In the mid-1800s, hundreds of thousands of people arrived in California in search of gold. With sweat on their foreheads, men and women worked tirelessly day and night to benefit from the precious metal found in the golden state. The first man to find gold, and the reason the gold rush even began, was James W. Marshall.
While the Gold Rush is long gone, there is a new rush taking over different parts of the country: CBD. Just in the past year, the market for CBD products has grown exponentially. And many can agree that the modern James W. Marshall is the Socati corporation.
CBD, or cannabidiol, is one of the 113 chemical compounds found in the hemp plant. Although it is one of the components, it does not produce a “high” by itself, nor, according to a report by the World Health Organization, does it have the potential for abuse or dependency.
In recent years, different health benefits have been attributed to this component, including the possible treating of childhood epilepsy syndromes, anxiety, and even insomnia. More and more studies continue to be conducted to further study CBD and its other possible health benefits.
The Socati company, founded in 2018, is the recognized leader in the cannabinoid sector. From its beginning, Socati has used advanced processes that remove the THC from the hemp plant extracts.
We spoke with Mark Elfenbein—Chief Revenue Officer at Socati—about what makes Socati so unique as a company and what the future of CBD looks like. This interview has been edited for length and clarity.
Green Living: What has Socati’s journey towards becoming the leader in the cannabinoid sector been like?
Mark Elfenbein: From day one, Socati has always distinguished itself for trust, quality, and consistency. We’ve always focused on the high end of the market, and we’ve been very appealing to brands for these same reasons. There’s many thousands of CBD brands. There weren’t that many a year or two ago. The top end of that market are brands that care about quality, consistency, and transparency. And that bottom half does not, and we have never been focused on that bottom half of the market. We focus on brands that align with our values and our vision.
Socati’s position in the marketplace was to create a broad spectrum material in which the THC was fully remediated but still left very high potencies of CBD and minor cannabinoids, which are becoming increasingly more important as they’re being studied. So, the first ever product that we shipped was already at a wide spectrum that included these minor cannabinoids. These have done well.
We were the first on the market to have the broad spectrum of USDA organic products. And we made sure to have non-gmo products, even before those gained popularity in the past year. We built a reputation where brands know what to expect of us every time they order. We have always tried to be a year ahead of the competition in terms of the standards expected. We run a higher cost operation that ensures a greater quality. We knew that to be successful for the long haul mounted to aligning with the target brands, and that is where we had to be efficient.
GL: How has the market for CBD products changed in the past couple years?
ME: When we came into the marketplace a few years ago, there wasn’t a lot of supply in the marketplace and there wasn’t really anyone providing anything beyond the CBD isolate, so as a result we had a very significant demand for the ability to customize different CBD products with minor cannabinoids. Things did shift. About a year ago, the FDA released additional information. This steback the industry a bit (He speaks a bit about FDA regulations that prohibit them from placing it in their food and drinks yet, let me know if you want some quotes on that).
Foot traffic has dropped since COVID. There has been an online shift that has affected some businesses but helped others. CBD sales have skyrocketed. A couple years ago the industry was really small. It was in the low couple hundred million dollars a year of total industry sales. But in 2019, that number pushed up to over a billion, and in 2020 that number will double. Projections were even higher but they dropped due to COVID setbacks and FDA. The growth is staggering. Over 75 million Americans will try CBD at least once this year.
It’s way more mainstream. You have a lot of people using CBD as alternatives to different ailments. A lot is pointing people towards working with CBD.
GL: What does the manufacturing process look like now? How is it different than it was before?
ME: The main thing that has occurred in the manufacturing process is that the cost of production has gone down. Those prices in the past couple years have significantly dropped. As a result, the cost of oil extraction has dropped. So, prices have dropped as well for consumers.
In terms of innovation, we now have the ability to extract and separate minor cannabinoids that can help us create specific products. Socati is the first company to actually be able to produce in large volume a broad spectrum USDA organic certified material. In current trends in the marketplace this is becoming a lot more important than it was a year ago. The sales of organic have increased about 50%.
GL: What are the current trends in the CBD industry?
ME: Gummies are very popular. At the consumer level, they’re the number one way through which people ingest CBD. And even more specifically, USDA organic gummies. Another trend are the water soluble products. We produce a stick pack of CBD powder that can be dropped into water; we have a version for coffee that is also a sweetener. It provides a daily dose of CBD with convenience.
GL: What does the company’s relationship with the different retailers look like?
ME: We usually ship to the brands. Socati is providing the ingredients that go to the products in these brands. The brands distribute to retailers. Retailers know about Socati because they carry the brand that uses our product. And brands that use Socati’s products are making quality products.
GL: What is expected in the near future for the market of CBD products?
ME: A lot is going to be tied to the FDA information that might allow the marketing of CBD in the form of dietary supplements. It will probably be available at big retailers. If retailers like Walmart, Target, Costco start selling CBD this will greatly impact the market and popularize CBD. This will be the number one most impactful thing.
For more information about Socati, visit www.socati.com.