Most Recent Interviews
- Scott SundvorEp 364 – New High Potency Pre-Rolls Are Taking Off in California
- Scott Berman and Jordan TrittEp 363 – Cannabis Is About To See An Influx of Capital, Here’s What You Need To Know
- Marie Montmarquet and Allen HackettEp 362 – They Turned Their Small Delivery Service Into a Cannabis Empire
- Ryan DouglasEp 361 – Cannabis Greenhouse Growing – Expert Dispels Myths
With more states legalizing recreational cannabis and federal legalization on the horizon, the industry is gearing up for an influx of capital. Here to help us stay ahead of the curve is Jordan Tritt and Scott Berman of The Panther Group.
Learn more at https://thepanthergroup.co
[00:56] An inside look at The Panther Group, a venture capital consulting firm for growth-stage cannabis companies
[1:42] Scott and Jordan’s backgrounds in cannabis and how they came to start The Panther Group
[3:08] How cannabis investing is changing and the different factors driving those changes
[5:25] When we might see federal legalization in the US and how to prepare in advance
[6:48] How the SAFE Banking Act could impact cannabis investing over the next few years
[8:06] The characteristics Scott and Jordan look for when considering investing in a company
[10:22] The most promising sectors in cannabis right now
[12:32] The Panther Group’s data-driven digital advertising approach
[15:44] The biggest pain points in digital advertising for cannabis companies and how to navigate them
[21:39] Interesting new gaps emerging in the cannabis marketplace right now
[27:05] Scott and Jordan’s tips on how to develop a successful pitch
[28:54] What investors should look for in a pitch deck and where to spot red flags
On a mission to enter the cannabis space, siblings Marie Montmarquet and Allen Hackett left their homes in Tennessee to join the action in California. Just a few years later, they’re now co-founders of MD Numbers, one of the most successful vertically integrated cannabis brands in the country.
Learn more at https://www.mdnumbersinc.com
[00:57] An inside look at MD Numbers and its subsidiaries, from MD Farms to Marie’s Deliverables
[1:17] Marie and Allen’s backgrounds in cannabis and how they came to start MD Numbers
[3:56] How Marie’s Deliverables has evolved since its start in 2015
[6:24] Why Marie and Allen decided to launch MD Farms and how this has helped them better compete in the Socal market
[7:33] Consumer preferences in Southern California versus Northern California
[9:56] The types of strains and wholesale services provided at MD Farms
[12:41] MD Farms’ mixed-light greenhouse facility and their plans for an extensive new indoor facility
[17:52] MD Numbers’ third company Legacy Coterie, a full-service cannabis consulting service focused on developing equity in cannabis
[18:44] The biggest compliance challenges cannabis brands face today and how to go about navigating them
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A-insider dot com. Now, here's your program.
Sinead Green: Today's guests are Marie Montmarquet and Allen Hackett, the Tennessee-born sibling duo that moved to California on a mission to enter the cannabis space. A few years later, they're now co-founders and owners of MD Numbers, a family of vertically integrated cannabis brands headquartered in the Bay Area. Marie and Allen, Thank you so much for joining us today.
Allen Hackett: Thank you so much for having us.
Marie Montmarquet: Thank you so much, Sinead.
Sinead: It's great to have you here. Can you guys give us a sense of geography, where are you in the world today?
Marie: I'm in San Francisco.
Allen: I am currently in Los Angeles today.
Sinead: Great. What is MD Numbers on a high level?
Marie: MD Numbers is a vertically integrated brand in California that encompasses cultivation with 50,000 square feet, greenhouse facility, distribution, processing, we have a nursery as well, and a delivery company.
Sinead: Awesome. Can you both share a little bit about your backgrounds in cannabis and how you came to start MD Numbers?
Allen: Sure. I'll start us off. I've been gravitating to the plant, cannabis, early on in high school, something just recreationally doing, not necessarily had a vision or making a career or even trying to go to lengths of fighting legality. Coming from the South where we're from, it's highly illegal, that pushed us to come to California. It was more Marie that made the initial push that got us to California. She came out with other business ventures, and then eventually, wanted to start a delivery service, then I followed suit. We saw the opportunity and then we doubled down on it. Six years later, we built up MD Numbers that encompasses all the businesses we had built in this time period.
Sinead: Great. Marie, you're from Nashville, is that correct? What got you into cannabis originally?
Marie: Yes, I'm from Nashville. When I was in college, I began getting a lot more educated on all the benefits of cannabis and just the understanding of the free-mindedness of not necessarily letting a law control the benefits of the plant. In Tennessee, of course, it's still criminalized, so I knew that I needed to leave Tennessee. That's the main thing that brought me to California, but in Tennessee, I definitely learned a lot. Allen and I were both affected by the criminalization of cannabis in Tennessee, and we're super driven to leave and be somewhere we could sustain a legal cannabis business.
Sinead: That's great. MD Numbers, that's really just the umbrella for multiple companies you guys now own, but can you tell us a little bit about your start in California and how you got up and running in that market?
Marie: Yes, for sure. This was back in 2015 when we originally got started and everything was still under Prop 215. Back then we knew that we wanted to get started, whether it was distribution or delivery, and delivery was the lowest hanging fruit, so to speak. We had someone that we could easily get really premium well-crafted strains. Back then, there was only about 10 deliveries in the county that we started in. It was a lot less saturated than today, but just being an early adopter was one of the main things that allowed us to compete even today and transition from Prop 215 to Proposition 64.
Sinead: Awesome. Then delivery service, it was Marie's Deliverables, which you started in Redwood City, which at the time was a dry county with zero dispensaries. What was that experience like and how has Marie's Deliverables evolved since then?
Marie: It's definitely a good question. Back in 2015, when we started, that was the city that we originated in and Redwood City is actually still a dry county when it comes to retail. Allen and I have applied for one of the first retail licenses in Redwood City. We applied in February. Fingers crossed, that will be one of the six licenses that are the first in the county to turn it from dry to wet, so to speak. That experience taught us so much, and a lot about business intelligence because we touch pretty much every part of the supply chain, inventory, purchasing, logistics, marketing, managing employees, managing a fleet, and was really able to establish the needs for what we wanted to develop in the future and get into cultivation and a lot of other things.
That was in 2015 when we started and established it in Redwood City. In 2016, we were launching in LA. We went to Los Angeles and transitioned into opening up down there. That's when we had a big revolution or a revelation rather about needing to get into cultivation. 2016, we launched MD Cultivation and we were putting flower that we were growing into the delivery service. Then the end of 2017 is when everything transitioned from Prop 215 to Prop 64. We went from Redwood City and to San Francisco and launched there in 2018.
We went through a lot of different product scarcity issues and all the compliance and regulations really put a lot of small businesses out. Then in 2019, there were a lot of different tech integrations and just continuing to build the business. Now, going into 2021 after COVID last year, of course, everyone saw a spike in business due to e-commerce and delivery being the go-to during COVID, and I would say, still is the wave of the future. Now, we're also still in business and planning to do a relaunch in the future with a new call center and collaborations with in-house product.
Sinead: Great. You mentioned MD Farms a second ago and that you had a big revelation to start cultivating your own product. What sparked that revelation and how has that better enabled you to compete in the SoCal market?
Marie: What we learned when we went to LA was there was a lot of competitors down there with delivery services that are all cultivating their own product. Because of that, they were able to have a really low cap. Really low max price, which was around $30. At that point was really the future that we were being able to see but in real-time that we were going to need to have control of a piece of the production somewhere to compete. Not just be in the supply chain, but own a piece of the supply chain.
In cannabis, there's just been a race to commoditize this plant and bring down the price as fast as possible with a lot of corporate cannabis. We wanted to grow premium flower and create a premium brand and that would enable us to compete in the California market anywhere as long as we could own a piece of the supply chain.
Sinead: Great. I've read when you entered the SoCal market, you discovered that the consumer preferences, there were a lot different from the NorCal market. Can you talk a little bit about the preferences there and the differences in the flower market in each part of the state?
Marie: It's crazy. I always say there's a lot of microclimates in California, and it's a joke, but not really a joke that you really do have to sell cannabis differently in each area of the state because in Southern California specifically, there's a lot of strains that they prefer down there that aren't necessarily really popular in the Bay Area. Southern California is really known for ocean grown and OG strains. When we went to Los Angeles in 2016, we didn't have necessarily all the OG strains that the preference was down there. We had a lot of cookie strains. We had a lot of different varieties of sativas and non-OG strains, but for whatever reason, they just have a lot of different preferences and are really OG-dominated down there.
Allen: To add to that too, I think people don't realize that LA is so big too. I mean, there's a lot of tourists there compared to the Bay Area, which is really small. It's really a lot of niche smokers in different communities whereas Los Angeles is really wide open, a lot of tourism. With tourism, you're looking at close to 30 million people annually that visit and travel in Los Angeles. A lot of that comes with people not necessarily educated on cannabis. When you tend to get uneducated people, they tend to like strong candidates, something that gives them a really strong effect. They want to feel that high, compared to what I'm noticing in the Bay Area.
There's a lot more functional smokers, people that like to be high, but want to be able to work and do things. A lot more sativas, a lot more hybrids, a lot more flavorful strains, I would say, up North in the Bay Area compared to in Southern California. It's more of a preference on THC content, how high is the THC, how stoned do I feel? That's where you get into more of the ocean-grown stuff, the OGs, which tend to be a little more stronger and gassier than your traditional hybrids or exotic flowers.
Sinead: Great. That makes sense. Touching on what you were talking about with the strains there, right now, you have your own in-house brands in the works I've read, you're in the research and development phase there, but right now you provide wholesale and private labeling at MD Farms. Can you tell us a little bit about all of the different strains you grow and who your typical client is?
Allen: Yes. For us, being able to have the delivery service and having all that data there, what people are buying and what people are liking to smoke and also what our competitors are doing as well because we can see everybody's menu on the same search engines that we have, we use that with our farm trying to make sure that we're growing strains that are popular, that are sought after, and that quite frankly are easy to sell.
We tend to grow a lot of hybrids, a lot of exotic strains there. We don't necessarily dive too much into sativas or sativa-leaning products. One, it's a little harder to grow. The climate that we have in Monterey County, it's a lot easier to grow some of those exotic strains. To name a few, for instance, we have a nice Gelato #41 cut, Gushers, Chem Cookies, Lemonade. We have a lot of Kushmans and different things that we got from different breeders throughout the state. We work with a few different geneticists and a few different breeders to try to curate strains that work well in our climate with our style.
Getting into cannabis and cultivation, we've seen a lot of people's shortcomings and a lot of people fail. We had those same struggles going into it. We were just on a smaller scale, so we can take those punches and keep moving. In a lot of those things, we're trying to build out a brand. It is very expensive to build a brand out in today's market. That was something that Marie and myself just did not want to focus on. We really wanted to focus on getting better at cultivating, getting better at offering delivery to our customers, and getting better at building relationships with different distributors throughout the state. We held off on that.
Now, three, four years later, we're looking to add a brand to our resume and have that in-house brand for our customers to be able to get a product straight from the farm straight to them, to the consumer. It's something we're working on now, and hopefully, with our new retail applications in line and with the farm expanding, we'll be able to create that brand and have it in the market and be able to provide it to our customers.
Sinead: Great. You said the cultivation side is just hugely important to you at MD Numbers and you've placed a lot of emphasis on it and it's clearly been a huge benefit to you guys that you have total control of that part of the supply chain there. Tell us about your mixed-light greenhouse facility and the new indoor facility that you are currently working on.
Allen: Very blessed to be able to have and got into the county of Monterey early when we did in 2016 and locked down a facility there. It's really hard to find a property in that regard. We currently have a 50,000-square foot greenhouse, 30,000-square feet of flowering space, and 20,000-square feet of nursery. We produce on average around 500 to 600 pounds per month that we wholesale and offer white label services for.
We have about 15 to 25 employees. That ranges depending on [unintelligible [00:13:25] [tremors?] and things like that. We operate year-round, 365 days a year we are open and those plants are getting fed and they're getting sunlight and they're getting nutrients and we're catering to those plants year-round. That was a big benefit for us, especially when we launched the delivery of having this other sector that we could, one, build relationships within the cannabis community, have insight into different strains and different things like that, and just have more data to be able to provide a better end product to the user that we're servicing.
With that, we decided to launch an indoor facility. In Greenfield, California, we were recently approved from the City Council for all of our regulatory permits and building permits to build out a 20,000-square foot indoor cultivation facility there. It'll be 200 lights when completed with a tissue culture lab and an R&D nursery as well as distribution as well. The main reason we wanted to launch that is because, like I said, going back to the delivery, we have all the data. We sell all types of product from high-quality indoor product to low-quality indoor, to greenhouse product, to mixed-light, to outdoor product. There is something for everybody. There's not just one strain or one type of cannabis that everybody likes. With that, we're purchasing indoor product from different distributors and different brands throughout the state.
We were like, "All right, if we can replace that with our own brand and then launch that brand and have indoor and mixed-light and greenhouse products, then we'll have a better chance of making better margins for ourselves." That's been my focus for the last year is trying to get that up and running and launch that, raising funds for it as well, then this will all coincide with the distribution and delivery that Marie's overseeing in the Bay Area, so our product will flow up north and hopefully be sold through our delivery through our stores.
Sinead: I've read you've got a huge philosophy about paying it forward, which I love. Part of what you use your cultivation facility for is demonstrations and educating equity candidates who want to get into this space. Can you share a little bit about that aspect of MD Numbers and the different projects you have and why that’s so important to you guys particularly in cannabis?
Marie: For sure. Allen and I definitely come from a background that's been very relatable to a lot of the people that we mentor and coming from a place where cannabis obviously is criminalized and the war on drugs was so big. We definitely take it upon ourselves to use the farm and any other educational resources we can to provide assistance. We partnered with Success Centers about two and a half years now. Angela White there is the manager of the Equity Program and she's definitely been really impactful on Allen and I.
Currently, we have a grant from the Office of Cannabis in San Francisco and the state to provide technical assistance and we provide mentorship and one-on-one counseling for those going through the Equity Program, making sure that they're educated about the supply chain, business economics, and brand creation or where even they want to start in the supply chain and how it fits in with anything they're currently doing and hopefully have the most success because a lot of these things are un-funded and the Equity Programs are currently underfunded when it comes to the larger capacity of capitalization. They might give you a little micro-grant here and there, but they have to really make sure they understand.
We use the delivery and we use the farm, we do a monthly tour on the farm to bring down all the equity applicants with Ms. Angela White, and we give them a live workshop there.
Allen does an amazing job and takes them through the entire farm from nursery through flowering, into our harvesting, processing, showing them the full post-production, everything from start to finish. It's a beautiful tour. Then we offer virtual workshops as well. Every other week, there's a job fair. In the week that there's not a job fair, there's a virtual workshop that we bring in professionals from all around cannabis and the supply chain, accountants, attorneys, all sorts of people to give workshops to those that are underneath the Success Center umbrella.
Sinead: That's amazing. In a few minutes here, we'll talk about how listeners can maybe take part in that because that's an amazing list of resources you guys have there. Going off that, can you tell us a little bit about Legacy Coterie and the work you do there as well?
Marie: Yes. Legacy Coterie is more along the permitting and distribution side of consulting underneath brand development. We have a lot of people that have built really large brands in California that can help with launch strategy, how to take over different areas, and into different brands, into retailers. We do operations consulting. Equity advising is wrapped up in there, just pro bono work that we do for a lot of equity. We bring in the same tools and resources to wrap it all together as a wrap-around service.
Sinead: Great. I'm going to shift gears here a little bit and ask you guys about the cannabis industry at large at the moment. What would you say are the biggest challenges brands are facing when it comes to compliance and legality and how would you advise them to go about navigating those challenges?
Marie: I would say a lot of the compliance and legality comes down to this just being such a brand new industry that's created and overseen by the Bureau of Cannabis Control. You have to make sure that you're involved with all of your local- your city or county and your state regulatory agencies. With that being said, permitting, of course, could be the largest challenge. The timeline for permitting is very long. You might be paying rent on a property far before you're able to even begin the build-out on that property, which is one thing that keeps a lot of people from being able to enter the marketplace, as well as zoning.
The zone, like Allen was speaking, we were very fortunate to be in Monterey County. A lot of people were put in a zone that didn't offer the type of permits that they needed to support their business. Maybe they offered cultivation but didn't offer processing. There's a lot of challenges just being in an area that's not friendly towards the process of coming into Prop 64.
Taxes. Of course, there's so many layers of taxes when it comes to all the pieces of supply chain, but not only that, 280(e) would be where we could start with some progress when federal legalization does happen and we can have normal business write-offs. Currently, that's one huge challenge. We're getting involved with industry because not only do you have to calculate all of your operation's overhead, but a lot of that has to do with things that you wouldn't be able to write off that you normally could write off in another business.
Sinead: Great. Something else working against brands right now is banking. As the Safe Banking Act hopefully gets approved here, what are your thoughts on that and what do you think that could mean for the future of cannabis?
Allen: It's huge. That would literally make or break most people's cannabis careers. Just simple banking on any regular level, you have a relationship with the bank. If you need a loan for something, whether it's short term or long term, you want to expand your business, you want to go buy a piece of property, you want to collateralize money that you have in the bank with a lot of credit or anything like that to help build your business, it literally is the infrastructure with what our economy has been built on with some small businesses getting started.
To have that completely removed from the cannabis beginning in California, it's been very challenging, to say the least. Hopefully, that's something that we could get implemented and then have the current operators and businesses that have been able to stand the test of time, have those resources available, but not having those resources was very, very challenging. It will definitely help new businesses that are getting started, new individuals that are looking to get in the business.
Look, cannabis is very volatile. It's hard to raise money in cannabis without giving your life or soul away to some investor somewhere far off that knows nothing about what you're really doing, or maybe knows a lot about it, but doesn't have the infrastructure in place to actually build it out. With banking, it eliminates some of the predatory lending that people have had to do or deal with thus far.
Sinead: Absolutely. That's a great point about the lending as well. Speaking of capital, where are you both in the capital-raising process, and what are your goals for the year ahead?
Marie: We are currently towards the end of funding what we're hoping to be about $3 million for these next cultivation projects which encompasses the indoor as well as four acres of greenhouse that we have currently in Salinas as well. We want to build that project out and fully fund it. That will be about $3 million total.
Sinead: Great. Awesome. Let's turn to some personal development questions here because you guys, while you live and breathe cannabis, I know you've got other things going on in your lives. First question, is there a book that has had a big impact on your life or way of thinking? Marie, maybe we'll start with you and go to Allen after that.
Marie: Definitely a big person on a lot of nonfiction and just backgrounds for those that have been really, really influential in the past. One book that's super cool that I've read a very long time ago is called What Makes the Great Great. It's by Dennis Kimbro. It's a really, really good book when it comes to strategies for those that have had extraordinary achievement throughout life. It's got a lot of anecdotal stories in there. They're really inspiring.
Sinead: Great. Awesome. How about you, Allen?
Allen: For me, I'm a big article reader. I read a lot of articles, I read a lot of news, I'm really big on current events. I would say different publications that I would gravitate to would probably be different Harvard Law studies. There's some on organization and different ones on being competitive in the workplace and things like that. They're super short and to the point. I've used those to help bridge my lack of business intelligence in this arena. I would definitely say any Harvard Law reviews, studies, or books. I don't have a specific one off the top of my head, but I've definitely read a few that have been gifted to me that have been very beneficial to us.
Sinead: Awesome. Moving on to the next question, what is one thing going on in the industry that you think might have a big impact in the future but might be a little underappreciated right now?
Allen: I will start that. For one, I would say women in cannabis. This industry has been dominated by White men, to start. Very few minorities have had their opportunity to get in and position themselves the way that Marie and myself have. Even fewer women. I would say that is definitely going to change. Like any industry, in any commodity, once women usually tend to get in, it usually gets a little better. I would say that is definitely something that's going to be big for cannabis once it legalizes across federal.
Sinead: Great. I couldn't agree more. How about you, Marie? Anything that you think might be going under people's radar at the moment?
Marie: Definitely what Allen said would be the first thing I would think of. The next would probably be something along the lines of national export, which of course has not happened yet because of the federal laws, but once we are able to export into other states from California and just the difference that will make on the supply chain and distribution and the impact that that will have abroad, I'm very interested to see from national export to global export, what that would look like.
Sinead: Great. Awesome. This can be West Coast or East Coast. I know you guys, you're born and bred in the East Coast and there are some good fast food joints on the East Coast as well. What would you say is your favorite unhealthy comfort food?
Allen: Oh, man. For me, that would have to be barbecue. Whether it's brisket or pulled pork and all of the sides and fixings that would come along with it. That is definitely Southern comfort food that can put you in a sleep coma.
Marie: I would say definitely going along the lines of fried fish, spaghetti, meatloaf, those would be the top three.
Sinead: Oh, man. Those are some classic comfort foods. Awesome. In terms of barbecue, that can be a bit of a controversial topic. Allen, are you more of a mustard-based sauce kind of guy or vinegar-based? What's your preference there?
Allen: Yes, that is very controversial in the South, I will say. I will say I'm probably more of a vinegar-based. I like sweet and sour a little bit. It's crazy you brought that up. Coming from the East Coast to California, I've yet to find really great barbecue in California.
Sinead: That's a shame.
Allen: It doesn't exist. They use more tri-tip and things out here they get away from the pork and the sauces and things like that. For me, I'm definitely more of a vinegar-based than a mustard-based, but sweet sauces are good. I love a good pulled pork sandwich.
Sinead: Being from South Carolina, I'm a little biased. I think South Carolina barbecue is the best, but my boyfriend’s from Texas so we have arguments about this all the time.
Allen: [chuckles] South Carolina is definitely up there.
Sinead: I agree. [chuckles] Awesome. As we wrap up here, you guys, how can listeners find you online and connect with you?
Marie: They can find us at www.mdnumbersinc.com and on Instagram @mdnumbers.inc and Farm is @md.farms.ca.
Sinead: Great. All right. Well, thank you both so much for coming on this show. Really appreciate you taking the time and wish you the best of luck with everything going on this year.
Marie: Thank you so much.
Allen: Thank you for having us. We really appreciate it. It's really cool.
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How can you use greenhouses and technology to take your cultivation to best in class? Here to tell us is Ryan Douglas, author of From Seed to Success.
Learn more at https://douglascultivation.com
[00:43] An inside look at Ryan’s cultivation consulting company, Ryan Douglas Cultivation
[00:58] Ryan’s background in cannabis cultivation
[1:41] The benefits of using a greenhouse to grow cannabis
[10:56] Why so many growers experience problems with mold and how to avoid this
[16:24] New greenhouse technologies in cannabis to look out for
[20:46] How to budget for an optimal greenhouse environment
[22:28] Tricks of the trade Ryan has brought with him to cannabis from his long background in cultivation
[30:32] How Ryan sees greenhouses and automation changing cannabis cultivation in the next 3-5 years
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now here's your program. How can you use greenhouses and technology to take your cultivation to best in class? We're about to find out with today's guest, Ryan Douglas. Ryan, welcome back to CannaInsider.
Ryan Douglas: Hey, thanks for having me on again. It's my pleasure.
Matthew: Give us a sense of geography. Where are you in the world today?
Ryan: I'm currently in Maine, in the Northeastern US.
Matthew: Okay. Remind us, what is your business, Ryan Douglas Cultivation, at a high level?
Ryan: I'm a cultivation consultant, so I help newly licensed cannabis businesses come to market quickly and spend less money getting there.
Matthew: Okay. Can you give a snapshot of your background in cannabis cultivation for new listeners?
Ryan: Sure, absolutely. In 2013, I was hired to direct cultivation for Canopy Growth Corporation, which at the time was one of the largest legal producers of cannabis in Canada, but prior to that job, actually, for 15 years, I was a commercial greenhouse grower of ornamental and edible crops. That's really my background and training and it helped to build the foundation upon which I became a commercial cannabis grower.
Matthew: Okay. You're steeped in this stuff, so it's second nature to you.
Ryan: It's all I know [laughs].
Matthew: Okay. What are the primary benefits of using a greenhouse to grow cannabis?
Ryan: Well, probably the biggest benefit is energy savings and the ability to minimize an operation's carbon footprint. We're in a bit of an interesting predicament with the cannabis industry because fortunately now we have more and more states legalizing cannabis, but unfortunately, the majority of those operations are indoor grow operations. These facilities are large and they can crank out a lot of cannabis and high-quality cannabis, but they use a ton of electricity and as a result, they have a huge carbon footprint. Probably the biggest benefit of moving towards greenhouses is allowing a grower to continue to produce a lot of quality cannabis at scale, but at a fraction of the cost and at a fraction of the electrical consumption as an indoor facility.
Matthew: Okay. We're seeing a lot of this emergence of the ESG directives, environmental sustainable governance, which is essentially shorthand is, reduce your carbon footprint or else, or an or else in most cases is penalties or you can't get investment from investors whose charter says, "Hey, we don't invest in companies that aren't looking closely at their environmental impact." When you make the case for a greenhouse, you can really show kind of a black and white difference in terms of sustainability then, is that right?
Ryan: Exactly, and this issue goes beyond just the US because just as you mentioned, as other countries begin to implement their plans for either reducing their carbon footprint or becoming carbon neutral, we all know that that they're first going to look at the industry. Unfortunately, we don't have a ton to be proud about when we look at electrical consumption and carbon footprint for cannabis growers. You might even have heard there's some rumors that it's possible that cannabis producers are going to take on a trend from some other food products where there'll be implementing consumer-facing labels that tells the consumer exactly what kind of a carbon footprint their product leaves.
At the moment, that would be quite embarrassing for the majority of cannabis growers, because like I said, most are indoors and most are producing really good cannabis, but they're doing so with a ton of electrical consumption.
Matthew: A non-sequitur here, but have you seen these micronuclear fusion reactors that can power four or 500 homes and they're incapable of having a meltdown, which is the big fear, like Three Mile Island and all these like a Fukushima and Chernobyl, those were kind of the big worst-case scenarios. Now they're making these tiny ones that could power a subdivision and really have just, there's really no downside. The only downside is there's such a stigma from the word nuclear, everybody instantly, the hair on the back of their neck go up and they don't want to try that, but it looks like there's something emerging here, which could be super powerful if we harness it. Have you heard anything about that?
Ryan: I haven't heard about that, but it sounds very interesting.
Matthew: Yes. Yes. We talked about the upsides of greenhouses. Is there any downsides or trade-offs?
Ryan: Yes, I think there's an assumption among cannabis growers that the quality of cannabis that comes out of a greenhouse isn't equal to that of an indoor grow. I find that opinion to be most strong among growers that have never grown in a greenhouse. When we think about quality cannabis, it really comes down to the genetics and the grower and the ability of the facility to maintain the optimal growing parameters. When you think about an indoor facility, the reason it's so attractive is that the grower really plays mother nature. They can control down to the point temperature, relative humidity, carbon dioxide, and so they're really in complete control of the whole grow up.
If you take a grower that's acclimated or accustomed to growing indoors, and now you put them in a greenhouse, there's a little bit less control, and there's a big learning curve in terms of learning how to use all of the equipment in a greenhouse to create the ideal growing conditions. In my introduction, I mentioned actually my background and training is in greenhouse production so I'm a lot more familiar with the methods and equipment that greenhouse growers use to create the perfect growing environment for their plants. Just as an example, anytime a greenhouse heats up, literally the greenhouse effect, there's options to use a natural ventilation or a forced ventilation with the sands.
We use evaporative cooling, which is simply providing water vapor into the greenhouse, through either a high-pressure fog system or something called a wet wall. The evaporation process actually cools down the greenhouse. We also use shade curtains that let us select how much of the sunlight we let in and as a result, we can cool temperatures that way. Instead of running to the air conditioning unit to turn it up or turn it down in a greenhouse, we actually use four or five or six different methods for cooling the greenhouse.
I think probably the biggest concern for growers, the reason a lot of commercial operators do not want to head into greenhouses, it has to do with humidity. For anyone that's not a cannabis grower, the flower is very susceptible to mold, especially in the last few weeks of the crop cycle, and because we're growing something that's consumed directly or inhaled, we're really limited, as we should be, to any protective fungicides that we could apply to the flower to prevent mold. Really the only tool we have is creating an environment that isn't conducive to mold growth.
Indoors, growers are installing massive dehumidification units and they do the job. They can, even if it's raining outside, which is essentially a hundred percent humidity, they can get down to maybe 40% relative humidity which is really dry, inside of the grow room. That's what protects the crop, but we don't really have that ability to dehumidify a greenhouse efficiently. I think that's probably one of the reasons that a lot of growers actually would prefer not to explore greenhouse production, but the good news is that there are ways to manage humidity in the greenhouse because cannabis is not the only crop that runs the risk of mold.
For decades, we've been growing in greenhouses and we've been managing the environment to grow the crops, so just briefly as an example, what we've been doing for decades, and I did this when I was growing flowers is utilized heat and vent cycles. As we know, heat rises in a greenhouse and as the air rises, it takes along with it moisture. Then once it hits the roof of the greenhouse, we simply open the vents for a short period of time and this air escapes. By using a combination of fans inside the greenhouse and these heating and ventilation cycles, we actually can adequately dehumidify greenhouses in the majority of the growing regions in the US.
The problem, one of the challenges greenhouse growers have is in places like Florida, where you have a booming cannabis industry, but most of the year it's too humid to grow crops in greenhouses. That's why you find a lot of the big producers in Florida are growing indoors. In that instance, unfortunately, there's not an easy solution. What a lot of growers do is actually utilize a chilled water system, which is essentially hooking up the greenhouse to an air conditioner. As we're talking about electrical consumption and carbon footprints, that's not ideal, but at least in that situation, you're still taking advantage of the natural sunlight.
You might be spending as much money and consuming as much energy as an indoor grow to manage the humidity and temperature, but you're still getting the light for free which is a step above a typical indoor grow. I think there's a number of fears that are justified but if you're not a greenhouse grower, then the idea is completely foreign and you wouldn't consider it. I think as an industry we really don't have much of a choice, I think growers are going to come under increased pressure to not only reduce costs but comply with environmental regulations in the future. I think you'll see more and more commercial operators start in a greenhouse or if they're currently indoors, as they expand, they'll be expanding into greenhouse production.
Matthew: You mentioned that the cannabis plants are-- You can get mold especially during the last few weeks of the grow and before harvest there. Why do most growers fall into that trap? They don't have a dehumidifier that can keep up with the amount of moisture in the grow and they think it's not going to get to you a point where- so they have too small, the humidifier, and then the last few weeks like sneak up on them and surprise them, is that what happens?
Ryan: Yes, so you're referring to greenhouse production or cannabis production in general?
Matthew: The cannabis production, in general, it's like what- like that mold the last few weeks.
Ryan: Yes, it's less common indoors because that comes down to a basic mathematical calculation. Depending on how you grow the crop, the density of plants inside the grow room and the volume and frequency with which you're irrigating your plants, you can get an idea of how much moisture you need to strip out of the environment. Plants will transpire or will evaporate 95% of the water that they receive in an irrigation. Mechanical engineers, especially in these big commercial facilities, mechanical engineers need to take care to do calculations to determine how much moisture in the air they need to strip in a 24-hour period. If you're not involving these skilled tradesmen or engineers in the production of your facility, then you might just be eyeballing it or estimating.
In that instance, if you are equipped to grow up with an insufficient capacity to dehumidify the environment, then indoors you certainly could run into mold issues by simply not having enough equipment or enough dehumidifiers or strong enough dehumidifiers that can strip that moisture from the air rapidly, and not allow the creation of an environment where mold spores are going to germinate and propagate and potentially ruin the crop.
Matthew: Yes, and this is where we see growers get into a pickle where they don't have a backup plan but they've got mold in their grow and they're upside down on their expenses and revenues, and then they resort to like eagle seven or something. They spray on there and they think, "Oh, I just did - just this one time", and then they might get caught and get into trouble. It's just better not to be in that pickle to begin with.
Ryan: Yes, especially since the majority of states require a laboratory analysis of the final product before you can sell it to a dispensary or sell it in your own dispensary. One of the things they check for in addition to different bacteria and fungus and heavy metals is the presence of pesticides or fungicides. There is really no chemical pesticides or fungicides that are allowed to be used on cannabis crops, so all of these laboratory tests, they need to show that the product falls well below the threshold. It's usually if not parts per million, sometimes parts per billion. It might be a quick fix to save the crop but if you can't sell the product, then you really haven't helped yourself at all.
Matthew: Then where doesn't it make sense for a greenhouse? Is there a latitude where you say, "This really doesn't make sense?"
Ryan: Well, we can get around it being too cold, so there's a number of ways to efficiently heat a greenhouse, and just by the nature of the greenhouse effect, if there's even moderate sunlight, that goes a long way. There's a number of ways to cool the greenhouse, so really warm regions, it can be challenging but it wouldn't be game over. I think the most challenging is going to be places where it's extremely humid all of the time because then you might reach a point where the cost of outfitting your greenhouse with a chilled water system, that decreases the temperature and also causes the moisture in the air to condense so it can be removed.
Air conditioning in your greenhouse is really inefficient and really expensive. You might reach a point, if you're in a place like Southern Florida for example, or maybe a tropical island that legalizes cannabis production. It just might make more sense in terms of capital expenditures, and then ongoing operational expenditures, to grow indoors. Again, that's because we can't wash the flour prior to consumption. A lot of other crops that are susceptible to mold, it's common to use fungicides on these crops because they're either washed prior to being packaged, like if you think of ready-to-eat lettuce or tomatoes, they go through a rinsing process before they're packaged.
It can be done at the production facility and then we as consumers can wash it again prior to eating and preparing it but we don't have that option with cannabis. There's really nothing we can apply on the plant, the best we can do is modify the environment, so the plant is less susceptible to a disease infestation.
Matthew: Okay. Are there any innovations or automations occurring inside the greenhouse that people might not be aware of that you think are cool or helpful?
Ryan: Yes. The interesting thing about cannabis is that the value of the crop is so high that the industry in my opinion is ripe for new technology or new inventions that can help a producer lower their Carbon footprint or lower their production costs, or actually increase crop quality. One technology that I'm interested encircles-- It has to do with carbon dioxide supplementation. Plants utilize carbon dioxide for photosynthesis. What happens in grow rooms and in greenhouses, I mean semi-closed greenhouses, is that if the crop is photosynthesizing and growing at a rapid rate, it can actually deplete the level of carbon dioxide lower than ambient levels.
Where you and I are right now it's roughly 340 parts per million carbon dioxide in the air, but if we were to load up the room I'm in with the plants, that level is going to drop dramatically, and as a result, the plants are going to slow their growth and they'll be less productive. What cannabis growers do indoors and in greenhouses is they supplement the environment with carbon dioxide gas to not only maintain ambient levels but research has shown that actually if you increase two or three times the ambient levels of carbon dioxide, the plants will actually grow faster and produce more.
The challenge is. if you read some reports about the carbon footprint of the cannabis industry, there's some attention that's being given to carbon dioxide supplementation. It's not the carbon dioxide that's released into the environment that causes the carbon footprint because the plants consume it. It's actually the process of condensing this gas into a liquid and keeping it cool and transporting these massive tanks to facilities that actually increases the growers' carbon footprint. There's one technology that really interests me. Instead of buying these massive tanks of liquid, CO2, plopping it outside of the facility and then bringing that gas into the grow room, what they've done is found a way to combine this carbon dioxide with water and they deliver it to the plants through a high-pressure fog system.
What happens is this high-pressure fog really creates a fog or a mist, it settles onto the plant temporarily and within a few minutes, it evaporates. During that time, it remains in a liquid form long enough to provide the needed CO2 to the plant, but it evaporates fast enough that it doesn't create a mold risk for the crop. What they're finding is that this method provides the crop with the needed levels of carbon dioxide for healthy growth but using 95% less carbon dioxide than traditional methods. As a plus, as the mist with the CO2 is evaporating off of the leaf, it temporarily acidifies the leaf surface.
One of the biggest risks to growers is a mold called powdery mildew. If you're not familiar, you haven't seen it before, this mold looks like someone sprinkled Talcum Powder on top of the plant and it can destroy a plant in the crop and it can spread rapidly, but in order for that mold to take hold, the pH of the leaf surface has to be just perfect. If it's too low or too high, that mold isn't going to take hold. What they're finding is that with this novel method of carbon dioxide delivery to the plants, they're using much less carbon dioxide and as a result, it's acting almost like a preventative fungicide, which is fascinating because seldom do you invent something that has a side effect that is just as important as the reason you invented the thing.
There's an example of a new up-and-coming technology that is going to help growers lessen their carbon footprint, lower their production cost and actually potentially increase the quality of the plant by helping to eliminate the risk of powdery mildew.
Matthew: Let's say I'm an investor, business owner, or cultivator, how do I go about budgeting appropriately for creating an ideal greenhouse environment?
Ryan: That's an excellent question. Unfortunately, it's going to differ dramatically depending on the region of the country. If we look at the US, if we look at the farther outside of the optimal growing range, the more expensive it's going to be to build a greenhouse. Currently, I'm in Maine. We have a beautiful summer but it's short. It's only 90 days. For growing a crop like cannabis that likes warm weather and strong sunlight, we need to invest a lot in order to maintain the right temperature, maintain the right light levels, and maintain the right humidity levels as well.
You could be looking at building a state-of-the-art greenhouse in the Northeast for $400 a square foot. That actually rivals the cost of building an indoor facility but if you go to another place in the US, maybe we'll look at Arizona where it's much drier and you have much more sun year-round, it's going to be less expensive to build there. Maybe you can anticipate budgeting $250 a square foot for a greenhouse down there. It really comes down to how much you need to modify the environment to create the optimal growing conditions. The farther outside of those conditions, the more expensive it will be to build a greenhouse.
Matthew: You've mentioned, Ryan, that you were in the general horticultural business before getting into cannabis, is there any tricks of the trade or tools or ideas that you brought over from that part of the industry into cannabis that you feel is like not as widely used that's helpful to you?
Ryan: Yes. In my experience, growing any commercial crop, whether it's flowers or hydroponic vegetables, 80% or 90% of the principles, the concepts apply directly to cannabis. I'm not saying that growing a tomato plant and growing a cannabis plant is exactly the same thing but what I believe is that when we're talking about commercial-scale production, when we're talking about planning production, managing production, managing the environment, managing people, managing the facility. A lot of these principles are exactly the same so I was fortunate in that I had 15 years of experience growing flowers, potted ornamental crops on a commercial scale, and growing hydroponic vegetables on a commercial scale, prior to tackling cannabis on a commercial scale.
What I found as a consultant is that when clients call me in to look at a crop problem, they bring me over to where their problem is and they point to the plant. As I begin the process of troubleshooting, oftentimes it leads back to a lack of experience in the cultivation leadership, which is to say the Head Grower or the Master Grower simply doesn't have the experience to pull off a grow of that size. When you ask about a specific technique or anything that's underutilized, there is one practice that is not very well known in cannabis that is common to traditional horticulture which I think has a lot of potential for cannabis growers, which is the use of plant sap analysis as a way to manage nutrients.
Just briefly, if you think back to our junior-high botany classes or plant science classes, the xylem and the phloem of the plant is what brings the water and the nutrients up and down throughout the plant. Plant sap analysis extracts this sap and it allows the grower a way of instantly seeing what's going on in the plant, so they can make real-time adjustments to their fertilizer regime. The reason this is important is that if you think about nutrient management, nutrient excesses, if you use too much nutrients it can result in burnt plants or increase susceptibility to insect diseases or extra costs that you really don't need to be applying that much fertilizer.
On the flip side, if you don't have enough fertilizer, then it can result in sick plants, low yields, and again increase susceptibility to insects and disease. As of now, what people usually do, if they see a problem in their crop, they'll take some samples of leaves and they'll ship it off to a lab for a dry tissue analysis. The problem is that is really the equivalent of a post-mortem exam because once you get that information back, let's say, you realize it was low in potassium, there's not much you can do because the crop has already suffered some amount of economic damage and the best you can do is try to prevent it from the next crop. When we're talking about cannabis, there's so much money at stake that growers really can't afford to wait to find out what's going on.
The beauty of this process of plant sap analysis is that you can instantly see what's going on in your crop and determine whether or not you're using excess nutrients or not enough nutrients. What that means, in the end, is that the grower can prevent using too many nutrients so they can dial back certain nutrients if they believe that the plant doesn't need it. Essentially, it lowers the cost of production but it can also result in a higher quality more productive plant because the plant is getting exactly the nutrients it needs at exactly the right time.
In my experience, actually in my opinion, I think a lot of cannabis growers are over-fertilizing their plants. They're just pounding the fertilizer to the plant when a lot of that is unnecessary. At the beginning of this call, we spoke about the beauty is that you've got more and more states that are legalizing cannabis which means there's more and more states that are cultivating cannabis. The majority of these growers are pouring the leaching from these grow-ups either out the back door or into the municipal water system so there's very few growers that are using these closed-loop systems that capture the leachate or the runoff, the drain that comes out of the bottom of the pot.
There's very few growers that have a closed-loop system that captures that and reutilizes it again. When we look at trying to comply with environmental regulations, all of this fertilizer somehow is going to find its way into the environment so it causes algae blooms and all sorts of things. I think, right now, it's still under the radar but as more and more states grow cannabis, I think it's going to come under the same kind of scrutiny that any other farming, so a lot of farmers have to be careful about how they irrigate, where the runoff goes to, what are they running off.
Just coming back to the plant sap analysis is that not only does it help the growers spend less money on fertilizer they would need, they also potentially can grow a much healthier crop. They're also much more environmentally friendly in terms of what is leaving their production facility.
Matthew: You mentioned a lot of growers, they have a knowledge gap just like we all do. No one can know everything and sometimes there are some unknown-unknowns, how can you hire a Head Grower and come up with a way to at least understand that grower's gap in knowledge or make sure that they're at a critical level, bare minimum, how do you measure those things and know you're getting a grower with the right skill set?
Ryan: That's tricky. Since you have more and more states legalizing, you've got fewer and fewer experienced cannabis growers available to hire. Naturally, we need to look for growers that maybe are outside of the cannabis industry but still bring that skill set that I mentioned where 80% or 90% of the principles directly apply. For anyone that's looking to hire a grower and interested in hiring someone from traditional horticulture, I think it really comes down to experience. You want to find someone that has at least 10 years of experience growing any crop on a commercial scale because they'll have well ingrained in them skills such as production, planning skills, people management skills, facility management skills, and the remainder, the crop-specific details of cannabis can be taught to a commercial grower through either a cannabis subject matter expert or a consultant. These commercial growers are trained to learn new crops quickly. Whether it's a different kind of a poinsettia or a different kind of a vegetable or a cannabis for the first time, they've already got a solid foundation of understanding of how to organize and execute commercial plant production. It's just simply a matter of filling in those crop-specific details, which they would do regardless of which crop they're growing. I think one of the biggest benefits growers from a traditional horticulture can bring the cannabis industry really comes in terms of helping the operation produce at the lowest cost possible.
With increasing competition, we've got to anticipate, eventually, there's going to be some price pressure, and so these companies that can produce cannabis for the lowest feasible cost possible are going to be some of the most successful. When you think about crops like tomatoes, you're buying them for a couple dollars a pound at the grocery store, which means they've got to be produced for half of that. When you look at cannabis, some places are selling it for $4,000 a pound wholesale to dispensaries. When it comes to minimizing costs, growers from commercial horticulture, they're hyper-focused on optimizing energy and work efficiencies, because the margins are razor-thin in the world where they come from.
If you hire a commercial grower from a vegetable or a flower range, from day one, they're already looking at ways to minimize the amount of times that you touch a plant, or the workflow of people, just how things are done. I think it's a tremendous benefit to being able to hire a grower from that world, because immediately you can begin to realize cost savings on an operational level.
Matthew: How do you see greenhouses, automation, technology, changing cannabis cultivation in the next three to five years?
Ryan: I think a lot of it's going to be focused on doing more with less in the sense that we're requiring less energy in order to do what we're already doing. Less electricity to run lights, which is why LEDs are so popular, or less energy to be able to cool or dehumidify the growing environment, or like the example with carbon dioxide, less energy in order to provide the plant with exactly what it needs. We can't change how much fertilizer or water a plant needs. We can't change the temperature it needs to grow, but we can change the manner in which we deliver those to the plant. I think that's where the greatest opportunity is in terms of inventions and new technology, is just becoming more efficient at the way that we grow plants on a commercial scale.
Matthew: Ryan, I'd like to move to some personal development questions to help listeners get a better sense of who you are as a person. What is your favorite unhealthy comfort food?
Ryan: I like chips and salsa. I think that might be healthy, but I like it.
Matthew: Do you really put a lot of stuff on there too, besides just the salsa, and some guac, some cheese or anything like that?
Ryan: As long as it's fresh, that's the most important thing. I think fresh salsa beats jarred salsa any day.
Matthew: Yes. What was the last song that made you sing out loud while you were driving or otherwise?
Ryan: It would have had to been a Spanish salsa song and I don't even know what I was singing, but I think I listened to it enough times that a few of the Spanish words stuck in my head and I just couldn't resist [inaudible [00:34:02]
Matthew: Okay. [laughs] Now I'd like to end with a quick tip, Ryan, before you give out your website and we close. What is it--? Cannabis plants love light, but part of the plant does not, which part of the plant doesn't?
Ryan: That would be the root system.
Matthew: Right. You got to be careful not to have certain kinds of pots. Right?
Ryan: Right. You want to be careful about anything that's transparent or even white plastic pots or white bags. Those are pretty common, but the problem is the light penetrates and really roots do not like to be exposed to light at all. Really the best rule of thumb is above the soil as much light as possible, but below the soil line, it needs to be dark.
Matthew: Great little helpful tip there. Ryan, as we close, how can listeners find your book and reach out to you if they need help with their cultivation practice?
Ryan: Sure. I recently published a book called From seed to success, how to launch a great cannabis cultivation business in record time. That can be purchased on Amazon or through my website at douglascultivation.com.
Matthew: Great, Ryan, thanks so much for coming back on and educating us. You got a lot of knowledge trapped in your head there. I'm glad you could come out and share some of it.
Ryan: Oh, It's my pleasure. Thanks for having me on.
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 cannainsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out through your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedbackcannainsider.com. We'd love to hear from you. 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.
Promotional consideration may be provided by select guests, advertisers for companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies with 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.
[00:36:55] [END OF AUDIO]
What if you could turn your smartphone into a cannabis testing system that provides lab-accurate results in under ten seconds? Thanks to biotech company Purpl Scientific, such a device now exists. Here to tell us more is Purpl’s Global Sales Director, John Hunt.
Learn more at https://www.purplscientific.com
Follow John on Instagram at @grimeygatsby
[2:15] An inside look at Purpl Scientific, a portable testing device that measures cannabis potency with instant results
[3:46] John’s background in cannabis and what led him to join Purpl as Global Sales Director
[10:41] The college course John teaches on gaining certification to become a dispensary agent
[13:40] The Purpl Pro’s infrared spectroscopy and how it works to provide lab-accurate results
[19:05] Advantages the Purpl Pro offers cultivators
[25:48] How the Purpl Pro stacks up against third party labs in terms of accuracy
[36:17] Purpl Scientific’s growing success in the Netherlands and the company’s goals to expand across Europe
[39:12] New upgrades to the Purpl Pro, from moisture content to extract measuring technology
[42:57] The Purpl Pro’s incredible ROI for everyone from cultivators to cannabis brokers
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A-insider dot com. Now here's your program. Hi, CannaInsiders. Just a quick note before today's interview get started that my colleague, Sinead Green will be interviewing today's guest.
Sinead Green: Hey, Matt.
Matthew: Oh, my god. You scared me. Sinead, I didn't realize you were in the sound booth.
Sinead: Sorry about that, Matt.
Matthew: Well, Sinead, since you popped into the sound booth here, this is a great time to just say hello to all the listeners as I was talking about you.
Sinead: Sounds great. I'd love to. Hey, everybody. I'm Sinead Greene. I've actually been working with Matt behind the scenes for a couple years now. I'm so excited to put on
my hosting hat and really get a chance to engage with you and bring you some more great interviews. I just want to say, if there's someone you'd like us to bring on the show, please feel free to email me your suggestions at email@example.com. I'd love to hear from you and I really hope you enjoy these upcoming shows.
Matthew: Gosh. I want to get a hosting hat now that you mention it. I'm getting a huge purple velvet hat. What do you think about that?
Sinead: [laughs] I think that would look great on you, Matt.
Matthew: Okay. Really important, Sinead, we want you to do a good job but not better than me. Does that sound fair?
Sinead: We'll see about that.
Matthew: All right. Everybody, enjoy this episode with the host, Sinead.
Sinead: What if you could turn your smartphone into a cannabis testing system that provides lab-accurate results in under 10 seconds. Well, believe it or not, such a device now exists thanks to biotech company Purpl Scientific. Here to tell us more is Purpl's Global Sales Director, John Hunt. John, welcome to CannaInsider.
John Hunt: Thank you guys for having me.
Sinead: Thanks so much for coming on. John, we were chatting a little bit before the interview. You do a lot of things beyond Purpl that I want to get into, but first of all, let's keep with the basics here. Give us a sense in geography. Where are you in the world right now?
John: I'm based out at Denver, Colorado.
Sinead: Awesome. Kind of cannabis mecca down there. Very cool.
John: Cannabis capital as some people call it.
Sinead: Oh, yes. [laughs] We'll start with Purpl and then we'll work into your other projects. What is Purpl Scientific on a high level?
John: I think the highest level, there was a need for people to be able to test their cannabis for potency which was the start, I believe. As of right now, it's one of the most mobile, fastest, and probably the word we like to use is transparency. It's a free app on your phone. You get a device and it tests and tells you the total THC, the total CBD. We've made an upgrade now where it does do moisture content and water activity.
After working with numerous different cultivators across the country, the upgrade helps with the curing and the post-harvest. Then the total THC and total CBD work during the flowering cycle, whether you're growing hemp or cannabis, it woks to give you some transparency and a little bit of data that isn't as easily accessible to a lot of people as it was for the regulated market.
People that have a regulated lab to use send off samples and get it tested, every harvest or every different batch of product that they make. The Purpl PRO was thought to be that for the people that didn't have access to regulated labs. How do we make an accurate testing device that can be instant and give people some data on the potency of the cannabis and hemp that they're growing, or purchasing, or being around, or consuming.
Sinead: That's great. Yes. The way I see it, you guys are democratizing cannabis testing, which is really, really cool. I'm very excited to get into Purpl in a second here. First of all, John, can you share a little bit about your background? I know you have a long-storied background on cannabis and I would love to hear a little bit more about it if you would share that with our listeners.
John: No problem. Started in cannabis in the Colorado industry in 2009. I lived up in Aspen, Colorado and started the patient collective there. After that, moved to Durango, Colorado and helped open up a cultivation facility and a dispensary there. Then the recreational transition occurred in between, getting back into the recreational market. After leaving Durango, after selling the farm and the dispensary, I got into this digital marketing, social media, event production aspect, which is where we have a company with a portfolio called Grimey Gatsby.
They do a lot of that and they've done a lot of different things over the past decade, but got back into the recreation industry in about 2013. Took over a position to staff and train and start Steep Hill, Colorado, which at that point was the first license testing facility in Colorado for recreational cannabis. During that journey and getting all that together, was met by some investors and some people that wanted to get into the actual core industry.
We got into a dispensary and a cultivation facility in Denver and a dispensary, and cultivation, and extraction facility that was in Colorado Springs. As the owner/operator, I ran those up until 2019. In 2019, 2018, is when I met the people at Purpl and they needed to do some beta testing and get the device right, talk about what that was going to do. They needed cannabis to test on it.
We ran all the beta testing and had it in our cultivation facilities in Colorado, polished here or there, helped them out with data, making sure that it was testing all of the different cannabis that we had. All the different phenotypes, testing out everything that we sold at our dispensary, and really just data collecting and fine-tuning what the device was going to do before it launched.
In 2019, I ended up selling those dispensaries and cultivation facilities. I took a position as the sales director at Purpl and that's when Purpl launched. It was in 2019. During my time as a own/operator of licenses in Colorado, I also got involved in other states. Currently, I oversee a large group of brand. It's Portland, Maine.
We also have a dispensary that I'm part of the ownership in Conway, Arkansas. Then in Missouri, where I was born and raised, I work with a group called North Medical Group. I teach a college course that helps people get into dispensaries as a Dispensary Agent. It's a certification process that happens online for six weeks.
Throughout my time, since 2009 until now, I've been pretty well saturated in the cannabis market, either helping out cannabis brands or helping launch cannabis brands. Now, today, I still work with Purpl and oversee the college course and do all the instruction there. Then we have Arkansas and Maine.
Usually every year, there's about one two three new clients that we help out with something. Whether it's structure in their operation and training their people on the new seed-to-sale tracking that maybe implemented in certain states, or we help them out with taxes and bookkeeping and how to maximize what they're doing for their recording. How to get new genetics or structure their cultivation facility to be more efficient, and effective, and higher yields, but pretty much the whole gambit.
I've been involved with cannabis the plant since I graduated college, and then since then got into the regulated market. Now, work in multiple different states, have written applications in, I think now it's nine or 10 different states. I think a total of 15 or 17 different application. Helping different companies get acquisitions and merges that they're looking to purchase things in different states.
The Grimey Gatsby Corporation now works at that level where we do some consulting, which is always a word that some people take good or bad. We definitely work to help our clients figure out the solutions for what they need, and also connecting them to the network that we have.
In the past couple years, there's a new trend line called Hunt's Harvest that I'm involved with. There's a breeding company out of the state of Washington that I've been involved with for a number of year now. It's kind of what we can do to make either better quality cannabis, or more cannabis available to patients, or helping cannabis companies be able to understand all the hurdles and what solutions happened for their company to have the longevity that they need.
Sinead: That's great. You're all over the states. It's amazing. If you had to pick the market you're most excited about right now, what state would you say you're most excited about?
John: That's a good question. I was born and raised in Missouri, so I'm definitely very attached to the Missouri market. There's a lot of different things happening, some good, some bad. I'm really excited to see Missouri stabilize and retail prices drop, and more cannabis being available through cultivators, and new products coming. That's really exciting.
In Maine right now, we're working on our transition from medical to adult use, which is what their term for recreational. It's really exciting in Maine because there's a lot of medical patients there, but there's also a lot of adult-use customers that are looking for that transition. That's exciting to be a part of. I've always been excited about the Colorado market. Washington, California, Colorado, they're more stabilized, but there's new products that are always coming out. There's new ways to operate. They just gave out the first delivery license in the state of Colorado. I think the landscape is going to change and deliveries are going to start to be accessible.
Overall to me, a lot of the new markets like here in Mississippi is going to be opening industry or Virginia. Those new states to me always give me a little bit more excited because for over a decade now, I've spoken to, taught, or been at certain places where people didn't have accessibility to cannabis.
When that changes, it's always great to see. If I had to pick one, right now I would probably pick Missouri. I'm really interested in seeing how it becomes more patient-friendly and how there's more products and better pricing. That's something over the next year that I think will change in that state for the people that are there.
Sinead: Absolutely. Yes, so much to be excited about. John, you wear a lot of different hats here. Besides your work at Purpl Scientific, like you said, you also teach a college course on certification for those who are interested in being a Dispensary Agent. Can you go into that a little bit? What does that entail?
John: Yes. It's a course that we developed. The North Medical Group is the dispensary that I work with and the company that I'm involved with. We worked with Jefferson College, which is in Hillsborough, Missouri, just south of St. Louis. We wanted to be able to have something that not only helped us as a company find qualified candidates to bring them into work in our dispensary's, but also would help the state as well.
If you're in Kansas city, you don't know what it takes to work in a dispensary. This course is online, so anybody in the state can take it. It's a six-week course. Our next one starts early September and there's a couple of seats available, just as a shameless plug for anybody in Missouri that says they wants to take the course.
We go through everything from regulations, SOPs, and daily operations, how to work with a patient, understanding cannabinoids and terpenes and their effects. We worked through a whole six-week curriculum that I wrote and we structured with the college. It allows people to get an understanding of how working in a dispensary happens, how the regulations impact day-to-day operations. What's expected, what's happening, how to interact with patients, how to talk about cannabis.
The course itself right now, we're about to start the fourth cohort. We do have 100% pass rate. All of the people that have taken the class in the past three cohorts have passed. Out of that, I want to say it's about 65 or 70% of them have already landed a job. We do tend to hire people at North Medical Group that have taken the course, and there's another six or seven dispensaries around where we're located that also know about the course.
Then we also have some people in different parts of the state, they're able to take the course, they get the certification. I'm a reference for them if they need it on their resume during submission. The term in Colorado would be a "Bartender". In Missouri, we call them a Dispensary Agent. In some places, they call them a Sales Associate.
It's the frontline aspect of somebody that comes into a dispensary, not only knowing how the grading works, but also how the sales floor works and how all of the regulations occur and the compliance of that job as well. That's what that course is focused on for the state of Missouri. There are some talks about doing it in other states if there's other universities and colleges that want to talk about it. Jefferson college, Hillsborough, Missouri is the place where it's at.
If you do need information you can always DM me or find me on Instagram @GrimeyGatsby. We can talk about the course, the curriculum, or what you're looking to do. As, now, College Professor, I have an open-door policy to talk to people anywhere that want to figure out how to get into the cannabis industry.
Sinead: That's great. Wow. What a success rate too. That's amazing. Moving back to Purpl, what exactly is the Purpl PRO device? Can you tell us a little bit about the technology there? I know it's called infrared spectroscopy. I had to look that up before the interview here, but if you could tell us a little bit about that, that'd be great.
John: Yes. Of course, it's definitely a mouthful. That was part of my initial training was just learning how to say words directly. The Purpl PRO is about the size of a hockey puck. What it does is it uses near-infrared spectroscopy. Near-infrared spectroscopy is used in a ton of different industries. The easiest term its reflection. A light bulb shines and there's a reflection that you can't see with your eye, but the sensor picks up.
Because of that reflection and what it reflects of how the data is captured, how it's written, how it's transformed, that data is then able to calculate what the potency is. Obviously, any of our growers out there know about trichomes and different aspects of the plant. The reflection of that plant, this device is trained through hundreds and hundreds and hundreds of tests.
I think as of right now, we're probably close to more of like 50,000 or 60,000 tests. The device is trained that it's been able to test all of these different flowers, and it's able to tell you what that reflection means for potency, total THC and total CBD. Then the water activity and moisture content are the other readings that it gives out.
In the 1940s, the FDA came out and said, NIR, which is near-infrared should be used for quality control management in multiple different fields. Pharmaceutical companies use it when they're making their pills and their medicines to get a reflection and be able to prove that they're doing QCM. Same thing with cat litter, dog food, cat food, the microbrewing industry, and beverage makers, near-infrared spectroscopy is used all the time.
One of the biggest companies that uses it that most people don't talk about would be John Deere. A lot of their combines and a lot of their machinery that they make have near-infrared spectroscopy devices on them so that they can do certain things. You can train the reflection to be data for what you want it to be. If you wanted it to say how much moisture is in cat litter, you start testing and setting it up, and then that's how you would be able to use it for the future.
At Purpl what we've done is we have a certain amount of data that we collect as a company, and we're able to use that. Then we also worked with SC labs in Oregon and SC labs in California and was able to do some validation with them on the device. We have a white paper it's on our website under the news column. That white paper talks about our variants sort of what a regulated lab would say, and then also our variants within the device itself.
Then on top of that, just most recently in the past two years, we've worked with Steve Hill in Arkansas and done the same validation with them to not only add that to be able to say, "We have three different states with three different labs." There's also two different companies of the labs trying to make it as transparent and accurate as possible for what it does.
You grind up a sample of flour, you put it in a sample holder, the light flashes, it reflects. That device then calculates and runs it through our database and says, "This is what the potency is." The result shows up on your cell phone. Like you said, in the intro, if you have a great connection and you're on 5g, it's about 10 seconds. I would say that if you're out in the field trying to do it, it's probably more of 25 to 30 seconds.
I've never seen anything take longer than 30 seconds to read out an actual result. I think you're able to use that result, keep a database of all of your samples, you can add in notes. The device, the Purpl PRO is mobile. It does fit in your pocket. You can charge it up and plug it into the wall to charge it and use it while it's charging. My best number thus far as I have seen one of our clients do about 85 tests in an hour. Drying up the samples, loading into the device, testing it all, keeping it all, separate, writing down all the stuff.
It's definitely something that cuts down the time and also gives you that instant mobile testing lab that you can test anywhere. The best sample is going to always come from the driest cannabis flour due to the fact that the potency will peak when it's cured the most. We do have some people that use it during the flowering cycle. You can take a bud off the plant, dry it out, and then test it, week two, week four, week six, week eight, week 10. For you Sativa lovers, week 12, week 14, however far you guys want to take it.
It'll do the testing on that as well. As long as it's dry, it'll give you the most accurate result. If it's not dry, the moisture and the water in that bud take up a percentage of what would be the potency. That's why the curing and the drying is always such a hot topic, which is the reason for the water activity and the moisture content upgrade that we did on it. If you do check Purpl scientific on Instagram, you can see hundreds of results. You can see videos of how the device works. I know it sounds like it's super easy, but when you watch one of the videos that you can see how fast and how easy it is.
Sinead: Wow, that's amazing. You're going into the advantages that Purpl offers cultivators. You mentioned you can test harvests multiple times throughout the harvest. You can maybe even use it for pheno hunting. Can you talk about the benefits that Purpl has offered your customer so far and what feedback you guys have gotten?
John: Yes, for sure. All of these are real case studies. We talk a lot internally about applications and how to use, but the easiest one to talk about is breeding and pheno hunting like you just brought up. You have 10 different seeds and in most situations, you probably have more than 10, maybe you have 100 or whatever. You're running 10 different seeds of the same genetic.
In the past, it was whichever one yielded the most, whichever one smelled the best, whichever one had the most colors. Whichever one was the tallest or the shortest, or whichever one was the thinnest. There's a lot of things that were just visual inspections that would occur during the pheno hunt, and at the end, "This is the keeper, this is the one." Now, with the Purpl PRO, you're able to add a whole another thing of potency. A lot of the breeders that we work with all across the country, they may not stop at the first cross. They may go into a backcross, they may go into a double backcross or, et cetera. To do that, they want to know which one is the most potent. If the one that wasn't the idea of visual, maybe didn't have the most color, maybe didn't yield the most, but that one gave you a 27%.
The one that had the most color and yielded the most was at 20%, there maybe a reason to keep both of those phenos and use those in breeding down the line, or you may just want to select the one with the most potency and breed it back to the other one and continue here with that one. There's a new data point that wasn't always so accessible.
There are some people that have been able to test stuff, and there's been need for spectroscopy devices in the cannabis industry before. There's different ways that people like to do the testing and a lot of people will say, "Well, you smoke it, you know how it affects you and that's what I want to do." I will say that in my experience, there's a big difference between an 18% THC and a 29% THC.
Now, a normal person that is a heavy consumer, may be able to tell the difference between 18% and 25%, but I don't know if they can actually tell the difference between 27% and 30%. That's a new data that they get to check out. Also, as you start to work through those seeds, you can see through the flower inside when that potency starts to peak.
If we get into week four of flower and it's hitting 17%, then we get in the week five of flower and it starts hitting 24%, but the other ones are at 20%, you're starting to see that this plant is able to produce that potency quicker than when you get to the finish line and you do harvest, you're going to have more data points on what it actually did when it was cured.
That's a big part of whether you're just growing three seeds out of a bed that you bought online or if you're actually making a whole breeding project where you're going to release a whole list of genetics, that's one part. The other part is, obviously, on the exact opposite end of the spectrum. If you want to find the least amount of THC, and you're growing hemp, you can now use these with those seeds that you're making hemp and trying to say that their hemp, you have a way to actually test those and say that there is a THC in that plant.
That's another big advantage that this has, that you don't have to send them off to a lab, you don't have to pay more to get it tested. You buy a Purpl PRO, and you can start testing all of the hemp that you have no matter what and see what that lowest THC number is, or where that-- There is two points, the highest THC or the highest CBD, and the other end to that is obviously the lowest THC and the lowest CBD.
Other applications are coming all the time, where if you have a room and say, you got 15 lights in it, this corner of the room produce more potency than the other corner, or this corner is a little bit hotter and has a little bit less wind movement, and there's less air flowing through it, and the plants over here are always producing like an 18% or 19% THC.
When you get right in the middle of the room, and the air conditioning is right, and the fans are blowing right, and the plants are getting blown and stronger, those plants are now doing the 24% or 26% THC. How do we mimic that type of homeostasis around the whole room, and how do we make the whole room be more stabilized with its potency?
Then you get into the canopy, how close are your lights and it's the top of your canopy the most potent, which it almost always is. If we do and move the lights a little bit, can you say that this run was a little bit more potent than that run? I used that as dialing in your environment. What parameters are you using? Do you need to put another fan over here? Do you need to put something else over here? Do you need a bigger air conditioner? Do you need more HVAC or less humidity or more humidity?
We get into that with some cultivators on how it works. Then, a whole new application is, obviously, the people that are growing, that are seen or being around a lot of cannabis. Cannabis brokers, or people that are purchasing cannabis, or patient-to-patient sales, which is a big topic in a lot of states right now, where you can grow at home. When you see somebody else, and you're able to take a little bit, the device takes about a third of a gram, and it doesn't alter the sample, whatsoever.
There are people that will test three different samples and put those into a joint, or put those into a blunt, or roll that up after they have tested it because you can. If you're around a lot of cannabis and, obviously, you want to be able to know why these cannabis is going to cost more, or why this one is better, or why this one is worst. That gives this new level playing field as opposed to just taking somebody's word on that they grew it.
I would love to say that I trust everybody that grows cannabis, but I think we all know that the more transparent it can get, the better it can be for everybody. Those applications come in to a lot of our talks about how that works, and then you get into the whole hemp testing and happening to be under 0.03 or it's got to be this certain amount, or depending on what state or what country you're in, there's a certain threshold for CBD or THC.
Those, now, are something that the device can at least shine some light on or understand where you're going to be in that. Then, lastly, it's just the fact that people want to know the number. If I'm growing three or four plants in my basement, I want to know how potent my cannabis is, and more importantly, I want to know that my cannabis is more potent than my buddy's cannabis. Who grows the best cannabis?
There's a lot of people with the master grower title and there's a lot of people that say they have the best weed in the world. If there's an easy way to put up or shut up now. That you can have a device that tells you the number and if yours is 29% or 30% and theirs is 22%, that whole conversation now is really easy to end.
Sinead: Absolutely. Yes, very interesting to hear all the different benefits. One thing I want to get back to, John, you mentioned during your development phase, you measured Purpl's accuracy against several different third-party laboratories. How does Purpl's accuracy stack up against actual brick and mortar labs?
John: There is two different variances that we talk about. Anybody that's worked for the testing lab will know the first one, which is a device variance. A device variance is what happens with how accurate the device is. There's certain degrees of accuracy. Some people are within 20%, some people within 10%. When you get into pesticide testing and other things, you're talking about parts per billion. You're talking about odd percent or sometimes even less than a percent in variance.
The first variance to talk about with the Purpl PRO is the device variance. We have a variance of 10% of the readout rate and the best way to understand this is that if you tested a sample and it said 20% THC, the accurate realm of that is 18% to 22%. In the USA right now, there are some companies that when they get their test result and there's a variance, they're going to use the highest number on that variance.
People would say, "Oh, it tested at 20%, but with the variance, it could be 22%. It also very well could be 18%." Our device variance is 10% of the readout rate, which is smaller in variance per device than what you would find in a regulated lab. Most of the regulated labs may have a little bit higher variance than 10% for a number of different reasons which the regulated labs can to you about, if you like.
Sinead: Okay. Very interesting.
John: Yes, the second variance that we talk about is the fact that, obviously, we wanted a device to test cannabis and most of the standard for testing cannabis is a state-regulated lab. In that, we did Oregon and California to start and since have done in Arkansas, but in that variance, we're 2% plus or minus, whatever the number is on THC, and we're 1% plus or minus on CBD.
In that same situation of a 20% THC number, our variance for our device is 18% to 22%, and our variance to a lab would be 18% to 22% on THC, and they will be 19% to 21% on CBD. Now, if you were down and there was a 10%, the variance has changed, obviously, but technically, it's 1.96 on THC, and it's 0.98 on CBD. Those are all on our white paper which is on our website, but that's a big conversation that we always have.
You said that you're going to test cannabis and the first question is, "How accurate is it?" The device itself is accurate to 10% of the readout value, and we are as accurate as 1% or 2% THC/CBD from the regulated labs. In Oregon and California, were both SC Labs and in Arkansas was Steep Hill labs, which are some of the largest names in the testing game. We continue to work with those companies.
Some of those companies, the ones that I've mentioned also have Purpl PROs at their labs that they use as they want to. Some of them even have a more of a rapid test cost that you can do to use the Purpl PRO. Us being able to say, one, that we worked with labs is one thing. The other thing, to be able to say that the labs use our device is another notch in the belt that some of the other testing companies don't have.
Sinead: Right. Yes, that's really fascinating that labs as big as Steep Hill are using Purpl PRO in their facility. That's something I really am curious to hear your thoughts on, John. How do you think a portable cannabis testing device like the Purpl PRO could change the industry over the next few years? How do you think that might even the playing field and even minimize the barrier to entry for the cannabis industry?
John: I don't think Purpl Scientific will have licenses and be a regulated lab in any of the states. I think that that probably isn't something we'll see in the near future. I do know currently that there are some labs that are in talks about giving their biggest clients a Purpl PRO to keep it their facility and they can run as many tests as they want. Then that data would be shared in between that client in that lab, so that there would be more knowledge of a certain genetic and what the potency is and during the flower cycle that we've tested some things before it comes to the lab.
Leveling the playing field, I think is the topic that we talk about whether you're regulated or not, but I do know that in states where only a regulated seed-to-sale tracking business can send a sample to a regulated seed to sell lab. There are a lot of people that don't fall into those categories, and they don't have access to the labs.
I think, knowing that the Purpl PRO is used by some of the biggest labs in the biggest states and also knowing that you can use a Purpl PRO on your cannabis or hemp that you have, I think that levels the playing field that you may not have access to the state-regulated lab, but you do have access to use some of the equipment that they use.
Now, people that have been around for long enough, five to six years ago, there was a piece of equipment called the QuantaCann. It was a near-infrared spectroscopy device that was sold by Steep Hill, very larger. I don't like to use the term bulky, but it was a desktop edition. It was bigger than a laptop, and you could run samples on it and that was something that Steep Hill used to do. They don't do that any longer. Also, SC Labs has used NIR in the past in their career.
This device isn't something that's necessarily new to the testing industry, but it is very new to the people that are out there that have accessibility with the retail point being 1,500 bucks or less to be able to buy one and being able to test unlimited flour with it. That I think is what's actually leveling the playing field is being able to give the picks and shovels that the miners use to the people that aren't necessarily state-regulated miners. That analogy always comes up.
I think in the future, you'll see other different types of cannabis people using the Purpl PRO. The breeders are really on top of it. The cultivators are really on top of it. We do have some dispensaries in certain states, Oklahoma, in Maine, and Michigan. They have a Purpl PRO in their buildings so that their patients and their customers can come in and just test their cannabis.
It, obviously, brings them to the dispensary, that's hopefully helping out their sales and foot traffic. It's also just the fact that those dispensary owners and workers want people to be able to have access to testing their cannabis that they could have gotten from another patient or however they came across it. Now you can test it to see what the potency is.
Sinead: Absolutely. John, something that I've read has been really negatively influencing the hemp market is the inability to distinguish CBD flour from cannabis flour these days. CBD flour has come such a long way in the last few years. It's nearly identical to cannabis flour. In states where cannabis isn't legal, and law enforcement can't tell the difference between hemp and marijuana. It's really hurting the hemp market in these states. Is that a market you're exploring at all, the law enforcement market?
John: In the past two years, we've definitely had a lot of talks with certain law enforcement that want to talk about the Purpl PRO and if they should have it in squad cars and what it's going to be. I think the biggest thing that I understand is just the barrier to entry. I don't think there's a lot of police departments that want to pay to have a Purpl PRO put in every car, unless they figure out how to have it as a budget item.
Also, as of this point, the Purpl PRO and its results and all that stuff has never been used in court. I don't know how that whole thing works. I'm not an attorney. I don't know how that would all work to come together, but on the CBD versus THC topic, that's the the biggest thing that we deal with in Europe right now.
In Holland, we have a distributor, and they have seen a surge in use on the Purpl PRO because people were taking CBD flour to the coffee shops in Amsterdam and trying to sell this THC flour and you couldn't tell the difference. One coffee shop got a Purpl PRO and was able to turn people away and then through word of mouth, other coffee shops understood that if you had this device, you could tell the difference between THC and CBD just by the readout.
I want to say now, I think there's something like 150 coffee shops in Holland that use the Purpl PRO when purchasing. It's even spread now. The people that were trying to sell the CBD flower in Holland, went to Spain and tried to sell the CBD flower there. Those people that have those coffee shops in Barcelona in Spain, started buying Purpl PROs.
There is no lab. There's no way for these guys or guys, gows, whoever, there's no way for anybody to test that product that they're purchasing. Now that they have a Purpl PRO in their office, as soon as it comes in the first thing they do, take a sample, grind it up, and test it. I think that has been a big help with Purpl just being able to understand. If you have 7, 8, 9, 10 CBD and a three or 4% THC, you're probably not buying cannabis, you're buying hemp flours.
In Europe, that's definitely not a topic with law enforcement, but here in the States, there have been some different Police Departments and State Patrol. Same thing like you said, they aren't looking to deal with it. If it is hemp flour, then let it go, but if it isn't hemp flour, they need to be able to tell the difference. I don't think we have any law enforcement using a Purpl PRO right now that I know of. I think that conversation will continue to happen while more states, not only allow hemp to be grown but also have a THC program.
I think, if you have medical cannabis and you have hemp in a state, I don't think there needs to be an issue as long as that person's a patient, but there's still some states that don't allow any cannabis whatsoever. I think that those are the states more where those people are trying to tell the difference between hemp and cannabis.
Sinead: Okay. Great. That's a great point. I had read the thing about your market in the Netherlands, specifically with coffee shops. It's really fascinating. It's almost ironic that these scammers are almost driving your business in Europe. How do you see that unfolding over the next few years, your market in Europe as more and more countries--? You mentioned Spain has got wind of the Purpl PRO and they're not using it as well. Where do you see that heading in Europe over the next few years?
John: I think there's a huge potential. We sell the device in the EU and the UK. We currently sell the device in Canada. We have some in South Africa. To make it very clear, we work B2B. We sell to businesses, we don't sell direct. We have distributors and retailers that are in these other countries and they retail and sell the device. If you go to Purplscientific.com and try to buy a device, you'll be directed to find Purpl.com and you can find a retailer that's closest to you.
That's how we work but I think the European Union and the United Kingdom have a huge potential. There are some countries that don't allow it yet. There are some countries that are talking about it. Here in America, we talk about states, but the multibillion-dollar industry of cannabis already exists. In Europe. We don't see that yet. Germany has some aspects for it. Italy has some hemp and CBD stuff for it.
Obviously, the Netherlands and the Hollands have a lot of coffee shops but technically that isn't legal or illegal. It's just allowed. Same thing in Barcelona, in Spain, there are coffee shops, but it's not necessarily regulated and talked about. Then you get into the United Kingdom and that island in and of itself as a whole cannabis revolution that's happening right now.
I think the EU and the UK are going to be a big market that comes along with the fact that there's not much talk or anything happening on the whole continent of Africa and how that would work. Then you get into South America and how it's going to work. Columbia allows some of that. You get into Brazil and Argentina, there's just a bunch of things that I think aren't tapped or regulated or set up yet. I think that'll be great for the Purpl PRO because the more that people are growing cannabis, the more the Purpl PRO allows that instant, transparent lab testing to happen.
I would say in my opinion, right now, Europe and the UK are probably the biggest market that we have an unbelievable distributed there, Delta 9 Analytics, and they handle a lot of stuff that happens all over that continent. I think that's the biggest reason why the coffee shops were able to find us is that those people are cannabis friendly people that are for the cannabis community.
Sinead: Very cool. Awesome. You mentioned earlier that you guys have added a few upgrades to the Purpl PRO, including, I believe it's water content. What was the other one that you guys recently added?
John: They both have to do with water and I mess up the word just as much, but it's moisture content and water activity.
Sinead: Got you. That's great that you guys have added those upgrades recently. I've seen that you also have in the works, some extract measuring technology. Can you tell us a little bit about that?
John: I can tell you as much as I'm allowed to tell you.
Sinead: That's okay.
John: More of an Area 51 topic.
Sinead: I understand.
John: When the device launched it did total THC and total CBD, and then about six months after launching we did the moisture content and water activity, and so people know the difference. Moisture content is more about the cure and how much moisture is in the plant. Obviously, the more moisture, the higher the water activity, the less the water activity, the less the moisture is. They are somewhat combined. One is in a percentage, one is not. That shows up on the device now for free. Any sample that you run, you get four readouts. You get total THC, total CBD, moisture content, and water activity. That's how it currently works.
There have been many talks and there are still many talks, whether I can confirm them or not is different, [unintelligible [00:40:37] an extract software update to the current device, which means the current Purpl PRO that we sell at some point would have a software update to allow it to test extracts. Extracts is a very broad term. We're talking about distillate, live resins, live rosins, hashish, charas, bubble hash, any and everything that has to be a concentrate, or in the extract title is probably one of the reasons, but you can't quote me, but I will say it's taking longer than it probably should, is that there's so many different types of extracts.
There's hydrocarbonates, there's ethanols, there's distillates. Anything and everything that you can try to extract and make this plant more concentrated is a part of what that would be. Yes, since the start at least, we've been trying to understand and collect data and have some way that this device would be able to test concentrates for the end user without having to buy a new device, or as we would say, a new piece of equipment. There's no additional hardware, there would just be an upgrade to the software and the current device would be able to then test those extracts.
Sinead: That's amazing. I feel like the ROI for the Purpl PRO is already just astronomical, but adding that feature would be insane.
John: [crosstalk] say, there's probably no short of 300 to 400 people that will listen to this that have already probably told us, "Once those extracts are done, we'll purchase the device," or "We're waiting for extracts," or "When will extracts happen?" Obviously, at that point, you get into the double ROI because you can test the flower before you extract it and you can test the extract after you extract it and then you get into even more understanding of how potency works and how potency retention would happen through certain extract processes.
If we take a 25% flower and we extract it and it comes through in a concentrate and that concentrate is 75%, but if you did it in a different manner of extraction, it would come back at 87%. There's all types of expanded fields of conversations that happen once you can do two different things within a process as opposed to just starting material to a process.
Sinead: Gosh. Yes. That's amazing. Going off that, John, first of all, how much does the Purpl PRO retail for? Speaking of ROI, how long-- I guess it depends on the customer and what they're using it for, but how long would you say it takes for the Purpl PRO to pay for itself?
John: First question on the retail costs. We don't retail the device, but I can say that our advertised pricing is at 1495. If you go to findpurpl-- and Purpl is spelled without an E, just because I know that's going to come up at some point in your comment, so if you go to findpurple.com, you can find all of the retailers across the whole country that sell it.
Right now until August 15th, participating retailers, which means some of them, not all of them, actually have it for 10% off of that price of 1495. You can get a Purpl PRO even cheaper than you normally would right now until August 15th of 2021. You may be able to talk to some of those places if they would extend that for you if you need a week or something.
If we go off the somebody purchased it at 1495 retail and we're in the state of Colorado, for a total THC, total CBD potency test and a moisture content test, you'd be looking at a range anywhere from $50 to $250. That's a number that we can figure that out. Obviously, at $250, it's a couple tests in an hour, 10 tests, whatever, you've already got the device paid back. If you're talking about a different state, like if we were talking about Maine, where it's almost $300 to $400 for a test, it's even quicker to pay that device off.
I have yet to find a state where if you bought a Purpl PRO and you did 10 to 20 tests the first day that you got it you wouldn't have already recouped what the cost would be through a regulated test, but most of those people don't have access to a regulated test, but it does unlimited testing. Usually, people buy a Purpl PRO, they get it set up, they're testing it, and they test everything that's in their house, and then they test everything at their friends' house, and then they test anything that they come across, or they test anything that they harvest. I would assume in a week, you've probably paid that back depending on [inaudible [00:45:23] state you're in and how much it's going to be.
If you're in the state of Missouri and you're paying $500 to $700 a test, that's, what, two or three tests and you're done? The recoup on the cost really depends on where you're at and how much it would cost to do the testing. Now, I know that there are people out there that are going to say they could get a test done for $20 or $30, and that's true, it just would take you more tests to pay it back. If it was unlimited testing and didn't cost anything more than what the Purpl PRO did, and you had it in your pocket no matter where you went, I think you would be more apt to do more testing than if you had to drive it and submit it and pay for it and wait for a result. That's the other thing.
In the best states that I know of, it takes three to four days to get a result back. In the worst states that I know of, it's 7 to 10 days. In 20 seconds to get it back, I know a lot of people pay for DoorDash because they don't have to leave their house to go get their food and I'm pretty sure that the Purpl PRO price probably falls into that same type of situation.
Sinead: Clearly, well worth the price tag. That's a-
John: Asking the guy that's in charge of sales that question is a layup, but that's [inaudible [00:46:31]
Sinead: [unintelligible [00:46:33] for that one, [chuckles] but yes, you make some really great points and you guys have quite a selling point there, for sure. Speaking of your role as global sales director, what are your goals going into the next couple of years, John?
John: The biggest goal is just getting more devices in people's hands. Since we don't sell direct to the end-user, the biggest thing that we have as a challenge is just reaching the end users. Our marketing department does a great job in that. We have social media that's out there, and we also have a lot of people with Purpl PRO devices that love to talk about it. I would say that in most places, if there's somebody in your crew that has a testing device, people like to talk about that and know about it.
The first thing that pops in my head is when trade shows used to happen and we'd be at a booth and somebody would come and their cannabis would test at 29%, they'd run and grab everybody that they know and bring them over and be like, "Show them that result. This is what I grew. This is what the number was." I think that type of excitement to even have a number when you've never known the number is a big part of it.
Obviously, from a sales standpoint, we want to expand and get into more countries. We want to sign more distributors. If you are in the states or anywhere in the world and you're listening to this and you think you could sell this device, contact us. Go to our website, drop us a note. We'd love to talk about how to get you some devices, not only that you can have to demo and show people, but also devices that you can sell to them. That's the biggest thing.
I think right now our focus is tending to the people that have the devices. There are thousands and thousands of units all across the country right now that are used most likely-- the average is like every six to seven days. Some people are testing 20 to 30 products a day, some people only test when they have a harvest. Making sure those people are happy with the devices is one goal that we always have with our tech support team being in-house. I think the other part is, obviously, selling more devices, but to do that, we need more people to hear about Purpl and more people to see it and then also more people to buy them.
We work with all of our retail partners, making sure they have what they need and making sure their devices are all up-to-date. They've done all the most recent software updates, they have all the things into them, they know how to use them backwards and forwards. We even get into stuff like scientific averaging, where you can take one test of one sample, but if you did three, five, seven, or nine and made an average, it would be more accurate.
Are you really looking for an accurate representation of what your crop is as opposed to just the highest number? If you are looking for the highest number, there's obvious ways to do that. You take the top cola and grind it up and test that, but when you get into like the top, the mid, and the bottom of the canopy and homogenizing the sample and testing it--
The education is a big part for us too. I think that's an easy goal that we always have. We train all of our retail partners. We handle all the tech support and train any of the end users on what they're looking for. That education is what helps set us apart as well. You can call Purpl and talk about how to test many different ways to see what your cannabis is doing, and how to test throughout the growth cycle to see what's going on, or how to test your [unintelligible [00:49:48] so that you have more data to pick the right keeper.
Everybody wants to be the next AJ's Sour Diesel, or Grape Ape, or whatever it is that you want your next strain to be, and we want to help you figure that out. More countries, more retailers in the states. We are always looking for retailers in new states because we don't want to have somebody wait to have it shipped. They could go pick it up at your store today. Let's make that happen.
Sinead: That's great. As we close in a few minutes here, we'll give the listeners some info on how they can connect with you online. If they're interested, they can certainly connect with you. That's great. John, moving into some personal development questions, first of all, I wanted to ask, is there a book that's had a big impact on your life or way of thinking that you'd like to share?
John: Oh, yes, for sure. On a business sense, one of the best books that I have that I recommend to a lot of people is The Tipping Point. It's by Malcolm Gladwell. If you don't know Malcolm Gladwell, that's where I would start with any of his books. Definitely changes perspective and changes understanding and how to work with data. More importantly, it changes your mental perspective on how you look at a lot of stuff, but The Tipping Point is a great book.
From management and leadership and skills, Jocko Willink is a guy that a lot of people know, but he has a lot of great books out that talk about things from his time with the Navy SEALs. I think it's Extreme Leadership, is one of the books that I would probably start with. Also, to go back to our consulting corporation and everything else, The Great Gatsby is a great book to read no matter what you want to learn about, The Haves and the Have-Nots and How Life Works. There's a big part of the sales in that with that guy selling himself as not being who he was. Those would be the three. I would probably start with Tipping Point, Extreme Leadership, and The Great Gatsby.
Sinead: Those are some great picks. The Tipping Point has been on my reading list for a while now. I'll have to get to that one soon here.
John: [crosstalk] bump it up. He's got a lot of good ones, but The Tipping Point is by far the one for me that always sticks out. I have a lot of people that are in all kinds of different industries, but after reading that book, you can really look at things a little bit differently and figure out, one, how to maximize things, but also how looking at data one way or a different way can help figure out where the solution is.
Sinead: I'm going to have to bump that up the list a little bit then. That sounds like a valuable read there. Awesome. Next personal development question here for you, John, what is one thing going on in the industry that you think will have a big impact down the road but might be a little underappreciated right now?
John: My biggest thing would be just the whole attention to accounting, bookkeeping, reporting, and taxes. I deal with this all the time in multiple different states. Unfortunately, there's a reason why Amazon doesn't pay any taxes and why their accountants know how to figure that out. In the cannabis industry, there's a lot of different things that you can figure out through that as well. I think it's underappreciated because a lot of the smaller mom and pops don't have access to how all of that works.
With 280E and the inability to write off a lot of costs of goods sold or COGS as it's called in accounting, it makes a big challenge for smaller cannabis businesses to figure out how to get through some of those, and coupled with the fact that almost every cannabis business is going to get audited at some point. If you don't have an enrolled agent IRS accountant that knows how to handle an audit, that's probably an issue. There's going to be adjustments, and hopefully there's no penalties, but all of that requires more money to be paid.
How you're doing your reporting, your accounting, and not simply just having a time clock and a balance sheet, but understanding how to work things into different categories, how to set up your companies. There's a lot of people that set up LLCs that would probably be better to set up an S corp. All of that is stuff that I think in the industry right now, with the evolution from taboo to medical to recreational to gigantic conglomerate multi-state operators, that's where you're going to fall into some of those things that you may not make it through the next transition if you don't have your books super tight and you don't know how to record everything, you don't know how to work through everything that you can.
Those to me I think in the next two to four years, we will see a big transition in how that works. One, people continually talk about it being federally regulated or that banking is going to open, but in Maine and Arkansas, Missouri, and all the new states, they require banking to happen through that state. It's a state bank that does it and charges the regulated licensees for that. The banking I don't think is going to be the big issue, the big issue is going to be reporting, taxes, bookkeeping, and all of the things that usually an entrepreneur doesn't want to focus on or take care of and hires an accountant to do it.
If your accountant has done it before or has no experience in cannabis before, they're not going to know the same way to do it the way that people do. That would be my underlying one. I talk about this topic probably three to five times a week with people because it's such an outside realm that a lot of the cannabis industry doesn't want to talk about or figure out.
Sinead: That's a great point. Like you said, it's only a matter of time before their arm is forced and they have to figure that out. Great point there, for sure. Great, John. Wrapping up, I got a real hard-hitting question here for you. You can only watch three movies for the rest of your life, which do you choose?
John: I guess my preference is-- Do I have to have my family and kids around? Because then I know it's going to be-
Sinead: Not at all.
Sinead: Yes, three whole movies that aren't in the Cars franchise.
John: [inaudible [00:56:17] I feel like one of has got to be a comedy. You got to be able to laugh and check stuff out. I'm going to say Eddie Murphy Raw would be one of the first ones-
John: [inaudible [00:56:28] myself, but that would be one. Then I probably would pick Caddyshack.
Sinead: Good pick. That's a good one.
John: Another [unintelligible [00:56:41]
Sinead: This could be a TV series too. I'll throw you a bone there if you've got a--
John: Yes, so Eddie Murphy Raw, Caddyshack. I'd do Predator with Arnold Schwarzenegger.
Sinead: Oh, okay. You've got the whole gamut there. Comedy, you have some tears in there. That's a great list.
John: That's a hard question. I'll give that to you. That's a good one.
Sinead: Oh, yes, that's a tough one. I'm not even sure I could answer that one. Probably not fair that I'm asking guests that.
John: Music would be totally different, but movies, you're like, "Oh, man, I only get two hours of it."
Sinead: That's true. I might just have to change my question there going forward to music. That's great. John, wrapping up here, how can listeners find you online and connect with you?
John: The easiest way for finding me would definitely be through Instagram, which is @grimeygatsby, G-R-I-M-E-Y-G-A-T-S-B-Y. It's an open account. You can drop me a follow, you can drop me a DM, you can ask me questions. If you are looking for Purpl Scientific or Purpl PRO, that would be www.purplscientific.com, but there's no E on Purpl, again, to bring that up. You can also go to findpurpl.com if you want to actually purchase a device. That'll have all of our retailers.
If you're in Maine and you want to talk about those things, I would still hit me up on Instagram. Alternative Essence, Refine New England, and Iron Lung are our three brands in Maine that we have. If you're in Arkansas, it would be Harvest Cannabis Dispensary in Conway, Arkansas. In Missouri, it would be North Medical Group. Outside of that, you can hit me up about anything.
If you have questions about growing cannabis, if you have questions about breeding cannabis, if you have questions about getting into the cannabis industry for a job, or you want to talk about a new state that is about to accept applications and you're really trying to get a license, or you want to talk about nutrients, or you want to talk about skiing or fly fishing or anything else, I'm always open. I'm always down to have a conversation. Instagram would probably be the easiest and then I can give you whatever email is correct for what you're looking for from there.
Sinead: Great. John, you said your Instagram handle is grimeygatsby, is that correct?
John: Yes. That is the one.
Sinead: I'm guessing that's a reference to The Great Gatsby, right?
John: It is a reference to The Great Gatsby. [crosstalk]
Sinead: Nice. Little slow off the blocks, but just occurred to me.
John: Yes. We started Grimey Gatsby as a consulting company and it has taken on many different shapes, but it is definitely a nod to The Great Gatsby and The Haves and the Have-Nots and How The World Works.
Sinead: Awesome. Yes, another classic book there. That's great. John, thank you so much for coming on. We really appreciate it and we wish you the best of luck with everything going on with Purpl. Lots of exciting things to come.
John: Yes, it's awesome. I appreciate it. Big shout out to everybody at CannaInsider. We appreciate the time to be able to talk and have your listeners vibe out with us.
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