Touring Dark Horse Medicinals November 29, 2022 By Griffin Coop At the back of a quiet, unassuming business park in West Little Rock lies an Arkansas weed business that is likely unknown to most outside the industry. It’s not a cultivator. And it’s not a dispensary. Dark Horse Medicinals is a marijuana processor, meaning they take raw materials produced by cultivators (and dispensaries that grow their own plants) and turn them into products like gummies, concentrates, chocolates and vape cartridges. In most cases, Dark Horse sends its finished products back to the originators who sell them under their own brand names. For instance, Dark Horse makes vape cartridges for the ReLeaf Center Dispensary and Farm in Bentonville and gummies for Fiddler’s Green dispensary in Mountain View. In other cases, Dark Horse purchases materials from the cultivators or dispensaries and processes them into products that they sell under their own Dark Horse name. These products include vape cartridges, gummies and chocolates. Products under the Dark Horse label appear on shelves in 36 of the state’s 38 dispensaries. Dark Horse has worked with four of the state’s eight cultivators and eight of the 38 dispensaries. It’s the exclusive processor for one of the cultivators, although Dark Horse co-founder Casey Flippo declined to name the grower. Dark Horse was started by college friends Flippo and Sean Clarkson, who devised a plan for a cannabis business in Arkansas before the state had even made it legal. Their business started by processing hemp into products in a small town near Stuttgart (Roe, to be exact). Last year, the state Medical Marijuana Commission approved Dark Horse as a medical marijuana processor, which allows the company to use similar processes as its hemp business but on marijuana plants. Today, Dark Horse brings in up to $500,000 a month in gross revenues. While the outside of the Little Rock facility seems like any other business, the inside is all about science, technology and, yes, weed. Visitors must sign in using an iPad that takes their photo and creates a name tag, and that’s just the beginning of the security measures at the facility. The facility’s first office, called “HQ” by the company’s founders, features a bank of video monitors showing nearly every square foot of the facility. The only areas not covered by the approximately 46 cameras are generally the small areas directly beneath the cameras or areas that could only be reached by passing another camera. The system sends updates to Flippo similar to the way a homeowner gets updates from his Ring doorbell. The facility is undergoing a $1.5 million expansion that will take the square footage from 3,500 to 10,000. The expansion includes $120,000 in security and that doesn’t include the cost of the new vault, one of Flippo’s favorite parts of the facility. The vault is a fortified bunker made with concrete that includes rebar every six inches in the wall. The vault, which will hold all of the business’ cannabis materials and products, includes seismic readers that can detect a disturbance like a break-in or the use of a jackhammer. There have been no reports of large-scale attempts at break-ins at Arkansas facilities, Flippo said, because of security requirements in place by the state’s marijuana regulatory agency, the Alcoholic Beverage Control Division. It’s generally well known that the state’s cannabis facilities are well-protected, he said. “If you can get in the door, that’s about one-fiftieth of the challenge to actually get to the stuff you’re trying to get to,” Flippo said while standing in the vault. “This is quite literally a bunker.” The old vault had a lot of the same features as the new one, but it was only 100 square feet, while the new one is nearly 500 square feet. All of the cannabis materials must be placed into the vault each day and taken back out for work the next morning. So, the size of the vault limits how much business the company can do and the smaller vault required the company to move product in and out in 12 days. While standing in the old vault, Flippo held up a jar filled with a honey-colored liquid called distillate that is rendered through the cannabis-extraction process. That single jar held enough distillate to make 17,500 marijuana-infusued gummies, Flippo said. While Flippo and Clarkson, the chief strategy officer and general counsel, handle the business side of things, the actual business of turning cannabis plants into finished goods falls in the hands of Lucas Haley, the team’s chief scientific officer, who holds a master’s degree in chemical engineering from the University of Missouri. Haley and the Dark Horse team describe their butane- and ethanol-based extraction methods in great scientific detail. In layman’s terms, Dark Horse uses two different extraction methods: Butane and ethanol. In the butane method, in a secure and sealed room, Haley introduces very cold butane (around -60 degrees) to the plant material, which causes the plant’s components to separate. The desirable cannabinoids are sent to a collection vessel and undesirable fats, waxes and chlorophylls are left behind. In the ethanol method, Haley introduces ethanol (at about -40 degrees) to the plant material that is then sent through a centrifuge that spins off the desired cannabinoids. The raw extracts are further refined to be prepped for finished goods. The butane and ethanol used in the process are also sent away, so consumers don’t have to worry about ingesting butane when they grab a gummy or chocolate. While the team’s processing capacity is limited, the expansion will change that. Under the current system, Dark Horse can process 27 pounds a day, but the new system will allow them to produce 27 pounds every half hour. “When you talk about the scale of the extraction efforts we conduct here at the facility, we’re very proud to say we are now one of the very highest-producing labs in the state, and that does include cultivators, by implementation of some of these expansion efforts,” Flippo said. The expansion will also grow the size of the kitchen, allowing the company to produce about 12,500 gummies and 800 chocolate bars a day. The new kitchen setup will be good for the business, Flippo said, because it will allow the kitchen staff to spend time doing other things like filling vape cartridges when they are stocked up on gummies and chocolates. That’s important for a margin-based business like a processor, Flippo said. “We don’t control our cogs from start to finish,” he said. “What we have to focus on is we have to mitigate our overhead to be able to be competitive on the open market.” Flippo said the business’ expansion allowed them to be well-positioned if Arkansas voters had legalized recreational marijuana in November, but it also helps them in an exclusively medical market. The expansion will allow Dark Horse to operate “exceedingly efficiently” and improve some of its turn-around times for clients, from three weeks to as fast as six days. “That’s a massive strategic advantage for us when it comes to securing new business,” he said.