If you have a business serving cannabis growers, it can be hard to get funding. Here to walk us through her nontraditional path to funding is Liz Wald of Good Earth Organics.
Learn more at goodearthorganics.com
[00:46] An inside look at Good Earth Organics, one of the nation’s leading organic soil brands
[1:05] Liz’s background and how she got into the cannabis space
[2:33] What today’s cannabis cultivators are looking for when purchasing soil
[7:59] Difficulties in shipping soil across the country and how Good Earth Organics is working to minimize these challenges
[12:15] Good Earth Organics’ history serving cannabis growers and why the company is the go-to choice for so many cultivators
[15:22] Lessons Liz learned during her time working for IndieGoGo and her advice to those interested in crowd-funding
[24:21] How Good Earth Organics is raising capital through crowd-funding for both product development and national expansion
[25:49] How inflation is affecting cannabis and why Liz believes “the upside opportunity is 10x the expected increase in cost”
Matthew Kind: Hi, I'm Matt Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com, that's C-A-N-N-A insider dot com. Now, here's your program. If your business is serving customers that are cannabis growers, it can be hard to get funding. Today's guest, Liz Wald of Good Earth Organics is going to walk us through her non-traditional path towards funding. Liz, welcome to CannaInsider.
Liz Wald: Thank you so much. Great to be here.
Matt: Give us a sense of geography, where in the world today?
Liz: I'm in beautiful Steamboat Springs, Colorado.
Matt: Okay, what a lovely place. What is Good Earth Organics on a high level?
Liz: Good Earth Organics is a manufacturer and distributor of premium certified organic soil and soil amendments, which are nutrients that you can add to the soil, that are optimized for cannabis growth.
Matt: Okay. Liz, can you share a bit about your background journey and how you got into the cannabis space into Good Earth Organics?
Liz: Yes, sure. My career really has been in the e-commerce and internet space for about 25 years. I was really fortunate in my timing. I got out of business school in 1995, and this whole idea of e-commerce and the internet was just starting to come to life. I decided to join this little company called AOL at the time, actually a consulting firm working for AOL but they were so small, it was, we might as well have been employees back. I just loved being part of an emerging industry.
I went on to be at places like Etsy, and then Indiegogo, and after about 25 years of participating in this, in this world, I thought, "What is-- What can I do next that's also emerging and growing and exciting and new, and really disrupting things?" Cannabis obviously popped right up, especially as someone who generally lives in New York where the East Coast is just starting to see cannabis come to life now. I saw, "Wow, this is emerging just like the internet and e-commerce world was emerging in the '90s."
Matt: Yes. What's the process when people are buying soils? I mean, your target customer, what are they thinking about? What's going through their head when they're evaluating, "Hey, should I get this soil or that soil?" Can you walk us through that?
Liz: Sure. We sell two major types of customers. One are the very large cultivators, the big growers, and then we also sell to the home growers. The big growers, they're really thinking about two things. One is the quality of their crop, is it a high-yielding crop? What they're trying to achieve at a THC level or CBD level or combination or whatever it is. Are they going to get what they need from the inputs that they're using? That's one thing they think about.
The other thing they think about is, "Are we going to pass all the state and local tests that we're going to have to pass in order to sell this crop?" If you grow this amazing crop and then you take it to be tested, and you fail because of contaminants, that's a disaster. Those two factors, is it going to be a great product, is it going to pass all the tests, are major considerations for a serious cultivator. They really think about plants are a little bit like people, you are what you eat. Whatever you put into the ground is going into the plant, and so that's a big consideration for them.
For the home grower, I think they're thinking about, depending on how sophisticated they are, its like, "I want a really good quality soil, and I want to see this thing grow but I probably don't want to have to do a huge amount of work. I want to water it, I want to check on it, but can I buy something that's going to create this great product, but also be pretty simple to use?"
Matt: There's a more sophisticated buyer, now they're thinking a lot a lot about the benefits of the soil and all these other considerations. Where do you see that going? Where are we going to be in three to five years from now in terms of soils and what they can do and what people will be thinking about when before purchasing?
Liz: Well, I think like many crises, lots of innovation comes out of it. I think with this pandemic that we've all been living through for the last year, people have thought a lot about the products that they buy and the things that they eat and the recreation that they do, and things like organic gardening have not seen a boom like this since World War II. We've got lots of people just really paying attention now, now that they have time to do so, of what's going into their food.
Likewise, in the cannabis industry, we've got people becoming much more sophisticated in what they're able to produce and regulators becoming much more sophisticated in testing what's in that product. Everybody's concerned about having consistency and safety. I think we're going to just see increases in all of these trends, more natural and organic products, much more of back to this earth feeling that individual consumers have been doing over the last year. The organic, certified organic products that have pesticides that are made from natural ingredients as opposed to chemicals are the kinds of things that are only going to increase in both supply as well as demand.
Matt: Yes. What's the breakdown of bagged soil purchases versus let's say a truck delivery or some other way?
Liz: Sure. Good Earth Organics is based in this beautiful part of Southern Oregon, pretty close to the California border. This area is really thought of as the emerald triangle or as I like to say the Napa Valley of weed because people get that analogy. We've been there for about 12 years selling to cultivators who are growing large-- Have large businesses growing outdoor. Those customers come to us and buy big truckloads of soil or have us delivered these huge totes that weigh 600 pounds or 1,000 pounds of soil because they have just large volumes. We also bag our soil and sell that to people who just need a couple of bags of soil or maybe a pallet of soil.
Traditionally, the bulk of our business has been in this larger format trucks, totes bulk soil. As we build our company and look to expand to markets throughout the entire US, we are doing a lot more business in our bagged soil and creating a brand around it, just really building that Good Earth Organics brand. We're also selling online and so we, from either our own website or Amazon, people come on and buy bagged soil from a consumer standpoint. I think we'll see a much bigger or a much more of a balance between the bulk and the bag as we grow and more consumers are interested in filling their back gardens as well as these home growers.
Matt: Okay. It's a difficult thing to move around and ship and do that sort of thing. How do you think about that? Like, "Hey, I want to reach customers with bags, I want to deliver with trucks," you mentioned pallets. It's a heavy thing to ship so how does that all work?
Liz: Yes, it is a little bit heavy to ship. It's not hard to ship because it's soil. It doesn't break or anything like that, but it is heavy and that's one of the main reasons we're looking at geographic expansion. One of the first markets that we've been to and that we've been selling in for the last about year is Oklahoma. I know you've had guests on your show talking about what's happening in these states that are really burgeoning, and Oklahoma has something like 6,000 licensed growers and they are all really new to growing cannabis. They've only been doing it for a year or two. They really appreciate the education that comes from a company that's been doing this for a long time.
With that market, we've been bagging up our soil, putting it on pallets, and trucking it to Oklahoma. Our goal is to really have a soil yard in Oklahoma, be able to serve that market directly, not have to ship you know truckloads of soil halfway across the country, and then be able to reach the southeastern part of the US from that location as well. Ultimately, we would like to truck less and build more locally. In a perfect world, we'd have maybe five or six regional areas where we're producing soil from, and then be able to build from there.
Matt: They probably get a lot of people from Texas coming up to Oklahoma, I imagine.
Liz: They sure do. Texas, I was looking at the map the other day. I think there's now 38 states that have some form of legalization passed and every single bordering state around Texas has a legal market, every single one. I think the pressure is on the Lone Star State to come over to the green side as it were.
Matt: I didn't ask but when I was younger, I read a book called The Good Earth by Pearl Buck.
Liz: Oh, that was an excellent book.
Matt: Yes, it really was an excellent book. There's a few that I read that long ago that leave a lasting impact like that, but is that where the name of the company comes from, Good Earth?
Liz: I'd love to say yes but I don't know that that is true. The company was started by a former chemist, someone who was in his '60s at the time. He was retiring from being a chemist and was living in Cave Junction in this area where our soil yard is today. He just believed so much in using natural and organic things to grow.
Because he was a chemist, he really understood both the needs of the plants from a nitrogen, potassium, phosphorus standpoint as well as how you could create the balance in the soil you need from ingredients like seabird guano, or bat guano, or earthworms, or coco coir , or all the things that go into our soil. There's actually no dirt in any of this soil. It's not like someone's going into the backyard, digging it up and putting it in a bag. It's all made from natural, organic ingredients, that are blended together to get this right chemical balance.
For him, the idea of 'good earth' was super important. This earth should be good, you could literally eat it. It wouldn't taste great but it's not going to hurt you. Then of course organics, our whole focus is on being certified organic products so that you know everything in there that's going to go into your plant is okay to go into you as well. It's not going to be synthetic, pesticides and chemicals and contaminants and all that stuff. To me, I think that's probably where it came from, but the next time I talked to Roy, I'll have to ask him for the specific story.
Matt: There's a handful of soil companies I can think of. How do you stand out? Because you know that your customers are evaluating much. They go to Good Earth, they go to this other one. It's like you want to be top of mind and you also want to fill their exact needs. How do you make sure you have this unique selling proposition for your prospect?
Liz: It's a good question. I think the way I think about it is you have to have a very consistent and a product that they can trust over and over, but you can't just tell people, "Trust us." The fact that we have 12 years of growing experience with cannabis growers, who come to us year after year, give us input, ask for different types of, "Hey, I'm looking for this kind of result. What would you recommend? Could we try and blending these two or three things together?"
We've had so much time working directly with folks like that that when we go into a new market, we can say, "Hey, you know what? We make this great soil but your market here, you guys really are going to need to grow indoors because there's too much humidity or your soil, the groundwater isn't going to work for you," whatever it might be. Then, we can say to them, "Hey, we've got this range of products. We have these soils. We also have all these amendments and we can really help you dial in what you actually need."
I think that capability is something that's really hard for another company just snap their fingers and replicate. To me, it's about education, it's about quality inputs, but it's also about really having a relationship with the customer and knowing that they can give us a feedback and that we'll be able to respond to that in some positive way.
Matt: I'm sure repeat buyers is a good indicator in terms of how loyal they are to your brand. Is that something you look at?
Liz: Totally. The people who've been purchasing from us for a long time in Southern Oregon, they've been great. They've done some videos for us and they get really excited talking about the soil. We don't really have to write a script or anything. We're just like, "Tell us about this," or like, "It's amazing. I just put it in the ground and we get these awesome plants." It's really fun to hear this because you know that they mean it and that they were using it year after year after year.
Many of them, these large cannabis cultivators, they also have gardens and orchards and other things, and they're using the soil for all of that as well. They truly appreciate it. We've got this one video up on our website of a woman named Joy who's holding this radish that looks like an apple. It's huge. She's like, "I grew this in Gaia's Gift and it tastes amazing. It's crunchy, it's sweet. It's incredible." Those are the kinds of stories that keep us working hard every day.
Matt: You worked at one of the crowdfunding platforms, Indiegogo. What were your key learnings or takeaways from how to successfully do a crowdfunding when you were there?
Liz: At the end of the day, what I really learned is that crowdfunding is really, it's marketing more than it is finance. It's all about, "How do you tell your story in a compelling way so people want to support you?" People want to support the companies. People want to support the vision. It's not about trying to necessarily just say, "Hey, give us your money and we're going to make this great product, and you're going to be happy." It's, "Support the vision of this company. Support the bigger idea of what does organic mean? What does great soil mean?"
Yes, you've got to raise some money and we're going to hopefully give you a tremendous return, but it has to be more than that for people to really buy in. It's really about how do you market it and how do you tell your story. I think that was probably the biggest takeaway from my time there, is to focus on that, and the fundraising part of it will come. If you focus on the relationship with the person who's going to fund you, they will actually give you the money but if you just focus on the money, it's much harder.
Matt: Correct me if I'm wrong here, it's like most of the ways that people get eyeballs on their Indiegogo campaign is if you're on the Indiegogo email list and you see it that way, but then everybody else, the only way they find out about it is that it's shared via someone that's on that list or it was shared from someone else. The sharing component, you want to embed something that makes you want to share it?
Liz: Absolutely. Email, social media, all of these places of-- Please tell people why you wanted to support this and get your friends to do it. I always use this analogy of a restaurant. You can hear about an amazing new restaurant that's opening in your neighborhood. This top chef is going to be there. She's been written up in 15 articles, and it's awesome. If you go down to go to that restaurant and there's no one in that restaurant, you won't go in despite how amazing it is supposed to be. You want to see other people there. If you go down there and there's a line and you're like, "I got to go to this restaurant."
That's exactly the same thing in crowdfunding. If you show up at a page and they've raised $1, that's not so great. If they've raised $ 1 million dollars but it's only from one person, that's also not so great. You want to see they've raised a million dollars and there's hundreds of people that are supporting this. Like, "Oh, this is something that I need to learn more about. There's other people who believe in this thing." That's really the key.
I always talk about that crowded restaurant analogy. If you can run a campaign successfully, you're going to have lots of people who are also going to want to tell their friends about it and you'll have hundreds if not thousands of supporters. I'd rather get 10,000 people to give me $100 than the reverse because you want to have lots and lots and lots of people spreading the word.
Matt: I'm not ashamed to admit that in many cities that I've walked around in, I get in a line if I smell something good and I see people in a long line, sometimes I'll just get in line.
Matt: I don't even know what the food is or anything, but I'm just like, "I'm going to see what's happening here because it's something special." I'm not disappointed when I find out.
Liz: Exactly. Crowdfunding is also-- There's a couple of kinds like we're raising capital for Good Earth organics using equity crowdfunding which is where you actually gets shares in the company. Other kinds of crowdfunding is you're purchasing an item in advance or you're getting rights to go to a film before other people see it, that kind of thing. With equity crowdfunding, you're actually get a little bit of ownership in the company.
I think one of the things that's really cool about the way we're doing it is we're opening that to everyone. You don't have to be an accredited investor. It's a pretty small initial investment. I think the minimum is $1000. We're trying to make this really open to lots and lots and lots of people, not just a certain group of people that can do these private investment type opportunities.
Matt: Formerly, this all used to be done to only accredited investors, essentially people that I think have over $ 1 million dollars net worth outside of real estate or make over a hundred or $350,000 two years in a row. I think it's something like that. Can you explain what the change was in the law that allows the ability to buy shares in the company?
Liz: Sure. Well, there were some-- changes in crowdfunding came along in with Obama, he brought in this idea of being able to open this crowdfunding to regular everyday investors. It took a while for all the laws to kick in. There's a few different laws out there. There's Regulation A there's Regulation C, there's Regulation CF, but essentially, it was a way for the SEC to say, "We're going to create a structure that allows a company, like the size of Good Earth Organics, that has been around for a while and has audited numbers," but to say, "Hey, you know what, we're going to do this public offering without using a big investment bank without spending all this money on a road show, without limiting it to only a certain type of investor. We're going to make that available to lots and lots and lots of people."
With the government, the SEC said is you can raise up to $10 million or up to $20 million or up to $50 million depending on what regulation you choose. We're doing Regulation A and we're looking to raise up to $10 million. We could go as high as 20 under the law, but it's essentially a way for regular people to say, "Hey, the SEC has looked at this company enough to say they can go ahead and make an offering. They've got financials that I can read and look at. It's not like they can just make up what they want and just put it out there. There's been some checks and balances, but we can open it to the regular everyday person."
Matt: Some of your insights from working in Indiegogo, how did you apply them to your crowdfunding campaign?
Liz: Well, the first thing I did was redo our video. I was like we need to make an emotional attachment to soil. We need people to understand why soil is important and why it's particularly important in cannabis. Having a bunch of executives talking about the financial returns, isn't going to do that. We really rethought our video and the video is a really important thing for investors or anybody of any kind of crowdfunding campaign because it gets to the heart very quickly of what the company is about and what the product is about. We show our soil yard, we show actual cultivations. We show people with their hands in the soil. It's a great reflection of the culture and the values of the company.
Then we can go from there to talk about, "Hey, this industry is growing 20% a year, year after year. Organic soil is going to be a $3 billion market doubling from today, all those things but the first and most important thing was grab that initial emotional attachment. That was the first thing I did then everything else was pretty easy because we have a great product. That's easy to explain to people it's not complicated. It's, "This is really good soil, put your plants in it and they're going to grow and be great." It's not a complicated technology product or something.
Then connect with the people. If you can talk about the fact that, "Hey, the people that run this company day to day, they know how to grow cannabis. They've been doing this for years. They are part of the local community. You can trust that they know what they're doing. I think that's the other big piece, is like, "Are the people behind the company ones that you can believe in?" If you can make that emotional attachment, connect to the people and then have an actually great product in a booming market, those three things should come together to be successful.
Matt: What will the capital go into that you raise? What do you use it for?
Liz: We're going to have a couple of different things. One of the things I've mentioned earlier was we want to do geographic expansion. We want to be able to either go and build our own soil yard in a location or find a small company like Good Earth Organics that's been around for 5 or 10 years serving a local market. We could come in and use the capital that we've raised to acquire that company and build from what they've started to develop more products and the like.
We are also potentially interested in purchasing other amendments or soils, brands that we think would fit in with the Good Earth brand as well as do a lot of our own product development. A big piece of our approach is after we raise this capital, we're going to do a direct listing on an OTC market which means those shares are going to be public quickly and there's going to be liquidity for the investors, but it's also going to give us, we hope a chance to use our stock price to be able to do some of these acquisitions and expand quite rapidly. Rather than trying to do it one or two sites every couple of years, we want to be able to knock out a few every year. That kind of thing.
Matt: One of the things I like to ask about business owners and executives that deal in physical goods and have staff as opposed to something like software, do you see inflation at all in your cost of goods or in taxes going up or healthcare, or just any of your inputs because we see like, they say it's around 2% CPI but there's-- that's not evenly distributed. Do you see input costs going up? I imagine that would be going up for a year, a lot of people, not just Good Earth Organics, but other companies in the space?
Liz: Certainly these costs are ones that we are trying to manage the best that we can at all times. I think one of the reasons people say, "Well, hey, can you use your soil for other products like tomatoes?" I'm like, "Absolutely, you sure can." The good thing about cannabis is that the wholesale price for a pound of cannabis is anywhere from $800 to $4,000. The good news for us is we might be at a business that has to deal with that 2% inflation, but our industry is growing 20% to 25% year over year, for the foreseeable five years, at least if not 10 at that rate.The upside opportunity in our market is 10 times the expected increase in costs.
I think we're in a very much a beginning of an exploding market with loads of share to be captured. I think from that perspective, all we're really thinking about is growth, growth, growth, growth, growth because we know we'll be able to do that profitably with the right strategy and the right capital behind us to be able to execute on these things right now and make ourselves in a good position for the future.
Matt: It's so much more fun being in a category that's growing so much this green wave, isn't it, Liz?
Liz: It's absolutely the case. No doubt about it.
Matt: I'd like to turn to some personal development questions to help the audience get a better understanding of who you are personally. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Liz: I was thinking about this question about these kinds of impacts. Came to the cannabis industry out of the blue as it were. For me, when I think about what really impacted me from this perspective, I read a couple of books that really helped me understand the cannabis industry and the soil industry. Even more so than the business books that I've read, these have really had an impact now. I think anyone who's looking at the cannabis industry, one book I'd really recommend anybody reads whether they're a consumer or on the business side is Steve DeAngelo's book, The Cannabis Manifesto.
I'm sure you know the book well, but it's such a great background, not just on the benefits of the plant of which he really details amazingly well, but he also takes the reader through the social justice issues and how we got to where we are today and why the market is the way it is. He's a great writer. It's just I thought great foundational book for anyone who's looking to understand the space a little bit better. That was one.
Then the other book I read, when I joined Good Earth Organics, I really wanted to understand this idea of living soil. Like what does that mean? I read this book called Teaming with Microbes and it's the organic gardeners guide to the soil food web, and this idea that soil is a food web is incredible to me. The first half of the book, you feel like you're back in high school biology or college biology class, it is detailed. The back half of the book is like once you get through the reminding yourself of the fundamental biology, the back half is all about how you use that in practice and that we can grow amazing plants or even a beautiful green lawn with all-natural products.
I remember at one point in the book, they talk about an old-growth forest. They're like, "Hey, you know what? An old-growth forest doesn't have any external pesticides or chemicals or anything. Mother nature has found the perfect balance of everything that you need. I felt like that book really helped me really understand the industry and what this means to have this living soil and how important it is for our planet that we get back to this kind of growing and away from so many of the more chemical things that are out there.
Matt: What's the most interesting thing going on in your field besides what you're doing there at Good Earth?
Liz: Well, as someone who's living on the East Coast a lot of the time, I think the most interesting thing is watching the pace of legalization potential happening. It's also at the federal level if we could get the safe banking through and whatnot. I think we're going to see dominos fall so quickly, so it's really interesting to be there and watch a state like New Jersey legalize and then across the river have New York scrambling like, "Okay, we got to get this done, and we've got to get it done now." That's been really fun to see.
Matt: What's one thought you have that most people would disagree with you on?
Liz: I want to stick with New York on this one. I think a lot of people think the pandemic is just going to wipe out New York for the next several years. I have a little more faith in New Yorkers than that. I think that the creativity and entrepreneurial spirit of people in New York are going to find ways to bring this city back quickly, and I actually think cannabis has a big role to play in that. I think the tax base is going to help us get the legalization happen quickly, but there's such an array of different industries from creative to pharmaceutical to restaurant to beverage. I think we're going to see some amazing companies come out of this, and they're going to come out of it in New York.
Matt: Interesting. Well, Liz, as we close, can you tell growers how they can find out more about your soil and also about your SeedInvest crowdfunding campaign?
Liz: Sure thing. The best way to find out about our soil is to go to goodearthorganics.com and you can see products there. Also, you can find out how to contact us if you're a wholesale buyer and you're interested in placing some larger orders, so goodearthorganics.com for that. For those who might be interested in learning more about investing, I encourage you to go to seedinvest.com/goodearthorganics. Of course, you can also link there from our own website, but you'll see that it's $1.65 a share, and open to everyone, and just a $1,000 minimum investment.
Matt: Great. Thanks so much for coming on, Liz. We really appreciate it. You're in a great business. I think this is going to help heal the planet and best of luck to you.
Liz: Thank you so much, Matt. I really enjoyed it.
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