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Evolving Beyond Cannabis Delivery with David Hua of Meadow

David Hua - Meadow

David Hua is the co-founder of Getmeadow.com an online cannabis delivery platform in California. David talks about how Meadow is expanding into the dispensary to help business owners manage their business and get more customers

Key Takeaways:
[2:02] – What is Meadow
[3:23] – David talks about being part of Y Combinator
[7:11] – More about Meadow
[9:25] – Meadow’s most popular delivered items and time of day
[11:26] – David talks about the medical market
[13:27] – What makes Meadow unique
[14:44] – David talks about the dispensary management software
[16:08] – What does the software do
[20:32] – Are there tech skills involved in implementing Meadow
[23:37] – David talks about online ordering with Meadow
[26:16] – David answers some personal development questions
[31:28] – Contact details for Meadow
.

Important
What are the five trends disrupting the cannabis industry?
Find out with your free cheatsheet at https://www.cannainsider.com/trends

Read Full Transcript

Most startup business pivot because their original idea is not working out so well. Meadow is a different story. They stared out as a cannabis delivery service in California and still do this, but they are expanding into dispensary software and winning customers. Here to tell us all about it is David Hua, better known as just Hua. Hua, welcome to CannaInsider, or welcome back to CannaInsider.

David: Yeah, woot, woot. Good to be back.

Matthew: Tell us where you are today. You’re not in your usual locale. Let’s hear.

David: I’m not. I’m in Las Vegas, Nevada.

Matthew: Cool, are you going to try out for Cirque du Soleil, or what’s going on there?

David: We’re actually here for ArcView Meet-up, and then later on this week there will be MJ Biz Con, which is a big conference where everybody gets together and talks about cannabis across the country and across the world. It’s great, there’s a lot of people that come by.

Matthew: Yeah, that is a massive event. Normally I go there. It is the place to be.

David: A lot of information sharing, it’s great.

Matthew: Did you find it overwhelming? Do you have to go back into your room and get in the fetal position just to recover from all the social activity?

David: This is my fourth year here, so I kind of know what to expect. Hydration, keeping tea, keeping the throat clear for all the talking and pacing. Some people just don’t know how to pace. It’s good. I’m okay.

Matthew: Remind us again at a very high level what Meadow is.

David: Sure, Meadow is an all-in-one platform that powering the California cannabis industry.

Matthew: What’s changed since the first time we had you on the show? I can’t remember, a year or two ago now?

David: I think it’s been a couple of years. Let’s see, I’m a father, that’s changed.

Matthew: Congratulations.

David: Thanks. I’m a father of a 19-month-old. I’m also a father of this startup Meadow. I think also, I mean, by focusing in California, we’ve been through so many legislative sessions where now the Medical and Adult Use Cannabis Regulation and Safety Act, also known as, MAUCRSA, also known as, The Act, will be going live Jan 1, 2018. So, there’s been a lot of talk about change and figuring out implementation is going to be next year.

Matthew: I just want to hear a little bit, you were part of the famous startup accelerator, Y Combinator. You probably get a lot of questions about this, but I’m just curious. What was that like being part of Y Combinator and then how much currency does that give you in terms of investors wanting to talk to you and be able to build relationships and so on and so forth?

David: It’s been actually really great. I think Y Combinator as a brand, as an accelerator is pretty well-know. When people see that it’s a stamp of approval. I think being the first cannabis company to come out of there was a little bit more unorthodox for them, but what’s cool is it’s paving the way for more cannabis companies to go through. So, we got Confident Cannabis that came through. There’s a gene company that came through last batch. There’s another one coming though next. It’s good. They’re seeing the opportunity and the potential. When talking to other investors, they realize that when you’re part of technology and Y Combinator that it’s a really good sign.

Matthew: What about just networking with Paula Graham or even other alumni from Y Combinator? For people who haven’t heard of Y Combinator, can you throw out just a couple of the more famous alumni of that program?

David: Let’s see, Dropbox, Airbnb, Weebly, Reddit, Stripe, Justin TV, which then became Twitch. That was bought by Amazon for a billion dollars. Cruise, the self-driving car company. Meadow. There’s a lot. I think what’s cool about the people and hanging out with everyone, everyone is just super hungry to affect change in the world within their own sense of control and bringing people aboard, and everyone’s really helpful in sharing what’s worked for, what hasn’t worked for them in hopes you can glean some of that experience and then apply it to whatever you’re doing in whatever field you’re working in.

Matthew: They say you’re the average of the five people you hang around with the most. I definitely could see where you’re hanging around with people that are in Y Combinator who went through that, who are alumni, who are kind of in Paula Graham’s orbit, changes your whole world view of what’s possible. Different than if you grew up in Omaha. Sorry to pick on Omaha, but your sense of what’s possible in how big you want to dream is probably entirely different.

David: Yeah, I think that we get so much exposure, especially with some of the partners at Y Combinator. They see so many slices of innovation across the spectrum of possibility. Anything from AI to machine learning or a smart luggage company like Blue Smart, or a company that specializes in tap water, Give Me Tap. Just trying to figure out ways to make things efficient, or an LGBT company. They have so much perspective of what’s out there. When you are able to talk specifically about my field or cannabis, you can pull in a lot of inspiration from other industries that you can learn from. Being at the start of this movement, we have a lot of opportunity to take the best from other industries and not necessarily focus on things that didn’t work and apply it to where cannabis could be with all those learnings and leverage and best practices.

Matthew: Let’s dig into more of what Meadow is doing here. You mentioned California. Is Meadow operating just in California right now?

David: Yeah, just in California.

Matthew: That’s a big enough economy where you can do that, no problem. I would speculate it’s probably Northern California and Southern California is 80 percent of the business. There’s not much happening in the middle or am I totally wrong on that?

David: It’s all over. We cover about 80 percent of California in the available areas that participate in the cannabis industry, but a lot of our partnerships are definitely more NorCal focused, since that’s our back yard, but we’ve been expanding into SoCal.

Matthew: What’s the game plan in terms of expanding to other geographies. Do you feel like you still have so much room to grow in California that you’re not really thinking about that yet or is there a roadmap?

David: Yes, so we’re really focused on California. We have major cities like L.A., San Francisco, San Jose. We’re looking into, we have Modesto, Santa Cruz. California is just a beautiful state. There’s still so much opportunity for these cities and counties to get onboard. A lot of local municipalities still haven’t really created their regulatory framework yet and their licensing framework. So we’re going to continue to help work with regulators and operators at these places in order to hopefully give them guidance on what the framework is in the state so that they can match up. What’s great is there’s places in our back yard like Berkley that’s really thinking about delivery and how that impacts them, but they’ve also been forward thinking in going with adult use.

There’s still a lot of counties that haven’t necessarily authorized adult use yet. So, there’s a lot of work to be done in California, and because all these laws are different, there’s a lot of flexibility that needs to be built in our software to accommodate these different formulations and how they’re going to regulate their respected industry in their local municipality.

Matthew: What’s the most popular items that are currently delivered through Meadow?

David: I guess you’re seeing similar trends to what’s going on in California and Washington and Oregon where concentrates and vaporizers are on the rise. Edibles are on the rise. Flowers are relatively still on the rise. We expect that to come down eventually, next year. Who knows. With adult use, it’s still a mixed bag on what could be happening. Popular products, you have a lot of pre-rolls and vapes. Edibles, my favorites are Mallows. They’re my wife’s marshmallows. I think they’re going to be perfect for next year because they’re low-dose, 5 mg. It’s still fragmented. There’s so many products that there’s still a lot of room for products to get on the shelf.

Matthew: In terms of time of day, you look at Uber, it surges when it’s raining or rush hour. Is there a rush hour for cannabis orders or cannabis related orders?

David: Yeah, typically we see evenings between Thursday and Sunday, to be pretty popular. Now that we’re pretty spread out, there’s different behaviors in different cities. Some people order during the day, and they’re okay with that. Some people schedule mainly for the day. So, they’ll take orders from the evening and schedule all through the day and then be done so they’re off the road by 5 o’clock. So, it just varies.

Matthew: Since on January 1st there will no longer be a requirement to be medical, do you see the medical dropping off in terms of people getting cards? Is that really starting to wane quickly?

David: I don’t know. We’re still very bullish on the medical program. I think because we Meadow MD, we really see the number of conditions that people are trying to treat for this. I think whether it’s sleep or chronic pain, there’s a lot of upside in getting a card next year because you can get a tax savings. So, people that are really trying to sleep, they’re guying edibles every week, or migraines, they’re buying every month. So, it adds up and they’re going to get some savings on it because the prices of cannabis are expected to rise and a recommendation isn’t that costly. So, if you’re spending more than $300-$400 a year on cannabis, which a lot of people in my circles do, it’s worth it to get.

Matthew: What about the average delivery time? I know that’s different in different places, but what can you tell us about that?

David: So, www.getmeadow.com it’s about an hour or less. Our average time is around 23 minutes. We also work with a lot of other dispensaries by powering their own site. So, places like [12.53 unclear] or Spark, where they need to have an online ordering presence there. So, what’s great is their delivery times are oftentimes the same than what we’re getting on the directory. Mainly because we want to keep improving the toolset so that they can deliver efficiently.

Matthew: There’s a couple other cannabis delivery companies on the scene. What would you say your unique selling proposition is? Is it the fact that you’re integrating with dispensaries now, or how would you define that?

David: Yeah, I mean I think we stand out because we’re really an all-in-one system. I think you’ll find that there are a lot of companies out there that use a Frankenstein approach to different software. So, they’ll patch up a bunch of different systems and try to use those. Some are more sophisticated and have some API integrations, which make it a little bit easier. I think for us, because we’ve specialized in delivery first and last mile, we’ve been able to build up the supply chain while the laws are being formulated. So, it’s really customer for the laws of California and the sophistication of the operator. As they scale the tools get better. I think we just spend a lot of time on the rules and working closely with the people that are on the ground and managing this thing.

Matthew: I didn’t even formally get the reason why you started the dispensary management software, because the last time we had you on the show it was just www.getmeadow.com delivery. What was the spark there? What was the genesis of why you came up with that?

David: What ended up happening was we started with the directory and then as we’ve built out these tools, a lot of dispensary owners were like, hey can we do this on our site. Yeah, sure. So, we started building out online menus for their sites, and that evolved into our inventory program and that involved into our reporting and analytics. A lot of the dispensaries we’re working with are doing delivery also had a brick and mortar retail location. They’re like, can you help power our check-in? Can you help power our point-of-sale? I guess we just kept saying yes, and we’re like sure, I guess we can do that. It’s been brick by brick. We just keep building on top.

What’s cool is whether you are a small operator or a large operator, you’re using the same software. Whether you are a brick and mortar or a delivery service, you’re using the same software. If you do all of it, you’re using the same software. I think what’s been really great for them is they’re realizing efficiencies across the board from not having to context switch to different applications.

Matthew: If I were looking over your shoulder right now, and you were walking me through what it’s like to look at the dispensary software, what would you show me? What are the buckets of things you can do?

David: Within the store, we have an iPad app. So, we build IoS apps as well. Our team is really good at mobile apps. The tools within the app range from point of sale, member intake, member processing, label printing, inventory cycle counts, shift management. In terms of their drawers and how much is in there. It’s a pretty nice Swiss Army Knife of tools within the app, and what’s cool is it’s getting better.

Matthew: We certainly don’t like to highlight other POS companies’ failures because we’ve all had our failures, but have you seen surge of interest as other software management tool have kind of had troubles recently?

David: Yeah, we have. I think people are just looking for stability, security and something that’s a little bit more dialed in to their needs and with usability. Yeah, we’ve been seeing some more interest. A lot of it’s been inbound. We’re not necessarily going outbound and reaching out. That’s not our style, but yeah we have had some inbound.

Matthew: Do you ever talk about feature bloat internally, because I’ve noticed over the years there are software tools that I love, and then I love them less and less over time because they decide they want to be a Swiss Army Knife and have 40 extension on the knife instead of just doing 12 things incredibly well, simply and elegantly. Do you ever talk about that with your team?

David: Yeah, absolutely. I think feature bloats could be a symptom of not properly teaching people the tools, or it could be a symptom of not talking to your customers to understand that that’s something you should have built. It’s something that’s very prevalent when teams get larger or their scale gets bigger and they’re like, well we got to keep making more things instead of improving on the things that they have. I would recommend, for companies who are doing that, to stay close to their partners. Talk with them a little bit more about what their true needs are, and then sometimes think about the idea of not necessarily what tool they need, but the problem they are trying to solve and then maybe improving some of the tools or workflows that you have that ends up solving for that.

Matthew: Are most of your new customer for the dispensary software, do they have no other software before or are they migrating from another vendor?

David: Both. We have people that are still pen and paper. We have people that have pretty sophisticated systems that aren’t necessarily cannabis specific. They’re moving over. It’s all over.

Matthew: I’ve seen people come up with some pretty crazy duct tape solutions. I mean they’re wildly inventive, but I mean it’s just a carnival. I have written these scripts that pull reports from Quckbooks, downloads it into a text file and parses it. You get 100 on resourcefulness, but it’s crazy. It’s crazy that you’re doing that.

David: It’s what people have had to do when they had to they realize as soon as you hit even 20 deliveries a day, all that manualness is really tough. When you have a 100 people visiting your store every day and you’re still photocopying everything and putting all that into manila folders into a file cabinet, it blows my mind on how much there still is left to do, but I think it’s going to change really quickly as people adopt newer technologies that make them more efficient and more competitive in their industry.

Matthew: Speaking of adoption. In terms of implementing the dispensary software and getting up and running with it, what kind of tech skills do you need to do that?

David: Tech skills, I mean, not much. A really good wi-fi is nice.

Matthew: I’m not going to be configuring a router and doing a telenet session or anything like that?

David: No, a lot of our work is in the Cloud and we use really secure hosting. Literally we come in, we help them with… first we really go through what they’re currently doing just to understand their workflows. Our system is really flexible. We can kind of cater to a lot of different workflows. So, once we have their ideal workflow from what they currently do and what we believe they should do, we match them up and show them what that can look like. From there, we do I guess you would call SOP development to help then show the process because most stores, most delivery companies have multiple people on staff and they might not be there the day that we’re there. So, we help them develop little guides.

We implement through getting them logins and putting our software either on the floor or in the front desk or in their dispatch back office and we simulate orders and how that goes and run through a demo environment and how that works, and then we go live when all the inventory and their menus are up to date.

Matthew: When someone finally gets the full power of they’re looking on their iPad at a dashboard is there one thing that they really love more than anything else? Seeing everything at a glance or the online ordering? What’s the thing you hear, I f-ing love this?

David: We hear that it’s so nice. We hear that often. “Wow, this is so nice.”

Matthew: I think I know what they mean by that. Your UX, your user interface is very simple and clean. You probably don’t even realize it, like fish don’t realize they’re swimming in water. Being in the Bay Area in the tech scene, it’s unacceptable to have a user interface that’s clunky. It’s very clean and easy to look at. Well organized. For you, you’re probably like I don’t see what… I’m glad they’re saying that, but I don’t know how I would even do it.

David: Yeah, you’re almost like, well that’s par for the course. I appreciate that. I think we often think a lot about how to reduce as much friction as possible and I think that’s part of the nice, but yeah, we’re flattered every time. It’s great.

Matthew: Tell us a little bit about the online ordering and how that connects with the Meadow service and the loyalty program to help dispensaries drive sales, because that’s what they’re interested in. That’s the big one.

David: Yeah, they’re great. What’s great about the online ordering is it adds a whole other line of revenue into a connected system. Usually we’ve seen dispensaries not take online orders or they take them over the phone or they’re using an outdated or somewhat clunky manusystem that was an extension. Online orders have helped them either process delivery orders or pickup and that time that would have been spent on those calls or answering an email is now just doing a pick list from that order and sending it out. It’s really streamlined on both sides in the sense, all right now they’re making more money and now they’re also saving time on their overhead. The speed in which people are ordering is really interesting.

Once they get through their first order, that first time, the repeat ordering is sometime less than a minute. That’s what people are looking for; convenience and speed and all that information right there for them to see without necessarily have to ask a lot of questions.

Matthew: Is there a surge to get this done before adult use becomes legal here in 2018?

David: There’s definitely a sense of urgency, but we’ve also I think, having been around the block for a little bit, sometimes urgency isn’t necessarily the best formula for a partner, if they’re all over the place. So, I think there’s more importantly they understand the value of technology and how it can help them and their organization. Once we align on that we can move really quickly. Yeah, there’s still a lot to be done. It’s not going to be everyone’s going to be ready to go by January 1. There’s going to be a lot of people afterwards that are going to try and interpret the laws and the regulations. We’re still, as of now, we don’t have the emergency regulations for California yet, and that’s what’s going to define how we operate next year.

Matthew: Pivoting to some personal development questions, is there a book that has had a powerful impact on your life or way of thinking that you’d like to share?

David: More recently I read, or I listened to, the Book of Joy. It’s an interview with Desmond Tutu and the Dalai Lama where they talk about what it’s like to live a joyful life. I think a lot of what they say in terms of compassion for one another, care and all those things that allow you to be a little bit more outward thinking, not so much internal, then brings back that gratitude that ends up making you happier.

Matthew: That’s good. I’ve read, I think, the Art of Happiness or something like that from the Dalai Lama of long time ago. I found that really insightful. Just very solid, practical ideas in there. So, thanks for that.

David: Yeah I think compassion, what’s really great about how they talk about compassion is it’s kind of what the cannabis industry was built on. When you look at the start of Prop 215 it was about helping the HIV community in San Francisco get access to medical cannabis because of the pain that they were enduring. It was because Nurse Brownie Mary was making brownies for patients. I think as we’ve visited a lot of different shops, there’s still a very strong correlation of compassion into how they treat their patients. There’s wellness services. There’s meditation. There’s free cannabis, free samples for people that need it. It’s in the DNA of this industry, in this movement and it was really nice to see it from their eyes. If we can apply those practices to this industry, then I think we’re going to create something totally different that’s going to be more value add than just the capital that it generates.

Matthew: Is there a tool, web-based or otherwise, that you consider vital to your day-to-day or business productivity?

David: Yeah, I use audible for my audio books. Having a daughter, you’re often pushing a stroller. Having those on the phone have been great. On the computer or on the phone I often use a lot of web-based tools like Quip for documents. We use Front for shared inboxes. Slack for internal communication. One of our core values is transparency through over communication. Having these tools allows us to look at what everyone is doing when it’s needed, and operate quite efficiently with our team of ten people.

Matthew: Tell us more about Quip and Front. I’m not familiar with those two tools. What do they do?

David: Quip is, for people who are familiar with Google Docs, Quip is very similar. What I like about Quip is that it’s more like a living document. Kind of like how Word has track changes, you can see what’s going on with a document within an activity bar. You’re able to comment people in. You can highlight different things, due dates. It’s a pretty seamless documentation portal for us. Front is another Y Combinator company. They’re great because you can create a shared inbox, and that shared inbox allows you and your other team members to manage it. For instance, we have support@getmeadow.com, so a bunch of us have access to that. Whoever is available can answer support. We don’t have a dedicated support team. We all do support so that we can improve the product and understand where the pain points are.

Matthew: Very cool. One more last question, just because I’m curious in your answer, if we waved a magic wand and you couldn’t be involved in cannabis delivery or any kind of point of sale software or dispensary software, what would be doing? What would your career be? What would you want to focus on?

David: I’m going to live the Matthew Kind Digital explorer life, extraordinaire. I’m going to interview people and take my family out across the world. That’s sounds pretty appealing to me right now.

Matthew: Okay, that’s good. Fair enough, I like that. Well, tell us where we can find you online, where listeners can find you if they’re interested and they want to get software for their dispensary, they want to themselves purchase some cannabis, some edibles or whatever it might be in California. How do they find you?

David: Yeah go to www.getmeadow.com. We have everything there. Whether it’s the directory or links to our MD program or links to our dispensary software, or if you want to just reach out directly, you can reach out to partners@getmeadow.com or even my personal email david@getmeadow.com or hua@getmeadow.com. Whatever you want. I’m pretty accessible.

Matthew: All right, thanks Hua.

David: I appreciate the time. This was awesome.

Creating a Recognizable Cannabis Flower Brand – Dustin Johnson

dustin johnson adakai holdings cannabis

Dustin Johnson is the founder of Adakai Holdings. Adakai owns Monarch dispensary, Huxton Brands (Flower and Vape Pens) and Omaha Farms. Listen in as Dustin discusses how he created a recognizable brand of cannabis flower.

Key Takeaways:
[0:58] – What is Adakai Holdings
[1:23] – How Dustin got started in the cannabis space
[4:40] – Dustin talks about doctors these days
[6:23] – Arizona’s cannabis market
[7:40] – Dustin talks about Adakai’s brands
[10:13] – Omaha Farms size
[12:21] – Dustin talks about raising capital for Adakai’s brands
[14:11] – Products available at Dustin’s dispensary
[15:36] – Partnering with other brands
[17:23] – Dustin’s biggest problem in running a dispensary
[20:29] – Dustin’s automation that has helped him with his business
[22:29] – Dustin talks about his Huxton Brand
[25:47] – How do you build brand experience
[31:58] – Dustin talks about terpenes
[33:47] – Which of the Huxton flowers is the most popular
[35:33] – Dustin talks about Adakai expanding over the next five years
[38:29] – Advice Dustin would give to younger Dustin
[40:04] – Dustin answers some personal development questions
[45:59] – Dustin’s contact details

Learn more at:
http://adakaiholdings.com/

Matthew Kind evolved the idea of the MacGyver Quotient from this investor’s thesis around The MacGyver Factor
https://www.cbsnews.com/news/macgyver-factor-the-best-entrepreneurs-work-miracles/

Read Full Transcript

Matthew: As cannabis prohibition ends across the world, consumers will pivot from buying any cannabis they can get their hands on to carefully selecting a brand that fills their needs and reflects their lifestyle. Here to help us understand how to nurture and build a cannabis brand is Dustin Johnson from Adakai Holdings. Dustin, welcome to "CannaInsider."

Dustin: Thanks, Matt. Thanks for having me.

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

Dustin: I'm currently in Phoenix, Arizona.

Matthew: Okay, great. And I am in Valencia, Spain today. And what is Adakai Holdings at a high-level?

Dustin: Well, Adakai is basically just a forward facing representation of the folks behind the unique brands that we're building in the cannabis space.

Matthew: Okay. Tell us a little bit about your background, and how you got started in the cannabis space? Did you just wake up one day and say, "That's it. Boom. I wanna be in cannabis. Changing my life now."

Dustin: Certainly did not, no. I had actually moved back from college. I'd gone out to school...I went to school at Pepperdine University in California.

Matthew: Nice.

Dustin: Go, Waves. And was at home in Arizona working in the real estate business, and my mother had been in a boating accident about 15 years ago, 15-20 years ago, shattered her kneecap, had had multiple surgeries to repair it, and had ended up with a residual nerve pain called RSD. And so through the course of her treatment, her doctors had prescribed her all kinds of different narcotics, Vicodin, Oxycontin, Fentanyl, and then she was, you know, taking a host of other drugs to combat the side effects of all those narcotics, and that had been going on for over 15 years.

So she was at a point where, you know, she was really dealing with some serious pain. She has been heavily drugged by her doctors, and we were looking for some alternative treatments for her, and that was right about the time that Prop 203 passed here in Arizona. So I sat her down, I said, "Mom, I've been, you know, looking into cannabis. And I think that there might be some real options here for you. Let's give it a shot."

And, at that point, she was happy to try anything to see if she could find some relief and got her her card, started making some butter that she was putting in her tea in the mornings, and within about nine months of using cannabis, she was able to get off all her narcotics entirely, and has been for...going on for five years now. So it was really just a revealing moment for myself and for my family as to the power of the plant.

What it could do to change peoples lives. She became a whole new person. I mean, in my opinion, it literally saved her life, and just, kind of, brought back all that vibrancy and love of life that she had lost in the haze of all the narcotics she was taking. So, at the time, there were no good options for her to go and find the product, and get an education on what products shall be useful for her. And so I decided to set down the path, and see if I could provide that service myself.

Matthew: You really mention a good point there. I feel like the doctors have become...they're like the... You ever watched watch Star Trek and you ever heard of the Borg? Like, the Borg infects, like, whatever culture it touches, and they become part of the Borg?

Dustin: Sure.

Mattew: I feel like that's what doctors have become to the pharmaceutical industry to the point...now, I don't go to doctors anymore. I just get blood tests done because every time I go in they're just like, " How about this? How about...?" It's like all these drugs. I'm like, "Wait a second. I haven't even told you I have a problem and you're suggesting drugs to me." And I was like...it's like, "What is going on here?" I feel like I'm being peppered by commission-only salespeople.

It's like going to Best Buy or something like, "Get this. Get this. Get this." And, at least, in the United States, it's just a really unfortunate state of affairs that they're always just pushing drugs down you instead of looking for root causes. That's why I'm, kind of, looking more at integrative medicine now, and holistic doctors just because it's become a racket. It's no other way to describe it.

Dustin: You're right and, you know, I think, that during this process, I mean, we sat down with some of her pain management physicians, and had some conversations with them and said, "Look, I think, that this is an unhealthy path to take and, you know, you've been recommending these narcotics to her for quite some time, and she's just following her doctor's orders." And, you know, we're always taught to put faith in our physicians and, you know, kind of follow their direction. But when we told them that this was leading to a bad place, they weren't really willing to give us any alternative options.

And it felt like they just didn't have the knowledge base to do so, and it felt like they also didn't have any financial incentive to do so. So we were, you know, went out looking for something on our own. And they had threatened, you know, some of the doctors she had spoken to, they had threatened to stop giving her narcotics if she was using cannabis, and that was something that was very scary for her because she needed...you know, she felt that she needed those to manage her pain. But she's a brave woman, and, I think, that taking that leap was a difficult move for her, but it has certainly paid off in spades and we're happy to have our mother back.

Matthew: Oh, that's great. That's a good...there's a happy ending to that story. I'm glad you made the effort to, you know, help her try cannabis. So that's good. Now, give us a high-level overview of what's going on in Arizona. I mean, it is a big state geographically, but we just don't hear much about Arizona, especially with Colorado and California overshadowing Arizona to some extent. Can you just give us just an introduction of where it's at, and maybe how it's a little different than some of the other big states?

Dustin: Sure. So Arizona passed our medical law back in 2010. It was implemented in 2012 after some legal challenges put forth by our governor at the time. We currently have, I'd say, approximately 100 or so dispensaries that are operational. We're about 120,000 patient-based population. One of the most, I would consider, well-regulated and well-governed programs as far as medical goes.

We have the department of health services here that's done a great job of implementing the rules and providing oversight, and really allowing the operators in this space to have some confidence that they have some stable footing with which to build their businesses from. So it's a great place to do business. We did have a [inaudible 00:07:14] use measure proposed in 2016 that was not successful. We were the only one in the country that year that didn't get it done, but we're looking forward to some future efforts, and hopefully getting Arizona in line with the movement we're seeing in the rest of the country.

Matthew: Okay. And tell us just at high-level what your brands are Monarch, Huxton, and Omaha Farm, so we can get a general sense of what those are.

Dustin: Sure. So Monarch is our retail dispensary. We're located here in Scottsdale. Opened in in 2013. Just celebrated our four-year anniversary...

Matthew: Congratulations.

Dustin: Thank you. So we've really designed that to be a patient-focused friendly environment where the patients here in Arizona can come in and get a curated selection of products, accompanied by friendly staff that are incredibly knowledgeable. We have a head of patient services that will sit down with folks and, you know, do 45-minute to an hour long consultations about what might be the best path for them when starting on their journeys with cannabis.

Also, all of our sales associates are very well-educated as to the different nuances of the products. Can help guide folks through dosing. We really, you know, wanted to build that on a foundation, again, based around giving folks like my mother, and other folks that might be new to the cannabis world, a good understanding of what products they're getting, and how those products can affect them.

And then we have...all of the licensing here in Arizona is fully vertically integrated. So along with the retail licensing, that license grants you ability to do cultivation, a kitchen facility, as well as manufacturing and distribution. So we have a cultivation facility that we've kind of dubbed the Omaha Farms, and that is where we are producing all of the products that we make and distribute to Monarch as well as to other dispensaries here in the state. We currently produce our own Huxton brand out of that facility.

We are the licensed producer-distributor for Kiva Confections, a great chocolate company that I know that you're familiar with and have had on the show based out of California. And then just recently, also signed a licensing production distribution agreement from Mirth Provisions.

Matthew: Sure. Yeah, exactly. Have that one, too.

Dustin: Yeah, yeah. You sure have. So we're looking to kind of really expand through that facility noble brands in the space that we think that would have a great impact, and provide a great service for the patients here in Arizona.

Matthew: Okay. Wow, you're busy. You got a lot going on.

Dustin: Yeah, sure are, sure are.

Matthew: So how big is your grow for...you Omaha farms grown then? How many square feet it that, roughly?

Dustin: Yeah, so that facility is 20,000 square feet.

Matthew: Twenty thousand.

Dustin: We're, you know, with all of the Huxton products and the flower brand that we're producing out of there, we've, kind of, dedicated a small batch production, so it's not one of the larger facilities here in the state. We've kinda divided that. So we're at about 14,000 feet of canopy. So between our propagation, vegetation, and flower rooms, we're just a little over 14,000 square feet, and then the rest of the facility is dedicated to extraction, kitchen, manufacturing, and distribution.

Matthew: So when you get that license, it's obviously a big cause for celebration, but also where you're like, "Holy cow, there's a lot of stuff I have to learn here with growing, you know, retail, all of these different things." I mean, that's a lot, but it's also you got all the freedom to be successful. Did it seem overwhelming at first?

Dustin: It did, yes. You know, I don't have a retail background. I do not have a green thumb. I'm very capable of killing any live plant that you put in my hands, but, you know, having a good business background, I was a business major at Pepperdine, and having run some small businesses prior to coming into this industry, I think, what has really made us successful is the ability to attract some really smart folks.

You know, we have a really talented team out at Monarch, really talented team out of Omaha. You know, a great mix of chemists and biologists, and folks that are far smarter than me and understand all the logistical operations and requirements that a facility like that entails. A great team here at Adakai, you know, continuing to build iconic cannabis brands, and come up with unique concepts. So, you know, I really just try to stay out of the way, and let our folks do what they do.

Matthew: Did it require going out and raising capital? Was that part of the process of creating Adakai and Monarch and all your brands?

Dustin: Yeah, so, obviously, in order to be successful in this space, you need to be well-capitalized, and I think that that was one of our number one priorities. We wanted to make sure that, you know, we were giving all of our staff, and all of the people that...all the stakeholders in the process, a really good foundation to build from, and a good company to be a part of. So we wanted to make sure that from the get-go, we were well capitalized and, you know, going forward that's something is very important to us.

Matthew: Was it hard on your first few pitches to investors to, you know, answer the questions in a way that, you know, made them happy to invest, or was that a learning curve, or what can you say about it?

Dustin: Yeah, I mean, I think that there is a lot of excitement about this space. You know, right now, I think ,it's a little bit different. I think that folks are a little bit more willing to participate. Back then it was a little bit trickier. You know, there was a bit of a different feel as to where the industry was at. We were still at, you know, in a time period where there were folks in California getting rated.

You know, there was a lot of consternation about where the industry was going, but, I think, that most of those concerns have been alleviated, and, I think, that folks are realizing that while there still is quite a few challenges regarding the space, and regarding a lot of, you know, the luxuries they afforded folks that are engaging in federally legal businesses, there's a ton of excitement too, and I think that people see where this is going and, you know, are really excited about participating in it.

Matthew: Okay. Tell us what you have available at your dispensary, and compared to other states, do you have everything, flowers, edibles, vape pens, concentrates?

Dustin: We do. Yeah, we have a pretty wide array of offerings. So, again, what we've really, kind of, dedicated ourselves to is understanding the brands and the products that we're putting on the shelf, making sure that we're really spending a lot of time with the producers of those brands, understanding their techniques and, you know, basically their theory behind how they're producing those products. But we, you know, we're dedicated to offering the patients of Arizona a wide array of products, so that they can come in and find something that services their specific needs. So flower, vape pen products, concentrates, edibles, drink products, topicals, tinctures, all of the above.

Matthew: Now, you have a kind of an interesting model because you have your own brand, Huxton, your own branded flower, but then you've also partnered with Kiva Confections and Mirth Provisions that makes drinks. And Kiva makes small candies and chocolate, and they both are very strong brands that have very strong product market fit on the West Coast, and what is kind of the thought process there?

It's like, "Hey, they have such a good reputation with people, and they've already done all the hard work. I have my own brands, but I just wanna bring in some other brands, and let them do the heavy lifting of familiarizing themselves with customers they already have the name recognition." What's kind of the thought process there?

Dustin: Yeah, so kinda like you mentioned before with that fully vertically integrated license there, you know, there's an overwhelming number of things that you are able to do. I think that our perspective has been, just because we are able to do them doesn't necessarily mean that we should. And we really wanted to focus our energy and efforts on our Huxton brand, understanding, you know, really the nuance and detail of creating a branded flower and vape pen line.

And really wanted to leave, you know, some of the other opportunities around the table for us up to the folks that had spent a lot of energy and effort, and had already built great foundations for bringing those brands into the space. So it just seemed like kinda natural progression for us to go out instead of trying to build it all from scratch. Find some really great partners and folks that kinda shared our same vision and ethos and, you know, facilitate those brands into the areas on a marketplace. And, I think, that the relationship we've had with Kiva has been fantastic.

Scott Kristi out there, phenomenal folks, and their whole team has been great. So been really excited about what we've done those guys, and what we can continue to do with Kiva here in Arizona, and really looking forward to getting the Mirth products out there. Adam and that team are obviously spectacular, as you know as well. So just really looking forward to continuing to kind of elevate the industry here in Arizona by bringing those noble brands to the state, and getting patients access to them.

Matthew: Now, obviously there's a lot of different tactical things you need to do to run a dispensary, so I just wanna ask, kind of, an off-the-wall question. If you could wave a magic wand to get rid of your biggest problem in running a dispensary, what would you choose?

Dustin: Oh, man, I think, that that's a pretty easy one. I guess I would choose full federal legalization so that we are able to operate a business on the same playing field with, you know, any other retail business in the space. You know, there's a host of challenges, right. So we're super fortunate in the fact that we have a great banking relationship here in Arizona through some other businesses we've run.

We've got some relationships with the local bank here that has taken us through the front door after a long, kind of, inspection and audit period, and that's been fantastic. But, obviously, you know, not being able to take credit cards, and having to operate in an all-cash environment is a little bit tricky. And, I think, that, you know, the biggest challenge that has really caused me consternation in this space is being able to give confidence to your employees.

You know, about stable footing, and really helping them to understand the nuances of the industry, and make sure that they're aware of the risk that they're taking, and that's something we take very seriously. You know, we look around and we got a great team, and a lot of families that we're feeding, and so we just wanna make sure that we're able to stay true to our commitments to those folks.

Matthew: How do you see running a dispensary changing in the next three to five years? Is it gonna be pretty much the same, or with just maybe some different items to offer, customers, or do you see it changing in any fundamental ways?

Dustin: Yeah, I mean, I think, this industry is poised for hyper-growth, hyper change. We are, obviously, you know, right in the middle of shifting sands. There are all kinds of external factors that, I think, could affect how those dispensaries operate and function. You know, the biggest change, I think, you're gonna see is a lot more of the traditional...I shouldn't say traditional, the more common style of retail purchasing, which exists largely online now.

So as the industry advances, I think, you'll see a lot more folks looking for delivery options, availability of products that they can have brought directly to them at their homes. I just see that as, kind of, you know, the next evolution if you're tracking what's going on in just the retail world in general. Obviously, that's where things seem to be heading. So, I think, that will be something that will be a unique challenge if this industry is gonna be dealing with considering, again, the restrictive nature and a lot of the compliance requirements that states are putting in place around the operations of these facilities.

Matthew: Zooming in on Omaha farms and your grow, is there any automation or optimization that you've done over time since you started that has really helped you get a better handle on, you know, just growing well, or maybe more data, or just doing it better than when you started?

Dustin: Sure. Yeah, I think, that as far as the actual cultivation process itself, we've kind off taken a hybrid model of using just some old school techniques, and really then try to combine that with a lot of great data around plant health, genetic performance, understanding cannabinoid, and terpene profile, and been able to identify, you know, genetic drift. But our cultivation team out there is a really talented group.

You know, we started off from the very beginning wanted to be focused on all organic techniques and methodologies. All of our flowers grow naturally. You know, again, we do everything in small batch format. And so we're really, kind of, using I wouldn't say necessarily a lot of modern technology in that cultivation [inaudible 00:21:24] kinda trying to go back to the roots of cannabis cultivation. And, you know, really trying to have our folks looking at those plants, monitoring plant health personally, checking life cycles, checking soil, you know, checking water and nutrient feeds just to make sure that we have educated smart people that are not getting too read upon technology and automation to operate that facility.

But we've also then coupled that with, you know, with some great reporting, some really great data input so that we can go in and look and see which of our genetics are performing well in the marketplace. Trying to schedule out our production cycles. As you probably know, it's not easy to bring new products to market, and especially on the branded flower side. You know, to get a new genetic in, and get it into your system, and see how it performs is a lengthy process. So really trying to do a lot of forecasting and predicting, and really understanding the marketplace and what it looks like.

Matthew: Well, it's a good time to talk about your flower brand and your vape pen brand Huxton. Let's turn to that. Why did you decide to create your own brand there, and why did you choose flower and vape pens to be the thing you wanted to brand?

Dustin: Sure. So we really had a unique opportunity, I think, in running that retail facility at Monarch, and being able to spend some time understanding what the needs of the patients really were here in Arizona, and what folks are really asking for. And the one thing that we identified, and that we started to pick up on was the number one question that folks were asking when they're purchasing flower was, "How is this gonna make me feel?"

They wanted to know if it was gonna give them an uplifting effect, or a relaxing effect and we had just, you know, kind of followed the industry norms of saying whether if it's a sativa, it's gonna give you an uplifting effect, if it's an indica it's gonna give you a mellow and relaxing effect. We wanted to just kinda question that theory and really try to understand if that was true, A, and, B, if the genetics we were producing were really categorized correctly because there's a lot of different names out there.

There's a lot of different websites and resources that can kinda give you an indication of how a genetic is gonna perform or make you feel, but different cultivation practices, different cuts to that particular genetic, all can have a wide range of effect. So what we wanted to do is really understand our products and how they worked. So we spent about a year and a half, did thousands of focus group tests with friends and family that were patients, staff that were patients, some loyal customers at Monarch, and really we're able to get a real good foundation of understanding of how our genetics actually worked.

And so with that information, we then wanted to say, "How do we make the selection of smokable flower vape pens really simple, really unique, and really accessible for folks that may or may not have a good understanding of cannabinoid content and terpene profile?" And a lot of the industry nuances that are a little bit difficult to navigate through if you're not familiar with.

So what we did is we then took all of that information, and we categorized all of our products in three very simple series. So all of our series are designed around whatever your desire vibe is. So we have Arise series that's gonna be a little bit more focused, a little bit more of an energetic feel. We have our High 5 series, which is gonna provide a little bit more of that creative, uplifting euphoric effect, and then we have our Zen series which is, obviously, gonna be more of a mellow, relaxing vibe. And so really wanted to give folks the ability to select a product based on a simple version of how they wanted to feel.

Matthew: Okay. That makes sense. And how do you create a brand experience, or build that brand equity and packaging, and marketing and labeling, and all those things to reinforce the simplicity you're trying to bring forward of experience? How do you do that?

Dustin: Yeah, so that's a great question. I think that that was one of the things that we started with in addition to wanting to provide some consistency and some simplicity in the selection process for folks. We also really wanted to create what we like to call "Experiential Authenticity." So we really wanted to identify with our consumer. We are consumers ourselves. We understand, you know, some of the unique issues that exist and really wanted to build a brand that was devoted to the nuance of the craft.

And so every little detail, you know, we've really tried to think through it as far as putting a book of matches in our preroll tins so that people always have fire. I'm always fumbling for a lighter. Always asking for somebody if they got one, so we thought that, you know, giving folks the ability to always have fire with them was a great call. We sell a circular tin that's...it's an eight to flower, again, it's all based on experience, and we design that around kind of our middle canopy or smaller sized buds.

The industry kind of gravitates to these real large, big flower products, which you then have to go and break up and have a grinder, and have a lot of tools in order to get to a format that's smokable. We wanted to be able to design something for the consumer on the go that was discreet. Folks that were going over to their friend's house, going to a concert, going to be out doing something where they didn't have all that available to them, that they could easily just pinch it out of their pack of vaporizer, pack of one hitter, whatever they were using to consume that product with.

So just really trying to be thoughtful in all of the things that we're doing. We also wanted to design the brand to be discreet, so that folks can, you know, potentially take it with them into situations where they don't necessarily want people to know that they are carrying a cannabis product. So we wanted to provide that little bit of the anonymity, too. And that's why you'll see most of the stuff we do is really, kind of, devoid of anything that would indicate that Huxton is a cannabis brand. And that was intentional to a degree.

Matthew: That makes sense. Now, how important is packaging, and how do you arrive at your polished looking packaging? Is that kind of a journey where you're just trying out different things and looking at different fonts, and how did you do that and how long did it take?

Dustin: Yeah, that took some time. I mean, I think, that, again, we wanted to be incredibly thoughtful in all of the touch points, and all of the details of everything we were doing. And packaging is huge, and a it's a big piece of this industry that, I think, is often overlooked. That is, you know, very often the customer's first interaction with the product is to see it sitting on a shelf, to put it in their hand and get a little bit of a tactile feel for it. And most of the packaging that we had seen out there was pretty basic, and, kind of, pitched to that traditional stereotype.

And what we wanted to do was create a concept that allowed folks to pick up our products, be able to take them home, put them on their coffee table, leave them on their bar, wherever they might store it at, and feel good about, you know, having those products in their home. One of the tag lines we use is "enjoy proudly." We want folks to, you know, to be able to be excited about their cannabis use, and be able to show their products to their friends, and be excited about the way they look and feel.

So that was really important to us, and I think that we were able to find a great, creative agency here, Kitchen Sink Studios, that helped us out with a lot of the design. Like you mentioned, a lot of the font selection, color palettes, brand theming, all that stuff was about a six to eight-month process that we spent working through all the nuance and details. And I would say that just continues to be a process that we're working on. So it's not something that ever ends once we finished it. It's like the Golden Gate Bridge, once you get it painted, you got to start back over and go the other direction.

Matthew: Right. Well, I mean, people probably think about Huxton, and then they say, "Well, I have something in my head when hear that word. And then when I see what it looks like in pictures, is it congruent with what I thought of the name. And then as I experienced the product, are all three things aligned? You know, what I originally pictured what, you know, the packaging kinda says, and then how I experienced the product." So it's tougher than one might think to get those things all dialed in correctly. So I understand what's there.

Dustin: It is. Yeah, it's tricky and it just takes a lot of devotion. It takes a lot of time and energy, and really it just takes a lot of feedback from your consumers. And when we spend a ton of effort and energy on engaging our consumers, understanding what it is that they want, getting feedback from them as to, you know, how Huxton fits into their lifestyle. We're really trying to be a little bit bigger than just a cannabis brand.

We're starting on a really unique set of apparel that will be coming out later this year. Launching some cool accessory items all the way from, you know, just some smoking items that are gonna give folks kind of some assistance in that area, all the way down to home goods like candles that pair well with certain genetics that we're putting out. So just really trying to be thoughtful, and engaging that consumer where they live, understanding all the other different pieces of their lifestyle that we can help support.

Matthew: Now, I've been getting much more of just terpenes this last year and trying to understand them. And, you know, everybody thinks, "Oh, I want the highest THC. The highest THC." And then maybe, " I want some..." then they say, "Well, maybe I want some CABD, too." But they're not really thinking about how the terpenes, you know, really dramatically, dramatically impact their experience. How do you think about terpenes and terpene profile, and the moods that you follow and vape pens evoke?

Dustin: Yeah, so I think that, obviously, incredibly important, right? So we're doing some unique work on the vape pen side. All the products that we release so far are full flower extractions. So we're taking our best flower, putting it through a CO2 extraction process. We like to call it an advanced live resin, so it's a little bit different than from what most folks are doing. It's a slow 24-hour extraction process, 24-hour distillation process, really designed to do nothing other than just reflect that plant in it's purest format in an oil version.

So, again, not adding any terpenes to it. Not adding any PG, any PEG, any MCT. We're really just trying, to kind of, gently pull out that plant as it exists in Mother Nature, and then offer that to our consumer in a vape pen product. And what I think what's that allowed us to do is really capture those terpenes as they exist in the cannabis flower. And, I think, that that's a hugely important piece that we'll start to find out as this industry matures.

Like you mentioned, it's not just about THC, it's about all of those different cannabinoids and components working together. I think that those terpenes play a huge part in that. And I think as the testing side of the business matures and we start to get a little bit more understanding of exactly how that works, we'll really start to find out that, you know, just finding the most potent product out there is not gonna deliver the best experience. It's really trying to find the most rounded, you know, most representative of what this plant looks like in its purest format is the best direction to go.

Matthew: Which of the flowers, Huxton flowers, is the most popular?

Dustin: That's a great question. So we have a couple of genetics, so we do a, kind of, a unique different variety of flower products. So we do the preroll tins, we do our circular tins, and then we also do single origin genetics, still sold by series, but classified by that particular strain. And we have a couple award winners in that particular class, but generally, any thing in our High 5 series has seemed to be really popular. Our Green Crack has been a first time...our first place Earl Cup winner here a couple of years in a row.

Our Durban Poison does really well. But, again, that High 5 series is, kind of, on the top of the list, followed very closely by both our Zen and our Arise series. We're finding that you know folks are starting now to understand that they can use cannabis at different points in the day, or in different settings and use it differently. And so if they're going to a concert, they're doing something that's active, or they're looking to be creative, anything in our High 5 series flower or vape pens is a great fit.

But then those same folks might also be, you know, looking to unwind after a long day, looking to sit on their back patio and take in a sunset, and so anything in our Zen series is a good fit as well. So we're starting to see, kind of, this balance of the three sets as people start to understand how they fit cannabis into their lives.

Matthew: Okay. You're building an interesting, kind of, Swiss Army knife, cannabis Swiss Army knife of businesses, and skill sets under one roof with Adakai. How do you see that, kind of, rounding out, or expanding over the next five years or so?

Dustin: Yeah, that's a great question, too. I mean, again, so much of this industry is still uncertain. I feel like we're just kind of in the infancy of something that's gonna be incredibly impactful going forward. We're really just trying, like you said, to build as many skills, and have as much knowledge as possible. Really have a foundation of understanding for all parts of the industry. Really, you know, the main thing that we're really focused on, and what we've realized is gonna be key for any successful business in this space moving forward, is the power of brand.

You look at any other consumable product, and brand wins hands down time after time. So, I think, that, you know, we're really in a space where a lot of these cultivators and activists, and folks that are fostered this industry and brought it to where it was, you know, folks that I have a ton of respect for, have been disincentivized from letting people know who they were because they were in an environment where, you know, that could get them into some legal trouble.

And as that changes, now, a lot of this folks are starting to be able to come out of the closet and start to put their names on the products they are producing. And, I think, that really, you know, spending a lot of time and focus and energy on crafting that brand, whatever that might be, is gonna be one of the, you know, the biggest keys to our success moving forward.

Matthew: Right, because if there's no brand or there's no other way to have a unique value proposition, then people just compare on price, and then it's a race to the bottom and everybody loses.

Dustin: Certainly. Certainly, and, I think, that, you know, brands exist for a reason, and they allow consumers to make selections based on previous experiences. They provide a level of consistency, and that was the one thing that we saw that was really lacking in the flower space was the ability for consumers to get a consistent experience. You know, Huxton was the first flower brand here in Arizona that could be bought in multiple locations.

You've seen a lot of folks now doing that across the country, and, I think, as we move, kind of, from this model of bulk wholesale to retails, then repackage that flower under their retail name and move more towards brands, I think, that the consumer just becomes more aware of who is behind these products. They're able to make qualified selective decisions on the products that they're purchasing. And, ultimately, I think, that that just really, you know, raises the tide here across the industry.

Matthew: So you said you just celebrated your fourth anniversary, I think you said. So if you could go back four years and give some candid advise four-year younger Dustin, what would you say to him, so he could thrive and get through this with minimal stress?

Dustin: Yeah, great question. You know, I think, that if I could have gone back and done it all over again, I think, the only thing I would have told myself was, "Get started sooner and hustle harder." You know, it's been an incredible journey. I can't really describe what it's like to be on the forefront of an industry that has so much opportunity, is emerging, you know, kind of, out of this haze, and really starting to change minds, and really people are starting to understand what cannabis can do, and how much social impact it can create. And, I think, that if I can go back four years ago, I would tell myself to start six years before.

Matthew: Gosh, you know, everybody I've met from Pepperdine is always, like...I don't know if I would have left Pepperdine. You have a beautiful campus there in Southern California, the ocean, and it's just, you know, it makes me think about that movie "Old School." Like, if I went to Pepperdine, I might just like find a way to stay there and be, like, a 40-year-old college student somehow.

Dustin: Yeah, yeah, I made the big mistake of leaving right after I was finished, and that would be the other thing I probably would do is go back and challenge that decision.

Matthew: Well, let's put there just some personal development questions. Is there a book that has had a big impact on your life or way of thinking that you'd like to share with listeners?

Dustin: Yeah, absolutely. I mean, I'm a big reader, you know, I have been most of my life. The one that I picked up recently that I would recommend to anybody is a book called "Extreme Ownership." And it's a book written by two ex-navy seals, and taking a lot of lessons that they've learned in their deployments, and applying them to business. Really, just a great, kind of, central theme about understanding that there's a lot of things that can happen to you in life, and a lot of things that can be put, you know, on your plate.

You can't control external circumstances, but you can control yourself. You can control how you react to them. And at the end of the day, you know, your destiny is really in your own hands. So I thought that there was just some really great lessons and some super interesting stories from those guys. So I would highly recommend picking that one up.

Matthew: Is there anything that you picked from that book that you turned around and implemented into your business and you'd like to share, like, one bullet point?

Dustin: Yeah, you know, I think that really what we've done is just try to impart that same belief on all of our staff. I think that if you can build a culture where everybody, you know, is you know, slow to point fingers at external circumstances that are causing difficulty and willing to take a look in a mirror and say, "What can I do to affect this?"

I think that you know that just creates a really strong bond and, you know, a unique foundation for creating a successful company. So just really try to encourage everybody, you know, in our organization to constantly be challenging themselves, constantly be challenging me, constantly be challenging each other, and really, you know, take on that idea of extreme ownership and saying, you know, "This is our future to build. Let's get after it."

Matthew: I've coined a term that I call "The MacGyver Quotient," and that is how do you solve that you don't know how to solve. And that's what I call "The MacGyver Quotient." Like, how are you gonna do something you don't know how to do? Like, you just have to figure it out. You know, I didn't know how to start a podcast. I didn't know anybody in the cannabis business when I started this. Just like how are you gonna do this? You know, you gotta develop, you gotta nurture and get some kindling out, and just kind of start your MacGyver Quotient until it turns into a raging fire. And I don't know if you remember that show "MacGyver"? But...

Dustin: Oh, loved it.

Matthew: Yeah, he's always thrown into this situations, and he's got like a fishing hook, some dental floss, and a contact lens and he has to, like, disable a nuclear bomb with just that. He's like, "What do I..." but he just figures it out, like, at the last second and makes it happen. But he's not saying, like, "Well, I have to wait for someone that tells me how to do this." You know, he's always just figuring it out as he goes. And sometimes it's messy, but that's okay. You know, you can clean up the finer details later.

Dustin: No doubt. I think that, you know, in addition to all those tools, he had a pretty incredible mullet that really helped him.

Matthew: He did. And I, you know, I've come to realize...I've been educated that there's more than just one kind of mullet haircut. There's the Kentucky waterfall. There's the ape drape, and there's a few others. It's not just one. It's a broad category of mullets, so you can Google different mullet types if you got to learn about that. My favorite is the ape drape, but we'll move on.

Dustin: Yeah, sounds like the rest of my morning is all set. I'm gonna be taking a look.

Matthew: Is there a tool, web-based or otherwise, that you consider vital to your productivity that you'd like to share?

Dustin: Sure. Yeah, I mean, you mentioned books and, you know, being as busy as I am and doing as much as we're doing, I really don't have time to read anymore, so I really appreciated the Audible app. I've been using that a lot to be able to listen to books while I'm, you know, finding some time to get to the gym, or driving in my car, you know, have a couple of minutes to kinda wind down. That's been great.

The other tool that I've really appreciated is the Headspace app. And, again, I think, that we're all busy, and we got a lot going on at work. And everybody is, you know, trying to build something unique, and we're all kinda running pretty hard but, you know, I like to try to make sure I'm framing my perspective in a way that is creating an abundance of wealth. And that, you know, includes being able to come home, and, kind of, turn my head off and focus on my family.

And I got a three-year-old and a one-year-old daughter that command a lot of attention. So just trying to make sure that I'm focused, and present when I'm around them. And that Headspace app, you know, doing little 10-minute meditations before I walk into the door are really useful to allowing you to, kind of, shut off all that clutter, and all that noise that is in the back of your mind. So I really appreciated that one as well.

Matthew: And just released this week, the founder of Digg, Kevin Rose, who's also a big Silicon Valley investor, released an app called "Oak Meditation" that's only available on iPhone, but I think android is coming soon. And it's very similar to Headspace but free. So for people that don't wanna spend, what, over $3 month that is for Headspace, he just did that as kind of a public service because he's gotten so much out of meditation.

As you mentioned, a lot of the benefits that you just went through. So that's another one I'd like to through out there. I'm glad you put that out there. The guy from Headspace is a very soothing English accent as he gets you to visualize all these different things makes meditation very accessible, so I totally agree with that one.

Dustin: Yeah, absolutely.

Matthew: Well, as we close, Dustin, tell listeners how they can engage with you, follow your brand on Instagram, find your website, and come to your dispensary?

Dustin: Absolutely. Yeah, we're Huxtons on Instagram. We're @HuxtonUSA. You find us on the web at huxtonusa.com. Monarch, again, on the web at monarchaz.org, and we're here opened seven days a week in Scottsdale, Arizona. For all of our local folks listening, we'd love to have you come through. I think that, you know, we're excited about continuing to build those brands, and carry them into the future, and looking forward to continuing the hustle.

Matthew: Well, Dustin, thank you so much for coming on, and sharing your journey with us. We really appreciate it and good luck to you.

Dustin: Thank you. Thanks so much for having me.

Expert Grower Explains how To Get 3 LBS of Cannabis Per Light – Josh Haupt

josh haupt three a light cannabis

Ever wonder how to consistent get 3+ pounds of cannabis per light?Our guest today Josh Haupt from Three A Light will tell you how to do just that in an easy step-by-step way.

Learn how to successfully grow three pounds of cannabis a light with Josh’s book Three a Light

Key Takeaways:
[0:57] – What is Three a Light
[1:34] – Josh’s background
[2:20] – Josh talks about using cannabis for his epilepsy
[4:16] – Josh talks about his book
[7:23] – Different lighting used in grows
[10:50] – How to find Josh’s book
[11:33] – Josh talks about his harvests
[13:17] – Josh talks about creating his own nutrients
[15:28] – Delivery method for nutrients
[16:00] – What is Nutrient Lock
[17:21] – What is Schwazzing
[19:11] – Creating clones
[20:40] – Preventing hot spots in your grows
[21:55] – Josh talks about things he sees when consulting
[23:27] – Josh talks about greenhouses
[25:02] – Pests and diseases
[27:30] – Josh discusses the ideal growing media
[30:22] – Josh answers some personal development questions
[33:56] – Josh talks about the future of the cannabis industry
[37:07] – Josh’s contact details

 

Read Full Transcript

How can you get the highest yield per light? That is the eternal question. Josh Haupt from "Three A Light" is gonna help us answer this question today, and also give us some insights around growing. Josh, welcome to "Canna Insider."

Josh: Thanks for having me. Nice to be here.

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

Josh: So today, I am in Denver, Colorado, which is nice; this is my home. I've been traveling a bunch lately. I feel like I've been in about four time zones in the past two weeks, so it feels good to be home..

Matthew: Good. And what is "Three A Light"? Give people a background if they've never heard of it.

Josh: "Three A Light" is a simple approach to achieving your highest yields in your garden, as well as really just teaching individuals how to grow cannabis from A to Z. All the way from your cloning through your finished harvest, and how your environment plays a role in there. Try and make it very user-friendly and easy for someone to grow cannabis.

Matthew: And you've done a great job of that. We'll get into your book. You sent me a beautiful book about that, and I want to get into the details. But first, tell us how you got into this business. What's your background, and what sparked the interest in growing cannabis and teaching how to grow cannabis?

Josh: You know, I would say more of a personal touch there would be my epilepsy. At the age of 14, I got diagnosed with epilepsy, and that caused me to go on a handful of different medications that they had me on. And by "they," I mean the doctors. They were really trying to control my seizures with one steroid or the other. And a lot of them just were insufficient and had a ton of crazy side effects. And then a good friend of mine introduced to me that "Colorado now has it legal for people that have conditions like yours, Josh. You should give it a try."

And kind of the rest is history. It was the only one that worked well, and it's...yeah, it's been great since.

Matthew: So did you start smoking it or ingesting it, or oil? What was the best remedy for you?

Josh: Well, the best remedy for me, after all these years, is hands down gonna be CBDs. But at the beginning, with just cannabis, you know, smoking it the same way most kids do in high school, you know, rolling joints or hitting the water pipe...metaphor...if you will. So...

Matthew: That's cool. Well, that's great. What did your parents and doctors think of that when you said, "Hey, I'm gonna turn to marijuana as the solution here"?

Josh: Well, my parents are kind of open-minded. So they were a little bit like, "Hey, if it works for him, and it keeps the stress out," and stress is so closely tied to seizures as well, that that was something that they were kind of...they understood. I don't think they were an "advocate," I would say, but they understood. And then as long as I kept a good balance around it and I wasn't just, you know, smoking weed to smoke weed...you know, as most high schoolers may do.

And then my doctor, even to this day, thinks that I'm crazy.

Matthew: Really?

Josh: He thinks he's like...I would say my neurologist is very much a...he's an elderly gentleman. He's very much a western medicine kind of individual. So when something like this is proposed, it has little to no funding behind the research of it. He's very hesitant to make suggestions on it. So I had to find a different doctor to make the recommendation for me to grow cannabis and consume cannabis.

Matthew: Interesting.

Josh: Yeah.

Matthew: So let's get into the book. You sent me this book...it's a $500 book, and it's huge, it's beautiful. It comes in, like, a very interesting textured case and it's got a great tactile sensation, very immersive experience. And it just does a great job of, you know, orienting someone how to grow cannabis in these huge pictures, and it makes it very simple. Why did you write this?

Josh: Thank you.

Matthew: What problem were you trying to solve, and how did it come to you to do it this way?

Josh: You know, after many years of growing cannabis myself, I had a lot of friends living up in the mountains, and I lived in Breckenridge for almost a decade of my life, that wanted to get into the industry. And they weren't sure how, so they kind of built a small garden for themselves in their basement or what have you. And they would ask me, "Josh," you know, "What's the best way to do this?" And I would make a couple different suggestions for books and say, "Hey, make sure you read this section out of this book, and then pick up this article from this website. And you're pretty much gonna be good to go," and then I would give them a feed regimen of what to feed their plants along the way.

And so, basically, nothing existed. There was almost a hole in the boat as far as the industry is concerned with a book that says, "This is how you grow cannabis from A to Z." And honestly, after setting my tenth or twelfth friend up at their home with how to grow, I said, "Let's just write a book about this." And the book came from that.

Matthew: Okay. Very interesting. Okay. Breckenridge is a great place, by the way. I encourage everybody to visit there, it's really fun. All seasons--summer, winter, everything.

Josh: Yeah. Love Breck.

Matthew: Okay. So that's...you kind of scratched the itch of your friends that were trying to start their own grows, and they just couldn't quite get a few things right or a lot of things right.

Josh: Yeah, it was that, but it was really the fact that this didn't exist. Before "Three A Light" came out, there's not a book you can go pick up that says, "This is how you grow cannabis from A to Z," and truly walks you through without a bunch of botanist language in it. You know, the cloning process, the transplant process. And then, "What do I feed my plants throughout these different processes all the way through flowering?" "How do I know when my plants are ready to flip to flower?" "What temperatures do I run my room at during flower, during the day, during the night?" and so on and so forth with all the different environments.

Matthew: Okay. How long did it take you, personally, to get all those mental models in your head correctly before you kind of reached this Jedi status?

Josh: Actually, the practice side of it, I'd say definitely a decade-plus, before we really started getting that down. And you know, I think most of our lessons in life are taught through our losses or things that we do wrong. We typically can learn how to do them right based off of our own mistakes. And this is one of them that's no different. I definitely did not start out growing three pounds per light by any means. I started off, you know, with the one, then it slowly crept up to three over the years.

And it's very nice having people to purchase the book and say, "This is the first grow I've ever done," and "Wow, Josh. We hit over three pounds per light. Thank you so much." It definitely always makes me feel good inside to know that, you know, there are people that can take advantage of these different methods, so...

Matthew: Well, I mean, one of the first questions I'm sure people are thinking is "What kind of lights do you use?" And that's one variable, obviously, but it's an important one. Can you talk about lights a little bit?

Josh: Of course. And do keep in mind that the industry is ever-changing, as you know, with...for example, the Moore's Law behind the technology is it's always doubling itself every year-plus. And so, my suggestion there is whatever we discuss today, please keep your mind open and always try new things. We do a lot of research and development behind LED lights right now. However, they are not winning the war...or the battle, I should say, against high-pressure sodium bulbs. However, we're doing everything we can to try and find a way to reduce our footprint when it comes to our energy consumption at our facilities. So we do a lot of different testing.

But our main source of lighting is a high-pressure sodium bulb, a dual-ended fixture on it so it produces an additional arc, and that's the light that we use.

Matthew: Okay. What do you think, in your mind, is the reason why LEDs aren't there yet, and why do you like the HPS bulbs versus the LEDs?

Josh: You know, high-pressure sodium just mimics the sun so well. Whenever I try and tweak things within our garden or really just say, "Is this gonna work?" I always look back to nature. Because if you think about this, a thousand years ago, cannabis grew like weed everywhere. And you have indicas that are very short and stout, and those grew up in higher mountain regions with much shorter summers and shorter seasons. And then you have sativas that are gonna be obviously incredibly tall and long. And those were grown in nature close to the equatorial belt where they had very long seasons.

And so, I always...you know, coming back to the lights, it's one of those things where "What did they grow under back in the day, and what can mimic the sun in the closest manner?" And that would be high-pressure sodium because it puts out so much orange, red, yellow rays. And then you have an LED that really doesn't complement the sun as much. It does complement things on a micro-mole level. But without getting too high-tech there, the overall picture of it is it's a very intense blue/purple/pink light that doesn't put off as much yellow and orange rays. And that's gonna be the main differentiator there. The plant's not used to being grown under it.

Matthew: Okay. And so, for someone that just wants to have one light in a home grow, is it okay to have an LED, or do you recommend any kind of specific light for them that you think would be ideal for someone that just wants, you know, that three pounds of light for just one light?

Josh: Yeah, if you want three pounds of light, I'm gonna just recommend following our process to the letter, and that's gonna be with the high-pressure sodium bulb, typically 1,000-watt or stronger. Because if you get a dual-ended bulb, you can push them up to 1,150 watts. But I would just recommend that just get a high-pressure sodium bulb and make sure you have the ability to cool it properly. Because otherwise, if you put it in a closet or something, it's going to produce a lot of heat. You want to be able to remove that heat between the bulb and the top of the plant so it doesn't create a hot spot and kind of burn your plant.

Matthew: Yeah. How do most people find this book? It's an incredible book. Like I said, it's huge, it's beautifully laid out, it's extremely immersive, and it's very clear on how to grow. It can really walk anybody through how to grow. But how do your customers find you? Is it all just word of mouth at this point, or how does that work?

Josh: No, I mean, you can find us a couple different manners. You can find us on Amazon. You can also find us on our website at threealight.com. But soon, you'll be able to find us at Barnes & Noble. We're working on a version that can be sold paperback and on the shelves of many Barnes & Nobles is our goal. We're definitely a few months away from that.

So for now, I would suggest our website at threealight.com, which is just all one word. T-H-R-E-E-A-L-I-G-H-T.com.

Matthew: Okay. Now, you were using nutrients before. Actually, before I talk about nutrients, how much are you harvesting each month, right now, to give people a sense of scale of what you're doing?

Josh: Our growers in Colorado are essentially the...we produce a little over a half a metric ton a month, anywhere between 1,200 and 1,400 pounds. We will produce anywhere from 100 to 150 pounds every two days to equate to that number. It really just depends on which room we're harvesting between our three facilities here in Denver.

Matthew: Okay. Are you doing hand trimming here? Do you have trimming machines? Is it a combination of both? I mean, that's a lot of volume.

Josh: Yes, it is a combination of both. Great question. We will do...a lot of times, we'll go ahead and run a trimmer...a twister trimmer machine that allows us to get through our large volumes. And then we'll also have a boutique section where we'll hand-trim things as we have certain clients that specifically request hand-trimmed product, and they're willing to pay the extra premium for it. We're happy to do that for them. Although between you and I, I can't really tell the difference between the two products unless you have a microscope. The twisters do a pretty good job at not damaging the tri-comb development, so it works out well.

Matthew: Yeah. Also, it's like...you get...I've been to trimming parties and stuff, and you're trimming, and it's just...you kind of go into a daze after a while. It's just like...I don't know how people do that for eight hours a day or whatever. That's hard.

Josh: Amen to that. Yeah, it definitely can be...like your eyes can kind of start to glaze over would be the easiest way to put it, you know? But yes, people can put in the long hours, and I always tip my hat to them, as it's not easy.

Matthew: So you were using nutrients before, and then you brought in an agricultural chemist to create your own line. Can you tell us more about, you know, what you were doing before, why it was unsatisfactory to you, and then how you started to create your own nutrients?

Josh: Yeah. So the nutrients we would use before, we didn't follow the application directions on the bottle simply because it wasn't built for cannabis, so why would I? I would really listen to the plants and how the plants responded to the feeds we would give them. And with that, when we were writing our book and I was going to...I was writing the book, I was going to introduce this to our feed line, and teach people how to endorse these nutrients and really run with it, I brought in an agricultural chemist just to say "What they claim is in these nutrients, is that accurate?"

So we backtracked everything and we found that they were actually packed full of food coloring. In addition to that, they had an overwhelming amount of preservatives. And then, to kind of put the icing on the cake, the majority of the nutrients we were using were only what they claimed was in there was actually only about 40% in some cases, and 60% in most cases of what was in there.

Matthew: Oh, snap. This probably made you mad, I would imagine.

Josh: Yes, sir. So I was like, "Wow. I can't endorse these products." So we went ahead and built our own without food coloring, and throughout the process, focused heavily on micronutrients. There's two types of nutrients when it comes to cannabis...or it comes to just agricultural, in general. And that's gonna be your micronutrients and your macronutrients.

Typical agriculture will always...[inaudible 00:14:40] especially, will always focus on your macronutrients. Which is going to be your nitrogen, phosphorus, and potassium. Without paying a ton of mind to your micronutrients. We kind of flipped that with our nutrient line, and we placed a large emphasis on our micronutrients rather than our macronutrients. That's where we could really...because when it comes to growing cannabis...they say in most things, you know, "The devil's in the details." It's no different with cannabis. You really want to make sure that what you're feeding them is what they need throughout the process. And if you can make the most out of each of flowering or each phase of development in growth, you can really capitalize on your yields and harvest.

Matthew: Okay. At the commercial scale that you're doing now, how do you deliver nutrients? Is it through a feed line, or how does that work?

Josh: You know, we still actually hand-mix all of our reservoirs, and we will hand-water all of our plants. That is the one part that we haven't fully automated. Now, I had mentioned before we do a lot of research and development. So we are working towards finding a process in the automated feed line that works well. However, it's a work in progress. It's not something that I haven't fully made the switch over to yet.

Matthew: Okay. Could you tell us what nutrient lock is, and how you deal with that and prevent it?

Josh: Yeah, nutrient lock is where a plant will...you're essentially feeding it too much food and it doesn't know how to process all the food that you're giving it. Very similar to an individual or, you know, one of us eating too much food, and you know, you're not able to flush your body properly.

So the best way to get rid of that is going to be to use heavy amounts of water as well as little, little amount of nutrient to act as almost a cleaning agent. So we use a product called Sugar. It has a high amount of sulfur in it that acts as a cleaning agent with it, and it works very well. It's similar to...if you've ever used a water pipe before and then you had to clean your water pipe. If you had to clean your water pipe or your bong with rubbing alcohol...I don't know if you've ever done that.

Matthew: Sure.

Josh: And if you used just rubbing alcohol, it won't work, but as soon as you add salt, salt acts as your cleaning agent and it cleans it up right away. So people that just try and flush with straight water to remove nutrient lock, which is basically a heavy amount of magnesium built up in the roots or calcium, it won't actually remove it. You use a cleaning agent, then all of a sudden, it will flush it right off.

Matthew: Okay. And what is "schwazzing"? You made up a word, "schwaz." Let's explain to that to listeners what that means...

Josh: Yes, absolutely.

Matthew: ...besides it being fun to say?

Josh: Yeah, so we've gotten a lot of questions about our schwazzing process and how that works. Schwazzing is going to be...it's an extreme, extreme method of defoliation. Defoliation is where you will just remove the leaves from the plant, but you do a little bit here and a little bit there. Schwazzing is where on day one of flower, you actually take the plant and make it look like a cactus. You remove every single fan leaf from the plant. And people are very, very hesitant to do this, and especially follow it to the letter with this process.

The "why" behind it is it allows for optimum light penetration throughout the entire canopy. So that way, you don't have small buds that are shaded the entire time. The light can penetrate through the entire canopy as well as the plant can refocus its energy to where it matters most, and that is in developing new bud sites.

Matthew: Yeah, I can see where that makes people nervous. They're growing their plants, it looks beautiful, and then, like, "Now, take all the leaves off," and it's, "No, I want to do this." Like, against every instinct to do that. But you say do it and you'll have a healthier plant...

Josh: Yes, sir.

Matthew: ...but how long does it take before that happens? Like, you've cut off all the fan leaves. How long before it starts to look healthy again?

Josh: It'll go through a day of shock. Just like you or I, it'll say we've been riding the couch for a few months, then we jump back in the gym and we hit a hard workout. It's one of those things where your body's gonna get beat up the next day, but overall, a little bit of stress will definitely strengthen you.

And then, as your genetics get used to the process, just like your body gets used to the gym process, they respond much and much quicker as generations, you know, proceed.

Matthew: Okay.

Josh: So they bounce back pretty quick now, that's for sure.

Matthew: So when you're creating clones for a mother plant, do you see fatigue from the mother plant over time, and how do you deal with that?

Josh: We do. We actually...because of that, we do not keep mother plants. We go buy...you'll hear me use a lot of analogies and revert back to nature with what works best. But I think...and this is my personal opinion, that our genetics develop exponentially over the years. They get stronger and stronger. And so, we take clones from teenage plants, and by "teenage plants," I mean plants that are developed and just about ready to flip and to flower. We'll take clones from those plants. Just because they're much younger, we'll identify the phenotypes that we like. So by "phenotype" I mean...it could be the same strain. You could have two plants that are both OG Kush. And if they're right next to each other just like, you know, maybe...do you have a brother or sister?

Matthew: Yes.

Josh: Okay, so you have a brother or a sister. You guys both have the same last name, which means you're from the same gene pool and everything. But you guys are both incredibly different. Unless it's a twin or identical twin, you're incredibly different.

So that's why we always choose to pick our favorite phenotype, because they both might be OG Kush, or one might portray a much stronger [inaudible 00:20:19] than the one next to it. And it allows us to always keep our genetics on their toes.

Matthew: Do you ever get hot spots in your grows, and how you prevent those? Because even within one grow room, there's little microclimates sometimes, and there's spots where maybe air is not being pushed around, or it's a little hotter than some places. How do you deal with that?

Josh: You know, we do get that, especially in a commercial facility. As these grows get from...they used to be one-light rooms, then they turned into four-light rooms, and now there's...gosh, I have a grow in Nevada that's got over 400 lights in one room, which turns into a hot spot nightmare for me.

What we do to stay on top of that is to make sure that the air flow is most prominent between the bottoms of the bulbs and the tops of the plants. What I mean by that is we'll just add as many fans as necessary to make sure that there are no spots where the air is not moving.

As you know...you may or may not know, a leaf of a plant will use all the air around it within every 90 seconds. So it'll breathe all the air around it. So if that air's not moving, that plant essentially will struggle with breathing. And so, we want to make sure that the air is always flowing, and not in an aggressive manner, but in a manner the plant can feel it.

Matthew: Okay.

Josh: It's a nice breeze.

Matthew: Okay. And you're a consultant helping other growers around the world. Is there any problems you see consistently or knowledge caps where new growers, new cultivators are just...they just don't see something and you have to add an additional lens to their knowledge to help them? Anything you see over and over?

Josh: Yes, of course. Of course. Now, I would suggest the largest one is going to be the standard operating procedures that are required to run a large-scale facility. A lot of times, you have people entering the industry where they think because they got a license, it's a license to print money. It's quite the opposite; it's a license to lose money.

Matthew: Yes.

Josh: Because most people don't understand that, you know, if you take traditional business...for a quick moment, let's step aside. Traditional business, if you pump a bunch of money into something, there's a strong chance it's going to be successful. Whether it's a whole chain of restaurants or whether that's a software business, you can make it very successful. Cannabis is quite the contrary. Now, they want to hire their...let's say now you have a large investor stepping into cannabis. He wants to hire his buddy that he's always purchased product from because his buddy grows the best stuff in his four lights in his basement. The problem is now, he's given his buddy 1,000 lights to manage. And when you run four lights in your basement, as you know, you can be the gentleman that handles everything. You can be the gardener that transplants waters and schwazzes and does everything.

But when you have a large-scale facility, you have to rely on standard operating procedures for every single spoke of the wheel. And a lot of times, you'll have gaps in that. That's where we step in and help people on a consulting level to make sure that their facility is run efficiently out the gate so they don't have a license to lose money. Instead, we can ensure that they have a license to print money through our consulting services.

Matthew: Do you see anything interesting happening with greenhouses? How do you feel about greenhouses, in general?

Josh: We love greenhouses. Honestly, it's one of those things where that's...in a lot of ways, will be the future of cannabis as well as, you know, indoor. Between the two of them, you're just gonna have a little bit of a quality difference when it comes to greenhouse. More often than not when you have commercial grow facilities, especially greenhouses, it will take up just a small point off the quality. Of course, it will reduce your cost per pound as far as production is concerned. So a lot of people like it for that reason. But that's why we stick to indoor. But we are definitely are working like that Paraguay grower I had mentioned before this. We're working with a grow down in Paraguay in a 100,000-square foot greenhouse. They're gonna have top-shelf quality, and we're gonna do everything we can to control the environment to the letter, if possible. Our humidity, temperatures, our lights. We want to make sure that it's almost like a hybrid version of indoor.

Matthew: Yeah. I suppose blacking out the sun is extremely important in that situation to make the plants think it's nighttime here and there when they're supposed to...you have one little sliver of light getting in, it can screw up everything, I imagine.

Josh: It sure can, yep. You don't want to interrupt the photoperiod. Interrupting the photoperiod can always cause hermaphroditism. And by that, I mean the plant will just push out seeds because it's confusing. And nobody wants seeds of the product, you know, that...

Matthew: Right.

Josh: Yeah.

Matthew: And what about pests and diseases? What are the most common reasons you see pests and diseases coming up for new growers or even experienced growers?

Josh: You know, there's one or two there. One is if you get a strain from someone that you're not too familiar with, or someone that might not have the cleanest grow, a lot of times, it can bring over a disease that is systemic, which means it lives within the plant, and it probably won't come out until the flowering phase or something along...or a late veg phase.

The other one is you can just honestly have a mite that just kind of hops on and catches a ride to the next facility. Whether it comes in through your dog because you brought your dog in your grow, or it comes in through someone else who was at a dirty grow earlier that day. It just really comes down to your operating procedures...and veg, especially.

What we do is we try and build the plant's immunity in veg to where it's so strong that it repels any kind of systemic thing, similar to how someone that has a strong immune system from working out all the time or just being in great shape overall is a much less likely host for a flu virus as opposed to an elderly individual that might not have the best health. It'll cling to one of the weaker genetics in the room the same way that a flu virus will work through us.

And so, the pests are the same way. The pests will go towards a stressed plant in a heartbeat because it doesn't have the ability to ward it off. I don't know if you know, but THC in nature is designed to...the plant's immune system, it pushes it out to ward off pests. So the pests eat the plant...oh my gosh, I think the pest just got stoned. It doesn't want to eat that plant anymore. That's how it works in nature.

So your garden's no different. It will always go towards the most stressed plant which wil carry the least amount of THC.

Matthew: That's interesting. I didn't realize that. What does it say about humans, that we don't feel...we want to go back to that THC over and over again.

Josh: I think, honestly, it's just...we're obviously...we out-size pests by the millionth, if you will. And so, for us, we're large enough to be able to handle it. And I think it turns into a nice buzz if you can manage your buzz properly.

Matthew: Right. That's be a great name for a band, "Manage Your Buzz."

Josh: Yeah, "Buzz Management." My dad always says that. It's like, "Oh, buddy. We've got a long day today." I'm like, "I know. I know."

Matthew: This is a marathon, not a sprint.

Josh: Exactly.

Matthew: Got to manage this.

Josh: Yes.

Matthew: Okay. Well, tell us about soil or hydroponics. What are your thoughts around that? I mean, what's the ideal growing media?

Josh: You know, once again, I'm gonna revert back to nature on this one. For millions of years, the cannabis plant has been grown in soil. I think that you can do what you can to possibly complement Mother Nature, but it's hard to beat Mother Nature. And so, what I say by that is it's never been grown in water, just water, for millions of years. Now, I think you can do a good job...and I've grown hydroponically for years, and overall, consistency is just too...there's too many variables of things that can go wrong. So I choose to not endorse it on a commercial level. However, I do know hydroponic growers that have no problem doing all the maintenance required to have a hydroponic grow.

Now, soil, on another level, acts an amazing buffer. Let's say you have an AC unit go out in your room and the temperature spikes to 95 degrees. Well, the soil will act as an amazing buffer to the root temperature. It won't increase the temperature of the roots enough to where it's gonna kill the plant.

Now, water will be quickly manipulated as far as the temperature is concerned. And my biggest thing is if you ever have a pump go out...let's say you have a $5 pump go out, and of course, you're smart enough to have a redundant pump behind it to where if this pump fails, this next pump will kick in. But if that second $5 pump went out, I could lose a $250,000 crop because of that. And obviously, the math doesn't equate for me; I like the consistency the soil provides. So I'm a big fan of soil in that nature.

Matthew: Yeah. That's a good point. I've got to think about that. So you mentioned that you, you know, you're always testing things and doing research and development. Is there anything in your operating procedures that you'd like to share, that you're proud of in terms of how to...you know, how to grow at scale, and how to manage it efficiently?

Josh: Yeah, I think that one of the biggest things that...when it comes to growing efficiently on a large scale is just going to be...I'm gonna give you the simplest answer and that is lean into your calendars. Have a very, very solid strucure around when your plants need to be fed next and guidelines around checking on them. If you can check on your plants constantly and you can be on the room and not rely on some robot system to make sure that everything is done, I believe in a lot of ways growing is where science meets art. And so, you can have some science applied to it, but you have to make sure that there's someone in there that's being an artist.

And so, when it comes to commercial facilities, just make sure that you have a very close pulse on your calendar with your daily projects and things to get done.

Matthew: Okay. Good point. Josh, I want to pivot to some personal development questions to help listeners understand more about you, personally. With that, is there a book that you've read...it doesn't have to be related to cannabis or anything like that, that has had a big impact on your life or your way of thinking?

Josh: You know, I think the biggest thing that...and I'm gonna kind of pivot from that. What's important to understand is there's no substitution for hard work in this world. And if you want something in this life, you need to go out and get it. And if that's even "I want to be a professional baseball player," well, make sure that you're working so hard and doing everything...you know, look at the guys that are playing pro ball. And how hard did they have to work to get there? And make sure you're on path with that.

And so, growing up, my father was always very heavy on me with balance. "Buddy, if you're gonna play hard, you need to work ten times harder." And those are the thing that got me to where I am. It's one of those situations where I wanted to share my story with the world as far as how cannabis has helped me beat my epilepsy and all the amazing things behind it, as well as...now, we've helped tons of people with everything from PTSD to Crohn's disease, to full-blown cancer remission. We've had a lot of amazing stories. And that's what the hard work has allowed us to achieve now.

So if you want to get into cannabis, and you want to be on a level that is just the best at whatever it is that you like to do, just put in the hours. Work hard. And look at the people that are currently doing what you would like to do. Look at their routine. A lot of times, success can be found in the daily routine. So if you're someone that gets up early, works really hard, and maybe...you know, I rely heavily on my workout. I really appreciate a good CrossFit workout at the beginning of my days, and then it's just hard work throughout the day. And literally, you know...especially when a lot of times people can think "This is a daunting task to achieve this goal of mine," well, the onl way to eat an elephant is one bite at a time, so it's important to get started.

Matthew: Great points. Great points. And the only thing I would add to that is, you know, working hard is great as long as you're pointed in the right direction.

Josh: Yes.

Matthew: So, you know, if you good have mentors or a good knowledge base...I think your book is an excellent resource for that. Because if you're spending all this money, you're trying to get into it, you know, invest the money in the knowledge. People just think, "Well, if I get the best equipment, then I'm good to go." And that's like going out to the Atlantic without any measurement tools or any GPS. You're just gonna...you're gonna get out there, but you're not gonna get where you want to go.

Josh: That is very accurate. I bought the best sailboat. I don't know how to use it, but this is an awesome boat. You know, you might be lost at sea before you know it. So be careful doing that.

Matthew: Well, speaking of tools, is there a tool that you consider vital to your productivity that you'd like to share?

Josh: You know, if I had to put it on something, it would be our iPonic system. Our iPonic system allows us to know what's happening in our rooms when we are not in our rooms. So we have an AM and PM checklist throughout our facilities where we walk into every single room. And when we pull a graph...we cannot do it through our host system, but we'll pull a graph of every single room for our highest and lowest temperatures for the prior 24 hours, as well as our highest and lowest humidities, our light intensity, and everything. And we really like to make sure that our rooms are doing well when we're not in them. So that's got to be one of my favorite tools, the iPonic.

Matthew: IPonics, okay. Now, you're a young guy, still, and you're really experienced in this industry.

Josh: Oh, thanks.

Matthew: I was gonna say, you know, where's this industry gonna be in five or ten years. But you're gonna be around in this industry for decades if you still want to be. Where do you think it's going? What is it gonna look like in five, ten years and beyond?

Josh: You know, I appreciate the compliment, and I was in New York this past week for a big stock trader event where these gentlemen with these big hedge funds were asking me where to put their money. And they kept on asking me because they said I was the only gentleman that wasn't in my 50s and 60s at the conference trying to get rick off cannabis. I said, "Of course, guys. This is what we're doing."

But I suggested the industry is going in a direction that is very exciting. You know, the amount of tax revenue that my grows pay alone, and that the state collects is such a massive magnitude now, that they can't put the toothpaste back in the tube, metaphorically. And what I mean by that is they're gonna have a really hard time when they take, you know, $250,000 to $500,000 a month from us in revenue, to just my grows, to then shut is down.

Matthew: Right.

Josh: It's one of those things where it's moving towards legalization on a massive scale. And the people that are pioneering it now are gonna be some of the individuals that can really influence the direction of where it goes and how it gets there. And that's our goal within the industry. We want to be the consultants that teach people how to grow the cannabis product at the highest quality...because yield is important, but quality is everything, at the highest quality, with the lowest cost per pound. And we want to make sure that that's available in as many countries as possible.

Because let's face it. You know, you and I have never heard of a story where somebody got too stoned and there was a domestic violence involved with it. Or...you know? Or some crazy, crazy, you know, hit and run accident. These things typically don't happen, you know?

And so, I'm just gonna compare it to alcohol because that's kind of the sister...or the brother, or the analogy when it comes to, you know, a buzz management conversation. And so, I think that where it's going, it's going to go to full-scale legalization. The time frame that it gets there I think will be in the next five to ten years. I think that we...obviously, within the U.S. right now, we're trying to lead the way. But us having our current political presence might slow that down a tiny bit.

But I see Canada and all the direction that they're going, we're helping them with a lot of projects. And I get a lot of calls from political events happening in new states trying to get medical. For example, if you use the U.S. alone, there's over 31 states that have it on the ballot now, or already have it initiated. Those 31 states make up over 80% of the population of the U.S.

So America has already spoken, you know? And I do think around the world, for that matter. It's only a fraction of time before everybody else follows suit.

Matthew: Yeah. It does seem like there's an unstoppable momentum, although I say it's like pushing over a Coke machine that goes back and forth a few times before it ultimately goes.

Josh: I really like that analogy, and that's a really good metaphor. Yes, it's going to rock a little bit before it tips, absolutely. And you need a lot of people pushing; those things are heavy.

Matthew: Yeah. Josh, let listeners know how they can find your book, your nutrients, how to connect with you on YouTube, Instagram, all that good stuff.

Josh: Yeah, so you can find our book at, like, I said, threealight.com. T-H-R-E-E-A-L-I-G-H-T.com, as well as Amazon. You can connect with us through YouTube on our Three A Light channel, as well as Instagram and Facebook. You can find us all, just search "Three A Light."

And then, of course, if you want to connect with us personally, one of the biggest things we push out is our customer service. You do have, metaphorically and realistically, the keys to the castle with your book purchase. Please take us up on that. We will give you a free starter kit of nutrients. We do ask that you help us out with shipping costs on that, but the nutrients are on the house.

And we want to help you, though. You can literally call us anytime. Of course, Colorado time, we're open from 9:00 to 5:00. A lot of times, you can reach out to us via e-mail. And we want to help you. If you have questions about your grow, or there's something going on your grow where you're just not sure if your plants look how they should at day 20, we encourage you to call us. We have master growers on site and available to discuss your grow issues with you, to really make it as user-friendly as possible. We want to build a relationship with anybody who is a supporter of us. And that's what we do through teaching them how to grow cannabis.

Matthew: Josh, thanks so much for coming on the show today and educating us, we really appreciate it. And good luck to you with everything you're doing.

Josh: Thank you so much. It's been a real pleasure. I appreciate your time, Matt.

Important Data on What is Selling in California Dispensaries with Roy Bingham of BDS Analytics

roy bingham

Roy Bingham is the CEO of BDS Analytics. BDS collects sales data at the point of sale in dispensaries. Roy knows EXACTLY what is selling and what cannabis product trends are accelerating and what trends are fading. In this interview, Roy tells us what is selling in California dispensaries.

Key Takeaways:
[1:57] – Roy’s background
[2:35] – Roy talks about the state of legalization in California
[3:29] – Total spend in California dispensaries this year
[7:09] – Roy talks about how dispensaries spend breakdown
[8:10] – Bestselling strains in California
[9:51] – Roy compares the cost of flower in California to other states
[11:03] – Trends in the market
[12:08] – Roy talks about concentrates
[16:23] – Roy talks about growers
[17:35] – Popular edibles in California
[18:44] – How good are the retail displays
[21:14] – Branching out into new categories
[23:00] – Roy talks about the unpopularity of topicals
[26:03] – Roy answers some personal development questions
[30:11] – Roy’s contact information

Learn more at BDS Analytics
https://www.cannainsider.com/bds

Get the California Cannabis Dispensary data briefing here:
https://www.cannainsider.com/california-dispensary-data

Read Full Transcript

California passed France last year to become the world's sixth largest economy. California matters not only because of the size of its economy but also because California creates and drives its cannabis innovation beyond its own borders into the rest of the United States and the world. I am pleased to welcome Roy Bingham, CEO of BDS Analytics, back to CannaInsider today to tell us what cannabis products are selling in California. Roy, welcome back.

Roy Bingham: Thank you. It's great to be back, Matthew.

Matthew: Tell us where you are in the world right now.

Roy: I'm in Boulder, Colorado, in my home office which I love to be in, but don't spend very much time here. Kind of a fun day for us here because it's coming up to Halloween and our officers decided this is the day for us to do fancy dress. So I'm dressed as Count Dracula right now, which is a traditional thing for me.

Matthew: Do you have the full face paint on and everything or no face paint?

Roy: No, yeah, that may happen later today. But at the moment, no, it's just a very conservative outfit.

Matthew: Right, okay. Good. For guests that don't...

Roy: I'm glad to talk to cannainsider listeners. I got to say, I'm amazed how many people come say, "Hello," to me who have first heard me on CannaInsider in the past. So your message is getting far and wide.

Matthew: Oh good, I'm glad to hear that. Yes, it's fun to go to places and events and stuff and meet listeners. It really makes it kind of surreal. So I'm glad you mentioned that.

Roy: You bet.

Matthew: For guests that don't remember Roy's background, it includes an MBA from Harvard, time at McKinsey Consulting and then, ultimately, working at a POS data firm in the natural food industry. If you wanna hear more about Roy's background, I encourage you to listen to episodes 133 and 100. So you just go to cannainsider.com/133 and then the same 100, it'll take you right to those episodes if you wanna hear more about Roy's background. Now, let's jump into California. What's going on in California? Help us understand the context of where they're at in cannabis legalization and what's happening.

Roy: Well, of course, California has had a legal medical market for 20 years now, far ahead of any other state. But they are on the threshold of having adult use which will begin January 1 of next year. And so, they're in the process of implementing a completely new set of regulations for the entire market. It's obviously going to be very confusing for the next several months. I spend at least a week every month in California at the moment and I can tell that dispensary owners are very uncertain, and the regulators are fairly uncertain themselves about exactly how it's all going to work. But it's a huge change that's coming to the largest state in the United States and, as you said, the sixth largest economy in the world.

Matthew: Yes. What's the total cannabis spent in California dispensary so far this year?

Roy: Yes, so that's not even easy to calculate either. The first thing is that data hasn't been centralized, there's been no regulatory authority, and there are thousands of dispensaries. And in Northern California, they have tended to be regulated by the city or district, whereas in Southern California, it's a little bit of the Wild West. We estimate that there are well over 3,000 operating dispensaries and delivery services in California. And for context, they're about 700 in Colorado. Based upon our panel of dispensaries that are providing us with data, we're estimating that the market is about $3 billion at the present time, and by that, I mean regulated entities but not necessarily. For example, in Los Angeles at the moment, no one is really regulated but these are people that are operating in the open with confidence expecting that they will be admitted to regulation next year. So yeah, it's big. $3 billion, of course, represents about 40% of the entire US market at the present time.

Matthew: Yeah. And when you think, it's really all in...a lot of it's in the big cities in Southern California, in Northern California, you can take out the rest of the state because the Central Valley is so big, it's those huge metropolitan areas in Northern and Southern California that probably makeup 80% of that, I would guess. Something huge.

Roy: Yes, absolutely. And in fact, we also did a comprehensive consumer survey of Californians about two months ago, in June of this year, three months ago. And it identified that the vast majority of the market are urban dwellers among, you know, hundreds of other data points that we learn from that process.

Matthew: Well, anything else you wanna tell us from that survey that's interesting? Anything you wanna highlight? [inaudible 00:05:37] that sticks out?

Roy: Well, yes. So actually, if people go to bdsanalytics.com and if you go to our market insights blog, you'll actually find that you can download a report, it's about a 10-page report called, "Now we Know What Californians are Smoking," and that covers, you know, which products Californians are consuming. And then, separately, if you contact us, we can go into detail about who the Californians are who are consuming those products. But, you know, at a very high level, they tend to be affluent, they're highly educated, they have an average income of about $94,000 a year. As many as 30% of them have been to graduate school. They describe themselves as being happier than the non-consumers and that life has treated them better. They're outdoorsy, they're social, they tend to average younger but the average age is not very young, it's about 38. And they skew a little bit towards the male versus female, about 55% male. But among the newer adopters, it's about a 50/50 ratio or even actually slightly skewing towards females now. So that's just a little bit of the data that's in those reports.

Matthew: And how does the dispensary spend breakdown in terms of flour, edibles, concentrates, pre-rolls? Anything else?

Roy: Yes, yes. So that's very interesting. You know, in California, in the last six months, flour represents about 55% of consumers spend in dispensaries and delivery services. And concentrates are big, they're 25% of the market already. Edibles, about 12% of the market. Pre-roll product is about 5%. And everything else is about 4% of what's purchased in those dispensaries.

And that's an interesting comparison to the other major states: Colorado, Washington, and Oregon. Washington is also flour about 55%. Colorado and Oregon have had a little longer head start with adult use and they're down to just below 50% flour. And concentrates also in the 25% to 27% range.

Matthew: Okay. And what strains are the best sellers in dispensaries in California?

Roy: Yeah. Well, the first thing to say is that individual strains are a relatively small share of the market. The largest share, by a long way, is blends.

Matthew: Yeah, hybrids.

Roy: So in the last six months, yeah, in the last six months, flour sells about $740 million of which an array of blends represents $450 million, especially indica blends. The individual strains, and we have 13,000 names of strains in our database, would you believe? The individual strains like Blue Dream is number one with about 13 million in sales but that's really only about 2% of the market. Gorilla Glue number four, second, Girl Scout Cookies, third, Jakarta, fourth, all about 1% of the market. So it's really those blends that dominate.

Matthew: So it's an inch deep and a mile wide there with the strains?

Roy: Absolutely, yes. It's one of those classic longtail market environments. Yeah.

Matthew: I guess it makes sense that flour starts out strong and then kind of decreases because, I mean, really just smoking is a way to decarboxylate and activate the flour and it's not the most elegant way. And it's when people catch on that there are other ways of doing it, they adopt those. I think that makes sense.

Roy: Yes, absolutely. And that will explain the popularity already of concentrates. Yes.

Matthew: Now, tell us how does the cost of flour in California compare to other states?

Roy: Yeah, that's very interesting. So we've sort of got a tale of two groups of states. So California and Washington prices are very similar for flour, they are about $8.80 per gram. Colorado and Oregon is significantly lower, around $5.60 each per gram. So you're seeing a premium in California versus Colorado and Oregon of about 35% at the present time. Interestingly, that premium does not apply to pre-roll products, edibles and to only a very small sense concentrates. So at the moment, flour prices are relatively high, but the prices of the other products are fairly similar to Colorado and Oregon.

Matthew: You mentioned you're in California for about a week every month and that the dispensary owners and operators are a bit nervous, a little anxious. Any other trends? Were you visiting dispensaries, talking with people? Anything else that stands out about what they're thinking about, what their challenges are, where the market's going in anyway?

Roy: Yes. Well, there's obviously a lot of energy and enthusiasm. I would say the Californian dispensary owner management are working, you know, 30% harder than everybody else. They start early in the day and they're working all the evening trying to understand the regulations, trying to understand when and how to apply for the temporary permits that they're gonna be granted first, trying to understand what it means for their consumers, trying to make sure that they're ahead of marketing and sales trends, making sure that they have the right products on the shelves. It's a very challenging environment. At the same time, there's tremendous optimism that now we're moving into a situation of being out in the open, publicly, confident that you are not going to get in trouble with the regulatory authorities provided that you comply with their codes.

Matthew: Okay. Let's zoom in on concentrates for a moment. Would you say this category is breaking away from the pack in general?

Roy: It certainly has done in all other states. So the trend has been, you know, Colorado is now four years of experience of adult use, concentrates over that experience have grown from about 10% to 27% of the market. Washington came along six months later, very similar trend, concentrates about 24% of the market. And then Oregon came along and allowed adult use, at the beginning of July, for concentrates and edibles of last year, and already that represents about 25% of the market. Now, California has been tracking for a lot longer in its medical market. And concentrates are certainly outgrown flower and edibles at the present time. As I said, edibles are about 12% of the market, pre-rolls at 5%. But concentrates are way up there at 25% of the market.

Matthew: And within that concentrates, what's the story there when we then break that down, that category? What is the data?

Roy: Yeah. So that's very interesting and California is quite different, certainly, from Colorado in that respect. So what we call vape products, essentially cartridges and disposable vape pens that are pre-loaded, they represent a booming 61% of California's total concentrates business. Whereas in Colorado, that's only about 36% of the market. Interestingly, Oregon, which is very new to this, is also similar to California. So new adopters seem to be adopting vape products in preference to shatter, wax, oils, live resin, etc. Colorado has a more sort of diverse population of those kinds of products within shatter, within concentrates, I should say.

Matthew: Okay, okay, that makes sense. And then, what about individual brands within there, that category of concentrates? Is it spread evenly or there're big players or how does that work?

Roy: Yeah, that's fascinating. So yeah, we looked recently at brand share, it's in the report that I mentioned earlier. And, you know, the top five brands in Colorado already represents 70% of the market which surprised me. It's a much more mature looking market than you would expect in concentrate. Well, California is not that far behind. In California, the top five brands represent 52% of the market and the next five brands are another 14%. So combined the top 10 brands are 66% of all sales of concentrates. So it's relatively mature, you know, this is a sort of inevitable process of the big companies emerging and taking market share and outperforming the smaller companies, unless they're disrupted by someone coming along with something radical and new.

Matthew: Yeah. And that's the only way really to get in is that they have something radical, new, different, has a different narrative around it, different benefits. One way to get in with these established players. Well...

Roy: Yes, so we'll have a better business model in some other way, more effective sales and marketing capabilities, better supply chain management, something like that. I think there's still plenty of opportunity for people, they're not radical and new with their products but more effective with the way they do business.

Matthew: I have this concern that all growers in California, nearly all of them, are gonna be wiped out by either huge players that can just scale that put so much investments in just scaling grow operations with automation and efficiency. And then the small kind of artisanal grower that has some special story around it, kind of like a vineyard or winery would where people really identify with the story or the fact that it's made in small batches and they can visit the grower or something like that. Do you see any kind of bifurcation like that or do you think that's where it's going? Or do I have it totally wrong?

Roy: No, I think you're right. I mean, if you can imagine that you're a concentrates or edibles company that's already doing something like $100 million in consumer sales in California at the moment, then you have the ability to either build your own manufacturing facilities or partner with others to build very low-cost per unit of production facilities over huge economies of scale there, and also to lock up a very stable supply of cannabis plant as well. So they have a huge advantage when they've got to that scale. Of course, I think there's plenty of opportunity for what you call the artisanal smaller scale producers as well in specialty environments. In a market that's growing so rapidly and is already so large, there's always going to be a category of consumers that is excited about something that appeals more to them because it's, in their perception, better or different.

Matthew: Yeah, let's pivot to edibles. What do California residents like there?

Roy: Yeah. So they like candy, candy products represent 29% of total edible sales. Chocolate comes second, not far behind, with about 24%. And then, infused foods, so your brownies and cookies, etc. That represents 17%. And interestingly, tinctures, which we include within edibles, is a large category too at 15% of the market followed by pills and beverages.

Matthew: Yeah. Okay. When you visit these...

Roy: And within candy, you know, the most popular is gummy candies which is the case in most other states as well. And that's where we already have some of the major players.

Matthew: When you visit these dispensaries, do you find they're doing a good job on their retail displays and putting the, you know, maximizing the return on investment by putting the proper placement of products and things out for people? Or is that still not that thought of much anymore because, you know, most dispensaries are pretty profitable even without having to consider that?

Roy: Oh, I think there's huge room for improvement there. I think that still, most dispensaries are using the judgment of the owner or store managers with regard to how much of the store to allocate to which types of products and which brands to make most prominent. I think it's still mostly done by gut feel, by relationships, by preferences of the budtenders. Of course, what we do is give the dispensaries the data that shows how they're doing by category, by brand, by item and compare that to the average of the state. Or in the case of California, we divide between Northern and Southern California, and then you can actually objectively choose which products to put on the shelves, which to feature based on what's growing most rapidly or already has the largest market share. That way, you can really mirror demand in the market. And some are getting very sophisticated at that, I'm very impressed by some of their dispensary partners out there. But there's a long way to go.

Matthew: Yeah. I used to wonder, you know, does this type of data drive dispensary owners and manufacturers into kind of a herding type behavior? And I would say, perhaps for some it does. But then, for others, it provides an opportunity, kind of like the Blue Ocean Strategy where they say, "Okay, I see where all the competition is. I'm gonna create a new category to something entirely different, you know, a freeze-dried cannabis drink or something that's like its own category that I can own." And that, I think, that drives some of that behavior.

Or they say, "I'm gonna play within one of these existing categories but just totally do something different. Maybe it's going to be a gluten-free brownie that has an effervescent aftertaste or something just bizarre or just novel or has some unique experience." So I've been thinking about that a lot lately because of this...I don't know if you've read that book, "The Blue Ocean Strategy," about how you just create your own categories and don't fight in the red ocean where the fish and the sharks are biting each other over the same thing but do something new within the category.

Roy: Yes. Well, I think we're already seeing that. For example, the fastest-growing category in Colorado last year, or subcategory in Colorado last year, was pills, or pills and capsules, to be more precise. That was barely in existence two years ago. And then, one company in particular and a couple of others came out products and they grew extraordinarily rapidly to end up being, you know, 7% or 8% of edibles already, and the current rate of growth will cross over 10%. So that's an example of that sort of radical blue ocean strategy.

And then, I'm also hearing from many clients who are developing new products that have special dosage mechanisms or delayed release or rapid release, of course, is more popular with edibles. So tincture, sublinguals, even breath strips, those kinds of alternative delivery systems. Nasals and inhalers as well. And at the moment, those are sort of negligible in terms of their market share. There are a few products here and there that are in the testing phase. But there are a lot of people who are pinning expectations around consumers going after those products who may be currently adopting vaporizers because they like the discrete nature of those products and the controlled dosage, but actually would prefer not even to use a vaporizer.

Matthew: I was a little surprised to see in your data that topicals were such a small percentage, such a small piece of the pie. Do you think the message on how to use those is not getting out to Boomers? Or what do you think explains that?

Roy: Yeah. I think it's actually partly to do with the channel of distribution, the licensed and regulated dispensaries and delivery services. Yeah, you're right, topicals capture less than 1% of the current California market. But actually, they're less than 2% in the other mature markets as well. You know, among them things like balms and salves are about half of the market. Cream is about 20%. And patches, patches are quite familiar to people who're following these things. There are only about 5% of the market at the present time.

I think perhaps, so far, people haven't had particularly impressive experiences with some of the products out there. There's certainly a number of scientists and doctors that are working on new technology where they are very sure of availability and efficacy. And maybe when we see some more data and some more science around those products, the consumer will latch onto them much more quickly.

Matthew: Okay. Is there any other ways the Californians stick out that you'd like to mention?

Roy: Yeah. Californians love infused pre-rolls which is interesting. So pre-rolls that have added concentrates with them as well. And that's a significant part of their pre-roll market and it's about 30% of their pre-rolled market, whereas it's negligible in most other states. So that's interesting. Also...Yeah, I would say that's the one that really stood out to us at the present time as being, you know, very distinct.

Matthew: Yeah, I imagine that pre-rolls are kinda always popular as little giveaways or things, "Come in today and," you know, "buy two pre-rolls, get the third free," it's always a popular marketing tool. I supposed the concentrate, it's kind of novel and also allows for more of a premium pricing there. So interesting.

Roy: Yes, yes. And, you know, it's convenient, and for new adopters, they don't have to learn how to roll a joint, etc. And therefore, we're seeing significant growth in pre-roll and interestingly, as I said, with infused pre-roll.

Matthew: Well, I'd like to pivot to some personal development questions if we could, Roy. And since you've been on the show twice before, I normally ask for book suggestions and, in the past, you recommended, "The Innovator's Dilemma," "Philanthrocapitalism," "Robinson Crusoe," "The Swiss Family Robinson," and, "The Count of Monte Cristo." But since we already know some of your book recommendations, I'd like to ask, if you were still in the cannabis industry but couldn't do anything with dispensary data like you are now, if you are in the business of providing that data and collecting it, what would you do with your knowledge? What opportunity would you pursue in the cannabis industry?

Roy: Well, obviously, I'm a bit of a data nerd. So if I can actually produce data, then I'm very interested in using data. And that's what I did in my previous company, a company called Renew Life that we grew from 30 million to about 110 million with digestive care products. And so I was using data from IRI, and Nielsen, and SPINS. I think I'd go right back to that and start brand-building in the cannabis industry, you know, using data from BDS Analytics, assuming that that was still around with me not being there...in order to figure out what the market opportunities are, what the niches are and targeting a new product development, special marketing campaigns pricing strategies. And so, all of those sorts of things that I've done before. And then, I know how to leverage data and I think there is a huge opportunity here in the United States to create some very, very powerful brands that ultimately will be billion-dollar companies.

Matthew: Yeah, great point. Your product is such an easy slam-dunk. I mean, all you have to do to be better than your neighboring dispensary is, you know, just implement the best practices in your data. I mean, if you just start there... I mean it's like it's...

Roy: Yes. We like to say we take the error out of trial and error. Most people are doing things right now by, "Okay, let's make one and see if it sells, let's test it with our friends, etc." And we make it much quicker or much easier, much less expensive to figure out what the category is, what's the growth opportunity now, who's the consumer and therefore, how do you want a brand and package that product to appeal the best to that target consumer so that you have much higher probability of a successful launch of those products?

Matthew: Yeah. Well, let's end with one final hypothetical here, Roy. Let's say, for some crazy reason, you had a great exit of BDS Analytics. Your investors and employees are super happy, all of your friends and family are healthy and happy. What would you do for just pure fun for the rest of your life?

Roy: What a great question. So I guess I think of about three things that I love to do. And ironically, you know, I would still like to do for-profit work. You know, I've trained in this world for 35 years now. I love building businesses, businesses with a heart and conscience, but I love building businesses. So perhaps I could do that more in a board member type of capacity. I did a lot of charity work, 25 years or so ago, in Africa, South America, India. I'd love to get back to doing that sort of thing, really getting exposed to the poorest parts of the world because you feel like you can have an immediate impact...it's very gratifying, it's actually a selfish pleasure, really, when you think about it to help people out in poor countries when you've got a bit of money to help them with that they wouldn't get any other way. And then, I'd love to combine that with travel. I've always loved to travel, my entire family has wanderlust, my father was in the Merchant Navy all over the world. So travel with a purpose, combining it with the charity work.

Matthew: Well, that's a great answer. Yeah, I can see what you mean by how gratifying it is because you can see such a big change quickly in an underdeveloped country where they go from nothing to a big improvement quick. Even something as simple as water, you know, getting clean water, how that changes up the whole dynamic of a village or something like that.

Roy: Yes, or getting shoes to a village or a soccer ball to kids that currently don't have one. It's amazing how little things like that, as part of a bigger effort, can make you feel so good.

Matthew: Yeah. Roy, as we close, can you give out your website one more time and tell listeners how they can connect with you and what type of businesses should reach out to you to become a client or just learn more?

Roy: Yes, Matthew, thank you. It's bdsanalytics.com. And we have services for dispensaries and license applicants to enable you to figure out which products to put on your shelves and how to match consumer demand. Our clients are growers, producers, and brands or people intending to get into that space who are developing their business plans. And you've heard how growers and producers and brands can use our services for sales, marketing, and product development benefits. And then also, investors are very interested in the way the world is going and growing. And, of course, we not only have the GreenEDGE point-of-sale data, but also the consumer insights services that I mentioned earlier on. So many companies are now beginning to say, "Okay, now I understand my market share but I don't know who my customer is." And so, we're helping them to figure out and then target very precisely the most attractive customer categories and segments.

And finally, of course, in conjunction with our partner, Arcview Market Research, we write the, "State of Legal Marijuana Markets," it's a big annual book that comes out as a best-seller in the industry. And also, "The Cannabis Intelligence Briefings." And we do provide custom consulting projects for large companies and small who are investigating the industry.

Matthew: Roy, is there any special way that dispensary owners can get involved and get these insights for themselves?

Roy: Yeah, absolutely. Thanks for asking. Yes, of course, dispensary owners and dispensaries can join our panel and they actually get the GreenEDGE service completely for free. All you need to do is set up access to your point of sale data. We anonymize it, aggregate it into a database and then you can get the full access to the dispensary point-of-sale service, you can look at your own sales, you can compare them to the state sales. So if you have a dispensary in California or, for that matter, any other state, let us know, we'd be pleased to have you participate in the panel and get all of this service for free.

Matthew: Well, thank you, Count Dracula, for coming on the show and educating us. We appreciate. That data is so valuable. Good luck with the rest of the year and we'd love to have you on the show again when you have some new data to discuss.

Roy: Well, thank you very much, Matthew. I shall go and try and find some blood now.

Matthew: Okay. Thanks, Roy.

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