In the recent magazine (Marijuana Ventures) article, Lilu’s Garden was featured. The potential huge impact LiLu’s Garden will have on the industry is focussed on their ability to process hemp into CBD, using aqueous extraction (i.e. water extraction).
Summary: LiLu’s Garden has some huge volume water extraction process, that is commandeering the industry. Exciting and concerning simultaneously, since they will quickly dominate the market with a monopoly.
Technology Review: The website says they have multiple patents. From the limited amount of photos (very normal with proprietary technologies), we can only guess what they are using. For huge extraction on this scale, there is one industry that is already doing it, it’s called steam distillation. While ultrasonic extraction works on a small scale, using high frequency radiowaves isn’t likely on a huge scale. In the mint and lavender industry, they use a method proven over the past thousand years, call steam distillation. Basically, steam is perculated from below the biomass (in this case hemp) and essential oils are released into the steam, which is then condensed to produce hydrosol (mixture of both water infused with plant products, and oil). The oil (hydrophobic) naturally separates from the top, and is easily filtered off. While this method is easy to do, it is expensive for the steam production (typically done with natural gas), slow, and in-efficient. The benefit of this process is that you can easily do 30,000 acres in one fail swoop. If you’re only going for CBD’s, it’s a interesting strategy. What is left behind in the hemp biomass ? Probably around 30 percent. But when you’re doing huge volume, who cares ? The Costco Business Model in this case, is to trounce all of your competitors and squash them, but producing large volumes to push the price low. They tried this in the cannabis industry on the west coast with disastrous results (market bottom fell out and everybody lost money).
Process Extraction: Our best guess is that the employ several extraction strategies. The first wave is steam distillation. Since that inefficient process is probably less than 70 percent efficient, the leftovers are then combined with ultrasonics and CO2 extraction (sold as separate products). Steam distillation pulls out all the terpenes into the hydrosol (basically the water condensation). The terpenes are the flavinoids (and contain valuable phytonutrients) probably sold separately, or just dumped out. For huge scale CBD isolate, our guess is that they have large CPC (centrifugal partition chromatography), or use low cost large numbers of commercial water softeners with qualified media for the CBD filtering (called chromatography), or use Reverse Osmosis Water Filteration machines with the proprietary carbon media that was developed by United Science (hence the lawsuit against them). If you research ethanol extraction technology, many processors filter out the poor quality extract that has green bitter chlorophyll, with carbon filters, which are basically activated carbon for absorption. It’s those same carbon filters that filter out most of the CBD’s, which means that ethanol processors that use carbon filtration, have poor quality extracts, and they pass that on to the consumer is high quality, when it’s not. The smart thinking person would just use carbon filtration to do what it does best, filter out the CBD’s then remove the CBD’s from the carbon. Brilliant ! Very efficient, and very cost effective. The photos of reverse osmosis water filters are a great distraction for the common man, when may be used as the CBD process (i.e. when you want to hide something, hide it in plain site).
Activated Carbon: “Also called activated charcoal, activated carbon is a form of carbon that has been processed to have an incredibly large surface area. Tiny, low-volume pores provide a surface for either adsorption or chemical reactions. One gram of activated carbon has over 32,000 square feet (3,000 square meters) of surface area — and one teaspoon has roughly the area of a football field. This enormous area alone makes activated carbon extremely useful for a wide range of applications, but activated carbon can undergo further chemical treatment to increase its adsorption properties. Activated carbon is derived from a carbonaceous source material. Examples include wood, bamboo, sawdust, willow peat, coconut shell, peach pits, coir, petroleum pitch, and a variety of coal. But regular carbon isn’t the same as activated carbon. To form millions of tiny pores across its surface, carbon must first be activated.” Source: https://www.carbonblocktech.com/the-science-behind-activated-carbon-water-filters/
Recycling or Recharging Activated Carbon: Once carbon pores are filled up with your desired components (i.e. CBD’s) how do you get them out ? A process called temperature-induced desorption. Reactivation. The beauty of carbon (charcoal) is that the filtration process can be reversed. In this case, a elegant and simple reactivation would be using the reverse osmosis filtration technology, which uses pressure and water. This is probably the IP in the patent applications.
Seeding Yeast With Hemp CBD or more preferred CBGA: Another novel way to make CBD’s is to seed bakers yeast with organic hemp CBD, then grow via yeast culture. The basic methodology is, “By loading brewer’s yeast with genes from the cannabis plant, they’ve turned the miracle microbes into cannabinoid factories. It’s a clever scheme in a larger movement to methodically pick apart and recreate marijuana’s many compounds, to better understand the plant’s true potential.” Pretty interesting. They continue, “Having a vat of yeast churning out pure, non-psychoactive CBD promises to massively simplify production. “Being able to produce that in a way that’s uncontaminated with THC is a pretty valuable thing,” says Keasling. Especially since the FDA might want to have a word with you if you accidentally dose patients with a psychoactive substance. Cannabinoid-producing yeast may also make it easier to study cannabis in the first place. We’re talking about a wildly complicated plant here, with more than 100 different known cannabinoids so far. Some of these compounds are more prevalent than others—modern cannabis strains are packed with THC, because cultivators have bred strains to be ever more intoxicating over the years. But a cannabinoid like tetrahydrocannabivarin, or THCV, shows up in much lower amounts. “Now we’re going to have a handle on being able to produce these things in a pure way, and in a relatively simple way, that maybe we can start to test what their functions are,” says Keasling. Engineered yeast have been used to tackle the scarcity problem in other ways before. In the 1960s, researchers discovered that the taxanes from Pacific yew tree bark can fight cancer. All well and good, except for the Pacific yew, which conservationists feared would go extinct in the hands of an eager medical establishment. But as with this cannabinoid-producing yeast, researchers engineered microbes to help make the drug—deforestation-free. For cannabinoids, the key benefit is scale. The idea is that you could crank out vast amounts of CBD in vats far more easily than by planting greenhouse after greenhouse of cannabis plants. (Which is not to say some folks won’t still appreciate their cannabis grown the old fashioned way.) But to make it as efficient as possible, you’d need to work with the highest possible concentrations of cannabinoids. That is, you’d want optimize your yeast to churn out a whole lot of product.”
Intellectual Property: Patents Pending (design and utility patents). This means that patents have been filed, not granted. It usually takes around two years to get a patent granted, if it is truly patentable. “Lilu’s operates the Owenton facility armed with its patent-pending Aqueous Extraction technology and the ability to process over 300,000 lbs. of hemp biomass per day. That’s roughly 865 kilograms of isolated CBD per hour which is equivalent to Lilu’s Garden annually processing the entirety of the 2018 production of hemp, by itself. Lilu’s Garden is the proud parent of nine patents-pending and which include design patents for equipment, utility patents for processes on several applications including Water Soluble CBD and other Cannabinoids and of course our pièce de résistance, the Aqueous Extraction process.” Source: https://www.lilusgarden.com/lilusgarden/
Why do Investors Like IP ? IP is basically useless. Look at Apple and Samsung. Competitors copy technology and it gets mired in courts for years. The successful entrepreneurs develop new technology quickly, produce as efficiently and low cost as possible, which reduces or eliminates competition. Good developerss have updated technology ever other year, so the time it takes to get a published patent (i.e. granted) is around two years. Basically, the legal people get wealthy in court. Look at Apple and Samsung. Investors will pump money into your bank if they have perceived value and security that you have the legal veil as a foundation. The reality is that it doesn’t work well, and costs huge amounts of money to file, maintain, and defend patents.
Scale by Volume, not Quality: “There are a multitude of other benefits that Lilu’s scale and processes bring to the table. While other companies are demanding only the highest potency of CBD biomass, greatly limiting their options of available hemp stock, we are not. Other hemp processors have very limited processing power and are therefore forced to run only the highest potencies in an effort to maximize derivative output, Lilu’s can, simply put, process all of it. Allowing for non-feminized seed production and lower potency CBD varieties greatly increases our farming partners chances of success, it keeps costs down and allows for the most important factor, SCALE!” Source: https://www.lilusgarden.com/lilusgarden/
Production Output: “Lilu’s Garden estimates that approximately 20% of its 2019 harvest will be utilized in food and beverage products; 20% will be added to nutraceuticals; 20% will go to pet care; 20% will be consumed by the cannabis and specialty products market; 10% will be added to cosmetics products; and 10% will go to vaporizers and electronic cigarettes.” Source: https://www.businesswire.com/news/home/20190321005092/en/Lilu’s-Garden-Predicts-Record-2019-Hemp-Harvest/
Bloomberg CBD:“The U.S. market for it could be worth more than $20 billion by 2022, compared with about $600 million last year, according to cannabis analytics company Brightfield Group. As a result, hemp planted in the U.S. tripled to more than 75,000 acres last year, and is expected to double again in 2019, said Eric Steenstra, president of the Washington, D.C.-based hemp advocacy group called Vote Hemp… We believe hemp products are going to be a tremendous opportunity — potentially as big as cannabis,” said David Goldburg, a managing partner at Merida Capital, which is a $125 million private equity firm that focuses on cannabis investments that include CBD products. In addition to CBD, hemp can be used to make apparel and building materials.” Source: https://www.bloomberg.com/news/articles/2019-04-17/hemp-in-spinach-out-as-investors-throw-money-at-newly-legal-cbd
Trust But Verify: If you buy any volume amounts of CBD, acquire and learn how to operate a analyzing machine to produce your own COA’s (Certificate of Analysis) so you can verify that it is actually organic hemp derived CBD and not synthetic CBD’s from China. LiLu’s website claims to have available COA’s, but if you try to click on the link, nothing happens. Source: https://www.lilusgarden.com/products/ “All Lilu’s hemp extract products undergo full panel lab testing. See COA + MSDS + Product Spec Chart”
Lawsuits and Legal Actions: LiLu’s has some odd lawsuits. Apparently they were at one time working with United Science LLC ( https://unitedscience.com ) which has Jon Thompson, PhD, and CEO and Doug Fryer as scientist. Dr. Thompson has “A strategic marketing professional with a strong technical background and industry experience in analytical instrumentation, in-vitro diagnostics, biotech, mining, and the homeland security markets. Market development experience includes M/A targeting & strategy formulation, and market research & plans. I have significant experience in worldwide business-to-business functions including product management, product development, technical sales, strategic marketing, and business alliance formation. International experience in Europe and Japan.” Jon Thompson also is CEO of https://extraktlab.com in Wisconsin. Extrakt Labs produces the Drain Droyd, and CO2 processing extraction equipment, and provide carbon filters. They also do facility design, “United Science specializes in the design of scalable cannabis manufacturing facilities since 2014. With dozens of facilities currently operating as designed, United Science deploys designs based on proven facility workflow, material flow, equipment placement, and scalability. The proven designs are based on United Science’s highly scalable and high throughput manufacturing process, which have a radical impact on: Labor – Facility footprint at scale – Power requirements at scale. Whether you are building from scratch or retrofitting an existing building to meet your manufacturing and packaging needs, we have you and your team covered with expert advice.” More importantly, “It’s All About Scale Up.
With our extensive knowledge on designing and engineering cannabis manufacturing facilities, we can help you build scale into your design. Using a simple approach to scale, we help identify the critical infrastructure needed to accommodate up to 2000 tons per year of processing capacity. Source: https://extraktlab.com/facility-design-and-layout/ Authorizations (pdf): https://extraktlab.com/wp-content/uploads/2017/03/SUnited-Sci17031616500.pdf
So it would appear that LiLu’s Garden may have initially contracted United Science to do the initial design, and they parted ways. The April 10, 2018 Federal Lawsuit against SLC1, LLC (SLC1, LLC dba Sweet Leaf Capital 1, LLC and Sweet Leaf Capital Management, LLC) was thrown out, due to insufficient jurisdiction. All requests to extend the lawsuit were dismissed. Case was closed. So it appears that they were trying to rattle the cage of Dr. Thompson. SLC1 formally Sweet Leaf Capital has some documentation here: http://www.dbo.ca.gov/ENF/pdf/2018/SLC1%20LLC-Consent%20Order.pdf
240 Saint Paul St, Ste 315
Denver, CO 80206-5115
1807 S Pearl St
Denver, CO 80210-3136
Slc1, LLC Overview
Slc1, LLC filed as a Foreign in the State of California on Monday, May 8, 2017 and is approximately two years old, according to public records filed with California Secretary of State. A corporate filing is called a foreign filing when an existing corporate entity files in a state other than the state they originally filed in. This does not necessarily mean that they are from outside the United States.
United States District Court District of Colorado – 28:1332 Diversity-Breach of Fiduciary Duty – Party Names: United Science LLC, Defendant
Lilu’s Garden, LTD, Plaintiff
SLC1, LLC, Plaintiff
Sweet Leaf Capital 1, LLC, Plaintiff
They then started another lawsuit, and this one was even more bizarre, challenging Dr. Thompsons citizenship, and trying to identify his coworkers citizenship. The May 18, 2018
Lilu’s Garden, Ltd. v. United Sci. LLC “Plaintiffs do not dispute that their allegations are presently insufficient to establish federal jurisdiction. Instead, they request an extension of time and the Court’s authorization to depose Mr. Thompson regarding the names and citizenship of any additional members of United Science LLC.” “Because plaintiffs have failed to establish that the Court has subject matter jurisdiction over this case, it is Ordered that this case is closed.”
Filed: April 10, 2018 as 1:2018cv00842
Plaintiff: Lilu’s Garden, LTD , SLC1, LLC
Defendant: United Science LLC
Cause Of Action: Diversity-Breach of Fiduciary Duty
Court: Tenth Circuit › Colorado › US District Court for the District of Colorado
Type: Torts – Property › Other Fraud”
Result: “ORDERED that this case is dismissed without prejudice due to the Court’s lack of subject matter jurisdiction. ORDERED that this case is closed.”
Lilu’s Garden, LTD. et al v. Thompson
Filed: May 18, 2018 as 1:2018cv01234
Plaintiff: Lilu’s Garden, LTD. , SLC1, LLC
Defendant: Jonathan Thompson
Cause Of Action: Diversity-Fraud
Court: Tenth Circuit › Colorado › US District Court for the District of Colorado
Type: Torts – Property › Other Personal Property Damage
Lilu’s Garden, LTD et al v. United Science LLC
On Friday, May 5, 2017, a U.S. federal trademark registration was filed for LILU’S GARDEN. The USPTO has given the LILU’S GARDEN trademark serial number of 87438280. The current federal status of this trademark filing is ABANDONED – FAILURE TO RESPOND OR LATE RESPONSE. The correspondent listed for LILU’S GARDEN is GUEL, THOMAS of 1940 ELMWOOD AVENUE, BERWYN, IL 60402, . The LILU’S GARDEN trademark is filed in the category of Smoker’s Products . The description provided to the USPTO for LILU’S GARDEN is Electronic cigarette liquid (e-liquid) comprised of flavorings in liquid form, other than essential oils, used to refill electronic cigarette cartridges; Smokeless cigar vaporizer pipes; Smokeless cigarette vaporizer pipe; Smokers’ oral vaporizer refill cartridges sold empty. Source: https://trademark.trademarkia.com/lilus-garden-87438280.html
Word Mark LILU’S GARDEN
Goods and Services (ABANDONED) IC 034. US 002 008 009 017. G & S: Electronic cigarette liquid (e-liquid) comprised of flavorings in liquid form, other than essential oils, used to refill electronic cigarette cartridges; Smokeless cigar vaporizer pipes; Smokeless cigarette vaporizer pipe; Smokers’ oral vaporizer refill cartridges sold empty. FIRST USE: 20160401. FIRST USE IN COMMERCE: 20160401
Standard Characters Claimed
Mark Drawing Code (4) STANDARD CHARACTER MARK
Serial Number 87438280
Filing Date May 5, 2017
Current Basis 1A
Original Filing Basis 1A
Owner (APPLICANT) Guel, Thomas INDIVIDUAL UNITED STATES 1940 Elmwood Avenue Berwyn ILLINOIS 60402
Type of Mark TRADEMARK
Other Data The name(s), portrait(s), and/or signature(s) shown in the mark does not identify a particular living individual.
Live/Dead Indicator DEAD
Abandonment Date February 21, 2018 Source: http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4805:yge9vt.2.1
LiLu’s Garden Info: Lilu’s Garden Ltd
999 18th St. Ste. 3000, Denver, Colorado, 80202
From Zoom Info: Revenue: $9.8 million 49 employees
Production: 300,000 lbs/day 136078 kg day
865 kg cbd isolate per hour = 20,760 kg day (source: their website)
For more technology information on water processing, please contact Infinity Supercritical. Infinity uses hydrodynamic cavitation for a one-step craft extraction using water. Full spectrum hemp CBD oil first pass.
Steam Distillation for Terpenes: Here’s an interesting thread with some COA’s on steam distilled cannabis. Source: https://future4200.com/t/steam-distilled-hemp-terpenes/11550
COA from same source: OctoElectraTerps
Review Blog Opinion by: Infinity Supercritical Staff