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Ep 281 – Scared Cannabis Investors Are Presenting A Rare Opportunity

codie sanchez entourage effect capital

While many cannabis investors are feeling underwhelmed with publicly-traded cannabis companies, opportunities still abound for investors willing to look past the headlines. Here to tell us more is Codie Sanchez from Entourage Effect Capital, a private equity investment firm dedicated to investing in cannabis.

Learn more at

Key Takeaways:

  • Codie’s background in cannabis and what led her to become a partner at Entourage Effect Capital
  • An inside look at Entourage Effect Capital and how it’s evolved since it was founded in 2014
  • New ways to invest in cannabis and opportunities that still remain untapped
  • How valuations for private cannabis investments have changed over the last couple of years
  • The vaping crisis and how Codie believes it will impact the industry long-term
  • How MSOs are responding to the Pot Com bust
  • The investments Codie is most excited about right now
  • Codie’s tips for entrepreneurs on how to pitch to investors
  • Where Codie sees the cannabis industry heading over the next few years
Read Full Transcript

Matthew: 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 That's C-A-N-N-A Now, here's your program.

Many cannabis investors are deflated and depressed with the publicly-traded cannabis companies right now. But opportunities still abound for investors willing to look past the headlines. Here to tell us more is Codie Sanchez from Entourage Effect Capital. Codie, welcome back to CannaInsider.

Codie: Thanks, Matt. Thrilled to be here.

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

Codie: I am in Washington DC, so the swamp itself.

Matthew: Okay. And your company has recently had a name change to Entourage Effect Capital. Can you tell us a little bit about that?

Codie: Yeah, absolutely. So, you know, we just went through a rebranding exercise, and for those of you that are, you know, very, very immersed in the cannabis sphere, you'll know that the name Cresco might sound familiar from another big guy out there. And so we changed it to Entourage Effect Capital. And as we were thinking about it, the reason why we did is because we have this very active role we take with our management teams. It's a reason why, you know, probably if you're an entrepreneur and you email me, might get annoyed because we say no to a million things and say yes to very few. But it's because we really can't do this aggressive value-add that we do to our portfolio companies if we say yes to everybody. And so in cannabis there there's a term called the honor effect, which essentially is used to describe sort of a method of endoccanabinoid regulation where all the compounds within the cannabis plant, or we're not sure that all but many of them work in concert to create a sum greater than any of its individual parts. And so that's why a lot of times people will say things like, "This product is full spectrum." So when we were thinking about investing in cannabis and how we do it, there's a word in venture capital called Keiretsu, it's a Japanese word, but it essentially means leveraging your ecosystem or your network to uplift the companies that you invest in. And we thought that's sort of modeled exactly what we wanna bring, this really aggressive backer behind you, not just monetarily so that were the most valuable names on our founders' cap tables.

Matthew: Okay. And you've been on the show before, but for new listeners, can you give a quick snapshot of your background and how you came into the industry?

Codie: Sure. I came from sort of the institutional investing worlds of the likes of Goldman Sachs and Vanguard and First Trust, State Street, if any of those big names ring a bell. And what was interesting is I started my business in one emerging market which was exchange trade fund business, so as that was really starting to come out and dominate how we invest in markets now. And then I moved to a few other emerging markets, including the last one being Latin America. I've always been in sort of these emerging industries and I see a lot, a lot, a lot of parallels with cannabis to that. But I did get into cannabis mostly because of two issues. I mean, you and I have talked about this a little bit before Matt, but I'm Hispanic and I graduated early to do my thesis at the time as an investigative journalist in some of just the absolutely violently-ravaged areas around Juarez and El Paso and Agua Prieta along the US- Mexico border. And, you know, you see things there that you can't really unsee. And at the base of all of it is they were really related to the illegal drug trade. And that started to convince me early on that we had to make some changes to the drug policy there in. And then years passed by and I started to understand the language of finance, and what really was the final trigger was my fiancé is an active duty special forces, military man we could say. And we do a lot with the veteran community, and saw firsthand really the effect of opioid cocktails and how they were destroying families and honestly, you know, killing our veterans. And so, you know, I kept having this question of, "How do we trust these veterans to go to war and die for us and we as Americans say that we have this strong backing for our veterans, but we don't trust them to decide as adults if they wanna use a plant that all the early research shows helps with PTSD symptoms isn't addictive, and oh by the way, has never caused a single overdose ever?" And so when I put those two things together, I put my first money in the space into actually Cresco Capital, which is what we were formally known as in 2014 with a friend of mine who's the founder in Texas, and it was pretty incredible to see the returns and impact sort of cement together with this generational wealth creation opportunity and an ability to have a little purpose with those profits. So that's kind of how I got into the industry.

Matthew: Interesting. Well, I definitely wanna be with you and your boyfriend when the zombie apocalypse descends upon us.

Codie: Yeah, you do. He's a bit of a prepper, so I think he'll be ready.

Matthew: Now, is there any contrarian ways to left to invest in the cannabis space? I know when I got into this space it was kind of still gritty and there's kind of like the guerilla investments and just like all these things that are in gray areas. Is there anything left in the contrarian department, ways to invest?

Codie: Well, I would say much more today than even, you know, three or four or five months ago. And a couple of different, you know, statistics. I know there's two ways to look at it. One is, first and foremost where we've seen most of the money flow into cannabis has been in public markets, right? We've seen a lot of money flow into the Canadian LPs, the Canadian companies. We've seen a lot of money flow into these sort of SPACs and RTOs on the public basis. But what you gotta remember is private companies outnumber public companies 80 to 1. So we have a heavy bias towards private. There's something like 30,000, 35,000 private businesses across just the U.S. which kind of tells you how nascent this industry still is, and there is going to be this continual progression towards consolidation and towards sub-sectors underneath consolidate into main players, which for us is good because our portfolio companies theoretically get acquired or make acquisitions. So the first contrarian way, I think, is a lot of people talk about it, but not very many people do it, is still investing on the private side. And second, which I think we're gonna talk about a little bit today more, is distressed. I mean, I think right now is probably one of the most interesting times I've seen since 2014 to invest in the cannabis space, which, you know, for people listening, maybe they're screaming at me right now because given the correction we've seen in the markets, that might be bizarre. You know, for those of you that don't know, the capital markets have had that serious downturn with, you know, anywhere from at the low end, 20% of reduction and valuations to 80%, 85%, 90% reduction evaluations on the largest, even publicly-traded cannabis companies. So, you know, you'd say, "Well, that doesn't seem great." But we think that this is actually a really positive thing. One, it actually makes companies go back to being rational. Two, it is always about the price that you can buy investments at. So there's a saying that investors use, which is, "Fortunes are made in the downturns and collected in the rallies." And so our belief is right now is one of the best times to invest in cannabis because for those people who have money and can do a creative M&A or tuck-ins, so buy companies and add them to what they're already doing, and double down in a distressed market, there's probably no better time to do it than right now.

Matthew: Yeah. So you mentioned distressed a little bit. I mean, valuations get more reasonable terms, get more reasonable. But what are you seeing out there in terms of, you know, distressed markets and how you're capitalizing on them and how you see other investors capitalize on them? And do you see startups, you know, making concessions that maybe you were asking for but weren't getting before?

Codie: Yeah, it's a great question. I mean, we've seen shares, you know, public company shares come to 52, 53-week all time lows. And so what that means for companies that are out there raising right now is that it's not a particularly fun time to be an entrepreneur raising. Now, my heart always goes out to entrepreneurs because I've been one, I've raised capital, I've sold a company before. It is a grind. So, you know, we are there for you and feel that portion of it. The opposite side of it is for companies that have real business models, that have actual revenue, that have reasonable expectations, this should be a good time for you. You're going to have to lower evaluations. I mean, there's sort of like four questions we ask our founders to ask themselves right now today, which is one, do you have 12 to 18 months of runway? Two, do you have a real handle sort of on your finances and cash management? Three, are you right now today profitable with the money that you have currently? If you aren't, can you get to profitability? And four, do you consider yourself a top performing company in whatever you're doing, your space is. And by top I mean top 15 to 25%. And if you answer yes to those four questions, you are sitting pretty to raise right now. If you didn't answer yes, it's time to go out, in my opinion, and think about raising, probably not at great valuations, but get in with investors where they will be able to help you get to the next level. And as an investor, what we're starting to see is, you know, listen, we don't want to take advantage of any companies ever. So what we would do is make investments where we say, "Your valuation right now is too high. It's not a substantiated by the market. It's not substantiated by a revenue. And there is no premium right now that you get for being a cannabis company from a valuation standpoint." However, what we will do is say, "Listen, you're gonna come down on the valuation and what we're gonna do is set some terms so that if you hit all of those revenue numbers that you say you're going to hit or all of those milestones, we'll give you an opportunity to claw back some percentage of the company."And so then it's a win-win because we can actually move forward with cash. But the message for entrepreneurs today needs to be, you've got to revise down your valuations because down rounds are coming, and you wanna be the one with cash on hand when the market is ripe for acquisitions.

Matthew: Okay. And what do you think? How do you think WeWork has played into market sentiment? Because, I feel like we had Lyft then Uber and now WeWork. And WeWork seems like there's been a mental transition in investors'r's mindset where it's like everything was about, you know, venture capital and growth, growth, growth, growth, growth, forget about profit, what is profit? It's so far back on the back burner that we don't even think about it. It's gotta be about this geometric growth. And then all of a sudden the terms of WeWork just seemed so agregious overnight and investors kind of flipped. Where do you think that has affected sentiment and is this kind of a phase transition or just kind of a blip on the radar?

Codie: Yeah. I mean, I think investors that listed on public exchanges a few years ago had a great time. They were able to raise a ton of money incredibly fast. But the problem that they made, or the decision that they met that I don't agree with was that they put out really high expectations. And so those expectations were not being met in the cannabis space. It's really not dissimilar from the same problems as you said that WeWork has had, or you could say Uber, Lyft, Slack, Peloton. I mean, we've seen it sort of across the board that there's a move away from a market share focus and towards earnings and cash flow. So there's two things happening there. One, I think that's, again, rational and reasonable. And two, that's why in cannabis, there's a unique differential. For WeWork, you have the SoftBanks of the world with, you know, hundreds of billions of dollars that can inflate these private company prices. In cannabis, you don't have any of those institutional investors able to invest. The largest cannabis funds are less than $300 million in assets. There's no lending, there's no leverage on the space for the most part. So the interesting part in cannabis is I think you want to be a private company now where you can be long-term thinking in your growth and execution, and as investor, you wanna be on the private side because capital is not a commodity in cannabis. So while we have the SoftBank throwing around way too much money on these companies making WeWork valuations crazy, in cannabis we don't have that issue. So entrepreneurs do have to be scrappier, but investors are compensated much more for every dollar they invest in this space, in my opinion,

Matthew: Are some investors cashing out or taking some chips off the table right now when they're seeing the opportunity to do that or what's your kind of feel about that?

Codie: Yeah. I mean,we certainly see it on the public side. And I think it's easy for market participants to really overthink the downturn. It has been, it has been painful seeing that the valuations sort of plummet like they have, and yet for me, it's really relatively simple. You take a product which is consumed by tens of millions of people if you have the black market and you convert the product to the legal channel. So if the base level is if that's what we're doing without any innovation, without any financing on top of it, without, you know, anything else besides that, this industry is going to grow sizeably. So the part that's fascinating to me and really useful for investors is there's a big arbitrage opportunity happening. On one end, you see public stock prices really sort of fall in, and on the other end, if you were to walk down Abbot Kinney let's say that, you know, famous street in Los Angeles and you were to walk, you know, let's say you sit on one of the sidewalk cafes there, and I was to say to you, "Hey, tell me, you know, look at all the people passing by and what do you notice? What do you notice about just what commonalities are there?" And you were to watch for two or three or four minutes. What you would quickly see is people have one of two things in their hands. They have a coffee, okay, that's pretty standard, or they have a MedMen bag. And you'd see these little red bags everywhere because the truth is that consumers have not stopped consuming just because public stocks have felt a downturn.

Matthew: Right. How do you think the vaping crisis has affected the industry, and will vaping make a comeback?

Codie: Yeah, I mean, you can't talk about it I think without saying that sort of a tragedy it is that this is even happening, and that it seems to be hurting, you know, our young people more than anybody else. But my opinion there is that is really, that sits squarely on the shoulders of federal legislation, because if we had guidelines on this industry and tracking and we did not allow the amount of black market stores to be out there, we wouldn't have this. That said, it is far from a deathblow. You know, don't get me wrong. We were very concerned initially about what was going to happen, and as we saw sort of gut reaction and overreactions by States like Massachusetts, you know, outlawing vapes. But we've seen across the industry 20% to 25% decline in vape sales on average while sales of cannabis-related products up overall. So consumer goes into the dispensary, they may not buy as many vapes it looks like, but they're replacing that with edibles or flower. And so, you know, the long-term growth rate of 20% that we see in 2019 and we think we'll continue throughout the few, you know, oncoming years hasn't changed. So we're actually revising our estimates up of what we think the total sales will be for consumer products in the U.S. in cannabis to 13 billion from 12.8 billion. And that's because we're seeing higher sales in California, Oregon, Massachusetts overall.

Matthew: Yeah. I wonder often how much bigger the legal California market would be if taxes were lowered further, because it seems like it's still thriving from all estimates, the black market is, just because it's so much cheaper. I mean, there's no regulation in the black market, so you could be getting pesticides and all these other things that you don't want and you don't know, you know, what conditions the plant was grown in. But, I mean, do you have any sense on how much bigger the California market would be if, you know, if there was no black market or it was reduced to 80% or 90%.

Codie: Yeah, I mean the estimates all say that 60% to 70% of the cannabis market in California is elicit or is black. And that's huge. To me, that's got to be underestimated it because how do you even report on that? I mean, I know that there are, you know, 3000 stores that are in California as illicit enterprises and only about 800 legal ones. We actually saw this last month that California licenses went down, they contracted a little bit, which is actually a good thing because for the first time ever, really since legalization happened the state is going after illegal enterprises and they're no longer re-issuing temporary licenses to those that didn't get up and running properly. So you're actually seeing a contraction which we think will be good for the market overall. If Weedmaps actually does take off all the illicit stores, I think there's a big bump towards the end of the year when that's supposed to finally go through. And so overall, it seems to me like we have a lot of room to grow in California. But, you know, we have to have legislators that allow us to do that. I mean, I know they kind of funnily in California, they said that we should have $1 billion in tax revenue from cannabis this year. Now, I don't know where they got that number. It sort of just seems like they liked the idea of having that many zeros, but when in essence they only were able to get about $280 million in revenue. And when they dug into the numbers, the reason why is because of the amount of illicit activity that still goes on in California. So I'm sure you saw that they just allowed for tax deductions in California, sort of maneuvering around 280E. And I think if they continue to allow that to happen, we'll not only see cheaper products for consumers, but we will see a lot more volume.

Matthew: Yeah. Now, we've talked about a lot of sobering issues here. What makes you most optimistic about the future of the industry?

Codie: Yeah. I mean, I think first and foremost you've always gotta look to the consumer. You know, right now in the global economy, everybody is talking about all the varying data points and what could happen with a slowing global economy. And, you know, we have, you know, sort of 2% growth in the U.S. which is very low. We have the industries overall sort of stalling, maybe going up slightly towards the end of the year, a lot of contracting industries. Literally, the only industry in the U.S. is growing with double digit growth is cannabis. So, you know, that U.S. shoppers spent $9.8 billion on legal cannabis retail last year. So if we think about that going forward, the consumer is always the most important part for economic growth and for industry growth. So that's what I look to first. Not to mention, we're starting to see more and more legalization happening. I think we'll get more allowances around tax and safe banking, potentially even the States Act. And I do really think we're going to start seeing more of these black market clients convert as the prices come down and maybe even with some of the negative press surrounding vaping. So, I mean, I'm obviously biased, I'm in cannabis. But I think when we're starting to talk to investors, you're seeing for the first time institutions are getting interested because they don't see the crazy exuberance we saw in the market previously, and they're looking at these same growth numbers. And history doesn't always repeat, but it rhymes and it tells us that this leads to investment returns.

Matthew: Okay. Is there any recent investments you made that you're excited about? I mean, I know it's hard to kind of highlight one or two because they're, you know, obviously you invested in them all for a reason. But is there one or two that you think has a particularly good story you'd like to talk about?

Codie: Sure. I mean, I, you know, I don't wanna call any of my babies ugly. And so we support all of the portfolio companies. We have about 43 now, but I'll just talk about some of the recent investments we made so that way I won't be picking favorites. Let's see. Well, you know, let's, we're talking about California. So let's talk about some California companies. There's one in particular called Cann, which is C-A-N-N, and the website is drinkcann. This one I think's fascinating. It's run by two guys who are former Stanford grads, Bain consultants, and it is a little bit like a white claw if you could imagine, but with THC in it. So, a spiked seltzer with THC but be beautifully designed, like the ingredients are all, you know, whole foods quality. You absolutely cannot taste anything to do with cannabis in it whatsoever, and it's microdosed. And so it's, you know, 2.5 milligrams. And the idea is that we replicate this social aspect of drinking. So you can have two or three or four of these little cans and taste delicious. You might wanna sip on them just like you would, you know, any sort of seltzer water during the day. But it turns out that they have cannabis and them and the brand is just killer. You'll have to check out the website. The guys are super creative.

Matthew: That sounds good.

Codie: Yeah, so that's one. And then the other one I'll highlight that I think we're gonna fit a lot, or maybe I'll highlight due to be equal opportunity, but Urban Leaf and NorCal. NorCal's the big guy, they've been around for awhile. Their management team is killer. They're a dispensary and branded product display in California and the North, and then in the South and they're kind of starting to meet in the middle is Urban Leaf, and I just love their model of cannabis consumption buses. So they ship people in from old folks homes, from the beach in these branded buses to their dispensaries. And because of that, they have the highest, one of the highest grossing dispensaries in the country. So they're just retail machines. Yeah. If you're ever in Pacific Beach or Ocean Beach or Mission Beach, you'll see these big, huge black sort of party bus looking things and they're just waiting there to shuttle tourists back and forth. So I love seeing that innovation in the space.

Matthew: How about for startup founders that are listening? What can they do to make sure that their pitch really resonates with you as an investor or other investors?

Codie: Sure. Well, let's talk about it in a little lens of this market in particular. And, you know, I've written a decent amount on this. So if you go on LinkedIn and check out any of the articles I've written, I try to make it easier on entrepreneurs to fundraise. It's never fun. I don't think any entrepreneur I talk to ever says they're having the best time ever getting told no constantly. But, you know, one thing I do kind of say to them as I joke that only your mom really wants to fund your dreams, that investors want to fund your future revenue. And so the real focus that I see missing in the cannabis space is a focus on the financial aspect, really, understanding what is it going to take from a cash perspective to get to your growth and projection goals. How are you managing to that? Do you have a strong understanding of what happens if some of those licenses or regulations change and your revenue gets cut in half ,by 50%? Are you prepared for that? And are you being really realistic on the margins and the unit economics and the cost that you're gonna have to acquire customers? And so, you know, you can have a great idea in cannabis, but if you really don't know how to back it up numerically, I think you get in trouble in this market more than ever. So make sure that you're leading with like very detailed financials, very detailed projections and how you got to those assumptions. And remember that, you know, you cannabis is typically the decks I see are less about you creating the next Facebook, you know, YouTube, Instagram, whatever, Space X, and really you're taking a business plan and saying that you have some unique spin on it, but you're not really recreating the wheel. And so focus a little bit less on the dream and a little bit more on your revenue potential and why this is a unique opportunity.

Matthew: Okay. And what do you think is one thing that's gonna surprise people about the cannabis industry in the next year that they're not ready for?

Codie: Well, I'm actually pretty optimistic on regulatory changes, not just in regards to legalization. This surprised the heck out of me. But, you know, Gavin Newsom, who's the governor of California, just passed eight laws in Canada, I'm sorry, in California that were all pretty positive for cannabis industry overall, lessening a lot of regulation. Let me tell you one thing about California. They very seldom lessen regulation.

Matthew: Right, right.

Codie: So yeah. I mean, so a perfect example is they've eased the burden of product testing somewhat. And so they basically allow companies to retest products to correct for small errors or discrepancies rather than destroying tested products. So you've seen some, you know, there's been some news articles about companies in Canada having to throw away tens of millions of dollars of product because of either the way that it was grown or it didn't meet their specs. And so California is kind of addressing that small issue. They're starting to address 280E on a state by state basis. And so what I actually think we're seeing is states finally stepping up to the power that they have internally to help create really vibrant cannabis industries. And it's not all of them, but I mean Maryland's now allowing edibles, Massachusetts is potentially going to roll back their vape ban, Chicago, many more sort of municipalities and counties within Illinois have agreed to have cannabis, you know, some portion of the cannabis value chain represented in their counties. And I don't think I was positive on this happening. And with this legalization push, what you're essentially doing is just adding automatic sales to an industry where nothing else has to happen, but these regulations decrease and these companies gain profitability.

Matthew: That's interesting. Codie, I'd like to transition to some personal development questions to help listeners get a better sense of who you are. With that, what do you think is the most interesting thing going on in your field besides what you're doing? So if you had to do something else besides investing but stay in the cannabis industry, what do you think you'd focus your time on?

Codie: Yeah. I mean there's a couple of areas we are looking at pretty aggressively that I'd love to fund somebody. And so, you know, for one, when you look at some of the most valuable portions of other industries, it's not always necessarily the, let's call it plant touching or the retail branded products or the dispensaries or retail. For instance, in alcohol, one of the most valuable portions of it is the distribution of alcohol. And in cannabis, we don't really have strong distribution roll-ups. So I think there's something really interesting about who could do that well. Same thing with delivery. We see a lot of problems with the people who are doing the delivery right now. Could that be done better and more intelligently? In tandem with that, the biotechnology that we're seeing in this space is fascinating. I think it's a either a zero or a 10 X, but more maybe a 100X. But if we start to get biosynthesis creating THC and CBD as have, a lot of guests you've had on the show talk about, I think that we have a completely three standard deviation event that changes the industry a lot. So we invest in things like that as a hedge to make sure that we have a balanced portfolio, which is why, you know, I don't like to ever invest in just one company. So I think I would be doing some variation of those, not to mention something in Europe, because Europe is definitely about three to five years behind the US and I think also ripe for investment.

Matthew: Now, Codie, you're one of the few guests I have on the show that travels more than me and you go to a lot of interesting places. So if there was for some reason you couldn't go back to all the places you love again, which place would it bother you the most? Which city would have bothered the most that you couldn't return to?

Codie: Well, I have two, Matt, because I just, I do love to travel, but there's this place that I'm even hesitant to say. If you weren't from California, you won't know it, but it's called Sunset Cliffs in California. And it's right by Ocean Beach. It's tucked away on the other side of Point Loma across the Bay from downtown San Diego, and it is the weirdest little hippie community right on the beach. And I think it's a little bit of a throwback of what it must've been like in some of these coastal communities in California for decades. So that's one where I'd be sad if I could never go back there because I'd like to, we have a place there, so I wanna keep that place forever. But then for maybe more exotic climbs, there's a place in Brazil called [inaudible 00:31:20], and it's about an hour up the coast from Rio. And it looks like if you were to take sort of maybe New Orleans, like that French colonialism architecture and plop it down in the middle of the Amazon alongside a Bay with tiny islands that kind of look like they're from maybe the Philippines or Thailand. And if you were to put that all together, that's [inaudible 00:31:43]. And so I spent some time there and it's just one of those places where you could forget the rest of the world existed.

Matthew: Oh wow. Great answers. I hadn't heard either of those before. So, well done. Codie, what kind of investor is a good fit for your fund?

Codie: Sure. Well, you know, the thing about the private market is we have to have accredited and qualified investors. So there are sort of minimum requirements you have to have. But in tandem with that, I really think what I've found for our type of investors are these are investors that are curious about the space overall. We do have some investors that are really passive, but a lot of our investors are family offices, trusts, holding corps that really want to figure out how to make their mark in the space too, and we do kind of a unique, I think, job of educating and keeping our investors updated on the space. We offer co-invests where they get to sit down and speak individually with a lot of our portfolio companies because our belief here is that these companies that, you know, maybe can't go and own their own company right now but could privately invest in them, they'll be the future acquirers. And so our investors are typically those that wanna do more in the space than just singularly invest.

Matthew: And what kind of entrepreneurs or established businesses do you wanna hear from that's a good fit for your investing style?

Codie: Well, first and foremost for entrepreneurs, what I really wanna see increasingly is an ability to execute on the set plan and transparency in everything that you're doing. And this market, it really shakes out who the good entrepreneurs are and who the not so good entrepreneurs are. And the really great entrepreneurs are the ones that we have constant communication with because they're, everybody's always going through challenges in your business. I mean, you have to be kind of a sociopath to wanna be an entrepreneur because it is so hard building a business, and only in this day and age do we actually think it's a sexy thing when in fact it is, you know, a little bit of a masochist that you have to have inside you. And so one, we want an entrepreneur that has that relentless dedication to execution and then it's also super transparent about what is not working, because we can often help absolutely change the trajectory of a business when we get the heads up early enough about what's going on inside of it. It's largely why we required board seats and all of that. So there's that. The second aspect would be we are looking for businesses that fall into a few different verticals. One, we're largely not doing cultivation unless there is a moat around the business or industry, such as we might do a cultivation license in Germany because there's a very limited number of them and they have a unique path to market for instance. But we probably wouldn't just do one broadly. I am very interested in companies in the lab space, in companies in the beverage space, like the one we just invested in. And I'm really interested in distressed companies right now. So, you know, increasingly we're looking to add companies into our portfolios and we're looking to do that at valuations that are attractive. And so if somebody out there is having a company where everything's not going perfect and that scares them from going to get investments, that shouldn't be the case. We can come in and help a lot of times and we can do a lot of things with turnarounds and tuck-ins to our portfolio companies that really can make something that's not doing great by itself, really powerful when paired with another company with strong operators.

Matthew: Codie, as we close, can you let listeners know how to find Entourage Effect Capital as well as, you know, startups, investors and where to find you also on social media, just all the ways that people can get in touch with you?

Codie: Yeah, isn't the internet fun these days? We're just about everywhere. I mean, is our website. I would say I'm most active on LinkedIn and Instagram, probably the company as well. So I am at Codie Sanchez, C-O-D-I-E is first name on both of those. And if you are an investor that wants to invest in the fund, feel free to reach out on any of those platforms, same with entrepreneurs. And if you are an entrepreneur, keep a thoughtful eye on sharing your actual financials and how big of a company you are, etc when you send. That will get you quicker up the chain.

Matthew: Great. Well Codie, thanks so much for coming on the show and educating us. Again, we really appreciate it and good luck to you in e verything you're doing.

Codie: Thanks Matt. Love the show. Thanks for having me.

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. Learn more at What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at 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 or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episode soon. Take care. Bye-bye.


Ep 280 – Cannabis Consumers Are Demanding Price Transparency

dan nelson wikileaf

Where do you start the search for your next cannabis product? Here to tell us how customers are starting their cannabis search (and what they’re searching for) is Dan Nelson of Wikileaf, the industry’s leading price comparison platform.

Learn more at 

Key Takeaways:

  • Dan’s background in cannabis and how he came to start Wikileaf
  • An inside look at Wikileaf and its mission to help customers save money while making informed purchases
  • Consumer trends and the types of products that are gaining traction
  • Differences and similarities between Wikileaf and Leafly
  • How Wikileaf creates perceived value to attract buyers without cutting price
  • Dan’s advice to entrepreneurs on how to go to market to ensure the best chance of success
  • Wikileaf’s ad policy for brands looking to stand out in a crowded market
  • Where Dan sees dispensary offerings and consumer preferences heading in the months ahead
Read Full Transcript

Matthew: 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 That's C-A-N-N-A Now, here's your program.

Where do you start your search for your next cannabis flower product? For most of us, it's online. Our guest today is Dan Nelson of Wikileaf and he is here to tell us how customers are starting their cannabis search and saving money. Dan, welcome to CannaInsider.

Dan: Thanks for having me, Matt. Appreciate it.

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

Dan: We're here in Seattle, Washington. That's Wikileaf technology's headquarter, but we have offices up in Ottawa and then a dev team out in India as well.

Matthew: Okay. And what is Wikileaf on a high level?

Dan: So Wikileaf is the first price comparison platform. We've got a little over a million people using the site to price shop and to find dispensaries in their area, also to research strains and find strains that they like in their area and do a price comparison at that level. We have a little over a million users using the site and we're in 25 States plus Canada and we've got about a little over 4,500 dispensaries on the platform.

Matthew: Wow. Dan, can you share a little bit about your background and journey and how you got into the cannabis space and then started Wikileaf?

Dan: Oh, yeah, sure. So, I guess the best place to start that story would be back in late 2007, early 2008. So, back then, I was actually running an interest rate comparison website. I focused on the savings side, so not anything to do with really mortgages or credit card, but more to do with money market accounts, CDs, online savings account, anything that was federally insured by the FDIC or the NCUA if it was a credit union. And back in 2008, if you can recall interest rates, the environment or the landscape was a lot different than it is today. You had, you know, one year CDs yielding 7%, 8%, 9%, today, you know, you're lucky to get a 1.5% percent on those same products. So, the search volume for these products was through the roof. And I started the interest rate comparison site to sort of highlight where these products were and where the best interest rates could be found.

We focused more on smaller regional banks and credit unions and some of our, most of our competitors focused on just the large national banks. So, that's how we carved out a niche for ourselves. And the site was doing really well. Again, interest rates were sky high, so they were just extremely popular. And I actually got into an arrangement with Bank Rate who was a publicly traded company at the time, and I embedded their interest rate tables into our high traffic pages on our site. And we had a rev share program where they charged the banks $8 per click. They would send me $4 a click and then they would keep $4 a click. So we split the CPC 50/50. And the site was just doing really well. We were ranking well for all the key terms and we were able to convert our traffic into leads for the banks. So the site was doing well financially and it allowed me to kind of pick up and travel the world in my mid-20s and run the site remotely.

So, from 2008 to 2011 I was abroad, I was in Europe traveling, I went to Asia, I went to Africa. My brother was actually playing professional basketball in Austria at the time. So I kind of made that my home base. It was kind of a central location in Europe and I just had a bunch of buddies from high school and then from college that were coming out and spending stints out there and in Greece and in Germany. So, I was able to connect with them. So the site was doing really well and it allowed me to basically travel the world. And then when I came back to Seattle in 2011, I noticed something very interesting had happened and that was that dispensaries were popping up here in Seattle.

I'm not really sure why my friends didn't clue me in on that, but it was a very interesting thing to see when I got back. This was circa 2012, so, the was all medical at the time and Washington and Colorado were the only States that allowed for it. So, I got my medical card here in Seattle and started shopping around and seeing what these dispensaries kind of were all about and quickly noticed that there was a massive price disparity from one dispensary to a next. So, I was in the South, like union area, which may not mean anything to you, but it was...there was a high density of dispensaries in the area. So, there was about four or five dispensaries that weren't any more convenient to me than the other. So, I was kind of just trying to figure out what was gonna be my go to, if you will.

And I quickly noticed that, you know, I could get one gram of OG Kush for 20 bucks down the road here and then see that same gram of OG Kush, you know, at another place down the block for just $10. So, it was kind of like, how are people pricing these products? You know, what's the rhyme and reason here? And that was sort of the initial sort of aha moment or a concept of Wikileaf where I was gonna...I wanted to bring all of this pricing out in a transparent way for people to be able to shop based on price and see what these prices are in these dispensaries that were kind of reclusive and didn't do much marketing or advertising. So, I took a lot of the framework that I had used for the interest rate comparison site and sort of changed it for this new emerging market of cannabis. And that's essentially how the Wikileaf idea was born.

Matthew: Cool. So, visitors that are looking, when they find you, are they usually saying, like, hey, where can I get the best deal for blue dream in this zip code? Or is that how they come across your site?

Dan: Yeah, there's a lot of people looking specifically for strains that they like. That's the majority entry point to the site. But then there's also people that are just looking for dispensaries in their area and sort of want a general lay of the land. So, right now if you go to and click on the dispensaries button there, you'll immediately get thrown into your market. We'll pick up your location, we'll spot out all the dispensaries that are in your area and then we'll run, we have an algorithm that runs an average pricing for one eighth of an ounce, which is the most commonly-purchased increment of cannabis. So, you can kind of see how on average people are charging for an eighth of an ounce in your immediate vicinity and get a sort of a general lay of the land in that way.

But the way that we're actually shaping our product here for Q4 and Q1 of next year is that we're actually trying to bring that price comparison down to a granular SKU level. So, what we're seeing is that people are now starting to have favorite products. And in the beginning of the cannabis industry, it was kinda like you pop into a dispensary, you kind of asked the budtender a couple of questions and they sort of show you what you should purchase. But now what we're seeing, probably as any industry matures, is that people now are having favorite products. They're having favorite strains, and they're specifically searching out dispensaries that have these strains. And we want Wikileaf to help facilitate that search and allow people to find out who has which products in their inventory in real-time, and be able to run a price comparison at that SKU level so they can find the best deals in their area.

Matthew: Yeah, I could see that. That's very helpful. And how many visitors do you get to your site a month?

Dan: Right now we're a little over a million people using the site every month. And like I said earlier, we have about 4,500 dispensaries to put in front of those million people. And of those, we have 1,600 what we call live menus where we're pulling inventory from their POS via an API sync or some other live menu workaround like that, so that we can have real-time information so that people, when they see a specific strain or a specific product in a dispensary's menu, they can be sure that what they're seeing when they go into the store, will be the exact same thing as what they saw online.

Matthew: Okay. That sounds like a lot of complicated technical work. I'm glad I'm not doing it, but and, like, once you get it done, I'd love to be a consumer. Are most of the people searching, I mean you probably have the most traction in the Pacific Northwest I'm gathering because you started there or in California. Is that pretty fair?

Dan: Yeah. California, Washington and Colorado are huge for us, where that's where the majority of our users come from. But we do have a growing, we do have a lot of emerging, what we call emerging states and emerging markets. For instance, Oklahoma is a very, is a quickly growing one for us. So, we're about...Oklahoma's about our fourth or fifth most trafficked state. And, you know, if you look at the population there, it's obviously not that high. So, we're getting a lot of traction Oklahoma and they're using us to sort of be that forefront of their, their cannabis shopping and navigation experience.

Matthew: So, what's kind of the typical path that someone who lands on the site? What do they do? What are they checking out after they come and they're looking at how the strain will, you know, what experience it'll evoke, they're comparing prices. What else do they do?

Dan: Yeah, so the number, what you exactly just said. So, the number one instance of people using Wikileaf is coming through from a strain that they're looking to read up on, they're looking to learn how it's affected other users and then they're looking to see you know, where this is nearby and potentially even run a price comparison and see where they can purchase. So that's the number one use case. The number two use case is people that just wanna find a dispensary in their area and they wanna make sure that they're getting, you know, a decent price. And that's how we showcase the landscape using our average pricing algo that we attached to the one eighth of an ounce increment.

Matthew: Okay. So, for each strain that you have the typical effects, and I mean, what is the effect most people are going for? You can probably tell that, you know, by looking at your data, like, what do people want right now?

Dan: Yeah. So we can see through search volume what people are looking for. It's usually creativity. People wanna be, you know, focused. People wanna be able to use cannabis and still sort of proceed about their normal lives. And we see that through people filtering for cannabis strains for creativity, focus, energy, these sorts of searches.

Matthew: Yeah, that's a funny thing to search for, like, I want cannabis to make me more creative, which is kind of a funny thing, but it's like, it's inside me but I need something to unlock it, which is...The whole thing is kind of crazy, but it does work.

Dan: Right. Yeah, yeah. It's interesting.

Matthew: Can you give us an idea of what people want in terms of the different products? Like, what they're most interested in right now in terms of vape, flower, edibles and so forth?

Dan: Yeah, I mean we see that vape is the quick, sort of like the surging product that people wanna use. It's a little more discreet. It doesn't come with the smell that flower does. You know, you can kind of take one or two pulls and be fine. You don't need to, you know, smoke a full joint or anything like that. There is a bit of a scare that's had a bit of a pullback on vapes with the whole I guess the black market that's sort of tainted the vaping scene in general. But it's still the quickest growing product line I would say in the cannabis industry.

Matthew: Yeah. It seems to be recovering. Like, that scare seems to be fading a little bit as people understand, like, oh, this was kind of black market stuff that got into the mix somehow. How has the market changed in a way that surprised you over the last couple of years? Have you ever scratched your head, like, wow, I didn't expect this to happen and yet it has?

Dan: Yeah. Well, really the CBD, which we kind of just touched on a little bit earlier, the CBD market has been the biggest sort of like wow moment for me, seeing how much that's caught fire in the industry, seeing how that there's, you know, just CBD only stores now that are popping up in places like Texas where you wouldn't imagine maybe cannabis, you know, succeeding in that state. But we're seeing a lot of CBD in States like that really catch fire. And also, we can see that the search volume for things like CBD oil, CBD tinctures, CBD gummies, you know, all this stuff is going through the roof. So, we can tell that it's definitely growing in popularity. And I think the whole side of the plant that is non-psychoactive, that doesn't, you know, ''get you high,'' the trending popularity in that has been the biggest, sort of a, I guess, eye opener to me because just, you know, growing up being, you know, 37 years old, you sort of only think of cannabis in one sort of vein. And now it's, you're seeing that there's a lot of other applications that consumers are keen on and it's exciting to see.

Matthew: Yeah. So, you mentioned that you're connecting to get real-time data on products so people can walk in and know, like, hey, I wanted this vape cartridge and there it is. So, like, there's price certainty. So, you're connecting with, like, the point of sale systems, it was like MJ Freeway, Flowhub. Any others?

Dan: That's exactly right. Yeah. We have partnerships with MJ Freeway. We have partnerships with Flowhub, Green Bits is extremely big here in the Pacific Northwest. Cova, we've got Corona coming online. They're another Pacific Northwest company. So, yeah, I mean, just connecting with the big ones and it's still a fragmented market, the POS sort of landscape. But what we're trying to connect with all the big ones and we've got all the majors under our belt. It's just sort of picking off the ones that are kind of growing market share in new states that we need to still sync up with.

Matthew: Yeah. Because if you show a product that's actually not available or not available at that price, then you've got an angry, angry, customer on your hands, right? And they're out. So, you just gotta be, it's gotta be real.

Dan: Yeah, that's exactly right. And we've actually had an instance of that back a couple of years back before we were connecting with point of sales and the menus were all updated by the budtenders or the dispensary managers. And we had instances where yeah, someone drove a very, very long way over an hour drive to get a specific strain they were looking for. They found it on Wikileaf. It was a great a price, and then they got to the dispensary and it was no longer there. So, that was a bad sort of experience for us. But it also showed us that, you know, people are using the site the way in which it was intended, and now we just need to get our data on point and we'll be providing a very valuable service to people.

Matthew: Is it hard to get these dispensary partners to talk with you, and, you know, get them on the horn and get the technology all set up? I mean, what does that take?

Dan: Yeah, I mean, it's a bit of's a bit of a rigamarole. Yeah. I mean we have to find the right time of day to touch these people. We have to know when their shops are busy, when their shops are not busy, when the dispensary manager is gonna be in, you know, who that dispensary manager is. So, we have a dispensary onboarding team that handles all of that and they're doing a phenomenal job. We've integrated with, you know, 1,600 dispensaries in under a year. So, I mean, if we continue at that rate, you know, I think we'll be in a very, very good place throughout 2020.

Matthew: Yeah. Okay. So, most listeners are familiar with Leafly that's also there in Seattle. How are you similar or different or how do you compare yourself in your mind?

Dan: I mean, there's some things we do that are similar, but I still think that we are the number one price and product discovery vehicle. Leafly kind of, I think, is very strain and review focused almost kind of like a Yelp kind of model, where we're as a product finder and a product price comparison vehicle, and strains and reviews is also an important element of that, but it's not, like, our focus where I think that is probably likely with Leafly.

Matthew: Now, like, do you see at some threshold there is a transition in the customer's mind where it's like, if the price drops below 10% of what they think it should be, or 20% that, like, that gets them off the fence? Like, is there some trigger or is it totally variable on geographies?

Dan: No, there is a trigger and we can see that the dispensaries are actually leveraging this. So, they'll have things like, you know, 20% off wax Wednesdays and you'll get a flood of people in specifically for wax because of that 20% discount. And dispensaries update their deals and their about section on our site specifically highlighting these daily deals throughout the week so that they can drive in a surge of customers that are specifically looking for that price break for that product at that time.

Matthew: Okay. That's interesting. Any other best practices for dispensary owners out there listening where it's like, hey, you know, I'm sitting here as Dan, you know, CEO of Wikileaf, but if I was forced to become a dispensary owner tomorrow, I would do X?

Dan: I think you really would want to, I mean the biggest thing is driving, you know, boots into the store, right? Everyone needs customers. So, that's number one. So, that's what we're doing with our million, you know, million plus people using the site every month is trying to, you know, showcase which dispensaries those million people should use. But I think the other thing is gonna be big, is gonna be business insights and data intelligence and finding out really which products are selling well, which strains are selling well, who, you know, your dispensary neighbor across the street, what's flying off of their shelves and how can I leverage that and how can I stock my shelves correctly. So, I think that's also an important aspect moving forward for dispensary owners.

Matthew: Now, what if you had a cousin that moves to Seattle and he says, Dan, I know I wanna be in the cannabis space and create a brand. What do you think I should do so I can get my brand into dispensaries and get people to care about it?

Dan: Yeah, that's a good question. I mean, I think I would just talk to people, talk to people that have built successful brands, talk to people that have been in the cannabis space for a long time. Learn what's worked, learned what hasn't. And just go from there. I mean, it's all a learning process. You know, it's a brand new industry. We're all kind of learning as we go. And just having the conversations with the right people will get you, I think where you need to be.

Matthew: Yeah. Now, do you offer ads for brands that want to stand out a little bit, they wanna, you know, make themselves get above the fold or do something on your site?

Dan: Yeah. So, we are unrolling a beta program for brands that we're working on right now actually. And what we're allowing brands to do is to be able to showcase all of the SKUs that they offer. And then through our point of sales syncs with our dispensary clients, we're actually able to allow the brands to show customers in real-time where their brands are right now, who has those brands in their inventory and how are those retail outlets pricing those products. So, that's the brand side of the equation that we're building out right now. And we'll be having that beta program roll out here in the next coming weeks and months.

Matthew: Okay. And if you were to look down the road, you know, maybe the next five years, how do you think consumer preferences are gonna change?

Dan: I think that like I said earlier, brands, specific products, and strains are gonna start getting more traction based on the quality and the price of those products. Just like in any other industry where, you know, as time goes on people start to get loyal to certain brands and products, I think you'll see that that same phenomenon exists in our space too.

Matthew: Okay. And where are you in the capital raising process? Can you tell us about that?

Dan: Yeah, so we just actually finished our $6.8 million Canadian round. We also listed on the CSE with that raise.

Matthew: Cool. Congratulations.

Dan: Thank you. I appreciate it. So that'll sort of allow us to just execute our operations that we've had planned out for the next 12 and 15 months. And, you know, we'll be obviously, the big part for us is rolling out our advertising network and our product suite where we're actually gonna be bringing in revenue from the dispensaries and from the brands. So, we think that this raise got us the appropriate runway to reach breakeven and profitability.

Matthew: Great. So, Dan, I like to ask a few personal development questions to help listeners get a better sense of who you are as a person. 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?

Dan: Yeah, so when I was traveling three years abroad, you know, I didn't have much access to technology, to TV, to even my phone or my laptop at all hours of the day, like you obviously have here in the States. So, I did a lot more reading then and I think ''Pillars of Earth'' actually was, is my most favorite book. It's the book that I recommend to, to everybody. It's not really, I mean, it's a fiction book. It doesn't have much to do with work or anything like that, but it definitely allowed me an escape when I was sort of abroad and just provided some much needed entertainment during that time, I think.

Matthew: Okay. What do you think the most interesting thing going on in your field is besides what you're doing?

Dan: I think that the CBD space is extremely interesting and something that I didn't foresee catching fire like it did. You know, I had touched on this a little bit earlier, but like, just growing up it was always kind of cannabis is, you know, THC, gets you whatever ''high.'' And then just seeing that there's all these other chemicals and all these other sides to the plant that have very real value for people has been very interesting to see, and CBD specifically. I mean, when we have the guys look through search volumes for, you know, all the CBD products under the sun and we see that these things are going up and to the right, it's very interesting to see that just consumers are super keen on this side of the plant.

Matthew: Who living or dead would you most like to smoke a joint with?

Dan: I think that hands down would go to former president Barrack Obama. I know he's dabbled in the past. He probably doesn't now, but that would be quite the experience.

Matthew: Okay. Dan, as we close, how can listeners find out more about Wikileaf and also find your stock ticker symbol?

Dan: Yeah, so we're trading under Wiki, W-I-K-I. I'd say head to our blog to keep up on news and then just going to Google news in general and searching for Wikileaf should keep you up-to-date with all the developments of the company.

Matthew: Well, Dan, thanks for coming on the show today. We really appreciate it.

Dan: Thanks Matt. I appreciate you having me.

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 What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at

Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at 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 on CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye, bye.


Ep 279 – Lab Grown Cannabinoids Looking to Disrupt Growers

kevin chen hyasynth bio

As cannabis cultivators pour billions of dollars into developing cutting-edge, efficient grows, we need to ask: is there a hidden disruptor that could steal their business in the years ahead?

Here to help us answer this is Kevin Chen of Hyasynth Bio, one of just a few companies experimenting with non-plant-derived cannabinoids.

Learn more at 

Key Takeaways:

  • Kevin’s background in cannabis and how he came to start Hyasynth Bio
  • An inside look at Hyasynth Bio and its work with non-plant-derived cannabinoids
  • A deep dive into biosynthesis and how Hyasynth Bio uses this process to grow cannabis compounds inside yeast cells
  • How Hyasynth Bio has successfully overcome challenges with biosynthesis
  • The history of biosynthesis and cannabis and where Kevin sees this relationship evolving in the years to come 
  • The different types of end products we’ll start to see for sale in dispensaries that use biosynthesis
  • How biosynthesis will affect cannabis prices
  • Hyasynth Bio’s intellectual property strategy and how Kevin manages the company’s patents
  • The traditional cannabis companies that are investing in biosynthesis
  • Where Kevin sees cannabinoid biosynthesis heading in the next 3-5 years
Read Full Transcript

Matthew: 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 That's Now, here's your program.

As cannabis cultivators pour billions of dollars into creating cutting-edge efficient grows, we need to ask, is there a hidden disruptor lurking that may steal their business in the years ahead? Here to help me answer that question is Kevin Chen, CEO of Hyasynth Bio. Kevin, welcome back to "CannaInsider."

Kevin: Great to be back.

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

Kevin: I am in Montreal where we have our labs and offices. And right now I'm actually in one of our, like, back storage rooms because our conference room is fully occupied and we're moving a bunch of stuff around with some new instruments. And so the storage room is the quietest and most private space right now here. But yes, surrounded by boxes and desks and instruments, and yeah.

Matthew: I appreciate you going deep cover for the interview, resourceful. That's a good trait in an entrepreneur.

Kevin: Of course. Yeah. It's part of...I mean it's part of communication I guess to give context to where we're at.

Matthew: Yeah. So you were on the show a year or two back, but for new listeners, can you give us a summary of what Hyasynth Bio is?

Kevin: Definitely. So you could describe us almost maybe as one of these hidden disruptors that are coming up to the industry and gonna change a bit of how this industry works. But our basic goal here is to create strains of yeast that you can use in industrial fermentation the same way that you may be brew beer or produce insulin and then use the yeast to produce THC and CBD without having to grow plants at all. And so as opposed to like, you know, a plant growing cycle or where you have to have all this light and energy and it takes three months to grow, a yeast will grow in about a week, and then you can do an extraction and purification from that, which is also relatively straight forward. And then you end up with like your purified, you know, ingredient that you can use and all kinds of different applications. So we really want to take advantage of that, like industrial fermentation system and process that so many industries rely on today, and bring that to the cannabis world.

Matthew: Okay. And as I mentioned, you were on the show a couple of years back, but could you share a bit about your background and journey and how you got into the cannabis space?

Kevin: Yeah, definitely. So my background is primarily in biochemistry. So I'm coming from a science background and then I got interested in, I guess, the cannabis industry as a whole back in 2014 when we were sitting around as co-founders and talking about some ideas of, you know, startups that we could do. And I guess we were a bunch of people who knew very well how to engineer a yeast to do all kinds of different things, and some of our previous work was with the yeast or algae to produce different kinds of like anticancer drugs or to produce maybe like precursors for plastics, things like that. So we kind of had our laundry list of ideas of things that we could make using a yeast. And cannabinoids was one of those, opioids was another one actually. Those two industries are gonna be headed in opposite directions, I guess.

And so we started with cannabinoids, investigated a bit further. I got a chance to meet a lot of the researchers and patients and companies that were, you know, working in the cannabis space and just getting started. And that really gave us, you know, a good amount of inspiration and motivation to kind of see, you know, how important, you know, these compounds are and how important it will be to have a really good supply chain for these things in the future. And that's how we got into it.

Matthew: Okay. Yeah. Like three months back, I think it was, I was up in Montreal and you were kind enough to give me a tour of your facilities. Can you talk a little bit about your lab and just walk us through what you showed me there?

Kevin: Yeah, definitely. So I guess we're divided up into a few different sections of, you know, genetic engineering and fermentation and analytical chemistry. So what you walked by would have been like, you know, kind of walls of freezers and incubators and shakers and some robotics stuff and a lot of machines that do all kinds of different things. But our typical workflow is to basically try and generate and screen as many different kinds of yeast strains or enzymes that are involved in cannabis biosynthesis as we can. So, you know, we're always working in the scales of, you know, thousands of samples per week. And whether it's like, you know, a new strain of yeast that we're trying or a new version of like the cannabis, you know, THC biosynthesis enzymes that we're trying, there's all kinds of different things that we'll do. And that's maybe like, you know, the bulk of what our work has been like for the past while.

The next phase after we've got these strains of yeast, of course, is to do like production. And that's what we're producing in a much larger volume of the vessel and actually purifying material out and then having that know, either verified internally or maybe sent externally for validation. And that's like the kind of like production and quality workflow that is becoming more important now as our strains get closer and closer to completion.

Matthew: Okay. And what's the relationship, or maybe you can name the university and what's the relationship with the university? Because you're kind of like on the edge of campus or even on campus. They're kind of fostering, you know, innovation with graduates. So maybe you could talk a little bit about what's happening there.

Kevin: Yeah, a little bit. I can tell you, we are on the campus of the university. The university that we are inside of, I guess, we don't have a specific relationship aside from a lease, I guess. And you know, it's a good location and the lab space is great. And it's the University of Quebec in Montreal and we're really happy to be here and have this location just because it's nice space and nice location. A lot of our teammates are coming from Concordia or McGill University and with each of these universities, maybe we've had a bit more of like, you know, either a hiring relationship or other kinds of like startup, you know, initiatives that exist there. And so I can point to them better as far as like, you know, universities that are pushing more startups and getting things out, which is interesting. And here we're, yeah, mainly just renting space, I guess.

Matthew: Okay. And biosynthesis is a term some people get stuck on. I mean, that's the whole thrust of your business. But for people that get stuck on that term biosynthesis, is there ever a way you can help them get unstuck in a simple way? You're so deep in the weeds, it's probably like, it's so clear to you.

Kevin: Yeah. No, I just did a big, long meeting with another investment banker and he was tearing apart my slide and saying like, "All this stuff, you just don't need," you know, he doesn't get it and it doesn't matter. Just curious about, you know, the profit and the margins and stuff like that. I was like, "Okay, I guess so." But...

Matthew: I care about it, I disagree.

Kevin: Yeah. And I mean, being from scientists also, his comment is like, you know, "It's clear you like to teach people about what you're doing and that it is science," and it is fun to teach. So I do still enjoy that and I won't...I'll take away...I'll dial it back a bit, but I guess I'll give you the...I mean, the quick spiel about biosynthesis is that as far as like coming back to the basics of like how biology works is that, you know, your cells themselves are machines. And maybe I'll use insulin as an example of where, you know, there are cells in your pancreas that produce insulin. And that you need that to help regulate, you know, your glucose and this is how if that doesn't work properly, then you end up with, you know, conditions like diabetes.

And so, you know, back in the 1970s and '80s, people figured out how to produce insulin using a bacteria and then that became something that can be dosed as an actual drug. And that's, you know, most of what we know of as like, you know, the insulin today being used for treating diabetes. So, you know, it's the same kind of analogy there where, you know, there is, you know, cells in cannabis plants that are responsible for producing THC and producing CBD. And inside those cells, there's a whole lot of chemistry happening to do that.

And our goal is to replicate that kind of chemistry, but inside of yeast cells, which grow a lot faster and are lot cheaper to grow and create that same sort of equivalent where, you know, we don't need to grow cannabis anymore, we can just grow yeast and have a much more stable and reliable supply chain for this. So, you know, that's kind of how it works. And then getting into the deeper weeds is like, you know, it is genetic engineering and we are changing a lot of different parts of a yeast genome, but this is a yeast that started out maybe as like a typical brewer's or a baker's yeast kind of thing. Did I get too far into the weeds or is that a good overview?

Matthew: No, no. No, I think that's good because it's more context.

Kevin: Yeah, definitely. And it is like such a complicated and interesting field because, you know, some parts of it really touch on the yeast that you do use for baking and brewing and ways to like engineer and modify that or to breed new types of yeast that give different flavors for like, you know, I guess if you think about the flavors of beer where you have like, you know, your range of sour beers and also like other kinds of beer that part of that flavor is driven by the yeast and which yeast it is and the genetics of that yeast. And then, you know, maybe that's a kind of introduction to using fermentation to handle, to produce flavors and to boost fragrances that are unique. And then in our case, you know, getting a bit more hands on where, you know, we're trying to be growing something very specific in a really specific, you know, way as opposed to dealing with, you know, breeding and wild fermentation kind of stuff. But a lot of the concepts kind of start to align when you think about they know the science and the chemistry of what's actually going on inside these yeast cells to produce different like flavors and fragrances or, in our case, cannabinoids.

Matthew: Yeah. So growing cannabinoids and yeast in a lab environment, and obviously, you know, at a 10,000-foot level when I went into your lab, I'm like, okay, you guys are creating cannabinoids in a lab and cultivators are more like farmers and there's just, you know, juxtaposing these two things. It's just very clear like, wow, and something's gonna happen to here. It's hard to know what, maybe these two fields will merge. Maybe one will take over, but you have a lot more ability to change things in a profound exponential way than a traditional cultivator. But, I mean, why is biosynthesis not bigger than it is right now? What's kept it from scaling up to this point?

Kevin: Yeah, it's a big challenge on, I mean, the scientific front, maybe specifically, to just engineer a yeast that does these kinds of things. And if I think about a good story to tell here, like I think biosynthesis kind of technologies and sort of genetic engineering has had a lot of different kinds of challenges over the past few years. I mean, if you think about the insulin type of thing I just described, how that's like the major way to produce insulin now, that was a great success story and that was like the 1970s and '80s that got first developed. And then over the past like, you know, 15 to 20 years, there was a lot of attention going towards using biosynthesis in the biofuels world. And that was a really, you know, interesting story because it was like huge amounts of investment that went into these, you know, people that were trying to engineer yeast or algae or whatever to produce biofuels. And then it just kind of tanked in the end and a lot of money that, you know, was invested into this kind of R&D went to waste because in the end you couldn't, you know, grow sugar, which is maybe the main feedstock for a yeast cheaper than you could buy, like, gasoline, right? And the economics were never quite perfect enough that that needed to move forward.

There's still some like stuff coming out now. I think that's like, you know, the newer version of the biofuels stuff that is kind of on its way to market. But it's really hard to just kind of, you know, walk into a room and say that you're an engineer yeast to do something. Or I guess, sorry, it's easier to walk into...It's easy to walk into a room and say that but then when you actually get into it, then, you know, you're still dealing with an organism that has its own priorities as far as, you know, wanting to grow faster or slower depending on how you feed it and everything like that. And so the science starts to get really, really challenging.

And this is why, you know, in our case it is about, you know, screening thousands of different strains and samples and ways to do this stuff and as opposed to like, you know, hundreds. And so, you know, maybe there's a big, you know, scientific challenge in the biosynthesis world that has always made it hard to develop these kinds of technologies and kind of like to say that. But I think we're getting to close to a point now where it is gonna become more of like a normal thing to start to see biosynthesis take over different industries, not just cannabinoids. And maybe we're recovering a bit from this like, you know, huge failure of the biofuels kind of thing.

Matthew: Okay. So you think we are approaching some sort of transition where finally there's gonna be that leap that's needed and is that gonna come from looking at so many different strains and maybe manipulating them on a genetic level?

Kevin: That's gonna be definitely part of the story. And it's like, you know, seeing how the kinds of challenges that we've run into that like, you know, a lot of it's kind of unexpected, but then, you know, you can find ways to deal with these different challenges that you can get. And then whether that's something that has to be changed on your process or with the, you know, genetic engineering or whatever else, either way, like, you know, I feel like, you know, today maybe we...over the course of enough years of experience, like we've got a good handle of how to solve a lot of these like yeast engineering problems and it's, you know, maybe closer to being a finite amount of time and money that has to be invested to complete a biosynthesis pathway. And in our case right now, you know, we've already done it, we've made cannabinoids using our yeast. Now, there's some more like process improvements and strain improvements that we need to make. And that's, you know, even more of a clear, you know, sign that this is gonna happen. There's not gonna be any like really big issues. This isn't like discovery science anymore. And I think we'll start to see that kind of across different industries that are like anything like, you know, chemical or bio products. Yeah.

Matthew: Okay. What end products do you see being first to market in a dispensary that use biosynthesis?

Kevin: That's a good question. I don't know. I mean, I would say not...I mean obviously not like cannabis plants because you're's the cannabis plant that you're smoking, right? So that's not gonna change really. But almost, you know, anything else like, you know, the cannabis oils or maybe the other kinds of derivative products like edibles and stuff like that, we'll start to see...I mean in our case, you know, it is also kind of like, you know, let's see, you know, once we are ready to start like marketing products and putting things on the shelves, we'll have a decision point where we'll have to decide exactly what it's gonna be. And I don't know if I can say specifically what it will be today. Partly because we're still like exploring to some extent and seeing who wants to develop the next best thing.

And I mean, one of the big questions I think overall for the entire cannabis industry is also like, you know, what is the future of, you know, these products, like is cannabis oils, like, you know, the default way to use cannabis or is it gonna be kind of as pills or is it gonna be like a food, like a beverage kind of thing? And maybe that's more, like, you know, what'll help drive our decision-making process for who we're gonna work with and how we're actually going to like, you know, get our stuff onto dispensary shelves somewhere.

Matthew: When I think of Anheuser Busch and their huge manufacturing facilities in the U.S. or up there in Montreal and saw the big Molson facilities, what's it gonna take for biosynthesis to be at that level, like producing cannabinoids there, like what kind of leaps are gonna have to happen? It's just finding the right strains?

Kevin: Yeah. It's partly just finding the right strains. And I mean there's challenges all along the way and I mean it's just a matter of making sure that your research teams are experienced and that you've, you know, got the right approach to managing the capital that is going to go into this kind of, you know, larger-scale facilities. In a lot of cases, there are, you know, manufacturers that you can hire just to do this kind of manufacturing. That's one of the big advantages here is that, you know, unlike a lot of cannabis growers where you sort of had to start, you know, build a greenhouse from scratch almost especially in....or especially if growing indoors, you kind of have to build a specialized facility for this kind of stuff. In the industrial fermentation world, there's already industrial fermenters that exist and then you can either buy those or hire them to do work for you.

So, and then those companies will have experience of taking strains from like small scale to like, you know, immense scales like the ones that you see in these, you know, beer fermentation breweries. So there is like a, you know, rational way to actually go about doing the scale-up. It's not risk-free, but it's at least, you know, you can manage that risk. And this comes back to maybe a bit of like, you know, our experienced that, you know, as we get into it, that will help drive our strategy there is, you know, again, having staff who have spent a lot of time around the biofuel stuff and seeing a lot of companies go up and down.

Matthew: Okay. Kevin, has there been interest from brewers or it's been more cultivators or investors? I mean, who's kind of interested here? I would think this is kind of the brewer's bread and butter because they're used to yeast at a huge, you know, manufacturing level. Has there been interest there from brewers?

Kevin: Yeah, there definitely has to some extent at least, but there's also some like, you know, divergent, you know, ways to do fermentation that like, in one case, we're trying to produce like, you know, beer. In our case, we're trying to produce like a fine, you know, chemical in the end. So the types of fermenters that you would use are a bit different and it's not like a perfect crossover. But the skillset and like the experience is still the same where like, you know, you are dealing with huge fermentations and there's capital risk to manage there. And so people who understand that are like people that I like to talk to you too. But we have gotten a lot of interest from, you know, maybe all kinds of the same areas of people who are just like looking at the cannabis industry. They'll often come across our type of technology and kind of approaches to see how this might, you know, affect their investments or if it's a cannabis cultivator, then they, you know, wanna know how this might affect their own company as a whole. And so it's a bit of like all of the above, I guess. And we're always happy to have, you know, these conversations and to see, you know, who's interested and see if this relationship to build now or something in the future.

Matthew: Yeah. I try to think about how this will impact cannabis pricing, you know, for a kilo or a pound of cannabis. And I'm thinking it's gonna be less of an impact on flower, dried flower, but extracted oil, that's where the margin hit might come from because this is effectively what you're creating is probably an input or ingredient to some other finished product. So is that what you're kind of thinking too?

Kevin: To some extent, yes. I mean overall, it is a more efficient process. But there's tons of also new stuff that we'll get into that'll be more about building specialized formulations or starting to target some of these more rare cannabinoids because we can engineer, you know, strains to produce those too. So I think there's a few different business models that will kind of like play out and there'll know, in one case, you know, we can focus a lot on these, like, newer formulations and increase the diversity of the products available on the market and have like some really unique stuff come out. And then there's also like, you know, maybe focusing on that commodity style, like ingredient supply where it is about, you know, having cost metrics that start to make sense for like the, you know, really large scales and for like a mass-market product and where those costs of, you know, cannabis oils or there kinds of products that might start to come down, which to some extent, I would argue they almost need to anyways.

If you think about, you know, the way that a lot of other food and beverage industries kind of work and how those margins are like and what the cost of ingredients is there, I think, you know, from some of the conversations that I've had, like the cost of growing cannabis is like, you know, way beyond anything that people would consider for, you know, being a food and beverage ingredient. And that prevents a lot of people from even entering this market at all. And so I think, you know, in order for the cannabis industry to...yeah, coming back to, like you said, maybe we're disrupting the cannabis industry. But maybe, in reality, this is about, you know, the natural scale and the growth of the cannabis industry that becomes important because if we have this really expensive and crude product then market won't grow.

Matthew: Yeah. The price is gonna come down in one way or another. I'm just trying to imagine all the different ways it can. Can you talk a little bit about your intellectual property strategy and patents in your business and how you manage that whole thing?

Kevin: A little bit, yes. Not very much, but like maybe just a little bit. And this is like a really interesting area to kind of look at IP-wise. And there's a lot of different, you know, competition coming into this space that we're keeping an eye on. I mean, as far as like maintaining IP and having good defensible positions, it's just about like, you know, having great advisors, having people who have lots of experience who can help guide that pathway and then making sure that that's part of your work. In our case, you know, we have two patents which are published and people can take a look at. And maybe that's currently the only like public thing I should say about our IP stuff. But it's part of like, you know, maybe the plan overall to have a good portfolio and to make that part of what, you know, helps support us when we start bringing products to market.

Matthew: Okay. Do you have any traditional cannabis companies as investors for real, like licensed producers or anything like that?

Kevin: Yes, we do. One of our bigger investors overall is Organigram, which is based out of Moncton, New Brunswick.

Matthew: That's cool. You know, they're looking ahead, so that's great.

Kevin: Yeah. And they were the first ones to really make a big, you know, investment towards this kind of technology actually. And, you know, despite...I've spent a lot of time, you know, talking with a lot of different kind of these producers and they were the ones to really like step forward and make an offer. So, and now we've seen a lot more, you know, since then start to step up too. But, yeah, it's one of these areas where like if you're ahead of the game where you're starting to look at it now, then now's the right time to start looking at that and start making these relationships, right, because it's coming.

Matthew: Yeah. And where are you in the investment process right now in raising capital?

Kevin: Yup. So we I guess we did close our Series A investment with Organigram in September of last year. Now, we're looking at plans for funding for our commercial development and really focusing more on like the manufacturing go-to-market strategy and stuff like that. So that's what we've got upcoming in the future. So there is definitely more fundraising in our future and then how we go about that, we're still maybe like, you know, working out a bit or I can't say too much about like, you know, our plan for that overall, but that's kind of what's coming.

Matthew: Okay. And when you look out on the horizon, let's say three to five years, what do you think is possible for cannabinoid biosynthesis?

Kevin: So many things. It's about getting this into a, you know, larger-scale situation and having like...I mean, I always look to existing industries in food and beverage or in pharmaceuticals as examples of how things should go with like, you know, product manufacturing. And right now cannabis is just like so far, you know, from what you would see for like, you know, the sugar that goes into like the typical like, you know, canned beverage, let's say, where it's something that is sourced easily in immense scales and people can really build global brands off of like these ingredients. And right now that almost doesn't exist in the cannabis world. So I think, you know, one of the first things that we'll see is that kind of normalization of the cannabis supply chain and we wanna play a big role in that and provide those kinds of like larger-scale reliable ingredients.

And then like I said earlier a bit too, there's gonna be a lot of interesting like product diversity to be introduced and really new ideas about like, you know, which cannabioids should be formulated and how they should be formulated and which, you know, pharmaceuticals can be developed from these unique formulations. Maybe not so much for the recreational market, but I think for, you know, there's a hundred cannas [SP] out there and some of them probably work better for certain diseases than other ones and we want to help with like, you know, discovering that and making that real.

Matthew: Okay. Let's jump to some personal development questions here. If for some reason you couldn't work in the cannabis industry or biosynthesis at all, in other words, if you had to do something totally different from what you're doing now, just because you think it's interesting and fun, what would it be?

Kevin: Yeah, that's a fun one. I guess, I mean for me, what really got me interested in this technology and in this, you know, I guess in the cannabis industry as a whole is how fast-paced it is and how it is this kind of like, you know, not just the new technological kind of revolution, but also this new cultural revolution where this is like the end of this prohibition and being a part of that whole like, you know, movement is so interesting. So I'd like to be part of these kinds of things that have this kind of impact and that use really interesting technologies and, to some extent, that are always gonna be know, have a high technological risk because that's part of the fun of it.

I've thought about this a little bit at least where, you know, if I had a job at like a regular tech company or maybe at a company that has more established like revenue streams or that isn't using so much like of these, you know, inventions of new technologies, then I feel like I'd become quite bored maybe a bit. And then now I have to focus on these higher risk and very intense kind of challenges and probably not so good for like, you know, making money all the time because, you know, risk is hard to manage. But at least it's what I enjoy doing and I like to work in science and technology and like towards people who are always thinking a bit about, you know, how you might invent new things and create new products and be in an industry that is exciting and changing all the time. Yeah.

Matthew: Cool. And you have a maker space, which is totally unrelated to what, you know, you're doing at Hyasynth Bio. Could you talk about what a maker space is and what you have going there in Montreal?

Kevin: Yeah, definitely. That's very much a side project and yeah, don't have as much time as I would like to spend working on that. But it is a maker space so you can get a membership and you can make whatever you want there. And we have most of the tools for any kind of woodworking project at least and some metalworking and other kinds of things too, like laser cutting and 3D printing, and it's sort of born out of that movement. And it's just a fun thing to manage. And you meet a lot of really interesting people, including, I mean, some people that are coming from more like the finance world who would just wanna have a hobby and then the people who are trying to make, you know, their livings off of trade skills and will actually run their businesses out of this kind of space.

So it's an interesting, you know, side project to work on from like a business standpoint and just to gain some more experience in like different kinds of work and business models for me personally. And like, it's a social good project. So it's a nonprofit, it's co-op and, you know, I really wanna find ways to, you know, support these kinds of communities and, you know, create...I guess we're doing a lot of work with inclusivity and just making these tools more available before...I guess there's this constant issue that I hear about in the educational system now where people are getting less involved with trade skills and people are forgetting how to do woodworking and normal, like, you know, house stuff. And so we've had some of the school boards come to us and talk about like re-introducing, like, shop class kind of thing. But anyways, I'm getting into the weeds with that product to you. But it's quite fun, yeah.

Matthew: Is there anything that's anybody has made there that's kind of jumped out at you? Like, hey, wow, this is pretty cool that this was made with all the tools at the maker space.

Kevin: We've had a lot of people be interested in making guitars, which is this sort of like complicated skill that normally you go to school and spend a lot of time on, but now you've got this little guitar making club of people who are just there like every week, every Tuesday night I think, they meet up and they just go at it and make guitars and now they made some like really, really beautiful projects. And that's one of the things that...I mean it's cool to make a guitar, but if I were to think about making a guitar, I feel like it's something complicated, it takes a lot of time, and it's maybe hard to do, but I guess, you know, maybe it's not so difficult to start doing that. And part of the process of making is like the fun of actually making it and then, in the end, you have this like really, really nice product. And so that's one that I was maybe a bit surprised that like kind of took off and that, you know, we have now this like group of hobbyist guitar makers that will just work on their projects and have a lot of fun doing it because I feel like it is a bit complicated. But we have a great team that's running that. So it's awesome.

Matthew: Okay. That's cool. Here's a Peter Teal question for you. What is the one thing that you believe that most people would disagree with you on? It can be about anything, not necessarily the cannabis industry.

Kevin: Maybe I only think of agreeable things and everybody's just happy to agree with me. No, I guess, I mean there's questions about...I mean, one of these ones actually in the cannabis industry I'll specifically maybe address is this idea of the entourage effect. And the agreeable thing that I would say is that, you know, it exists. It's something that is like worth looking into and definitely there's something going on there. But I find a lot of people like use it as a sort of dismissive way to like, you know, accept that like cannabis is the ultimate solution and the end goal for everything that we ever need, which it definitely is not. Like we can define things that are better than cannabis or find specific parts of cannabis that really need and really can improve on or that will make for better medicine and so on, so forth.

So it doesn't make sense to, you know, be so centralized on like, you know, accepting that cannabis, as it is naturally, is like the ultimate solution. And so like the agreeable point I would say is like, yeah, it's part of the story where, you know, for us as a company and for the cannabis industry as a whole, you know, we're gonna find a lot of new things and the entourage effect or whatever will get more refined and we'll start to understand a bit more how these different components work together and be able to, you know, leverage that to build really interesting things. And then make the disagreeable thing that I could say is also that the entourage effect shouldn't exist or doesn't exist. Or maybe the fact that, you know, this word was even used to describe this is actually hindering a lot of maybe new science that should come into effect because people are more keen on investing more in the cannabis growing and less so in the actual understanding of this entourage effect and getting to the bottom of how these things actually work. And yeah, that's one that I sometimes get stuck on a bit, or I always get asked about it and then I usually give this kind of answer and then people are like, okay, this is good.

Matthew: No, that's controversial enough, I think.

Kevin: Yeah, yeah, yeah. So yeah, that can make know, I don't think I've...maybe after a few drinks, I'll just say it doesn't exist and then be in an argument with somebody for awhile, but...

Matthew: Let's start there just for fun just to poke a bear.

Kevin: Yeah. Yeah. But I think it's one of these things that like fully satisfied with acknowledging its existence and finding ways to work with it. But I find that, you know, maybe there was a better way to approach that challenge as opposed to just kind of like, you know, accepting it and using it as a reason to not do more science. I think that's kind of silly.

Matthew: Okay. And last time you were on the show, you mentioned two books, "Future Perfect" from Steve Johnson and "Bold" by Peter Diamandis. And are there any other books that you've had an impact on your life since then that's worth talking about?

Kevin: Yeah, definitely. I've been reading a fair bit lately. So I've got maybe five I could recommend, but I'll choose maybe a couple of these. I really enjoyed "The Three-Body Problem" series from Cixin Liu. And that's like sci-fi, but it's like a being sort of recent and relevant. It's actually really, really interesting. So highly recommend that one. And then I also am really enjoying reading a bit about the modern art world in this book called "The $12 Million Stuffed Shark," and it's, "The Curious Economics of Contemporary Art," by Don Thompson. And this is like a really interesting, like, you know, discussion about like how the modern art world works and how people will kind of drive up the price of different kinds of art. And it's always this like, you know, mix of subjective judgment and personalities and everything like that.

And to some extent we see that a lot in like the startup world too where, you know, it is about valuation and about hype generation and how to like, you know, leverage that in many ways. So I like to...I'm interested in reading this book because it's a fun book to read, but also there's something interesting like, you know, tidbits about like, wait a second, you know, this kind of applies to some of the things that I do on an everyday basis. Or it kind of explains a bit of like, you know, the things that we see in the startup world.

Matthew: You know, it is similar in some regards, the modern art and how, you know, art dealers, they really try to get you into the narrative about the artist or the piece and something about it. And usually, if it's unusual or something that, you know, has some dimension to it that's fun to share, then they can kind of hook you into it. You know, like they can get you to buy into the story about the artist or the piece or why it has some sort of importance and then they're kind of hinting at maybe it's limited supply and then there's other people looking at it and in the future, who knows how much could it go for. You know, I've seen all that with art and it's like, well, you know, even though you know it's happening, it still works. Like our minds are hard wired that way to think in terms of, you know, stories and narratives.

Kevin: Yeah, yeah, definitely. And this is I mean, pitching 101. And if you look around and watch some like, you know, pitch instruction videos for startups, like they do really focus on leveraging that story and making sure that, you know, part of what you tell is it about, you know, your team and your overall story and trying to get people hooked on like this idea, right? And I mean, in the extreme cases, it goes awfully where, you know, the CEO is just kind of over-pitching and the story is too much and there's not enough like function behind it. So it's this really, really interesting, like, yeah, communication question that is funny about how like the human mind works and what we have to do in order to get each other to understand things, to focus a bit maybe. But it's, yeah, yeah, really, really interesting.

Matthew: I think about how powerful that narrative is too because, you know, Ben & Jerry's ice cream, we have the idea of the two quaint guys from Vermont and I've been to their factory up there in Vermont and it's nice and everything, but I mean, they were bought by Unilever, a huge, multinational years ago, but people still kind of have that quaint kind of idea about Ben and Jerry when they're buying ice cream, even though all of that has gone. So it's so durable once it's in people's minds.

Kevin: Yeah. Yeah, it is. And I guess that's what sticks and that's why, you know, we have brands that have value in the end, right? And, you know, I guess with Ben & Jerry's, it's enough, like, great ice cream behind it that people still love the ice cream and they still love the story. If the ice cream wasn't so good then maybe people would kind of shy away from that.

Matthew: That's true. Good point.

Kevin: But I think there has to be like this nice...I mean, in the end, you kind of have to have to deliver something. And I think that maybe in this book there's like these art pieces that maybe it's not so much about delivering on something and something feeling just about generating a lot of energy, but it's it...yeah, I mean understanding this aspect of like, you know, what attracts people to certain things is an important thing to think about. And it applies to like, you know, daily life or at least gives you a sense of, you know, how people will rationalize certain decisions. And whether it's, you know, us talking to like the Canadian government or us talking with investors or us talking to like potential customers, there's always like, you know, this goal, in the end, of trying to get people to understand and be interested in what you're doing.

And then you have to also kind of, you know, give them something functional that they can actually latch onto in the end. So it's not like a pure story and this always like maybe worries me about a bit being in this like biotechnology sphere where companies will go out and raise like tons of money. And the biggest like, you know, scandal of the decade is the Theranos company which managed to raise tons of money without showing very much technology at all. And then, in the end, their investors were totally fooled by this great storyteller, which is both unfortunate for like the wonderful storyteller that could have used her skills, like, elsewhere and also for the industry as a whole of like, you know, getting people to understand things and not be afraid of technology, I guess. So yeah, it's so many interesting, you know, such an interesting dynamic to kind of like look into and understand it. And it is also like a very funny story to tell about this shark that was sold for $12 million.

Matthew: That sounds like a great book. I'm gonna have to check that out. What's the title one more time for people?

Kevin: It's called "The $12 Million Stuffed Shark."

Matthew: Okay. Okay. Well, Kevin, as we close, please tell listeners how they can find you online at your website and also for accredited investors, how they can reach out to you if they're interested in investing.

Kevin: Definitely. The place to go is So that's spelled And for now, that's the place to go for I mean all points of contact, I guess. For now at least still, I don't know how long this will last but I do go look through all the emails that do come through that. And if somebody is interested and coming from an investment firm, that is one that I like usually pick up and will reply to. And otherwise, it's nice to hear from people just, you know, who have their different stories and if there's a relationship to be built between like, you know, us and another company you or if you have an idea then it's always nice to chat about, I guess. So I encourage people to come out and reach out to us.

Matthew: Great. Well Kevin, thanks so much for coming on the show and educating us today. This is a really interesting area, biosynthesis, so we'll watch closely as this proceeds and come back and give us an update sometime.

Kevin: Yeah, definitely will do. I would love to be back sometime.

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 What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at Have a suggestion for an awesome guest on "CannaInsider?" Simply send us an email at, 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 Canada insider 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 listing 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 278 – Global Cannabis Trend: Exporting Extract From Africa to Europe

jonathan summers exmceuticals

It’s no secret cannabis cultivation is going global. Here to tell us why and how he’s expanding into Africa is Jonathan Summers of EXMceuticals, a medical cannabis firm that aims to become the largest volume, lowest cost producer of wholesale cannabis in the world.

Learn more at (CSE: EXM) (FSE: A2PAW2

Key Takeaways:

  • Jonathan’s background in cannabis and how he came to be Executive Chairman of EXMceuticals
  • An inside look at EXM and its mission to become the largest volume, lowest cost producer of wholesale cannabis ingredients
  • Jonathan’s insight on Brexit and how it will affect London as a financial hub
  • Why EXM cultivates cannabis in Africa before processing, selling, and distributing in Portugal 
  • What cannabis cultivation in Africa could mean for the country’s economy and job market
  • Differences between the cannabis industry in Europe versus the U.S. 
  • The products Jonathan foresees gaining traction in Europe over the next few years 
  • What Dixie Elixir’s Tripp Keber is bringing to the table as a strategic advisor for EXM
  • How EXM is working to support African communities through nonprofit funds and increased employment
  • Inspiration Jonathan draws from lectures given by English philosopher Alan Watts
  • Where Jonathan sees EXM and cannabis heading in the next few years
Read Full Transcript

Matthew: 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, that's Now, here's your program. It's no secret that cannabis cultivation has gone global. Here to tell us why and how he's expanding into Africa is Jonathan Summers, chairman of EXMceuticals. Jonathan, welcome to "CannaInsider."

Jonathan: Great to be here. Thanks, Matt.

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

Jonathan: Right now I'm sitting in beautiful, sunny London. I'm watching the rain come down. And the reason I'm in London is where cannabis business mainly operating in Africa and in Europe.

Matthew: Okay. And what is EXMceuticals on a high level?

Jonathan: EXM is best thought of as an ingredients business based on CBD and individual cannabinoids.

Matthew: Okay. Can you share a bit about your background and journey and how you got into the cannabis space and became part of EXMceuticals

Jonathan: Sure. My pleasure. It was...a few months ago, I've always been in finance. So I managed to do 15 years as a Wall Street banker before I left and did a couple of more entrepreneurial things in asset management. Started a couple of hedge funds, asset management businesses. And towards the end of last year, I began to look around for something else, having done finance for well over 20 years. And a friend originally brought me the EXMceuticals as a company he had met and was interested in and was helping to raise some small money for them. And he recommended I met them and I did so. And frankly, was very impressed with the plan.

I also thought that there were a number of things that possibly they weren't doing that maybe they should have been doing. And I started asking lots and lots of questions in addition to investing a small amount of money. And as part of the process of me asking lots of lots of questions, which tends to be my way, I got to know the guys who are running the company very well. And about six weeks later they asked me to come on board in an executive capacity. And that was end of May this year and I've been the executive chairman ever since.

Matthew: Okay. What do you think about Brexit? I mean, how do you think that's going to affect London as a financial hub? I mean, I don't really know. I spend a lot of time over in the UK, but I think, "Hey, perhaps if there's a clean break for the UK, you know, there could be more desirable tax rates and more business would flow to the UK be taken out of the European Union." I know there's more considerations and variables than that, but what are your thoughts around that?

Jonathan: I think it's one of those...we're kind of in uncharted territory, everybody feels very passionate in terms of their views which range vary widely from one end of the spectrum, it will be a disaster to the other end where people think it will be a fantastic boost to the economy. I think the truth will probably lie somewhere in between, but the facts are that this has been pending now for well over three years. A lot of the slowdown in economic activity that you would expect when there's a big change like this has already happened. For example, central London property prices are probably down 30% in the last 3 years as people have been worried about Brexit. So I would imagine that if Brexit is something other than a complete disaster, you would see, if anything, activity in London and England pickup.

Matthew: Yeah. Okay. And what do you think of Boris Johnson's haircut?

Jonathan: I'm a big defender of Boris, not necessarily as haircut, but because he's written a couple of very good history books, I would probably give him the benefit of the doubt.

Matthew: Okay. You've got some wild haircuts over here too. So that's...I understand.

Jonathan: You haven't seen mine yet.

Matthew: Okay. Let's talk about Africa a little bit. Why did you choose Africa and where are you operating there?

Jonathan: Sure. So just to give some background, Marc Bernier, the founder of the company, this is nearly three years ago now. So, a long time before I got involved. He was quite early in the evolution of cannabis and industrial hemp. He was working on a couple of projects in the Caribbean where he was setting up businesses and very close to having licenses and for various reasons based upon the scale of the land that he could cultivate, and just sort of the footprint he could develop he decided not to proceed with those, and the company then moved on and sort of went to Africa. The thesis behind all of it, but where Africa particularly was where we wanted to build a business with is basically you want to grow cannabis where it grows naturally. You want to grow cannabis where it's hot and sunny, ideally pretty much all year, outside of the rainy season, you want to go to cannabis with as long sunny days.

Lots of sunshine and also where you can get lots and lots of fertile, flat and available land. And Africa ticked the box on all those. The essential premise being you want to grow cannabis where you don't need to build large greenhouses and heat them because outside the greenhouse it's very, very cold. So that's the basic thesis behind why Africa. In terms of where we're operating, we have farms in Uganda and the DRC and we are in the process of the final stages of the acquisition of a gigantic farming and processing unit in Malawi. So that's currently where our farming operations are at.

Matthew: Okay. And DRC, is that Congo? Democratic Republic of Congo? Is that wat it is?

Jonathan: It is indeed. And obviously, when you mentioned the DRC, people raise eyebrows. It has a relatively checkered past. We are in a part of the DRC which is a much, much more stable. It's actually called the cubic [SP] kingdom. We are operating in a part of the DRC where I would imagine if we weren't there, none of the people that we're employing, of which about half of women would have a job. Effectively what we have in the DRC is a large area of clear land with a fence around it. We've put in the wells, we've put in the farm buildings, equipment, etc. And we have about 200 hectares of cleared land that we are planting out the initial 25 hectares of cannabis on. So, that's where we are in the DRC. It is basically a farming operation.

Matthew: Okay. And what markets do you think you'll be exporting to the most?

Jonathan: So we are not planning...this is important. We're not planning on exporting cannabis in any way, shape or form to countries or operations or companies outside of Portugal. So, everything we produce will be transshipped to Portugal in full client concentrate form. So we'll do the initial extraction in country. And Portugal is really the hub of our operations, which is where we are imminently expecting our initial sort of R&D pilot refinery license. And as soon as we get that... It's been about a two-year process to get to this point. As soon as we get that, hopefully in the next few days, we will immediately begin the process of fitting out and planning for a much larger to be GMP approved facility that we've already rented the site for about half an hour south of Lisbon. So right now we have an initial R&D lab and refinery in Lisbon. Once that's licensed, we will immediately begin the process of moving the refinery to the larger business facility half an hour south and the existing facility will just become R&D.

Matthew: Okay. Lisbon's becoming a bit of a hub, I know Tilray has a footprint there too. Why do you think Lisbon is kind of becoming a hub for cannabis or why do you find it desirable?

Jonathan: I think that the Portuguese authorities, while they're being very diligent, I think they're trying to build a business. I think they're obviously looking to create jobs and infrastructure in the country. They are gradually liberalizing the codes around marijuana, although obviously purely recreational is still frowned upon. I think that, you know, for example, I heard the other day 45 licenses are currently going through the application process to grow cannabis in the country. And that's obviously a process where we can be part of that because we're not going to be growing in Portugal, but we'll be very happy to process other people's production, you know, on a commercial basis.

Matthew: Okay. I'm curious how the African government officials have reacted to the prospect of cannabis cultivation in their borders. I mean, they haven't had the propaganda and reefer madness that's gone on in most of the Western world. What's kind of...what's their orientation in terms of how they feel about cannabis?

Jonathan: I think it's mixed. On one hand, there's an obvious slight nervousness. There is obviously a negative association within the country to do with, you know, with some people with recreational use, somewhat frowned upon there. So I think where they are generally much more encouraging of it is where it's an export market product where you're cultivating in the country, ideally transforming, doing some extraction in the country. So it's not just a farming operation. And then transshipping it elsewhere for medical or nutraceutical purposes, I think they have a lot more time for, I'm not sure there's a huge drive at the moment for sort of in-country distribution, and really in many cases the plant grows wild there anyways. So I'm not sure that's a process which you could really want to distribute in-country. There doesn't seem to be much point to that. Where I think this really resonates with governments, certainly in sub Saharan Africa, is in terms of job creation, export revenues because one of the big crops in a number of these countries, particularly in Malawi has been tobacco. And as the tastes, needs, wants, desires and the health issues of the world evolve, tobacco is a crop, which frankly is in less demand.

And with the price down, something like 50% for certain kind of...sorry, for certain tobacco strains in the last 2 to 3 years, the farmers are looking around for something else to grow and the local governments are looking around for other sources of revenues. It's that simple.

Matthew: Okay. So you're growing outdoors, taking advantage of the sunshine and eliminating that electricity costs. Is there some greenhouses involved there or is it just pure outdoor?

Jonathan: So I think it would's not smart to just have a purely outdoor grows. So obviously we have nurseries, we have one in Uganda and a very, very large 10-acre nursery, comes with the facility that we're buying in Malawi. And in the nursery you'll keep your seed stock, you'll keep your basic plants and you'll take cuttings from and your plant out from there. And then maybe you plant out in the field when the plants are a few inches, maybe a foot high on that basis. But I think it would's not as unsophisticated as just scattering seeds in the field. We're going to be looked at plants out of the nursery. One of the things we are doing in all of these geographies is also figuring out what we'll grow well outside in these environments that contains a lot of CBD. So for example, it wouldn't come as a surprise to you that a lot of the local strains in some of these countries are very high in THC and don't contain a lot of CBD. Also some of the more, shall we say, heavily engineered genetic seed stock that's just been bred in the West or in Canada to produce CBD doesn't necessarily grow that well outside in Africa given the environment. So, there is a process to go through in terms of what grows well that contains the right ingredients.

Matthew: Okay. So, you don't plan on selling flower, just concentrate and you're going to extract into concentrate there in Africa then export it. Talk a little bit about the strategy there. Is it really just to try to get as much value per gram over or what's kind of the idea there?

Jonathan: Yeah. I mean, it's really based upon...we're in ingredients business. We're not in the business of selling flowers for medical reason or for any reason. And I think it's, you know, what we'd like to do is very rapidly to get to the point where we're putting a lot of production through the extraction facilities. We already have a fully built one in Uganda and we will be putting one in Malawi as soon as we are able. You want to put the biomass in there as soon as you possibly can after you harvest it to keep as much of the sort of CBD chemicals as you can, the terpenes, etc., which we can also talk about and get that into a container and get it shipped to the refinery in Lisbon. This is really about growing biomass, leaving the biomass in Africa and we can figure out what to do with that further down the road. But getting the sort of the concentrate, the chemicals to the refinery as quickly as possible.

Matthew: Okay. So how much do you anticipate getting to the Lisbon refinery out of the gate?

Jonathan: So, our numbers for next year include us having 100 hectares of cannabis being cultivated all year. We're assuming that we can produce three crops because it would probably be slightly more than that, effectively as a three-month growing cycle. But you don't really want to be growing in the rainy season. The countries we've chosen, the rainy seasons don't overlap. So effectively we'll be able to grow all year. But obviously, while we're talking very, very large amounts of land, we're obviously not going to be plotting it all out initially. But if I give you an example, one hectare of land, fully planted and these plants get quite large when they grow outdoors in Africa, so they can easily be eight feet high. We're talking roughly 10,000 plants per hectare. If you assume that habitat produces 3 crops a year, and again, we have no shortage of land and roughly 6% of that, biomass turns into eventual sellable isolate or distillate, each hectare producers just over 7,000 kilograms of sellable product a year once it's been through the refinery. So effectively, if you think about it on a modular basis, if 1 hectare produces about 7,000 kilograms and you've got 100, 200, 300 in the ground, you can just do the math.

Matthew: Yeah. Okay. This is interesting. What kind of finished products do you anticipate the ingredients will make there the most? What do you think are the top three will be people use the ingredient for after it's refined?

Jonathan: So, I think Europe is very much in its infancy here in terms of where this product goes. And the vast majority of the 700 million Europeans that are getting excited about CBD are currently either thinking of purchasing or purchasing oils or tinctures. The U.S. has obviously ahead of this. And over in California, there's a lot of cannabis brands, be them CBD or recreational THC. So I think over here it's kind of in its infancy, but in general, I think obviously oils will be a big one initially, but the market will move on. I think nutraceuticals could be very big. Things like sports recovery, creams, hand creams, cosmetics. I think longer-term beverages and particularly food will need to be slightly further down the track, obviously given the regulatory burdens that are on that. And rightly so, given you need to make sure that the products are pure and to an extent, say, do what they say they're going to do. But I think in the short term it will be a sort of a nutraceutical market, a wellness market.

Matthew: Okay. And what about the minor cannabinoids like CBN and CBG? And maybe talk a little bit about terpenes and how you plan to preserve those two, if you would.

Jonathan: Yeah. So look, I think this is very exciting. I mean, at the moment, I think the point is everybody is fixated upon CBD. You're right to ask the question about CBN, CBG, THCV, etc. All these cannabinoids I think will really be a focus and it's going to be a focus for us. It is a focus for us. I mean, we are really aiming to produce 99.99% pure cannabinoid isolates from what will be a GMP facility. I think the market will increasingly mature towards a point where people will want specific cannabinoids because as the science proceeds in terms of what cannabis is used for or can be used for, people will want that particular effect. The science of the plant is really not very well understood right now. It's obvious that it does something, it needs to be a lot more quantified. The basic... As the science finds out what these individual cannabinoids do, it may well be discovered that certain combinations cancel each other out and other combinations enhance each other. So I would imagine very rapidly, and I think within a year or two you're going to get specific users will want to purchase large amounts of individual cannabinoids. And I think obviously CBN and CBG are the two you've asked for, specifically much in demand for sleep.

Matthew: Yeah. That makes sense. How do you find the posture or sentiment in the UK is changing in terms of adults talking about cannabis and maybe they're starting to look at it differently?

Jonathan: So, I think the problem that we have over here is a problem that maybe is general in cannabis. What would the fact that the industry is so young and has really exploded in the last year? I mean, I'll be honest, six months ago before I first came across EXM, I was really very uninformed about CBD and cannabis and medical and recreational. And I would've been asking silly questions too. The media generally doesn't understand it. I was at a conference recently where I was talking about EXM as an ingredients business and we're focusing on CBD and wellness. And the first question I was then asked was, what did I think the timeline was for cannabis to be legalized? At which point I said, "Well, CBD already is." And I had a sort of a blank stare back. I think there's so much confusion, so much confusion and misinformation and misunderstanding.

Not all of it deliberate, a lot of it genuine because people just don't understand the industry. Some of it I think in the media is created to sort of sell papers, etc. But so many articles about CBD ended up getting bogged down in discussions about recreational cannabis, which, look, if with CBD legal in the UK, know, as long as you supply products with less than a very, very small amount of THC in it, I don't care if cannabis is never recreationally legalized, we can still build a very large business in the UK. And the UK is just one country out of many in Europe.

Matthew: You recently announced Dixie Elixirs founder, Tripp Keber as a strategic advisor. Tripp has a deep background in North American infused products, but how was he going to help with the EXMceuticals?

Jonathan: So, it's really three-fold. So, the most obvious way Tripp will help is, Tripp has been involved in cannabis for 11 years through various ventures. Obviously the biggest one being Dixie. He grew up in the space. He's seen it evolve. He knows a lot about the industry, the business, the plant, you know, in addition to that, you know, I'm a finance background. My COO is a finance background. We have obviously a visionary founder. We have, you know, farming staff, but we haven't got somebody who's really grown up in cannabis. And I think Tripp sort of clearly ticks the box there. I think Tripp also knows a lot of people. I mean, Tripp is an incredibly sociable individual. He knows the vast majority of people that are active in the industry, particularly in the U.S. He can make lots of connections for us, and indeed already has.

And he and I were in the States two weeks ago. We attended the conference in New York, which was fantastic to spend both time with him, but also with a lot of the people that he knows. In many cases, these people have built great businesses or done a lot of investing in the space already over the last two or three years. The last place that Tripp can help us is a very, very key one. And that's one of the initiatives that the EXM is currently working on is we've had an MOU where the Canadian company called GFR Pharmaceutical for the last 18 months. And we are currently in the process of turning that into a firm and binding 50/50 JV. GFR is Canada's biggest white label nutraceutical company. They own an operator, state of the art facility just outside Vancouver, producing and selling hundreds of millions of Canadian dollars of non-CBD related nutraceuticals every year.

They obviously supply a number of very, very big clients. A lot of their clients are telling them that they would like to get into full-spectrum hemp boilers or CBD. So obviously GFR has a desire to get into that business too. We will supply our 50/50 joint venture with very reasonably priced low-cost production full-spectrum hemp boilers CBD from Africa via Lisbon. We will also put Tripp into that JV. Tripp is going to be on the board of that. And we're going to buy, build or lease a factory facility, most likely in Colorado, which is where Tripp is based, but it could be Arizona. And we are going to build, create a state of the art facility to do white labeling for CBD products around the U.S. And, you know, the reason why Tripp is excited to be with us is he understands the EU GMP from Lisbon with the cheap production from Africa. But also he's met the GFR guys. He's visited their family...sorry, their factory, he hasn't visited their family. And we want to build a state of the art facility in the U.S. to take this to the next level and really do this on an industrial scale. So, Tripp is key for our ambitions in North America. But the connectivity he has his in the industry is second to none.

Matthew: And tell me, what are you doing there with the local community in Africa? We talked about the government officials, but how about the people that work at facilities and the local community there? Because I'm sure that means it's not only good for business but, I mean, it just helps the world in general. And I know you're doing some things there, but I don't know all the details.

Jonathan: We're trying to...I think we're trying to do things the right way. So for example, we already talked about the DRC. There was a several month period late last year and earlier this year when we weren't producing any cannabis because for various logistical reasons, we had to put some wells in and we were spending CAPEX because we'd grown a very small amount prior to that. We had the staff, again, half of them are women. We didn't lay them off. We kept paying the wages. I doubt these people would get another job in the region that they live in without us. That's just an example of, I don't think you can just turn the wages on and turn the wages off because people rapidly come to rely upon it. Specifically in Malawi with the unit that we're buying, it's a very large agric processing facility with 2000 hectares of land.

The factory that comes with it is state of the art. It's like something you would see in Atlanta or in the UK. Two hundred and twenty employees going up to 300 in the harvest season for mangoes. It's currently a mango plantation. You know, I think it's fair to say that those jobs would not necessarily be existing in a year or two if we one coming in to sort of turn it into a...also into a cannabis cultivation facility. For the record, I'm not going to rip the mangoes out. Why would I? It's fantastic. We're one of the biggest mango plantations on the planet. So, we'll keep those, but we'll be looking to scale up. We'll be looking to preserve and scale up the 220 jobs there. But also I think what you're referring to him as across everything that we're doing in all of the geographies we're operating in, 2% of the revenues from the local operation will be sort of segregated out and sourced and given to a local trust.

There will be a board for the local trust. But effectively the local people will choose the projects that money is spent on. And I would fully expect that to be projects that fit with the needs of the local community. Now, it's pretty obvious that particularly in the DRC and Malawi you can do less so, but particularly in Uganda...sorry, the DRC and Malawi, we're dealing with very poor countries here that they need the export revenues, they need the jobs and they need money to be spent.

Matthew: Yeah. That makes a lot of sense. That's great. I watched this really closely, this international cannabis trade, because it's, you know, it started out with a trickle, you know, with some businesses moving down to South America and Columbia because it's such an ideal growing environment in the background for flowers. And, you know, now what you're doing with Africa and it makes a lot of sense. I mean, this is happening with other, you know, agricultural products, why not do it with cannabis as well? I mean, much more profitable plant. But then I think about, okay, in the Netherlands they are incredibly efficient and productive with these greenhouses. But still, I don't know what kind of the tradeoffs are in terms of how much profit they can make and the efficiency at their greenhouses indoors. But I got to imagine that somehow there's going to be some point where these all these things kind of compete with each other. Like these really high-efficiency greenhouses like the Netherlands. What you're doing in Africa, what's happening in Colombia. So, I assume at some point there's going to be like a...just like there is for pork bellies or soybeans, kind of like this international price that...maybe that'll be for hemp first, but maybe then for certain cannabis strains where there'll be futures contracts and so forth. Do you have any thoughts around there?

Jonathan: I would completely agree. I think it's going to become an industrial crop, whether it's cannabis or industrial hemp, it'll take slightly longer for cannabis to be an industrial crop because it's harder to grow legally, but industrial hemp rapidly will become an industrial crop, it goes without saying. I think you have to be looking to... I don't know if we're going to be the lowest cost producer, but we're certainly not going to be the highest. I think if the price, I would predict the price, particularly for industrial hemp will come down significantly over the next 24 to 48 months, maybe even sooner. But because we're growing without the big CAPEX and without heating facilities and because we can grow all year, our production costs per plant or per unit, how do you want to quote it, per milligram of CBD, etc., will be, I believe some of the lowest and it's not going to be a race to the bottom, but it will be something of a race to the bottom.

But I know a lot of other people will not be able to produce at the levels we can produce. And if it gets to the point where we're not making money in our farming operations, I'd say that the vast majority of the industry aren't either. So look, I would agree. I think if this was just about cropping and growing cannabis, it's less of an exciting proposition. We are, you know, we're not just growing. We're also in the process. We have the CBD refinery and the R&D lab in Lisbon. We have the joint venture in the U.S. which I think gives us a lot of credibility. And to have, you know, fast forward six months and EU UGM GMP approves facility, half an hour South of Lisbon capable of processing all kinds of extracts from all over the world I would say would be a massive differentiating factor.

But when I think about the price of wholesale ingredients coming down, the price of biomass coming down, lots of people growing cannabis and hemp. In a way this is inevitable. And if you think about how CBD and cannabinoids really become a multi, multi, multibillion dollar industry, I think prohibition partners think 28 billion pounds a year by 2028 in the UK. So, if you assume that happens, the price point and the price at which this can go in things has to come down in order for it to be a mass-market adoption. So, for example, if you're talking about CBD, going into beverages is probably not going to happen when the price of wholesale CBD is where it is now, because it would put the price of those beverages up too much. But if the price comes down, you are much lot more likely to see mass-market adoption on a gigantic scale, which would sort of just massively increase the volumes. So look, I think the price coming down means that you need to grow cheap, but the...or produce cheap, but the price coming down will also mean that the take up of the product explodes even potentially as quickly as the most optimistic estimates.

Matthew: Okay. So the market expands as the margin potentially sink or lower. So you're making up in a revenue here even though you're losing in profit a little bit.

Jonathan: Absolutely. I just think...but if I think in terms of competitive advantage, growing outside on massive areas of flat land in Africa, eight-foot-high plants grow all year. You know, even if I automate my Dutch greenhouse or my Canadian facility, you know, there's no way you're going to be able to compete with that for nutraceutical general ingredients, which is what we're competing in. If you want to grow very high tech, purely medicinal cannabis, where each plant is barcoded, yeah, you'll need to do that in a greenhouse. If you want to grow specific strains of recreational cannabis to supply to a particular group of consumers who wish to consume it, that again needs to happen inside a greenhouse. That neither of those are businesses we're going after.

Matthew: It seems like, I mean, in many ways that Africa and, you know, there's a lot of individual countries in Africa and they're very different, but, I mean, they have no legacy infrastructure. So you can see kind of the uptake of certain advanced technologies like M-Pesa is a payment system there where, you know, if you have a cell phone, you can send money around anywhere in Africa. And I can't remember which telecom provider, I think it's a UK telecom provider that provides that service and they're putting them land deeds on the blockchain in certain countries in Africa. Do you see kind of catapult effect of Africa kind of going slow, slow, slow, slow and then like boom, making massive leaps to kind of get catch up to the developed world?

Jonathan: I'd like to see that. I think, I mean, we're a profit making enterprise. We're a company, but, you know, it would be nice to do some good as well. I don't know exactly how growing cannabis in Malawi, for example, is going to speed that up. But I completely agree with what you're saying. So for example, the best one is mobile telephones. So the fact that no outside of South Africa, no African country really built out a wire line business. They skip that. They completely ignore those billions of dollars of CAPEX that needed to build the telephone lines and put little cables in the ground. And they just went straight to the mobile and then it sort of...they skipped that whole sort of 40 years of digging pipes in the ground. Exactly how that would transfer to cannabis, I'm not sure.

I think, you know, it would be at the very least, a good simile would, in terms of how this can really work, if you just look at where tobacco is grown commercially, it's effectively probably the same kind of places that cannabis would grow pretty well commercially. And the one soundbite that actually I got from a conference when I was in...the one New York two weeks ago. Because people say, "Look, it's going to be a similar thing as to what happened to roses." Roses used to be grown in California. Now they're all grown in Ecuador. And actually over in Europe, they're all grown...sorry, in Europe they're all grown in Africa, mainly Zimbabwe and they're shipped to Holland and that's all from Holland. So, the same sort of thing will happen in the cannabis production chain as has happened in other agricultural goods.

Matthew: Okay. Yeah, I was kind of wondering if their local population in the next couple of decades is going to start to have more disposable income where they can buy some of these cannabis products at an affordable price point. I mean, it's speculation, hard to say, but...

Jonathan: It is hard to say. I think we're approaching this very much from the point of we will extract and take the product out of the country. And the main reason why I'm thinking along those lines is that's very much what these countries want in terms of export earnings. So, there's not really been much discussion about creating domestic products at this time.

Matthew: Okay. Jonathan, I'd like to ask a few personal development questions to help listeners get a better sense of who you are.

Jonathan: Oh, do you?

Matthew: Is there a book that's had a big impact on your life or your way of thinking that you'd like to share?

Jonathan: Ah, man, that's a tricky one. I read a lot. Actually I haven't read so much in the last few months because I've been so incredibly busy and I've barely seen any of my friends, but so I haven't had a huge amount of spare time. The first book I ever read when I was...that I really remember when I was nine that affected me was "The Lord of the Rings." And I read that in about a week and I then read all of his other books and it absolutely blew me away, as you can imagine, as a young boy, age nine. That was incredible. Reading has have always been a big part of my life. I studied history at university. I was fortunate enough to be allowed to go and effectively read history books for three years, which was absolutely fantastic. And I specialized a lot in history, military history, particularly a lot of World War II, which I still find fascinating to this day and still read a lot of. Evelyn Waugh, Douglas Adams. I've read all of this. You know, books about the universe, I find fascinating. Actually, most recently, the thing I've been listening to, particularly when I'm in the car and listening to podcasts is I've been listening to a lot of the audiobooks by a 1960s English philosopher called Alan Watts. I don't know if you [inaudible [00:35:16].

Matthew: Sure. Yeah. There's a lot of YouTube videos of his lectures and stuff too.

Jonathan: Fantastic. And I think, for a start, he's got a very entertaining baritone voice, and a fantastic English accent that's way, way, way ahead of his time given he died in the late '60s. And anybody who's not listened to any of those YouTube interviews or recordings of Alan or listened to any audiobooks, I would strongly recommend a couple of hours of your time.

Matthew: Yeah. I'll put a YouTube playlist of Alan Watts stuff in the show notes so people can listen to those because I find myself YouTube suggesting those to me all the time. And I will tell you, he definitely was out of his time.

Jonathan: Exactly. Fascinating man and quite an interesting life as well. So, worth just reading the Wikipedia page on it too.

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

Jonathan: Judging by the fact that the EXM share price is $1.35, I would say most people would disagree with me that EXM is going to be $1 billion business.

Matthew: Wow. That's great. That's a good look into the future here. So, good points here. Before we close, can you tell us the ticker symbol and the exchange where EXM is traded?

Jonathan: Yeah, of course. The main listing is in Canada. We're listed on the CSE. The ticker is EXM. We're also listed in Germany. We're on a few exchanges. The main one has got the catchy ticket of A2PAW2, so that's where we are.

Matthew: A2PAW2.

Jonathan: Yeah. It trades in euros in Frankfurt and also in Canadian dollars on the CSC. The EXM.

Matthew: Well, Jonathan, thanks so much for coming on the show. Really appreciate it. And good luck with everything you're doing in Africa. That's really an ambitious project you have going on.

Jonathan: Thank you very much. The opportunity to come and tell you a bit more of our story, I really appreciate it.

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