On to the pot of gold
Leading packaging automation integrator switches its strategic focus to help Canada’s fledgling recreational cannabis market get on solid footing
May 22, 2019
For an industry that was tipped to pump billions into government coffers and stimulate the economy into a flurry of job and wealth creation, the early estimates and projections generated by Canada’s legalized marijuana market are a real buzzkill.
With the Ontario Cannabis Store (OCS) expecting to lose $25 million in the first year of the new adult-use pot market, and legal cannabis prices still nowhere near competitive with the black market, the industry’s early growing pains are a sobering indictment of insufficient planning, forethought or preparation in the months leading up to national marijuana legalization via the Cannabis Act on Oct. 17, 2019.
That said, any such early setbacks have to be seen in the context of a much bigger picture of billions of dollars being invested into Canada’s 200 or so LG (licensed grower) and LP (licensed producer) cannabis
suppliers to make them early leaders in a market estimated to be worth at least $6 billion by 2024.
For many of those companies, setting aside a good portion of those funds to invest in new automated processing and packaging equipment—along with leading-edge systems integration—is an unavoidable cost of business and market access.
“Many of the LP startup companies simply have too many low-skill people employed to roll joints by hand all day long, which is both expensive and time-consuming,” says Blair Sachs, director of technical services at Orangeville, Ont.-based automated packaging technologies integrator PLAN LP Automation, a sister company of well-established Canadian packaging machinery distributor PLAN Automation.
As a new company created specifically to service the Canadian cannabis LP producers, PLAN LP Automation has already familiarized itself with the basic tenets of the cannabis business by executing some line integration projects at leading Canadian medical marijuana producers, with considerable success.
However, replicating that success on a much larger scale in much vaster recreational pot market will be a challenge, according to PLAN LP Automation’s chief executive officer.
For many people in LP companies’ senior management ranks this will be their first-ever experience with processing and packaging automation, Perreault says, so their choice of a systems integration partner to work with will be critical to the ultimate success of any major capital investment project.
“There are LP companies with only limited knowledge about plant operations or equipment requirements,” Perreault says, pointing the finger of accusation at government’s eagerness to legalize cannabis before
having an adequate retail and supply chain infrastructure in place.
“Companies in Colorado and Washington have been doing it for 10 years,” Perreault says, “so there is a huge competitive gap to fill in terms of production efficiency and employee skillsets.
“Although Canadian companies are fairly competent at the growing and extraction part of the business, now that they realize they need a cost-effective way to put their product into packages, they are finding they don’t have the resources or the people to do that properly.”
While bringing theses companies packaging automation competencies up to par will undoubtedly require an intense learning curve, PLAN LP Automation is already using its clout in the cannabis sector by becoming the first authorized Canadian distributor for the fully-automated Cone Rolling Robot machines manufactured in Israel by Hefestus Technologies Ltd.
According to Perreault and Sachs, several leading Canadian LPs have already placed orders for multiple installations of the compact rotary machines capable of producing up to 2,400 perfectly-rolled half-gram and one-gram cannabis cones per hour—requiring only machine operator to control two systems at a time.
Originally developed for use in Israel’s highly advanced medical marijuana industry, the Cone Rolling Robots represent a giant technological leap over the Canadian pot industry’s current manual methods of
filling retail cones with the semi-automated Rocket-Box pre-roll machines requiring a lot of manual operator input.
As Sachs explains, the Cone Rolling Robot machines come with an on-board processing system that automatically removes the stems and other debris from processed cannabis and grinds the remaining buds to uniform size to produce consistently dense, read-to-smoke cones with unfailing accuracy of within one-percent deviation of the target fill.
Using standard Futurola or Cones.nl brands of tapered cones outfitted with thin paperboard ends for user-friendly handling.
“These are very easy machines to use,” say Sachs, noting Hefestus also offers smaller-capacity versions of the Cone Rolling Robot machine with throughput rates of 300 or 1,000 cones per hour.
While obtaining the license to market Hefestus Technologies equipment in Canada is definitely a feather in PLAN LP Automation’s hat, machinery alone will not make LPs sufficiently competitive if not accompanied by proper systems integration of the entire packaging line to optimize production efficiencies.
According to Perreault, choosing the right integrator to achieve those levels of competence is fraught with many caveat emptor (buyer beware) risks and predicaments.
“There is nothing to stop anyone calling themselves an integrator,” Perreault says, “and there are many equipment manufacturers out there who think they can also integrate their equipment into a packaging line because they built the equipment.
“However, proper integrators will assess all the different variables involved to provide a proper solution to the end-user, advocating in objective fashion as how it will fill their needs,” Perreault explains.
“Many manufacturers inherently have an interest in their own products,” he points out, “but that may well distort or upset the integrity of what they are offering, with no incentive to providing other solutions that
may be available to the user.
“In contrast, a true integrator must advocate a solution that objectively focuses on the dynamics of the project at hand without any financial links or obligations to outside influences.”
Says Perreault: “A real integrator will evaluate all the different options and all the right solutions to get the real skillsets required to complete the project, on budget, based on the projected outcome of the line––how fast you want the line to run, how efficient you want it to be, how many rejects will you tolerate, etc.”
As Perreault points out, packaging automation is relatively niche segment of the much bigger and broader industrial automation systems integration market, so experience and acquired expertise are more valuable
assets than size and scale.
“Just having many have engineers on staff doesn’t mean that they will be very good in the packaging automation segment,” he says. “Diffused experience is no match for focused experience in a very narrow
discipline like packaging automation.
“You really need to have the right skillset and the ability to correspond and support the customer with the solution you pick for them,” says Perreault, citing a simple labeler changeover as a cause of line downtime at one cannabis operation.
According to Perreault, PLAN LP has already competed over 20 turnkey line integration projects a various LP operations across Canada, including capsule, joint, dry product, beverage and edibles lines.
With edible cannabis products widely expected to be rolled out in Canada this fall, Perreault in fact expects the company’s revenues from cannabis business to far exceed its traditional sources of income in the food-and-beverage industries within a year.
“You have maybe four our five new food plants opening up in Canada next year,” he says, “whereas you will have dozens of new LP plants opening up to do all kinds of capsules in bottles, weed in cans, joints in folding cartons, gummies and all other manner of packaged product.
“So while we’re not the kind of company to put all our eggs in one basket, that’s where the growth is right now,” Perreault states, adding he expects the recreational cannabis business to start generating significant
revenue growth over the next couple of years at the expense of black market operators.
Staffed by a team of nearly 50 top-notch technical experts and authorized vendor status for some of the most advanced packaging, product inspection and sanitary systems in the business, PLAN LP Automation has amassed enough experience and goodwill over the years of serving food-and-beverage industry to earn the luxury of being able to choose the clients it wants to work with, Perreault points out.
“Credibility is very important in this business,” says Perreault, “because it set the stage for a proper dialogue.”
As Perrault asserts, having an honest exchange of information is the starting point for establishing genuine mutual trust.
Says Perreault: “When talking about capital investment, the first thing we want to know from clients is if they have a handle on their supply chain strategy, how many SKUs (stock-keeping units) they have, how
often they sell those SKUs, if they have cost accounting in their operations, if they need to have validate the GMPs (good manufacturing practices) in place, and all the other factors that will have an impact on the final project outcome.”
Above all, PLAN LP Automation fully guarantees a successful outcome of all the line solutions selected by its clients, Perreault points out, minimizing the financial risk for clients.
“We vet the equipment vendors, validate the equipment, prepare FATs (factory acceptance tests), we assemble the equipment, install it, provide the training, and any other required follow-up support.”
As Perreault concludes, “We have the portfolio, the experience, the skillset, the solutions, and expertise in packaging automation to support the growth of Canadian cannabis industry by offering our clients unbiased, guaranteed, truly objective, and highly effective line solutions to our LP clients.”