Global Cannabinoids CEO and Chief Business Developer, Ryan Lewis said he never expected to become one of the leading bulk and wholesale suppliers of hand sanitizers, but he just stumbled on it.
A big part of Global Cannabinoids is staying on top of moves in the market. To accomplish this, the company has a dedicated team that analyzes online search results to see which ingredients are trending. In January, they noticed a spike in searches for hand sanitizer. That’s when the wheels started turning.
“Cannabinoids have antibacterial and antimicrobial properties. So knowing all this about cannabinoids, it made for a logical addition into a hand sanitizer, an ingredient formulation intended to kill bacteria.”
The ethanol opportunity
“What a lot of people don't know is that ethanol, which is the main ingredient in hand sanitizer, is actually the main solvent we use to produce CBD oil. I built supply chains for ethanol to our extractions facilities for the last 5 years.”
That’s when the producer, manufacturer, and distributor of hemp derived cannabinoids identified the opportunity to shift its vast supply chain of ethanol toward the production of hand sanitizers.
“We’re well-positioned, so I created a new company called Global Sanitizer Technologies, and we literally just started building out the supply chain for hand sanitizer production in the united states.”
Lewis told us that the decision to launch a CBD/CBG infused hand sanitizer was almost immediate.
“So I went to our manufacturers and said ‘hey, make a quarter million hand sanitizers, add CBD and CBG, here’s our formula,’ and they said ‘yeah no problem.’”
Lewis contacted several of his longtime suppliers and was able to secure the delivery of hundreds of thousands of gallons of denatured ethanol, approved by the FDA for topical use, toward the largest OTC manufacturers of hand sanitizers in the US. Up until a couple of weeks ago, all hand sanitizer had to be manufactured in OTC facilities under strict FDA guidelines. On March 20, the agency issued a guidance that loosened those restrictions in an effort to boost the supply of these products.
By getting a head start on the hand sanitizer craze, Lewis said this allowed his company to have an immediate production capacity and supply available to start distributing sanitizer. “And that really put us on the map.”
Indeed, Lewis told us that hand sanitizer sales in the last three months were bigger than all the sales they did for cannabinoids in the preceding year. Earlier this month, Global Sanitizers, the entity Lewis formed to house the new business, announced that it secured over $15 million in hand sanitizer orders in a one-week period.
Customers have the option of purchasing sanitizer with or without cannabinoids. Lewis added that they are in the sanitizer business for the long term, and the business decisions he makes reflect that.
“We literally have nothing that comes from China.”
Lewis told NutraIngredients-USA that he never gets involved in a business where he has no control of the supply chain.
“When I got into the hemp industry, it was the very beginning. There was no hemp industry. It had just been legalized. So I moved to colorado to build the supply chain for it. I didn't want to sit around and wait for a supplier, I wanted to be the supplier. So that's how I'm taking the approach to hand sanitizer production.”
Lewis prides himself on having a business with a vertically integrated supply chain based in North America.
“I’ve decided that I'm not going to rely on China for anything because that's how we got into this problem in the first place.”
Identifying kinks in the supply chain
Lewis highlighted the reasons he believes the current supply chain bottlenecks exists, in what he calls ‘a perfect storm.’
First, he pointed to the FDA’s highly regulated approach to hand sanitizer production. “It was literally categorized as a drug and had to be made in OTC facilities, which are very limited. They don't have crazy high production, and it’s a slow process because of all the record-keeping and testing.”
Second, like many in the dietary supplement industry, Lewis saw a shortage in bottles and caps.
“I would say 90% of the bottles in the United States come from China. So our reliance on China has never been more apparent with hand sanitizer because there’s no bottles or caps in the United States, so even companies that can make hand sanitizer, they can’t bottle it. It takes a month or two to get these things out of China.”
Indeed, earlier this month, the Council for Responsible Nutrition (CRN) reported that their members were also having trouble getting their hands on bottles, caps, and other packaging materials.
To avoid this problem in the future, Lewis said he flew to Mexico City two weeks ago and landed a partnership with the largest manufacturer of bottles in Mexico.
The third issue that Lewis identified is a thickening agent that turns denatured ethanol into a sanitizer gel. “The ingredient most commonly used to do that is also from China. And the cost of it went through the roof and the supply became very constrained.”
The fourth challenge he came across is related to limited manufacturing facilities. The type of ethanol needed to produce an FDA-approved topical for sanitizer has to be manufactured at a specific type of facility. “The vast majority of facilities in the United States, especially in the heartland, are not the types of ethanol manufacturing facilities that can make this type of ethanol. So there's limited supply and the price of ethanol was so low, that a lot of the facilities that could make this type of ethanol had shut down because the cost to manufacture and run their operation would have cost them more than the price of ethanol.”
Silver lining
Lewis said his new hand sanitizer business locked in a huge contract, allowing one of those shuttered ethanol facilities to turn the lights back on.
Meanwhile, he’s creating more jobs inside his own business as he hires more people and shops around for additional warehouse space in his current home of Las Vegas.
Global Sanitizers' line of hand sanitizers is currently being sold to big box retailers under the 'Medically Minded' brand. The company also donates a portion of its hand sanitizer to first responders.
“In times like this you have to adapt. And we’re just fortunate that cannabinoids go great in sanitizer.”
Earlier this month, Neptune Health and Wellness also announced it was transitioning a CBD extraction facility in North Carolina to hand sanitizer production.