Covid-19 and the Cannabis Supply Chain: A Q&A With Vanguard Scientific

As co-founder and chief executive officer of one of the foremost providers of equipment and service providers to the botanical extraction industry, Matthew Anderson of Vanguard Scientific Systems, Inc. is uniquely positioned to observe goings-on inside the cannabis extraction industry.

With many businesses and industries now experiencing disruption caused by the ongoing coronavirus pandemic, Matthew Anderson tells Analytical Cannabis of his experiences working in the supply chain over the past several months.

Alexander Beadle (AB): Before we get started, can you tell me a little bit about yourself and Vanguard Scientific?

Matthew Anderson (MA): With a background in regulated products, life sciences, and private equity, I have a heavily blended appreciation for both the art and science of life. I began my first entrepreneurial endeavor postgraduate, building a small distillery in my garage.

I entered the regulated cannabis industry during late 2014 during the Florida Senate Bill 1030 initiative. During my time in Florida, I was introduced through the Young Presidents Organization (YPO) to MacArthur Capital, LLP, a boutique private equity firm based out of Winter Park Florida and Austin Texas. I joined MacArthur as a full partner in early 2015 and subsequently participated as a regulated products subject matter expert as we built, raised, and deployed capital through three funds touching the cannabis, hemp, and supporting ancillary market segments.

Vanguard Scientific was the first investment in our first fund as well as the first follow-on investment of our second fund.

Today, Vanguard Scientific Systems, Inc. is the premier provider of equipment, systems, and performance solutions servicing the botanical extraction industry. From hemp and other plant-derived botanicals, the company's core mission is to deliver its customers the capability to manufacture the highest quality, most valued oils and extracts routinely and cost-effectively. Steeped in R&D, Vanguard Scientific is able to activate smart extraction facilities through the technology integration of superior processing systems and quality solutions. While product and producer agnostic, Vanguard Scientific has pioneered its own proprietary technology called MIDAS XII, a next-generation GMP compliant supercritical CO₂ extraction technology.

We are fortunate to work with some of the brightest minds in the industry. Moreover, I am personally able to work with men and women each day who impress and inspire my continued effort and passion for the advancement of plant sciences.

AB: The Covid-19 pandemic and subsequent lockdown measures saw significant disruption to nearly every industry on the planet. Did you see a disruption of this kind in the cannabis/botanicals extraction side of the supply chain?

MA: Absolutely.

With varied social distancing requirements mandated at different levels throughout the county, state, and country, it has been exceedingly difficult to appropriately service, install, and commission client operations, which is causing time-table delays and risking clients’ on-time execution of operating plans.

Oftentimes, the money spent with Vanguard is the largest equipment/facility expense a business will outlay – with equipment and facility improvements rapidly climbing into the millions of dollars per project. This type of capital outlay is usually tightly measured against expected or forecast revenues, which in the best cases have been solidified through contract purchase agreements. The delays in infrastructure build-out, pre-engineering, installation, and commissioning have placed multiple clients in delays which have caused down-stream rippling effects with their buyers, thereby threatening the businesses' revenue plans.

I am proud to report that Vanguard has resumed installation and commissioning during the month of June, implementing rigorous best-practices for health confirmation through methods such as Covid-19 testing for all engineers traveling to client facilities, mandatory PPE, and remote servicing and commissioning when in-person services are not permissible. 

AB: As cities and states begin to emerge from lockdown, do you think this pandemic will have a lasting effect on the extraction industry? Could we maybe be seeing more calls for increased automation in the future?

MA: I think we will see new technology revolutions throughout many industries as a result of this newly experienced remote working environment of tomorrow's business reality.

Specifically to extraction, Vanguard is leading the effort in advancing processing automation and digital reporting. With federal and internationally regulated standards for consumable ingredients still grappling with how to harmonize a set of best practices that will ensure consumer safety, Vanguard's Quality team continues to develop QMS [Quality Management System] products that meet the operator where they are today, and that encourage improved conformance to uniform operating procedures.

Not only are our processing and extraction systems themselves becoming increasingly more automated, but the supply chain validation and qualification requirements are now enabled by digital audits through the technology advancements that ourselves and our partners have made over the past nine months.

Below are a selection of specific technology capabilities we offer to clients that are enabling automated/remote working realities that suite the Covid-19 global environment:

• Vanguard's MIDAS XII CO₂ extraction system is completely automated, offering pre-programmed extraction cycles with on-board sensor-based machine learning that adjusts the parameters of the extraction to optimize efficiency as well as final ingredient quality without relying on the operator's understanding of precision tunability.
• Vanguard's VS + software application enables remote viewing of the MIDAS system through an application or web-based portal access, giving both clients and client-engineers the ability to monitor and troubleshoot, as well as provide predictive and preventative support to operators globally.
• In collaboration with our technology partner Rymedi, Vanguard gives clients immutable ledger capabilities to remotely track and trace the entirety of the cannabinoid supply-chain at varying levels of quality and GMP rigor. Not only does this capability reduce loss/waste/non-conformity of final products, but also during this time of Covid-19 it provides an invaluable ability for digital systems to replace the “high-touch” QA/QC [quality assurance/quality control] environments traditionally employed.

AB: How do you see the cannabis and hemp extraction industry evolving over the next few years? In terms of regulation, best practices, etc.?

MA: There will be a divergence around cannabinoid production in the next few years. Active pharmaceutical ingredients (APIs) will define the minor-cannabinoid opportunity, and firms like GW Pharmaceuticals have already laid the foundational clinical trial work for CBD and thereby all cannabinoids as small molecule drugs or APIs. This reality will force a rapid and rigorous up-regulation of all those supply-chain participants seeking to manufacture CBD, CBG, and similar products for human consumption within the US.

Similarly, EU progress and the adoption of cEUGMP [current EU Good Manufacturing Practice] rigor for supply chain qualification can be seen as a large supporting driver of the international pharmaceutical standardization for cannabinoid manufacturing and dispensing.

As with the nutraceutical industry in the US, ahead of federal regulation and enforcement of those regulations, you will see supply-chain participants opting-in to higher levels of quality control/cGMP standards as a means of commercial competition.

The consumer packaged goods or pharmaceuticals buyer who seeks to purchase or manufacture cannabinoids for their formulated products will be bound by strictly mandated procurement guidelines from their Home Office. Only those that are operating their businesses against the future realities of a globally regulated cannabinoid industry will be able to accept and fulfill these large and very valuable contracts.

AB: What are Vanguard Scientific's goals as a company for the future?

MA: An overarching goal for our company is the continued and purposeful growth and diversification of business practices to enhance our ability to return value to our clients, as well as to advance the science and technological application of the expertise found in other industries. We have the express interest to advance not only the plant sciences of cannabis and hemp, but also the incredible range of medicinal and aromatic plants (MAPs) that have been appreciated by global cultures and indigenous tribes around the world as important and respected ingredients that are integral to the health and healing of humanities physical and mental well-being.

Vanguard's system division continues to design and develop leading-edge technologies to improve extraction and post-processing best-practices, while also engaging in multi-party collaborative engineering projects to bring new commercially-viable technologies to life.

Our solutions division is tailored to facilitate our clients' ability to define and execute against their project success-metrics. Vanguard's innovation division is a collaboratively designed department which focuses on research and development of novel technologies and applications in the field of plant sciences.

In collaboration with universities and international entities seeking non-profit and commercial advancements, Vanguard's team of engineers, physicists and strategists work in the spirit of IP-sharing and open source communication in the interest of advancing the industries in which we work.

AB: Is there anything else about Vanguard Scientific or the industry that you would like to highlight?

MA: The cannabis and hemp plants can and will have an incredible impact on society and the economy as a whole. Medicinal benefits from specific and combined properties within the plant will not only provide natural solutions to previous pharmaceuticals, but the reality of combination-based treatments versus single-narcotic therapies will disrupt the current landscape of medicine. Whole plant medicines and a structured understanding of the entourage effects on the endocannabinoid system and other body systems will lead to an evolution in understanding how our body interacts with the world around us.

Further, plastics, paper, building materials, and fuel sources will all be significantly disrupted through the commercialization of hemp and similar fast-fiber crops, which collectively will present opportunities to significantly reduce carbon emissions, waste generation, and the overall pollution and degradation of our ecosystem.

I firmly believe that we are on the verge of evolution, not revolution, and I am thrilled and humbled to be in the position to lead Vanguard Scientific as we look to contribute our time and meaningful work to the betterment of mankind, all living creatures and the world around us.

Thank you for the opportunity to share!

Matthew Anderson was speaking to Alexander Beadle, science writer for Analytical Cannabis. Responses have been edited for length.