California Business Journal Article - Ionization Labs

By Shawn Price, California Business Journal

The first thing Cree Crawford and Alex Andrawes want you to know about their company, Ionization Labs, is that it’s not actually a laboratory, but a group of science and business minds that have developed a novel approach and solution to what has been limited to centralized testing labs.

Though the name might throw you off, Ionization Labs is actually putting the power of lab quality chemical analysis testing into the hands of the companies themselves. And at this moment, no one in the business world needs reliable testing more than those in the legal marijuana and hemp industries.

“We are not a replacement for state regulatory labs — we are a supplemental layer of testing and analysis that gives our clients access to immediate data required to run their operations more effectively,” Crawford says.

Ionization Labs is not a hardware company either – it is a software and data analytics company – “and in this business, if your data is not accurate, you’re wasting your time and your money,” Andrawes says.

Ionization Labs’ in-house testing solutions provide the data necessary to control successful outcomes for clients. They accomplish this by offering clients simple and cost-effective chemical in near real time. Crawford calls it “hyper-accelerated-chemical-analysis.”

The company is strategically focused on the hardware platform, which is used as the “gold-standard” for potency testing in cannabis and HPLC (high-performance-liquid chromatography).

Crawford and Andrawes developed their solution with a ‘bullet-proof’ platform and then they built its proprietary software and user interface to make it industry applicable and so simplified that “anyone with basic chemistry skills could be trained in hours to use,” Crawford says.

This process sets the stage for large scale deployment and use. Ionization Labs, which is based in Austin, Texas, offers growers and concentrate producers a software and hardware platform to get accurate potency testing of the top 15 cannabinoids within 15-20 minutes — a task that currently can take days and weeks to return reports when sent out to an off-site lab.

Ionization Labs’ generated data is protected and stored in the cloud and utilized for a myriad of useful business decisions and analytics that can give businesses a strong quality-control tool as well as an ongoing product development resource.

When recreational marijuana became legal in California in January, cannabis quickly blossomed in the world’s fifth largest economy. Though medical use was legalized a year earlier, the recreational side is what has really propelled the growth. But the kind of structure that virtually every other industry takes for granted is still taking shape in the legal pot business.

This is all uncharted territory to the vast majority of business people jumping into the industry, whether veteran or novice. There is no history of marijuana being grown or used like other crops in the U.S. Grown mostly in secret, without any enforced standards, nobody really knew what they’d get with each harvest. The challenge cannabis makers face is similar to car companies having no idea if the steel or rubber they use is any good — or even if it’s actually steel and rubber.

“I come from the wine industry,” Andrawes says. “I did a lot of chemical testing on wine barrels before we bought and blended a wine for my company, Personal Wine. I often sent lab samples to two or three labs, only to get completely different analysis reports. For me, I had already experienced the problem before and knew it was going to be an even greater problem in the cannabis industry. This is a problem that we only could solve with in-house chemical data.”

Crawford and Andrawes saw the potential ripple effect of being able to utilize fast and accurate in-house testing as gigantic – for both businesses and consumers.

“You could pay excessively for a ‘rush order’ to have testing done, but average turn-around in markets is often 14 to 15 days from the day you submit your sample to the day you get your results,” Crawford says.  “The thing about this plant is that it is chemically complicated. The variety of chemicals it can produce is astounding. There are many cannabinoids and most of them have yet to be discovered. The plant naturally produces some of these cannabinoids in miniscule concentrations. The cannabis industry wants to figure out how to study these to use them medically. There are people out there suffering from ailments who need this. Cultivators and extractors need to have predictable and consistent results — and the people who are going to win this game are the people who can deliver a reliable and consistent product.”

The ease of use is critical and it underlies how the business partners developed the software.

“Cultivators and extractors need to make decisions based on chemical data now and if they’re able to cut time and costs, it’s a win-win for them. With in-house testing, they can deliver the same consistency and accuracy which makes them more marketable,” Andrawes says. “I’m not a scientist, but after a couple of hours, I could do the testing.”

What Ionization Labs has done is develop a solution that creates a low barrier to entry and makes chemical data it easy to obtain. “This is not a hardware sale. This is not a software sale, this is a complete potency in-house testing solution,” Crawford says.

They have put together a simplified sample prep kit, calling it the “Blue Apron” of chemical analysis. Referring to the successful pre-prepped cooking subscription, many businesses can’t afford a $60,000 to $80,000 device. They will most likely even have to hire a PhD to operate it, costing even more.

Meanwhile, Ionization Labs’ entry is around $30,000 to purchase the hardware platform — plus a monthly turn-key testing subscription that includes everything to perform in-house testing — a unique value proposition to clients. The company also offers a lease-to-own option.  Nationally, the average for a potency test is about $75. Depending on a company’s subscription program, IL’s cost-per-test is $20-$27 — and it includes all consumables required to run an accurate potency test performed by a non-Ph. D., saving operators considerable capital outlay.

There is quite a bit that cultivators and extractors can do with Ionization Labs’ solution relating to R&D, consistency and purchasing. There are other devices out there, “but they haven’t focused on making it easy to use. That’s our secret sauce,” Crawford says. “Our goal is creating the low-cost / high-frequency testing market allowing our clients the ability to generate powerful data that they can apply to make their business and product better for consumers. It’s a true win win.”

The grace period for cannabis-based product manufacturers to meet national standards for labeling ended July 1 and it took several of the smaller businesses down with it. As a result, the demand only became greater for accurate testing. If a company cannot tell a customer what exactly is in its medical balm, tincture, fruit drink, cookie, vape or bag of weed, “they can’t legally sell it,” Crawford says.

And with proper labeling comes better education of what a product is or is not, which will make an even greater difference for medicinal products.

“Nobody has explained to the Baby Boomer generation that a topical product like a cream rubbed into the skin, which is high in CBD [the medically helpful element of marijuana] and THC [the chemical that creates the high] will not get you high in contrast to the same THC/CBD ratio in a tincture or vape oil,” Andrawes says. “In a topical format, you’d ideally like to see higher levels THC as it is generally understood to improve a patient’s response.”

Crawford says growers and producers of hemp products, used in foods and the creation of CBD products, are becoming some of the company’s largest client base.

“Whole hemp crops have had to be destroyed because they went ‘hot’ with too much THC and crossed over the three percent THC threshold,” Crawford says.

Reliable testing throughout the cultivation process averts those types of costly issues.

Crawford and Andrawes see the bigger picture.

“Our goal is to help accelerate the industry so that it’s safe and consistent,” Crawford says. “The only way there can be consumer trust is for there to be frequent and consistent testing to get consistent product. We accomplish this by bringing our low-cost, simple to use testing solution that does not sacrifice accuracy. By doing that, we create the conditions to test more.”

What’s next? Ionization Labs has a number of complimentary solutions slated for market in coming months. Q1 will see a release of a similarly simple and affordable “terpene and solvent” test/screening solution to add to the suite of important testing solutions for the cannabis and hemp space.

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