The oil barons of cannabis: Inside the illicit but lucrative world of ‘shatter’

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Behold the illegal travelling shatter salesman, who is not going anywhere soon. Behold how calm he is in the face of the legalization of recreational cannabis on Oct. 17, how … implacable. True, he is stoned, but he would be implacable anyway.

Andrew Alias, whose real name we are withholding – he is engaged, after all, in criminal activity – is a purveyor of the rarest and most potent of cannabis products. He sells concentrates and extracts, including shatter – cannabis oil that has been mechanically extracted from its plant and then concentrated and hardened into what looks like thin, clear peanut brittle. He sells shatter’s cousins, wax (more moisture than shatter, and emulsified; it crumbles on touch), sugar (less moisture than wax, therefore powdery) and caviar (more refined and distilled, like grainy gobs of honey). These are just some of the unguents a travelling shatter salesman sells.

Although Andrew prefers his formal title: cannabis brand ambassador. He is stubborn proof of how unpredictable and competitive the transition to legal weed is going to be.

Andrew unloads a pound of product every week – $30,000 worth, at anywhere from $30 to $80 a gram, depending on its potency. It’s all illegal. Andrew’s shatter is made by 91Supreme, a Vancouver producer of cannabis extracts that is, to put it delicately, not on Health Canada’s list of licensed manufacturers. Andrew refuses to say how he physically obtains 91Supreme’s wares, and the folks at 91Supreme claim not to know Andrew Alias.

This is the black and grey market, after all – the murky netherworld that Justin Trudeau wants to render superfluous by legalizing tamer cannabis products (dried cannabis and weaker forms of oil) next month. It will be another year before concentrates, extracts, stronger oils and many things that can be made from them, such as plastic vape pens and edibles, are legal. Even then, selection will be restricted to what each province lets you do, child.

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Andrew is an outlaw. But he only partly looks like one, with his fridge-like body, his blue-and-orange tattoos – PRACTICE PATIENCE, two letters per knuckle – his 18-karat-gold mandibular grill. He never removes his backpack, in which he carries cash and product: He says he was mugged and robbed of $25,000 a few weeks ago – people, he points out, get jealous. Otherwise, he’s a knowledgeable guy keen to improve the public’s perception of drug dealers, and rarely evasive, as long as you don’t want to go into too much detail. In other words, he is like most drug dealers you ever met, except that he’s a wholesaler, not a dealer. If everyone has a guy, says Andrew, he’s the guy that that guy has.

He is for now. Because the murky world of hash oil and extracts and concentrates and edibles, the last Wild West in the kingdom of cannabis, is finally being staked out by mainstream businesspeople, on Bay Street and elsewhere. Health Canada estimates that the market for such products expanded eightfold last year – much faster than the business of selling plain old dried cannabis (sometimes known as flower). The concentrate business is concentrating.

Industrial-scale extraction systems – already being used to make weak cannabis oil – are being sold to Canadian- and U.S.-licensed producers for anywhere from US$250,000 to US$1-million apiece. Last month, Veritas Pharma Inc., a medical-research company, acquired half of 3 Carbon Extractions Inc., a Vancouver-based extraction outfit. “It’s the fastest growing sector of the industry,” says 3 Carbon CEO Phil Kwong, who jumped into the extract game three years ago when he was diagnosed with multiple sclerosis and found concentrates helped. “With extraction, you take out all the extra stuff and focus it down to the good stuff. And there’s a larger diversity of product and how it can be taken.” In July, Ottawa’s CannaRoyalty Corp. agreed to manufacture and distribute the wares of San Francisco’s Pacific Remedy Inc., which makes shatter-coated joints (they use an uncooked fusilli noodle as a filter). And that’s just the light end of the list of products that cannabis oils and concentrates make possible: capsules (swallow), suppositories (insert), edibles (eat), vape pens (inhale), bath bombs (soak), creams (rub), lube (you know) and the aforementioned extracts.

As of this month, the federal government has issued a scant 117 licences to legally grow and sell marijuana, about half of which also permit the production and sale of cannabis oil, albeit a very mild and tepid version of it. Which poses another question that has been asked a lot in the run-up to Oct. 17: What will happen to black-marketeers, such as Andrew Alias, after weed goes legal? Will stubbled dudes who communicate only by text and who live in album-lined apartments become artifacts of the past, like men in bowler hats?

They will not. The black market, predicts Andrew, is never going away. A dealer's wider range of more potent products may be untested. But buying them from him is more discrete (the purchase leaves no electronic footprint) and arguably easier than schlepping to a dispensary or shopping online, which is what our governments want us to do.

Extracts and concentrates have a hillbilly past. The earliest versions of shatter were created with a homemade process known as “open blasting.” Does that sound safe? A typical open blast entailed stuffing a glass tube, perhaps the neck of a bong, with marijuana, filling the tube with lighter fluid (a source of the solvent butane), then filtering and “off-gassing” the butane in a dish over a flame until you were left with smokable residue. Many terrible explosions ensued, and the reputation of concentrate as “the crack of pot” was firmly established.

Over the years, as the process became mechanized and refined, it got safer. Today, extracts and concentrates are often made from trim – the cuttings and refuse left behind after a cannabis plant is clipped of its valuable buds. (Although, as demand for medical cannabis oil has grown, licensed producers such as Canopy Growth Corp., based in Smiths Falls, Ont., often render oil from higher-potency buds as well.) As recently as four years ago, trim was thrown out or given away free, a perk of working as a grow-op hand-trimmer for $25 an hour. These days, many cannabis farms buzz to the whir of mechanical trimmers that automatically vacuum up the trim: Even middling stuff with THC content of 10 per cent can fetch $500 a pound.

Then the chemistry starts. It’s a complicated process. The trim is placed in a sealed and welded stainless-steel container and rinsed with a solvent to wash the plant’s cannabinoid-rich resins off its leaves. (Butane, ethanol or CO2 are a few solvent options, but “solvent-free” cannabis extracts, washed in water, fetch premium prices.) The resulting sludge is then subjected to some or all of a series of processes – centrifuged, filtered, frozen (which helps separate the plant’s oil from its chlorophyll and fats), refiltered, distilled and redistilled.

Each stage produces a series of byproducts that become shatter, wax, crumble and their ilk – as well as ever-more refined cannabis oil that can be almost pure tetrahydrocannabinol (THC, the psychoactive compound in marijuana), almost pure cannabidiol (CBD, the non-intoxicating compound that some users claim is body-calming), or anything in between. The oil can then be used for vaping, for edibles, for tinctures and rubs, for balms and concentrates, for lotions and lubes.

And for making lots of money. In the marijuana dispensaries now common on the streets of many Canadian cities, you can pay less than $1 a gram for loose trim. But turn five grams of that trim into oil, inject the oil into a plastic cartridge, sell the cartridge in a vape pen, and the oil is suddenly worth $40 to $80 a gram, retail. (Vape pens, smokeless and odourless and masquerading as anything from a USB memory stick to a ballpoint, account for an estimated 15 per cent of the cannabis industry’s current revenue.) As one concentrate chemist puts it, it just like turning garbage into gold.

Pot: The inside track

The Globe and Mail has launched Cannabis Professional,a premium newsletter that gets inside the business of legal cannabis in Canada. Read more about it here.

Rosie Mondin, the CEO of Quadron Cannatech Corp., a Vancouver-based manufacturer of industrial-scale extraction equipment, was a cannabis advocate and lawyer when a string of clients approached her in 2013 for legal advice. They wanted to become licensed producers of cannabis under the Marijuana for Medical Purposes Regulations, the regulatory regime the Conservative government of Stephen Harper set up to eliminate the black market. (Such hopes didn’t pan out then, either.) “I thought, instead of doing this for others, I should do it for myself,” Ms. Mondin recalls.

Working with Shane Lander, a self-taught engineer and biochemist, and another partner, Leo Chamberland, Ms. Mondin borrowed $300,000 to buy a second-hand extraction machine. Mr. Lander started tinkering with it, eventually creating an extraction system of their own.

That beast, the Boss CO2 Extraction System, now for sale across the land, retails for $250,000 and looks like a cross between a Gothic arch and the Star Trek badge if it had been designed at Hogwarts. It’s about the size of a desk but twice as high, portable, and easy to use: It requires only two electrical outlets and a single human operator. Return on investment, Mr. Lander says, is three months. He claims to have installed extraction systems for at least two licensed medical-marijuana producers who will soon be making weak oil for the recreational market as well.

Ms. Mondin believes edibles and vaping – both of which use concentrated cannabis oil – are the future of the pot business, given widespread concerns about smoking. Now, at parties with her friends, “where they used to say no to a joint, they say yes to wanting to try the vape pen,” which heats cannabis to sub-combustion temperatures, producing vapour rather than smoke.

Besides, she says, “A lot of us have aging parents. A lot of them are going through cancers.” Bring out the vape pens, their preferred way to administer pain-relieving cannabis.

But there is no guarantee of success this early on in the cannabis-extraction sector. Competition is already fierce.

On a sunny day last spring, Paul Pedersen, the CEO of Nextleaf Cannabis Processing Solutions, is standing beside a tractor trailer parked outside a suburban warehouse in Port Coquitlam, B.C.. Until a week ago, the nondescript self-storage facility behind him was a grow-op. The grow-op’s assets have now been purchased by a licensed producer, and Mr. Pedersen and a team of technicians are using a corner of the space to test their new concentrate-production system, which will soon be installed on the tractor trailer. When it’s finished, they’ll be able to drive their mobile extraction lab from micro-grower to micro-grower.

How does someone come up with an idea like that? In 2016, Mr. Pedersen’s mother developed rheumatoid arthritis. A friend recommended a topical marijuana cream for her pain, but all the dispensaries were sold out. (Cannabis cream for arthritis is a bestseller to this day.) Travelling a few weeks later in Oregon – one of the first U.S. states to normalize recreational marijuana – Mr. Pedersen saw something he’d never seen before: a mobile extraction lab. A year and a million dollars later, he has a beta version of his travelling lab in operation.

As Nextleaf waits for its processing licence from Ottawa, the technical team has been tweaking the portable lab that will transform weed into concentrates and a full range of vapable, edible oils – “bridging the gap from soil to oil,” as Nextleaf’s slogan says. The team is eager to finish the job: Mr. Pedersen claims there are 4,000 cannabis growers within an hour’s drive of where they’re working. That’s a lot of mobile processing to be done. On the other hand, the vast majority of those growers will be rendered illegal by the Cannabis Act, at least for now. Will they stop growing marijuana? Will they apply for one of the small-scale micro-cultivation licences that Health Canada is promising? Or will the black market continue to fill demand for the extracts and concentrates Ottawa has yet to legalize?

The answer is possibly B and definitely C. Again and again, travelling around the nascent Canadian cannabis space, you hear the same sentiment: No one knows what’s actually going to happen after Oct. 17.

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To a newcomer, the array of concentrates and extracts at the Sunrise Wellness Foundation, a cannabis dispensary in Vancouver, is mind-boggling. There are daubs of this and dabs of that, gold and amber and sulfur yellow, in one-inch-wide vitrines, made by companies with fetching names: Elevated Extracts, Heavenly Daze, Kind Selections, Little Farma. These are the dispensary’s most valuable and potent delicacies: Kind Selection’s Kush Bomb SFE (solvent-free extract, very desirable), Miss Envy’s CBD capsules (two 20-mg pills, $6), medicine-dropper bottles of Green Island Naturals tinctures, to be absorbed sublingually (the Tranquillus – four parts body-calming CBD to one-part psychoactive THC – is popular, at $50 for 15 big doses), even Honey Tears, a superstrong concentrate the dispensary recommends for cancer pain. Walter Sorto, one of the dispensary’s three owners, just started his dad on Honey Tears. His dad has liver cancer.

Mr. Sorto – 48, looks 28, father of four, partner in three legal dispensaries while holding down a full-time job as a manager in a Crown corporation – earned an MBA at night school and worked for half a decade as a supply-chain management consultant in the Alberta oil-and-gas sector. Now, he wants to devote himself to the cannabis business, however challenging the regulatory environment. Sunrise is a legal dispensary under Vancouver’s municipal laws (the majority of Vancouver dispensaries are not). But it has been considered a “grey-zone” dispensary under provincial law, and illegal under federal law, which outlaws dispensaries, at least until Oct. 17, when each province will be allowed to set its own standards of who can sell, and how they can sell it. For the privilege of doing business in this legal limbo, Mr. Sorto and his partners pay an annual city licence fee of $30,000 per dispensary (they have three), and up to $12,000 more in provincial fees.

But mostly what a visitor notices about Walter Sorto’s dispensary, and about cannabis use in Vancouver in general, is the absence of any stigma or secrecy surrounding the purchase or use of weed and its byproducts. Mr. Sorto, who has a prescription for medical marijuana, kicks off every morning with 20 milligrams of 1-to-1 CBD/THC medicated coconut oil in his coffee, which he claims eases his arthritis (he’s a long-time surfer). That’s a lot of pot, but he insists it has no effect on his intellectual capacity. (If he was high when we met at 10 o’clock on a weekday morning, I certainly couldn’t tell.)

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At the end of the day, he goes old-school and non-concentrate and partakes of a plain old hand-rolled doob of Lemon Sour Diesel (a sativa cultivar, sativa being the supposedly enlivening strain of cannabis) “to think” – or, if he has to cut the grass (the lawn variety), a joint of Lemon Haze. “It’s also sativa,” he says, “but it’s pure energy.” Then, to quiet his mind at bedtime, he’ll smoke a narcotic indica cultivar that also helps him sleep through the night. For most Canadians, this is a new way of living.

Of course, double-blind scientific evidence for the efficacy of Mr. Sorto’s medicine, or for many of the goods the dispensary sells, is stubbornly non-definitive: For decades institutions such as the National Research Council discouraged research on cannabis because it was illegal. Most evidence for the therapeutic value of cannabis (and wax and shatter and other derivatives) is anecdotal – tales told by many over dozens and even thousands of years.

But the faithful who buy at the Sunrise dispensary, and the priests who serve them, are believers and optimists. The staff complete multiweek courses to qualify as budtenders, as the sales staff at dispensaries are sometimes called. I sat in on a class. Fifteen people – men and women from 20 to 70 – packed a sweltering downtown office to listen to a lecture and watch a mind-crackingly complex video on the biochemistry of the human endocannabinoid system. Then, the supplicants gathered round to try some extract. By then, they were looking forward to it.

“I predict 30 per cent of the market will eventually be concentrates, shatters, butters and resins,” Mr. Sorto says. Eventually being the key word, since, of course, it will be illegal to buy them or edibles for at least another year. Mr. Sorto acknowledges the government’s desire to make edibles and extracts safe. But to make cannabis legal, and allow various governments their longed-for cut of the tax pie, Ottawa has made cannabis culture a lot more milquetoast. “We probably won’t be able to move many of the products we sell now, because of legalization,” Mr. Sorto says. “The transition’s gonna be brutal.”

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A certain unnameable correspondent of my acquaintance was a timorous and only occasional user of cannabis. Nevertheless, he tried some concentrate. He has asked me to relate the experience to you, brave reader.

The adventure began when Andrew Alias introduced the correspondent to a young woman named Sara and her partner Nick, who were in Toronto from North Bay, Ont., to host an illegal pop-up dab bar in a downtown vape lounge, where customers can smoke pot indoors. I realize I now have to explain nearly every word in that sentence.

Andrew stages pop-up dab bars in his role as a cannabis brand ambassador. (To “dab,” à la Brylcreem’s “A little dab’ll do ya,” is to ingest concentrates such as shatter and caviar.) The date of the dab fest in question had been announced weeks in advance, via flyers and social media; the location was a secret until the actual day, and then announced on social media. Needless to say, the police are aware of many of these dab fests anyway, just as they are aware of unlicensed concentrate manufacturers such as 91Supreme. According to Mark Pugash, a spokesman for the Toronto police, “we are aware, we go online, we order, we arrest, and we put people before the courts.” But with the legal status of cannabis shifting, chiefly due to a series of high-court decisions that protect the right of patients to access cannabis products, convictions are not guaranteed. Furthermore, Mr. Pugash says, “we have competing priorities and finite resources.”

The vape lounge, which the correspondent attended with a pal, a seasoned stoner, was on the second floor of a low-rise building. The dab bar was a rectangular table at the back of the room.

By 10 p.m. there were lines of enthusiasts waiting to be dabbed by Sara off a dab rig on the dab bar. A standard dab rig is anywhere from four to twelve inches high, and consists of a titanium platform (a “nail”) installed in the mouth of a glass tube that descends into a glass chamber filled with water, out of which winds another, usually longer glass tube that ends in a mouthpiece. The nail is preheated, either electronically (via a transformer or batteries) or with a blow torch; the dabber places the dab of concentrate on the heated nail, simultaneously sucking the resulting vapour into the water bowl to cool it down, then out the top of the glass chamber through the long glass tube into the mouth and lungs and body and brain of the dabber.

In other words, a dab rig is like a bong, except prettier and more delicate. You can buy your own made-in-China dab rig, portable or otherwise, online or at a head shop, for $20 to $60. Some look like glass poo, but others are stunning. Andrew Alias has one that looks like E.T.

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On the night in question, Sara was doling out tiny, gooey blobs of honey-coloured caviar that had been chemically extracted from a hybrid strain of marijuana called Master Bubba. It was a “fully dewaxed” (spun, frozen, filtered and distilled) cannabis oil whose terpenes (the plant compounds that give each strain its taste and smell and multisensate buzz, known as the “entourage effect”) had been separated out and then recombined. The chemistry of high-end cannabis extracts makes wine look like child’s play. The caviar’s THC content was slightly over 90 per cent “prior to combustion.” Dried marijuana with 30-per-cent THC content is considered couch-lock material. The government stuff is one-tenth as potent as that.

Our correspondent ingested his tidbit of caviar – half the size of a small pea – at 10:45 that evening. It was a Friday. There were younger men and women present who dabbed three and four times to the correspondent’s cautious once. The correspondent has no idea where they are now. Perhaps they are suddenly married, or working for the circus. The vapour in the dab rig was cool and minty.

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At first, the correspondent felt nothing. Very shortly after that, he felt compelled to leave the vapour bar at high speed. Out on the sidewalk, he experienced a tingling up and down his forearms and thighs. A compelling need to walk and an urgent desire not to talk to anyone ensued – a five-minute phase of nervousness that his companion referred to as “the unnecessary anxiety.” The idea of anxiety as a superfluous emotion struck our gentle adventurer as a profound and brilliant concept.

Then he realized he was higher than he had been in … 45 years? But not bad, dizzy, whirling I-need-to-lie-down-oh-help-me-mommy! high. Everything outside his body was of interest, not just to his mind but to his mind via his body: In fact, his body and mind seemed to be in conversation about all these exterior phenomena, talking like two long-lost lovers who had suddenly encountered one another in a foreign city after years of exile. (Body: Look at those Russian mobsters on the hotel patio! Look at how big their heads are! Mind: Interesting that you think they are Russian.)

Everything the correspondent saw seemed to be touched by nowness. “You may not want to ride your bike,” his pal said as he headed into the subway – into Hell Itself, the correspondent feared – but then the correspondent immediately forgot about his friend. He proceeded to walk his bike around the fancy clubs and growling Ferraris and ultratanned smoothies of sophisticated Yorkville, Toronto’s most self-conscious neighbourhood, for two and a half hours, completely unself-consciously. It’s not that big a neighbourhood. He explored every cranny. (He never parked his bike because he was afraid he’d forget where he parked it.) He made his way through a laneway packed with patrons trying to get into a new disco, apologizing again and again as he pushed his bike past women in chainmail bustiers and guys with oiled hair piled atop their heads like beautiful desserts. “Why does everyone in Yorkville, men included, look like a hooker?” the correspondent asked himself. “And why do they seem so proud to look that way?”

By 1 a.m. our man had completed the 15-minute walk home. His wife looked at him as he stepped into their bedroom, then burst out laughing. “Do I look stoned?” the correspondent asked. “Yes!” she replied. He thereupon sat down and read and thought and made notes until 3:30 a.m., fell asleep and slept until 9:30 that morning. He felt slightly discombobulated until 5 p.m., but that didn’t stop him from buying groceries and planting some bushes. All in all, while the correspondent probably won’t try it again (because he doesn’t like vaping – it makes his lungs feel wet inside – and because he doesn’t like spending a day in an unrepentant haze), he thought it was an interesting experience.

Dabbing makes the world seem spanking new for a while, and then it doesn’t. But that is the arc, the up and the down, the strength and the weakness, of all cannabis. It doesn’t alter the nature of existence. It just masks some of the symptoms. Concentrates and extracts, in edible or any other form, simply accomplish this more decisively. The irony, given that the federal government legalized cannabis to eliminate the black market and shed light on the way Canadians use weed, is that you won’t be able to have that experience come Oct. 17. Unless you can figure out how to find Andrew Alias.