A very nice comparison could allow us to anticipate future markets ...
With the agreement of the author Jim Plamondon, we decided to report this beautiful text to explain by analogy the link between cannabis and the vanilla industry: a vision of a very interesting future.
Whether you like or hate vanilla, you can not deny that it is everywhere and in everything. One would think that it would be great for cannabis to be "the new vanilla".
This would not be the case. It would be terrible for the North American cannabis industry, and maybe even worse for cannabis growers in developing countries.
About 18 000 products contain added vanilla flavors, making vanilla one of the most popular flavors and fragrances in the world. At least 170 unique chemical compounds contribute to its complex and delicious flavor and aroma.
Originally, all vanilla aromas came from the pods of the Mexican tropical orchid Vanilla planifolia (the main species of orchid used to make vanilla), which has since been transplanted around the world. Today, Madagascar - a large island off the southeast coast of Africa - produces the best vanilla pods and flavors in the world (mostly extracts). 80 to 85% of all the vanilla aromas grown come from Madagascar, where about 80 000 small vanilla growers grow the vanilla plant. The cultivation, harvesting and processing of these bean pods into high quality vanilla flavors is an extremely complex and labor intensive craft. The production of 1 kg vanillin requires about 500 kg of vanilla pods, which corresponds to the [manual] pollination of about 40000 flowers. Josephine Lochhead, president of the Cook Flavoring Company, said Malagasy farmers "grow and care for these unique pods with a job and care so careful that we in the West can barely understand it."
What lessons for cannabis?
Vanilla cultivation requires as much in-depth knowledge, experience and work as cannabis cultivation, but vanilla growers are extremely poor. When cannabis prices plummet globally, cannabis cultivation will shift from the developed world to the developing world, and even there, will become as unprofitable as vanilla growing. North American cannabis growers will not be able to compete.
Yes, Big Cannabis could ban North American imports of poor foreign cannabis growers, but this ban will not help North American cannabis growers for the reasons outlined below.
In the 1800 years, chemists discovered that the aroma and flavor of vanilla came mainly from a single chemical compound, which they called "vanillin". From 1874, other chemists discovered ways to make artificial vanilla from inputs that were much cheaper than vanilla pods. The cheapest method - the synthesis of vanillin from petroleum - was marketed 100 years later, in the 1970 years.
Vanillin (4-hydroxy-3-methoxybenzaldehyde) is exactly the same chemical compound, whether produced by the chemical reactions that occur inside a vanilla plant or by the chemical reactions that occur in a plant. laboratory. What makes some vanillins "natural" and others "artificial" is not what they are, but how they are made. We will come back to this point shortly.
Artificial vanillin provides more than 99% of the world's demand for vanilla flavorings (20000 tons), of which less than 1% comes from farmed vanilla extracts (40 to 50 tons). This is not surprising given the huge price difference: in 2010, farmed vanilla extract cost 1200 $ / kg against 10 $ / kg for vanillin (120x). After Madagascar was recently hit by cyclones and drought, the cost of cultivated vanilla extract climbed to 11000 $ US / kg (1 100 times) .... but farmers in Madagascar remain poor.
Again, what lessons can we learn?
Today, artificial cannabinoids are manufactured per ton, legally, in the United States. Production is of high quality and small scale (only "metric tons", not containers), so their prices are higher than they will be later.
As these plants move from pharmaceutical grade to food grade, the US could start producing artificial THC, CBD, and other valuable cannabinoids at costs similar to "vanillin": 10 $ / kg (compared to 3 000 $ / kg today for isolated CBD from farmed cannabis). These cost reductions will not happen overnight, but perhaps over a decade. Competition is likely to be fierce.
Just like vanillin, THC, CBD, CBG, etc. are likely to be "good enough" to meet 99% of world demand. All cannabis growers in the world will fight for the remaining 1% of world demand, and only the world's best cannabis growers, in the poorest developing countries, will survive ... if you call extreme poverty "survive" .
At this moment, you may be saying, "Simple cannabinoids are much less effective than whole plant extracts. Only one artificial cannabinoid can compete with an entire plant extract. Cannabis growers will be saved by the Entourage effect.
In the late 1970 years, a McCormick spice company sought to develop an inexpensive vanilla flavor that better matched that of farmed vanilla. First, McCormick identified the thirty or so chemical compounds - in addition to vanillin - that contribute most strongly to the flavor and aroma of pure vanilla pod extracts. Then, McCormick mixed cheap versions of these chemical compounds (mostly artificial) in exactly the same proportions as in the best farmed vanilla in the world. McCormick's vanilla imitation is perhaps 5 more expensive (50 $ / kg) than vanillin alone (10 $ / kg), but 20 is still cheaper than 200 farmed vanilla. The flavor and aroma of l'Imitation Vanilla is a "perfect match" (that is, subjectively indistinguishable) with the pure extract of the best vanilla grown in Madagascar.
Lesson for cannabis : Chemists are very likely to be able to mix artificial cannabinoids, terpenes and flavonoids in an imitation extract that is subjectively indistinguishable and as effective as extracts from the best Gorilla strain, Jack Herer, Charlotte's Web , or any other variety. In addition, such an "imitation cannabis extract" may eventually cost a wholesale "vanilla imitation" price of about 50 $ / kg (5 cents / gram) - much less than the cost of the equivalent cannabis extract breeding.
It looks incredible, does not it? As incredible as "lasagna-flavored chips" ... but still exist today, and they are the result of the same combination of chemical analysis and artificial synthesis.
Maybe now you're saying, "But the imitation cannabis extract would be artificial, and nobody likes anything artificial these days. The big brands make "all natural". Cannabis growers will be saved by the vegan movement .... !
Recently, biotechnology companies such as Evolva, Solvay and other companies have developed genetically modified yeast to produce vanillin.
Why worry about biosynthesis, whereas biosynthetic vanillin costs nearly 50 times more expensive than vanillin produced by industrialized and proven processes of artificial chemistry? And when civil society organizations opposed biosynthetic vanillin like the case of Haagen-Dazs who said "no" to synbio. Why worry?
The US Food and Drug Administration (FDA) currently defines the word "natural" as follows:
The term "natural flavor" refers to the essential oil, oleoresin, gasoline or extract, protein hydrolyzate, distillate or any roasting, heating or enzymolysis product, which contains the flavoring components derived from 'a spice, fruit or juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf or similar product, meat, seafood, poultry, eggs, dairy products or their fermentative products, which play a significant role in food as nutritious and flavor dairy products.
The definition of the European Union is similar (with some subtleties):
"Natural flavoring substance" means a flavoring substance obtained by appropriate physical, enzymatic or microbiological processes from materials of plant, animal or microbiological origin, either in its raw state or after processing for human consumption by one or more of the traditional food preparation processes listed in Schedule II [which includes fermentation].
In other words and according to these definitions, the vanilla aroma (whether it is simply vanillin or a more complex mixture of chemical compounds) can legally be described as "natural" if its aromatic chemicals have been extracted by fermentation products of genetically modified yeast strains can, legally, be labeled as 'natural vanilla flavor'.
It's not a secret. Manufacturers are boasting about it.
[Solvay's biosynthetic] Rhovanil® US NAT is a very pure, naturally occurring, easy-to-use ingredient that replaces synthetic vanillin one-to-one. This means that US food and beverage manufacturers are better positioned to provide "natural" and "clean" products without compromising consumer appeal.
But that will surely never happen to cannabis, is it?
A few months ago, the Canadian giant of cannabis The Cronos Group has invested 122 million in the US company Ginkgo Bioworks. Under the terms of the agreement, Ginkgo will genetically engineer yeast to ferment the eight cannabinoids THC (A), CBD (A), CBC (A), CBG (A), THCV (A), CBGV ( A), CBDV (A), and CBCV (A). The target price is 1 000 $ US / kg - 1 / 3 CBD price from breeding cannabis today - but this is just the beginning. Economies of scale could bring down the price much lower.
Jason Kelly, CEO of Ginkgo, said that brewing cannabinoids from yeast is "cheaper, it is not subject to weather conditions, the price is not everywhere, it is no different if you grow in Morocco or elsewhere, it's just a much better product. The reality is that the brewery economy will collapse under the weight of the agricultural economy. "
Ginkgo has already developed genetically modified yeast strains to biosynthesize other chemical compounds. Moreover, the Ginkgo is not alone. Many other companies are doing similar research. Among them, the technological problems will eventually be solved.
The eight cannabinoids listed in the Cronos-Ginkgo Agreement are just the beginning. Eventually, yeast biosynthesis will almost certainly be able to produce all the cannabinoids, terpenes and flavonoids needed to produce a vinegar oil that is subjectively indistinguishable from the extract of your favorite farmed cannabis strain - and the oil of biosynthetic vinegar can legally be marketed as "pure and natural".
One could imagine that the main cannabis growers in North America could organize to exclude the extracts of genetically modified organisms tank-brewed from the definition of "natural" of the American FDA. It will be difficult because these same "leaders of the cannabis industry" are financing the development of biosynthesized cannabinoids! Cronos invested in Ginkgo Bioworks; Organigram in Hyacinth Biologicals; Aurora Cannabis bought Anandia Laboratories etc.
Some non-governmental organizations (NGOs) oppose the legality of using the term "natural" to describe the products of biosynthesis. The declared goal of one of them, the ETC group, is to "tackle the socio-economic and ecological problems associated with new technologies that could have an impact on the poorest and most vulnerable populations in the world. world ... especially in Africa, Asia and Latin America ". It is unclear to what extent these NGOs could be concerned about the impact on North American cannabis producers.
Weaknesses of the analogy
No analogy is perfect. Vanilla is not cannabis.
There are fewer strains of vanilla than cannabis (half a dozen against countless varieties).
The vanilla plant does not produce industrial fibers, nutritious seeds or other products that are potentially as valuable as hemp.
Most of the farmed vanilla is consumed as extracts, while most of the cannabis is consumed while smoking, spraying or eating.
Highlights of the analogy
The vanilla-cannabis analogy has many advantages
- Like vanilla, cannabis is consumed for recreational purposes.
- Like vanilla, cannabis is also medically consumed.
- Consumer preference is shifting from flowers to extracts in non-smoked products (drops of oil, dabbingedible, etc.). Once the flower is replaced by extracts, the extracts are easily replaced by non-cultivated cannabinoids.
- The will of consumers to smoke non-cannabis vegetable matter impregnated with synthetic cannabinoids (K2, Spice, etc.) demonstrates that there is a demand to which non-cultivated cannabinoids can respond cost-effectively.
- The economy is the same for cannabinoids as for vanilla: it is cheaper to manufacture them by industrial chemistry than by biosynthesis; it is cheaper to biosynthesize than to import them and it is cheaper to import them than to grow them domestically.
- According to the current rules, consumer demand for "natural" products can be satisfied by vanillin and cannabinoids, terpenes and biosynthesized flavonoids.
- The excessive concentration of the cannabis industry on only two cannabinoids - THC and CBD - strengthens the analogy.
- If the market demand for oils, extracts and isolates is satisfied mainly by non-cultivated cannabis, then the only market demand for farmed cannabis will be that of connoisseurs smoking the traditional adorned cannabis flower, and that of manufacturers whose brand requires them to use "all-natural" ingredients but not biosynthetic cannabis. This demand is much lower than the multi-billion dollar projections made by "cannabis industry promoters".
- The cultivation of cannabis flowers, like the vanilla pod culture, is very labor intensive, and it is therefore likely that it will move to countries with very low labor costs, which would export through the following.
Time factor: When artificial vanilla was synthesized for the first time in 1874, it was barely cheaper than farmed vanilla. Over the next 144 years, science and engineering have improved so much that the wholesale price of vanillin is 1 / 1000e of the price of farmed vanilla. This price decline lasted more than a century.
Today, however, the pace of technological change is much faster. Other things being equal, the price of artificial and / or synthetic cannabinoids could reach 1 / 1000 of the price of farmed cannabis in twenty years, and perhaps ten - much less than a "century". Similarly, modern technology could accelerate the development of "imitation cannabis extract".
Will "time" help cannabis growers save time?
At the moment. Noramco manufactures artificial cannabinoids per ton and legally.
Consider this Cronos CEO interview about Cronos' investment in Ginkgo biosynthetic cannabinoids.
The CEO of Cronos describes the biosynthetic cannabinoids as costing 1 / 10 of the cost of initially farmed cannabinoids. As his interviewer then observed (same video, 7: 20), "This implies that this massive strengthening of the [agricultural] capacity of cannabis is already exaggerated".
The same observation was made by Alan Brochstein, who wrote cell :
"To be clear, the industry could end up being oversized if biosynthesis becomes an evolutionary technology. "
That is: Time is not on the side of cannabis growers. Unless your agricultural producers are looking for quality at an affordable price for developing countries, you are like Blockbuster in an already Netflix world.
The endocannabinoid system of the human body makes its own cannabinoids to balance the internal functions of the body. The human body does not have an "endovanillin system". Cannabis is simply more complex than vanilla.
One measure of "complexity" is the number of chemical compounds it contains. Cannabis cultivated contains 483 chemical compounds - almost three times more than vanilla grown, about the same amount as chocolate, but only half the coffee.
Scientific studies support the counter-argument of "complexity", validating the Entourage effect, indicating that cannabis chemical compounds interact with each other and with the human body in complex ways.
Look at the ingredients label of your favorite soft or energizing drink. You will probably find "caffeine", but it is unlikely that you will find "coffee". Similarly, Coke could one day add from the CBD to its sodasbut is much less likely to add "full spectrum cannabis extracts".
Most of the caffeine contained in caffeinated beverages is synthetic. The same argument applies to THC infused beer.
Simple synthetic cannabinoids are likely to be "good enough" to be used in other products, despite being inferior to natural mixtures of farmed cannabis ... especially if the price is right.
Despite the complexity of coffee, you can buy artificial flavors of coffee in the barrel. Same for chocolate. Chances are good that you have already consumed a lot ... and that they were good enough for you not to notice, or cheap enough for you to make fun of. If Coca-Cola chose to add farmed cannabis extract, it would almost certainly buy these extracts from cannabis producers in the developing world - again, for a lower price - as described here.
It has also been suggested that cannabis users will avoid artificial and / or biosynthetic cannabinoids, inexpensive imports, and instead pay a substantial premium for "good things".
Will the willingness to pay extra for high-quality artisanal cannabis save the cannabis industry?
No, for two reasons.
First, the " price Is the first purchase criterion for cannabis users. As in all other markets, at a given quality level, price is the main determinant of sales. There will, of course, be "cannabis connoisseurs" who will be willing to pay a premium for "good things". Which brings us to the next point.
Secondly, first for "good things" is not high enough to offset higher production costs.
As the old Danish proverb says: "It is difficult to make predictions, especially about the future. Nevertheless, despite this warning, I will continue to make predictions based on the analogy of vanilla with cannabis, with the caveats above, as follows.
It is likely that over the next seven years, more or less:
Artificial cannabinoids will be available on the market both as single cannabinoid isolates and mixtures of cannabinoids, terpenes and flavonoids that most consumers will consider "good enough" for most applications. They will cost about 1 / 20 (or less) of the price of equivalent derivatives of farmed cannabis. They will be labeled as "artificial ingredients".
Biosynthetic cannabinoids will also be available, but at a price that ranges from cheaper artificial cannabinoids to more expensive farmed cannabis derivatives. Biosynthetics will be labeled as "natural ingredients".
The "non-crop cannabis products" described above will together account for most of the market for cannabinoids and non-floral cannabis extracts. (Not 99%, as for vanilla, but most.)
Imports of cannabis of foreign origin will consume (for the reasons discussed here) more than 90% of the North American flower market at wholesale prices that are considerably lower than the cost of production of US growers.
Implications for the global cannabis industry
In the next seven years, cannabis will be commercially grown only in the few developing countries that can produce and export high quality, internationally certified cannabis flowers and their extracts at the lowest prices in the world. world.