Most Recent Interviews

  • Chris Walsh
    Ep 346 – Cannabis Retail Sales Are Expected to Double by 2025, Expert Explains Why
  • Josh Haupt
    Ep 345 – Industry Veteran Explains How to Stand Out in a Crowded CBD Market
  • Tim Schuler
    Ep 344 – Midwest Cannabis Company Thrives In a Difficult Market
  • Cy Scott
    Ep 343 – Here’s What Cannabis Consumers Are Purchasing in 2021…
Browse All

Cannabis After Covid

7 ways the cannabis industry will change after covid-19 Read more
 

What is CBD

(Cannabidiol)? What is cbd cannabidiol See more
 

The Hottest Jobs

in the Cannabis Industry Read more
 

 

Ep 345 – Industry Veteran Explains How to Stand Out in a Crowded CBD Market

josh haupt plant love

How do you stand out as a CBD company in a crowded and noisy market? Here to help us answer that question is Josh Haupt of Plant Love Naturals.

Learn more at https://plantlovenaturals.com

Key Takeaways:

[1:17] An inside look at Plant Love, a USDA certified organic full spectrum hemp extract company based in Denver, Colorado

[1:31] Josh’s decorated background in cannabis, including his popular cannabis growing guide “Three A Light”

[4:36] The unique growing process behind Josh’s top-shelf cannabis flower that sets it apart from others on the market

[7:18] Why the price of CBD has dropped significantly over the last five years

[8:30] Common mistakes CBD companies make when trying to gain traction in today’s noisy industry

[9:35] Why Plant Love only sources its hemp from USDA certified organic farms

[11:04] How Plant Love’s subcritical extraction method preserves cannabinoids and terpenes better than the popular supercritical methods

[12:23] The growing interest in minor cannabinoids including THCV, CBG, and CBN

[13:36] How Josh uses CBD to successfully treat his epilepsy

Click Here to Read Full Transcript

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 do you stand out as a CBD company in a crowded and noisy market? Here to help us answer that question is Josh Haupt of Plant Love. Josh, welcome back to CannaInsider.

Josh Haupt: Hey, thanks for having me, man. I appreciate it.

Matthew: Give us a sense of geography, where are you sitting today?

Josh: I'm in my office in Colorado, Denver. Right here in Lower Highlands, and I am watching the snow melt because it was beautiful yesterday, and then last night it snowed through Colorado fashion springtime, and now-- literally was snowing less than two hours ago and I'm watching it all melt. It's a beautiful day. Looks like the sun's going to be coming back out.

Matthew: You're in a fun neighborhood there. I like that it's a fun neighborhood there in Denver.

Josh: It is a fun one. We got a lot of restaurants, a lot of moving people around here. It's good.

Matthew: What is Plant Love on a high level?

Josh: Plant Love at a high level, it's going to be just top shelf CBD products derived from the cleanest inputs. Great products that really aren't on the market today.

Matthew: Okay. Josh, as I mentioned you were on the show once before people probably know you for the book, Three A Light, and a few other things. Why don't you just give us a quick background about your growing career and so forth.

Josh: Three A Light, gosh, it really turned into a dream come true and opened a lot of doors for me, but it was my platform to enter the space and really teach people how to do well for themselves in the garden. A simple somewhat of a picture book if you will, that shows you from start to finish how to cultivate cannabis for yourself. With Three A Light, also came Success Nutrients, Success Nutrients is the feed regimen that we feed the plants to achieve those results. That's been massive. In 2017, both those companies were acquired by Medicine Man Technologies, that was a publicly traded company. I stepped in as the chief cultivation officer there. I served as the chief cultivation officer, chief revenue officer and chief operations officer. I wore a few different hats for the three years that I was there.

Recently stepped away from Medicine Man Technologies, they're now known as Schwazze. Wish them the best. Stay in close contact with them. I know they're going to do well for themselves. They've got a real focus towards the retail footprint and really making a splash in the state of Colorado. My ventures are the Plant Love Naturals CBD line and that's been a huge focus of mine as well as the launch in a flower line of prepackaged flower in Colorado. Colorado is really known for its overdried mids, unfortunately. What I mean by that is just really not top shelf product is somewhat of a rumor in the space. Unfortunately, it does reign true depending on where you're shopping in the state. Our goal with this next flower brand is called Artsy, and our goal is to create essentially the Louis the 13th of cannabis. A cannabis, flower packaging line that really does have integrity, truly is the crème de la crème. The best products you can get and so I've been having a lot of fun starting these or launching these two brands. Been a lot of fun.

Matthew: What's the pricing like in Colorado right now for a gram or an eighth or whatever the most popular amount of fresh [unintelligible [00:03:55]

Josh: Colorado has a little over 1000 cultivators in the state and 600 dispensaries, so it's a highly, highly competitive market. You're going to be paying anywhere from, you can get an eighth I want to say for as little as you know 20, 25 bucks all the way up to $60 depending on the quality you're going for and what you're looking at. You've got all ranges of the spectrum there. Then you have wholesale pound selling for as low as $1,400 a pound at a dispensary, and then you have the top sell providers that are still moved in to 2K a pound. It's really across the board because you have such a wide array of suppliers.

Matthew: Gosh. The market's smaller but not for the top shelf cannabis flower, but not so small that you won't get any sales, you don't think. What is the growth process look like for how you're creating Artsy?

Josh: Grow process for creating Artsy is really going to be focusing on just the cleanest inputs. I realized this when I meet with other growers and they run these huge facilities, I'm talking 60,000 square feet and up, and they won't smoke the flower they put out. That's just a shame to me, and I say, “Why, guys? What's going on?” They say, “Well, we got to put it through this X ray machine when it's done to make sure that everything that we're growing is killed off of it,” because they're growing it with a lot of mildews. There's just really a lack of integrity throughout the growth process in a lot of these large commercial facilities. Call it what it is. Now, there are good ones, so I'm not calling everybody out. I'm just saying the majority of them really want the auto feeds, really want to remove the human component to it, and that just makes it really tough to grow top shelf.

At Artsy, we have a large focus on all the inputs. We want to start with very clean genetics, good products to start, as far as the strains are concerned. We want to make sure that we're only giving them strong beneficials. We don't want to use any pesticides throughout the entire process. We want to make sure that the plants are cared for very, very delicately. We also want to make sure that we're giving them a lot of heavy, pure water flushes to clean out the roots. The cleaner the roots are, of course, the cleaner the fruit and the flowers will be. Those are very important things for us. Focus on trichome development. Really focused on, as I said before, when it comes to no pesticides. We're also going to be releasing predatory insects and bugs. They actually act as your security guards for your rooms, making sure that no other bugs can be housed in there to really protect the flowers.

Then at the end of the process, we have a very large degree of focus towards our dry cure process. We want to make sure it dried and cured as perfectly as possible. We don't want it to be overdrive, we also don't want it to be too wet. Those that have that nice, perfect medium. Then before it goes in the bag, we want to make sure it has a nice, light hand trim to it. Not a machine firm, we're not going to pump it through a machine. We're going to dry it properly. Really just focusing on the entire process. As we've mentioned before, really not cutting corners, and you'll have a product that is something that you're very proud of. We over at Artsy, we're looking at an April 20th, a 4/20 launch here, and really getting the products out on the shelves, and we're excited about it.

Matthew: What's happened to the price of CBD over the last five years, in terms of how much it's fallen?

Josh: Oh, goodness, well, you've got a classic example of supply and demand. Five years ago, you'd get a kilo of isolate, if you could get a kilo of isolate, it would be about $70,000. Today, get you a kilo of isolate, depending on how many you need for probably 300 bucks.

Matthew: That's the market forces at work.

Josh: Yes, it really is. People start to catch on. This is exciting and fun, and let's grow all this CBD, but the problem is, in such an unregulated industry, who can compete with hundreds of acres coming out of the Midwest, there's just no chance. You've got to really get grown on a global perspective now, which is fantastic, because we need it, but it's definitely made it very difficult to essentially distinguish where's the good products versus where's the bad products? What's a good kilo of isolate versus not? The whole testing process is really just taking wait for how they're going to regulate that space, and they've got a lot of work to do there.

Matthew: There's a lot of noise in the CBD space, as I mentioned during the intro, what do you think a lot of the CBD companies that are not getting traction are doing wrong, in your opinion?

Josh: That is a tricky one for me to answer, but I would chalk it up to a couple key points. One is they want to make sure that they're getting the best inputs into their products, that's going to be very key. Making sure that they're sourcing top shelf inputs, making sure they're not getting this leaf from a bad spot, that there's some kind of regulation behind the kilos that they're purchasing for their products, their inputs. Secondly, they want to make sure that they have the ability to market their product to their customer. In the CBD space, that can be incredibly difficult to do because more often than not, you don't have your traditional routes of marketing. To promote your page on social or things like that, there's very tight policies and guidelines for it. It is doable, but it is difficult. I encourage people to not get too frustrated, just give up there. Make sure that you're pushing the limits and trying to market your product and get market visibility.

Matthew: How do you find quality sources of hemp then for Plant Love? What's the process like?

Josh: For us, it's really-- we just focus, I'm not paying $300 for our kilos. Our kilos are much more expensive because I only want to buy quality. For us, it's one of those things where I just go to USDA organic certified farms only, because right now there's too much noise in where it could be grown elsewhere so having a USDA-certified organic farm it's already been vetted to a significant degree that other farms are not having detour to go through.

Matthew: Okay. What is it about USDA-certified organic farms? What does that attest to what they do differently?

Josh: What they're going to do differently is they're just going to make sure that the fields are not packed full of heavy metals from prior agricultural use. Then also really makes sure that the inputs that they're giving them are truly organic. That certification is tough to achieve and harder to hang on to. I know that those fields are tightly regulated. The inputs that are going into the products are going to be incredibly clean and all organic-based. That's going to be incredibly essential when you're cultivating hemp and then extracting that hemp, especially to treat. I would argue CBD is that, it's going to be the new aspirin in the sense of aspirin and help you with a lot of different things. I think CBD is going to find very similar avenues as well.

Matthew: Talk about your extraction process and the different major and minor cannabinoids you're trying to preserve there.

Josh: Well, our extraction process is a little bit different. I shouldn't say everybody, but there's the majority of the space. By the majority, I mean, a lot 90% plus of the space we'll do a supercritical extraction when it comes to CO2, they'll also use butane and other parts. We use a subcritical extraction. That's going to be lower temperatures and that's actually going to preserve the terpenes much better. When we're doing our subcritical extraction, we're not killing and burning off all these terpenes, we're actually preserving them and moving them into the actual product itself.

Our process is very unique and different in that sense. You're just going to have a lot more of the what's beneficial that we're trying to get from the plant is preserved and makes it to the end product with Plant Love Naturals, where another brand next to it doing a supercritical extraction would have already removed those terpenes and would have rinsed it a little bit, much more aggressively than we do. We want to preserve all those extra components as they are very, very vital to making the CBD efficient and get the results you want.

Matthew: What are your thoughts on THCv, CBG, CBN, these cannabinoids, are people looking for them and asking about them now when they're buying CBD oil?

Josh: People are not. I think that's only a matter of time. I think people will realize your CBGs, your CDNs, your THCvs, these are the things that actually make your work. What I mean by that is like, let's take a vehicle. Well, CBD is-- those are the tires, and it's fantastic that you have like four tires right on, but without the THC components, well, there's a show of your body. You've got your CBN, your CBG. Well, those are some components in your engine, then you add your terpenes. That's your gas for your tank.

Now, the vehicle can do something. They work much more harmoniously for the result you're going for together as a team, as opposed to when they create an isolate, all they do is they just do CBD isolate. CBD by itself, now don't get me wrong. That's not going to be harmful in any capacity, but it's much, much, much more efficient and much more recognized by your endocannabinoid system when it's a group of them.

Matthew: Talk a little bit about your epilepsy and how does CBD help that?

Josh: My epilepsy is-- I say every epileptic is a little bit different, but every person is a little bit different. What I mean by that is the way my endocannabinoid system in my brain responds to CBD is-- Epilepsy is going to be a misfire of neurons and electrons. I'm just going to have a seizure. It's never any good, that's the result of it. The CBD for myself really helps to calm all the activity behind the neurons and electrons, it calms it and makes for not nearly as many misfires. Therefore, I'm not having any seizures. It's helped me incredibly with my life.

I think that anybody that is struggling with how to stop seizures and it is going on the Western medicine process, which I highly encourage. I don't think there's anything wrong with that. I just would argue that at some point, I encourage you to try and incorporate some CBD, because that might be the missing link. That was the missing link for myself almost, or not almost, to the point where I don't take Western medicine anymore. I don't need it. I've been seizure-free for years now and CBD has been one of the main components behind that. Of course, having a healthy lifestyle, your diet, your sleep routine and your schedule you for working out or not is going to play heavily into that equation as well for myself.

Matthew: I know there's more to it than just milligrams, but what's your milligram dose range for CBD.

Josh: In our everyday balance tincture, which is what I created for myself, is my tincture, it's 33 milligrams per drop, and I'll do two of those drops in the morning and two of them at nighttime. By two I mean, just a full tincture full and that'll be- I’ll switch it under my tongue for a few seconds and then go ahead and swallow it and go about my day. It sits next to my toothbrush and it's a very balanced routine for myself. I encourage anybody else that's dealing with challenges that are heavily focused on Western medicine.

I encourage you to incorporate, not to steer away from your Western medicine, but to incorporate some CBD usage with it, you might find that it really helps it be more effective with what you're going for.

Matthew: That sounds like the right dose for you, but how did you arrive at that? If you take three or four eyedropper tinctures, is that too much? How does that experience come off, then you do, does your body just feel lethargic? Then if you don't take enough, how do you know?

Josh: Yes. I would argue that it's not too much. I really-- I struggle with taking two much, because I've just been taking it for gosh, for decades now. For me, it's not too much. I don't really feel lethargic off of it at all. If anything, it gives me a little bit more of-- I haven't ever taken too much, but I've also never taken more than three or four dropper fulls. I've never pushed it to see where my threshold is. On the other side of that, if I don't have it, I have these things called fatigue mal. With an epilepsy, you have a grand mal seizure and you have fatigue mal seizure. The grand mal is just like it sounds, it's granted, it's a couple of minutes. It could be a few minutes long. It's very scary.

A fatigue mal seizure is exactly what it sounds like as well. It's very tiny. It can happen in an instant in your mind. If I have a fatigue mal, more often than not, no one will even notice around me, but I'll notice it because if I'm holding something, I'll drop it. If I had a thought and I'm trying to-- if I'm texting or something like that, it'll interrupt what I'm doing incredibly. That's really my bumper that says, "Hey, I got to go take some CBD" If I have another one, it's very important that I lay down and I take a break. I recognize the fact that my mind is telling me you got to slow down or we're going too fast, or we need to relax.

The fatigue mal is really what tells me as an epileptic. Once people have had epilepsy, you start to understand how your brain works in the way of it'll start tell you when you're going to have a seizure. It's very important that you listen to that for myself. For me, that's how I rounded up. I came to that conclusion of, I was able to not have fatigue mal if I take two drops in the morning, two drops at night and stay on top of my workout routine, get good rest and try and keep low stress.

Matthew: I don't know how you do all those things, especially as we're winding up COVID here, it seems like.

Josh: What a year, man? Gosh, that was brutal.

Matthew: Yes.

Josh: Coming from somebody who I really liked to stay as positive as possible, maybe you've heard me say it before, but one of the things I like to say to my team is I'd much rather be optimistic and wrong and pessimistic and right. For me with life, I try and always stick to that. Man, the last year was tough with COVID. I had to push extra hard to stay positive and we've all got a lot of-- everybody's family has somebody that needs support. [unintelligible [00:19:01] somebody that's the wild one, everybody has family, that's someone that's a conservative.

Everybody got to realize that every single-- no matter which category you fell into, as a family member, it was important that we at least checked on one another and that we were there for each other, and that you could be there as much as you could of one another. I think that a lot of good can come from something as obvious 2020 in the sense of hopefully abroad families closer together. I don't know about you, but made me realize that being there for other people, and more importantly, being there for my family filled my cup much more than finances ever could.

The real currency for me moving out of 2020 is love and the real currency for what defines success for the road ahead is going to be my impact on my loved ones. That's what defines success for me. Now there's a new definition for success after such a challenging year.

Matthew: That's why you started Plant Love.

Josh: There we go. Absolutely.

Matthew: Josh, I want to ask a few personal development questions to help listeners get a better sense of who you are, is there a book that's had a big impact on your life or a way of thinking that you'd like to share?

Josh: Yes, I do appreciate reading as frequently as possible. I do love wafting out, when I don't have time for books, I'll just jump on some inspirational quotes just to really get my mind moving in the right direction. One of the books that I read in the last couple of years that really stuck with me, and I actually read a couple times now is The Hard Thing About Hard Things, it's a book by Ben Horowitz.

It was very helpful for me and very beneficial for me to realize how to handle challenging times, as we talked about a lot of things going right in the space, there's a lot of wins going on, but behind closed doors is also a lot of challenges, you got a lot of turnover within teams, you've got a lot of cutthroat things going on in the space, if you will, with consolidation. Really people jumping from this team to that team made it really difficult to navigate the waters, as these companies have grown so fast because growth can kill a company.

I think that the one thing this book really helped me with is my ability to communicate with my team throughout these challenges and this book really talks about that, talks about how you want to make sure that you're leaning into one another, and it also really pushes on how to have empathy for others and understand their challenges, even if they're supporting you, how do you return that favor as a leader? It really helped me in those areas. Yes, The Hard Thing About Hard Things, check it out.

Matthew: Besides what you're doing with Plant Love and Artsy, what's the most interesting thing going on in the cannabis field to you?

Josh: The most interesting thing going on the cannabis field for me is got to be the yo-yo of federal legalization, they started this yo-yo, gosh, I want to say in 1970s or they're saying, "Hey, we're going to talk about this going federal," and then the administration put it away and it didn't happen. It's slowly over the decades have been coming more and more and more forefront and recently, it seemed like with getting a Democrat in office that cannabis was about to go run the distance. It was his fifth, it was Biden and Kamala Harris, his fifth agenda item, they were really going to move this forward.

Then you've got some confusing messages going on, mixed messaging when they fire people from the White House that claim they had cannabis usage in their past.

Matthew: Jesus Christ.

Josh: It really scares me to think that Biden has good intentions, but he's a true politician, without putting it differently he's a yes man. In a lot of ways, these guys going to do what he's told to do because we all know that this world is run by the golden rule. That is the guys with the gold make the rules. I would argue that one of those things that's been challenging for me as being such a lobbyist for federal legalization and moving this forward, it's been tough to see it, "Oh, yes, we're going to make this a priority, and then we're not and then we're going to move Safe Banking Act forward, and then we're not." I'm really interested to see over the coming months, because I do think that this administration is going to do something about it, it'll be really interesting to see how all this unfolds, I couldn't be more on the edge of my seat about the coming years with this space than I am now.

It's going to make a big turn because during COVID, we got deemed essential and with that comes significant revenues, and with significant revenues comes significant taxes. We have the ability to do turn the needle the other direction, instead of constantly, constantly losing money, some of these things can turn it to, surely, they can't be profitable but they can definitely slow the meter on burning capital. They can give back a lot to the things that really mean the most.

Matthew: Josh, you have such a deep growing background, I know there's a ton of ways people can make a successful garden or an unsuccessful garden, but if for someone that's really wanting to grow their own plant, can you just give them just a couple bits of advice to ensure they get off to a good start because you you're really good at this?

Josh: Yes, I think that if you want to grow some plants for yourself at your house, I would just recommend putting right next to tomato plants in the garden. If you have the ability to grow medically for yourself at your home, you really got to start somewhere, picking up some seeds off of an online source, if you Google cannabis seeds there's thousands of breeders out there that they can send you some. I would recommend just putting it in a nice wet paper towel, let the seed germinate.

Once it has a little tail coming out of it, a little white root has sprouted from it, then go ahead and bury it about a half-inch in the soil and put a little dirt over it, give it water on a daily basis and watch it grow, then water like the weed but it is because it'll grow fast and big. Recommend that. If you want to get a little bit further into cannabis cultivation and bring it indoors, I'd recommend you pick up the Three A Light book or you Google and YouTube as much information about as possible and really just get started. [inaudible [00:25:26] half the battle to becoming a master grower or a master anything in this world is just getting started.

Matthew: Josh, as we close Can you tell listeners the best place to find you and connect online?

Josh: The best place to find me and connect online is going to be off of plantlovenaturals.com and artsycannabis.com or my Instagram, those three spots are going to be great spots and just Joshua Haupt on Instagram.

Matthew: Okay, Josh, good luck with everything you got going on here, your plate is very full and I look forward to hearing a full report next year or sometime when you have all these more mature.

Josh: Absolutely, Matt, it's my pleasure. Thanks for having me on the show.

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 your free report at CannaInsider.com/trends.

Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback at CannaInsider.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 or companies featured in CannaInsider.

Lastly, the host or guests on CannaInsider may or may not invest in the companies 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 your 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.

Ep 344 – Midwest Cannabis Company Thrives In a Difficult Market

tim schuler detroit edible

We hear a lot about what’s going on in the west coast cannabis market, but what about the midwest? Here to fill us in is Tim Schuler of Cannalicious and Detroit Edible Company.

Learn more at:

http://www.cannaliciouslabs.com 

http://www.detroitediblecompany.com 

Key Takeaways:

[1:09] An inside look at Cannalicious and Detroit Edible Company, two of Michigan’s most successful cannabis businesses

[2:00] Tim’s background working for Anheuser Busch and how he got into the cannabis space

[3:42] How the cannabis market in Michigan has evolved over the last ten years

[8:35] How Tim and his team decide the best cannabis extracts to produce at Cannalicious

[11:23] The types of products sold at Detroit Edible Company, from gummies to brownies

[17:44] Detroit Edible’s latest partnership with Eaze and why the California-based delivery app is expanding into Michigan

[21:31] How Tim manages his inventory using LeafLink, cannabis’ largest wholesale management platform

[25:51] Where Tim sees the cannabis market in Michigan heading over the next 3-5 years

Click Here to Read Full Transcript

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 @cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program.

[music]

Matthew: We hear a lot about what is going on in the west coast cannabis market, but what about the midwest cannabis market. Here to tell us what business is like for a cannabis operator in Michigan is Tim Schuler of Detroit Edible Company and Cannalicious. Tim, welcome to CannaInsider.

Tim Schuler: Matt, thanks for having me today.

Matthew: Give us a sense of geography. Where are you sitting today?

Tim: Ann Arbor, Michigan. We call it the cannabis capital of Michigan. They've been doing that annual hash bash for more than 50 years. When adult use or recreational cannabis came to being a little over a year ago, the first provisioning centers were in Ann Arbor. Now, we have over 220 here in Michigan.

Matthew: What is Detroit Edible and Cannalicious on a high level?

Tim Schuler: Detroit Edible Company is a truly an Edible Company. We make everything from fudge to brownies, to chocolate bars, which we call Barracuda bars, and then we have honey peanut butter. Then we have variants of gummies as well. We just launched our Guppy gummies. That's a five to one THC to CBM line, and then Cannalicious it's in a different location.

It's actually in Pinconning, Michigan, which is up North here in Michigan and it's a pure extractor and concentrate company. We do everything from hydrocarbon to ethanol washing. Then we obviously make distillate after we do both of those processes.

Matthew: Tim, can you share a little bit about your background and journey and how you came to start these two companies and got in the cannabis space?

Tim: Well, do you have an hour? No, I'm kidding. [chuckles] It's an interesting story. I started my career through Anheuser-Busch and working for one of the largest brewers in the world. Learned sales, marketing, and distribution, and worked for them for more than 15 years. The last five of those years, I was a state sales director here in the state of Michigan.

It's a three tier system. A brewer, then a wholesaler and then a retailer. We moved about 48 million cases of beer in Michigan on an annual basis. That's where I got or cut my teeth, at least, in sales, marketing, and distribution. Then I launched into the supply chain here in Michigan about three years ago to start one of the first secure transport companies here. Along the way, I met my current partners and decided to get out of secure transport and jump into the processing game. We launched Cannalicious about two and a half years ago. Then Detroit Edible Company started about a year and a half ago. We're progressing well as a processors here in the State. Then we also have one retail location in Ann Arbor as well.

Matthew: You have two businesses then. You've got Cannalicious, the extraction concentrate company and Detroit Edibles Company.

Tim: That is correct.

Matthew: We hear a ton, as I mentioned in the intro, about California, Oregon, Colorado, but we just don't hear that much about Michigan. It's just not talked about that much in the bigger markets. Can you just orient us in terms of what the background or the Michigan markets like in the past and what it's like today?

Tim: Sure. A little over 10 years ago, there was what was created the caregiver network here in the State of Michigan, which made it legal for an individual to grow up to 12 plants for him, or herself and five other patients. That individual, the caregiver could supply those products, whether it be a flower, pre-rolls, tinctures, edibles whatever variant of cannabis that they could come up with.

Along the way, through some various loopholes, various dispensaries started popping up across the State, where caregivers could bring their overage to that dispensary, and then that dispensary would sell it to medical cardholders who didn't have a caregiver to go find. The medical cardholders grew to nearly 300,000 medical cardholders here in the State. It became a little unwieldy because caregivers were doing things a lot different across the State. The State enacted a new supply chain, which essentially meant growers, processors, a safety and compliance.

They added a different wrinkle that most states don't have, and that's a secure transporter, to move the product between the different entities. Then of course the provisioning centers. That was implemented in late 2018 when it was all medical. Then the state voted by a margin of 58 - 42 to go adult use, and that started last January. All of those various medical license had been applied for adult use. We completed our first year in Michigan at 2020 and did almost $1 billion of retail sales.

Matthew: Wow. Let's dig into your business a little bit. Cannalicious, the extraction and concentrates company, and then Detroit Edible Company where you have one retail store and you also have all the edibles. How does the revenue breakdown between these two companies?

Tim: It's about 53% on the Edible side and 47% on the concentrate side to various stores. It varies by month and it also varies by areas preference. We obviously distribute across the state and that includes the UP. There's over 325 different provisioning centers. We have to call on each of them and we deliver from each one of those two facilities on a daily basis.

Matthew: For people not familiar with the Midwest, the UP is the Upper Peninsula,

Tim: The Upper Peninsula it's connected to both Wisconsin and Minnesota. It's a vast amount of land. If you're in Detroit, you can get to Washington DC quicker than you can leave the state of Michigan, if you were to go all the way up to the UP across the Mackinac bridge and then all the way to a place called Ironwood, which is where coach Tom Izzo at Michigan State's from.

Matthew: What kind of extraction equipment do you use for your business? Just curious there.

Tim: We started with hydrocarbons. We extract with both a combination of propane and butane and we use XT70 made by ETS to do that. Then, just recently about eight, nine months ago, we purchased an ethanol skid. We do ethanol washing, and then we take that ethanol product or by-product, and then run it through an HPE thin film separator to create distillate. We're one of the largest producers of distillate in the state of Michigan and do it for ourselves as well as there's a few other growers that also have processing license, but don't have the ability to extract so we do some toll processing for them to get raw distillate for them.

Matthew: How do you arrive at what kind of extracts you want to make at Cannalicious.?

Tim: I tell you what, we take the Amazon model from 20 years ago with Jeff Bezos, and that is that you have to change and adapt to what the marketplace may want or need. We've always rooted ourselves with a product called Rick Simpson Oil. We make the most RSO in the State and make a few different varieties of RSO.

As we look at live resin or shatter darts, distillate carts, we try to round out a menu so that our customers are, if they need a concentrate, we're a one-stop shop for them. As our inventory, we try to keep anywhere from a four to six-week inventory amount on our shelves so that PCs know that they can come to us and rely on a consistent product that's always there for them. We just build our inventory based on those levels of different products that are on the concentrate side of the business.

Matthew: A lot of people are familiar with RSO or Rick Simpson Oil, particularly if they know someone that's a medical patient using cannabis oil, but can you just go into what Rick Simpson Oil is?

Tim: Sure. Rick Simpson Oil he's a Canadian, so he's right across the border from us here in Michigan. He discovered almost nearly 50 years ago that the cannabis plant has some ability to either stop or retard the growth of cancer cells in most peoples' bodies. He started an extraction process where you basically get to a crude, and then you eliminate the fats and lipids. The product itself is not a pretty-looking product, but we put it in a one gram syringe and recommend to people to put about a rice-sized droplet on a cracker or mix it with some peanut butter or whatever they want to do because it's an ingestible concentrate that helps relieve a lot of different ailments.

It's not just cancer. We have a lot of research that shows that it helps in the relief of pain. We've mixed it with some CBN, so you can take it and have a good effect to be able to sleep at night. We call it a Rest RSO. Then, we've also flavored it with some natural terpenes, both cherry, grape, and wine, like RSO. For those who haven't had it, it's not the most flavorable concentrate out there. We tried to make it a little more appeasing to the palate.

Matthew: That's great. I'm really happy to hear that you're making that for patients. Then, we've talked about how you've picked extracts and you're trying different things. Is it the same way then with the Edibles Company or are you just trying different things? How do you think about that?

Tim: We're Detroit Edible Company now, but we used to operate as Detroit Fudge Company and made the best fudge on the marketplace. Since we're going in a direction of having multiple different variants of edibles, we changed it to Detroit Edible Company. We've always rooted ourselves in having great fudge, great brownies that are nice and moist for the consumer.

A fudge only has a lifespan of about three months of shelf life after it leaves our facility. Brownies have six months. Then, chocolate bars, honey, peanut butter, guppies, they all have 12 months. We have to do a nice job of working with our retailers to not over order and make sure that they have plenty on hand, but not too many because the last thing we want is any product going out of date.

Matthew: Balancing act there.

Tim: It is a balancing act.

Matthew: What does the illegal market for cannabis look like in Michigan or unregulated, some say? How would you describe it?

Tim: Unfortunately, too big. The caregiver model lasted here for eight or nine years, and there's a lot of caregivers that grow a lot of great product out there. The way the rules are written, caregivers can still exist. They can grow up to 72 plants. Because we're in a COVID situation, nobody's really monitoring how many plants that these individuals are actually growing. Then, obviously, their distribution chain is such that they have the ability to penetrate quite heavily. Whether it's 30%, 40%, or even 50% of the actual market, there's really no way to tell, but we definitely know that it exists out there because many of our retailers share with us what their customers are coming in and saying that they can buy from various sources. At one point, there was 40,000 caregivers here in Michigan. It's now down to registered 30,000. The caregiver network has the ability to grow up to 2.1 million plants. The licensed market only has the ability to grow about 700,000.

Matthew: Wow. I'm interested in how you brand with the edibles. You seem to have chosen a fish theme. Talk about that a little bit.

Tim: Sure. Michigan is surrounded by four of the five Great Lakes and we pride ourselves on being a great state to be in enjoying water. Barracuda is our chocolate bar. It comes in two different levels, 100 milligrams for adult use and 200 milligrams for medical use. We want to pay attention to the microdosing market out there because we believe there's a lot of canna-curious, that if they take too much at one point, like any other consumer product good, if somebody has a bad experience with that product, you may never get them to try it again.

We brought out a 10-milligram Minnow bar, which Minnow, obviously is a lot smaller than a Barracuda and allows people to microdose 10 milligrams. It comes in four distinct rectangles that they can break off so they can get it down to 2.5 milligrams per dosing, which we think is a great thing for the consumers because we recommend, "Start slow." Everybody has a different tolerance. Everybody has a different metabolism. We want people to have a great experience with our products.

Then, we've just launched our gummy line. Staying with that fish theme, we launched our gummies to be called Guppies, close to a gummy-sounding name. We found some white space in terms of what we believe is a great seller in California, Oregon, Washington, and that is a THC to CBN combination. There's so many of those canna-curious or myself, I'm a 54-year-old male that has problems sleeping at night, I can take one of those 45 minutes to an hour, and I'll sleep all night and fall asleep very easily.

It's better than taking a melatonin or Diazepam or any other sleep aid, in my opinion.

Matthew: Just take one of your gummies?

Tim: Exactly.

Matthew: How many milligrams is your magic number?

Tim: I stay with 10. I don't need to go much further than that to fall asleep and have a very restful night of sleeping.

Matthew: Wow. With a 100-milligram gram bar-- I know around 420, sometimes you see a 420-milligram chocolate bar. How do you orient someone that might be new to cannabis and they're going to take this, and like, "Oh, I eat the whole thing." Is there something on there that says like, "Hey, you might only want to take a nibble of this to start out or you're going to blast off to another planet."?

Tim: [laughs] That's one of the things that the MRA, which is the Marijuana Regulatory Authority has recommended and made sure that everybody follows, and that is a dosing amount on each package. For the adult user, the most amount of milligrams we could put into a chocolate bar is 100. Then, each serving size can be no more than 10. We recommend to people that, if you need an entire chocolate bar, that's going to be the entire bar and it's 100 milligrams. All of our bars have lines, a mould that it comes out of, so there's 20 triangles of five milligrams each. If they took half the bar, they would know they'd be getting 50 milligrams.

Matthew: You're going to start partnering with Eaze, the delivery app for home delivery. Can you talk about that a little bit?

Tim: Sure. We're really excited about Eaze. Eaze is obviously the leading home delivery company in California, potentially the largest retailer now in all of California through their home delivery depots. They made a concerted effort to want to expand out of California and they saw what was happening in Michigan in terms of $1 billion of retail sales. They've entered the market with us and we're going to launch next week Thursday, I believe it is, April 1st to be the first depot delivering out of about a 45-mile radius of Ann Arbor.

We believe that home delivery is going to be here to stay. COVID's obviously accelerated that with DoorDash or Uber Eats or any other restaurant or any other delivery service that's out there. What better way to allow people to bring things straight to their house to try. Cannabis and pizza has always been two of those things that have been home delivered. We believe Eaze is going to knock it out of the park here.

Matthew: How many adults in Michigan are not cardholders? I'm trying to get a sense of what the opportunity or the blue sky is for you going forward.

Tim: The state of Michigan is about 10 million people, last census, which is a little over 10 million. There's 7 million of those are over 21, and there's 300,000 cardholders in the State of Michigan. Now, you can be a cardholder and still be under 21, but most are over 21. The blue sky of adult use, we believe is somewhere between 6.7 and 6.8 million people. Another thing that's great for Michigan is Michigan is a tourism state.

Like I said earlier, it's surrounded by four of the Great Lakes. It has a number of different lakes. Tourism is one of the major industries here in Michigan and we lost out on that all of last summer with COVID. We believe there's still another level of consumption that will go on once people are vaccinated, COVID comes back down and people are now more apt to travel. Our surroundings state Indiana has zero cannabis sales. Ohio has medical only and a very difficult one at that.

Illinois is adult-use and medical but again their supply chain is not built out. Then Wisconsin is not either cannabis-friendly. When you look at those five states surrounding us, that's about 46 million people that are within a five to six-hour drive of the State of Michigan. We think Blue Sky Michigan has a great opportunity yet.

Matthew: For international listeners or people who have just never been to the mid-West, it's hard to understand the vastness of how big the Great Lakes are. They're just absolutely enormous. I brought a friend over from Germany once and he thought it was the ocean. I said, "I thought you guys were supposed to be good at geography, better than us." He goes, "You're in the middle of the country here." It's so big. You can't see the other side. I think it's a wonder of the world actually, the Great Lakes. They're just so big.

Tim: It is. You can stand on pretty much any shoreline, whether it's up in Port Huron, up north on Lake Superior, or on the left side of the State of Michigan. On a rough day, you would think you're on the shores of both the Pacific or Atlantic Ocean.

Matthew: One thing in talking with you that I was really interested in is that you use the B2B platform called LeafLink that's in the cannabis space. You use it in some interesting ways. Can you talk about that?

Tim: Yes. LeafLink, when we started this journey, we had a lot of inventory. How do you manage inventory and make sure that sales were actually not stepping on one another in terms of the amount of products that they have or selling on a basis. We went looking for one. I had used Salesforce in the past and Salesforce is a great tool, cloud-based but extremely expensive. There's another one out there called Sugar, it's good but again pricey.

I was introduced to LeafLink as a CRM or a consumer relationship marketing tool. We found it to be outstanding from a control of inventory. PCs can go on at no charge. Shop your menu as you keep it updated. We put up great pictures, test results, case quantities, all of those important things that a customer would need, and they can click and order. As we learned and dealt with LeafLink, they're a great company. We have a great relationship with probably more than half of their 100 employees now.

They wanted to bring to us some various tools. They have myBI which is my My Business Insight so that we can have a nice deep dive into our own analytics of when people are ordering, what are they pairing with each order, things like that. Then they also have another platform called MarketScape. Everyone that's on the LeafLink platform here in Michigan, we can now run reports to say, "Okay. How much RSO are we selling compared to the market? Where are our price points at? Where are other competition basically?" That helped us from there.

The other area that we've always wanted some help in is cannabis is a cash business. They brought out LeafLink Financials. We're their launch partner here in Michigan for it. Essentially, what it does is it provides to the retailer not have to pay on delivery it's net 30 terms and we don't have to deal in cash. That's really important to us because Matt, I don't know if you've every tried to count $70,000 at one time. It's dirty, it takes long, and there's a lot of risk. 

Matthew: I can barely count my fingers, Tim.

Tim: Exactly. If we can get out of that, we felt we'd have more time and more resources to put in other directions. We're a big believer in that. Now, we're in about 86% of all the provisioning centers in the State of Michigan and I want to say about 80% of those use LeafLink Financial, which makes it a whole lot easier on our comptroller to be able to monitor cash flow as well as understand he doesn't have to get his hands dirty or worry about safety.

The third platform that they've instituted is what's called LeafLink Logistics. Secure transport is one of the supply chain that we have to use here in the State of Michigan. What they've done is they've simplified it down to where we can click on a delivery, put in the date, and they arrange all of the logistics to get it from our facility to a PC. Why I say PC, it's not politically correct, it's provisioning center.

We've again, found them to be great partners. They're very knowledgeable about the industry itself. They helped people understand how to use the power of terms to be able to buy, sell, and then be able to buy some more products through that 30 days we've been running out. They've been a great help to our industry here in Michigan.

Matthew: Tim, how do you see the cannabis market changing in Michigan in the next three to five years?

Tim: Right now, there's 1,400 and fifty-something different cities and townships in Michigan. Only 400 of those have opted in to allow retail sales. There's big hot pockets of where retailers are centered whether it's Bay City, or Lansing, or Ann Arbor, or Kalamazoo, or Detroit, all the way up to Traverse City, things like that. We believe that as more cities understand the value of what cannabis can bring to the market and that it brings reputable people jobs and tax revenue, that we'll see as many liquor stores in the State of Michigan as we'll see cannabis stores. We as a manufacturer have to be ready for that and we have to work with companies as they grow. There's not going to be urban centers with a hundred stores, there's going to be a store in every different municipality. We believe there's a wide-open growth there.

Another level of adult use that's out there is called consumption lounges. We believe that that's another [unintelligible [00:27:11] for people to instead of going to a club and dancing and buying alcohol, they are going to be able to go and enjoy cannabis, which again would provide another opportunity whether that's through an edible line or a concentrate line for us.

Matthew: Tim, I'd like to ask you a few personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Tim: Sure. I do love to read. Thomas Edison's biography is incredible. The preamble talks about how the time he was 18 to the time he died, he averaged filing a patent every six days. [chuckles] It's just incredible. He just didn't invent the light bulb. He did so much with plants. He figured out how to make a synthetic rubber for the tire manufacturers. He was very influential. Steve Job's autobiography was also another all-encompassing how do you control where you're going in life.

Then my very first autobiography I ever read was Lee Iacocca. Never knew it at the time that I'd be living in Detroit but what he did with the Ford Mustang and then latter-day with running Chrysler, the ability to lead and to adapt and change every day is so important for personal, and obviously, a company's development. You need to have a vision of where you want to go and how to get there but also, the fortitude to change when something is not going the way you want it to.

Matthew: What do you think the most interesting thing going on in your field is besides what you're doing with Cannalicious in Detroit Edible Company?

Tim: I think it's the marketing of the cannabis itself. Obviously, every one of us believes we have some idea of what and how to market things. I believe, cannabis, when you walk into a store, you're now competing with Heinz, and Clorox, and every other food product out there that's a consumer product good. Our packaging has to be spot on, it has to be consistent, it has to represent and speak to the consumer.

If individuals are wanting to find different niches of where to go, it's not always how do I get in and run a grow facility? How do I process, but how do I market, handle, or do public relations around the industry itself? Much of it is currently ignored. We've talked to a couple of different agencies here that don't even want to deal with cannabis right now because they're afraid they're going to upset other clients. The individuals that jump on and take this from--

I equate it similar to prohibition, that people are hesitant to do it to where it's going to be mainstream is going to really help us grow as an industry. Then hopefully, as our company, rises along with the tide that comes with that.

Matthew: Here's the Peter Thiel question for you. What is one thought you have that most people would disagree with you on?

Tim: In this particular industry, people disagree with me on moving to what I consider the 95s or the 45s. Most people that sold cannabis in the past sold it as zeros, so $15 grams, or $40 eighths or candy bar for $20. If we're going to truly elevate us, we need to be more aligned with other consumer product goods and we need to price it at $14.95 $13.45 and be able to take price increases as we go because right now, the supply and demand makes pricing fluctuate so greatly, that the consumer gets a little confused at, one day I can buy a gram of live resin for $75, and the next day, it's $35. That doesn't make sense to the consumer.

Matthew: Tim, as we close, can you tell listeners how they can find your business and connect with you, the businesses?

Tim: Yes, businesses. Eaze obviously, if you're going to do a home delivery, and you're going to be anywhere in the lower half of Michigan, which is where they're going to launch first, go to the Eaze platform, which is www.eaze.com. Secondly, we're big believers in Leafly. A lot of retailers push people toward WeedMaps and it sounds WeedMaps. Oh, okay. How do I find my weed on a map?

Leafly does a much better job of educating the consumer, providing the exact same information, or geo-targeting to the location where they're at to find the store that has their products that they're interested in. We're listed on both Leafly and Eaze to be able to help people find where their location. Then, obviously, we have our own website, which you can obviously go on it and it'll show you where our retailers are as well as ask us where to find the closest retailer for them.

Matthew: Well, Tim, thanks so much for coming on the show. We really appreciate it and good luck surviving the winter here as we turn into spring, it shows you should be getting happier every day now.

Tim: Spring has sprung. It was 70 degrees here yesterday in Michigan.

Matthew: Great.

Tim: When it gets over that number, people start to move around a lot more.

Matthew: [laughs] Great. Thanks, Tim.

[music]

Tim: Thanks a lot for the interview, Matt.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest 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 with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.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, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may, or may not invest in the companies, 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. Look for another CannaInsider episode soon. Take care. Bye-bye.

[00:34:36] [END OF AUDIO]

Ep 343 – Here’s What Cannabis Consumers Are Purchasing in 2021…

cy scott headset

The products being purchased in cannabis retail stores are changing, and this leaves cannabis companies with two options: adapt and look ahead…or get left behind. Here to help us stay on the right side of that equation is Cy Scott of Headset.

Learn more at https://www.headset.io 

Key Takeaways:

[00:55] An inside look at Headset, the leading cannabis data analytics company

[1:34] Cy’s background as a co-founder of Leafly and how that led him to start Headset

[3:43] The fast-evolving cannabis beverage market

[11:16] Cross-category attachment rates for cannabis drinks and the product categories that sell most frequently with beverages

[14:59] Why the California vapor pen market is becoming more and more popular among younger generations

[20:24] How new celebrity-led cannabis brands could influence the industry

[25:44] Cy’s advice to new brands trying to get shelf space in an increasingly competitive market

[30:26] How Headset helps businesses leverage real-time cannabis market data to grow and stay ahead of the curve

Click Here to Read Full Transcript

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. The products that are being purchased in cannabis retail stores are changing. The most successful cannabis companies will adapt and look ahead or be left behind. To help ensure we stand the right side of this equation. I've invited on Cy Scott co-founder of Headset to give us a briefing on what is selling in cannabis dispensaries right now. Cy, welcome back to CannaInsider.

Cy Scott: It's great to be back.

Matthew: Give us a sense of geography. Where are you sitting today?

Cy: I am in Sunny Seattle today. Actually, we've had three days of sunshine, which is pretty rare for this part of the world.

Matthew: Oh, that's great. For new listeners, can you tell us what Headset is on a high level?

Cy: Sure. We're a data and analytics company focused on the cannabis industry, primarily retail-derived data. We work with retailers and dispensaries all over the US and Canada to score and sort data. We normalize it and provide it in an aggregate format to deliver market intelligence to customers so that they can make informed decisions around the cannabis category, whether that's really understanding the opportunity in the space, finding what the competitive landscape looks like, or their brand position. If they're in the market with a brand, they can really measure how they're performing and make sure they maintain that spot that they have.

Matthew: You have a really interesting background as originally a co-founder of Leafly and now co-founder of Headset. How have you seen the industry change since you co-founded Leafly?

Cy: Well, it's certainly night and day. Just to give you a sense of time, we're here in 2021. We started Leafly back in 2010, down in California. It was medical at the time and really saw this proliferation of dispensaries popping up and different strains being available and not a lot of good information out there for consumers to really understand the differences between the variety of strains.

We created that platform to help demystify cannabis for more of a mainstream audience. That was 10 years ago, 11 years ago soon. It was certainly very different. Just the fact that it was a medical-only market and there were no adult-use markets is probably the most notable change at the time. Now, we've got a large number of adult use as well as more medical markets. You've got more sophisticated operators, you've got more investment capital that's coming to the category than ever before. You've got smarter and smarter people coming in. It certainly is just very, very different than when we started.

Matthew: Now, there was probably still a stigma back then a little bit. Was there stigma in 2010?

Cy: Yes, certainly. When we would talk about Leafly, myself, and my co-founders, we would say, "We're in the cannabis industry, but we're not doing any plant-touching work." A lot of that was because of the stigma. We'd really emphasize we're a technology company that just so happened to be targeting this category of products, but not, again producing any--

Matthew: Qualify it.

Cy: Always qualifying, exactly.

Matthew: I'm on the squeaky clean end of the spectrum.

Cy: That's right and a lot of the feedback was that's interesting. Now, I can see why that might be something you're thinking about. Then you fast forward to today when I mention the cannabis industry, there's no qualification needed, and people want to know how to get involved.

Matthew: It is a huge change. Cannabis beverages have been talked about for a long time, but now, it seems like they might be having their breakout moment. Where are we? What's changed there?

Cy: Cannabis beverages are a relatively small category when you look at your total dollar sales in the cannabis industry, but it is growing. I think its start is that it's a very complicated product to produce. When you think about the cannabis categories, you've got things like flower and pre-rolls that people are very familiar with. You just tried flower, you purchase it in a certain weight for a certain strain. It doesn't take a lot of production. It is a packaged good, but it's not a package good in the sense of something like a beverage. I think it's harder for brands to come to market with a beverage.

Edibles, people are pretty familiar with edibles. Then beverages are similar to edibles in the sense that that's a familiar format. There weren't very many beverage companies really playing in the category in the different markets. I think that's partly why the sales are relatively a small percentage of the total dollar spent. Now, it is changing. You're getting a lot of interesting things happening, whether that's perhaps Blue Ribbon branding a cannabis-infused seltzer in markets like California. You've got Lagunitas branded Hi-Fi Hops. Just to name a couple commonly associated with the beer industry coming into the cannabis category.

You also have other cannabis first brands that are really taking a unique look at the category. I think it is bringing some people in to cannabis that might have not come in because the things like flower, pre-rolls might not resonate with a new consumer. When they see a beverage that looks like something like a seltzer, like a White Claw or a Truly that they're used to seeing and purchasing at the grocery store, that's a more gentle entry into the cannabis space than maybe something like a pre-roll or a vapor pen, or even an edible.

With some of the stigma, everyone has this story of eating a brownie that's too potent. Having beverages is a nice way to bring people into the category. I think the people that are already in the category, already purchasing cannabis, I think having more options in different types of beverages is really driving some of the growth that we're seeing.

Matthew: You talked about a tonic there or a seltzer. I'm thinking of Cann, the brand Cann, C-A-N-N and we've had the founder, Luke Anderson on the show. Really popular cannabis beverage in California. I think there's two milligrams per can. Gwyneth Paltrow just made an investment in them and now the multi-state operator or MSO GTI, Green Thumb Industries has made an investment in Cann. What do you think about a big MSO making an investment in a brand like this?

Cy: I think it's very interesting and pretty clever. GTI in particular didn't have a beverage in their brand portfolios. They work closely with other types of product manufacturers, whether it's edibles or vapor pen companies. This was their first play into beverages. Cann was an excellent choice I think for them. The two milligram per drink approach, Cann has really positioned as something like a lifestyle consumption where you can maybe have one, two, or three even, and really socially enjoy this versus maybe 100-milligram beverage, which can be quite intense for a lot of people.

100 milligrams beverages sometimes in the past, even came with things like a medicine topper where it's like a medicine cap. You could pour out just the right amount of dosage. That's not really a social experience if you think about it compared to something like Cann. I think it's very clever for GTI to make that arrangement. Now, another challenge in the cannabis industry is the state-by-state fragmentation and GTI, as a multi-state operator, has a footprint in a large number of states with production capabilities, retail capabilities, and so on.

Cann is able to leverage that network and really get in front of a lot of consumers in a relatively straightforward way. If they were to do it on their own, they'd have to find different license holders in those markets that have the production capability and the consistency. You see companies do that with different operators in different markets and they're licensed to different players. The nice thing for Cann is that GTI is one operator and has one footprint. You can get that consistency and you can also get that exposure.

I think a lot about the companies that are going to be around for the decades to come. The brands that everybody is familiar with and Cann could very well be that brand because of the access that all of a sudden you can have [inaudible [00:08:42].

Matthew: I lost you, Cy. You still there?

Cy: Oh, no, I'm here.

Matthew: Keep going, sorry about that I'll edit it out.

Cy: If you think about asking a consumer at any different markets about what brand do you think about when you think about alcohol or seltzer? You'll probably hear White Claw, you'll probably hear Truly, and that's because it's available everywhere. Now, if White Claw wasn't available, if it was only available in one state and you have someone outside of that state, they wouldn't know that brand. I think Cann has a real opportunity to become synonymous with the cannabis beverage category, through a partnership like GTI and GTI gets access to a brand that is really doing very well in its own state of California and is well-positioned for a broad consumer audience.

Matthew: I think about Cann specifically in that they're priced pretty high, like a luxury good, but they have a low THC concentration. I'm like, "Is this accessible to everybody, or is it more like an iPhone where the iPhone represents a tiny sliver compared to Google Android, and the whole world, but they make almost all the profit." They're a minority of the market share, but they make almost over 80% of the profit compared to Google what they make on handsets. Do you think that's what's happening here? They have maybe not the biggest market share, but they have the biggest profit margin. What do you think about that?

Cy: Yes, I think Cann is quite an expensive product on a per milligram of THC basis. A lot of that has to do with when you look at equivalized pricing which is just a per-milligram price point for cannabis, Cann because they're two milligrams per can, you have to have the can. There's the cost of all the liquid and the ingredients that go into it where you get a similar beverage that might come in 100 milligram, but it's one can or one bottle. Price is just inevitably cheaper.

Now, with someone like GTI, they can probably get economies of scale and drive that price down. I don't know how competitive some of those GTI markets that they're in are. California is a very competitive market, a lot of retailers, a lot of brands, but some of the markets that GTI is in are relatively limited license and not competitive. An Apple model where they are premium priced might make a lot of sense.

Matthew: Now, let's talk about, I'm on a drink fixation here, Cy, you'll have to bear with me. Now, when someone does buy a cannabis drink at a retailer, what other things are in their basket?

Cy: Yes, it's a great question. I mentioned cannabis beverage sales are about 1% of total sales. Now, when you look at, actually, total percentage of customers, about 6% going on 7% of customers have purchased a cannabis beverage. That's close to 1 out of 10 people have purchased a beverage. Now, they might not be purchasing it very frequently. They might be purchasing other products with more frequency, so it's a great question when you think about the basket, what does the basket look like? It's a great way to think about you're at the grocery store and you're purchasing your milk and your eggs, and maybe you throw in a Coke at the checkout or a pack of gum, what have you.

We find that beverages is very similar to that, so when we look at what's called cross-category attachment rates. That's a fancy way of saying what else do people purchase when they purchased those beverages? When they purchase beverages in that basket, one out of five baskets are beverage only. That means about 20% are only purchasing a beverage. Now, when you look at other categories, the product category that sells the most frequently with beverages is edibles.

Out of every basket that has a beverage, about a third of those baskets have an edible product, which makes sense. They're very similar formats, a very much a consumer package good format, a drink and a candy, it could be a chocolate, it could be a gummy type edible product. After that, you get flower in about 25%, 26% of baskets that have a beverage include flower. It's not surprising, flower does 40%, 50% of all cannabis sales and so it's the most popular format.

I can imagine a scenario where someone is driven into the category for flower and as they're at the checkout, the beverage could be a throw-in. They might want to try something because they see a Lagunita, so they see a [unintelligible [00:13:29] or a Cann beverage on the shelf and they say, "Why don't I try that?" That's the common frequency. Every category is in these baskets in some capacity, but really most often, beverages are sold with edibles, flower, and pre-rolls usually when people purchase those beverages.

Matthew: It's a good impulse purchase. You have it right there, maybe buy cans and refrigerators as you're checking out or even not in a refrigerator. I guess you probably have them in the fridge, but what else is an impulse buy? Do you think of anything else like a Dogwalker? You can't really have those out. I'm trying to think what else are impulse purchases.

Cy: I think the Dogwalker is a good example like a low-price pre-roll. Single pack pre-rolls are often the most frequently purchased by a younger consumer and that's really because of price pressure, so when I think about throw-ins, usually it's not a big decision. It's a few dollars here or there, so I could see something like that being a throw-in to your purchase, where beverages are less of a throw-in, they're a bit more expensive, but it's something that people might want to try, especially with these new brands like Cann coming to market.

You can see that being may be less of a financial reason to try, "It's cheap and I don't have to think about it," but more of a, "Hey, this is an emerging category within cannabis, let's see how this is and what that's like, so I'll throw in a beverage."

Matthew: Now, let's turn to another super popular category, vapor pens, and specifically in California, it seems like it's a huge business, but it's not equally represented by all generations or age cohorts. Can you just talk about that a little bit?

Cy: Yes, the category of cannabis that is vapor pens in California actually do really well. I think they're the number two selling category. First, you have flower and then you have vapor pen. It's pretty interesting. In other markets, I think generally the number two category is pre-roll. Vapor pens aren't that far behind, but they seem very popular in California and I think that's driven by a couple of factors. One, it's a newer market, a newer adult-use market than maybe some of the more mature adult-use markets like Colorado and Washington.

When California legalized, you had a situation where brands, the vapor pen companies had a good head start looking at Washington and Colorado and they came to market right away, wherein a market like Washington State, where I'm at here in Seattle, the vapor pen category is pretty small when the stores started opening up. It took a while for them to start appearing. It's still a growing category. With California, it was day one great representation of vapor pens. That's one, I think reason. Another is generation. I think you mentioned not all vapor pens consumers are the same.

I think vapor pens really seem to resonate with a younger audience, particularly millennials and younger, so millennials and Generation Z, although millennials aren't as young as they used to be. I think the oldest millennials are turning 40 this year, which is crazy to think about, but they do seem to resonate with that category a bit more than some of the older generations, like Generation X and baby boomers, and so on. I think the Generation Z, in particular, seems to really resonate.

Now, the problem with that is that vapor pen cartridges may be a bit more expensive than other categories. For Generation Z that are so, as I say, wallet-conscious, just have so much they can spend on cannabis, vapor pen may be a luxury item for them now. That's changing in California. Actually, relatively recently just last week, the parent company which you may be familiar that was a recent publicly listed company. One of these cannabis SPACs that came to market with Jay-Z's involvement introduced a new $25, a single gram cartridge, which is extremely inexpensive when you think about single gram cartridges for vapor pens.

Normally, single-gram cartridges go between $45 and $60. To come to market with a $25 product, I think is going to be really interesting. You may see even more growth in that younger category in a market like California, where products like that are being introduced. Expect to see these numbers change and it'd be great to look back if we do a conversation like this a year from now, what the landscape looks like at that point.

Matthew: Now, how about 4/20 this year? What are you expecting? Anything different from previous years?

Cy: Yes, I think 4/20, being the biggest sales day of the year for the cannabis category will be, again, pretty unique this year. I think we'll see a lot of the same patterns that we saw last year, particularly around it being spread out over a number of days. I think at this time last year, we were worried that the stores, whether adult-use cannabis retailers or medical dispensaries were even going to be allowed to operate. They were deemed essential businesses in all markets, which is fantastic. Certain markets like Nevada really had a slowdown because of tourism impact and all that, but just the fact they were able to stay open was huge, especially the pandemic was really just ramping at this time.

This is the biggest sales day for a lot of these retailers. What we ended up seeing last year is I think what we're going to see a lot of this year, which is spreading out the 4/20 sales day across an entire week. A lot of that has to do with social distancing and making sure that you don't over-exceed capacity at these retailers. No one wants to be in a big crowd these days especially in maybe a small retailer store or waiting in line. They have been spreading these deals out quite a bit. I think we're going to see the same thing. When you look at the total sales data, every year it continues to grow.

Last year I think was a little lighter than the year prior, but some of that was due to some of the pandemic purchasing patterns that happened in the beginning when we weren't sure if the stores were going to be open, a lot of people rush to the cannabis retailers and purchased a significant amount of products to make sure that they had enough supplies, should everything gets shut down, so people probably had a lot rolling into the April 20th holiday.

This year may be a bit different. I think if they spread it out over a number of days like they did last year, I think you're going to see just increased sales. Market over market, every market that has the legal cannabis framework, we saw growth in 2020, and I expect no different in 2021, even while we're still in the midst of this unfortunate pandemic.

Matthew: You mentioned Jay-Z and I know actor Seth Rogen has created a brand called Houseplant. How much do you think these celebrity-led brands actually boost sales? Is that a thing?

Cy: Maybe not so much. It maybe varies on the brand. When we look at the data for brands like Marley Natural or Willie's Reserve, they do fine, but it's not like they're outperforming a lot of the other brands. Often, they're not the number one best-selling brand in the markets that they're in. In that capacity, maybe not the biggest driver of sales. I think a good marketing exercise and a good way to differentiate, it is getting very crowded out there. There are a lot of brands being introduced every day. Having a celebrity behind your brand could be a way to cut through that noise a bit more, especially if the celebrity is really tied to the brand and passionate about the brand.

With Jay-Z and The Parent Company, Jay-Z is associated more or less with their monogram product line and the Fun Uncle brand, which was part of Caliva. It's a retail group in California that became part of The Parent Company in this merger of different brands, really runs Fun Uncle. I don't know how much impact Jay-Z has on that. Maybe had a lot, maybe didn't, but very different than the monogram positioning. In that sense, not totally sure, the jury's out. Now, I would say there are exceptions. Houseplant and Seth Rogen made a big splash a couple of weeks back. Houseplant's been available in Canada through Canopy Growth for some time.

Canada, for those that aren't in Canada, has very restrictive packaging restrictions or requirements I should say around the size of the logo, and how you can position it, and the amount of THC that can be in the different edibles, and so on. It did okay up there. Canopy Growth was really responsible for the flower quality and all that. Different people have different opinions on the brand now. Houseplant's coming to California. It's going to be a bit different.

That's for a couple of reasons. One, Seth Rogen and his group seem very involved in the rollout in California, even talking about going with a direct consumer model where in California there is delivery and you can order online and get it delivered, which is really great. Direct to consumer, when we think about just retail in general is becoming a bigger and bigger channel. People are purchasing brands that are sold direct to consumer. Houseplant being direct to consumer with a good delivery network is nice advantages there. Seth Rogen is particularly passionate about cannabis.

If you look at any of his Twitter posts around his Houseplant introduction, he says, "It's the greatest thing he's done in his life." He's a well-accomplished actor and producer and writer, and to come out and say that this is the thing he's most proud of is pretty incredible. I think some of the time, that passion comes through, hopefully, that comes through into the product and comes through into their success. I think that's a big reason why they'll be successful. Also, they're doing something interesting and they're introducing a house line of products, a house goods line of products. Things like lighters, things like ashtrays that they can sell anywhere. They're all very high-design, mid-century modern design.

Matthew: It's like restoration hardware meets cannabis accessories

Cy: Exactly, exactly. They even did some vinyl LP records that were for sale. When you think about brand building and you think about trying to create a mass-market brand in cannabis, it's hard because of the fragmentation and the availability. Houseplant is available in Canada and it's available in California, and that's it. A consumer in Colorado, a consumer in New York soon won't have access to Houseplant flower, but what they can do is buy all the Houseplant accessories. When the Houseplant team does go to New York and start selling their products, they have a customer base that already exists, that has just been waiting patiently for these products.

I think you're going to see a lot of success from that strategy. They're not the first one to do it. The Marley Natural did it long, long ago in California with different types of accessories that were very high-end, which was their play at the time. Marley Natural brand is positioned as a high-end brand. I don't know, the Bob Marley audience, if they're more of the high-end audience, I'm sure there are people that have more high-end tastes with these things. They're very expensive products. I think it did okay. Now, that's all part of The Parent Company, the Jay-Z Group that we're talking about.

Houseplant, I think the time is right. They're very motivated. They're very passionate about the category. They care about the strains. They care about the flower quality that they're bringing to market. This house good line, I think that's a great example of a celebrity brand that is going to do very well.

Matthew: You mentioned earlier about the market, there's a lot of competition. How hard is it for brands to get shelf space at a cannabis retailer? Do you hear complaints from a lot of brands, or do you hear interesting tactics or strategies?

Cy: Yes, it is harder and harder. It's shelf space and it's share of sales and what's called skew rationalization. Really, that's the next phase of the battle here for these brands, these product manufacturers. It used to be, just a handful of years ago, you'd produce a new product, and you could get it on the shelf. You could get it carried by the retailer, and you'd have some success. It's very different now. The industry is maturing. It's getting more competitive out there and more challenging for brands to come in and get that shelf space. I think it's harder to create a new brand and come to market than it's ever been. It's still a great time.

I always joke, there's never been a better time to come into the cannabis industry. I still believe that. I think it's still wide open. We're talking about beverages and 1% to 2% of the category's sales that gets still wide open. When you look at a beverage like Cann, it over-indexes to female consumers and to millennial females. It's very much like a Gwyneth Paltrow brand. I think White Claw was very similar when it first started, very female attractive product. It's seltzer, it's not a beer. White Claw was very clever in some of their marketing. If you remember any of that, the no Laws When Drinking Claws ridiculous campaign, but it worked.

It shifted this perception of this drink is more of a feminine product to attract a female audience and this can be consumed by guys just as easily. A brand like Cann has an opportunity there. Certainly, males are purchasing Cann, but it definitely over-index female. When we talk about a new brand coming to market, I think there's room there for that to be more of a White Claw, more of a brand that is attractive to both and is a low dose, two milligram. You can have two or three of them at a party and so on. The book is still being written and I think there's still opportunity, but it is harder.

For brands that are in market now, what they're doing and what's really important for them to do is to go to new retailers. If they're trying to get more distribution or take their success from their current retail distribution and move into other retailers, really bring the data with them and say, "When I am at this store, this is how our brand performs." Working with your store, having a relationship with the stores that you're in to really understand that, and that's critical. They're already working with the stores with things like in-store promotion, where they'll go in and they'll set up and they'll educate consumers as they come through because marketing in cannabis is hard. These channels are limited.

Advertising is limited. So often, you have to meet the consumers where they are. Many of them have relationships with retailers, really understanding how your product is performing at those retailers and taking that data with you. Coming from a data and analytics business and working with a lot of retailers and a lot of brands, we see this happening now. It's powerful. If you walk into a retailer and you said, "When I'm at this store, their sales increased by X," and it was expansion revenue, not cannibalization of these other skews that you might carry. Then it makes it easy for the retailer to say, "Well, I will take a bet on this brand and I'll bring you in."

Then you measure that. You show them how it is performing and then you get more and more shelf space, and you create further relationships. That's something they can advantage, the brands that are in market might have versus brands that are just coming to market. That's a bit harder when you're just getting started. Even when you're just getting started, find those stores that are willing to carry your products and really start with how you position your new product and market and how it's different and how it's either priced differently or positioned differently, marketed differently. That may open some doors because there's still a lot of white space, plenty of white space.

Then once you open those doors, look at the data, look at the numbers, and look at how you're performing at retailers versus the overall category that you're in versus competitive brands. Then take that data to other stores and go get that shelf space.

Matthew: Yes, this is so fun because most of the things I talk about are subjective, but this is actually objective. We have data we can look at. We could say, "This is what's actually happening, boots on the ground in certain markets." This is probably a good time to talk about the benefits of using Headset because there might be some business owners out there or some investors that are saying, "Hey, if we're moving forward with this brand, we need to know where the puck is headed, what's going on? What the market share is, and what the competition's doing, and all those things." Why don't you just mention the primary benefits for brands, investors, whoever might use Headset to using it?

Cy: Yes, absolutely. We have a couple of different services split into our retail and dispensary services, and then our market intelligence services. For the retailers and dispensaries, in particular, we provide a lot of tools, primarily business intelligence and analytics around their own data. As well as market data in the context of benchmarking we do layer that in, but really to help with optimizing those stores to understanding the thing we were just talking about, like your skew assortment. Are you carrying the right products? When you carry 20% of your brands or driving 80% of your store sales? What brands should you divest from? What brand should you continue to invest in?

Tools around, marketing, so you can measure your marketing ROI. When you are spending marketing dollars out there, is it driving new customers? What are those customers look like? What's their lifetime value for those customers. Helping you with customer retention, being able to text consumers that might be your most loyal consumers that are going to churn out and move on. That's all tools that Headset provides based on the analytics that we have that can really help businesses like retailers and dispensaries, in particular, optimize and just be more successful by leveraging their data.

We try and make it really easy. Really going beyond just kind of your top line sales and digging in and understanding how can you really make your brand perform. Our mission is to have cannabis be an ultimately successful category by empowering the operators to make more informed decisions and ultimately be more successful. This industry won't be successful if the retailers and dispensers aren't successful, or the brands aren't successful. We're very motivated to bring the tools to enable that success.

Cannabis operators and retailers and dispensaries are a spectrum, you have the mom-and-pop small businesses, and you have these MSOs like, GTI, and we work with all of them. That's a great thing. If you're a smaller store, our tools work just as well and are leveraged by some of these big multi-state operators. It really helps level the playing field a bit, as you're looking at the cannabis industry and what's ahead, and all this potential consolidation that may be coming as some of these bigger operators grow.

If you're a bigger operator trying to do a lot of this with your own teams, building out analytics teams is very costly. Our tools really streamline a lot of that, so you can spend your money on marketing, and driving more customers, opening more stores, less on having to analyze all your data because it is pretty time-consuming. That's on the retail side, the dispensary side. Then our market intelligence side, this is where we see the percentage of female consumers that are purchasing Cann. We provide a service called Headset Insights.

our customer base is really made up of cannabis operators, so the brands, product manufacturers, distributors that want to understand the competitive landscape, that want to find that opportunity if they're going to introduce a new beverage, how to position it by looking at the data. It's a very powerful tool for them there. We also have a lot of non-endemic clients as well. Clients that aren't license holders in the cannabis space, so financial services companies like hedge funds and banks that are making investments into the cannabis industry and really need to know what they're investing into. They leverage our market data for that.

Other types of companies like consumer-packaged goods, companies, beverage alcohol, or tobacco companies buy our data as well. It's a broad spectrum of types of companies that can get some great insights from our market intelligence data. That's how we look at it. A lot of the market intelligence data is freely available on our website. I encourage people to visit us at Headset.io. You can sign up for what we call Insights Pulse, which is a higher-level market data but you can get insights into most adult-use and medical markets in the US and Canada at no cost.

You can understand these category trends like how our beverage is performing in Canada versus the US, where they're actually selling a bit better in Canada, all at no cost. We've got great industry reports as well. About once a month, we publish something interesting. We actually recently did a beverage report that covers a lot of this on Cann and Lagunitas and others that goes into some depth, all freely available. I encourage all your listeners to go check us out at Headset.io.

Matthew: Great. Cy, just a few personal development questions before we wrap. What is one time waster that still goes on in business that you would love to stop doing?

Cy: I hope we don't have too many of them here at Headset. For me personally, when I think about a time waster, something that just seems to take a lot of time for something that's so simple is scheduling, sounds ridiculous, but it does. In this remote world that we're all in, just scheduling calls even internally and externally, and when you have to have multiple people from your team, it can be quite challenging to do the scheduling. That's something that is tough. There are tools out there that will help with that, where you can share calendars and people can block time.

There is also etiquette and there are some strong opinions around things like usage of tools, where it's like, "Drop something on my calendar." I do think it makes a lot of sense too. The amount of time I have to spend in a day just looking at my calendar, looking at other's calendars trying to find time is crazy. We're a 50-person company, growing quickly, and I don't have an admin. I don't think I need an admin, but sometimes with scheduling, I feel like I could use an admin. I know that's a lot of the pain and love with what admins help out with, but it does seem like it's a small enough problem, doesn't warrant it, so I continue to have this problem.

It's one of those things I'd love to stop doing, but I just don't think I should stop doing yet. I really wish the world would just embrace some of these software tools. It really is a funny etiquette thing. Just the etiquette thing, it's so ridiculous. Some people get really, really frustrated if you just send a link to a calendar and say put something on my calendar versus the back and forth, three emails with time frames and all the above. In the virtual world, you'd think we'd get there but still a ways to go. Kind of a goofy thing, but for sure one of those things I'd love to stop doing.

Matthew: What's one song that makes you sing out loud when it comes on the radio or whatever on Spotify?

Cy: All right, radio, that's funny. I'm not one to belt out singing. Good question. I think sometimes, a good old David Bowie classic. I find myself singing along maybe someone like The Clash, same thing I can't think about a singular song. Some of the probably notable hits, I might find myself doing that. It's kind of top of mind. Somehow, within Spotify, I ended up down this rabbit hole of the '70s Road Trip playlist somehow. I really have been enjoying that. I don't know where it comes from. I didn't grow up in the '70s, was born in the very end of the '70s. For whatever reason, that's top of mind some of the David Bowie stuff. I might catch myself singing into some of those classics like Ziggy Stardust.

Matthew: Yes, mine, any Lionel Richie song that comes on, instances. Not only do I sing it but then it's stuck in my head for the rest of the day.

Cy: That's a good one, Lionel Richie, maybe Hall & Oates. There's probably some '80s ones too that are good. Maybe, that's my next, '80s Road Trip playlist. I need to look up on Spotify as I go through the decades.

Matthew: There you go. Final question here, Cy. If you could construct a day of just fun activities that have no constructive, or educational, or business value whatsoever, just for fun. What would that day look like?

Cy: Yes, those days are a dream.

Matthew: Your mind can't even wrap around answering a hypothetical about it, it's so far from reality.

Cy: I know. I know. It's all balance. You got to make time for that stuff. I think probably right now maybe with the pandemic and everything, just going to museums. Here in Seattle, we've got a great assortment of museums, whether it's the Seattle Art Museum or the Museum of Flight, really cool stuff. I just love spending a day, an afternoon wandering around, looking at the exhibits, gives you something to focus on and takes your mind off other things.

Frankly, I didn't do it enough in pre-pandemic times. Now, that it's just not available. Although, they are starting to open up on a limited scheduling, so might have to go do that. I think something like that would certainly be what I would like to do, good way to spend the day, no business value, maybe constructive educationally, but yes, just a nice day. I'll have to look into that.

Matthew: Cy, you mentioned Headset.io is your website, you also are writing on Medium now. Where do we find you on Medium?

Cy: Yes, that's a new thing for me. I've been writing essays on Medium at medium.com/cannabis-packaged-goods. You might be able to search my name and cannabis packaged goods. It's planned consumer packaged goods. I do think there's a lot of interesting stories, like the Cann GTI story, the Houseplant story. These are the things that I've written about recently. I think it's a really, really interesting thing that we're seeing develop, this emerging cannabis category and particularly the CPG overlap or the consumer-packaged goods overlap.

Now, it's turning into, very similar to an alcohol-type industry or grocery-type industry. If you ever go to a Total Wine or a Beverages and More, BevMo!, that's what cannabis will be in the not too distant future. Writing about that on Medium, it's really been fun. I like to think that I'm documenting the emergence of brands that we will be talking about decades from now, like if this was the '20s and I was writing about Anheuser-Busch and Budweiser. Really cool and really cool to see how they're leveraging the playbook, for value creation for consumer-packaged goods, and how that can be utilized in cannabis.

At the same time, CPG industry is really struggling with some growth challenges, the traditional CPG industry. A lot of that's due to different reasons, like Generation Z having a different mindset around the brands that they choose. They're not looking for the tried and true brands, a little more disruptive. I think some of these disruptions that are happening in CPG are actually accelerants for cannabis.

I'm covering that on a weekly basis. Check it out there, take a look. I always welcome any feedback, leveraging Headset data and some insights into the CPG world and marrying those two things together. You'll find me there on Medium, cannabis packaged goods, and also, Headset.io where you can get access to a lot of our market intelligence that we talked about in this conversation.

Matthew: Cy, thanks so much for coming on. Please make time to go to the museum next year when we have you on the show. We'll do a scorecard, see how you did with your 4/20 estimations and celebrity estimations and see if you went to the museum and had a fun day. Thanks for coming on the show, thanks for educating us, and good luck with the rest of 2021.

Cy: Thanks for having me.

[music]

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 guest 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 with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.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 for using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies entrepreneurs profiled on the show. Please consult your licensed financial adviser 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. Look for another CannaInsider episode soon. Take care. Bye-bye.

Ep 342 – Cannabis Extraction is Booming – Largest Extraction Company Reveals Trends

nick tennant precision extraction

With extracted cannabis-derived products making up about 50 percent of all cannabis products sold, extraction equipment is in high demand. Here to tell us more is Nick Tennant of Precision Extraction.

Learn more at https://precisionextraction.com 

Key Takeaways:

[00:52] An inside look at Precision Extraction, the industry leader in cannabis extraction equipment, C1D1 lab planning, and extraction training

[1:40] Nick’s background in cannabis and what led him to start Precision Extraction

[4:28] Biomass and why it’s a critical component of cannabis extraction

[9:04] How Precision Extraction’s diverse line of equipment is designed to accommodate different production needs

[13:14] Shifting consumer trends in cannabis-derived products and how Precision Extraction’s clients are able to adapt more quickly 

[22:34] Why Precision Extraction freezes biomass before the extraction process

[25:09] The most common mistakes Nick sees new business owners make when trying to develop cannabis-derived products 

[27:32] How Precision Extraction’s premade C1D1 lab containers known as “Extraction Pods” are saving businesses time and money

[29:35] How Nick sees the cannabis extraction market evolving over the next 3-5 years

Click Here to Read Full Transcript

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. With extracted cannabis derive products making up about 50% of cannabis products sold, cannabis extraction equipment is in high demand. Here to tell us more about the state of cannabis extraction is Nick Tennant, CTO of Precision Extraction. Nick, welcome to CannaInsider.

Nick Tennant: Thanks for having me. Pleasure to be here.

Matthew: Give us a sense of geography. Where are you in the world today?

Nick: Our headquarters is outside of Detroit Michigan, in a suburb called Troy and that's where I'm at.

Matthew: What is Precision Extraction on a high level?

Nick: Precision Extraction is the end-to-end solutions provider for anybody that's going to create any sort of extracted product. When we say end-to-end, we mean you can bring basically a piece of dirt to us, and we can outfit you with not only all of the engineering, all of the design, but we have partnered construction firms. Obviously, all of the equipment, the equipment setting, and integration of that equipment, the design of the lab in terms of workflow and efficiencies. Then ultimately, training the staff, getting the SOPs implemented, and assisting the client with bringing online a production facility that does exactly what they want.

Matthew: Nick, can you share a bit about your background and journey, and how you got into the cannabis space and started Precision Extraction?

Nick: Yes, absolutely. I've been in cannabis now for about 17 years. I was in it since 2006. I had some family that was in California and Colorado. I began traveling and meeting with them, and looking at the space. I've always been an entrepreneur. In 2008, Michigan passed their law for medical use. I was the 40th person to get licensed here in Michigan under medical use. We did a lot of different niches for the following five years after Michigan passed their law.

We've operated dispensaries, we've done a commercial grow, we've done analytical laboratory. Pretty much everything under the sun, you name it, I've operated in the space. About seven or eight years ago really started to saw the trend go towards extraction. Looked at the technology at the time, it was very primitive. Really tried to engineer a better mousetrap, so I taught myself how to engineer pressure vessels, and manufacture, and develop a global supply chain, so did all that. Went to market. First 90 days, did about a million dollars in sales, and the rest is history.

Now, Precision is the largest extraction equipment solutions provider in the world. We operate in-- Over 20 different countries, we've got installation, so we're a global company. Really have a footprint in terms of the best clients in the world meaning if you've heard about of a publicly-traded company, or a blue-chip cannabis MSO, they're likely our client.

Matthew: I'm not playing around with pressure vessels and the side here. You obviously have a background in like-- What is this metal fabrication? What do we even call this? I don't know.

Nick: Yes, so pressure vessel fabrication would be the proper terminology. It's regulated by something called the American Society of Mechanical Engineers, ASME. Similar to basically nuclear submarines, and pressure vessels for boilers, and things like that because you are using pressurized components to do what we're doing here in many instances. Yes, it's a combination of technology and manufacturing.

We always say that we're ultimately in the end. We're a cannabis technology company because the form of the equipment always follows the methodology and the process. What are we trying to do from a technological standpoint? How are we trying to isolate these high-value molecules from the cannabis plant? How can we do that in the most efficient, effective manner?

Matthew: One thing I want to talk about is biomass because it's a key variable that you hear tossed around a lot when you're discussing extraction. Can you just talk about why biomass is one of the critical variables when you're talking about extraction and what it means to you?

Nick: Yes. To be more politically correct, I'll say it's poop in, poop out. The term in the industry. The biomass is very important. When you think about what you're trying to do. The biomass is creating these molecules THC, CBD, the other cannabinoids, the terpenoids, and flavonoids, and things that you're trying to extract. Ultimately, you're trying to get the native essence of that plant.

Anything that's going to disturb that native essence is going to effect your ability to create a very good extraction or a very good extracted product. Some of these things can be environmental issues. Ultimately, all of these molecules, the cannabinoids and terpenes, and so forth, they can all oxidize. The more oxidation, the more degradation they have, the biomass has been sitting if it's been overdried if it's been exposed in too much heat. These are all things that degrade the natural essence of a plant.

Therefore, we need to be super conscious about how we're handling biomass. Also, super conscious about our practices for harvesting and preparing the biomass in order to prepare for the extraction.

Matthew: Now, some people consider different things part of biomass like the stems and so forth. What do you consider part of biomass and not part of biomass? At least in the cannabis industry.

Nick: Technically, biomass is a blanket term. It can be used interchangeably through many industries. It really depends. Typically, what we try to isolate our biomass to is the cannabinoid-rich areas of the plant. The cannabinoid-rich areas of the plant are the flowers, of course, and what we call the sugar leaves. The leaves that are directly adjacent or part of the flowers have a pretty high concentration of cannabinoids.

The rest of the plant really doesn't have a high concentration of cannabinoids. When we talk about the roots [unintelligible [00:06:45] the stems, what we call the fan leaves, those are kind of like the solar panels of the plant for it to photosynthesize. Generally, most of that is discarded. Now, in instances when there's high volume, for example, if there's acreage of cannabis or acreage of hemp, some of that stuff becomes combined harvested. The combine actually just mills everything together, and that leads to a much lower quality of biomass.

It leads to a much lower concentration of cannabinoids in the actual material. Ultimately, it leads to more work in extraction and generally a less pure-- Less artisanal product. To the prior point, the preparation in harvest, in how it's grown, how it's stored, how it's prepared in order to go into the extraction device is very important.

Matthew: There's really either cost on the front end or the back end, whether if you're using a combine to cut down on cost. On the back end, you don't have that surgical precision to pick out the parts of the plant that you want to gather.

Nick: Yes, that's exactly right. There's a lot of different ways to skin that cat whether you're using mechanical. Large scale people use just a large workforce. It's very laborious. We've got a technology that we've implemented which is a-- It's called a CryoCan system. That system actually uses liquid nitrogen in order to flash freeze and sublimate the water out of a freshly harvested plant. It also uses an agitation system to separate those cannabinoids and purify those cannabinoids into what we call a sift.

A sift is just really a purified pile of cannabinoids. It looks like sand almost. Where the trichome heads, they look like little mushroom heads coming off of the buds and sugar leaves of the plant. Plus trichome heads are snapped off due to low temperature and separated, which is a very, very efficient way to harvest, so that technology. Again, when I say that ultimately Precision is a technology company, these are the types of examples that can be had. The way that we think about how to isolate these molecules really drives the future of the innovation of the company.

Matthew: Can you give us a sense of how much cannabis biomass your extraction equipment can process in an hour? It seems like that's one of the first questions that comes up like, "If we're trying to fit into one of Precision Extraction's machines extraction equipment, then we need to know how much product you have going in and how much oil you want out." Give us an idea of your line up on a small end and then in a high end.

Nick: Yes, absolutely. Our smallest equipment starts about five pounds a run. A run typically taking 30 to 40 minutes. We like to say conservatively, it's around 40 pounds a day. We're not catering to home users. That's our lowest size of our commercial equipment. Just to give you an idea of scope on that. If somebody's using a hydrocarbon piece of equipment to make artisanal products, and they're processing 40 pounds a shift in an eight hour period, that could be something that's potentially $7 to $12 million a year revenue business.

Now, our equipment goes all the way up to 10,000 pounds+ a day in our industrial line of extractors which is our KPD series. That KPD series is, again, that's more think about combine, think about high volume, lower quality oil that needs to be refined and distilled, and so forth. Any range in between there, we can accommodate. Typically, at every processing throughput, Precision has a solution. Depending on what product you're going to make, our team and our specialists can absolutely consult and advise you on what combination of equipment's going to be most effective for your potential production and business plan.

Matthew: I noticed that there's this lingo in the industry. It makes sense just how we use horsepower for cars. We still use some legacy ideology with eight-hour shifts because that's how humans work. Are some of the machines you have now going to transcend this idea of working in eight-hour shifts where you can put all the biomass in one area and it gets processed for you over a greater or shorter period than eight hours?

Nick: Yes, absolutely. All of the machines are capable of running 24 hours. Let's start by putting context around that. It really depends on when you cross the inflection point. Really, at around 2,000 pounds a day, you start crossing an inflection point where it doesn't make sense to do batch processing anymore because of the overly burdensome labor costs.

What that translates to is more of an automated feed and automated discharge system like you see with our KPD series of extractors. These are typical to either large THC players that are consolidated and have a massive amount of greenhouse space or to the CBD players because the CBD players are really extracting a large amount of acreage.

With that in mind, you really can process 24 hours a day absolutely. With anything in a batch form, you have to have the human power really robust in order to meet those high throughput-processing demands in that short period of time with minimal downtime and with the automated system. Obviously, the machines do a lot more work for you. Extraction really is an art. It really is artisanal. You can think of it almost like cooking or making any artisanal product. Cannabis very much is an artisanal product itself. You can think of that like microbrews, you can think of that like artisanal wines.

A lot of this stuff, even as the industry grows, there's going to be a lot of small-batch production, and we see that obviously in our business. 2,000 pounds a day is a lot of biomass. Then, you can still do that on batch production. We call that high-volume batch production. It just gives an overview of the trend of the industry and throughputs and automation versus batch equipment and time frames for processing.

Matthew: You get the inside scoop from all these companies that are doing extraction for their business. They really tell you the truth because they need your solutions. They want to tell you exactly what they're doing. Without naming names, can you just give us an idea of what the trends are in terms of what manufacturers are making, the most popular products that they're using the extraction equipment for?

Nick: Yes, absolutely. A good way to really look at this too is what are the consumer trends? I think we talked about this a little bit before. Every state has its own micro-demographic, micro-economy, and micro-consumer trends. The patterns of production are a little bit different from state to state. One state may be more dominant on vape pens. One state may be more dominant on edibles that might be a particular sub-segment like gummies. We really see it all over the place. It's really a result of the level of maturity in the market. As consumers become more educated, they realize that there's a multitude of different ways to ingest cannabinoids.

As they understand that, they'll explore more products and gravitate towards perhaps newer, more innovative products. Most of those products, of course, come from extraction. What we see is we see a shift generally from flower consumption to extract consumption, the more mature a market gets. In terms of our clients, they have a different strategy on a state-by-state basis. Typically, what we're building is a very diversified lab where that lab has the capability to do pretty much every product whether that's distillate, whether that's isolate, vape pens, live resin, shatter, butter, wax, sauce, whether that's high-volume crude for resale and separate processing or Rick Simpson Oil.

Typically, what we see is these labs being extremely diverse and the ability to produce these products because the consumer trends do shift. What's hot today is not necessarily hot tomorrow. The market is extremely dynamic in that regard.

Matthew: I'm sure you get a lot of questions about whether hydrocarbon extraction, for example, using butane or propane is dangerous. When people ask that, how do you respond?

Nick: It's funny because a lot of competitors, they tend to mark it off of fear and things like that, especially the CO2 guys. I always ask myself a question, "If somebody's negative-selling, what does that say about their company, or what does that say about their technology?" When we think about hydrocarbon, hydrocarbon really is a technology that's been around for a very long time. On a day-to-day basis, you can't go a day without eating something that was extracted with hydrocarbon whether that's canola oil or soy-product derivative, or natural flavoring. Those are all extracted with hydrocarbon.

Hydrocarbon is flammable, of course, as is ethanol. The key thing to remember is we're working in a controlled environment. We're working with a piece of, no pun intended, Precision-engineered equipment. These are the same types of codes and regulation that you would operate in any controlled laboratory environment. You'd operate in any environment like an oil rig or refinery where you're dealing with things that are potentially flammable.

The same type of controls that you potentially put into anything where fuel is stored in terms of even your vehicle or a gas station. A gas station has controls in it for anti-static. It's a Class I, Division 2 area. Ultimately, these technologies are extremely safe. In our almost decade of operating history, we've never had a single client have any instance of accident. That just puts the context around, "It's a lot of fear-mongering."

The reality is hydrocarbon as a molecule, we think about it as this lock-and-key analogy. There's always going to be a perfect solvent for an individual molecule that we're trying to extract or we're trying to dissolve. These solvents vary in terms of, what we call, polarity, and they vary in terms of their chemical structure. What's important to understand is that hydrocarbon is almost the perfect chemical structure to extract cannabinoids and terpenes. It gives the most efficient, the most effective-- It picks up all the stuff that we want while leaving behind the cellular structure, the chlorophyll, the cellulose, the phospholipids, all the things that we don't want, that the hydrocarbon leaves behind. All the things that we do want, it brings to us.

Ultimately, that leaves us with a very, very, very high-quality extract in almost all circumstances relative to the other technologies in the market. Now, the other technologies are applicable. We sell ethanol equipment as well. Ethanol is less artisanal. It has more of a broad range of extraction. It does pick up quite a bit of chlorophyll. It does pick up waxes and fats. You have to run it very, very, very cold in order to be effective at any artisanal product. It's really good for high volume.

As we previously drove this conversation, it's an artisanal market. Ultimately, that translates into the majority of people using hydrocarbon equipment. It's ultimately why our flagship models have been so successful over the last seven years.

Matthew: It sounds like there's a lot of nuance there. It's not as simple as like, "Hey, CO2 or ethanol is better than butane or propane." There's trade-offs and nuance that you really have to dig deeper to uncover.

Nick: At the end of the day, it all goes back to your product strategy and your product plan, and your throughput. What are you trying to make, how much you're trying to make of a particular product, that's really what we do here at Precision. It's very much a consultative process when somebody buys equipment for us because there is nuances. It is a very technical sale. There is a lot that goes to standing up a production line to making these particular products.

Ultimately, it's what has given us a tremendous amount of success because it's not only myself that has been in the industry for the amount of time that I've been in it, but we've got a very experienced staff. I've personally handpicked most of our technical team over the last five years. They've grown with us and a lot of these guys have been in the industry for a decade-plus and running extractions.

We've got thousands of installations of our equipment. We've seen it all. We're consultants and advisors, as much as we are a company that's going to sell you something. We're always the company that's going to stand there, and make sure that you're meeting your production goals.

Matthew: Some of these multi-state operators or MSOs are raising a lot of money, they have a lot of capital, I'm sure they deploy a lot of it into high-end equipment with you. Do you have a recent install with an MSO that you can think of, and what kind of solution they put in?

Nick: Yes, I have many. Unfortunately, discussing the details of individual clients' MSOs, in particular, their production plan is just probably not the best thing for me to do. I think they'd get a little upset with me. If somebody is curious is listening to the podcast, we have a public disclosure memorandum or whatever you want to call it with this particular client. If you want to look at a Free As Diamond facility, they've put on a new facility, it was several 100 million dollar bills. They put a really diverse line of extraction equipment in there. While I don't think that anybody will be able to see the details in the public domain, they can see the facility. It gives you the type of idea and scope of infrastructure that's being built by these large companies.

If you think about the amount of revenue, just think about their amount of revenue, half of that revenue is coming from extracted products. If these companies are growing to multi-100 million dollar companies, and in some cases, I do believe that these companies will get well over a billion dollars in revenue as the market continues to grow. Just remember, half of that is coming from extracted products. Those extracted products all require a robust infrastructure in order to be created. That infrastructure is created by companies like Precision.

Matthew: Just a question about back to biomass here. I noticed on one of your extraction machines, there's an area that cools down the biomass before it goes into solvent. Can you talk about why that is and what happens if it doesn't get cooled down?

Nick: Yes, absolutely. It's a pretty common practice to freeze biomass and in some instances, deep freeze biomass prior to extracting. What we're really trying to do there, depending on what type of organic solvent we're using, the idea is to really freeze out the water especially with polar solvents like ethanol, you're going to pick up water out of the biomass. In many cases, the biomass that's fresh frozen, it's actually harvested while it's still alive. It's never dried.

If you think about a growing plant, this is how you make live resin. You actually harvest the plant while it's alive. It goes immediately into a vacuum-sealed deep freezer, and that could be anywhere between -10 to -40. In some cases, people are even freeze-drying. What that does is it doesn't allow any of that oxidation to take place with these cannabinoids. It's going to preserve all those terpenes, all those cannabinoids. There's going to be zero degradation.

If you think about it, almost like a banana. The longer you let a banana sit on the counter, the more that oxidative degradation process takes place and the more that the compounds are turned into glucose, the more it degrades, et cetera. The same principle happening with cannabis. Now when it's fresh frozen, you're preserving that. It's just like frozen fruit. You're putting it into the machine and ultimately extracting it in the same manner that would be if it was completely fresh.

It could be ostensibly sitting for 50, 60 to 100 days in the freezer vacuum-sealed, but it's going to give and yield the same result as if it was completely fresh. The other side of that is freezing it in order to bypass any sort of water. Any sort of polar solvent, ethanol, methanol, things like these, they're going to pick up water really, really easy. It's just the nature of the molecule. It likes to grab onto the water while hydrocarbon is more hydrophobic. Ethanol, methanol, and things like that are not. They tend to pick up water. If we keep it very, very cold, the water stays frozen and we can bypass that.

Matthew: Can you tell us some of the most common mistakes you see from business owners just getting into the space in terms of lack of understanding and what's needed and what they could do to get on the right track more firmly earlier on?

Nick: Absolutely. I think that probably the comments in the discussion and just the narrative that we've had thus far, I think it's starting to paint a picture that there is a lot of nuances. There is a lot that goes into this business in terms of extraction. I think that the number one mistake that people make is that they don't have somebody on their side that really knows what they're doing. Now, they hire somebody, and maybe that person knows what they're doing, maybe they don't. It's hard to find people that are really, really good in this industry.

The people that are really, really good, all have jobs at MSOs or the top tier talent always goes to the best places. Somebody that's starting out, their best bet is to find as good as talent as they can, but to really find somebody that knows what they're doing, somebody like at Precision, or hire a consultant that really has a strong history and reputation in the industry because there are so many pitfalls.

The second thing I would say is it's kind of common sense, but budget, making sure that the budget is accurate and planning accordingly. Then the third thing I would say is understanding your market. We talked about each state and each individual market being its own micro-economy and having individual consumer niches within each of these individual marketplaces. That's extremely, extremely important to understand because from day one, you're planning your production and sizing your equipment according to what you think you can sell, obviously. What product is your business going to make?

With that being said, it requires a substantial amount of due diligence. We see that a lot of people, they don't really understand their market as well as they should. We give them advice, of course, on what products to make, how to make them, and bring the production online in the proper manner, but really doing the due diligence around the consumer trends in your state, that's huge. Absolutely.

Matthew: What are your extraction pods? Can you talk about those a little bit? Who buys them and what are they for?

Nick: The extraction pod is a-- Think of it as a pre-made lab in a box. Ultimately, what it is, it's an ocean container that's been outfitted with all the appropriate controls, meaning ventilation, electrical, Class 1, Division 1 equipment placement, et cetera, that's pre-listed. What that translates to is no build-out in your facility. It's something that can be dropped on site and be used pending the approval of the municipality because it is a temporary structure.

It saves our clients from doing a very labor-intensive, robust build-out. Alternatively, if they are doing a build-out, this gives them the option to bring their facility online faster, so long as the municipality that they're operating in is okay with these types of structures being placed on the property.

Matthew: Is it also used as a supplement when they're between different sized extraction equipment, they say, "Okay, let's supplement with a pod until I get to a higher level, or is that not really the case?

Nick: Yes, it can be. A lot of people, they get into a facility, they're in there for two years, they need their production ramped up, their new facilities coming online, but they need excess capacity. Yes, they can bring that online. It's extremely universal. It's meant to be not necessarily an ad hoc solution because I don't really think that's the proper terminology, but it's supposed to be a quick response type of solution where it's saving the client 90, 120, 180 days, on going through permitting, going through build-out, going through plan comments, and all the stuff that it takes in order to build out one of these facilities and bring it online.

Matthew: Where do you see the extraction business changing and evolving in the next three to five years?

Nick: I think the big thing that's going to happen is we're going to get CGMP standards. CGMP means Current Good Manufacturing Practices. When we look at any nutraceutical or supplement or anything like that, all of the manufacturing of supplements in the United States is subject to FDA regulation. It's subject to CGMP standards. We're starting to see that inch into the edibles market in certain municipalities and we're starting to see that inch into the production of CBD-based products.

Ultimately what you're going to see is you're going to see blanket CGMP compliance across the entire cannabis space. We're obviously advising our clients that they need to prepare for that and build for that and plan for that. Our equipment is already CGMP certified. Certified is really not the right nomenclature. It's CGMP compliant or CGMP ready because the equipment is only one part of the GMP process.

You have quality management systems and personnel training and quarantine processes and facility cleanliness standards and all these sort of things that go into CGMP. In terms of where the industry's going, 100% that's where it's going on a compliance standpoint. On a standpoint of product, the industry is going to trend towards all these other minor cannabinoids. We really just know about a few of these cannabinoids, or I would say that the public domain knows about a handful of them, maybe they heard a CBD or CBG or CBN. Obviously, they've heard of THC. Maybe they've heard of Delta-8 THC, which is an isomer of Delta-9 THC or isomer of the acidic version of THC.

What most people don't know is there's over 100 of these cannabinoids in the plant and each of these cannabinoids has a unique molecular structure. Based upon the molecular structure of each of these cannabinoids, it binds to what's called your endocannabinoid system within your body. Your endocannabinoid system is an endogenous system that actually regulates many things within your body. For example, your sleep, your mood, your fight or flight response, your nervous system moving you out of parasympathetic into sympathetic nervous system activity in certain scenarios.

The bottom line, without going into all the robust medical details, is that these cannabinoids, the way that they interact with your body, they have tremendous, tremendous promise. We've seen that with CBN, with CBG, with CBC. We've seen it with CBD obviously. We've seen it with THC, but all of these have a little bit of a different effect. In some cases, they have a profoundly different effect. CBD doesn't get you high. THC gets you high. They all are going to have a very distinct and very robust therapeutic benefit. In a lot of cases, these will be made into products that are multi multi-billion dollar products. We've got 152 clinical trials going on right now with different cannabinoids.

We're really just beginning to scratch the surface of what we know is available and where this technology of isolating these molecules and using them to improve quality of life. We're just beginning to understand what we can do right now.

Matthew: Nick, I'd like to transition to some personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?

Nick: Oh, many books. I'd read probably, I would say 50 books a year, usually about one a week. I think there's a few whether it's from an investment standpoint or a health standpoint but some of the ones that I really, really liked, I like Benjamin Graham's work. I think that it teaches you how to think about the fundamentals of business. From a business standpoint, I think it's a really good book from investing also, but thinking about the fundamentals of what creates a successful business. These guys have invested in businesses and created businesses and helped to advise the management of businesses for a very, very long time.

From a standpoint of business, I really like most of Benjamin Graham's work. From a health standpoint, I like Dr. Ben Lynch's work. He does a lot of work on the human genome. It's interesting because I had my genome mapped and a lot of other people have their genome mapped. You understand that you're a very unique individual. People push a certain diet or certain lifestyle or any number of these different things but ultimately the research shows that it's all genetically specific.

Some people can tolerate things while others can't. The more that you understand about your personal genome and the more that you understand about how to provide your body nutrition, I think that that gives you a tremendous leg up in whatever you want to do in life because everything on a molecular and cellular level in your body is operating in an optimal scenario. From a health standpoint, I really, really like that.

Matthew: Okay. I haven't heard of that one. What's the most interesting thing going on in your field besides what you're doing?

Nick: Again, I think the most interesting thing goes back to the cannabinoid research because we're a fraction of 1% into that. Ultimately, it's just an endless black hole of unknowns, but the little that we do know is so overwhelmingly positive for humanity, that it just becomes so exciting to be able to continue on that research. To be able to make money from that also it's amazing.

I'm super excited to see where the rest of the industry goes in terms of being able to, again, use these mystical compounds, if you will, within the cannabis plant to treat, cure and prevent human disease.

Matthew: Here's a Peter Thiel question for you. What's one thought that you have that most people would disagree with you on?

Nick: Oh, boy. I think I have a lot. In terms of a contrarian, I think that when you look at a particular situation or a particular person or a problem, you have to look at it holistically. I've always tried to do that. Well, not always, but in my more recent years, I try to look at it holistically. What are all the variables top to bottom end to end? To analyze anything like that gives you I think a greater benefit of your desired outcome. Whether that's hiring somebody within your organization, whether that's making a particular investment into a particular asset.

These are all kind of on the same theme, whether it's your personal health, looking at it holistically, and understanding the truth of whether it's the root cause or in some cases, it could be characterized as the fundamentals. It takes a deep level of analysis to do that. It's on the line of the thinking of a researcher or a technologist. Some people think that that's completely crazy but whenever I make big decisions, that's how I think about them anyways.

Matthew: Final question about Michigan. Obviously Detroit kind of got its lunch eaten when foreign auto manufacturers came in and displaced a lot of American jobs, but is there a Renaissance at all? Obviously, you're a specific example of using manufacturing skills and engineering skills and creating jobs there in Michigan. Apart from what you're doing, are you seeing a broader trend of retooling going on in Michigan?

Nick: Yes, particularly as it pertains to cannabis, I'd say Michigan's economy is generally in an uptrend. The way that people have perceived Detroit for a very long time is probably not what you would anticipate when you come here. When you come here, it's actually really nice. Everything's new, everything's clean. It's not the typical perception, I guess, is what I would say.

Now, cannabis in Michigan is actually booming. Some of the numbers out of BDS and these other publications are anticipating that the Michigan cannabis market is going to be upwards of a 3 billion dollar industry within the next few years here. It's ultimately translated into a lot of jobs being created and a lot of dollars being materialized into the economy here. I think that Michigan has a lot of resources, obviously in terms of engineering and so forth.

I don't know if that directly translates into cannabis specifically. I know that a lot of people from automotive have come into cannabis. The majority of our staff, our engineers, our project managers, and so forth and so on. A lot of them have come out of automotive. Automotive is still, obviously one of the dominant industry sectors here, but Michigan as a whole has diversified economically away from being pigeonholed into one industry also. I think, all in all, it's a positive trend for the state.

Matthew: Well, that's a great note to end on, Nick. As we close can you tell listeners how they can find out more about Precision Extraction and how to reach you or connect with you or salesperson or someone to learn more about your solutions?

Nick: Sure. Absolutely. They can find me on LinkedIn. Just type in my name Nick Tennant, Precision Extraction you'll find me. If you want to talk to anybody about our products or strategy regarding your extraction, we're happy to help. We're in Monday through Friday [9:00] to [5:00] and we've got a robust staff of extremely intelligent and experienced people that can help you out. Our website is precisionextraction.com. You can give us a ring at 855-420-0020.

Matthew: I love the 420 in there.

Nick: We always had to sneak that in. We got to remember our roots, right?

Matthew: Great. Well, Nick, best of luck to you. It sounds like you don't need any luck. Things are just blooming. Well done in creating your business and good luck in the rest of 2021.

Nick: Thank so much. It's been a pleasure speaking with you and I look forward to doing it again.

Matthew: If you enjoy the show today please consider leaving us 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 guest to you. Learn more at cannainsider.com forward/iTunes. What are the five disrupted trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com forward/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.com. We'd love to hear from you.

Please do not take any information for CannaInsider or discuss as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertised [unintelligible [00:42:10] companies featured the cannabis [unintelligible [00:42:12].

Lastly, the host or guest on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial adviser 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.

[00:42:47] [END OF AUDIO]