Andy Williams, founder and CEO of Medicine Man Denver and co-star of MSNBC’s The Pot Barons of Colorado shares his insight into being a cannabis entrepreneur, raising money, creating an innovative grow and pivoting to provide what customers want. Learn more about Medicine Man: http://www.medicinemandenver.com/
Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback at cannainsider.com to get started. Now here’s your program.
In Denver, Colorado there are more cannabis dispensaries than Starbucks Coffee Shops. In other words it is a competitive market. However, some cultivators and dispensary owners stand out in their ability to run thriving businesses despite the competition. To help us understand how to run a successful cultivation and dispensary operation in this competitive Denver environment I’ve invited Andy Williams of Medicine Man on CannaInsider today. Welcome to CannaInsider Andy.
Andy: Thank you very much. Thanks for having me.
Matthew: Andy I mentioned Denver are you in Denver today? I just want to give the listeners a sense of geography?
Andy: Yeah I am in Denver today. I have two stores here one in Denver, one in (1:48 unclear) and my cultivation is in Denver and then I also just started a new manufacturing product company and that’s also in Denver I have a building there.
Matthew: Great, great. How did you get started in the cannabis industry? What’s your background?
Andy: Well my background I’m an industrial engineer and I’ve been in manufacturing in the corporate world for the majority of my adult life. But I’ve always also been an entrepreneur and I’ve had multiple businesses over the years that have failed to one degree or another but it’s a real passion of mine. I’ve always wanted to have my own successful company. It’s been a lifelong not just goal but activity of mine and my brother is also a lifelong entrepreneur and he had a successful tile business. He also grew as a caregiver in his basement under the Colorado laws and was actually making very good money doing that. And when the Ogden letter came out in October of 2009 I went to him and I saw what he was doing and he’s a great grower and a great inventor, and I said let’s go big with it and he quickly agreed. So that’s how we got into the cannabis business.
Matthew: Oh okay. I’ve been fortunate enough to go on a tour of your facility and dispensary and it’s very extensive to say the least. Can you walk us through your grow room so listeners can get a picture of the scale and technology involved?
Andy: Sure you know when you’re in our facility I don’t know how recent you’ve been there Matt but we have 40,000 square feet in one building. We started with half of that and it’s kind of a museum of our company’s history in that when we first started we didn’t have a lot of money to work with and we did what we had to do in order just to get a crop out and while you won’t see the early, early stuff you’ll see some of the early stuff still in use in our facility.
Then over time as we got more money we just built out as we learned things improved, processes changed, techniques changed, and you see that growth through our facility until the newest side which is 20,000 square feet all by itself. It looks like a lab. It’s white, it’s bright. It’s extraordinarily clean, it’s very aseptic and we have rooms ranging from of course our clone rooms where are babies are which are relatively small. They contain lots of little plants growing. And then we have two large vegetative rooms that are about 100 feet x 18 feet x 10 feet and both of them contain all of the vegetative plants and mothers, and then we have 18 flower rooms as well that range, most of them are about 75 feet x 18 feet x 10 feet. And then of course we have our cure rooms which the finished products are in and our trim room as well. So that’s what the cultivation facility looks like. There’s a lot of rooms within a large warehouse space.
Matthew: So Andy do you break everything down into smaller rooms to mitigate risks or is that too provide what you’re doing by function or what’s the strategy there?
Andy: There’s multiple reasons for that. One is power. I only have so much power in the building. Right now we have about 5,000 amps in our facility. In order to maximize how many lights that I can build in that facility I have to restrict whether they can come on and off at any certain time. So I have big switch boxes that throws power from one side of a room to another side of a room every 12 hours and because of that I can have twice as many flower lights in my facility than I would be allowed otherwise. So that’s one reason just capacity.
And then another is that control. So if you have a room and you just have a big warehouse full of plants that are growing; one you have to have a large crop all at once which is not very good when it comes to harvest time. But also the dangers of pests and mold and mildews and what not would flow throughout the entire facility all at once. So those rooms do mitigate bad things that might happen to your crops as well. So with that those are the reasons that we do it. Oh and one more we also control the climate that way. So having nice; you know we try to control the climate in the entire warehouse it would be much more difficult than controlling climate in our facility.
Matthew: Yeah speaking of the climate control I noticed it looks really extensive. Something like you’d see at NASA or something. There’s these big columns it looked like it might be a German name on the climate control. Can you give us a little summary of what’s going on there?
Andy: Yeah as an industrial engineer and in manufacturing I know that to have a consistent and high quality output you need to control the inputs into our process and we also need to control the environment and the climate as well as these plants are growing. And so what we’ve chosen is what’s called a STULZ unit and STULZ is a manufacturer of what are called CRAC units and a CRAC unit C-R-A-C is computer room atmosphere control and these units are typically used to control the atmosphere in data centers.
What benefit it offers us is that it controls temperature, humidity, and CO2 levels and is completely programmable. So that we can tell it we want our humidity at this level and our CO2 at that level and our temperature at this level, and if it deviates from that over a specified range, the range we specify in any way we get notices. Whether it’s a text notice or whatever we can program it in there and we get warnings if things are out of tolerance. In addition we can program that machine to take action on this so if we have a spike in humidity we can tell it to slow the fans down to 71% which helps draw some humidity out. Raise the temperature up to 80 degrees and pull the humidity out of the room and then cool the room back down. It also keeps data for us and then we have a lot of data on the rooms so if one room is doing better than another room we can actually determine why and mirror those same qualities that help the other room out now.
Matthew: Now if there’s someone’s just won a license that’s listening to cultivate cannabis you know one of the big threats is obviously pests, funguses, and mold and it impacts almost all growers at some point or another. What do you think the best way is to mitigate those risks to have an optimal harvest?
Andy: Yeah that’s a really good question. So a little history on that in Colorado, specifically Denver there’s very little that we can use in terms of pesticides. They’ve really cracked down on that and there’s really very few pesticides even though they might be safe to use on our products it hasn’t been proven as such, and if it’s not proven as such or if the definition of its uses are broadly defined enough we cannot use the pesticides. So our hands are very tied on what we can use for control once something has been identified.
So really where we put our biggest effort is prevention. And so we have an integrated pest management system that is multi-faceted but we look to very much prevent any outbreak and we do that through cleanliness, we do it through restricting access to the rooms to only people necessary, and making sure that; we have uniforms that our employees will change multiple times each day. When they go from one room to another they wash up, etc. There’s mats on the floor that they walk over when they go in to get any contaminates on the bottom of their shoes.
I can go on and on. There’s a lot of stuff that we do that takes time and energy throughout the day but controlling those outbreaks and whether it’s a pathogen or an insect of some sort is very important because getting rid of them once they occur is typically destroying a lot of plants because we don’t want it to spread. That’s very costly.
Matthew: I noticed that there’s wheels on your cultivation tables. Can you explain why you do that?
Andy: Yeah so one of the things this industry; if you get into this industry that you have to be an inventor. We don’t have off the shelf products. So those tables are one of our inventions and what we do is; the way we run our shop is we run it off a 6 light system. So in our flowering rooms everything is on a 6 light system that’s in there and under those 6 lights we have 54 plants and those 54 plants are divided among 3 tables and we use 3 tables because they’re easier maneuvered than if we had two or just one. It’s not as heavy.
And we designed these tables to be able to fit close together. We have an extended halo around the footprint of the table to allow us a little bit more canopy space and they go together as one unit. When you’re looking at it it looks like one big table but then when you want to work on a plants to whether it’s Scrog which is to; we use a Scrogging system to screen a green so our plant canopy is tied down to a net and so to do that you have to get in between all of the systems. So we have to move the table apart. So those tables move very easily from side to side so that our growers can get in there and work with the plants if necessary.
Matthew: I noticed on the tour of your facility you cleaned the water before delivering it to your plants. That’s something that’s really not talked about very often. Soil medium is talked about, lights, humidity, temperature, but not water. Why do you feel it’s important to treat the water and how do you treat it?
Andy: Yeah that’s something that is very important in that remember I said we have to control the inputs to the process to get the same output.
Andy: And water is the biggest input to a plant. It’s what it drinks and if you’re not controlling the water that it’s getting the nutrients that are in it and the minerals then you’re going to have a product that’s not consistent. So treating that water with a purification system is important to us. So we have a purification system that pulls all the solids out of the water so there’s less than one part per million of a solid in that water. It’s more pure than deep; it’s wonderful water. We actually also treat it after that to deionize it and we’ll use deionized water to spray the plants and deionized water will help clean the plant or whatever. It helps treat the plant a little bit and it’s a very safe way to do it. So the water is a very big portion of controlling the input to the plants life.
Matthew: What do you think the ideal growing medium is for cannabis plants? What do you use?
Andy: Well that’s interesting. My brother used to use hydroponic crossed with an aeroponic system in his basement and we thought we would move that right into our warehouse and replicate what he did in his basement and we soon learned it’s a different world in an industrial level than it is in the basement, and we didn’t have the knowledge to control in a large scale what he did on a small one. So we quickly found that going to a soil medium was much more forgiving but then we also found that when you buy your soil to put the plants in you purchase bugs with the soil.
So we went to a Soilless coco and we did a lot of experimentation with different mediums and the coco that we’ve landed upon is wonderful. It’s a sterile medium. We don’t get bugs with the mixture and being sterile we also can control exactly what the plant is uptaking as nutrients. So again we’re controlling the inputs to the plant. But it’s also very forgiving in that we don’t have to worry as much about; because if you’re not using a medium like that you have to control the water temperature very much and pathogens within the water as it’s recycling and lots of other things. So I really like the coco medium on that mix with (14:47 unclear).
Matthew: And where do you stand on LED lights? I know it’s kind of a controversial subject. A lot of people think they’re not ready for primetime but perhaps when we need to do have devote a small area to the cultivation facility to test things and see how they work. Where do you stand on LEDs?
Andy: We do a lot of testing like you said, and lately LEDs have been improving. The testing that I’ve done with LEDs now are coming close to the results that I’m getting with the high pressure sodium bulbs but it’s still not the same. I don’t; it’s not quite as much production in flower from the LED and I don’t want to poo poo it though because I think somebody better with LED lights and the different spectrums that they can put onto a plant might be able to replicate that.
But right now in terms of mass production, mass sell, and mass use I don’t think it’s quite there yet. Now I do think that in the vegetative state the LEDs are very good and very useful right now but it really needs to be designed (16:07 unclear) light. So the rooms that I have designed for the HPSs, High Pressure Sodium and Metal Halides and in replacing them with off the shelf LEDs isn’t feasible because they’ve already been engineered so I need new construction. I certainly would look at LEDs for vegetative but there are some other lights that are on the market right now that I would also look at for flower (16:32 unclear) and others they’re doing a good job.
Matthew: Is there any technology that is emerging for the cultivation room that really excites you? Either something you’re considering making or something that’s out there in the marketplace?
Andy: You know I’m having a lot of fun right now with greenhouse technology. This is something that we’re looking to get into. Not exclusively I like having my industrial space and the controlled environment but having a greenhouse environment is something I’m playing with right now. And my brother’s actually been working on a design for probably a year and a half and I think it’s pretty nailed down on what he’d like and we’re going to move forward with that and see what we can do. So that’s kind of taking up some creative juices from both my brother and I.
Matthew: Do you feel like there’s any lingering misconceptions about cannabis cultivators? For someone that’s on the outside looking in that just thinks like hey I put some seeds in dirt and then I make millions. I mean what are some of the misconceptions out there versus the contrast of the reality you live day in and day out?
Andy: There’s a really big cut so I get a lot of education. We have local politicians and local officials come through. Yesterday we had our monthly police department tour through where we take police not only from Colorado but from other states and give them an idea of what a cultivation facility looks like and then people from all around the country come through and I hear their reactions and their reactions are wow I never expected this. They expect the stoners sitting around kind of smoking dope with dirty clothing on and probably haven’t showered and working on these plants that are just on the cement floor in the warehouse and they’re watering them and maybe cutting them and watching tv and playing games and what they walk into is a manufacturing facility. They see people in uniforms. They see things; tools and what not hanging in their place. They see a very clean environment. They see very organized. They see charts up there tracking data for us so that we can improve what we’re doing.
They see a business and that’s what shocks them and then they start thinking wow how do they do this without a bank and then all these questions start coming up that really start hitting home for these people and like you said this isn’t something that you get into the cannabis industry and you’re just a guaranteed success. This is like any business. It is very competitive and in new markets it’s typically a little bit more forgiving in terms of margins and some mistakes can be made and still survive but as this market; and that’s not even a guarantee but as the market matures if you’re not able to produce at a low cost and high quality and serve your customer well, you’re not going to stay in business.
Matthew: Can you tell us a little bit about the infused products you’re manufacturing now?
Andy: Yeah I’m really excited about this. So right now we don’t have any products of our own on the shelf. We use our own product. We use our own marijuana and we have other people do extractions for us and so it’s really our own product that we grow. But we are now going to be able to do our own extractions and our own products. This facility is being built right now so it’s in its initial phase but it’s going to be focused on the medicine side of marijuana. And I have teamed with a gentleman named T.J. Johnsrud and he’s from NuCara Labs. He owns and has been running pharmaceutical labs for over 40 years and he has 27 labs around the country and they do fractionalization and compounding formulation in dosage forms for different medicines and working with the FDA etc.
So these guys are really good at creating and making, manufacturing medicine, and so we teamed up with them. We’ve teamed up with other folks as well in the medical community and we’re going to be doing not only in order to keep our lights on an extraction business where we create our own extractions and sell them in the marketplace but also doing research and manufacturing necessary to really take marijuana to a medicinal level because right now it’s very therapeutic. It’s whole plant medicine. We’re not really quite sure that the mixture of the compounds that are impacting people for different reasons and we want to isolate those, we want to identify them, and then be able to produce it in a way that’s reliable and reputable for people and it’s extremely exciting for me.
Matthew: So Andy switching gears to your dispensary one of the things visitors to Medicine Man Dispensary in Denver will notice upon entering is that there are two sides to the dispensary. There’s medicinal and adult use. Can you tell us why they are separated?
Andy: Yeah there’s a couple reasons for that. One the state requires us to track our inventory separately and of course our point of sale we have to make sure that we’re charging the proper tax and what not with the different products that we sell because it is different between medical and recreational and so that’s one reason.
Another reason is that on the recreational side we pre-pack things so that if you come in you’ll see eighths and quarters pre-packed of our different strains and while you can still look and smell the different strains from sample jars it’s not the same as on our medical side where we have large jars full of the marijuana that people can look at under a magnified lens and really get some nice aroma from the jar itself and take some time shopping. It’s meant to really speed things through. We see a lot of people on a recreational side and we just don’t, we just can’t take the same amount of time as we do with the medical folks on that side.
So that’s one of the reasons we have actually two ways to serve customers. On the medical side we get more of a; I don’t know of a consultation session where the bud tender is very knowledgeable to help you out a little bit more privacy. It’s not as close to the others the recreational side. That’s not to say the recreational side is hurting or uncomfortable. It’s just different.
Matthew: So you touched on a good point there Andy. Why would anybody in Colorado consider getting a medical cannabis card and you mentioned one of the reasons is that the tax treatment is very different so you can tax less. But also in terms of edibles and infused products you can get a much higher dosage is that right? What are we talking about in terms of dosages between the rec side and the medical?
Andy: That’s right. On the rec side the dosage for any one product in terms of an edible can be up to 100 mg and on the medical side there really is no limit although most of the products are 500 mg or less. Although there are some that are a little bit higher and the reason for that is people that are medicating with marijuana will develop a tolerance to it that they need more milligrams in order to have the desired result.
And of course on the recreational side we have a lot of people that maybe aren’t frequent users or even first time users that has been publicized by so well in the media that people have over consumption issues with cannabis if they’re not careful so that’s one of the reasons they restrict the amount in those edibles.
Matthew: Andy in terms of strains are there any particular strains of cannabis that are selling well right now or trending in a positive direction?
Andy: You know with strains we’re always working our genetics and Girl Scout cookies has been doing well for a while. I have heard there’s some new strains that are becoming very popular and (25:00 unclear) at the moment but one thing that is very popular is live resin. That seems to be something that is very popular which is you take a plant; a whole plant without trimming it and freeze it and then we use an extraction technique to extract the cannabis from the method and it’s a very heavy terpene extraction. So you get a lot more flavor and smell in the extraction and more live plant properties or whole plant properties than you do when you use just a straight extraction so that’s very popular right now.
Matthew: Yeah you touched on terpenes there that really seems like a word we’re going to start hearing much more and maybe even the creating a terpene profile that really delights customers because of the flavor. I mean that’s what we’re getting down to is the flavor. I mean it impacts your perception of the cannabis even before you consume it if the terpenes have a pleasant psychological effect. So do you think that’s a big trend moving forward? Do you think we’re going to see a lot more about that?
Andy: I do. I think extraction techniques are going to improve so that we do see more of the terpenes surviving the extraction. They’re very volatile and so getting them to survive the extraction is you know so getting better at doing that is what’s going to be important and quite honestly I have a feeling that terpenes have some benefit medicinally for people. So it’s not just; I have a feeling anyway that it’s not just the cannabinoids that are making this beneficial health effect for folks but it’s the combination of the cannabinoids and the terpenes that are having that effect. So it will be fun to see over time what research proves for that.
Matthew: Since you’ve started in this business how have you seen preferences change in terms of flowers, concentrates, edibles, gums, candies? Has it surprised you at all to watch this evolution?
Andy: No it really hasn’t surprised me. We’ve seen the preferences go from over 80% flower to probably in my stores anyway high 60% flower and then of course the remainder other whether its concentrate or edibles. And so it’s still in my stores predominantly flower but the trend certainly is for concentrates and edibles and I see that continuing over time. I don’t think flower is ever going to go away nor do I think it’s going to be a minority but it sure is convenient to have a vape pen or a candy bar or whatever if you want to; if you need to medicate or just relax in a very discrete way.
Matthew: Do you have any ideas where consumer tastes will be in three to five years? We touched a little bit on terpenes playing a more important role but do you have any guesses on what the market will look like then?
Andy: Well the cannabis market is going to mature of course. There’s going to be a consolidation in terms of ownership a little bit anyway during that time. Of course a lot more states are going to come online during that time maybe, maybe as many as ten more. And one of the things is there’s going to be a lot more research and development so different types of extraction methods are going to be utilized, and we’re going to have different products in terms of concentrates and edibles on the market with different dosage forms so different ways to deliver cannabis. So we’re going to see our choices opening up. We’re going to see the quality of cannabis getting better and more reliable, more consistent, and we’re going to see prices drop. So it’s going to be tougher to compete so all those things are going to be happening in the next three to five years no doubt.
Matthew: Now you went to the ArcView Group and raised some money for Medicine Man. Would you mind just discussing how that experience was for you?
Andy: Yeah that was fun. Well I had been chasing money for three years because Pete and I when we started we had some seed money from my mom and what little we could scrape together and we just; every dime we made we put back into the business to be able to cultivate more and better and I didn’t take a salary for the first couple years. I worked another job to boot. And so in order to stay on the forefront of the cannabis industry here in Colorado we had to work really hard to make money to spend money, and so I tried finding money that we could borrow in order to expand faster and ArcView is what gave us that opportunity.
So Troy Dayton the leader of ArcView told me once that they were because they; ArcView is if you don’t know it’s a Shark Tank for the cannabis industry. They bring qualified investors together with entrepreneurs who need money and they provide that forum for the qualified investors to listen to those entrepreneurs and make a decision whether or not they want to invest. So it brings people together for that purpose and he told me; and then when they first started it was just for ancillary businesses. So if you were maybe BioTrack and supporting the cannabis industry with your software it might be a place you would go and get money or other people it supported in the ancillary faction didn’t touch cannabis to get money.
And he told me that someday they were going to open it up to cannabis businesses and I said well as soon as you do let me know, and so I got that invitation in the summer of 2013 and there’s a selection process that I had to go through and was able to do that and able to present. I was the first cannabis company to present with them and we were able to raise about $1.6 million in unsecured loans through its members in order to help build our newest and greatest cultivation in our facility. So since then we’ve actually improved upon what we do and we have newer and better now but at the time it was the best. It enabled us to double in size from 20 to 40,000 square feet in one build which was fantastic.
Matthew: Wow, wow. That is amazing.
Andy: Yeah it was fun. We really enjoyed that.
Matthew: Now one thing I neglected to mention which is a huge deal really is that you were on MSNBC’s Pot Barons of Colorado which was a show that kind of gave people an inside look into the life of people in the cannabis industry. How was that experience for you?
Andy: That was a lot of fun too. The Executive Director of that, Gary Cohen and his crew did a phenomenal job and they did just hours and hours and hours of footage of us and I really liked them and they didn’t ask us because we’ve had other camera crews follow us and they’re always wanting us to act out a scene that helps their drama a little bit and while we don’t do that Gary’s crew never asked us to do it. They would ask us every once in a while to relive a moment that they didn’t capture, but they didn’t ever ask us to do something that was fake and they just got that raw footage and it was just so much fun doing and I had a really good time watching that in that I got to see some of my friends like Bob and Trip and others in their normal day to day life that I don’t necessarily get to see all the time so it was great.
Matthew: And in closing Andy how can listeners learn more about Medicine Man and all you do?
Andy: Well you can go to our website which is www.medicinemandenver.com and at that site you can hook up with all of our social media outlets and what not and see lots of pictures of our facility and then you can also go to if you’re looking for a consultant or would like to learn more about what we do on the consultancy side you can go to www.medicinemantechnologies.com and soon we’ll be having a website for our production company but that remains to be done yet so.
Matthew: Okay well Andy thanks so much for being on CannaInsider today. We really appreciate it.
Andy: My pleasure. Thanks for having me Matt.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, simply send us an email at feedback at cannainsider.com. We would love to hear from you.
Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.
[2:03] – Andy’s background
[3:20] – Tour of Andy’s grow room
[6:56] – Andy talks about the climate control system in his facility
[8:54] – Andy discusses controlling pests, funguses and molds
[12:13] – Andy talks about treating the water in his facility
[13:28] – Ideal growing medium for cannabis plants
[15:05] – Andy talks about using LED lighting
[17:45] – Misconceptions about cultivators
[19:41] – Andy talks about his infused product line
[21:45] – Why the dispensary is split between recreational and medical
[23:49] – Differences in dosages in medical and recreational
[24:48] – Andy talks about popular strains
[26:10] – Andy discusses extraction techniques
[27:58] – Andy’s predictions for 3 to 5 year trends
[28:58] – Andy’s ArcView experience
[32:52] – Medicine Man’s contact details