Dhydra Technologies CEO, Greg Stromotich, joins Midas Letter to introduce the company and explain their technology solution for the industrial drying of hemp and cannabis. They offer a solution to the industry’s drying and curing bottleneck, and aims to help Licensed Producers dry plants more efficiently and cost-effectively while retaining the flower’s original integrity. Having started out in the food industry, Greg explains the competitive landscape and the company’s differentiators, and provides details on the machines and the full process and applications for cannabis.
James West: All right. I’m joined now by Dhydra Technologies CEO Greg Stromotich. Greg, welcome.
Greg Stromotich: Well, thank you for having me. Always fun to talk with Dhydra.
James West: You bet. Okay, Greg, tell me: What does Dhydra Technologies do?
Greg Stromotich: Dhydra Technologies offers a solution, a technology solution, for the industrial drying of hemp and cannabis.
James West: So the idea being that you can dry cannabis in a shorter time frame than just air-drying it?
Greg Stromotich: Not only a shorter time frame, but in a more controlled manner. So it comes to our core IP, which is controlling the process, and then drying it under an hour.
James West: In under an hour?
Greg Stromotich: Yeah.
James West: Okay, so the biggest problem that I’ve encountered with rapid drying systems is that the complete terpene and flavonoid profile is destroyed in the process.
Greg Stromotich: Well, certainly the microwave can have that effect, but that’s not the way we run our machines. Our core IP is really surrounding the control of the microwave power onto the machine, or into the product.
James West: Oh, perfect. Okay, and so then, it takes, like, an hour, and have you got data that demonstrates that the terps and the flavonoid profiles are relatively stable through the process.
Greg Stromotich: Well, we have data; when we partnered with our LPs and they’ve been running product through the machines. But the machine runs both fast, at a slightly warmer temperature for trim products – you can get a lot more throughput – or you can dim it down and coordinate it really to max the drying profile of the flower so you don’t take all your terpenes and the rest of it off.
James West: I see. Okay, so how did you get into this technology?
Greg Stromotich: Well, we actually started in the food area. We were looking at food sustainability and the vast amount of food we waste at the primary processor level, and then we wanted to provide a solution so that we could basically provide food to others at a cost-effective price.
James West: Right. So dehydrated food that would otherwise be thrown out?
Greg Stromotich: Exactly.
James West: Ah, interesting. So then, do you have any large LPs as clients at this point?
Greg Stromotich: Well, 18 months ago we announced that we had a deal with a large Tier One, and we’re continuing to work with them, but we have smaller LPs also.
James West: I see.
Greg Stromotich: And we’ve kind of broadened our spectrum. When we started, we had just the big machines associated with the food industry, but cannabis is a little bit smaller, and so now we’ve got our small machine, which is the Atlas, and it will do just 30 pounds an hour.
James West: Thirty pounds an hour? That’s pretty amazing. Okay, how much does it cost for a LP to acquire this technology?
Greg Stromotich: Well, the cost of the machine is really dependent upon the size of the machine and the platform that you’re doing, but we’ve designed it so that we can have craft growers get into our technology and apply it that way, and then also go up to 300 pounds an hour for our large LP. And it’s customized to what the customer really needs.
James West: So does the speed of drying, then, reduce the cost of production overall for the user of the dryer?
Greg Stromotich: It does, but even at 300 pounds an hour, which is the larger machines, it’s the same sort of thing. The cost advantage is really you’re cutting, you’re trimming, you’re drying, and you’re ready to stable product. The cost associated with moldy product is huge, and that’s one of the things the industry needs to address.
James West: Yeah, you bet. So tell me about the technology itself. What exactly – you mentioned microwaves, but how exactly does it work?
Greg Stromotich: Well, essentially when you draw a deeper vacuum, water boils at a lower temperature so you don’t have to heat it as much. So as long as you match the profile correctly, you don’t pull off your terpenes, and you just take the water off.
James West: Oh, that’s interesting. How can I try, like, how can I try the product? Is there a way for me to to try it? I guess you didn’t bring any samples with you? [laughter]
Greg Stromotich: No, I didn’t bring any samples with me.
James West: Too early in the day, anyways. I’ve got a full day ahead of me. Okay, so there’s one LP who’s using this, and this is the product –
Greg Stromotich: No, multiple LPs. We have one just a couple hours down the 401 from here.
James West: Okay, okay, well, that narrows it down a bit. [laughter]. Not really, actually, not in Ontario.
Greg Stromotich: Not in Ontario.
James West: Great. Well, so, how long have you been doing this?
Greg Stromotich: We’ve been – well, we took a really calm approach. We wanted to go through the crawl stage and really push our IP as far as we could into the sector. Then we took a walk stage, which is get the initial LPs and start getting the product out there, and getting feedback and partnering with these people so that we can improve our technology to match their needs. It’s a very customized approach.
And now we’re in the run stage, where we’re really looking at getting it out to more LPs. Excited to announce that Dhydra Israel has partnered with Telemedics to produce a GMP, state of the art facility out in Israel.
James West: Oh, okay, wow. So, are you a publicly traded entity, or do you envision becoming publicly traded?
Greg Stromotich: We’re privately traded right now, and again, it’s the same model: we want to crawl, walk, run, and when it’s time to go public, we could entertain that.
James West: Sure. What do you think the global size of the marketplace is for your machines just in cannabis?
Greg Stromotich: Cannabis is huge. I think we’ve only started this process, and really, the industry has to go through its maturation where they start looking at how we do this on a large scale consistently and cost-effectively. Labour is a huge part of this industry right now, and with robotic infeed and outfeed and the full data analysis we can provide for our customers, it just offers an advantage to them.
James West: Wow, interesting. Okay, so how long does it take to build one of these machines, and what are they made out of, mostly?
Greg Stromotich: Stainless steel.
James West: Oh, okay. [laughter]
Greg Stromotich: There’s a lot of stainless steel on these machines. We really wanted to build a robust machine that doesn’t have a failing out in the field. Our whole model is to really enable the customer to be able to use the machine 24/7, and for that to happen, we designed it such that any components that would fail are easily changed out, and it’s sort of a plug and play solution.
James West: Yeah. Okay. Who are your competitors, and how do you differentiate yourself from your competitors?
Greg Stromotich: Well, we differentiate ourselves on a very specific way: we have core IP that’s different. Not every – we’re not your mother’s microwave. We’ve taken a different approach to it; we’re more like a telecommunications microwave, and then we have our design. We started out looking at this problem from the perspective where we were going to take this. What did our customer need? They need reliability, they need efficiency, they needed analysis, track and tracing, real-time data back to them so that as they’re drying the product, they can know what their moisture content is.
And then it’s our promise that we move forward with. We are committed to delivering this product and we will work with the LP to get that out and running. By just rolling in a couple of days later, the machine is operational, can go through just standard doors; no fancy floors, no high ceilings, just regular rooms. And we roll the machine in, and then once it’s set up in three to five days, we have our next team come in and train their staff, and then they’re operational relatively quickly.
James West: Sounds really interesting. Okay, well, we’re going to leave it there for now. I’m going to come back to you in due course. Thanks very much for joining me today.
Greg Stromotich: Thank you.
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