Alex Hoggan: Staying the Course Amid Changing Regulations

Alex Hoggan is the founder of ChemHistory, a cannabis testing lab based outside of Portland, Oregon.

In this episode of the Ganjaprenuer.com podcast, Alex joins our host TG Branfalt to discuss the early days of Oregon’s cannabis testing landscape, the intricacies of pesticide testing under Oregon’s  strict testing rules, the regulatory switch last October that nearly drove the state’s marijuana industry to a grinding halt, and other issues related to entrepreneurship and running a successful and respectable laboratory.

Listen to the interview via the media player below, or keep scrolling down for a full transcript of this Ganjapreneur.com podcast episode.

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TG Branfalt: Hey there, I’m your host TG Branfalt and you are listening to the Ganjapreneur.com podcast, where we try to bring you actionable information and normalized cannabis through the stories of ganjapreneurs, activists and industry stakeholders. Today I’m joined by Alex Hoggan, he is the founder of ChemHistory, a testing lab out in Oregon, how you doin’ today Alex?

Alex Hoggan: I’m doing well, thanks for having me.

TG Branfalt: Absolutely, I’m thrilled to have you on the show today, discuss something that … I’ve had a couple of interviews here in Michigan with some testing guys, so I got the base, but let’s kick this off with you. What’s your background? How’d you get started in this space?

Alex Hoggan: Well I’m basically an entrepreneur, I had a son that is a scientist, he was working in a lab, then he got a job actually working for Agilent Technologies, who provide equipment to labs, so they sell the mass spectrometers and a little over 3 years ago, my son had been talking about wanting to open a lab and he was looking for different ways and opportunities for that to happen and we had heard about that there was a rule change or actually a law that had passed in Oregon for testing for cannabis and so we saw the opportunity and we’d be on the ground floor with virtually no competition at that time, maybe one or two other labs that had been in the market for maybe just a year or so and we thought “Hey, let’s go for it.”

And that’s basically what we did. That was about … So we are three years in business as of next month, so it’s been a challenge but it’s starting to finally take hold, which is what we’ve been hoping for.

TG Branfalt: Tell me a little bit more about what you guys do. What do you test? What do you test for over there at Chem History?

Alex Hoggan: Okay, so in Oregon, Oregon has the most comprehensive testing regulations on cannabis, I think, pretty much anywhere in the country, if not the world. We basically test for a full panel of pesticides, about 60 of the most commonly used pesticides on cannabis. We obviously test for potency and we test for residual solvents and terpenes. We do test for all the, when we say potency, all the different cannabinoids, such as THCA, CBDA, CBGA, THCV, CBDV, there’s a whole bunch of different cannabinoids that we test for, but mainly the ones for regulation are THCA, which converts to delta nine. We test for delta nine and THCA and then CBDA or CBD, which are the activated components of … Once you basically burn the plant or the compound, it turns into delta nine, or the activated part of the product.

TG Branfalt: So, in your experience thus far in the years that you’ve been in business, have you been asked more often to test for terpenes? That’s becoming kind of a hot thing that consumers want, so have you noticed a more demand for that sort of testing?

Alex Hoggan: Yeah, it’s been off and on but definitely, there is a huge movement towards terpenes because the terpene profile is basically the aroma of the plant and that is really the signature of what makes something a skunk verses a sativa or indica or a hybrid. It basically is more of a signature something than you would find in just testing for potency. You don’t really know. There’s only other ways is they have some kits I think that have been developed for figuring out the DNA of the plant, that sort of thing, but ultimately, what makes … There’s really no way of saying “This is a sativa or an indica.” Other than you committing time to a terpene profile. The terpenes — the more and more people find out about it, the more popular they become because they do have medicinal values to ’em and it’s really interesting to see … I’m amazed every day at all the different strains that come into the lab of the different smells. It’s crazy how amazing some of ’em smell and how stinky some of ’em smell too.

TG Branfalt: I do want to back up a little bit. You said that your son’s background is … He’s a scientist and so, what was the process of setting up a lab when you personally didn’t have that background yourself, that knowledge?

Alex Hoggan: It was a learning curve. Like I said, I’m an entrepreneur, I’ve come from owning my own business in the past, so it wasn’t like I just jumped into running my own business from nowhere. I’ve had multiple businesses in the last 30 years and so, you go through your due diligence, you write your business plan, you write down your … Your pro-forward all the costs that you’re gonna have to spend, all the equipment, all of this, all of that, and then you decide based on that business plan if it’s viable for you to jump in and at that time, it looked really good but what we found when we first jumped into the market was when you jump into an unregulated market … So there was a law that was passed, but there was no infrastructure from the government to enforce the law and/or to regulate that law.

What you ended up with is you have a whole bunch of people that jumped in at the same time, which is what happened here in Oregon and when we bought our equipment, we bought it based on that law, which says you have to test pesticides at 100 parts per billion, right? You had to go out and buy what they call a triple quad. Most labs that do basic pesticide testing, they have a single quad. In order to get down to that level of detection, you have to have a triple quad for the Oregon law and we were only one of two labs that actually even had that equipment and so what ended up happening was these other labs jumped into the market and they didn’t even have the equipment to even test for pesticides but yet, they were passing everyone when they would come to their lab for a pesticide test, so anyway, it was crazy and it was a really hard time for us because we would see pesticides all the time and we would fail people and they would not be our customer anymore. So they would go somewhere else where they get a pass, right?

We had to adjust to how the market was playing at that time and it was pretty brutal first couple years because when you had labs that weren’t regulated, that weren’t credited, they could literally just rubber stamp stuff, and you hear those stories, I really think a lot of those stories are true. I know they’re true, being here in Oregon for those first couple years, it was kinda brutal with … How can you compete against labs that basically can just shortcut everything and put out a really super cheap test and just kill the guys that are trying to do it right. Luckily voters in Oregon voted the rec law in and then the regulation was funded by the law and so it was about a year of planning through different committees within the government to come up with the laws and they finally kicked in last October, so we became accredited by the state of Oregon through, they call, the T9 standards or they call the Oregon Lab Accreditation Program.

It’s a really tough accreditation to get. It’s even more tough than you would get from a lot of labs that just have what they call the ISO certification, which is like an international certification for labs but you really have to run a tight ship. Anyways, to make a long story short, we were stuck in this market that didn’t appreciate what we were offering at that time because everyone wanted to just basically get the highest number on their test and they wanted to get a pass on their pesticides, so whoever could do that the best basically was winning, but unfortunately, a lot of those dudes didn’t even have the equipment to do it, right?

Now that things have shifted gears, only accredited labs can actually test for the cannabis industry here and we can charge basically a fair price and we can actually make money now where before we, you know, the first two years of business, we lost a lot of money and it really sucked. We thought we were gonna have to go under but luckily we weathered the storm and here we are.

TG Branfalt: With what you initially purchased to set up the lab, was that enough to meet the eventual demand or have you had to expand since you opened your doors?

Alex Hoggan: Yeah, so the first two years, the first year, it just ended up being me and my chemists and we had an assistant and then we … That was pretty much it. There was about just three of us. Three or four of us that just tried to get out there and make it happen and it was tough, because again, you’re competing against a market that didn’t want to pay for a real test and wasn’t even investing in the infrastructure at all. Yeah, we set up our lab … Our original investment was about $250,000, and again, we bought the equipment that was needed to actually support that particular law that had passed, but unfortunately again, it didn’t go down that way but we have just a standard business and to grow the business, three to four times that original budget, and we’re now finally paying back the original moneys that we borrowed basically to get the lab open.

Not all the money is borrowed, and I wouldn’t suggest people borrowing money to open a business in general, ’cause that’s tough to have that hanging on your back and you have … It takes a couple years to get your feet on the ground and get the business rolling, and a lot of times if you strap yourself upfront with the debt, it’s gonna hurt you, so we were lucky enough that we had a wise enough investor that allowed us to stay in the game without having to try and pay that money back right up front.

TG Branfalt: I want to talk to you a bit more about the current industry and testing issues out in Oregon, but before we do that, we’re gonna take our first break, this is Ganjapreneur.com podcast, I’m TG Branfalt.

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TG Branfalt: Welcome back to the Ganjapreneur.com podcast, I’m your host TG Branfalt here with Alex Hoggan, founder of ChemHistory. Before the break we were talking about some of the struggles that you had getting our business off the ground and congratulations that you didn’t go under, especially how important testing has become in the space. I want to talk to you a bit about the regulations that went into effect earlier this year. By all accounts, those regulations ended up creating product shortages because, as you said, there weren’t enough tests, there weren’t enough testing facilities, so what was your experience like during that period when you were going through the initial steps when they rolled out the new rules?

Alex Hoggan: Yeah, so ultimately what happened, which was part of the reason why it created the shortages was … So the state of Oregon decided they were gonna allow the Oregon Lab Accreditation … Or the entity that the state uses for all the labs, the environmental labs here in Oregon, to be accredited through, they were gonna have them do the cannabis part. The only problem was is that again, they didn’t fund that program to really be successful, so they didn’t increase the employee loads or anything, so when we were trying to get accredited by the state of Oregon, it was really a, I don’t know how else to say it, it was a shit show because their people that they had working for them were working so hard and so much overtime and the state wouldn’t pay their overtime so when we were supposed to get accredited, one of the lead people called and said “Well, I’m not working today because I’m not getting paid overtime.” And we’re like “Really? Because we’re losing like thousands of dollars every freaking day and the whole industry’s going to crap because you guys can’t get over here and get us audited and get us going.” Right?

It was really really stressful. Actually as of right now, there is a bill that I think just passed yesterday that’s gonna fund the Oregon Lab Accreditation Program so that there can be more oversight for laboratories here in Oregon for cannabis and that’s really what needs to happen on a national level is, if the states are gonna jump in, they really need to have lab oversight because there is a lot of pressure that’s put on the labs, especially in the cannabis industry because everything is driven by that number, right? Everyone wants the highest number they can possibly get, right? 30%, and they get 12%, they can’t sell their stuff very easily, so everyone is just totally driven to make their stuff, their cannabis 20% or more, so the stuff, I’ve worked with so many growers. And they grow all these different prototypes and if they don’t test over 20%, they just basically get rid of them, right?

It’s really driven by that, which is unfortunate because there’s a lot of strains that test under 20% that are really nice strains and they have really nice terpene profiles and people that smoke ’em, they love em, but when you’re a dispensary and someone walks in the door, they’re looking for the highest number, right? It’s crazy that way. There’s been talk about ways of maybe curving that number thing where there would be like a low, medium and high kinda thing, it wouldn’t be tied to like 21.2, you know. That is the one thing around the cannabis industry that’s a little stressful is people always think their stuff is higher than it is. “There’s no way it could be 14%.”

Exactly, and there is variances in the labs, in the sense of we’re still not totally standardized, meaning yes we do take a proficiency test twice a year and we have to fall within 20% of what that known value is of the people who provide the proficiency test but ultimately we’re a lot at about 20% variance, so if you had a 20% flower, it could easily be 24% or 16% depending on how well or how not well someone extracted and put it on their instrument and then came up with that number for you. There is that. When it comes to pesticides, that’s a whole nother ball game. Pre-October, those first two years; in order to cheat in the marketplace, we offered an extended pesticide product for all of our growers, there was maybe one or two growers that really felt like it was important, and they did it, right? They went went out, they upgraded, paid the extra money, had the profile but in order to compete in that market that I was telling you about with all those other labs, we had to cut our pesticide list down to almost nothing.

We were only really testing for maybe 10 pesticides because, again, if someone fails, they’re just gonna run over to the other place and get a pass and there were … Now, that’s all stopped. In this market, with the regulated market, everything has to be recorded through metrics, and if you get a fail, you’re done. You basically have to … There is gonna be some chances for people to remediate your products, but ultimately you have to destroy it if it can’t be remediated. It is a game changer and it has worked, so where we would see tons of pesticides pre-October, now the fail rate for flowers is probably about 10%, and then on concentrates, it’s about 26%, where pre-October, if you failed your pesticide test, you would go run and make it into oil, right? And then you’d try a lab that would pass that for you and you get rid of your stuff, but now you can’t do that. You really have to take your grow seriously and you really have to not use those pesticides that are on the list or you’re gonna fail and it’s not gonna feel good and you’ll lose a bunch of money.

TG Branfalt: Does Oregon require the testing of heavy metals?

Alex Hoggan: No, no they don’t.

TG Branfalt: Do you think that’s a problem?

Alex Hoggan: I think it’d be … I don’t see it as a problem but if you’re growing somewhere where there’s a lot of heavy metals in the soil, I guess you might want to do that but I don’t see … A lot of these guys are buying super duper soil and all that kind of stuff. I really don’t see that as a problem.

TG Branfalt: You don’t see a real risk associated with that is what you’re saying?

Alex Hoggan: I don’t see it but, again, it could be out there in different areas of the country where if you’re growing outdoor and you’ve got high levels of arsenic or some other heavy metal in your soil, it could potentially be a problem but generally, I think most people are doing indoor grows and they’re bringing their soil in and they’re bringing their organic stuff, their organic soils and stuff, I don’t see it as a problem.

TG Branfalt: When I toured a lab here in Michigan, one of the things that got the guys there really excited was they had found this strain that had just incredible high levels of CBG, that they had never seen before and so what’s kinda the strangest profile that you’ve seen? Have you seen anything that’s sort of you looked at the number and you’re like “Wow, that’s really different”?

Alex Hoggan: Well, high levels of CBG — the CBG is a precursor for THC, so it could be they harvested the plant too early, and that’s why they’re seeing high levels of CBG, but there are certain strains, obviously there’s the high CBD strains, there are some strains that have high levels of THCV, and they’re still a lot to be learned about THCV. It’s another part of the compound that as more research is done, has some really good medicinal values, there’s the CBDV, which currently has some really good medicinal values as well.

We do see some strains have high levels of that, but generally, there’s quite a few CBD strains that are really good that are producing high levels of CBD like critical mass and there’s a bunch of them out there but what’s happening in Oregon now is they’re allowing the hemp farmers to get rolling so they have a … There’s quite a few strains of hemp that have high levels of CBD and that, I think is gonna be a game changer as well because these guys can grow crap loads of hemp, produce lots of CBD products.

TG Branfalt: And is that gonna have to go through the same testing process?

Alex Hoggan: Yeah, so here in Oregon they did do that, just recently they’re making it so that they have testing regulations that are gonna be covered by the cannabis regulations so it’s a little bit tough because again, the pesticide testing is tough because you can’t really use pesticides at all and 90% of the market when you go to the grocery store has pesticides on it, right? But in cannabis in Oregon, you can’t have it on there, otherwise you’re gonna fail.

TG Branfalt: Are you guys preparing yourself for now an influx of another product that you’re gonna have to test?

Alex Hoggan: Yes. Yup, we are. In fact, we’re already testing for … There’s quite a few people that are out there that are doing this so we’re already seeing a quite a bit starting to test, so that’s cool.

TG Branfalt: I want to talk to you a bit more about public policy and testing, but before we do that, take a short break, this is Ganjapreneur.com podcast, I’m TG Branfalt.

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TG Branfalt: Welcome back to the Ganjapreneur.com podcast, I’m your host TG Branfalt here with Alex Hoggan, founder of ChemHistory out in Oregon. I wanted to ask you. You touched on this a little bit earlier. What, in your opinion, should public policy include in newly legal states with regard to testing? We’ve got Mass coming online, Maine coming online, Nevada coming online. What would you advocate in those states with regard to testing, with your experience having gone through Oregon’s shift and that sort of thing?

Alex Hoggan: Yeah, I would definitely look at your most commonly used pesticides on cannabis and I would definitely include those as part of the regimen for testing because when you figure there is … The wholesale value of most strains are around $2000 a pound and retail is $4000 a pound. If you find yourself in trouble when you’re growing and you find all of a sudden you got spiders all over your plants or you got powdery mildew all over, you’re looking really fast and hard for something to use and a lot of times people are just tempted to do it and unfortunately some of that stuff is not so good for consumers.

Example is Myclobutanil, which is Eagle 20. It works really good, you just dip your clone roots in there and you’re not gonna have any fungus problems, you’re not gonna really have any powdery mildew problems but that is one of the ones that when you smoke it, it does turn into a poison and I think it sits really super similar to cyanide, so you really don’t want to be smoking that stuff and that one particular pesticide, we see all the time and it was really super popular before pre-October. People use pesticides and they kill the neurological of the pest. They go after the neurological brain or whatever of the pest, right? You gotta figure if you’re smoking that, it can’t be good, right?

TG Branfalt: Is there anything else that you see a lot of that maybe aren’t included in … Oregon’s really strict, right? Would you suggest that other states follow Oregon’s example or is it too strict?

Alex Hoggan: Well, I definitely think there could be some happy mediums. There are some considered organic type pesticides that could be used that can’t be used. I do feel like there should be some give and take there, meaning there should be the ability for these growers to use some of these pesticides that are considered organic/not harmful. Some of ’em are just basically like bacteria that just basically work on different things on the plant so that it keeps the plant stronger and healthier, but they can’t use ’em so I will applaud Oregon growers because they’ve innovated and they figured it out, right? A lot of these oil companies, they’re doing extractions now or are testing clean oil and that’s not an easy thing to do. They were saying in California they did some samples off the shelves down there they had ’em tested and like 80% of ’em would fail on the Oregon regulation.

It’s easy to grow with pesticides, right? It makes your job way easier. It really takes a seasoned person who knows what they’re doing in order to really get that super duper bud that doesn’t have to have pesticides on it. I think they just need to get the right minds together so that there can be allowed some of these ones that are considered safe and natural so to speak. Pretty much what Oregon growers are using now are good pests, meaning good bugs, and they’re using cinnamon and garlic and different teas that people brew that can, you can spray it on a plant. That kinda thing. There is a lot of nutritional stuff that they feed the plants that help them stay strong. That’s a whole other topic but we see some crazy good bud come through here that you’re just like “How did they grow that?”

TG Branfalt: Do you think that there’s a way that legal states, maybe industry associations, things like that, do you think that there’s a way that they could create a national standard for testing and would you support that sort of action?

Alex Hoggan: Yeah, I think that’s actually happening right now, and I forgot the name of the organization who’s doing that but yeah, I think that’s actually happening right now. What would be nice is, for instance, right now we have to use these standards that we buy from basically two different companies and the standards are basically the known amount of THC or CBD, or whatever we’re testing for, but they charge us like … I’m talking about racket, it comes in a one mil vile, which one mil is like nothing, right?

TG Branfalt: Yeah.

Alex Hoggan: That’s 160 bucks and 40% of it is basically methanol, right? It’s like “Are you kidding me?” That’s like $60,000 a gallon. We have to use those every day in order to do the testing. Basically if the government, the federal government would declassify it as this illegal thing, then we could get a more potent/standard that we could use to be more accurate in our testing, and it would be so much cheaper because right now in order for us to get anything better we would have to have a license from the state for controlled substances, so we’d have to go out and get all this extra stuff and it would be crazy and you’d have to go through all this extra thing, and no one’s doing that because it’s just ridiculous. If they could get that part figured out, that would be very helpful for the laboratories.

TG Branfalt: Do you have any insight as to the program that’s being worked on presently?

Alex Hoggan: Yeah, it’s a national organization. I’ll have to find who they are. I can’t remember. I can find out though and let you know.

TG Branfalt: Do you know what sort of things are included in that at all?

Alex Hoggan: I think it’s gonna be for potency testing. I’m not so sure about pesticide but potency is the big one, so there’s gonna be standard methodologies that would come about but it is … Most labs, for potency anyway, I know here in Oregon are doing pretty close to the same thing. For pesticides, I don’t really know if everyone’s doing exactly the same thing. I would probably guess no, because we do still see variances between labs on pesticides we’ll do retests for certain labs and they’ll do retests for us. We definitely do come up with different things …

TG Branfalt: Is that a way to keep each other honest?

Alex Hoggan: Yeah. We do it because the growers are allowed. If they get failed, they’re allowed to take it to another lab, but if they get failed twice, they’re done. If they do get a fail, they have to have actually two other labs pass them in order to get a pass.

TG Branfalt: Oh, wow. Well, what advice do you have for cultivators, dispensaries and manufacturers when they are submitting products for testing?

Alex Hoggan: Well, one of the things that we came up with just recently because there was so much pushback from the industry, come October 1, that they were basically gonna gut the Oregon regulations, right? But there has been a lot of public outcry the last two months because they were gonna gut those rules, so what we did in anticipation of that is we created a seal for our product called ChemCheck Approved. It’s a consumers choice seal and we are prepared to offer that in case they gut the law.

We’ve already talked to most of the people we work with now and the reality is consumers want pesticide testing. We’re gonna sell people … In fact, the laws are going to come down tomorrow, so we’re really anxious about tomorrow about what’s gonna happen ’cause they had kept it really tight knit, which is really kind a weird that they would do that when they’re talking about overhauling the whole thing and maybe you could put labs out of business, we don’t really know for sure until tomorrow but that’s one of the things we’ve been kinda stressed out about, that’s why we came up with this program called ChemCheck Approved so we are offering other labs in other states, we can teach them how ’cause it’s not … cannabis is really tough to test pesticides for. It’s such a dirty — I don’t want to say dirty, but it’s such a complex matrix because it’s so sticky that it really messes with the equipment and the instruments and it’s not easy.

That’s why in Oregon, there’s like 20 labs for cannabis but only 6 of us right now are doing pesticide testing because it’s difficult. We spend a lot of money with consultants that do pesticide testing to come help us develop our methods and, like I said, it tweaks the instruments so we’re constantly having to maintain and do maintenance on our instruments because of how dirty the cannabis matrix is, especially for concentrates ’cause you gotta figure concentrates are 10 times more concentrated than flower and it’s that much stickier. It’s so sticky it’s ridiculous. Putting that on your instruments is terrible.

TG Branfalt: This ChemCheck Approved program, can you tell me more about what that is?

Alex Hoggan: Yeah, what we’re gonna do in a lot of the trade magazines like the consumers would find at a dispensary, we will have basically an ad talking about the seal, that they should look for that seal on their product because the bottom line is if you don’t have that seal on your product, there is a good chance you’re smoking stuff that has pesticides on it. If I was a dispensary owner/grower and I was doing it right, I would want that seal to set myself apart from the guys that aren’t doing it right, because especially in these new markets, there’s gonna be a ton of dudes because it just is what it is. They’re gonna jump in, they don’t know what they’re doing, they go somewhere they’re told, that this works, but they’re not told that it has this in it and then they use it, it works good but if someone tested for it, it’d probably have high levels of pesticides in it and then the consumer basically loses, right? And they don’t even know it.

That’s why the ChemCheck Approved would be such a good thing is that if consumers, all they have to do is look for that seal and they have the piece of mind knowing that it’s been tested. Now some of the things that we’ve run into related to that is there’s a trust factor, right? Once you leave that grow site, even now, there’s nothing to say they couldn’t bait and switch the whole product. What we’ve developed is a random shelf test, so we’ll go back in after the fact once or twice a year and buy their product right off the shelf and then test it just to keep people honest.

TG Branfalt: That’s a really really really smart idea.

Alex Hoggan: Yeah. Yup. And it’s what consumers want.

TG Branfalt: Absolutely it is. Finally, can you tell me … What would you tell entrepreneurs interested in getting into the testing side of things in the cannabis industry?

Alex Hoggan: It’s really important to have good employees. That is wow. You really need people that know … Especially the first two years, you need people that are gonna be team players and you need people who are committed that will do it. Like I said, that’s probably your number one deal, right? I don’t know, if I was gonna do it over again, it’s tough because I didn’t have a science background, my son had a science background, so I did have that, but you really gotta get in there and find out what’s going on because you don’t want to be in the dark and you don’t want to have people holding a gun to your head because they know more than you do, right? You just gotta be really careful and really knowing this is what you really want to do and you gotta find the right people ’cause if you don’t have the right people, you have nothing.

TG Branfalt: I really want to thank you for taking time out to join us on this podcast. Really really enlightening stuff and I’m really hoping that the consumer drive for clean product is not curtailed by the legislature with this upcoming vote.

Alex Hoggan: Yeah, me too. We’re praying today.

TG Branfalt: Well thanks again for joining us on the show.

Alex Hoggan: Okay, yeah, well thanks for having me. Good talking with you.

TG Branfalt: You can find more episodes of the Ganjapreneur.com podcast in the podcast section of Ganjapreneur.com and in the apple iTunes store. On the Ganjapreneur.com website, you will find the latest cannabis news and cannabis jobs updated daily along with transcripts of this podcast. You can also download the Ganjapreneur.com app in iTunes and Google play. This episode was engineered by Jeremy Sebastiano, I’ve been your host TG Branfalt.