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Dr. Patricio Stocker PhD joins Matthew Kind to discuss why his company PharmaCielo is growing cannabis at the equator in Colombia for export to the rest of the world. Why not grow cannabis in an ideal environment where indoor lights aren’t needed and water is abundant?
Be sure to tune into this episode to understand how the international trade of legal cannabis is unfolding.
What are The Five Trends Disrupting Cannabis Industry?
Find out with your free guide at http://www.cannainsider.com/trends
[1:10] – Dr. Stocker talks about his background
[2:19] – What is PharmaCielo
[5:10] – The government regulatory system in Colombia
[6:58] – The growing environment in Colombia
[11:14] – How the political & crime situation has improved in Colombia
[15:55] – Leveraging Colombians experience with flowers and coffee
[20:16] – What countries does PharmaCielo export their product to
[22:37] – Where the cannabis market is headed the next five years
[26:30] – Environmental standards that PharmaCielo adhere to
[30:47] – Dr. Stocker answers some personal development questions
[38:40] – Contact details for PharmaCielo
PharmaCielo, a Canadian company, is looking to leverage the abundant sunshine, and ideal growing environment in Colombia to bring affordable, high-quality cannabis to other markets. Here to tell us more about it is Dr. Patricio Stocker, President and CEO of PharmaCielo. Dr. Stocker, welcome to CannaInsider.
Dr. Stocker: Thank you very much Matt, I’m very happy to be here with you today.
Matthew: Before we dive into PharmaCielo, can you give us a little background on yourself and your experience and your education and how you came to be part of PharmaCielo?
Dr. Stocker: I was born in Argentina and raised there and studied later on in Switzerland. Then I worked for more than 15 years in the automotive industry, most of the time at Daimler running brands like Mercedes Benz in Colombia and Latin America in general but also in Europe. And one day a very, very good friend of mine came to me, like three years ago, and explained to me this unique opportunity. And that’s the way I got to PharmaCielo, in a very probably unconventional way running corporations, running companies that were present around the world. But I decided a time ago to make a complete switch to the cannabis industry, which I think is the biggest opportunity for the years to come.
Matthew: Can you describe a little bit on a high level what PharmaCielo is,for listeners that may have heard of your company but aren’t exactly clear on all the details?
Dr. Stocker: Yes, PharmaCielo is a Canadian-founded company but with a total Colombian operation, and our focus is in processing flower into oil for the global market. So we’re not focusing on certain markets. We’re focusing on the world, and we’re aiming to become the world’s leading supplier of naturally produced standardized, medicinal-grade cannabis oils and extracts. For this we have a unique concept, and you already mentioned it in the introduction. And we want to produce all natural cannabis. Premium quality with the lowest possible cost, high yields in a scalable way.
Our project is completely scalable over time, environmentally friendly or sustainable and also socially inclusive. It sounds like it covers everything, but it’s a reality. Why do we say we have a premium quality? First of all, the premium quality... you know, Colombia is known for its strains in cannabis and the climate really allows us to use different micro climates so we will be able to get the best quality strains in a natural environment. And the low cost is possible due to the technology, let’s call it the technology of the Colombian flower growers that already are one of the biggest and most important in the world. And this also allows us to scale the project very very easily with a contract grower model.
Finally, the nature and the natural environment of Colombia really gives us a last push which allows us to be completely environmentally friendly in a very sustainable project. I could go deeper on this if you want. But the last point, which I think is also very, very important for us, Colombia is in this moment in a peace process and there are many people who were struck by the conflict and also by the war on drugs. And for this reason, we also set up a solution to be completely socially inclusive and to make in certain regions, the most struck regions in the country, those people our partners.
Matthew: Yes, and there’s still that when people think of Colombia they think of FARC or Pablo Escobar, and I want to get to that in a minute. But in terms of what kind of regulatory approval you have from the government of Colombia, can you tell us a little bit about that, what kind of licensure or what they’ve given you, how you can operate there?
Dr. Stocker: Yes, yes. The Colombian licensing process is a three stage approval process. You need to have an extraction license, an oil production license. You need to have a cultivation license and an export license. We as PharmaCielo are the first company to receive this first extraction license, so we’ve completed the first stage and we’re very, very close to get the second stage. What is important also to mention that Colombia’s law is completely ready for this new market, and it focuses only on oil extracts. So by Colombian law you won’t be able to sell any flower or to commercialize flower. Everything is focused on medicinal grade oil.
Matthew: Medellin-and you’ve mentioned a little bit about Colombia, and in my mind’s eye until I had been there over the summer, it’s pretty close to the equator so I was picturing more kind of high humidity and very difficult to get around, kind of tropical environment. I think it is that way by the coast but Medellin, where I was and where your South American headquarters are, they call it the Land of Eternal Spring because it’s this high altitude, even though it’s on the equator, and it’s kind of somewhat gifted in terms of where it’s situated in the world. Can you tell us a little bit about that and the kind of environment where the cannabis is actually grown, and is it indoor or outdoor and that type of thing?
Dr. Stocker: First of all, we are developing different micro-climates, or the production in different micro-climates. We want really to take advantage of all those native strains in Colombia and all of the best strains around the world to adapt them in the best way to the Colombian environment. What do I mean with this Colombian environment? For example, you have been in Medellin and we’re very close to Medellin, closer to the airport in Rionegro, which is around 2,000 meters altitude, so this is our first environment that we have.
The second one is in Cauca, which is the biggest cannabis-growing region probably in the world, as of today. And there we have an environment around 1,000 meters. We’re also developing other projects at close to sea level, around the 100-400 meters altitude. So we want to really, over time, take advantage of all these possibilities that Colombia gives us through its natural environments. For this we’re going to use open-air greenhouses. The open-air greenhouses are the methodology that flower growers in Colombia use to produce their flowers.
In those-open air greenhouses we have a possibility to control the climate in a natural way, in a very cost efficient way. So simply by opening or closing those greenhouses by using some basic ventilations systems, which make much, much easier the climate control in general. And of course, in all those places taking advantage of the 12-hour light cycle, of natural water sources. So this is the basic concept that really allows us to get this premium quality at a very cost competitive level.
Matthew: Yes, and I mean, that’s part of what PharmaCielo sees is that eventually this is going to come down to economies of scale and the ability to produce massive volumes while controlling the cost of your inputs. So you’re making a big bet now, that’s where the market is headed. Would you say that’s accurate?
Dr. Stocker: I would add to this. I think it’s accurate that we’re trying to really develop the most cost efficient concept, but it’s really focused on a natural growing process. It’s really focused on an environmentally friendly-that will be our biggest differentiator together with the social inclusive model. So I think around the world there is produced cannabis in probably locations which aren’t natural locations to produce cannabis. For example, you don’t produce in the Northern Hemisphere bananas or mangos, but you produce cannabis. And this is the natural environment where we really can produce with no energy cost or very low energy cost, and this is the big differentiator that we have.
Instead of using energy from the grid, we use the sun. Instead of using water from the tap, we use the water from natural sources. We have a system that collects all the water from over our greenhouses and in natural ponds and this really allows us to make the biggest differentiator and the biggest impact with the lowest possible footprint.
Matthew: Nows you mentioned you’re originally from Argentina but can you give us just a quick rundown of what the lay of the land is like in Colombias because a lot of people listening they’re watching “Narcos” on Net Flix and they’ve heard of Pablo Escobar even though he’s been dead for quite some time, or hear about the dangers of FARC. Can you just touch on a couple of those things and then maybe talk about how Colombia has evolved in the last 20 years or so?
Dr. Stocker: First of all, I had the same impression when I first came to Colombia over 20 years ago, and yes, Colombia has or had this image combining guerrillas, drug lords, etc. This is probably not the good side of Colombia. But if you take the real facts, Colombia is one of the most stable economies in Latin America. Colombia is probably the only or one of the few countries in Latin America without a military government in the last 60 years.
Colombia is the only country, as far as I can recall, which had stable growth around 4.5% every year plus/minus 2 percentage points. So there are many things that make Colombia an ideal investment spot in Latin America, with good laws that protect foreign investment and with a big focus in trade and opening the country. Colombia signed FTAs with the United States, with Canada, with the Latin American and Central American countries through Mercosur, the Caricom countries, with Europe. Colombia is trying to negotiate for years with Japan. So Colombia is really open to the world and wants to grow. Colombia is very, very well logistically positioned between the two oceans, very close to North America.
So there are many, many benefits around Columbia.
When we first started this project we really had two clear visions to develop this project and the first vision was we want to transform, or help to transform, the image of Colombia which comes from a legal drug image country. Everything that you mentioned, all the Netflix series, etc., that show really this illegal drug country to a medicinal drug country. This will take several decades to change this because it’s the first thing everybody knows about Colombia and what comes to its mind.
The second really big vision of us is to develop a complete new industry that is made based on the natural advantages that Colombia has. But this is the general situation. The peace process the FARC, I think this is something very, very positive for the country. Colombia, from my point of view, was always like two Colombias. You had a very safe Colombia, a country where doing business was-you could do it in the normal way like in any other country in the world, and a part of the country which was not so normal, which was not so safe in this way and what is making this peace process in Colombia.
That you will have a Colombia that is united as a safer place again, developing with people who are really are tired of this conflict that took over more than 50 years. So I think the outlook is very, very positive for Colombia at this moment. Even President Santos got the Peace Nobel Prize some months ago as a recognition for this big effort of the Colombian people to change the situation of the country and to change also the general image of Colombia.
Matthew: Yeah, that’s great. I’ve heard a lot of positive things about Santos and what he was able to accomplish. I mean, that’s incredible, because this conflict with the guerrillas has really been… it seemed like it may never be resolved, so it was really miraculous that that was able to come to pass. The Colombians are no strangers to growing agricultural crops like coffee and cut flowers. Have you been able to parlay the agricultural skills of people down there over into cannabis, or I should say commercial cannabis? Have you seen a lot of carryover of skills and so forth?
Dr. Stocker: Yes, yes. First of all, Colombia is a country with an extreme or an incredible bio-diversity. If you take a look at what all kind of fruits that the country has it’s really incredible, but there are the main traditional industries, as you know, our coffee and cut flowers. And in cut flowers Colombia is one of the biggest players in the world with 70% of all the cut-flower market is being… or 70% of all the cut flowers in the world come from Colombia. Seventy-five percent of all cut flowers imported to the United States and Canada come from Colombia. So Colombia is very, very competitive due to a combination of nature and special skills that were developed and all the logistics that the Colombian flower industry developed here.
And here we see that as PharmaCielo we can, and as a new industry, we really can take advantage of this. You have really skilled people there, knowing how to work in the flower industry and cannabis is a kind of a chrysanthemum. With Colombian, in one of the regions where we are going to produce, 90% of the chrysanthemums of the United States come from this region. So we have those skills and this will be very, very helpful to develop the business. Trained people on the workers’ level but also trained people on the agronomists level, the way you build greenhouses. So all the infrastructure already exists and finally, we’re changing the flower.
Matthew: I saw some picture of greenhouse on your website. So you’re saying this is just a matter of taking greenhouses in Colombia that have already been used for the cut flower industry where the cut flowers are grown and then a lot of them shipped all over the world, but mostly to North America. You just pretty much take those type of greenhouses and growing environments and get them close to natural water supplies and grow at different altitudes, anywhere from 6,000 feet, I think you said, down to 1,000 feet, and you’re going to do that all over Colombia.
Dr. Stocker: It’s not as simple as you’re saying it but the basic concept is correct. What do we need to do? We are setting standards. PharmaCielo’s wanting to set standards in an industry that is evolving and an industry that is growing and developing. So we are part of the creation of this industry in Colombia. And, of course, we’re taking advantage of all this knowledge but we’re building the greenhouses in the proper wa,y adapted to what we need. We need also to comply with all the government regulations.
So the first hurdle is to get all those licenses and the next role is really also to ensure all the security you need to put on those facilities. It’s not simply using a greenhouse. You’re building using Colombian regulations. Let’s call it a high-security tract where you are not allowed to lose any of what you’re producing, any of the flowers and you also need to have a complete tracking of all the process. So it’s not as simple but the basic concept of taking advantage of this knowledge, adapting it to the cannabis industry is correct.
Matthew: Now, after the flower is grown in Colombia and I’m assuming you’re going to export it to Canada, but not exclusively? Are there other countries on the list where it will be exported to?
Dr. Stocker: We are focusing on the world. We are not focusing on Canada. We’re a Canadian/Colombian company. Our operations, as I said, are fully in Colombia, but we’re focusing on the world. We want to sell to every country in the world where it’s legal to sell cannabis oils and where it makes also sense for us from a business point of view. What do we see? We see the first market for us will be Colombia, then the rest of Latin America. The biggest focus there is Brazil because of the size, but we won’t leave countries out if it makes sense there.
Then, of course, we want to focus on Canada, on Australia, on South Africa and Europe. And every week I receive contacts from people around the world from countries that are evolving in a medicinal market and the health market that are approaching us to evaluate possible, distribution agreements. And so, again we are a Colombian/Canadian or Canadian/Colombian company, but we are focusing on the world. All these facilities and the extraction plant is going to be built to focus on the world cannabis market.
Matthew: That’s fascinating. It really is. How do you see the market for cannabis flower changing and maturing over the next three to five years? I mean, you’re taking probably the most comprehensive international approach that I’ve seen so far. There’s maybe just one or two others that really kind of have this big global vision on how the cannabis trade will operate, but even those competitors don’t have the ability to grow at the equator right now quite like you. So you’re in a good position I think, ideally. And your opinion of where the market is going is probably different from smaller producers, but I’m curious to hear what you think is happening and where you think the market will be three to five years from now and what PharmaCielo will look like then.
Dr. Stocker: The first thing that we see, and just is one of the basic parameters of our business plan, is that we will have a very strong regulated market. The market will become highly regulated in cannabis. We have a tendency of legalizing use of cannabis for medicinal and other purposes around the world, but this will become very, very highly regulated. So today, as of today, what do we see? We see even in developed countries that the consumer has no real guarantee of what he’s buying. What can be assured what he’s really getting for kind of a product? Maybe he’s using it for a medicinal purpose, but there are many side effects of pesticides, of other problems that…t the cannabis as it’s grown today that you’re not sure.
So on one side we see that we’re in a moment like we had many years ago when alcohol moved from prohibition to a legal market. And during Prohibition, there were no standardized products, there were no clear product definitions so everyone bought what was on the market. This is something that in some countries in the world can be seen also. And here I see clearly a shift that will go to a very very regulated market. And for this, PharmaCielo is prepared. We see, maybe you saw our board members that have this high experience coming from tobacco industry, coming from areas like the World Medical Association, that come from pharmaceutical companies. So we have a team of people that know how to handle this.
And for this is what we are preparing us for the next, as you said, three to five years where we see a highly regulated market and a market that will be very, very much controlled. And for this reason, we are also preparing PharmaCielo to become the leading supplier of standardized medicinal grade cannabis oil extracts. And our project, really, PharmaCielo, I always compare it with building the biggest surfboard so when the wave, the real big wave comes that we are ready. We want to have this biggest surfboard of the world so when this legalization of cannabis wave really is here we are ready to take it. And as of today, for example, we’re in the middle of a financing round, just preparing us for the next steps, where we have investors from around the world that really are as convinced as I am of this unique concept of PharmaCielo that will change and shape the cannabis industry in the future.
Matthew: I know it’s a focus of the company to maintain high environmental standards. Can you give us a little more detail about that? I know you have the greenhouses, and that’s definitely a way to save on electricity, but is there anything else you’re doing in terms of specifics that you would say emphasize sustainability?
Dr. Stocker: Now, this is a very, very interesting question and again, this is I think our biggest differentiator that we have compared with other cannabis companies. The central point here in the environmental issue is what you mentioned, the low energy cost or really no energy cost. But we are also using or planning to use for all the pests and all those problems, all natural products. For example, we are growing special crops outside of the property that trap certain insects.
We’re using kind of vacuum cleaners that can trap the insects you don’t want that can be a problem, but release the insects that you need for a natural environment. This is what makes our product really completely natural on this side. In some weeks, we are participating in a study that is being performed by the Global Footprint Network. This is a company based out of Zurich. They are the specialists in measuring global footprint, or the footprint of agricultural production activities and other activities, and they are comparing different ways how to cultivate and harvest cannabis. And so we’re comparing our model with a model in the northern regions, let’s say California, let’s say Colorado, let’s say Canada, let’s say other places in the world, and I don’t have still the results, but the first comments that we expect that it may be several hundred or several thousand times of difference on the footprint.
Why? Why is this the key issue? Because yes, you can have energy, you can have water, and this is clear, what I was seeing that using the pesticides and other maybe unnatural ways how to produce cannabis, this makes the biggest difference. I always say we are producing with open-air greenhouses in a natural environment, and in other places in the world it’s like producing on Mars or like producing on the moon because you have a closed environment, you have to generate the climate of a tropic, subtropic area with energy. You have then to try to handle all kind of pests, diseases in a closed environment.
So it’s not that we are much more intelligent. It’s simply we have a much simpler environment and natural environment. And I say again, how many of these people produce a certain part in the north or in the south of the planet, bananas or mangos or even flowers. You don’t do it. And this is the biggest differentiator that helps us really to make a key difference on the environmental impact and on the footprint area.
Matthew: Great points, and sustainability is I think going to become more of a topic not just for preserving the Earth but as fossil fuels become more expensive there’s a secondary benefit there of looking for ways to keep the input cost down. So it’s a win/win/win all the way around if you can make that happen.
Dr. Stocker: Yes this is exactly and this is the, I insist. the biggest differentiator and was one of the factors that really trapped me and gained me for this project.
Matthew: Patricio, I like to ask a few personal development questions to help listeners to get to know you a little bit. Is there a book that you feel had an important impact on your life or opened you up to a new way of thinking you’d like to share with listeners?
Dr. Stocker: There was one book… okay, there were several books that shaped my life, but there is one book that shaped my vision of Colombia very, very strongly, and it’s the book Cien Anos de Soledad-let me translate it, 100 Years of Solitude- from Gabriel Garcia Marquez, who was the Nobel Prize winner, or the only Nobel Prize winner until Santos received his Nobel Prize for Peace before. And this book really shows this diversity of Colombia, this magical realism. And maybe this book also showed me with all this confusion in a country with so many facets, so many different aspects that you have, why also it is possible within big difficulties to get the best things out of the people.
And here in our concept we really see here how in an environment that was not easy, how we can take all the good things, all the natural and the cost-efficient issues, the environmentally friendly issues that we’re taking out, and taking advantage to produce this cannabis. It’s a really wonderful book with a hundred stories. If you read it, probably you will start forgetting half of the stories when you finish it because it’s many generations of a family going over, and it’s a fiction book but I think it describes Colombia very well. What Colombia says is a magical realism.
Matthew: Great suggestion. Second question. Is there a tool, web-based or otherwise, that you consider vital to your day-to-day productivity?
Dr. Stocker: I think my day-to-day productivity is really moved to being connected. So you are anywhere in the world and through a little phone or a computer allows you really to be in touch with your team in Colombia, with the team in Canada. It allows me to talk to you. It allows to meet investors, to have conferences with our experts, potential distributors. So I think the biggest tool for me is simply the smartphone that allows me to be in touch. I remember when I moved to Switzerland in the 80s to study there I had to pay more than $5 for one minute of a phone call. Today, we have Skype or other different tools, you’re in touch with everybody for zero cost, more or less.
So this is really a tool that made it easy to bring the world closer again, to be in touch with people. Maybe you don’t write any letters anymore. This is the only sad thing about this but you can be connected very, very quickly and very easily. So this is a tool that helps me on my day-to-day basis.
Matthew: It’s a great point. Yeah, it was just a short time ago that it was so expensive for long distance. I remember that too. There’s the futurist, Peter Diamandis, that talks about how the world’s dematerializing, how we used to have a separate GPS device and a separate digital camera and now that’s all in our phone, so those two industries are kind of going away and they’re integrated as an app. It’s just an amazing time.
Yeah, I know I said I only had two questions, but I have a third question for you just because I am so interested in Argentina and what’s going on there. I followed when Cristina Kirchner was the president of Argentina. I just wanted to get your thoughts on the new president, Mauricio Macri and how you felt-- I think I got his name right-- but how you felt that transition was going and what you thought of the Kirchner legacy and the general direction of Argentina.
Dr. Stocker: Oh, first of all, you got the name right. And Mr. Macri is a pro-business person and he brought back Argentina into the financial markets so this, I think, is a first important step for Argentina. He is facing still many difficulties on the . It’s more of a political issue because he’s not from the party that normally had the power in Argentina, so he will struggle with this. But from my point of view he’s doing the right things. The people I have touch with constantly, they are positive. They see Argentina in a different way, and they’re believing in what is really developing today in Argentina. Mauricio Macri also pushed again all the agricultural sector that the former government didn’t want to push and I think Argentina is coming back to the basics and doing its homework and going the right route today.
Matthew: I have to say I’ve noticed a very positive attribute of Argentineans. I lived in Chile for a year and one of my good friends is from Argentina, and I said to him, you have an ability to get things done that I don’t see in other people. He said, you know, the reason why, Matt, is because you come from a system where the system generally works so you just have to focus on whatever it is you’re working on. But in Argentina the system doesn’t work so well so you have to be good on navigating the system that doesn’t work and then doing what you’re doing on top of it. Would you say that’s why Argentineans really have kind of a knack for getting things done, maybe compared to other places? I’m curious of your thoughts on that.
Dr. Stocker: I think this is true, because basic things in Argentina, like we were talking about technology, how easy it is in somewhere in the world to make a wire transfer from your computer or your cellphone or to get an ID, a passport or whatever. Such of those basic things in Argentina aren’t always as easy as probably in the US or in Canada or Europe. But what is interesting here on this side, and coming back to Colombia, and really after all of those years, Colombia is also Latin America, but I see Columbia at a different level of this development. And it’s not Europe, but finally you have many of those things that are so complicated or maybe so complicated in Argentina, like making an international wire transfer. Such kind of things Colombia always had been looking in the last years to support and to make it easy for foreign investment. So you have different countries, you mentioned Chile. Chile is a very much organized country in Latin America and it’s close to where Colombia is becoming today. Argentina still has a long way to go.
Matthew: Okay, great. Well, Patricio, as we close, what’s the best way for listeners to learn more about PharmaCielo if they’re interested in investing or just learning more about what you do?
Dr. Stocker: The best way is to go to our webpage, which is www.pharmacielo.com. There you can find all our approach, many of the things I was telling you, and it’s also the way to make contact with us, to get in touch with us if you’re interested in participating in this unique business opportunity and this unique way to shape the cannabis business in the long run.
Matthew: Well, Patricio, thanks so much for coming on the show today and educating us. We really appreciate it. I forgot to mention you’re joining us from Toronto, Canada, so I hope you can make it down out of the winter in Canada and down back to Medellin soon. Thanks so much again for coming on the show today.
Dr. Stocker: Thank you very much, Matt. I’m very, very happy to be here on your show today and, of course, I’m just here in Canada to meet my main investors and also to remember every day to myself looking at the climate why we’re producing in Colombia.
Matthew: Good point. We could all agree on that.
Dr. Stocker: Thank you very much, Matt.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider.com. We would love to hear from you.
In this episode Matthew Kind the last forecasts he made in 2014 about the cannabis industry and then lays out disruptive changes that will impact the cannabis industry in the next five years. Considering how many Matthew got right the first time around, you don’t want to miss this episode.
Get The 5 Cannabis Trends PDF, CLICK HERE
[2:10] – [7:45] Review of Previous Forecasts from 2014
[8:57] – The First Trend Blockchain will Disrupt the Seed to Sale Tracking
[12:58] – The Second Trend, Boomer Cannabis Adoption of MIPs Soars
[14:16] – Third Trend, Dynamic Terpene Profiling,
[15:21] – The Fourth Trend – Intravenous Cannabis Oil Medications
[17:24] – The Fifth Trend – Autonomous Cannabis Deliveries
Hi CannaInsiders. This is Matthew Kind. I’m going to try something just a little bit different today in that we are not going to have a guest, but instead I’m going to walk you through the five trends that will disrupt the cannabis industry in the next five years. So this was a paper I wrote a few years back. I think 2014, and it’s actually available still at www(dot)cannainsider(dot)com/trends, but I want to go through these, talk about them a little bit and then lay out what I think are five trends that will impact over the next five years. So let’s just get right to it.
So the first trend I outlined, and I think again this was in 2014 roughly, was a market focused on CBD was trend number one. Now CBD is everywhere all of a sudden so this one seems a little bit obvious, but at the time I wrote this it did not seem that clear that CBD would have such an impact. I think that this is a profound development that we have the compound of the cannabis plant that has a lot of benefits to it, but I think there’s other cannabinoids that will come to light that will have a lot of impact on our health and give us a lot of natural solutions that we didn’t have otherwise.
So I’m really excited about CBD. I’m glad this trend emerged and has somewhat overtaken the market, but again there’s over 480 natural chemical compounds known to the cannabis sativa plant. So only 66 has been classified as cannabinoid. So we have a lot of discovery left to do, but I am really encouraged by what I’m seeing with CBD. So actually if you go to www(dot)cannainsider(dot)com/reviews, I have a whole long expose on what is CBD that can give you a very clear examples and illustration and why it’s important and ways to think about it that you may not have been exposed to in the past.
Number two is robot assisted growing facilities. That was trend number two. Again roughly 2014 when I first started talking about this. So what’s emerged since then? If you listen to the last episode, we had Yoni Ofir on the show and he was talking about how essentially he has created a robot assisted microgrow facility called Leaf, which is a remarkable development. That’s more on a consumer scale. On the commercial grow it still really hasn’t emerge to a level I thought it would, but there’s still two more years left in that time horizon, and I think it will emerge.
We see companies like Grownetics and Smart Bee that are kind of analytics and automation, and I think the next level is going to be harvesting equipment and robots perhaps that can go up and down on a track and monitor plants, trim them, identify pests and so forth. I think that’s very very close. I’m going to keep that in the has not happened fully yet but still likely to emerge. And on the consumer level with Leaf I would say it’s there. So let’s move on to trend number three.
Marijuana infused products will become a big market focus. So again this is one of those things that falls into the category of yeah this is really obvious, but when I wrote this it wasn’t so obvious that this was… it was still all about flower. Flower was the thing and MIPS were gaining a popularity, but they hadn’t quite gotten there yet. I think with the Baby Boomers there’s a stigma associated with anything lighting or fire and smoke in cannabis that goes back to the Reefer Madness.
So for the Boomers this is very important, the MIPS and why a lot of Boomers gravitate to MIPS. Don’t want to generalize too much. There’s a lot of Boomers that don’t fit in that category, but I would say look for this to increase even more interesting and creative ways that cannabis is going to be infused into different products.
So on to trend number four CannaMedicine. Hybrid Cannabis Medications. I’m going to put this one in the hasn’t quite happened yet category too, but still a couple more years here. That could happen, and likely to happen. So we have cannabis medications and we have medications but we haven’t seen the two really fuse yet. One of the interesting things I see now is kind of these transdermal patches and sprays with different cannabis compounds in it. That’s really interesting because a transdermal patch is considered more of a traditional medicine, but you see it now for aches and pains and autoimmune problems and arthritis and so forth.
That’s kind of taking cannabis to more of a traditional market fit there. So that’s pretty interesting. I still think this one is going to come to fruition. What I was thinking here specificially when I wrote this trend was that perhaps there would be a cancer medication that helps with nausea that could be infused with an edible or something like that. That’s what I still haven’t seen. It might be out there. If someone has seen something like that, let me know, but that’s what I meant by more of a traditional medicine like an anti-nausea medication being infused into an edible that’s also infused with cannabis to maybe help stimulate hunger or something like that for a cancer patient while decreasing nausea. So if you see something like that, just go to the contact page of CannaInsider and let me know if you see a hybrid cannabis and traditional medication being infused together or combined in some way that’s interesting and compelling.
Wow trend number five, again, this falls in the category of this is obvious but trend number five was tipping point in cannabis acceptance, and man did that ever happen in November with these ballot initiatives. So what I wrote back in 2014 is that many cannabis enthusiasts think the tipping point in public opinion to support cannabis has already arrived. In fact just the first wave, the bow wave arrived. The visionaries and early adopters have moved in and are building the foundation for the second wave.
The early adopters are the foothold that will help the second wave adopters to see the light and enjoy the benefits of cannabis. So we definitely had that first wave of foundation builders. Now the second wave is just starting. So a lot of opportunity still exists for the entrepreneurs that are listening for sure. It’s still worth getting into this industry because there’s tons of Greenfield opportunities everywhere and there’s still a lot of states that haven’t legalized too. So don’t think it’s maturing too rapidly or anything like that. It’s still the good ole’ days.
Okay now let’s move into my five forecasts for trends that will disrupt the cannabis industry in the next five years. So starting here in 2017 and going out to 2021. My first one is that the Blockchain, the technology that has popularized BitCoin will disrupt the seed to sale tracking market for cannabis. So if you’re not familiar with what BitCoin is it’s an open ledger decentralized crypto-currency. It’s really amazing. If you’re not familiar with it, I would just suggest Googleing “What is BitCoin” because it’s a little bit outside the scope of explaining what it is on this podcast, but it’s essentially an open ledger crypto-currency that’s decentralized that requires consensus among decentralized computers to verify that a transaction has occurred.
One BitCoin, as I speak now, is roughly in the thousand dollar range, and just a few short years ago there was for a few dollars you could buy a BitCoin. It was amazing. You couldn’t do anything with BitCoin when it first came out, but now you can. Now you can send payments. You can do a bunch of different things. You can pay for things with it. It’s really quite interesting. So the Blockchain technology that BitCoin is based on is that decentralized open ledger, and this is very compelling because states want to see how cannabis and cannabis infused products move from cultivator to processor and then to retailer.
They want to track this whole thing and they want to do it in a way that makes sense for all parties and is cost effective. I think that we’ll see that with the Blockchain technology. The Blockchain technology is open, verifiyable and can be private or public. So a processor might get a sign day, certain number and when you watch the seed to sale tracking transactions take place from say a cultivator to a processor we can see this number transacted this amount of cannabis plants or ounces or pounds or kilograms and you would be able to see it right on the open ledger. So it would be kind of somewhat private, somewhat public, but public enough that the officials could see what’s happening and where things are going and who to hold accountable for what.
Another interesting aspect of this that’s just emerging now is something called a Theorium. A theorium is a Blockchain based smart contracts. It’s a clever way and cheap way for contracts that will be doing the same thing over and over again to be done via the Blockchain, a Blockchain like technology where, let’s say, a processor is sending a thousand 5mg cookies to a dispensary. The theorium layer of technology could make that very cheap, affordable, transparent and legally binding if done in that way. So I’m not sure if I explained that well, but again a Google search on what a theorium is will yield you a lot more details on that. So look for the Blockchain technology to disrupt the seed to sale tracking market.
Okay let’s move on to the next trend, trend number two. So the Boomer Adoption of Cannabis is going to soar. I focus so much on the Baby Boomers because they’re somewhat haven’t adopted like GenX or millennials cannabis as much. Certainly a certain part of the Baby Boomers have, but there’s a whole group now that’s graying as they get into retirement age that are going to develop more aches and pains and they’re going to be searching for natural botanical solutions and that’s when all these different entrepreneurs are going to bring to the table increadible edibles, topicals, sprays, ointments, tinctures and then those hybrid medications I talked about before that will help the Boomers ease the aches and pains of their aging years.
So I really see that as a huge wave, and even anecdotally over the last year two people that I know personally that I never thought would be open to cannabis that are in that age cohort are now very much open to it and are curious because they’ve gotten that blessing from whatever state they live in.
So onward to trend number three. This is one is a little bit unusual so stick with me. I call this Dynamic Terpene Profiling Integrated with Gene Therapy of sorts. So we’re seeing kind of a gene expression, epigenetics and understanding your unique genomic footprint. We’re seeing technologies that kind of map that and then we’re going to see the study of terpenes kind of be mapped over that or laid over that in a way that you’ll be able to dial in exactly the kind of experience you want in more of a scientific way. So it may seem like that’s far off, but we’re in the hockey stick exponential growth of some of these technologies and I really think that in five years this easily could happen. It might be in the latter half of the five years, but I definitely see that coming to pass.
Okay on to number four, Intravenous CBD Cancer Fighting. So you may have never heard of a gentleman by the name of Dr. Linus Pauling. He was a Nobel laureate. Gosh I don’t know how many years ago now. It was over 50 years ago, but if you get on Google and check out any of his work, he did massive studies on using Vitamin C to kill cancer and it was just incredible what he did, but it requires amazing amounts of a certain kind of Vitamin C taken intravenously, and I think just as how he had breakthroughs with that I think you’re going to see the same thing with cannabis and cancer fighting.
So you’re going to see people taking cannabis oil or cannabis in some sort of a powder or intravenous medium that they can take in huge doses to work with their cancer, whatever they’re suffering with from cancer. Now I’m not recommending this. Obviously I’m not a doctor so don’t listen to me essentially. Talk to your doctor, know that behind the scenes these certain corporate interests, not that corporations are bad, but certain corporate interests are trying to make holistic, botanical remedies outlawed or extremely heavily regulated. So talk to your state and local congressman and representatives wherever you can to try to prevent that from happening.
Okay, last but not least is Autonomous Cannabis Drone and Car Deliveries. So that is starting to emerge I think now, but I think with areal drones and also cars, cars will come to your house and you would put in some sort of ID. Maybe there would be a scan of your face or some unique identifier for your cannabis or infused product is released to you from this autonomous car. Maybe you even have to get into the car to verify who you are and then it’s released somehow, but I think that will come to. I think as more states… there’s so many states that are incredibly indebted and they have no way to get out of the black hole of indebtedness because unlike the federal government that can just print money and diminish the purchasing power of our current paper money system, the states can’t do that. They can’t print money.
So they have to either default or renegotiate their debt or look for new revenue streams. And as they look for new revenue streams, they’ll look for things they can tax and they’ll look for ways to grow their state GDP with more business. And states that probably wouldn’t consider something like autonomous cannabis delivery or wouldn’t consider having cannabis in their state are going to move towards it because they need the revenue so desperately. So the desperation will drive them to that. I think Illinois, California, New Jersey, New York, the northeastern states for sure will be in that boat. That might be later in the five year period, but they are in really dire straits in terms of their state budget debt.
So those are my five trends past and my current five trends that will disrupt the cannabis industry. Let me know what you think about it. Send me an email at feedback(at)cannainsider(dot)com. Let me know if I was clear. I know some of these concepts are a little bit nerdy and maybe even seem out there a little bit, but I would be curious as to your thoughts about it. Please do check out the Blockchain technology. It was kind of in a dormant period for three to five years I would say and it was just being used by techy people that were really into computers, but now it’s kind of crossed over and reached that tipping point and we can see major venture capital firms like Andreessen Horowitz investing heavily into Blockchain technologies.
So I hope that was helpful. Again shoot me an email at feedback(at)cannainsider(dot)com and let me know what you thought of this and also let me know what you think about the show in general and what you would like to hear more of on CannaInsider. I’m always curious as to what you like to hear more of and what you like to hear less of. So don’t worry, I have thick skin. You can tell me what you liked and what you didn’t like. And thanks so much for listening. I never thought when I started this in 2014 how many people would listen. It’s been an incredible outpouring and I really appreciate you for listening and telling your friends about the show. So thanks and I look forward to more episodes soon.
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Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you’re still paying attention. This little whistle jingle you’re listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.
Yoni Ofir returns to Cannainsider to give us an update on how his super sleek, plug-n-plant home grow solution called Leaf. Soon you will be able to grow your own cannabis from your phone. The Leaf smartphone app will interact with the Leaf grow cube and allow you to adjust temperature, hydration, nutrients and share your grow recipe with the Leaf community.
Learn more at http://www.getleaf.co
[2:20] – What is Leaf?
[3:09] – Yoni talks about his background
[6:30] – Yoni talks about developments with Leaf
[12:10] – Hardware iteration process
[15:40] – Yoni talks about the tech industry in Tel Aviv
[21:24] – Does America have a puritan streak
[25:28] – Yoni talks about the features of Leaf
[28:58] – Yoni talks about the other co-founder of Leaf
[32:08] – Launch date and cost of Leaf
[33:51] – Approximate ROI with Leaf
[37:04] – Yoni talks about the social aspects of Leaf
[43:32] – Will Leaf stink up your home?
[45:30] – Drying and curing process
[47:34] – Yoni talks about lessons learned as a CEO
[52:52] – Yoni answers personal development questions
58:39 – Leaf contact information
What are the five trends that will disrupt the cannabis market in the next five years? Find out with your free guide at: http://www.cannainsider.com/trends
I am pleased to welcome back Yoni Ofir, CEO and Co-Founder of Leaf, the “Plug N’ Plant” system that automatically grows cannabis from the comfort of your home. Yoni’s self-contained grow system won Product Hunts 2016 Hardware product of the Year. Yoni has been featured in Forbes, Vice and Tech Crunch. Yoni, welcome back to CannaInsider.
Yoni: Thanks Matt. Thanks for the awesome intro.
Matthew: Sure thing.
Yoni: It’s so good.
Matthew: Give listeners a sense of geography. Tell us where you are today.
Yoni: Right now I’m in Tel Aviv, Israel. It’s raining a little bit which is pretty rare over here, but that’s where I am and it’s where Leaf’s headquarters is as well.
Matthew: Okay. Give u a high level overview of what Leaf is for people that aren’t familiar.
Yoni: So Leaf is “Plug N’ Plant” system that automatically grows cannabis and is controlled by your smartphone, and you could think of it as a beautiful mini fridge that stocks itself with high quality cannabis, and we help you grow it in a fun and interactive way.
Matthew: Gosh, what a great visualization. The only think I like better than a stocked mini fridge is one that self-replenishes itself. Sounds like Star Trek.
Yoni: Yes exactly, and it’s completely pesticide free. No harmful chemicals. So that’s also awesome.
Matthew: Now you were on a couple of years ago on the show, but for new listeners can you give a little background about yourself and what you were doing before Leaf and how you came to start Leaf?
Yoni: Yeah so Yoni Ofir. I’m 28 years old, originally born and raised in Long Beach, California and have been living in Israel for about 17 years on and off. So at a young age kind of moved here with my family. I was in the Israeli military. I served there for three years as a safety NCO and non-commissioned officer. What I did in the military was basically our unit was responsible for all of the safety within the ground forces. So that could be anything from training safety, combat safety, what degree of vision you’re allowed to fire at in order to not accidently hit friendlies, anything from there to vehicular safety.
A big issue when I was in the military was drunk driving, unfortunately, and most of the soldiers are between the ages of 18-25, youngsters. We give them so much responsibility but still we’re still young and there’s a lot of drunk driving issues within the military. A friend of mine that we were both in the unit togtether we set out to solve this by creating after our military service a product called (4.37 Alcohoot?) which was the world’s first microphone breathalyzer, a police grade, consumer, pocket, beautiful breathalyzer that connects to your smartphone and can easily within seconds give you your accurate blood alcohol reading. Our goal was to allow people to have this affordable device that would allow them to test their alcohol levels at any given time and prevent people from getting behind the wheel when they shouldn’t.
So that was my previous company. It went very well. We had a lot of success with official partnerships with Heineken, with (5.17 unclear). The product was placed in retail stores like Target and Bloomingdales and Walmart. We really did bring the conversation to drunk driving and we sold that business at the end of 2014 and a little bit after that I started Leaf, about three or four months after we sold that, my partner and I. I’ve been doing Leaf since about March 2015. Sort of slowly at the beginning and then getting more and more involved as time went by.
Matthew: Now when you first started talking about Leaf back in 2015 and I met you it was really just a prototype. You had this box and you were talking about it and it really gathered a lot of attention even way back then, this concept of what you were building, but take us back to 2015 to where you are now. You were going around to investors, showing them this prototype and where are you today versus back then?
Yoni: Yeah so 2015, it was a totally different world. Completely different world just in general but also in the cannabis space and also in with Leaf. We had very basic prototypes. The sort of essence of the product when we started was basically a box that had sensors inside and the sensors could remotely transfer the information to a mobile application or to a website or whatever we decided it would be. So remote kind of sensor and monitoring. The idea was we could tell you hey, temperature is out of wack. You need to fix this and this is where you want to be and always give you notifications and that’s how we started.
We sort of started from there. That concept had gotten a bit of attention. Most people felt it wasn’t enough. Yeah that was kind of a marginal improvement and of course the design was much nicer, but our tagline was “Plug N’ Plant” Cannabis, and we really wanted to achieve that. So from a product perspective, if we look at back then and today, today what we’re talking about is a system that is almost fully automated. It’s not just sensing and telling you hey the temperature is too hot. It actually has an air conditioning unit, a heating unit, a dehumidification, humidification unit. So it’s really a bunch of products into this box, let’s call it, into this system. There’s nutrient dosing. There’s PH balancing and more and more. It not only has the remote functionality, the remote monitoring functionality, but there’s also a remote control. There’s an actual control.
So it doesn’t actually tell you what to do. It does, and I think that that was thee important change in the evolution that the product has made. Of course a lot has also happened on the way. We’ve shipped units, beta units of that first generation. We learned so much from the customers and partners that had used them and we iterated and we evolved and grown our team and the whole industry has evolved into something that even the most enthusiastic proponents of this industry couldn’t believe how quickly it’s been growing, and I’m really happy to be a part of it at least in some form.
Matthew: So if we were looking at a Leaf right now in front of us, it’s roughly about five feet tall, two feet wide and two feet deep. Is that about right?
Matthew: Okay. How do you feel, like your background with Alcohoot, your breathalyzer product helped you with Leaf? Was there a lot of carryover there?
Yoni: Yeah. The main thing that you need to understand here is that we’re creating a real hardware product, something physical, that actually needs to be manufactured and that iterations take a lot more time and cost a lot more. Going through that process just kind of once with anything, it doesn’t matter if it’s as complex or not and it’s really… it was not as complex as Leaf by any stretch of the imagination, but just going through that process of sourcing components, finding a manufacturer, building an assembly line, going through the quality control process of the assembly line, logistics of moving between different counties internationally because we’re manufacturing in China. We’re bringing it to the US. Just that whole process is something that going through it and having done that successfully and just getting the product on to the market and it working and being of high quality is tremendous. It’s tremendous and pretty much necessary.
So in that form it was very helpful. We also had Alcohoot was sensor based product. We had one senor in it, the sensor for the alcohol and we have several sensors in Leaf so there is a little bit of carry over there. So those kinds of principles really help. In addition to that, Alcohoot was my first business, my first startup period. So hiring a team, managing finances, raising money, marketing, everything, business development, just everything you go through in a business. Patience, patience is a big one. So all of those things really really helped, but Leaf has been its own journey with its own set of challenges and a lot of new things that have been very interesting.
Matthew: You mentioned talking about hardware development. It is difficult, especially compared to software because the iteration cycle takes so long. How do you keep up with morale and keep the team encouraged and excited when some of these cycles in improving a product like Leaf, it just takes longer than you might like. How do you keep the team engaged in moving in the right direction as they wait for these iterations?
Yoni: Yeah we haven’t had really a big problem with morale because the reason why I think that’s the case is because everyone really loves this product and what we’re doing, and the team is so connected by our shared passion for this. We know there’s going to be speed bumps and things like that, but really there’s always something to do. We’re still in a stage where the product is before manufacturing and there is a lot of things to do even while we’re waiting for something to come from the factory or a component to come from overseas or whatever it is. You’re just like okay, I got three or four days to wait, but there’s a long backlog of things that we’re working on all the time, and morale has not been a problem. We do a lot of stuff with the team that has nothing to do with the product.
We go on trips. We go on educational trips. We were just recently here in Israel. One of the largest malls in Tel Aviv, there’s about 750 square meters, excuse me for all the US listeners, I’m not exactly sure how much that is, but a huge mall. The entire roof, almost the entire roof, they’re growing hydroponically. They’re growing vegetables, about 10,000 heads of lettuce a month which is great. So we take the team on trips like that and we learn about sustainable agricultural practices within cities. There’s a lot of ways to keep morale up, but not necessarily something to do with the product, and I really like that about our team. While yeah we’re doing a product that has to do with cannabis and growing, but there’s so much more complexity to our team and fun stuff that we like to do and morale has been great.
Matthew: So 750 square meters for the US listeners is about 8,000 square feet.
Yoni: Yeah and that’s one mall on one roof that’s providing 10,000 heads of lettuce a month, 10,000 heads of whatever it is, lettuce, spinach and whatnot. So it was just a cool trip and we do a lot of those things every few weeks. Morale is up and morale is great. It doesn’t hurt also being in this industry and it seems like, I’m sure you know this, it seems like every week there’s several great headlines coming from all over the world of some advancement in the science of cannabis, some advancements in legalization and so on and so forth. That it really feels like the wheels are turning and they’re moving very quickly. So that keeps the energy level very high all the time and I like that and I think our team really likes that.
Matthew: How would you describe the tech scene in Tel Aviv? I hear some interesting things coming out of Israel all the time, but I don’t know. I don’t have boots on the ground idea of what it’s like. I mean I heard that (15.36 unclear) Conference is really cool there, but how would you describe it?
Yoni: The Israeli tech scene is very unique. If you look at Israel just as a country we’re talking about roughly 7.5 million people in an area the size of New Jersey, yet more venture capital money per capita than any place in the world, more patents per capita than any place in the world, most Nobel Prizes per capita than any other place in the world. So there’s sort of culture of innovation in Israel. It’s always been that way. We all go to the Army. That’s one of the big reasons, and we have several technology units in the Army which has helped kind of grow the tech scene around here.
In addition to that, Israel does not really have any natural resources. We don’t have a lot of physical space so it’s always kind of been that our natural resources people, ingenuity, innovation, things that you can make better and not necessarily… oil, diamonds, whatever it is. This has been going on forever. This isn’t just a new thing. We’re talking about advancements in science, in medical devices, in high tech startups and agriculture, in water desalinization for example, the leading country in the world. So all this innovation is in Israel. Tel Aviv is sort of the hub of that. Tel Aviv is kind of our, let’s say, San Francisco, Silicon Valley area in which you have startups all over. When you do end up coming here to Israel Matt, I’m sure you will com time soon, I’ll take you out here to Rothschild Street. You will walk on one little stretch of street and you’ll have 800 startups. It’s just ridiculous. Big, small, and everything in between. This is Israel, this is our people.
There’s also a form of Israeli (17.46 unclear). I don’t know if you’ve heard that term. Basically the audacity, kind of the audacity to just go for it. So we have that and I think that’s really important for an entrepreneur. On the cannabis side it’s very interesting because the cannabis part of this equation, if you look at Israel, Israel is kind of a conservative country. So it’s kind of weird that we’re very very advanced in medical research with cannabis, but what happened was in the early 60s a young researcher at the time called (18.25 unclear), he had the idea to start researching hashish and the story kind of goes where he actually went to the local police station. He told them, this is 1963, I’m a researcher from a Hebrew university and I want to get a five kilo brick of hashish for my studies. He just literally went to the station.
He knew the chief of police there. He sat, he had coffee with him and by the end of the meeting he gave him a five kilo brick of Lebanese Hashish from the safe and he tells the story. He’s pretty funny. He put it in his book bag and at the time, I think ’63, he didn’t have his own car. I think he took the bus. It reeked. No one really knew what this smell was because it wasn’t so prevalent back then, at least not in Israel. He’s just this researcher. Funny story, but long story short, that’s how it started. This researched (19.24 unclear) THC. For the first time they discovered THC. The later discovered the endocannabinoid system, and just through that there started to become a culture of this little team that grew and grew and grew of researching cannabis in Israel. There were clinical trials, small instances of them, even with children with cancer in the 70s and it’s amazing.
Today all of the knowledge is already here and there’s a situation where there’s sort of a every country wants this knowledge immediately. They don’t actually allow to do the research so they come to Israel. Now when you pair this sort of mentality or this history of cannabis research with the innovation and the high tech that’s already here and the agricultural practices and the bio science and everything, I think Israel, you know a lot of people call it the startup nation, I would call it cannabis nation because really all the pieces are here in this little country; agriculture, science, cannabis research and medical devices and everything. So this is how Israel became a powerhouse in medical research for cannabis and also in high tech, let’s call it the cannabis tech.
Matthew: Wow that’s interesting. Do you think there is anything to do with there being no… in the United States there’s this kind of Puritanism where we have hang-ups about cannabis and alcohol. We have a higher drinking age than the rest of the world. Do you think the fact that we have kind of this Puritan streak holds us back a bit compared to other countries like Israel?
Yoni: Well I think I said this earlier. Israel is actually typically a conservative country, more on the conservative side. And of course Israel in one way or another a majority Jewish and so that sort of goes all the way to the top. So we do have kind of that similar roots as in the US where I believe it’s back in the day it was predominately Christianity and so like you said, Puritan, we do have that here. So I’m not exactly sure that that’s the reason why, but with that together there is in Israel a very high regard for science.
In Israel it’s still illegal, cannabis is still illegal. It’s not even decriminalized, although recently they said that they would decriminalize, but that’s only recently. There’s been other countries for example in Europe and even states in the US that it’s been decriminalized for decades now, like in California or other places. Just the decriminalization part. So I think just the high regard for the scientific aspect and saying hey we have a theory, we want to test it. We’re not saying that this needs to be given to every single person, but that sort of regard for science is important here, and I don’t see it as much in the US unfortunately, but here we have it. I’m pretty proud of it because until you test something, really how do you know. How do you know what’s good, what’s bad, what works, what doesn’t. You need to test and it needs to be done with science.
Matthew: I think there is a certain amount of it too that has to do with the density of people. You have all these people that are technologically savvy, but they’re in a dense area, kind of like San Francisco or New York City. The more dense these people pack in, these ideas kind of spill over from one coffee table to an office and then down the block all in one day and it kind of starts this flow of things happening that you can’t always chart.
Yoni: Yeah and also if you think about it Matt Israel, like I said, small country. It’s basically like a state. It is the state of Israel, but if you imagine like a state in the US and it’s easier to get things done on a smaller scale. For example in California, they’re very very liberal about cannabis, and maybe if they weren’t bound by federal law then they would have already allowed research and they would have already allowed all these different things. So it’s easier to get things done on a smaller scale when there’s kind of less people, less hoops to go through, although it’s not always the case in Israel. People will make it difficult here in some things. That’s just kind of the nature of Israelis, but that’s also if you’ve ever met any Israeli, than that’s also kind of a (24.36 unclear). So in your face, tell you how it is, get things done kind of mentality.
Yoni: Hutspa yeah pretty much.
Matthew: I’m going to be using these terms all over the place here. Schlepping. I use that one all the time. I kind of like that one because it’s like an onamonapia. You can kind of visualize what the word means just by hearing it.
Yoni: Yeah exactly.
Matthew: Well let’s circle back to Leaf here. We were talking about the science and technology coming out of Tel Aviv. Tell us a little bit more about the cutting edge design and technology features in Leaf itself because there’s a lot of things going on here. Controlling temperature, moisture, odor, just walk through some of the features you get asked about the most or people think are the coolest.
Yoni: I can tell you what I think is most important and what is most important for the plants because bottom line is we want to get an amazing crop and an amazing medicine come out of this. Climate control number one. Temperature, humidity, the moisture, as you said, that also goes down to we’re a hydroponic system and even the temperature of the water is important to allow the roots to properly soak up nutrients and things like that. So that’s number one, and that’s a system on its own. Most people are familiar with cannabis grow systems and the fact that you need to circulate air from the outside and bring in new air because you want to have a consistent CO2 level.
The plant will take the CO2, use it for photosynthesis, convert it into oxygen and that’s always happening. So it becomes really difficult to control this environment. Imagine your refrigerator, my mom used to always yell at me when I used to kind of lurk in front of the refrigerator with it open because then it would lose its temperature, this is kind of similar. We need to maintain a specific humidity and temperature while essentially the door is “open” because you’re getting new air every minute from the outside. So it’s complex in its own way. We’re talking about a very small grow area. Normally you don’t really have systems that are off the shelf but then heat or cool the small area. Normally air conditioning is for at least the size of a small room, not the size of just a refrigerator. So that’s one of the systems.
We have a system with capsules, nutrient capsules. Imagine kind of like an ink inside of an ink jet printer that you can kind of click them in and connect it to pumps. Those nutrients on the schedule times or dynamically, depending on what grow recipe you’re using. There’s more basic recipes. There’s more advanced recipes and that works also with the PH. You mentioned odor. We have an active carbon filter that deodorizes everything. Our lighting, you can change the different intensities dynamically at any given time. And there’s more and more and more. Really we sort of thought through every little thing, and nothing from what existed in previous growth systems that were commonly used or grow tactics and strategies that were commonly used. We didn’t take anything for granted. Like hey everyone has been doing this for 20 years. Let’s just do that. That’s already done. We relooked at everything and that’s why I believe that we’ve created something that is completely unique to the market and I think people are really going to enjoy it.
Matthew: Tell us a little bit about your co-founder because it sounds like he’s probably involved in a lot of the day-to-day kind of nuts and bolts of how these things are worked. I know you are too, but tell us about his skillset and what he brings to the table and how it’s impacted the design and range of Leaf.
Yoni: Eran is my co-founder. He’s our CTO. He’s the tech guy, the hardware, mostly hardware guy. First of all what he brings to the table is that he’s awesome. He’s awesome, he’s always in a good mood no matter what’s going on. That’s the number one thing really, but his background is in product design and manufacturing. So he’s the head of company, boutique firm for industrial design and engineering and manufacturing of products. They’ve done consumer products, medical devices and anything. He’s brought several dozen products to the market that you can go and find in stores today, and that’s really important.
Anything from manufacturing technologies to when you’re thinking in a design process there’s more than just making it cool. There also needs to be a manufacturing process attached to every cool thing that you want to physically make. So it’s really really great having that experience on the team and actually leading the team because then we don’t waste time with things that are just unrealistic. We want to try and move as quickly as possible. We’re creating really a home appliance. It’s also certified, all the safety procedures and certifications are of a home appliance, just like your dishwasher, your refrigerator or anything that is supposed to work for years and years.
His experience is really bar-none from any person that I’ve met in my professional life, and it’s been an honor to partner with him and we’re both fully immersed in this 150 percent. We love it and he’s also a great friend. He’s a great friend. We worked together on Alcohoot, not as partners. His company did the industrial design and then he sort of taught me the ropes of how to kind of manufacture and how to build the quality assurance process for a manufacturing line. I’ve just learned so much from this guy. He knows how to hire the right people and he knows how to get the job done which is fantastic.
Matthew: Oh that’s great to have such a synergy with a co-founder. How big is your team now? How big is the Leaf team?
Yoni: We are 21 people. We’re 21 people and I am the only non-engineer. There’s 20 engineers on the team. It’s crazy. It’s absolutely crazy. Maybe that just speaks to how deep we’ve gone into the technology here to make it something that will be totally relevant ten years from now.
Matthew: Now when’s the launch date? When will people be able to actually buy Leaf, and what will it cost?
Yoni: People can already preorder. We launched preorders late in December, and it’s been going very well. You can put a deposit down today of $300 and the balance of the unit will be in September when we start to ship. The balance is $2690. So the total price is $2990. That includes the first round of nutrients and filters and basically everything that you need to start growing an excellent crop.
Matthew: Okay, so putting down the deposit kind of guarantees your place in line.
Yoni: Exactly, exactly. You’re basically putting a deposit on a unit that’s going to be manufactured for you. We’re not asking you to take the financial risk or anything. Of course you can get a refund on that deposit up until we ship the unit, but we do want kind of a serious (33.08 unclear) so that we know we can know when manufacturing, know how many units approximately order needs to be and you know this is really a brand new product. It’s an appliance. It’s something new that doesn’t exist, and so I think this is a great way to gauge the interest of people and also succeed in our business goals of knowing how many to manufacture, not too many, not too little and so on and so forth.
Matthew: Well now that we know the price let’s talk a little bit the return on investment. What kind of yield can a customer get from homegrown cannabis with Leaf would you estimate?
Yoni: With Leaf you’re going to get easily four to five ounces worth of high quality cannabis. That is per growth cycle. A growth cycle is three to four months depending on the strain, depending on if you started from a seed of a clone, but let’s just say three to four months. So that’s four or five ounces, let’s say three times a year. In the first year the unit will pay for itself. So that’s pretty awesome because most technologies that you buy, whatever the cost is, it’s sometimes difficult to gauge exactly what it’s worth. For example my laptop, I don’t know how to gauge it. I mean it’s definitely worth it for sure.
Matthew: But you can’t measure it exactly like you can like hey I spent this much last year buying flower. Yeah that is nice, especially for someone that’s consuming a lot. It’s like a no brainer.
Yoni: I think that the number one reason, I don’t just think this, we talk to our customers. It’s not the number one reason why people buy this is to strictly just save money, and quite frankly let’s be honest for the people who are just looking to just save money and it’s all they want to do, they’re going to go and build a grow room, a little grow room for themselves. They’re going to invest the time in understanding it, if that’s all you’re worried about. If you’re looking at this from a perspective of getting the highest quality bud that you can get, the highest quality medicine that is completely chemical and pesticide free and just doing that consistently and having a fun experience while doing it.
This product is sort of like a game in a way. It’s like a new video game except you’re not just getting digital trophies. You’re getting a real live plant which is super awesome. So I think those are the main reasons to begin. Then when you think about it hey you know in the first year it’s paying for itself anyway so that’s kind of a logical reason to back it up. Yeah it will pay for itself in the first year.
Matthew: I’ve grown my own tomatoes and jalapenos and different plants and it may be totally psychosomatic but there’s something about growing your own plants and then consuming them and like wow this tastes better than I imagined and it’s better than what I can get from the grocery store or dispensary and that could be totally in my head, but there is something there. It’s kind of a pride of ownership and especially if you have friends that they Leaf, they’re growing their own plants. You kind of compare notes which leads me to the social component of Leaf I want to talk about a little bit because you were telling me before the interview about the recipe builder which you mentioned, how you can take pictures and so forth. Can you talk a little bit about kind of the social aspect, the sharing and even it’s somewhat of a gamification of growing where you’re showing people your recipe hoping they use it and so forth. So can you kind of give some highlights there on how that will work?
Yoni: Yeah totally. Gamification is really a great word. We really love this kind of artisanal experience of growing cannabis and it’s been going on for years and years and traditionally people have been basically sharing their techniques, their grow recipes, if you will. It’s been done from word to mouth for years, on forums, kind of in different ways. We love that artisanal experience, and we wanted to bring it into Leaf. Out of the box Leaf has default recipes for a bunch of different strains or strain types, since we can’t really test ever single strain, as you and imagine, but in addition to that, you can also build your own grow recipe. So if you have for example a strain that we’ve never grown, and you got your seed and you planted them you can start building out a recipe. For example what is the intensity of the light at different stages. How much nutrients at different stages? What do I want the day time temperature and humidity to be versus the night time temperature and humidity at different stages? At what height or at what day do I switch to flower.
You can get as deep as you want with this. There’s a built in HD camera within Leaf that actually records your process as you go and you can also see a live stream during the grow. What’s really cool is after, when you’re showing off your grow recipe on our community function, you can show off these time lapses in addition to the recipe. So there’s sort of more, here’s what actually came out of this and this is how good it looked. People can sync, with one click, that recipe into their device. So if they have the same strain, they’re going to get very very similar results. You can rank the recipes. The top recipes are shown within the community. I expect people to be competing with each other. I expect people to be trying out new things that our team has never thought of, and this community function is something that is going to be updated weekly. Not just something that we’ve built and just going to let people go with it.
We’re going to allow people to go with it, but we want to highlight our growers. We want to highlight our community members and give them a spotlight. Of course, you don’t have to show off your grow. Everything is completely anonymous if you want it to. You don’t have to have access. You don’t have to even have the camera on if you don’t want. As you can imagine, people want their privacy and we respect that completely, but if you do choose to, then there’s going to be a whole new world for you to explore. You can also just consume recipes. You don’t only have to show them off. You can just say I just want to see them and sync them, and I don’t want to maybe rate them, but I don’t want anything else beyond that. That’s fine too. That’s fine too. In general you’re getting a full recipe, we call it a grow recipe builder, with the app and a community tab that you can see all of these and rank them and et c.
Matthew: That would be very helpful. The first time right when you get your Leaf and be like hey for this first harvest I want to just copy a recipe from someone that’s already having success with this or it looks like it will be easy to do. Watch how it happens and then maybe I’ll create my own recipe the second go around or the third go around.
Yoni: Yeah and we have our default recipes, the Leaf ones that most people, I think, will probably opt to use those to begin with even before you get into the app, the community functions. There’s our recipes that we show, but you know what Matt I’ll tell you honestly, you heard it here first on this show if there’s going to be a community recipe out there better than our defaults, we’ll change it. I expect that thousands of growers are going to be able to do a much better job than the dozens or hundreds of even test grows that we’re doing, and I would be pretty proud and excited if we changed our default recipe to something that a community member made. That would be awesome.
Matthew: Yeah a lot of pride there for sure. I remember playing Nintendo as a kid and thinking I was great and then you see some of these people around the world, their high schools and you’re like holy cow. It makes you up your game quite a bit when you realize there’s people out there that can get 10X the score, they’re playing on a different level. Not to say that Nintendo is the same as growing cannabis, it’s just that it does. It does something when you can kind of see what your peers are doing, and not just about points, but just like hey I’m helping someone to have a better experience. There’s a lot of value in that.
Yoni: Yeah absolutely and the key here is is because every Leaf is so tightly controlled. It doesn’t matter if you’re growing in the winter in Canada, in the summer in Miami or whatever it is, you’re all going to get consistent results using the same types of nutrients, same growth space, same light, same conditions. I think that’s really powerful, and the gamification part of it is fun, interactive and awesome, but also imagine there might be a specific let’s say very high CBD strain that’s pretty rare, but someone made a recipe for it and it’s very good and then people are going to be able to get their medicine that is specifically tailored or works for them and they’re going to be able to get that in a very high quality even if our team has not been able to specifically calibrate to that strain. That’s also something that opens up a new world that just doesn’t exist right now and we can’t wait for that. We can’t wait for that.
Matthew: You mentioned that you have a filter for the odor and for the people that want privacy and they’re worried about their landlord or neighbors or anything, they don’t want the odor to go too far. Does it sequester the odor entirely or is it just kind of pull the order within a few feet? I guess that really depends on everybody’s different circumstances and where they live and airflow and things like that. I mean to what extent do those filters sequester the scent?
Yoni: So this is how I always say, in order to smell it you would need to literally come up, put your nose touching the crevices of the unit, the little small, there’s not even openings. It’s all air tight, but you would need to literally put your nose up to it to smell a little bit of hint of cannabis. But if you’re standing even a foot and a half away, you’re not going to smell anything at all.
Yoni: Because all the air that is in the system all passes through this filter and it clears up 99. Something 9 percent of the odors and also a few other particulates. So that part is pretty… that also exists in a lot of systems today. So we didn’t invent carbon filtration. We put a little spin on it to work for us. The caveat to that is that the active carbon gets used up and if you don’t change the filter for a very long time and there’s no more active carbon to deodorize. So these filters need to be exchanged, but we sell them. So you can purchase them from us. They cost what you would pay for a gray carbon filter at your local (44.55 unclear) shop which is $39 and it’s also $39 for a whole set of nutrients that last for a full grow. So $78 for a full entire grow. The filter even lasts a little longer than a grow. So that’s the caveat, if you don’t replace it, but the Leaf app tells you when to replace it, when it recommends to replace it and you can order that directly from us, gets to you quickly and odor free. Odor free.
Matthew: And what about the drying and curing process, all done within the unit as well?
Yoni: Drying is. Curing is a process that takes a long time in that it’s done within jars. It doesn’t need to be done within the system, but we show you how to do it, and drying, you also dry within the system. So basically we show you how to harvest the plant properly, how to cut it down, what to cut down. Some people are confused, do I cut it off the entire stem? Do I cut it down to the branches and just individual flower. So we show you how to do it. We put on thsese individualized racks inside the system, close it up and you hit dry mode and it changes the temperature and the humidity to a level that will optimize the drying process in terms of speed and consistency.
What’s also super cool is that there’s still a continuous air circulation. So all the fans are still working, and it’s still deodorized right. It’s really smelly when you’re drying, as anyone who has dried cannabis knows. That’s when all the aromas are coming out and also even other things. Chlorophyll is starting to leave the plant. So it’s really smelly and it’s nice to have it in this entight closure that cohesively kind of dries everything. So everything is dried in the same way and you’re not getting some that are very dry and brittle and then some that are still wet. Everything happens really nicely. Once you’re done drying, you can put it into jars and you can cure from there as long as you want. It’s ready to consume after drying, but I like to cure it for taste and better taste and better flavor.
Yoni: You could start consuming immediately and continue to cure as you go.
Matthew: Have there been any lessons you’ve learned about being a CEO in moving forward that have been perhaps hard lessons to learn but meaningful that you would like to share?
Yoni: Hard things? Well I will say something that is specific kind of to the cannabis industry and that is the consumers, the people, the customers for your products, they are ready for these products. People consume cannabis and I think that’s not really a secret to anyone. Even if you don’t look at the sales numbers of retail cannabis you know because we live in society and we see that people consume this all the time regularly and as part of a normal, healthy lifestyle. The business communities, investors and things like that, not everyone is 100% sure how the market is going to react to everything.
So one thing I’ve learned is you really need to recognize that … I came from a tech background, hardware and tech and there’s just a certain way that things work there. It doesn’t work the same in cannabis. That’s been something that I’ve needed to learn. There’s a bunch of specific takeaways but one of them is if you’re raising money from investors you need to really pinpoint the people that sort of get it, as opposed to trying to convince people that it’s going to be something. So that’s one thing.
Then a general thing that I’ve learned in business is that the team is the most important thing. Team, the culture is the most important thing because there’s good products and there’s good ideas all over the place. In as startup, as they say, things are going to hit the fan no matter what. It’s going to happen, and a good team will survive and then thrive after a very difficult hurdle. Teams that are not very, I won’t even say good, because sometimes there’s very talented people in teams, but there’s no cohesiveness and there’s no culture and things just don’t mesh well. So I would say if you’re an entrepreneur, your team is the most important thing. Not how much money you have in the bank, of course sometimes you need a certain amount, but without the team it’s going to be very hard to succeed. So bring in people that are smart but that also there’s good chemistry and that they are really a part of the mission.
Be transparent with your team as much as you can, especially as an early stage startup. Normally you’re one to twenty, one to twenty-five people which is still a small company. Be transparentwith your team. You’ll be very surprised if you have the right people that they will help you come up with solutions that you never even dreamed of and it’s not always up to just one person at the top to say hey we’re doing this, we’re doing that. We’ve had a lot of success involving our team in everything that we do, I mean, pretty much everything. That’s some advice I think that people should hear.
Matthew: How about if you could wave a magic wand and make one of the more difficult things about Leaf be solved right now and forever, what would that be?
Yoni: Well if I could wave a magic wand and get whatever I want, there would be a lot of things. But if it was only regarding specifically Leaf, then I think that we have a bunch of different… we’re not getting to technical. There’s a bunch of different sensors and things that are just difficult to work with and this has been kind of a problem in growing. Growers will know that sensing PH and TBS and calibrating those sensors and things like that. It’s something you need to learn and something you need to build with. We had to go through almost a year, three people just working on re-engineering sensors to make them work for something that will be easy, and we have done that. I’m really proud of that, but in the early days I wish I could have just waved a magic wand and just had it ready. So that’s just kind of one little thing, but honestly I think it’s all about the journey anyway, everything in life.
Matthew: Yeah. Also it makes it harder for your competitors behind you if it’s that difficult.
Yoni: I don’t know. Do they also have the magic wand?
Matthew: No. We’ve only lent it to you temporarily.
Yoni: Okay only to me. But in all honesty yeah there’s just a lot of technical challenges that I wish, I don’t wish, if we didn’t have them that would be easier on us and certainly would have had a few less gray hairs but like I said, all a part of the journey and we’re thankful for it.
Matthew: Yoni, I like to ask a few personal development questions to help listeners get to know you a little bit better. With that is there a book that has had a big impact on your life or way of thinking that you would like to share?
Yoni: You know I don’t really read that many books for pleasure. I like to learn things as I go in life. I also have horrible ADD that I just can’t sit and read a full book. So don’t really have any tidbits there, but things that have always helped me in my career, in my life is just sort of looking around, listening, and taking the things that sort of meshed well with me and my life goals. Sometimes when you hear something you can hear someone talk about something and one thing that they said really sticks out to you and you really like that. I just take up those types of things from everywhere, from every person that I meet, from places that I travel, places that I go, other businesses. I’ve seen use cases.
That way you start to kind of build your own business personality and just the way that you like things done. Some people want things done really really quickly and later you can figure out the quality. Sometimes there’s people that the quality needs to be perfect the second it comes out. There’s all these different types of things. So for me it’s always been about just listening to other people and taking away the things that I think are good from what they’re saying. Some people I listen to more than others, but I can tell you that just a person that I listen to a lot and that I really like is Elon Musk. I know I’m not the only one there. That might be pretty common, but I really do like a lot of what he talks about, what he’s done. Tesla is one of the companies that we really looked at at the beginning and we made an inspiration board and Tesla was one of the companies that we really felt that inspired us to kind of push the envelope on innovation and what a lot of people think is very very difficult or a huge challenge that might not be worth investing the time, energy and money to solve we feel like we’ve taken a lot of inspiration. He’s just someone that I kind of look up to and there’s a lot more, but from a product perspective I think he really has hands, his companies and specifically Tesla, speaking of they really do a great job.
Matthew: How about is there a tool web based or otherwise apart from Leaf you consider really valuable to your day-to-day productivity?
Yoni: Oh yeah, there’s one that I talk about a lot that I really like. It doesn’t necessarily have to do with Leaf or I use it all the time. It’s called Similar Web. I don’t know if you’ve heard of it. Similar Web is a really interesting website. They have a Google Chrome extension that I use literally every single day. Basically what it is is you can go to any website or you can type in any website and you can see the data of how many visitors approximately are coming to that site per month in different months, where the traffic is coming from, the name of the sources, the geolocations of the users, referrals, things like that. It’s really great for a lot of things.
It’s kind of there on my extension bar in Google Chrome and it’s just easy to click it and see it. Once you start using it you realize that you can learn a lot of different things and it can take you on many different pathways when you’re researching whatever. It shows you different ads, audiences, things like that. So Similar Web is one thing that I use every single day.
Matthew: Wow that’s cool. I haven’t heard of that. I’m going to check that out for sure.
Yoni: Yeah it’s Similar Web. It’s an Israeli company. Actually I didn’t know that until months after I started using it. Really cool.
Matthew: Yoni where are you in the investing process? Are you taking on more investors?
Yoni: Well you’re always sort of investing money in a startup but are we looking for investors? Right now we’re taking investments on a Series A round. People can contact me. I’m sure if people are interested there’s going to be all my information here at the end of the show. There’s still a little bit of space left in the round.
Matthew: Is there a minimal commit for investors?
Yoni: Yeah there is a minimum commit. I don’t want to talk about it publically right now about the actual terms or anything like that, but again I think the serious investors can probably get a hold of us pretty easily.
Matthew: Okay, Just a super quick interruption to this interview because we forgot to actually say Yoni’s email. It is email@example.com. Now back to your program. So that would probably be for a credited investor it’s going to be for. So people who aren’t familiar with that term, just Google that.
Yoni: Exactly yeah.
Matthew: Okay tell us one more time when Leaf will be available so everybody knows and also your website.
Yoni: Yeah so Leaf is available for preorder right now. The website is www.getleaf.co, just like it sounds. A $300 deposit secures a unit today. The balance when we ship. It’s fully refundable up until then, and there’s still units available. We have a limited manufacturing run that’s still open. We’ll probably still have within the next month or two, but it’s still available right now, and if you guys are interested, I urge you to go take a look. We have awesome videos showing how the product works on our site. A lot of in-depth information about how the systems work, etc. Of course there’s a live chat that you can ask us any questions that you want right then and there on the website.
Matthew: Yoni, thanks so much for coming on CannaInsider today. We really appreciate it and good look with shipping the first units. This is really exciting.
Yoni: Thank you , thank you and thanks for having me again. We’re closing a circle here right now.
Matthew: That’s right. Alright, take care.
Yoni: Alright Matt.