Join Marguerite Arnold – Cannaclear.de and M. Patrick Doherty – CannaList.eu, as they interview the internationally based team of SovereignPort – Joshua Ready, Sarah Roberts Yetman, Jorge de Tuya – a company making waves as they import cannabis biomass into the E.U. from the U.S.
We’re finding that there’s a lot of new information out there that is not making it into the conventional channels. So we’re trying to set up to do here because we’re all over the map, and there’s a lot of information falling through the cracks. We want to get out there to people, so we’re starting to do this.
I work for a company right now called InterPort Logistics. I’m a customs broker and a freight forwarder. I’m a third-generation broker. I’ve been doing this for 40 years.
I am always early because when I was a kid, if I weren’t to work on time, my dad would dock my pay even though I was too young to drive. So, I’m usually early when I get to any place, or I have a meeting.
How is COVID impacting you guys down in Florida?
My company, Interport, has been open the whole time because we’re considered essential we have cleared and transported over 40 million masks into the USA. So we’ve been busy doing that almost 24/7.
Fortunately, my family is healthy. My parents are older, so they’re kind of self-quarantined in the House, and we have to give them something we just put in the mailbox for them. So we’re all safe – thank God.
How’s it treating you guys in Europe?
It feels like it is changing right now. I mean there’s there are people who are running around with masks, but things are opening here.
Believe we have just been joined by Sarah. Welcome, Sarah – very nice to see you; thank you very much for joining us.
Where are you today? Does it look like you’re very tropical?
Jorge and I are both in Florida. This will be the one hour I don’t have the mask on.
You must be doing all of your stuff by phone.
Right, everything’s by phone, especially since we had 10,000 new cases yesterday.
To answer your question in Germany, it feels like it’s over, and the Germans are happy about kicking its ass except for the fact that they’re reserving the right to put certain towns in lockdown.
I’m trying to behave so I can come to Germany and the Canary Islands soon, so trying to actively keep my mask on so we can jump on a plane in the next few weeks.
It is EU-wide the only exception are people in the transportation industry, which includes us. I don’t want to pull that card until it’s necessary, which will be at the end of this month. We’re just trying to stay safe and compliant and get our COVID tests before jumping on a plane.
This has worked because we have started these conversations and have gone in some engaging conversations, so maybe tonight, it’s going to be just Patrick and me.
We are also recording this, so I hope that your expertise will be heard by Patrick and me and the people who are starting to dial in and listen and our followers on YouTube.
So by way of introduction very quickly, my name is Marguerite Arnold. I’m a journalist. I also have been increasingly a consultant covering the space. I’m an American ex-pat. I’ve lived in Germany. It looks like I’m finally getting my German citizenship, but regardless. I’m also sort of involved in this space, not only documenting what’s going on as a journalist but involved in some startups and tech.
As this market evolves with all of its quirks, some people want to see this grow, which is one of the reasons CannaClear, one of my tech startups, decided to work with Patrick on CannaList. E.U.
We decided to work together on the project to see how we could bring some of the inherent expertise that is not necessarily known about into a place where people could find it. So what we’re doing with Clearly Cannabis is having these conversations where we invited experts and asked you guys questions. Allowing our viewers to get a little bit more of a down and dirty understanding of some of the real issues in this industry as it develops beyond the fluff.
To sort of kick this off – can you start with an introduction about what SovereignPort is doing in the cannabis space, specifically in the import and export area in and out of Europe.
Josh is our E.U. director; he’s helping get everything established in the E.U., which is fantastic, and he’s incredible. Yeah, he’s phenomenal. I’m so glad he’s on our team.
Jorge and I started opening up customs; we’re a logistics solutions company. We put together some logistics solutions and customs clearance for CBD specifically. So Jorge and I started finding ways to bring it into the U.S. Jorge wrote a couple of customs and tariff classifications for some pending regulatory rulings that haven’t been responded to yet. So to help with the methodology and clear up the path to compliance for everything that has to do with hype.
We started with the importation because the U.S. wasn’t growing yet, so we had a considerable need to import, and everyone was trying to get it here, but there weren’t clear classifications on it.
So when the U.S. grew and had an abundance of it, the farmers didn’t have a way to make money on it, the prices dropped.
The U.S. has excellent prices on industrial hemp and CBD, but not in the E.U. or Canada. So I just spent most of 2019 working with Jorge. Popping over in the E.U., working with different countries to open up customs there, and then Josh came in at just the right time, and we started opening up.
Josh was hugely influential, the key to opening up the E.U. port, and now we’re both an E.U. company and a U.S. company, and we have ports in the U.S. in the E.U., which makes it a lot easier to transport CBD products back and forth.
Well, let’s just back this whole thing up because again, a lot of people who have been aware of the ins and outs of this industry have known that it was not possible to do what you were talking about certainly in terms of exporting out of the U.S. until something happened called the passage of the 2018 farm bill which started for those of us. Those people who are listening overseas.
In 2018, a federal bill was passed in congress that started to lay the groundwork for federal oversight and hemp regulation. Even though it pushed it into the state level to regulate on one pound but what’s interesting to me has been since I met Josh and began to learn about what you guys were doing, you saw that opportunity and said, okay, export.
How did you guys decide to start exporting hemp from the united states to Europe?
It was just about supply and demand. I mean 2018 farm bill happened um; it couldn’t have been better timing. We again needed a lot of imports. We had zero here, but when the farmers were able to grow as of January 2019, many people grew, so we have an abundance, so no one was buying it in the U.S. they had it.
So who were the buyers? Not South America; they’re growing it in abundance. So our buyers were South Africa, the E.U., and Canada. Australia not so much yet due to regulations, but there’s just there’s a huge need all over the E.U. because it’s hard to find ample biomass for these processors to process at the right level and create profits.
I mean, it’s just a supply and demands that got us set up, and it’s an arduous journey, but we’re here, and there’s a lot of details, laws, and legal aspects. We’ve had to jump through, but it’s an ability now, and I know George has worked hard on it. He knows most of the legal aspects of it thoroughly.
The way we started was I went, and I had a meeting with the port director at the airport in Miami. I told him to look – they’ve just made this legal – people will try smuggling it; why don’t we start finding a way to make this compliant. So you guys know what’s going on. It’s open kimono, and you don’t have a bunch of inspectors just seizing things all over the border. So let’s find a path so from there is where they suggested.
They were more than suggested or requested from some rulings regulatory rulings and harmonize tariff rulings and start. So we did, and we started working together, and the U.S. government, I think most governments anywhere in the world, will write a law and then forget to write the regulation. So it’s no different here.
Our objective is to help write the regulation for the import and export of this great commodity through all borders around the world not only by engaging U.S. customs but also by engaging German customs dust customs Spanish customs and get there and show what we have to offer that we have a high-quality good substance that’s beneficial for on all phases of not only the planet but the general health of the public and to eliminate this stigma and have it move freely through all borders.
What has been the pushback?
There hasn’t been a lot of pushback on the federal regulatory level. The FDA still hasn’t written any regulation on CBD regarding the thresholds and safety standards for CBD and anything – whether it’s food or cosmetics.
On the import side, as long as you’re not making any medical claims. So they’re kind of just watching.
We are very open with the “listen, I’ve got this coming in, we’re going to disclaim it,” but they have access to the entries. So I give them the information so they can look, and we can dialogue along the way.
The biggest hurdle, believe it or not, is removing the stigma of the product that the carriers hold. The carriers are afraid that their ships or airplanes will be seized for essentially shipping contraband, and those minds are the hardest ones to change. However, it’s happening.
They’re starting to realize that this is legal. It’s legal in the united states now that there are safeguards with the classifications and labs that we use to protect them from any kind of action by any government.
If it were easy, everybody would do it. But, I mean, if a farmer can’t tell the difference between CBD biomass from the smell or look all of it – how can a customs agent? How can a shipper? They don’t know if they’re shipping cannabis with THC cannabis or CBD that’s compliant and legal other than having a COA.
So, that’s where you have to have reputable people who follow all the rules. You have to have an excellent track record of backgrounds. You can’t cut one corner. You can’t compromise anything with your company and your integrity, or they don’t believe you anymore, and so it’s been a long haul. Still, we’ve done things correctly, which gives us more validity in the market, and so it’s easier for transportation companies to trust us because we do it right the first time.
We lose business because we won’t cut corners. We do it right the first time.
When you come into the E.U., you’re faced with 28 different member states with 28 different sets of rules, is that correct, or do you go with a country like Germany and hope that by complying with their standards, the other member states will be onboard?
You have to approach each government. Each government has its sovereign laws, and you’ve got to follow them. You can’t just ignore them and say, well, it’s legal here; why can’t you do it here? You have to engage them in dialogue so you can continue that path.
Let me jump in with this one. You guys are talking about the nitty-gritty, which is the first time that we’ve had somebody on this conversation that’s talked about this. You are talking about going to the people who are signing the leading bill to make sure that they know you’re there with a legit crop.
What’s interesting to me – from the beginning, you’re just doing it right. You know how the logistics work, and you know who the people are. You’re going out there, and you’re doing something which is now technically legal.
The next question on this one and I think sort of as a follow-up to Patrick’s question. In Germany, right now, you have whole states – for example, North Rhine-Westphalia, where Cologne is located – deciding that they will follow the E.U.’s non-binding legislation on CBD. Namely that it’s novel food if the oil is not pressed from a seed.
What’s interesting about you guys is that you are actually in the logistics end of getting it from a to b when every German state’s rules are changing.
When people say, “Can you just ship it for me?” – Okay, from where to where, who’s getting it, what city? Why do you need to know the city? Oh, because everything is different, and that’s why it pays to have a logistics consultant on your team when you’re working with CBD.
We had a client who thought they could do it themselves, which is cute.
You should charge them more when they think that!
Well, they shipped it. They’re like, “Thank you for getting all of our classifications for us. We’re just going to send it to because there’s a party I want to use; they’re so much cheaper.” But, unfortunately, their 400,000 is still sitting on a dock in Germany because they didn’t do it correctly, and Germany is one of the hardest countries.
What we’re doing right now is shipping it into an E.U. port and clearing it. Then we get E.U. Certificates Of Authenticity (COAs); we get the government to approve it and determine which countries will accept it.
Cyprus is different than Greece is different than Italy is different than Germany is different than Switzerland, which isn’t even in the E.U., Furthermore, don’t realize there are VAT taxes between all these too. Bobbing this around could cost so much more than you’d ever want to pay for an import if you don’t know what you’re doing.
You have to bring it in correctly. You have to land it, and you have to clear it. You have to decide if it needs to go to Italy strategically. What’s the best way to get it there, and how do we meet the Italian side’s expectations? Everything we do is auditable, so no one is upset. So it never gets confiscated.
And it’s not easy. We make it look easy, but it’s not an easy feat. Every month is different.
How many countries are you currently able to ship into?
That’s interesting, I mean, I could sit here and say 200 because I don’t know, but it depends on where the supply and demand are. We look at every country. If we’re four months out from the last shipment, we have to relook at everything. Laws are changing so fast everywhere.
Colombia wasn’t letting anything out, and now they are. THX seeds weren’t allowed out of E.U., and now they are. It changes so much. I might be able to ship it to 50 countries today; tomorrow it’s 20, the next day it’s 100; it just depends. I always tell people, let’s make it a shipment-by shipment basis.
That’s why we have a team of experts or have a consulting group on hand. Just because you have a route doesn’t mean that it will stay for more than a month.
Cannabis is a lot more fun than bringing in people’s consumer goods and furniture and from overseas. But, getting CBD through customs is a real challenge.
On the one hand, cannabis is just a plant with all sorts of stigma where the rules change every day. Where the ins and outs points and who can shift what to whom for what purpose is all in flux all of the time. Is that a fair assessment?
How do you, in a volatile business, try and find a measure of stability? For example, do you have clients who keep clients in Europe at this point, or do you just say I’m open for business, give me your bill and lading waiting problem, and I’ll sort it out?
Well, I think that’s where having that E.U. port and being an E.U. company is essential.
Now, we’re at the point where we just buy the product, ship it to ourselves, and hold it. Then we ship it out from there. I’m not guaranteeing clients which we could. Still, I’m insuring my load and then shipping it to clients, so we have many clients in Europe, but it takes weeks to get a product over there. The way we’re kind of making it happen is we own the load, and so we hold the shipment we put it into an E.U. company, and then we distribute from there, and that’s how we’re helping get it to our clients without them having the risk or any issues because we can clear.
In the United States, it sounds like you guys are the shipping and customs logistics experts, but that is not what Josh has been doing here in Europe. So, Josh, do you want to jump in a little bit and talk about what you’ve on the island’s office?
Sarah and Jorge have been explaining the framework in the United States to ship here to Europe – to 720 million people on the medical side. The infrastructure that is in the United States does not exist here. So we’re on this education piece just like this podcast now to let people know how things are being done to you. To be able to create more of a similar way of thinking.
Whether it’s fiber on plastic, paper, clothes, or concrete, we can help countries increase their GDP in this crazy time. Also, to remain medically conscious of the plant’s benefits.
As you see, we don’t have hemp consumption levels in California; retailers like Costco, Ralph’s, or Kroger offer hemp clothes. They also provide CBD products and medical products. So people can begin to see beyond recreational use and understand how it can help out with health and wellness.
My role is to spread the news and the message like we’re doing here now and focus on recreational usage and explore other economic benefits of hemp products.
My role is just to support everything that Jorge and Sarah have been saying. So that’s why we’re just educating so that people can take this for what it’s worth.
SovereignPort has been starting companies in the Canary Islands to enable shipment from what I understand, regulated, compliant cannabis biomass from the United States to Europe. So that is how you have been dealing with the bill of sale rating issues, so, in other words, you’re bringing American biomass to Europe. Then you’re selling it within Europe, is that correct?
We just found that Spain was probably the most inviting and best market, and having a unique port was about the best entry for us to be able to then stage be able to offer an E.U. product.
Spain is amiable, and they have a vast thriving cannabis market as well. We just found a great solution that makes everyone happy with the Canary Islands. Josh was on the ground for several months putting together the E.U. company for SovereignPort. It’s been amazing, and it was a great option. Then the wonderful thing is Jorge’s family is from the Canary Islands, so he’s gotten along with customs well down there, and we’ve developed some great relationships on the island, which is good for us.
It’s off of the E.U., but it’s an E.U. island, so we’re able to stage there and then work within the E.U.’s compliance before we take it into the mainland.
I don’t know if you’re following the court decision in France. But, still, there’s this tension right now between what’s going on at the E.U. level in terms of how we treat cannabis, even CBD, and then on the regional country level, there’s another discussion.
In Germany, Cologne just banned CBD that is not pressed from flowers or leaves.
I’ve heard rumors that the entire state of North-Rhine Westphalia is going to do that on the flip side, though. in France, there’s now a big lawsuit about local authorities’ ability to ban CBD oil import because of what CBD is. But, of course, anybody who knows anything about the science or history of plants or food knows that CBD extracted from hemp, in particular, is not a novel food in any way, shape, or form unless you extract it in a certain way.
I find it interesting that you’re right in the middle of this conversation, not only on the CBD front but also on the import-export fund, which interacts with new regulations and new interpretations of laws as they apply to this plant.
It’s challenging. In the U.S., every state is different, and every state has state rights and has state rules. You can drive your product from Colorado and a truck to Florida, and it can get confiscated at the border of Florida because you don’t have the right paperwork.
So we’re used to working inside one country with 50 different rules in each region, and I think that’s what brought us the strength we were able to put that together in the U.S., and we’re able to duplicate it over in the E.U.
It’s like anything else; it’s new on the market. The World Health Organization is just now saying it’s okay. We’re just decriminalizing the stigma of the cannabis plant, and that’s fine, but we have people who don’t understand what they’re doing or have never seen the plant, or have not worked with the farmers making the laws.
Hopefully, as we become more in the process, we can start working with governments. I love that we’ve got the state of Arkansas wanting to work with us about transportation and what the law should be
I worked with the minister of Uruguay. I like when people bring in the right consultants and find out what’s good, bad, and right. What’s wrong? They’re right. Many processors are not doing it correctly, and I wouldn’t want to give that to my citizens.
If you have an EU GMP-certified facility documenting from seed to sale where everything’s going, it shouldn’t be an issue, and it should not be on the novel food list.
We’re still learning the hemp business. I know we can get scientific in our conversation, and it can go into so many different exciting ways on the medicine side, but we’re in the hemp business.
We were discussing this the other day. We can call it one thing. I think it’s semantics. It’s still all derived from hemp and, thus, even the industrial hemp, and we know there are five different conversations there.
If you say it’s CBD, a lot of the education piece goes into that whole another sphere of the different laws and regulations.
We’re really under the 2018 bill – a form of the farm bill that also the E.U. recognized why this is such a fantastic time. If we keep it simple and just really talk hemp, and keep it at hemp.
Let the scientists do what they do. I’m not a scientist. There are some other ways to improve hemp. So we let those people do that. Our core job is shipping logistics with special needs cargo, which is industrial hemp but for the medical use or fiber, and that’s for our clients to decide.
That’s what we’re trying to do. We’re bridging the world together through the Canary Islands but connecting the foreign trade zones once again. We can get into that even on the more global front, but that also goes to the medical marijuana side. We’ll talk about that later.
On the hemp side, that’s why we’re just trying to keep it simple. Only hemp and then yes are all these other things and nuances, but we can create a framework and educate.
Jorge is working and educating with the customs. Sarah is continuing to have these amazingly creative ideas that allow us to do what we’re doing, so we’re matching all the continents together and saving the world.
I find it interesting that you’re bringing biomass over here appears in an environment where there are several different CBD or if you want to call them, hemp markets. If you’re in the industrial hemp space or you’re extracting hemp oil from seeds – that’s a very different space than the GMP medically certified side.
SovereignPort brings biomass over that has been certified in a certain way, i.e., are you bringing biomass over for the industrial market, or are you bringing biomass that has been differently certified and then selling it?
Or are you bringing biomass over and just saying, okay, we have biomass and letting your buyers say it fits these boxes?
Everything’s pre-certified approved before we put it on. There’s no way I’m spending millions of dollars to throw it on a ship and not have all the checkmarks there, especially since it’s on my dime. That’s not wise.
So we don’t say, oh let’s see if a buyer will take it that’s crazy um we have clients that I’ve had for years which I’ve known well that I’ve been working with since day one and we know the requirements of the countries. Every country is different. We make sure it’s certified for the countries we already have it sold in, but we ensure that it’s done correctly when new buyers come on. If it’s not, we don’t sell it. So there’s no way I’m going to have my name on a box that gets confiscated. It’s not going to work. I’m going to give you an easy one, though.
In the United States, the farm bill has set out a federal mandate for the states of no more than 0.3 THC in hemp. Some states are above. There are some states below. You are far better. It’s all point three.
A couple of E.U. states who are like 0.2 regardless of the federal standard in the United States are 0.3. the federal or sort of regional standards here is 0.2. how do you get around that, or has that been a problem
Just because there are standards here doesn’t mean that’s how all the biomass is grown, and just because it’s the U.S. doesn’t mean we’re not using E.U. seeds.
Anything that leaves here is below well below 0.2 before it ever gets on a ship, and we make sure those COAs are in check, and then we have it checked again when we get there.
This is what we do. It’s an elaborate thing, and I thought it would take us two-three weeks to get the first ship out, and it took us three months, and it’s because we had to check every box, and there were more details than I had planned for. But we send out samples to various labs in the U.K. or Spain, or wherever.
In the E.U., we have them check it to make sure compliance. We have the US COA to ensure compliance when it lands. We recheck it to ensure compliance; we make sure it’s covered. We have all those funds site filed customs agents know it. It’s why it took so long even to get us off. People were importing and exporting CBD. 70- 80% gets through. The rest was confiscated.
We don’t get confiscated because it takes us longer, but we check every single box and make sure we’re doing it correctly.
Now, I’m not going to tell you exactly what we’re doing because we’re the only ones who can do it, but we follow the rules. So we’re making sure everything’s compliant and everyone’s happy.
We’re 60 days past due for our first shipment, but it’s okay because we’re doing it right.
The carriers didn’t even have published rates for it yet. So we were the first to publish a tariff for industrial hemp from the united states to the E.U.
Do you see much in the biomass business in Spain? Is Spain on your list because the market there is very different from Germany, which is very different from Switzerland?
No, we don’t have a massive market in Spain yet. However, we know we’re going to see that change. Most of our clients are established clients are not in Spain but the E.U.
What keeps you up at night?
I sleep like a freaking baby. I’ve got a great law firm. I’ve got a great staff. Jorge handles everything. It’s funny, we had an issue with the shipment, and I called this D.C. law firm. They are influential people, including John Boehner, our last speaker of the House.
Our attorneys had five or six people on the firm on a phone call talking about this one project. We had to send them all the prod, all the paperwork over, and they’re looking it over, and you know how attorneys want to keep looking. They got on the phone they said there is nothing we can add. Jorge did it so well. It’s better than what we would have done it. We can’t even imagine anything else you could have done.
He knows what he’s doing. It’s wrapped uptight, and when I say I sleep like a baby, I snore too. I have zero issues falling asleep.
Are you creating this market?
I think the market’s creating the demand. We’re the transportation customs clearance arm. We know how to do it; that’s what we’ve been doing for years. We approached the authorities to look at a shipment that’s on the water now. Customs wanted to take a look, and really, everything we move is subject to seizure.
I use the tariff rate that customs asked me to use. The inspector was looking at a customs tariff rate that he thought we should have been using. Luckily, I had already received a response to the tariff classification that we were supposed to use. I sent it to him. He let it right through, and now we have an established connection with that port in itself with customs.
If we have any issues, we’re upfront about it. We preempt any problems that may arise by giving them the first shot at it. So they have the right of first refusal, and we’re ready for them. And it’s all legal, and it’s all compliant.
Our work makes them feel warm and fuzzy, which is our objective, and it sails precisely when it’s supposed to.
Do you send it by ship, or do you ship by air, as well?
That’s that depends on the quantity. So far, there are very few steamship lines that want to carry it. Even fewer airlines want to take it. that’s one of our next hurdles is to find the air freight carriers for smaller shipments
We are talking about three containers right now in a larger biomass project that will be hitting the E.U., so you’re going to move that by sea. Smaller shipments may be samples of isolate or distillate that may be leaving the united states that will have to fly, and finding carriers to move it is a more significant challenge than federal authorities around the world believe it or not.
We’re shipping pre-rolls to Greece right now to get their compliance approval before containers go out. So samples always go out, and we’ve got samples going all over the place, but samples go out, and we get it approved. So we make sure the government knows what’s going on and the customs brokers know what’s going on, and if there have to be amendments written or regulations written, that’s what we do.
Then we send out the containers, so we’re continually moving new products as samples of various sizes, but as far as these containers, we shipped at sea because we had so much weight on them.
Does it make sense to go air again? For example, Frankfurt is known as a major international shipping point but has no ports.
90% of everything we’re shipping over is probably going by air, but if you go by weight, volume – 90% is going by sea. So smaller shipments, a pallet, or less, we are testing the waters, getting the rulings. It’s helping ship samples for our clients.
At this point, I would never ship directly to Germany. It’s a huge shipping port, but I would never ship directly unless I wanted to lose product in a million years. It’s ridiculous, there are so many laws there you have to customs clear and then get pre-approval you got to get it through the E.U., and then you get pre-approval from Germany.
Germany is a big market. We all want to be there, you know we all want to sell there. But, still, instead of trying to sell it straight into Germany, you established companies within the canary islands to be your European presence, so you ship to Europe first and then you clear within the E.U.?
We ship to the E.U. We clear it, and it’s a lot more detailed than that. It’s like, how do you have a baby? Oh, I got pregnant and had a baby. It’s a lot more precise than that. We made an E.U. company, and now we’re sending over babies. It’s complicated, but it’s precisely the road map we took that’s awesome, and when you look at the different areas you can ship to.
What does the E.U. look like for you? This is a big market with many opportunities, but there are a lot of challenges and 28 different member states. How do you look at that kind of market and compare it to other markets that might be easier or, at least, less regulatory?
If you look at where the large processors are, they usually start processing in areas that are easy for customs clearance and biomass.
I mean, Poland is huge. I see many other countries jump on that I didn’t expect, such as Croatia and Serbia. A lot of the eastern bloc countries are hot right now. I’ve got a considerable client in Bulgaria.
Eastern European clients are importing products that they cannot get in the E.U. Are those people then processing the biomass into something else that they can export?
I would assume that’s what they’re doing. I don’t think they’re just keeping the biomass. It’s probably going to labs. I don’t know what they’re doing; I’m not asking. They’re publicly traded companies. Those are their trade secrets. But I know everybody’s licensed. Everybody’s approved. Customs is happy.
We ship it to them, and they process it into whatever they’re processing for. I’ve seen a lot through our E.U. companies are processing at such a standard as EU GMP compliance. So we can then ship to Asia. A lot of it does not stay in Europe. We’re sending it there, moving it to Asia as a GMP product.
Who in the U.S. is GMP certified at this point?
Not us – it’s different in the U.S., and farms can’t be GMP certified. They’re GAP certified, and a lot of people are gap certified. A couple of processing plants have got EU GMP certification specialists out to get them pre-cleared. I believe one’s already finished, so there are EU GMP-certified labs here.
There are GMP-certified farms, and we send over the highest quality products that are cleared and pre-approved in the E.U.
Do you send any stuff that is not GMP to Europe?
It depends on what farm it’s coming from. It is the highest quality product you can get out of the U.S. That full panel COA has to be the cleanest thing they’ve ever seen when you put it on a boat. That’s why we ship it to several location labs to test it.
There can’t be any issues with this product, so we have the COAs we send it over, and everything’s pre-cleared, and then it goes from there. So E.U. makes products, ships them out to makeup companies or wherever the final part is going.
South America is sending stuff up to the E.U. we’re ensuring it’s papered. We make sure it’s completely compliant.
South America is doing a lot of growing. Will you facilitate that, or will you only focus on what’s coming out of the U.S.?
We work worldwide. Jorge just finished a Brazilian deal. We’ve worked with Uruguay to make a deal. Colombia is huge.
Looking at your crystal ball, do you see those sorts of movements where the U.S. was hot. Now, it’s going to South America? Where do you think is hot?
The best CBD is coming out of the Americas. So – whether that’s North America or South America. I mean, it’s just it’s ample growing, and the farmers know what they’re doing, and they’re kicking out some killer product.
The U.S. market is much different from the E.U. because of the percentage of THC and the availability of the seed that you have to use. So it’s a much lower CBD. I mean, you talk to processors. They want 14%. I’ve seen South American stuff hit 20%. It’s crazy.
If you want a higher-end, it’s hard to find that in the E.U. right now. In the E.U., they produce three or four percent CBD, and it takes processors two to three times longer and much more biomass to process it into one kilo of anything.
So, we can have compliant products brought over that meet or exceed what the processors are using now. A few of them use our excellent CBD that’s pre-approved, exceeding any of the rules and regulations over there, and they’re mixing it with what they have. They’re not going to throw out their biomass, and they’re not going to throw out the farmers they’ve got contracts with.
They’re mixing it to process CBD a lot faster and cut down their bottom line to be profitable. The blend is better than their stuff. If you’ve got between one and three percent sitting there that you’re going to process that takes you forever, I can throw in some eight on top of it. It makes life a lot easier.
I think that that is probably what you’re hitting. It’s a place where the regulations, I don’t want to say fail because you’re taking it up a notch, but you’re hitting a place where the regulations have not defined what is going on.
I think that many people in this business right now within Europe are pretty peeved about the regulations. Where novel food has gone, it is stupid.
Suppose you’re going to set regulations on science, which we all want to see here. I would say that that’s the best way to continue to move cannabis forward as a regulated plant.
Right now, there is no difference between a cannabinoid that is extracted from a seed versus a plant versus a flower. There are issues with extraction processes certainly. Do you use butane? Do you use ethanol? Do you use co2 extraction? Okay, fair enough, there are all sorts of safety issues that fall under that.
But what I think is interesting about what you’re doing is that you appear to have found a bridge between on the European side – growers who cannot get funding because they can’t figure out what on earth it’s supposed to be doing. Is it novel food? Should I get a certification? In the meantime, there is a need. It seems to be that people are saying, okay. Well, I’m processing this way. I’m using biomass, but I’m assuming it’s not just obviously from seeds, plants, and flowers, etc.
You’re creating a market and finding a market in something that almost cannot be done by growers here.
That’s still on the shoulders of the product developer right that company we’re saving the money which hopefully makes it cheaper for the consumer right once again so the consumer it’s more exposure to the customer the client their client we’re just making life easier as Sarah said a lot of these things the novel food act etc. are on the shoulders of yes some of our clients but if they’re able to save money. You know and have it where their machinery is not breaking down and maintenance issues.
We’re going into stability issues here so that they can better address whatever novel food act fees it’s 300,000 or something or a lot so that they can operate a lot more freely, and we’re helping them do that we’re still on the solution side.
I think the difference right now is in the farming, and you’re right; there’s not enough supply in Europe of what the processors need to be competitive with the U.S. or Asia. There’s just not enough, and it’s because most of the growers are outside and when they’re outside, and you have different temperatures.
I had a Bulgarian guy who’s growing who said to Sarah, “I know you can’t get more than six percent off our seeds because I’m growing this, and we have the best people on the grounds.” I believe him. It’s a fantastic company, but I’m all outdoors, and you’re at the mercy of nature. So it does affect the plant a lot, most of us, not most. Still, there are a ton of u.s growers who know how to do it indoors now, and they can do four full cycles or more annually, and they can ultimately make that plant as perfect as it needs to be.
Until the E.U. goes more to an indoor grow style, we will produce better plants that are compliant in the U.S. and South America. They’re going to have to have it imported in to mix with their crop.
We’re not going to mess up the farmers in the E.U. The farmers will still be needed because they will be able to get all the base crops and then fulfill the rest. So we’ll bring in the seven eight nine ten percent let them mix and process.
Some other emerging markets you have are Africa – North and South Africa. You have the Middle East – Lebanon and Israel. We’re discussing how Israel’s genetics in those parts of the world are advancing like leaps and bounds, and that’s a whole other topic – genetics. Once again, going into education, no farmer was left behind.
We’re just helping to supplement what is going wrong to enhance what’s going right for Europe. I think that’s where Europe’s clock is right now. They have to have these certain seeds.
Here in the states, and I’ll take Oklahoma for an example, they started a program whereby if you had compliant seeds. So you could prove genetics, and they were compliant to that state it took six weeks, and they’d add them to the chart that way everybody could participate, and it wasn’t 18 seeds that were allowed because that’s what’s hurting Europe right now.
If they would allow any seeds that are compliant, we could get them better genetics. So those farmers could be growing 10 12 percent CBD plants that are still hitting 0.2 requirements.
How are you guys succeeding? A part of the novel food regulation in Europe is about seed sources.
The novel food approach has not worked. So I think that cannabis is one of those perfect examples to show where the idea behind, you know, keeping I don’t know as the British call it chlorinated chicken or the cannabis version of chlorinated chicken out of the European market.
There seems to be working in a model in other words, where farmers here are growing certain kinds of crops the market is regulating I would say recreational slash novel food versus GMP – the whole discussion though about how much of a percentage you’re growing in your CBD plant is one discussion and then how you’re extracting it is another. and what you are using actually to remove from is the third issue.
Just on the recreational side and beyond indoor GMP medically certified, what I think is happening is why it was great to have you on. But, again, the level of detail and your experience and just talking about what you do is so important.
Many people I talk to ask do you know anything, or do you know somebody who does this? Because the regulations are fierce, they are there. The people in the market who are succeeding are saying, okay, well, we know perfectly well then not all the CBD that’s being processed and sold in Europe is coming from European sources or is being grown in E.U.
Plants are coming into these ways. The governments are letting it happen. There are all sorts of certifications. It sounds like you’re doing everything right and checking all those boxes. but this is a third way for this kind of product to enter the market
Indeed, on the export side, because the case law increasingly says, unfortunately, you’re more protected as a CBD product or CBD biomass if you’re imported from somewhere else. There’s no rhyme or reason. that’s why I thought that you guys are doing is super exciting and ahead of the mix
I mean a lot of people who say, well, I talked to someone in Europe. For example, we’re trying to grow it here as well as ship it within Europe. I think that you are one of the companies that I’ve gotten a sense of as I talked to you and Josh in particular, who is kind of finding, as you said, that third.
With Sovereignport, which I would say is one of the few specialty companies that I have found in this educated and professional space, you are doing what you’re supposed to be doing.
You said part of what you’re doing is education, so what is the message when you’re trying to educate governments that resonates with them?
I think a lot of the significant issues in the beginning. How do they feel about specific classifications? Sometimes they had the wrong classifications. For example, Uruguay was trying to export off improper classification, and they thought they were going to get in trouble on a worldwide scale.
It’s just education. It shows them that this is classified CBD because there are no THC properties, or it’s within regulations classified as industrial hemp, and that’s what we have to work with.
That’s what gets shipped back and forth. It’s just education and working inside when you educate a country. You have to teach them inside their laws, and so it’s always tricky.
Everyone’s a little different. Uruguay was easy. It was a classification issue. Whereas Germany is not easy, you know. So they’re continually educating us like no, we’ve decided if there’s one leaf in it, we’re throwing it away.
Then let’s go back and re-examine the products we’re bringing in. Jorge probably knows more than I do as far as educating um the governments. You’re not educating them. We need to form relationships with those officials to understand that what they’re getting is something that they can examine, and their backs are covered. Because at the end of the day, they’re just people who are trying to feed their kids, just like us.
And when you approach them in that way and validate their regulations as understandable for their country and citizenry, you work within those parameters. Then, you’re going to open a lot of doors.
You can’t just bum rush their border and say, “Hey there, I’m American. I can do whatever I want because it’s legal there now.” No, you have to give them the respect that they’re due as government officials in a foreign government to move forward in a dialogue that’s beneficial to everybody. You’re almost like cannabis ambassadors.