an AZUCA Lime Syrup. Those are all designed to go into beverages.”

Does that mean the company wants to market the Azuca brand to consumers? “Absolutely,” said Rael. “All of our licensing agreements are co-branded models. All of the products on the market will say ‘Powered by Azuca Time Infusion’ or some version of that on the label. And we kind of think of that like the ‘Intel Inside’ logo on a PC or a Better Homes and Gardens seal of approval. It’s a quality stamp that tells the consumer that this edible will meet your expectations from an onset, predictability, and dose perspective.”

Would a tavern or a bar also keep Azuca products on hand in case someone wants to have an infused drink rather than an alcoholic beverage? “Spot on,” said Rael. “That’s one of the main ways that we think about the beverage category. We’ve done a lot of research on social consumption regulations in the United States, and we’re watching, and we are ready from a product perspective for on-premises social consumption of cannabis beverages. We’re waiting for the regulatory framework to catch up with what we can do for precisely that reason, because you have got to be able to walk in and have your cannabis Mojito.”

Would a tavern buy the syrup and then learn how to do it properly, or would it be a licensing situation? “If you wanted to run a social consumption lounge, I think the business model would be you’d buy what we sometimes call a beverage kit from someone else who manufactures the THC syrup and then sells them to the consumption lounge,” she said. “That’s assuming you’re in a state that doesn’t require vertical integration. That’s where we see things going, but the regulatory world is not there yet.”

The Future of Emulsions

Regarding regulatory and legislative hurdles, how specifically they will that impact Azuca, and is the FDA the ultimate regulator of this sector? “That is a great question,” said Rael. “I have a little bit of a policy background. My first job out of college was working on Capitol Hill, and I really worry that the cannabis community is not paying close enough attention to the details of some of the different legislative proposals floating around Washington. I think some of them that appear to have social justice initiatives, social equity issues, and some of them that appear to have broad legalization, will actually be devastating for the industry. Sometimes I tell people, one of my greatest fears for cannabis right now is that Congress legalizes cannabis the same way it legalized hemp with the 2018 Farm Bill, which has been an absolute disaster for consumers and for the industry. I think we need to be super attentive to the details of things like Schumer’s bill, which is not good for the industry in my mind.

“So, to the extent that I can use this soapbox to really encourage our colleagues across the country in the cannabis industry to really pay attention,” she added, “I really think that for the sake of the industry and consumers, that things like the State’s Rights Act, SAFE Banking, dealing with 280E make a ton of sense, but handing the whole industry over to the FDA, the DEA, and the USDA, like the like happened with the hemp industry, will be a disaster. Disaster.”

What outcome would she like to see? I would like to see SAFE banking, 280E, and states’ rights protected, and I would like the federal government to stay out of it beyond that.”

What about descheduling, which would take care of 280E? “Descheduling is a really complex and mixed bag, because then what happens to our state-by-state products,” Rael said. “Do they stay within a state-by-state model? For example, gummies are now regulated by state; dosing, packaging, labeling, all of those things. So, all of a sudden, are they regulated by the FDA? The farm bill was passed in 2018, and according to the FDA, you still cannot put CBD in a gummy.”

How truly competitive is the emulsions space, and what sets Azuca apart from the competition? “I’d say there are maybe half a dozen or a dozen companies that are doing some version of formulation enhancement for onset and predictability, bioavailability,” said Rael. “A few of them have some market traction, like we do. I think we’re the leader in our category. I think there are two big things that differentiate us from competitive approaches. One is scalability: infinite scalability from small to large in a way that if you are manufacturing something, you control the process. I don’t control it for you. There are other solution providers that have to either come onsite and process your active ingredient for you, so they’re bringing in a truckload of equipment and loading it into your site, processing your stuff, loading their equipment back up, leaving to go into the next site. We don’t do any of that. Or you have to buy the pre-infused emulsions from them, so they sell you the THC-infused ingredient for you to put in your end product.

“The problem with that model is you can’t move any of that across state lines,” she added, “so if you are an MSO or a brand that has your brand in 10 states, you need that solution in every single one of those states, and it’s not really scalable in every state. So as long as there is no interstate commerce allowed for infused ingredients, I think it’s really important to have this scalable solution. I would say the biggest generic competition we see is attempts at doing this yourself. Some formulators are trying to figure out fast-acting on their own, but we’ve got a lot of R&D into our processes, and I would encourage them to come talk to us and not try to reinvent the wheel.”

“To add to what Kim was saying about usability, another benefit of Azuca is the way that we’re set up, that we’re very much coming from a chef orientation,” added Silver. “We’ve been helping people formulate things that are bringing a different point of view. It means listening to what they want to do and helping them think about different ways to approach it that might be more creative. And we have not just me, but quite a few people on our team that have a lot of culinary experience, and in chocolate, confections in general, and beverages. I feel like we’ve been able to lend a hand.”

“I would add that trying to make a delicious, predictable product with distillate is like cooking with tree sap,” said Rael. “It doesn’t taste good, it sticks to everything, and you can’t measure it, so how can you get tree sap into a cookie? What we do is we sell what I sometimes call the last mile of cannabis as an ingredient. Let us solve how you get that tree sap into delicious, perfectly dosed fast-acting ingredients. If you are a pastry chef, or a beverage formulator, or a mixologist, whatever your specialty is, let us get that tree sap into a great tasting, predictable, easy-to-use ingredient and then do whatever magic around that you’d like to do. We really want to empower people’s creativity.”

It must be fascinating to hear people’s ideas. “100 percent,” said Rael, “and we want to do what we’re best in the world at, which is making these pesky cannabinoids into a great ingredient. We want to do that for you so that you can do with that ingredient what is differentiated, because not everybody in the world is going to be the best at doing this special part of the cannabis value chain that we’re focused on.”

And because Silver brings creativity as a chef, it sounds as though Azuca has it all going on. “Definitely,” he agreed. “I would say that the other thing we have is a lot of experience, and to me the most important thing is continuous curiosity about what needs to be addressed, and how can we best address it in the most usable way. It’s very challenging all the time, and surprising to see the stuff that we come up with. For me, it’s amazing.”

“The last thing I would add that we haven’t really talked about is team and culture. What is so important to me and to our whole team is that we have a core value of helpfulness,” added Rael. “We exist to be helpful to our partners and to our customers so that their products can literally be the very best they can be. We get up every day and say, ‘How can we be helpful?’ And we have an incredible team that supports our partners day in and day out. If there’s an issue, we’re on it. This is the most fun I’ve ever had in my entire career.”

“I want to talk about that for a second,” said Silver, “because that really is important in the cannabis industry. And I don’t want to be tooting the Bubby’s horn that much, but our service ethic really does stem from our restaurant background. When somebody has a problem, we are literally on the spot within one second. I think that’s surprising for people and I’m understanding that it’s unusual, and it really does help to build trust, because once we’re in people’s gummies we really want to be there and be helpful all the time. So, it builds nice relationships, and I think it builds a nice community within the industry, which is very important.”

Will gummies always be the predominant form factor, I asked. “I think gummies are going to stay the category leader,” said Rael. “I think we’re going to see more growth in non-sugar-based ingestibles, like Xylitol mints, small dose, very discreet. And then I think beverages are going to be a major player, but I think it’s going to take a while as the industry and supply chain adjust to what it means to get cannabis beverages out there.”

Companies like Azuca are like cannabis breeders, I noted, in that they lead the industry into the future, but they also have to listen to what the industry and consumers/patients want and need. Do they think of themselves as being on the cutting edge of new products and new formulations in this industry?

“Not to be dropping names or anything like that,” replied Silver, “but this afternoon I’m hanging out with one of the top developers of strains in the United States. We’re friends. So, absolutely, we’re interested in the cutting edge of things and also we’re friends with some of the developers and thinkers in cannabis in lots of different ways; in edibles, in strain development, and all kinds of thinking about the future of cannabis.”

Can we go wherever our imaginations take us? “No, I would say we can go where the cannabis plant takes us,” said Silver.

“The only thing I’d add to that is that the beauty of the way we think about innovation is to be able to capture the complexity and gifts of the cannabis plant and bring them to manufacturers and consumers in a form that is helpful, simple to understand, and approachable,” added Rael. “It’s the cannabis our grandmothers would use.”

“My grandma just rolled over in her grave,” responded Silver.

Read the full article here: https://www.cannabisbusinessexecutive.com/2022/07/with-its-fast-onset-formulations-time-is-on-azucas-side/

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