Most Recent Interviews
- Master Grower Shares Secrets of World Class Cannabis Cultivation and More (Encore)
- Adina LeiferEp 374 – Surging New Interest in CBD for Pelvic Pain, Physical Therapist Explains…
- Jeff SampsonEp 373 – The Rise of Cannabis Dark Stores
- Cooraez KeshvaniEp 372 – Is Crypto the Answer to Our Cannabis Banking Problems? He Says Yes…
Is California the Hunger Games of cannabis?
In the face of regulatory failure in California, black market cannabis thrives as licensed sellers and growers – much like the pledges in the Hunger Games – compete to survive in a dangerous world controlled by The Capitol (Sacramento).
So what happens next? Will state leaders see the error in their ways or will dispensaries and cultivators unite to force a change? Here to help us answer this is Seibo Shen, CEO of Hanu Labs.
Learn more at https://hanulabs.com
Seibo Shen’s new product The Hanu Stone from hanulabs.com
- Seibo’s background and how he came to enter the cannabis space
- How California’s cannabis market has evolved over the last few years
- Disadvantages that licensed growers and dispensaries deal with compared to those in the black market
- How the black market has impacted the vaping crisis
- Why so many cannabis businesses are undergoing financial difficulties
- Slotting fees and why brands must pay to get their products on dispensary shelves
- An inside look at Hanu Labs and its new, award-winning personal vaporizer
- How Hanu Labs is unique to other big players in the pod manufacturing space
- Where Seibo sees California’s cannabis market heading in the next few years
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 cannainsider.com. That's C-A-N-N-A insider.com. Now, here's your program.
Is California the "Hunger Games" of Cannabis? Dispensaries and licensed growers are like the pledges of the "Hunger Games," running around in a dangerous and competitive world that the capital, Sacramento, controls. In the face of regulatory failure, the capital turns a blind eye to the market being flooded with black market products. What's to come from California?
Will the capital see the error of their ways or will the dispensaries and cultivators unite to force a change? Here to tell us more about the California market is Seibo Shen. Seibo, welcome back to "CannaInsider."
Seibo: Hey, thank you so much, Matt. I'm super excited to be here and what a cool intro, I mean, to somehow figure in how to put in the "Hunger Games." That was awesome. I was listening with excitement and happy to be here.
Matthew: Great. Great. Give us a sense of geography. Where are you in the world today?
Seibo: I'm in San Mateo, California. That's about 15 minutes south of San Francisco.
Matthew: Okay. And you've been on the show before, but it's been at least two years. For new listeners, can you just give us a snapshot of your business and your background?
Seibo: Yeah, absolutely. So, the last time I was on, I was running a company called VapeXhale. They make desktop vaporizers. And for those that aren't familiar with a nomenclature of desktop vaporizer, these are the first generation of vaporizers that weren't like the vape pens that you would carry around in your pocket. But these actually plugged into your wall like a desktop computer. So, when I was first on, we had created the highest rated desktop vaporizer, and since then, we utilize the technology that we learn from creating the desktop to create our first portable, the Hanu Stone.
Matthew: Okay. And what were you doing before you got into the cannabis industry?
Seibo: So, prior to the cannabis industry, I had a career in the high-tech space. So, I graduated in college. I had actually been looking to become immigration attorney, but law school just didn't work out for me for I could go into the tons of reasons. It wasn't right for me, but I had previously been selling software for various software companies like Salesforce and LinkedIn. And after a few years...not a few years, 12 years of selling software, I decided it was time for a change. And then I decided to get into the cannabis industry.
Matthew: Let's talk a little bit about California. Let's orient listeners so they can understand. It's really just a unique animal. If you were talking to a friend that was from a different part of the country, how would you explain the California cannabis market where we started a few years ago and where we are now?
Seibo: Yeah. So, the cannabis industry like many other new industries, it changes quite rapidly. So, even from let's say 9 to 12 months ago, I feel like California is a different climate right now. But I think when people think about the good old days, they're talking about pre-Prop 64 when we were still in SB 420 in Prop 215. And this is when we were very much more patient-focused.
The environment was I would say...I don't wanna say much more compassionate than it is today, but as the industry began to formalize and organize, we quickly started becoming less about compassion and more about profits. And there's nothing wrong with that. That's all what we were expecting, but I think that the quickness in which it changed caught a lot of people off-guard. There were a lot of legacy companies, pre-Prop 64 that were doing quite well that have had trouble making the transition either waiting too long for licenses or trying to lease buildings, but the price of the buildings would be too expensive and just struggling to evolve their business where it could survive in today's climate.
And on the inverse side, we have giant MSOs, Canadian LPs who have raised 8 figures, 9 figures, sometimes 10 figures in capital, and they came in with a strategy of just offering the lowest price possible. And in many cases, while that did help them buy a market share, they also found out that some of the price points that they were offering were not sustainable and not the way you would build a healthy business with. So, they kind of shot themselves in the foot.
So, I think if I were to give someone that was brand new a snapshot of today's landscape, I would say that it is very much a dog-eat-dog world where everyone is really looking at figuring out how they could save more margins for themselves while at the same time struggling with all the taxes that have to be paid on the state level, which are... depending on which municipality you're in could be between 30 and 35%.
Matthew: Okay. So you talked about disadvantages, yeah, taxes. What are some of the disadvantages that license growers and dispensaries are dealing with compared to the black market while illicit has much more freedom? What are the disadvantages for people that had to actually have a license and competing in the regulated market?
Seibo: Yeah. So, I think there are many, many differences, and I'll try to go over what I think the major ones are. But obviously, the cost of doing business is much higher when you are in the legal market. You have to have compliant packaging. You have to get your products tested. You have to utilize a distributor. And each of those checkpoints requires additional capital and shaves off your margins. Now, when you're on the black and illicit market, you don't have to go through any of that. And on top of that, there are the taxes. So, it's kind of like a double, triple, quadruple whammy, depending on how you're looking at it.
And in the earlier days, Prop 64 and SB 420. I would say those days. I don't wanna call it the "Wild Wild West," but there was much less oversight. There was still testing being done to make sure that there wasn't any pesticides or things like that in your edibles or concentrates, but at the same time, the packaging requirements were quite a bit less. And this allowed a lot of mom-and-pop and artisanal shops to be extremely competitive because they would have products that were very unique and were differentiated.
But in today's day and age when you have to factor in all the different compliance, testing, distribution cost that you have, it really made it tough for these artisanal shops to compete. And this is why companies had to really scale up in order to still have margins left over after paying all the different people within the value chain.
Matthew: And just for listeners outside of California, could you just summarize what Prop-64, SB 420 are?
Seibo: Yep. So, SB 420 and Prop-215, that is what we had prior to Prop-64, which is when we had adult use in California. So, prior to that, we were a medical state. I don't know the details enough to delineate where Prop-64 or SB 420 and Prop-215 kind of bled over on each other, but this is when we had a medical market. This is when instead of giving product for cash, we would be giving product for what they would call donations. And it was just a different environment where there was just less oversight on what we were doing, but at the same time, we were kind of like a self-regulated industry. Like the people within the industry, if you were putting out bad products or products that were testing poorly, it was almost like we self-regulated and got rid of those bad actors.
Now that we're in the Prop-64 days and we have adult use, now we're counting on the legislators to kind of be the big brothers and give us oversight. But when you are giving this power to people that don't have a close understanding of how people utilize the plant, then, of course, they're gonna make some mistakes. And we knew that this was gonna happen. We just hope that the mistakes would be fixed more quickly than they actually are right now.
Matthew: Yeah. I think that's what...you said something interesting there. The industry self-regulates in a way, and bad actors don't thrive. People don't buy again when they like the product. And I think that's something we don't really think about too often like solutions do emerge in the absence of regulation. There could be consumer reports for cannabis that's $1.99 a month that would be an app on your phone that reviews. They only take money from their members, and they review the products and test them and so forth. So, a lot of things do emerge without state regulation.
And right now, the California regulation is...I would say as you described it earlier is tone-deaf. But I wanna go back to what the black market looks like right now. Do you have friends or family members that feel more comfortable buying on the black market? Can you talk a little bit about that?
Seibo: I would say the vast majority of people that I know under the age of 25 buy from the black market. And this is just my own experiences. So, I wouldn't use this as a blanket statement. But I would even go as far as to say pretty much everyone under the age of 30 that I know utilizes the black market.
And obviously, as you get older, you have more disposable cash, and you have more to lose from buying things on the black market. So I think that my older friends tend to have that mentality. But if they were given the choice and there was no risk from buying from the black market, I think the vast majority of them would opt for it.
I've only been to a handful of these, what they call secret sessions. But when you go to these things, it doesn't feel like you're going to a black market event. It very much feels like you're going to a pre-Prop-64 event where there's a lot of vendors that have a lot of great products, and you don't have to pay for samples. You could just give it a try.
So, I would even argue that the buying experience at these sessions is more enjoyable than going to a dispensary where the bartender is really pushing a product that the dispensary owner wants them to push versus giving the customer the type of product that they actually need. And obviously, there are huge massive savings when you're going to the black market. So, I would say the buying experience, the money that you save, these are all big reasons why people have opted to, even with the legalization of cannabis in California, to continue buying products off the illicit market.
Matthew: Interesting. Where do you think we are in the vaping crisis and how is the black market impacted that in your opinion?
Seibo: Yeah. So, while I was just singing some of the praises of the black market being cheaper and a better buying experience because there is less oversight and there's less testing, I would say that by and large, the black market is very much responsible for the vape crisis. Me being in the middle of the vape crisis, it's a little bit more difficult to have an objective view like, "Are we in the beginning of it, the middle of it, or are we coming out of it?" I tend to be a more optimistic person. So, I think that the worst part we've gotten through, and now we are beginning to rebound.
But in the case of vape pens, cartridges, and pods, it's much harder to delineate the quality of the oil inside a cartridge versus when you're looking at flour that you could smell and just kind of rotate 360 degrees in your hand. And I think with flour, just the visual cues could give you a good idea of the quality of the medicine that you are about to buy. But when it comes to oil, people look at clarity, people look at viscosities, and by and large, those are pretty good indicators, but they're not the best indicators.
So, what people have figured out in the black market is if you change the viscosity of your oil to look like thick honey, then that is the viscosity that... the regulated cartridges tend to have the highest quality oil. So if you start off with a thinner oil, you might add some vitamin E acetate or some MCT to it to thicken it up and give it that look. And because they aren't tested, the end-user, they buy a product that looks like a duck, walks like a duck, talks like a duck, but unfortunately, when they consume it, isn't the same thing.
And it's really exacerbated the situation in the cannabis space because...for those that are listening right now, there's probably enough interest in cannabis for you guys to read a little bit further and understand the difference between a quality cartridge and a bad quality cartridge. But for the vast majority of America that just reads the headlines, I think they just stop at the fact that people have been dying from these pulmonary diseases, and vaping is as bad or if not worse than smoking.
Matthew: Yeah. I'm surprised. Is there anything out there that you know of where you can kind of put in a vape cartridge or a pod and just kind of test it quickly for anything that might be objectionable that you wouldn't want in there?
Seibo: Currently, there is not. But if there's anyone listening, this could be a great business proposal and business opportunity. Like I've seen these types of testing kits for party and recreational drugs for people that go to raves, but as far as I know, there's nothing like that for the cannabis space.
Matthew: So people in the industry right now don't like to talk about it because it's not sexy, but there's a cash crunch for many businesses right now. Can you talk a little bit about that, what's causing it and what the environment's like?
Seibo: Yeah. So, again, this is one of those topics that I think you may find varying answers depending on who you speak to, but I tend to... being in the industry in California, I like to talk to a whole bunch of different entrepreneurs here and kind of combine everyone's experiences to get some sort of average experience. But when we first started talking today, we talked about how taxes have really impacted the growth of the industry, and more people are buying on the illicit market. So, I think all of it starts there.
And when there are less people buying, the retail stores are obviously wanting to carry less inventory. They wanna carry products that have higher margins. And this just starts a downward trend for everyone, and so I guess this cash crunch is also exacerbated by the fact that the BCC has been issuing licenses rather slowly. So, in addition to people waiting on the licenses...the vast majority of licenses were granted in San Francisco and Los Angeles. So, people that lived outside of those metropolitan areas still had trouble accessing the cannabis that they wanted.
So, because of this lack of availability, because of these higher taxes, people are going elsewhere to purchase their cannabis. When everyone was expecting the California cannabis market to be a certain size and it wasn't that size, we all had to figure out, "Okay. You know, we projected this much revenue for this quarter. We're gonna miss that number. Where can we make it up?"
And if we kind of rewind to what I was saying in the early stage where people are just buying less, this has led to retailers wanting to charge different things like slotting fees. For people like ourselves that depend on our partners to get paid in order for us to get paid, many times our partners were having trouble collecting on what they were owed from dispensaries. And when they can't collect, we can't collect from them. And it just becomes this cycle of accounts receivable being the main job of a lot of people.
And while this has very much impacted us, I still have a lot of empathy for our partners because I know that they're going through the exact same thing. It's a trend that...I mean, virtually every company that I've spoken to when I've expressed my own lack of effectiveness of collecting money that was owed to us. That's when I realized everyone is dealing with this.
And when you're looking at treating the symptom, I don't think you'll ever get to a solution. You really need to look at the cause, and at least in my opinion, the cause all starts with these higher tax rates that consumers have to pay in order to buy whichever cannabis product that they were used to buying in the past and having to pay 30 to 35% more for it.
Matthew: So you mentioned slotting fees there, and for some listeners, this might be the first time they've heard that or understand what that means. But in a dispensary, there's shelf space and there's...obviously, some shelf space is better than others, and it gets more exposure to people coming into the dispensaries. Can you talk a little bit about slotting fees, how much they are and how that works?
Seibo: Yeah. So what's interesting is slotting fees was a new concept to me, but as I spoke to more people in retail, slotting fees is quite common in most retail channels. And for example, so if you walk into a grocery store like Whole Foods, the packages and the products that you see that are eye-level, they tend to pay a premium for that because they know that when you are eye-level, there's a higher probability that someone chooses your product.
Also, if your product is at the end of the aisles, those are premium real estate areas where more people tend to see your product. So, when it comes to the cannabis space, retail stores especially the higher-end stores are beginning to charge slotting fees so that your product is placed in a certain area or on a certain shelf so that customers that come in that may not have familiarity with your product will see it first.
And the slotting fees that I've seen, they have been as low as $1,500 a month and as high as $20,000 a month. And when I asked the dispensary store owners why they started doing the slotting fees, many of them gave me the answer that it was because that business was down. They needed to figure out a way to make up for the loss in revenue. And a lot of the larger companies that we mentioned earlier, the MSOs or the Canadian LPs. These companies were happy to pay the slotting fees.
And as you can imagine if a company's paying you anywhere from $1,500 to 20,000 a month for slotting fees. You just need a handful of those in order to justify or cover the rent or to cover your lease of the location. And while it does seem like a smart and savvy business move, on the retail side, it does limit smaller players, the mom-and-pop, the more artisanal brands out there because...in the case of ourselves, and I'm not gonna mention any names, but we were going to open an account. The first order was $10,000. The slotting fee was $8,000. So, for us, we just couldn't justify getting paid $2,000 and giving away $10,000 worth of merchandise, and so we passed on that account.
And unfortunately, for us, I had thought that by passing, they would probably come back and give me a lower offer or give me a different offer with a lower slotting fee, but they made the business decision that they needed $8,000 slotting fee for whatever new product that they were bringing in. And unfortunately, we weren't able to come to an agreement.
Matthew: Do you feel like there's transparency then after a slotting fee is paid? I mean, a product gets moved up to a better exposure, and they get more sales as a result or they don't continue to pay that slotting fee. Is that typically how it works?
Seibo: I think that is typically how it works, and I've talked to a handful of these retailers about proposed alternatives to slotting fees where if a certain amount of inventory is moved, then a certain slotting fee or fee could be paid to the retailer but to ask for a significant amount upfront without any sales data to back it up.
Like I said, the companies that routinely pay these slotting fees, when you go to these high-end dispensaries, you'll start noticing it's all the same big boys. And these are also the same big boys when you start looking at their financials are the same ones missing their numbers by 20, 30, 40%. So, I wouldn't say that this is a strategy that seems to be working for people across the board.
Matthew: Yeah. Race to the bottom. Okay. So, tell us more about Hanu Labs, your products, and how it works and how you came up with the idea.
Seibo: Yeah. So, as we started off this interview, we talked about my previous company the VapeXhale EVO or the VapeXhale. And I've been on record saying that I would never create a vape pen, and I created the Hanu Stone, which is essentially a vape pen. But the reasons why I decided to do that was I noticed that whenever my parents or my in-laws would come over, they would use the VapeXhale EVO at my house. But one time as they were leaving, I saw that my mother-in-law was taking out her vape pen, and I just out of curiosity I asked her which one it was.
She had one of the dosist pens. She paid $99 for a disposable, and it really got me thinking about people's lifestyles and how they interact with cannabis. And seeing my in-laws as well as my parents who are obviously seniors utilize this device, it really kind of motivated me to come up with a better mousetrap.
And the first thing I wanted to do was...my in-laws and the vast majority of people that are new to cannabis are consuming cannabis, not for recreational reasons, but they think that it's gonna improve their health and wellness in some way. So we wanted to change the visuals of our vape pen. Most vape pens, regardless of their tubular or square or octagonal, are long and skinny, and to me, that reminds you of the form factor of a cigarette. And we're here talking about health and wellness. So why are we mimicking the form factor of something that's bad for your health?
And that's why we went with this stone shape, and the stone shape for anyone that doesn't know what it looks like, it's actually asymmetrical shape. And the reason why we made it asymmetrical was that...I live in the heart of Silicon Valley, I love technology, but I think even here, people are fed up with technology. We're always looking at our Apple watches. We're always checking our notifications are on our smartphone. I'm constantly deleting slack messages so that I won't be bothered and I can concentrate on work.
Well, because we were bringing out yet another piece of technology, we wanted it to have the imperfection of nature. So we made it asymmetrical. And the side benefit of that is this asymmetrical shape when you hold it in your hand, it just gives you this really great tactile feeling where you instantly start feeling relaxed. And we had also seen that many people around here were carrying what they call a worry stone, and worry stones are just smooth little rocks that you could buy on Amazon. And when you're feeling kind of anxious, you could just start rubbing it with your thumb, and it's kind of like the equivalent of like an adult fidget spinner. So, we wanted the shape to not just be visually appealing but to have that tactile sensation so that you would feel some calmness and relaxation even if you weren't inhaling from it.
And then the last thing that we did, and which I think is the most important part, is we created not just the best functioning pod but also one of the safest pods. And we talked about how vaping has come under attack over the last year due to bad actors utilizing low-quality hardware or low-quality oil. So we wanted to make sure that our pod was not only heavy metals and lead-free, we had it certified by a global standard called RoHS, which is for hazardous materials. So, we feel very confident from a hardware perspective that we are top in class.
And then on the functionality side, we created a pod that utilizes a lot of the technology that we learned from creating the desktop vaporizer. And essentially, we learned that if you have more surface area to interact with the heat, you have a much more efficient vaporization process. So, with vape cartridges and vape pods obviously creating a larger atomizer is difficult because it'll add size to the device.
So instead we did the inverse, which was we poked a bunch of holes into our atomizer. We made it more like a ceramic sponge in a solid piece of ceramic. So, when the oil interacts with the atomizer, it soaks into all the nooks and crannies. And we have roughly three times the surface area in our device, which allows us to use lower temperatures to give larger clouds and to also preserve the terpene profile. So, our value proposition is it tastes better, it hits better, and it hits smoother. And depending on what type of cannabis user you are, I think that one of those three value propositions will really resonate with you.
Matthew: So, portable vaporizer, customers just want it to work. They really don't care how it works. But on your side of things, it can be tricky to create these pods and cartridges that work just right because, for example, if it's hot outside, pods might leak, and there's all other kinds of considerations there. Can you share a little bit about your experience there with creating a pod and kind of the difficulties?
Seibo: Yeah. So, creating the pod and cartridge technologies, you know, on the surface level is it's very complex. There's an atomizer that heats up the oil then that heated oil turns into a vapor. But to your point, a lot of pods and cartridges, they end up leaking. And I had just talked about the porosity of our ceramic that gives it that great performance. So, if you can imagine that the atomizer acts like a dam for the oil. The more porous the atomizer, the more likely the oil will seep through and begin to leak.
So for us, the biggest challenge was how do we create an atomizer that is porous that will give us more surface area but at the same time have enough density so that the oil won't seep out and leak when the weather starts getting hot and the oil becomes less viscous. And this is the challenge that I think the vast majority of manufacturers have a problem-solving.
And not to pat ourselves on the back, but I think one of our advantages is that the engineering team and the team testing the hardware are all the same team. Whereas most manufacturers will leverage a team in China, and that team in China needs to take direction from the American team and then utilize their own translation of that to make a product that will fit the needs and requirements of their U.S. counterparts. Whereas for us, because we design, we engineer, and we manufacture it ourselves, there's much less lost in translation, you know, first and then also because the people building it are also the users, I think there's just a much more intimate understanding of what is a good hit, what is a tasty hit, what is unsmooth hit that is too smoky.
These are all things that we can resolve like in just a few days, whereas if you're a team in America working with a team in China, many times they have to create the product. They send it over to you. It takes a few days. You have to test it out. You have to write down the notes, translate it back to them. And this back and forth just takes a really, really long time. So I think having design, manufacturing, and engineering under one roof for us. That was our secret sauce into designing a vape product, our first vape product that is top of class, and then being able to resolve difficult issues like the porosity of the ceramic atomizer creating better flavor but also making it more leakable.
And I think like I said, it wasn't any secret techniques that we used. It was just a lot of trial and error and going back and forth with our various teams, and I think because we're all centrally located together, we're able to do that much quicker than teams that are in America that have their manufacturing and engineering in China.
Matthew: Yeah. You could iterate so much faster and also you don't have an extended team with kind of different motivations. If you're shipping your product overseas for engineering, they have a lot of customers, and you might be bottom-of-the-barrel some days, and you're sitting there waiting, waiting, get frustrated, where you could be tinkering on all of it. I guess this is kind of a trend here with tariffs and everything going on to you to come back to wherever you sell your goods to try to design and manufacture them there in that theater.
Seibo: Yeah. And just to be clear, we actually still manufacture the product in China. We have a team in Washington as well that they were previous, they back sale distributors. And they had been working with factories back in China, and they ended up having that same experience that you just talked about where sometimes their secret sauce would be exposed to other customers, or depending on their ordering volume, they would be their most favorite customer, or they would be put on the back burner. So, this group actually went out to China, started their own factory.
We aligned with them very quickly because we knew that they had kind of...I don't wanna say American business style. But the way that they did the business was very much in line with the way VapeXhale did business, and because they moved their family out there to start the factory, we actually came up with a very great working relationship where I get to utilize my creative mind, come up with new products, and then I get to leverage their larger engineering team to see if my ideas have legs or if it's just some crazy idea I had the last time I took a dab that was way too big.
And by having this type of relationship, even though we aren't physically under one roof, the cultural differences are very little, and there's a very, very high level of trust too because we've worked with each other for the last seven years. So, this was a very ideal scenario for us, and in the coming months, you'll probably see some announcements of tighter and tighter integration between us and our manufacturer.
Matthew: And who are the big players in the pod and cartridge manufacturing space, and how do you compare those for people that aren't familiar with them?
Seibo: Yeah. So I would say the 800-pound gorilla in the space is a company called CCELL. CCELL, based on what I was told, is currently pumping out 30 million cartridges a month. CCELL has other cartridge competitors like Greentank, Convectium, 14th Round.
And based on my research, the second-largest company is pumping out about 3 million cartridges a month. And there are a handful of companies that are in the 1 to 3 million cartridge volume-wise. So as you could see, CCELL is the biggest, biggest player in the space. Now, on the pod side, it's a little bit different.
We have players like Pax. We have players like G Pen and Stiiizy. And on the cartridge side, they had standardized on what they call the 510 cartridge, and that is linked to like the type of threading that is on the cartridge itself. On the pod side, there is still no standard. So, what works in the Pax device doesn't work in the G Pen device, and that doesn't work in the Stiiizy device or in our device.
And the company that we have aligned with, it's a company called AVD. They are quickly becoming the Samsung to CCELL's Apple. And the vast majority of their current customers are X-CCELL customers. So they feel very strongly that they can be a reasonable competitor to CCELL on the 510 side.
And then we are working very, very closely with them to ensure that the Hanu pod system becomes the pod standard on the pod side of things. So, there's still a lot of heavy lifting to be done, but I do believe that our combination of creativity and engineering capabilities will allow us to make a lot of headway.
AVD is a fairly new company. There are only 18 months old, but in the last 18 months, they have won accounts like Blue River, True Leaf, Friendly Farms. And if you guys aren't familiar with any of those companies, these companies are...they're basically like the blue-chip extract companies in their specific geographies. So, I think if you look at their customer base, that gives you a good idea of the type of traction that they're getting.
And we're super excited because we know that with our ability to generate ideas for new products, their ability to engineer, we have a very, very potent design and manufacturing entity under our belt. And this is just the beginning. We have a whole bunch of other products that we're super excited to bring out in their near future.
Matthew: So, a lot of business owners are running around like crazy thinking they have to do everything like be a Swiss Army knife, and they have to have every extension on that knife and do everything themselves. And that might be true in the beginning, but long term, it has some hazards. Can you talk about how you've kind of settled into your workflow and decide what to do and not to do and let someone else do?
Seibo: Oh, man, that analogy really resonated with me. I would be the first to admit that I thought that you had to be...not only be a Swiss Army knife but to be the best tool in each of those categories of the Swiss Army knife. And I think the best analogy that most people could understand is when you look at a basketball team, you know, the shortest player tends to be the point guard, the tallest player tends to be the center, and the players in between fill in the shooting guard, small forward, and power forward roles. But there are certain attributes that people have that make them more optimized for certain roles.
And for myself, what I realized about myself is I love being creative. I love making things. And many times, I would beat myself up for perhaps not being the most process-oriented person or perhaps not having the best operational efficiency. And I would stay up at night just beating myself up over these things, and as I matured in my role as a CEO, I began to realize that it's okay to not have all these skill sets under your belt. And as a matter of fact, it's probably counter to being super productive and hiring people that are experts in those core competencies where you might be weak. Ultimately, that's what is needed to grow and scale your organization.
And I can only give anecdotes from myself, but I kind of fancied myself as a decent marketer. So, I would sit in on all the marketing meetings, and I would give a lot of my input and say I would have an open mind. And ultimately, while I did say I had an open mind, the marketing team, the vast majority of programs we did were the ones that I recommended.
So, in retrospect, I started realizing I had an open mind as long as they chose my idea, and in those cases, I often...when I look back, I was like, "Well, I hired this girl because she had so much creativity. She had great execution." And here I was kind of getting in the way of her being the best marker that she could be.
So, that's not to say that you shouldn't have some sort of fundamental understanding of all the different categories of business, but understanding what your strengths are and understanding what your weaknesses are and operating more in the areas that you're optimized in. I think that's ultimately what will help your company grow and also help you get out of the way of others that are looking to grow and enhance their skill set by doing whatever programs that they wanna do within your own company.
Matthew: Well said. Seibo, I'd like to move on to some personal development questions that give listeners a sense 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?
Seibo: Yeah. So, I think the last time I was on, I shared that I liked the book on, "The War of Art," which is the inverse to the art of war, and it's to conquer the enemy within. Since then, I've read two really good books that I've probably read two or three times since my initial read. The first one is "The Four Agreements," and the second one is a book called "Sapiens" by Yuval Noah Harari.
And the book "Sapiens," it is the history of humankind condensed into I think 500 pages. It's not a short read. In my opinion, it's the one book that I've recommended that when people read it always call me and wanna discuss everything about the book. I was curious. Have you heard about the book "Sapiens" by any chance?
Matthew: Oh, yes, I've definitely heard of it, and I've actually listened to some podcasts with the author. But I have not read it, which I am disappointed that I haven't. It sounds great.
Seibo: Well, I would say that there's one specific premise that stood out to me in the book, and the author talks about how there's three different types of reality. There's objective reality. Like, it's 72 degrees outside. And then there's subjective reality, which is, you know, Matt thinks 72 degrees is cold, Seibo thinks it's hot. So, you're in a t-shirt. I'm in a jacket. And then there's a third type of reality, which is intersubjective reality, and he gives a few different examples like the stock market is intersubjective reality in that if everyone believes a stock is going up, well, the stock goes up.
And fashion is also another example of intersubjective reality where, you know, if mom jeans and bell-bottoms are out of style, and everyone agrees, well, then it's out of style. And then 10 years later, when we all agree bell-bottoms looks cool again, it's cool again. And the author posits that the vast majority of life is intersubjective reality, and it is all the stories that we agree to believe together.
And I think when you have that framework of thinking, at least for me, it's helped me more easily navigate life, more easily navigate the political situation that the United States is currently in, and helps me better understand why sapiens do the things that sapiens do. And it's always to build and add to the intersubjective reality and narrative that we live in.
Matthew: Yeah. That's a great suggestion. I wanna check that out. What is the most interesting thing going on in your field besides what you do?
Seibo: Oh, man, that's such an interesting question. As much as I love my own product, you know, I wouldn't say that it is the most interesting thing going on. Where I do have a lot of interest is in all the new cannabinoids that are being studied now. We already through experience know that when you just isolate THC by itself...while it does a good job in relieving certain symptoms, you know, we all know that the entourage effect is so much more important to someone's overall feeling of well-being.
And more recently, I think that they've found different compounds. You know, THCV and CBG were ones that they were starting to about 18 months to 24 months ago. Now I think there's like THCP and some other cannabinoid derivatives where the psychoactivity maybe even stronger than THC. So, you would utilize even smaller amounts to get the therapeutic benefit that you are looking for.
And to me, you know, the study of the cannabinoids how they interact with the terpenes. This is the area that is most fascinating to me because I understand that everyone's biochemistry is different. And I've always been on this quest to find consistent methodologies for people to utilize cannabis where they would feel confident that if they tried it this way, you know, it would be like an early morning cup of coffee. If they did it this other methodology, it would be like taking a sleeping pill.
And right now I feel like we're still at that stage of it's just trial and error, and you gotta try, you know, 5 different strains, 10 different strains until you find one that works for you. But I think that with this research into these other cannabinoids that aren't as famous as THC or CBD, you know, we'll start making baby steps towards having something that is much more predictable and consistent for the end-user.
Matthew: Seibo, what is one thought you have that most people would disagree with you on?
Seibo: You know, this one was a question that I put a lot of thought into, and I thought of a few different answers. But the one that I'm gonna give maybe is controversial, but I think is the one that will give the biggest impact. And that is that those with different political views than you are not bad people. Like in my travels, you know, I live in California. So, the vast majority of people here are bleeding liberals, and they have a certain view of people that support Trump or our conservatives. And then I've flown to conservative states, and I've heard all the different stereotypes of progressives and liberals from California.
But in all of my conversations with all these various people, one thing that I've come to in conclusion of is none of these people are bad people. They have their own opinions. They have their own perspective of what types of policies will impact them negatively or positively. But when I speak to them, like, I rarely see just like a dark and evil heart.
It's just that the way they grew up, the experiences that they have have led them to believe and interact with society in a certain manner. And as I've traveled more and I've met more people, you know, I've come to the conclusion that, you know...and maybe it's because I'm here in the heart of Silicon Valley and we're working on a lot of robotics and AI, is that humans are just like machine learning algorithms.
The types of conclusions that machine learning comes to, it's very much based on the type of data that you put into it, and humans are no different. So, if you grew up seeing immigrants coming in and taking jobs, or you've had bad experiences, like, I could totally see why you would have a certain stance on immigration policy. Conversely, if you've had great experiences with immigration, you love the cultural diversity, you love like all the different foods that you could eat, you know, and those things, and you have a totally different view.
And ultimately, what I've come to reconcile with myself is that...you know, I just mentioned that I am a liberal, but if I had grown up in areas that were much more conservative, and I was told the things that I was told, you know, I don't have any type of...I don't think that I would think any different is basically what I'm saying, and that I am a product of my environment and all the various experiences that I've had.
And by switching to this type of attitude, and I wouldn't say it was a conscious switch. It was just based on what I've seen, you know, I've been able to I think kind of go between both groups, get a better understanding of what's troubling both groups, and reconcile and come to a conclusion of like, you know, not which group is right, but what do we have to do to resolve the differences between both groups and come to a solution.
And sorry for rambling on, but the main thing that I wanted to get to you was that, you know, I realized that...growing up in California, we always wanted to be liberal and progressive, but as I grow older, I realized there are some ideas that are worth conserving. And this is why conservatives and progressives need to be able to speak to each other because there are some ideas that absolutely need to progress and get better. And then there are some ideas like being kind to your neighbor, you know, loving your family. These ideas need to be preserved. So, my hope is that with this attitude, we could start building bridges between both polarized communities and get to a place where, you know, we're living in a state where or a country where, you know, there's more hugs and there's more love and there's less divisiveness.
Matthew: Maybe after this podcast, it'd be good if you hold up a sign and go downtown San Francisco and to say free hugs. What do you think about it, Seibo, challenge accepted?
Seibo: Not only challenge accepted, I may bring a few of my kids with me who are much cuter, so my probability of giving and getting hugs is much higher.
Matthew: Great. To add to your point, it's like not only is the other side are they good people, but I actually think that both sides need the other, because if you think what would happen with any ideology that's unchecked, it's not a happy ending. They need each other to some extent, which is not something, you know, right now people wanna think about. And to your point, like, "Hey, I'm the product of my environment."
I kind of had that epiphany some time back, and I was like, "Well, what wait a second. I got my values pretty much from the environment I was raised in, the people I hang out with, the zip codes. I'm in the most...and somewhat maybe on my interests." So are they really my values or are they kind of soaked in through osmosis and then galvanized so I believe that they're mine? So I went through an exercise where I defined what I consider my values and created a personal mission statement. And I realized that they borrow from both, but they're really neither. And it's an interesting thing to consider. And I encourage anybody, there's a lot of stuff on Google, you know, this personal mission statement and how you come up with one. But it's helped me achieve kind of a true north and once I know what my individual value system is. So, I really appreciate what you said there.
Seibo: Yeah. And I think that exercise that you did, I'm gonna look that up as well and do something like that because it's really important. And one of the things that I found is as I've gotten older, you know, I'm in my early 40s now, is that, you know, these values change in the different stages of your life. So, it's good to do these exercises every few years because you're consistently evolving as a person.
I'd like to say my wife and I, we have a very, very happy marriage. And one of the things that we actively do is as we evolve, we try to make sure that we're evolving with each other so that we're not just evolving apart, and we're taking interest in the new things that we're all interested in because, you know, as I said, if I was the same person that I was in high school or the same person as I was in my 20s and 30s, you know, I just don't know if I would be as happy as I am now with this constant evolution to become a better person.
Matthew: Yeah. Well said, Seibo. As we close, let listeners know how they can find your new product, the Stone and Hanu Labs. It sounds really compelling. It reminds me of a river stone, by the way, when I look at it. That's what I think of is like a hand-sized river stone. If anybody knows, that mean that asymmetrical kind of smooth rounded shape.
Seibo: Yep. So, thank you. It was very much inspired by river rocks, and I didn't even get into the story of like how we came up with that shape. But you could find it at www.hanulabs.com. We're currently only available in California, but we are about to release a farm bill compliant CBD line. So if you are outside of a cannabis medical or recreational state, you'll still be able to purchase the product. And in California, we are in a few locations in both northern and southern California. But we are about to sign up with a direct-to-consumer delivery service so that you could just go to our website and order the product direct. So, hopefully, by the time this podcast airs, that functionality will be built in, and if not, you know, shortly thereafter.
Matthew: Great. Thanks so much, Seibo, for coming on the show. We appreciate it, and good luck in the rest of 2020.
Seibo: Oh, thank you, Matt. I really appreciate the conversation, and hopefully in two or three more years if I come on again, I'll have some awesome stories to share about how California cleaned everything up, and now everything is kumbaya, and we're all holding hands and singing songs.
Matthew: It sounds good. If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on "CannaInsider"? Simply send us an email at feedback@ cannainsider.com. We'd love to hear from you.
Please do not take any information from "CannaInsider" or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Emotional consideration may be provided by selected guests, advertisers, or companies featured in "CannaInsider." Lastly, the host or guests on "CannaInsider" may or may not invest in the companies entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listing to will get stuck in your head for the rest of the day. Thanks for listening and look for another "CannaInsider" episode soon. Take care. Bye-bye.
With online shopping at an all-time high, dispensaries are looking for more and more ways to create retail experiences that inspire customers to shop in-store.
Today’s guest is Shryne Group Executive Chairman Jon Avidor, who will explain why customers line up for his cannabis dispensaries AND what experiential retail means for cannabis.
Learn more at https://shrynegroup.com
- Jon’s background as a business attorney and what inspired him to enter the cannabis space
- An inside look at Los Angeles-based cannabis holding company Shryne Group Inc.
- Ways in which California’s cannabis market affects the rest of the country
- Why Jon believes it’s important for Shryne Group to be a vertically-integrated company in the cannabis industry
- How Jon has created experiential retail experiences so successful that customers line up at his dispensaries
- Jon’s advice on how to spark excitement in customers with fun attractions like Instagram pods, art murals for photo-taking, etc.
- The types of people dispensaries need on their team to achieve an exciting in-store environment
- Exciting things to expect from Shryne Group in the next 12 months
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 cannainsider.com. That's cannainsider.com. Now, here's your program.
In-store retail is getting harder and harder for merchants unless you're one of the few that creates an incredible experiential retail environment that excites, inspires, and creates an X factor consumers can't get shopping online. Our guest today is going to share why customers line up for his cannabis dispensaries and what experiential retail means for cannabis. I am pleased to welcome Jon Avidor of Shryne Group to the show. Jon, welcome to CannaInsider.
Jon: Hey, Matt. Thank you for having me.
Matthew: Give us a sense of geography. Where are we in the world today?
Jon: I'm joining you today from downtown Los Angeles, sunny California, and our operations are primarily located in the state of California.
Matthew: Okay. Well, give us a little overview, and what is Shryne Group on a high level for people that aren't familiar?
Jon: Sure. So Shryne Group is a vertically-integrated cannabis company with assets ranging from cultivation as far North as Humboldt County in California and as far south as Palm desert with retail locations there. We've got manufacturing, distribution, and cultivation just about everywhere in between up and down the state as well. Our operations are the result of a consolidation of some of the highest performing assets in the industry that has taken place over the past two years since I've been involved. Our main hubs are in Los Angeles and Oakland. We've got vertically-stacked licenses in downtown Los Angeles and in Oakland where we do our manufacturing and distribution, and we have retail locations as well.
Matthew: Okay. Can you share a little bit about your background and journey and how you got into the cannabis space?
Jon: Sure. So I'm a mergers and acquisitions attorney. I worked at big law firms for my entire career. Started at Sullivan and Cromwell in New York and then practiced at Goodwin Proctor in Silicon Valley. And it was a bit of a deal junkie doing a lot of mergers that were hundreds of millions of dollars big or all the way up to billion-dollar transactions of selling companies to large tech buyers or to consolidated companies in various industries, pharma, big tech, etc.
And, at some point along the road in 2016, I decided I liked working with entrepreneurs so much that I wanted to become one myself. And I launched my own legal practice and a venture capital fund early that year that I used as a springboard to work on projects that excited me. So I would work with founders and entrepreneurs who had exciting businesses, technologies, projects ideas that they were really passionate about, and that made me really passionate about them. And the venture fund was a project that I created so that I could invest alongside of these businesses that I was helping on the legal side.
So what grew out of that was the ability and the freedom to really do add value to companies and to projects that really excited me. One of those projects was a business out of Northern California that was run by a good friend of mine of 15 years who had been amassing a set of cannabis assets in Northern California that were ranging from farms to retail locations and everything in between. In 2018, I started working with this particular client and friend to develop the assets and to assist with potentially raising money, and creating partnerships, and consolidating assets into a top company that we could use to leverage and raise additional capital.
So that project kind of snowballed in late 2018. And we had created a couple of brands, used to be known as FX, and we'd started consolidating all these assets together, and that process grew into consolidating one of the largest companies in the state. And that's how Shryne Group was born, and that's how I ended up getting involved. I joined the company after having put together this legal transaction that created the Shryne Group. I joined as executive chairman in July of 2019 and have been basically merged my law practice in New York into another firm and moved to LA and jumped headfirst into the cannabis industry in 2019.
Matthew: So you've chosen California as kind of your primary focus, at least initially. That probably means you're really bullish on that geography. Can you talk a little bit why California at least is your initial focus?
Jon: Yeah. California is the largest legal market for cannabis in the world. It's not rocket science. It accounts for 25% of all the U.S. sales in the cannabis industry. It's also the epicenter of culture. We have Hollywood where influencers were born. The Kardashians came from Southern California. Style music, fashion all come from California and influence the way that people think and act across the globe. And so, California, both from a market-size standpoint and from a cultural relevance standpoint, seems like the best market to be setting trends in the cannabis industry.
Matthew: Okay. So the vertical integration there, was that part of the consolidation, or was there more of a strategy around that? Or do you feel like it was necessary if you were gonna thrive? What's the thought process there?
Jon: Yeah. So vertical integration is a product of, I think, necessity in the cannabis industry. If you look at the way that cannabis evolved as an industry over the past decade, and if you'll recall, California is probably the oldest legal market for cannabis in the world in that it's been legal since 1996, at least in the medicinal context. But in the shadow of federal regulation where it's still illegal at the United States level, the necessity grew to do business with a select few group of people who you could trust and who you could use cash with.
I mean, remember that you can't do credit card payment processing. Or, at least up until recently, you couldn't have access to banking. So this was a cash industry. And I think what ended up growing out of that is you have a very small subset of people with whom you can do business. So fast forward to recent years where the way that we do business is in this bubble of people with whom we trust.
And so the consolidation of assets across the different verticals in the industry grew out of this necessity to work with only people you trust so you can hand a bag of $1 million cash, you know, in exchange for a bag of flour sort of the old school way really had an impact on the way this industry developed. Now, from an economic perspective, it also makes sense, right? Our focus is on the bottom line.
I think Shryne Group wants to be a profitable company. It has been a profitable company since its inception, and the underlying businesses have always had a focus on generating bottom-line EBITDA so that it could sustain distributions to the partnership. And that focus on the bottom line really led us to say that vertical integration is the best way to go. And now add on top of that, from a business perspective, vertical integration just makes good sense.
You have a consistent supply of product with consistent quality, and you can trust the folks you're working with because they're your partners and you're all aligned in generating profits for the consolidated business. So that's how it came about. I think if you fast forward to the future and think about what the industry is gonna look like in 5 years, in 10 years, I don't think vertical integration is where cannabis will be. I think cannabis will look a lot like every other industry. The beverage industry is a good example where you will have distributors and brands who will be capturing a lot of the value of the profit. And you'll have commoditization at the productions and agricultural levels.
So you'll still have that sort of craft beers of cannabis where there will be, you know, growers who are maybe smaller and less large in terms of the amount of product that they can pump out on an annual basis. But for the most part, you'll have large farms that are run by conglomerated agricultural companies that are producing at the highest level and at the lowest cost. For now, though, it makes sense for us to have our own cultivation and to have our own manufacturing because those are processes that we like to control, and it just adds to our bottom line.
Matthew: To your point in the near future, interim future, there's gonna be some sort of commoditization with cannabis flour. You're combating that with strong brands and what I would call immersive experiential retail. Can you tell people a little about your recent retail opening and why customers were waiting in line?
Jon: Yeah. So retail's a major focus of ours for a number of reasons. And the first of that is there haven't really been a ton of established brands that have broken out of the camp out of California or out of any other state in which they currently operate. There's a handful of them, but the competitive landscape has not been fully set. So retail for us is really the opportunity to have a direct connection with our consumers and be putting products into their hands, hopefully, our products into their hands and really getting direct and immediate feedback as to what products are selling, what people are saying about the products, what they will come into the store to buy, and how they're interacting with those products. So retail for us is just a necessity of building brands and being at the cutting edge of the consumer's interaction with those brands.
Now, how have we executed our retail strategy? So, we were fortunate, as part of the consolidation of Shryne Group, to roll in one of the most popular and most emotionally-connected brands to its consumers in STIIIZY. And STIIIZY was born from the cannabis culture and made for the cannabis culture and so really hit...struck a chord, let's say, with consumers since it was developed really with consumers in mind. So our retail is simply a physical manifestation of the brand, STIIIZY, so far. So when we opened our downtown Los Angeles retail location, which was the first STIIIZY-branded retail location that opened, we had 4,000 people show up on the first day.
Matthew: Wow. That's great.
Jon: Of those people, about 500 waited in line overnight. So, by the time we came in in the morning, there were over 1,000 people when I arrived at 9 in the morning standing in line, you know, and we had to sort of audible at that point. We didn't realize so many people would show up, but what we did is, you know, we had to turn it into an event. So we had to bring tents, and bathrooms, and water and all the things that go along with having that many people waiting around in your parking lot.
Matthew: Yeah, that's kind of a high-class problem, but a problem nonetheless. I mean, if you and I were walking to this latest opening, could you just describe, you know, visually what people would be seeing, what the interaction would be like, and so forth so they get a flavor for that?
Jon: Yeah. And we took...there's some great video from this that we can share.
Matthew: Yeah. I can include your Instagram feed in the show notes so people can get a sense, and I'll try to get it exactly down to the open so people can see the open. Because I really want people to get a picture of this because as you were talking about how, you know, California's culture moves westward but also internationally, like, if you just have a plain old dispensary, that's not gonna fly after a while unless you live someplace where there's just such limited licenses that you get business. But that's really something I wanna get across to people, and I'll be sure to include that in the show notes. But go ahead, tell us what it'd be like to be a fly on the wall on opening day.
Jon: Yeah. So, for the first one, we kind of went a little over the top and had some fun with it. So, we had smoke machines at the front. And when we finally went to open the glass doors to the front of the dispensary, which also happens to be co-located with our corporate headquarters. So you have our sort of corporate people coming in at 9:30 in the morning to start their day walking through this line of people waiting outside and, you know, heavy security presence with, you know, armed guards around because it still is the cannabis industry and still a lot of cash that's floating around the environment here. But you would've seen basically all these employees walking upstairs going, "What is going on here?" You know, they all had an idea, but the excitement was really cool.
There was definitely a momentum in the air of the company, you know, executing on its goals and really succeeding and bringing people into our retail location. Now, what you would have seen if you were on the wall inside the dispensary was we actually had patient appreciation days, they call them PADs, where we brought representatives from many of the top brands that we sell in our dispensery to give out various promotional items and talk about their products and try to sell their products into the hands of the consumers.
So we were basically running, you know, thousands of people through the store on that first day, and people had an opportunity to speak directly with the representatives from some of the major brands so that they can get more information about the products that were being sold. So it was a riot. It was a lot of fun. But add on top of that, you know, we've done a lot to make our retail locations experiential as well. So there were certain things that were draws for people in addition to the free bongs we gave away and the discounted product that we offered, which is, I think, let's say the loss leader of bringing people in that door the first time.
Matthew: Yes. You do a lot of things. You have Instagram pods for customers in the store to take photos with kind of interesting backdrops. You mentioned the bong giveaways, huge art murals. There's kind of an element of showmanship and creating that event that you were talking about, an event-like atmosphere. What kind of people do you need on your team that kind of create this event environment that have a background in that that are capable of doing that? Because a lot of people don't even know how that's done.
Jon: Yeah. So this team has been really remarkable in that it's very gorilla in nature. So we do have top marketing professionals from some of the major brands across big beverage, big pharma, big tobacco that have added a really solid and diverse set of backgrounds to help shape what is cannabis marketing. But the core of let's say, building the STIIIZY brand, for example, came from the consumers. I mean, this came from our co-founders who were so tapped into the cannabis culture in LA because they lived it, right. I'll give you an example.
Our co-founder, James Kim, is a military veteran. He got back from his tour of duty in Iraq. And the PTSD was so heavy for him, and the VA and conventional medicine wasn't really giving him a whole lot to work with. So he turned to cannabis and created...he was also in the vape industry and had sort of built a business around nicotine-based vape back before Jewel took over the entire market and had an understanding that there was a desire to create a product similar to a vape product in the cannabis industry.
And only a few folks were doing it at the time, this is a few years ago, and so he created a vape pen that had cannabis oil in it that hit well, that also made you cough just a little bit because that was what cannabis smokers were used to. And also, it sort of made you know that you were actually still smoking cannabis. And he created a product for cannabis culture and really targeted, let's say, the 80% of sales that come from 20% of the consumers in the market. This wasn't your soccer mom's product. This was something for really the heavy cannabis users who used it to either manage anxiety or just get through life or used it recreationally to, you know, further their own personal goals, whatever those may be.
And because the focus was so heavy on the consumer, on creating a product for consumers, we were left with...really just needed to get the product into people's hands. So our marketing was simple. It was going out to the beaches, storming the beaches on weekends in Southern California and giving out merch and encouraging people to go to the local dispensaries where they could buy the product, which was rolled out to about 60 or 70 dispensaries at one time through a concerted marketing effort to get on the shelves.
And then these guys would fly, eventually when the money started being there from sales, would start flying airplanes across the beaches at the same time that they had these teams of models and cannabis users go to the beaches and give out towels, and give out beach balls, and give out tee shirts and hats and the like. So it was really this high-touch guerrilla marketing tactics that got the product into people's hands. And this team knew that once the product was on people's hands, because it was developed for the cannabis consumer by the cannabis consumer, that it would catch on. And sure enough, it did.
So Instagram followed and people started engaging with the brand. And really, it's that authentic connection more than any professional who came from Altrea on our team, or came from Red Bowl, or Shooting[SP] Preme, or wherever who, you know, are bringing us an air of sophistication to our marketing. It was really just the fact that the product was focused on what consumers wanted. And that's what I think gave us the leg up in creating at least the STIIIZY brand, and that we're trying to recreate for some of the other brands that we're building as well.
Matthew: As you look ahead the next 12 months, what excites you the most for Shryne Group?
Jon: We've got a lot of really interesting initiatives. One is, I earlier talked about retail and how big a part of our strategy that is. So, we are intending to open dozens of stores in the coming 12, 18, 24 months. We have four currently open in California. We should have another four by the end of Q1. I'd hope by the end of 2020, we'd be somewhere in the range of 20 stores or 30 stores if we really hit our numbers.
So that's an initiative that we're spending a lot of time and effort on. And, as I explained, having that direct connection to consumers where we can put our products in their hands knowing that our products are good and really are a reflection of what they want, built with consumers in mind, I think is a very high priority for us.
Secondly, I think the way that retail is going eventually for cannabis is the same way that retail went with the rest of the world, and that is people buy online. So delivery services are very exciting for us, and I think you'll see Shryne Group make a move in the delivery space sometime in 2020 and really take, I think, a piece of that market and help develop that piece of the market as well. And I think those are the two major initiatives for us as we look ahead to the next 12 months.
Matthew: I wanna ask a couple of personal development questions, Jon, to help listeners get a better sense of who you are personally. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Jon: So I've read a lot of great books over the years. The one that really stands out for me when you ask this question is ''The Alchemist.'' It's not a book about business, it's not a book about management, but it's a book about your personal journey. And, for me, what I consistently remind myself throughout my career is that there's no real endpoint, right? This isn't about making a certain amount of money or achieving a certain status.
This is really about the journey and staying grounded with the reminder that life and your career are the daily decisions and the daily interactions you have with your team, and with your family, and with your friends rather than some pie in the sky goal of creating, let's say, $1 billion company, or selling a company, or any of the other goals that I think drives people.
It's really about the journey along the way. And what ''The Alchemist'' teaches you is that finding your personal legend as the author, Paulo Coelho, says in there, is really not the goal. It's really the adventure that you embrace as you are searching for that legend. So that book really stands out as one that I read when I was much younger, and I try to read at least once a year to keep me grounded and as a reminder that it's the journey, not the end.
Matthew: What is the most interesting thing going on in the cannabis field besides what you're doing at Shryne?
Jon: So I think if you fast forward 10 years, cannabis is going to be at least 50% run by the big pharma companies. And the cannabinoids that come from the hemp, from the cannabis plant, can be created in a lab. So I think one of the most exciting innovations and developments in cannabis is going to come from the companies that are viewing this from a big pharma lens and creating and taking forward the initiative to figure out how those compounds, how the various cannabinoids actually interact with the human body and what the effects are.
So there's a company that my good friend, Mike Gorenstein, who runs Cronos Group, I used to practice law with, that Cronos Group is working with, called Ginkgo Bioworks. And Ginkgo is making strides in really isolating the compounds that are in the cannabis plant and how those affect human behavior, and human moods, and all the cool things that come out of either smoking or ingesting cannabis.
And if you can boil down, if Ginkgo is able to boil down to a very molecular and cellular level, the compounds and how they interact, I think what you'll see is a drastic reduction in the cost of producing cannabis or producing the oil that goes into all the products that are not smokable flour. So that's the most exciting thing from my perspective, at least through a business lens, in terms of really innovation and changing what the market's gonna look like in the next 10 years.
Matthew: I have a Peter Teal question for you. What is the one thought you have that most people would disagree with you on?
Jon: So I happen to think that states that are limiting the amount of licenses in their locations are not necessarily the best breeding ground for profits for cannabis operators. I think there are a lot of cannabis investors and operators out there who would say that Massachusetts, and Illinois, and Florida where there's really a limited amount of licenses are great places to invest and build companies. I would say that the states that are focused on building an industry that looks and feels more like the other industries that it mirrors, for example, tobacco or beverage, I think those states are where you wanna put your investment dollars.
And the reason for that is the states with the more developed infrastructures and the more support, both at the state level and at the local levels, are going to be the ones that create the most value and innovation. And, at the end of the day, we're just at the very beginning of a decade's long industry growth, and you wanna be aligned in markets that are supporting new entrepreneurs that are taking innovation to the next level.
Matthew: Oh, that's an interesting take on it. Well, final question here, unplanned. Since you've spent time in the New York City area, I think you went to law school outside Chicago, and now you're in California, what's your favorite food at those three places? So when you go back to New York or Chicago, what's one thing that you have to have, and then what's your favorite food in Los Angeles?
Jon: Yeah. So, Chicago, I didn't love the food that much. I think that might be a controversial statement in itself.
Matthew: I'm gonna have to edit that out being a Chicago native, Jon. I'm kidding. Go ahead.
Jon: The deep-dish pizza really doesn't do it for me. I like a slice of Joe's from New York above all and a nice New York bagel from Marie's. But LA is really interesting in that it's got an amazing array of diverse foods like...you know, the Mexican food and the Thai food here is really something special. I actually think... I remember in Chicago when I was in law school, we couldn't find a place to get a great burrito. And, I think the same thing goes for New York. So, LA's just got hands far and above the selection of amazing Mexican food, and that's what I love about LA.
Matthew: Jon, as we close, can you tell listeners how to find out more about your cannabis brands and interact with you?
Jon: Yeah, I think anyone who is a connoisseur of brands and wants to learn more about our main brand, STIIZY, should follow us on Instagram. Just @stiiizy, which is, S-T-I-I-I-Z-Y. And if you're interested in Shryne Group and what we're doing on the corporate level, our website is shrynegroup.com.
Matthew: Great. Well, Jon, thanks so much for coming on the show and talking with us, and good luck to you in 2020. You got a lot of moving parts here. We're interested in what's gonna happen and, hopefully, you'll come back on and tell us how all this has evolved.
Jon: Thanks, Matt. Look forward to continuing to grow and keep our heads down and build something special. And thanks to you for being a good conduit of connecting with the industry, and look forward to working with you in the future.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannaninsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at email@example.com. We'd love to hear from you.
Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies entrepreneurs profiled on the show.
Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.
While thousands of new cannabis products hit the market each year, most fail to create product-market fit due to a lack of differentiation or clear-cut benefits.
Today’s guest is CEO of Dosist Gunner Winston, who has simplified cannabis consumption with targeted formulas and precise dosing to create a product that is catapulting cannabis into the wellness arena.
Learn more at https://dosist.com
- Gunner’s background in cannabis and how he came to start Dosist
- An inside look at Dosist and its mission to simplify cannabis consumption with innovative delivery devices
- How taking the guesswork out of cannabis is attracting more people to the category
- Variables that are important to luxury brand consumers
- Customer reactions to Dosist’s new dose pen and dose dial
- The thought process behind Dosist’s high-end yet minimalist retail environment
- Why Gunner believes brick and mortar stores remain valuable in the age of online shopping
- Where Dosist is in the capital-raising process
- How Gunner is planning to evolve Dosist in the coming years as consumer preferences change
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 cannainsider.com. That's cannainsider.com. Now, here's your program.
Thousands of new cannabis products hit the market each year, but most fail to create product/market fit because they can't communicate the benefit or differentiation of the product to their prospective customers. Today's guest has simplified cannabis consumption and netted everything out to simplicity and clear benefits with his brand. I'm pleased to welcome Gunner Winston, CEO of dosist to the show. Gunner, welcome to "CannaInsider."
Gunner: Thanks for having me, Matthew.
Matthew: Give us a sense of geography. Where are you in the world today?
Gunner: Right now, I'm at our global headquarters on the iconic Abbot Kinney Street in Venice, California.
Matthew: Okay. That's becoming, what do they call it, Silicon Beach now, that area?
Gunner: Close. That's in the area and I'm looking at the wonderful sun and pretty warm weather right now, so not a bad seat.
Matthew: Great. And what is dosist on a high level for people that aren't familiar? I know most people in California for sure are, but give us a little background on the brand.
Gunner: Yeah, sure. dosist is a leading global wellness company that is on a mission to empower people to naturally manage their health and happiness. We do this through, really, two primary ways. It's our award-winning devices and our target formulations. And so when we talk about formulations, unlike traditional cannabis companies that think around strain names oftentimes, OG Kush or Durban Poison, or a variety of different strain names, we focus on the need states to which people often use cannabis to help with. So we have six different formulations, bliss, calm, sleep, relief, arouse and passion. And we have two award-winning delivery devices in our dose pen and now the dose dial, which houses our dissolvable tablet.
Matthew: Okay. And Gunner, can you share a little bit about your background and journey and how you got into the cannabis space and became CEO?
Gunner: Sure, Matthew. So unlike a lot of people in leadership positions in cannabis, I actually did not have a history with cannabis before joining dosist. I spent my entire career, professional career investing as a professional investor. Right out of college, I worked at Morgan Stanley and investment banking and then went to work at a large hedge fund and then co-founded my own hedge fund in 2007 to 2014. I retired from that space in 2014 largely because, and you can't see me now. I have a scruffy beard that just really didn't work on Wall Street. But really, it was a chance for me to explore other opportunities.
And when I came across cannabis as an investor, personal investor in 2016, I was fascinated by the category, but really what motivated me about dosist's narrative and when I met them, the narrative was less around intoxication and recreation and was far more focused on science and innovation and a true narrative of wellness and how to use cannabis to help people as opposed to just getting stoned.
Matthew: Okay. That makes a lot of sense. And what do you think about the transition from New York City hedge fund and then to, you know, Silicon Beach area where you are now? What's the culture difference? How do you feel about it?
Gunner: Yeah, exactly. It would look very different if you can imagine, you know, besides the fact that I'm able to wear, you know, sneakers and jeans every day, you know, clearly the LA versus New York dynamic's different. Including just the emerging space in which we're operating in, be it wellness or cannabis or both, right? It's such a progressive industry or industries, right, when you're thinking about cannabis and wellness, that it's really a wonderful platform to explore and think about so many creative and innovative ways to address health and happiness. You know, I think the difference in sometimes for New York and finance in particular, it's more regimented, more structured. The expectations have been set.
One of the beauties of the cannabis space, including what dosist is doing, is we are changing many of the codes and stereotypes that have existed for decades as related to cannabis usage. And that's really exciting for me. And I think LA, honestly, and California broadly is at the forefront of so many changes in the world, particularly as it relates to wellness, whether it was yoga or the way you eat and healthy diets. A lot of it starts out here so it's really exciting to have, having had launched this brand, dosist, in California
Matthew: At a high level, do you see the cannabis market as a whole... When you look at it, the flower will always be there, but people seem to be reaching for more innovative solutions and, as you talked about, kind of dialing in specific benefits, like you're kind of pairing a solution to a perceived problem, you know, with bliss or passion. How do you think the market as a whole is kind of moving and where do you see it kind of going around the corner next?
Gunner: Yeah, I think when people have historically talked about cannabis, it was from such a myopic view, right? It was someone in often a, you know, two guys sitting on a couch, I often say, eating Doritos, watching "Wayne's World," and particularly high, right? And what we've realized, and other brands, is that there is a world of people out there who are either scared of cannabis, who are against cannabis usage, but at the same time are either taking prescription pills or drinking heavily and don't even really understand why they don't like cannabis. And there are a variety of reasons, as we've explored it, for that. Some that you just can't fight, right? The government, the broader society, not just in the US, but globally has demonized cannabis usage, has associated obviously cannabis usage with a lack of productivity when we obviously know and most people who are fans of the cannabis plant understand that it can be uplifting and empowering.
The challenge sometimes is around the delivery mechanisms. So not just seeing a flower, which unfortunately has been connected to all of the ills of cannabis usage. And I'm not saying appropriately, but those are the facts, to also the ability to control that product. So someone gives you a bong or a joint. For most new consumers, it's extremely intimidating. And so what dosist has brought to the category really is science innovation. And part of that is taking the guesswork out of the cannabis, out of cannabis usage. So by that, I mean if someone passes you a joint, Matthew, the first question normally is where did it come from, what's in it and how much do I take? And so what we have worked on is we do know most people are coming to cannabis, whether they're high potency users or a new user for a reason, or they might wanna feel blissful, they might wanna deal with anxiety, they might wanna deal with sleep issues or pain issues.
The challenge when you have flower is creating that repeatability of the experience. As we think about a brand, a brand has to mean something and there's the repetition of that narrative. And so when you go to...when you go to New York and get a, you know, a Big Mac, it's normally gonna be the same as when you go to California and the same, whether it's Corona beer or whatever traditional consumer product, consumable product. The challenge with flower, as you know, is the growing conditions can be very challenging even when it's in the same location.
So what we've brought to the table using our formulations, so targeted formulas that are using different cannabinoids and botanical terpenes as well as our delivery devices where we've taken the guesswork out of the usage because we deliver the same amount every single time. It's allowing people to explore the category who maybe would have never considered cannabis before. And then we add a lot of design to that, right? So our devices are obviously medically forward in their presentation, and we're using medical grade materials, obviously have been gone with white products to connote sort of a more medical sense. All of these things help bring people into the category and make it a little less taboo.
Matthew: Okay. When people compare commodities, they usually compare by price. With a luxury brand, price is always there, but it's not as important. You know, you mentioned a little bit about consistency with a brand, but is there anything other than price and consistency that are variables that are important to luxury brand shoppers?
Gunner: Yeah. And I think, you know, Matthew, when we think about representing dosist, we actually eschew the word "luxury" and favor more "aspirational" because "luxury" immediately connotates separating a certain segment of the market, right? Saying you're only gonna appeal to people who have a certain amount of money. You know, we have a variety of different products at different price points. We do sell a premium product, but premium doesn't just mean price. Premium is the experience. Premium is the innovation. Premium is the experience outside of just the product, right? It can be in, you know, whether it's a shopping shop that we might create in a store, whether it's creating our own stores. My only point to you is when I think about the greatest brands, you know, from Nike to Apple to Starbucks, think about consumer brands, innovation is often at the forefront of what they do. Just the way you stay ahead to ensure that pricing isn't the only way that you can beat. Because to your point, when I think about a commodity, the essence of a commodity is it's somewhat fungible, right? It moves around, people are not purchasing it for any other reason than that it's the cheapest. Whereas we think about investing in the brand and investing in innovation, so quality becomes important, right?
Ensuring that, whether it's our dose control pen or a dose style, that we're representing the product appropriately. We explain to people what's in it, what's not in it. So safety is one component. Broader innovation, right? Making sure we don't stand still. Our dose pen, which has won many awards, came out in 2016. We have our next generation of dose pens coming out in Q1 of this year, sorry, 2020, but we also have other dose control products because we have to innovate and stay ahead. So my only point is when I look and really compartmentalize what separates a commodity from a brand, it's really that investment in the brand and that investment has to be around innovation and experiences and safety and trust.
Matthew: Yeah. Now one of the problems you're solving with dosist is obviously the dosing piece. This is nontrivial and keeps many potential new customers away. In fact, I have a lot of people I know that it keeps them away. And existing cannabis consumers that accidentally overconsumed, you know, they kind of shy away, too, because they had a bad experience. What's the reaction you get from people that are kind of in the, the kind of cannabis-shy or had a bad experience and you give them the dosist pen, what's kind of the initial reaction? What do they come back to you and say consistently?
Gunner: I think the key word and reaction I get is one of empowerment that they now know that cannabis isn't maybe as dangerous as people have referenced, right? It was always the common assumption that if you try cannabis, you're gonna become a stoner. If you try cannabis, it's gonna be a gateway as opposed to how to make cannabis part of your life to elevate you, right? So we look at our brand very much as a performance brand. When you sleep better, you perform better. When you have less anxiety, you perform better. When you're able to find calm or bliss, you perform better. When you're able to mitigate your pain, you perform better.
And so to your point, when people use our products, they first realize that, "Wow, using THC is not always going to get me overly intoxicated," right? We know there are the explicit elements of intoxication that come from THC, but when you dose control it, right, combined with having the same repeatable formulations every single time, you're able to step into a brand and not have the unanticipated outcomes that often came with cannabis usage. So that's really important and it's been really, I think, changed people's expectations of cannabis products and we're really happy to be a part of that.
Matthew: Curious, which of the pens sell the best?
Gunner: Sure. So of our six formulations, bliss and calm are our bestsellers in California. And part of that reason is really because I think, one, bliss is the more THC-forward product. It's one of our, we had the core four originally, which was bliss, calm, sleep, and relief. passion, arouse came out a little after. And then calm is our more CBD-forward product. So between those two, I think you really have a healthy mix of some people looking for a little less THC, right? Which you can get in our calm product, which is heavily skewed to CBD, a 10 to 1 CBD to THC ratio, and our bliss, which is an 8 to 1 THC to CBD ratio kind of gives you, as we say, the right amount of good.
Matthew: Right. Right. I haven't been in your retail stores yet, but from what I see, they look really polished, minimalist, high-end or aspirational.
Gunner: Thank you.
Matthew: What's the thought process when creating a retail environment?
Gunner: Yeah, for us, Matthew, it was really less about economics and it was more about three things. It was, number one, to inspire, right? We wanna have a brand, if you're gonna be aspirational, you have to have people inspired by your brand. We wanna make sure that we educate. So the challenge of any brand is you walk into a wholesale channel, are they gonna represent you correctly? Right? If you throw us in the backhand corner near the bathroom on the third bottom shelf, right, you're not gonna see us. You're not gonna understand what dosist is about. And the last is to engage. By that, I mean we have really, really wonderful guides. Those are our sales associates in our stores who aren't paid on commission. And their job is to engage you and if you choose to purchase that day, it's your choice.
Most importantly, we want you to leave having had a good experience because if you tell 10 people about having a wonderful dosist wellness experience, which is what we call our stores, that's more valuable oftentimes than you buying one or two products from us that day. And so really, those are the three fundamental elements of our stores. So everything you see should feel like the visual representation of our brand and our products, right? Our store, our products are very, as you said, polished, minimalist, and aspirational, and so is our store. But those hallmarks that I just referenced are what are key to us when you engage with us.
Matthew: Okay. So, dosist came on my radar because I've heard you were doing so well on the LeafLink platform, that is, a lot of the retail dispensaries were, you know, want your product. So if one reaches out to you, it's not just like, "Hey, I wanna sell dosist pens." They have to show, like, a willingness to have it in a, kind of a certain position in the retail environment?
Gunner: Yes. So when started, I took over the company in May 2017 as CEO. The company launched September 2016. And when I came in, we were in 250 stores in California. Within two months, after surveying the landscape, visiting a large portion of our stores, we cut 40% of the store base from 250 stores to about 150 stores within two months because we wanted to make sure, and this is important for any brand, you properly align your brand positioning and presence with the ultimate retail experience.
And so I always say there's a reason Chanel doesn't sell in Macy's and Kohl's. It's because they're going to demolish the integrity of the Chanel brand, whether it's price discounts, whether it's not putting them in good visual merchandising locations, whether it's having, you know, inappropriate education on the products. And so all those things we look at in a similar light for dosist.
And so when you go into an account and it's only focused on potency and getting people really high, you might not be a fan of dosist and we're okay with that. But when we do partner with you, we truly partner, you know, and what we ask for is prominent visual merchandising so we can educate appropriately on what we're doing and then being able to educate the sales associates because we do sell a premium product that is often or sometimes more expensive than other products because we're investing so much in our quality and our safety that we need someone to be able to explain why you might want to pay more for something and all the things that we're doing to protect the consumers.
So my point is when we get those two things, Matthew, we then work really hard with them to help drive people to those stores, so between co-marketing and education outside of the four walls to help them drive in. But you're right. We very much curate the number of stores we're selling into really so we can find alignment. I'd happily sell in 300 stores in California. We just haven't found 300 good partners.
Matthew: Okay. Gunner, I have this feeling with the ease of online delivery of cannabis products that retail experience is really going to have to be so special, tactile and visually stunning. Otherwise, well, people will just eventually order everything from their phone. Do you feel like that's where we're going, and how do you deal with that?
Gunner: Yeah, I think to your initial comment about the direction of where the cannabis industry might go, I think it's somewhat analogous to where retail in general is going, right? If you don't have a credible experience, to your point, retail is very challenging. That's happening across the board from obviously book sales to purchasing luggage to wherever else, right? The convenience is key. But that being said, right, even digitally-native brands are realizing that retail is still a very viable methodology of reaching consumers, of educating consumers, and e-commerce on its own is not the end-all, be-all.
With that being said, I think the keys for me are going to always be location, right, for retail, and then, to your point, experience. And I think the retailers that are winning are combining those two, making sure you're in well-trafficked areas and simultaneously offering the consumers a reason to drive often in traffic, get out of their car, find parking, pay for, you know, maybe a meter and then go into your store. So I think it's gonna continue to force retailers to get better. We certainly understand that. You know, we look at where a lot of our consumers are going, they don't wanna be inconvenienced. And I think as this industry evolves like every other industry for consumer products, you're right, it's gonna put more pressure on retailers to continue to elevate that and not take for granted that the consumer has choices.
So for us, you know, we continue to look at reaching our consumer as the ultimate decision making point. But the challenge of online is education, right? When you have the online experience, the piece that is difficult to bridge from the store to online is how do I communicate with a new or existing consumer, right? So if you know you already like dosist, well, it's no problem to reorder, but what happens when we bring out new products, right? And there's education around that. And certainly for the new consumer, I think we have still years and maybe decades of introduction to the category where retail really can be fundamental to cushioning someone's introduction to cannabis.
Matthew: Yeah, it's good points there. You know, you mentioned that, you know, adding new products. How do you decide which products to greenlight? Is that based on feedback from existing customers? Because sometimes customers say they want something and then they, it's different than what they said. And, you know, sometimes they wanna be surprised or they want something totally new or they have higher expectations of your brand and they don't want a "me too" product. Like for example, I think of like Apple's new, you know, TV, it's like people that have Apple products like it, but they weren't necessarily looking for, like, Netflix from Apple. They wanted something that's, like, exceeds their expectations. So how do you look at which projects to greenlight?
Gunner: Yeah, perfect. I think that's a great question. And for us, Matthew, it starts with our mission. Our mission is to empower people to naturally manage their health and happiness. Now, we first have done that through cannabinoids, right? THC, CBD and other cannabinoids. We first did that through our dose pen, our award-winning dosing device. What's important, though, as we think about future innovation is, number one, you have to innovate to continue to stay relevant, especially in a competitive category. I always say, could you imagine if Nike only had their 1975 Nikes today and never came out with Nike Airs? If Apple only had the iPhone 1, I think they're on the iPhone 11 now. My point is innovation is so fundamental to any developing business because once you find success, people try to find ways to knock you off. And the best solution to competition is to have someone chase a moving target.
But what's just important in this space is also knowing what you shouldn't do. So if our brand is to empower people to naturally manage their health and happiness, and we do that through two main verticals of targeted formulations and dose control products, what don't we do is where we often start. So we don't do flour and we don't do pre-roll because the repeatability of those products is really challenging combined with having a wellness narrative, right? When people are taking either, you know, bong hits or smoking a joint, we have no problem with that, but it's really hard to stick to our brand ethos.
And then you focus on what can you do. And so long as it fits sort of the two parameters of targeted formulations and dose control, we'll consider it. So, an edible, certainly dose controlled. Can we do targeted formulations? Those are decisions we make. A topical, you know, potentially a spray, things like that, Matthew, come into the equation and then it's about, can dosist offer the consumer something that doesn't exist today? So it took us 18 months to bring out our second product, which is the dose dial, the dose dial is the first certified child-resistant packaging or, rather, device for our dissolvable tablet, a 3.7 milligram, low-dose dissolvable tablet. And the reason it took so long is because we were trying to do something different than another mint or a gummy that's in an Altoids-type container.
When we think about the fundamental challenge for the edible category, it's whether it's your kids or adults taking a product that they didn't know was THC-infused. And so anyway, my point of all that is as we think about innovation, it has to fit our guardrails of precise dose formulation. And then we have to bring something different to the category. If we can't, we tend to just pass.
Matthew: That makes sense. Can I tell you my wishlist for dosist?
Gunner: Please, please.
Matthew: You know how there's these glucose monitors now that monitor blood sugar. I would love to have something like a smart patch and then something that integrates with my phone or like an Apple Watch that I can...it monitors, you know, my blood and I can kind of give, like nudge it where how I'm feeling a little bit. And then it says, "Okay, based on your, you know, your heartbeat and your blood and all these different variables, you know, this is what your smart patch can do." Like, it gives me 10% more calm or 10% more bliss. I mean, that's a little bit...that would require some R&D, but, and I don't know if people are gonna want that...
Gunner: No, fascinating.
Matthew: ...but I would love something like that.
Gunner: I think, Matthew, that's a great challenge for us.
Matthew: Yeah. Well, cool. Well, tell me, Gunner, where are you in the capital-raising process right now with dosist?
Gunner: Yeah, so we launched, as I said before, in September 2016. The capital-raising process, which was before me, started at sort of inception of the business in late 2015 and '16. And so we've had several different capital raises to this point in time. We don't disclose the exact amount, but for us, you know, we've tended to be pretty private as it relates to capital-raising because you see a lot of times companies have these splashy headlines when they raise money. When you get to see one from us, you know, the key for us is continuing to raise the right amount of money that allows us to fund the business on its path to growth and also becoming self-funding, which is a key dynamic in this business or any business, right, is how do you transition to be dependent on outside funding to funding yourself. And that's a journey that we're obviously on as well as we look to move into a lot of new categories and new geographies. But what I can tell you is we fully balance the opportunity, which is big, versus the need to be financial responsible along the way.
Matthew: Okay. If there's accredited investors listening that are interested in investing, is that an opportunity or no?
Gunner: You know, I think, for us, we've been very fortunate to have a fairly dynamic group of investors where we haven't had to do a lot of outside fundraising. But, you know, I think, as always, you're always looking for the right investors, Matthew. It's less to me about money or the absolute number of investors. It's about finding people who understand the vision and simultaneously understand what we're trying to build, which takes time. And so to your point, I think for anyone, you know, once again, they can reach out to us on our website or through customer service. If there's always an interest, we're always looking for, more so than the exact amount of money or the pedigree of the person. It's finding the person who understands the vision of where we're going.
Matthew: Okay. So if you're going to identify yourself as an accredited investor, say why you think you're a good fit beyond just money.
Matthew: Okay. Okay. And I wanna ask a couple personal development questions, Gunner. Is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Gunner: Oh, good question. So there are a couple but one sticks out to me that I read maybe 10-plus years ago. It was called, "Pour Your Heart Into It." It was written by Howard Schultz, the former CEO and chairman of Starbucks. And what was fascinating, it was less of a business book and more along the lines of the title about finding things in life that you're passionate about. And when you find passion and match your skillset with that particular endeavor, you're really positioned for success. And for me, like I'm a complete passion guy. Like people have asked me in the past about my ability to disconnect and everyone who kind of works with me knows that I'm normally always on, like anything that I see. If I see sort of a off-white image on a street and I might reach out to our CMO and go, "Hey, have we thought about, you know, changing the color of our pens to off-white?"
I'm making this up completely, but I just live in the world of what I'm doing at the time and, which is the reason I didn't work formally for three years. So I think that book is a reminder to me of, you know, you'll be most successful when you do things where you really do wanna pour your heart into it. And then the challenge for each individual is managing obviously what's going on in their life outside of work and their stress with that ambition. But I do think for me, "Pour Your Heart Into It" is fundamental to everything I do. Whether it's being a dad, whether it's working, whether it's being a husband, I think those are just really life lessons that extend beyond business.
Matthew: Oh, that's a great suggestion. I haven't heard that one yet. So what would you say is the most interesting thing going on in your field besides what you're doing at dosist?
Gunner: Yeah, sure. I think, you know, for me, what's fascinating about the field is as we, the industry develops from an illicit market to one that's heavily regulated, are all of the elements that go into creating not just a large and regulated business, but one that's sustainable. And the ability for businesses to develop and thrive, you know, so overregulation can stymie that, too little can lead to a lack of distrust from consumers and people outside of the space. And so for me, what I find continually fascinating is that unlike, or it's actually similar to most other spaces, you're going to have to invest in your quality and safety, especially as you have an ingestible product. Because irrespective of where the regulatory environment is, the best brands that I have come across particularly for consumable products are ones where consumers trust them, right? They trust that they're gonna adhere to standards that are oftentimes higher than what's required by the industry, right?
And as I look at what's going on, you have this sort of jigsaw puzzle of regulations that exist at the state level because of the lack of federal infrastructure. And to me, it's fascinating to see us developing as an industry, but simultaneously realizing that if you don't adhere to dynamic and appropriate regulation, one group of people is gonna lose and that's the consumer.
Matthew: Great points. Great points. What is one thought you have that most people would disagree with you on? That's a Peter Thiel question.
Gunner: You know, the biggest pushback I've had initially, and maybe a little less so now, has been my viewpoint on when you have a big space, most people view it as it's a gold rush and you almost treat it like real estate where you have to grab as much land as quickly as possible. We at dosist have taken a very, very divergent path is we recognize the opportunity.
We said this is not a land rush or a gold rush. It's a rush to get good. And so oftentimes, as you know, spreading yourself too thin is the enemy of getting good, right? It's the ability to kind of spread yourself out and hope someone buys you. And instead, dosist has treated this as if we're never going to sell. We've treated this as we're trying to create a forever brand and we invest far above where regulations are today and far above what our actual business can fully support because we're trying to build a brand that answers to one group of people and that is the consumer. And so that's been the challenge initially. I think people are now seeing scaling this space is really, really hard. And while people got out of the gates very quickly in this space, they're having to retrench now or they're going out of business. And so that has really been the biggest dynamic is big opportunity doesn't always mean rushing. You can't go slowly, but you have to service the customer first before you serve as anyone else.
Matthew: That's excellent strategy and it's obviously served you well.
Gunner: Thank you.
Matthew: Gunner, as we close, just a few questions to help listeners. Where are dosist products available right now if...for listeners that want to try one?
Gunner: Yeah. So right now we're available throughout the entire state of California. We're available in Nevada and Florida.
Matthew: Okay. And what states are...do you see yourself expanding to next that we should keep that a lookout for?
Gunner: This is really an exciting part of our journey. As I said before, we've really taken three years and a very pragmatic and measured approach to growth, but simultaneously looking at our long-term vision of becoming a global aspirational brand. And we've really put the infrastructure in place to now scale pretty aggressively.
We launch in Canada in six days, the first legalized international market for dosist. That's quite exciting. We'll be represented throughout the country in a fairly prominent way. Also in the first quarter, we'll be launching in Colorado and Arizona and targeting Michigan for the first half of 2020. So it's really exciting for us because we do believe through all these different geographies, we're learning how to scale and that most of these markets, unfortunately and fortunately, are like their own little countries. But as we're learning how to do them, the ability to scale is getting a little bit easier as we go forward.
Matthew: Sure. Well, Gunner, please give out your website so listeners can find you.
Gunner: Yeah, so www.dosist.com. And if anyone wants to get in touch, just click "Contact Us" in our bottom navigation of dosist.com and you can speak with us or email us.
Matthew: Great. Gunner, thanks so much for coming on the show. This has really been fun and you guys are really crushing it, so well done. Kudos to you.
Gunner: Thanks for the great questions, Matthew. I appreciate you having me.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on "CannaInsider?" Simply send us an email on feedback at cannainsider.com. We'd love to hear from you. Please do not take any information from "CannaInsider" or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.
Promotional consideration may be provided by select guests, advertisers, or companies featured in "CannaInsider." Lastly, the host or guests on "CannaInsider" may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another "CannaInsider" episode soon. Take care. Bye-bye.
California is arguably the cannabis industry’s most impactful market with more and more developments taking place each month.
Here to tell us about it is Khurshid Khoja, a business attorney constantly interfacing with Sacramento regulators and politicians to help his clients see what’s just around the corner.
Learn more at http://www.greenbridgelaw.com
- Khurshid’s background in business law and how he came to start Greenbridge Corporate Counsel
- How the California cannabis market is coping with high taxes and restrictive regulations
- The biggest obstacles the cannabis industry faced in 2019 and those to come in 2020
- The Interstate Commerce Clause and how it’s affecting the cannabis market
- How Oregon passed SB 582 and the doors it opens for licensed businesses in-state
- Exciting new developments Khurshid foresees taking place in 2020 as well as areas to practice caution
- Whether or not Sacramento politicians can remedy the budget deficit and debt situation in California
- Khurshid’s advice to those looking to enter the California cannabis market
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 cannaninsider.com. That's cannainsider.com. Now, here's your program.
California is arguably the cannabis industry's most important and impactful market both in terms of cultural impact and innovation. Today's guest is an attorney interfacing constantly with Sacramento regulators and politicians to help his clients to see what is just around the corner. I am pleased to welcome back Khurshid Khoja back to the show. Khurshid, welcome back to CannaInsider.
Khurshid: Thanks for having me back, Matt.
Matthew: Give us a sense of geography. Where are you in the world right now?
Khurshid: Well, I'm often on the road, but today I'm pleased to say that I'm in my home office in what's usually sunny Sacramento and we're getting some much needed rain today in the Capitol.
Matthew: Okay. It's been several years since you've been on the show to help new listeners. Can you share a bit about your firm and your practice areas and what you do day-to-day?
Khurshid: Sure. So I'm the founder of Greenbridge Corporate Counsel. We're a business law firm representing license plant touching and ancillary businesses in multiple jurisdictions, including California, Oregon, Washington, Hawaii, and Canada. We serve businesses from startup phase all the way through advanced operations. So we represent some multi-state operators and publicly listed companies with international operations as well. You know, I think when we last spoke, we were still fairly small. You know, we've grown from 3 attorneys to a team of 21 lawyers now, and we serve clients on a broad range of business law matters, including licensing, regulatory, corporate finance, mergers and acquisitions, intellectual property, tax, and real estate matters.
Matthew: Okay. And I think, what, Southwest has a direct flight from Sacramento to Hawaii now. Is that right?
Khurshid: It does. I have not been able to take advantage of that boondoggle yet. As one of my colleagues workshops in Hawaii work, but, you know, I'm looking for an excuse.
Matthew: Yeah. Geez. You're slacking in your obligations here, Khurshid. Okay. So add a 10,000-foot level, where is the California cannabis market right now?
Khurshid: Sure. So I would say that we're still experiencing a lot of growing pains. The market is still burdened with regulations that are hard for some operators to comply with, even with the best of intentions. You know, not everything is spelled out in the regulatory regime yet. It's still new. There are still unanswered questions and the regulators themselves are overworked, understaffed, and unable to respond in a timely manner to all of the ambiguity that continues to remain out there. And, you know, that adds up to significant costs for the operators who are in the market now and hampers a lot of forward progress.
So, you know, there are dozens and dozens of different ownership transitions that have been filed with the various regulators to, you know, essentially authorize mergers, different mergers, acquisitions of companies where new owners are being added to the roster of legacy owners and trying to consolidate operations and grow market share. And that's all very difficult to do when the regulators cannot respond in a timely manner to a lot of the filings that have to be made in connection with those types of transactions.
So there's that, which seems to be kind of a drag on the market and its development. There's also the high tax burden. Taxes are slated to actually go up at the beginning of 2020. And so there's a lot of consternation justly so around that issue. Given how difficult and costly it is to operate in this market, the tax burden isn't helping things. And we're getting perhaps further away from the goal of ending the illicit market.
Matthew: Yeah. The illicit market's kind of interesting there because there's such a huge amount of cannabis that's coming through, I guess, from the Emerald Triangle, is that Mendocino, Humboldt, and Trinity counties in Northern California. There's just so much coming out of there and probably other places in California too. It's like if you're somebody that's like, "Hey, I can buy this from, you know, a local farmer and it's half the cost and, you know, come by my house," or, you know, whatever, it's like, "Why wouldn't I do that?" It's like, I know where this guy's farm is. It's, you know, sun-grown a mile away from me. Do I want to like go through all this headache and hassle and pay twice as much? And that's a legitimate issue because the regulations and the taxes and everything, just, there's no way to compete on price, the overhead. So, I mean, is that message resonating, do you think, though, in Sacramento?
Khurshid: I think so. And I think, you know, what actually also helps is the current public health scare over vapes, right? I mean, a lot of problems there are emanating squarely from the illicit and unregulated markets, right? Illicit markets for cannabis and unregulated markets for things like e-nicotine, nicotine e-juice rather, and even CBD vapes as well. So, you know, I think that that is helping legislators and decision makers to understand the value of the regulated market and why we need to, you know, we need to be deadly serious about stamping out the illicit market not only to assure the success of our licensed operators who are following the rules and paying their taxes, but also, you know, to protect the public health.
Matthew: Yeah. For sure. Yeah. The vaping crisis is kind of a tough one because it's like, if all these regulations come in, that kind of makes it so that only big players can afford and raise capital to, you know, be in the business, in the vaping business. And he would say, ''Well, I want those things. I want, you know, all those things.'' But perhaps, you know, couldn't we just have more stringent lab testing and that would allow for smaller players, so it doesn't all get consolidated? I think about these things a lot because I know people in the industry and in California and they're like, you know, "Is this all gonna go to a few huge players that can afford, you know, 10 or $20 million to, you know, check all these boxes?" I mean, what do you think about that?
Khurshid: I think that's a valid concern. You know, I think the more regulations you layer on, the more expensive you make compliance, the harder it is for less well-capitalized players to continue to compete. And especially when they have to still deal with 280E and with the lack of banking access, you know, it's very hard to raise capital in the cannabis industry. And, you know, I'm concerned for small mom and pop operators, minority-owned businesses who don't have access to those avenues for private equity. You know, are they gonna be able to do a subsist and survive? I'm not so sure.
So, you know, yes, it's burdensome, but at the same time, you know, we do have to balance the fact that there are legitimate public health concerns that we need to address including lab testing as you mentioned. So, you know, a while I think, yes, it's always burdened some and always hurts the smaller operators to have a heavy regulatory burden, sometimes it's also necessary, right? So we have to strike the right balance there.
Matthew: Yeah. Khurshid, what questions do you get asked the most from your clients and potential clients and just people in the ecosystem?
Khurshid: So, you know, we get a lot of questions currently about hemp CBD. There are a lot of folks in that market and there's still a lot of ambiguity as to what folks can do, what ingredients they can use, not withstanding repeated FDA warning letters saying, "Hey," drawing some at least some bright line rules, right, about making claims and using certain substances such as CBD isolate in foods. There are some bright line rules, but there's still a lot of ambiguity, and the fact of the matter is there's not enough enforcement there. So that leads to a lot of questions from clients asking what they can and can't do and what their potential risk is for enforcement actions.
Matthew: Okay. And, you know, looking back at 2019 and then looking forward to 2020, what do you kind of see is kind of the biggest issues both in 2019 and then the biggest to tackle in 2020?
Khurshid: So we talked about, you know, taxes, right? So, I'll guess I'll start at the state level. We talked about taxes and how that has been, you know, it's been really challenging for licensed operators in California. And there have been, you know, for the last two years, efforts in the legislature to try to roll back some of those taxes, reduce some of that tax burden to give the industry a fighting chance to get up on its feet. And, you know, especially the smaller operators and minority-owned businesses, giving them an opportunity to succeed before they have this huge tax burden.
Now, you know, those efforts haven't been successful in previous years, but given that the taxes are slated to increase at the beginning of the year, there's increased attention to that. And again, legislators who are urging action to reduce that tax burden and to help these licensed businesses, you know, get up on their feet and be in a position to continue operating.
So I think that's one huge issue at the state level for licensees under MAUCRSA. I think there's also the legislation that was introduced last year to essentially legalize the use of hemp CBD as a food additive in California and allowing regulated businesses to incorporate hemp CBD into their production and supply as well. And so that, unfortunately, did not pass last year, but it's going to be reintroduced this year in the legislature. And so I think a lot of folks are watching keenly the development of that bill, AB-228, and hopeful that it will pass this year.
So that being said, you know, the FDA just came out with a new round of warning letters on hemp CBD and kind of up the ante a bit as well with this last round of letters that are issued in the past week. And so that could complicate things. One of the things that the FDA said is, ''Hey, you know, hemp CBD is not generally recognized as safe in terms of being a food additive.'' They hadn't said that previously. And now they're saying that explicitly. They're also saying that, ''Hey, we believe that there are side effects that are from hemp CBD that are not being accounted for and could lead to things like liver injury.'' And so that's also new. And that, you know, is both a signal as to where the FDA is potentially going on hemp CBD regulation as well as an obstacle potentially to passing this legislation in California. So I think, you know, those are issues that folks who are watching keenly, in addition to...you can talk about federal as well, unless you want me to hold off on that.
Matthew: Sure, no, please.
Khurshid: Sure. So I think, you know, being on the board of the National Cannabis Industry Association and serving as their co-chair of the board, I'm really happy about the passage of the Safe Banking Act in the House of Representatives. That's something that NCIA has been working actively for for several years now. And putting an effort year after year to see this even brought up to get a vote, right, which have we not had that good fortune in the past years. And this last year we actually not only got it up for a vote, but it passed overwhelmingly in the House of Representatives, and so it's on its way to the Senate now. And so that is gonna be something that everyone watches in 2020 to see how the Senate addresses the Safe Banking Act.
The Senate committee that is gonna be first in line to review the Safe Banking Act has already indicated that they are inclined to give us a vote and they are also inclined to seriously engage with language and suggest edits that they might wanna see in order to pass this through Congress. That would be huge if we were able to do that. And that is no small part, thanks to the efforts of the NCIA staff, both our executive director, Aaron Smith, as well as our GR team Michael Correia, Michelle Rutter, and others that work diligently on this banking bill for the past several years.
Matthew: Can you summarize what the interstate commerce clause is and how you're thinking about that in the cannabis industry?
Khurshid: Sure. The interstate commerce clause, essentially, it's a clause in the constitution that gives Congress the authority to legislate in matters that affect interstate commerce. Interstate commerce, obviously, you know, commerce between states. It forms the...you know, it's the basis upon which the federal government has enforced the Controlled Substances Act even against, you know, purely intrastate operations. So there's a case called Gonzales v. Raich that was heard in the Supreme Court in the '90s, which essentially...sorry, early 2000s, which essentially stated that the DEA can and the feds can enforce the Controlled Substances Act against medical cannabis collectives that were operating solely within California. Because the entire premise of the Controlled Substances Act is that these illicit markets and controlled substances are interstate in nature. And, you know, the Congress is empowered to do anything it needs to, to effect and shut down those markets, including shutting down intrastate activity.
So, you know, it's the reason why states that are neighboring states that have legal cannabis regimes are not able to trade with one another, right? There's no trade between Oregon and Nevada. There's no trade between all these states, among all these states in the Northeast that have medical cannabis or adult use cannabis regimes because that would violate the Controlled Substances Act and it would certainly trigger some federal enforcement on those grounds. So that's why it's so critical that we see that impediment, you know, torn down as best we can.
Matthew: Okay. And Khurshid, on the topic of interstate commerce, can you talk about how Oregon passed SB582, and what that means and why that's important?
Khurshid: Sure. So SB582 was a state bill that essentially says that Oregon licensed businesses, licensed cannabis businesses, are going to be able to do business with licensees in other states as soon as there's some indication that the federal government will not enforce the Controlled Substances Act against those licensees and assuming that there's an agreement between those states regulating those types of interstate transfers. And so, you know, what SB582 is banking on is something along the lines of a Cole [SP] memo, right, that says, ''Hey, we are not going to... We, the federal government, are not going to intervene in any kind of lawful commerce that's happening between cannabis businesses in different states where they're operating legally and there's an agreement between those states.''
So, you know, if we get that type of trigger, either a memo from the DOJ indicating that that's, you know, the enforcement position or federal legislation as well, right? The Oregon delegation did introduce a companion bill in Congress that would essentially recognize interstate commerce between legal cannabis states. So if we have that type of federal trigger occurring and that condition comes to be true, then Oregon can start doing business with neighboring states that have legal cannabis. So, you know, when you think about not only Oregon, but California also potentially passing similar legislation and you think about the states in the Northeast passing similar legislation, you know, you are creating a massive interstate market that is really going to change the face of the cannabis industry in the U.S.
Matthew: Okay. Wow. So as we finish 2019 and we look to 2020, what is there to get excited about and perhaps what should we be cautious about?
Khurshid: I think we should get excited about banking. You know, it's not a slam dunk, but I think we have gotten closer than we've ever been before to actually passing the Safe Banking Act. And so I think we need to be, you know, all eyes on the Senate on the banking bill to, you know, hopefully, we will see the beginnings of equal access to the banking system for the cannabis industry. So I think that's something that's very exciting. I think the advancement of social equity in the industry, to me, is also very exciting. I serve on the board of the Minority Cannabis Business Association and as co-chair their policy committee. And so we are very much invested in seeing the advancement of social equity legislation at the local, state, and federal level. And so we're watching the MORE Act and, you know, we are very hopeful that we're going to see some movement next year in Congress. And if nothing else, I mean, we started the discussion at multiple levels on social equity and folks who are a lot more aware of how we can work to redress the casualties and injuries of the war on cannabis.
Matthew: Now, you see some states that are losing population and have some fiscal troubles. New York, New Jersey, Connecticut, these are states that have a lot of assets, intellectual and businesses, and some say perhaps they're not competitive, they haven't looked at their cost structure, and there are some huge obligations that they're kind of ignoring. California is not in the best position, but it's not in the worst position. Do you think there's the will for Sacramento politicians to really do something about making the, you know, budget deficit and debt situation in California more sustainable?
Khurshid: You know, I sure hope so. But politicians in Sacramento, as elsewhere, you know, have their own constituencies. They have folks who put them in office. And so I really hope that there is the political will to get it done. But we live in an age when politicians are constantly disappointing us. And so I'm a little more cynical than I used to be about folks acting in the best interest of the country and of the state.
Matthew: Okay. It seems like...I mean, my perception is, is that, you know, unless there's a crisis, you know, where the public says you must act now, there's really no upside for a politician to take away something from their constituencies. Okay. Because I mean, we've kind of built in this where we don't want any long term planning. Everything's gotta be short term. And that's unfortunate, but it seems to be the case everywhere.
Khurshid: Yeah. I mean, you see that with the climate change movement, right? We are in a bona fide emergency and, you know, and the world is crying out and we see, you know, the youth especially taking to the streets and that's not moving folks as quickly as it should, especially in our country, unfortunately.
Matthew: For business people that may be listening, what areas of hemp and cannabis do you really focus on for people that need some legal help? What's a good fit? You know, for some that's listening, wondering, "Hey, am I a good fit to work with Khurshid and his team or am I not?" What would be your kind of ideal client that you feel like you can help the most?
Khurshid: Well, so we work with a lot of startups, but we've also seen a lot of our startup clients grow into thriving businesses and we've taken on businesses that are, you know, a lot more advanced. And I've gone through several rounds of financing and have been operating for a while. And so, you know, the maturity of the company doesn't really matter as much to us. What we're really looking for is folks who are doing this for the right reasons, right? And that's been a consistent theme for our business because we started as...you know, we started in the Drug Policy Reform Movement back in 2012, you know, well before we had what we have today in terms of the market. And so I am, you know, used to be that I would ask businesses, you know, what their involvement was in advancing the ball, right?
And that's still very interesting to me. And I, you know, wanna know what folks are doing to actually improve market conditions for themselves and others. And so, you know, it used to be, "Hey, you know, how much money did you give to normal, or how much money have you contributed to DPA in the past or SSDP or MPP?" And today those questions are still relevant. But I also wanna know, you know, what folks are doing to advance the ball in DC, especially being on the NCIA board. I wanna see some commitment. And I wanna see businesses that are, yes, they're doing this because it's lucrative, and we're not gonna fault them for that. But at the same time, you know, they need to care about issues like social equity.
And, you know, not come to us with designs to game the system or to, you know, do things that are going to advance their interests at the expense of others, right? We're still very much, you know, while we are absolutely dedicated to our clients, you know, we are also keeping an eye on market conditions for the industry and we're very much invested in the growth and the success of the industry at large, including our clients.
Matthew: I wanna go to some personal development questions. Before we do that, you know, you work with a lot of clients. You work with a lot of people who are successful in the cannabis industry in California and probably seen a lot who have failed, too. You know, for all our listeners, most are interested in staying in California and being successful or, you know, maybe perhaps bringing their business into California and being successful, too. What's kind of the attitude and kind of game plan that one needs to be successful in California that you feel like sometimes new participants may not think about?
Khurshid: Time. Time. Everything takes a lot longer than folks expect. And I don't think that, you know, their expectations are necessarily unreasonable most of the time. Some of the times, they are unreasonable, but I think people are underestimating the amount of time it takes to get through, especially regulatory approvals in California, right, and things that should be sort of commonsensical. You know, we have to remember that the regulatory regime is still, you know, very new and still developing and staff at the regulatory agencies are still developing and still learning and still, you know, customizing the system and, you know, solving for some of those ambiguities that we talked about before.
And so I think that's one thing that you need to note is be prepared to wait sometimes, right? It's not so much getting a license is gonna be...take that long, although that can be a lengthy process as well. I mean that's a relatively, you know, short wait compared to some of the recent mergers and acquisitions that have happened in the industry where, you know, regulators have not responded yet to some of the filings that you need to file to say, ''Hey, we've changed our ownership roster and we've added a few new folks here. Here's all their info." You know, we're not seeing responses to that on a timely basis. And so if you're planning to come in and, you know, acquire a stake in a licensed business or find seasoned operators that you can do business with and integrate into their existing licensed business, you know, you are gonna be in for a bit of a wait.
And that's not something that most folks necessarily expect. They think about the licensing timelines, but they don't think about, you know, some of these filings that have to be done and the amount of time that it takes to get through with those. So that's something that... You know, and with time, I mean, if you have to wait longer to get a result that you're looking for, you're gonna lose revenue. You're going to have additional costs that pile up. You know, let's say you've got a new premise that you're trying to launch with, you may be paying rent on that for some time before you're able to actually use it, right? So I don't think most folks understand how difficult it can be in California. But that being said, you know, we want those businesses. We want to see the development of the industry in California. And, you know, I'm hoping that things improve from that perspective.
Matthew: Okay. So Khurshid, a few personal development questions. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Khurshid: Sure. So I think that the last time I was on, you asked me this question as well. And I mentioned ''The New Jim Crow'' by Michelle Alexander, and I'd still recommend that for those who are relatively new to the cannabis industry and wanna understand the roots of the industry and the Drug Policy Reform Movement. And in that vein, I'd also recommend CBDs...Steve DeAngelo's book, ''The Cannabis Manifesto,'' and Doug Fine's book, ''Too High to Fail.'' But those are all, you know, for folks who wanna understand kind of where we came from and where we're at.
In terms of, you know, personally, what's had a big impact on me, I'm thinking totally outside of the cannabis realm. You know, I thought about this and I think I'd say Dale Carnegie's books on human relations, right? So "How to Win Friends and Influence People," "How to Stop Worrying and Start Living." I read these at age 12 because my dad was enrolled at a Dale Carnegie course. He was in food service management at a country club corporation. And so he was enrolled in these, and after he got through the course, I inherited those books and I read them cover to cover. They were the, I think at the time, the first nonfiction books that I'd read cover to cover at that age. And, you know, those lessons have stayed with me and I would certainly recommend them to other folks who want to understand how to, you know, treat yourself and others with respect, but also how to lead. So highly recommend those books.
Matthew: Do you have any morning rituals that help you, that you'd like to share?
Khurshid: Sure. So, you know, I used to read the news first thing in the morning when I got up or my emails. And after the 2016 election, that got a bit...I got a little tired of that. That was a lot of doom and gloom. You know, but what I do instead now is I watch videos of my daughter and her schoolmates singing. She goes to a wonderful public international baccalaureate school that has a bimonthly assembly where all the kids from kindergarten through third grade sing songs to welcome the morning and to start the day off with positive energy and optimism. So they sing songs like "Good Morning All Over the World" and "Jump Up It's a Good Day." And, you know, I'd never miss it when I'm at home and I'm always in the front row of parents who are attending that. I have it recorded too for those times when I'm traveling or I need a little bit of a pick me up between assemblies.
So, you know, to me, it's an antidote to all of the gloom and doom and, you know, it's a good way to start your day without kind of infecting yourself with that, right? I mean, it's not to say that the gloom and doom isn't warranted, but that watching those kids, you know, it does bring a tear to my eye and it kind of reminds me of that, you know, our country, our planet are still worth fighting for.
Matthew: Oh, that's great. You're so right too because the, you know, starting your day with, you know, whatever the news is, it's like they've got that banner in the bottom that was like... I remember when that banner, the bottom first started, it was like really only for like the worst kind of breaking news that was like really bad. So when you saw that, you're like, "Oh shit, some of the terrible has happened." But now it's there all the time, scrolling across the bottom, like, "Oh, one crisis after another." After watching the news for a little, it's like, I wanna take a cold shower and then go on a sensory deprivation tank. So I think the way you're doing it is definitely the way to go. It's like I may not be as fully as informed as I could be, but I think I can, you know, bring something more positive to the world.
Khurshid: Yeah. I think it will work watching any little kid singing, you know. So you don't have to be in Sacramento at my kid's school. It's, yeah, it's pretty amazing.
Matthew: So I'm gonna ask you a Peter Teal question here. What is one thought you have that most people would disagree with you on?
Khurshid: Interesting that you'd mentioned Peter Teal. I'm gonna say social media, especially Facebook, I feel has been a detriment to maintaining a vibrant democracy. I think it's like an anti-civics class for the world. I used to say that it was a necessary evil for kind of modern communication. And everyone's on there. Everyone's doing it. But I'm not so sure that I believe that anymore. I've been relatively quiet on Facebook. I wil,l from time to time, still go on and post things about, you know, different NCIA events or MCBA events. Once in a while when I've got an interesting quote in a story, I may post that as well. But generally like I've just stopped you know, posting to Facebook and don't really follow it very closely and I feel better for it.
I don't think it's hurt me in any way, although people would definitely disagree and say, "What are you doing? You need to be on social media platforms to do business." You know, and there are still some that perhaps are better than others. And, you know, I still like LinkedIn, but generally I'm not a fan of social media and maybe that makes me a bit of a dinosaur.
Matthew: No, I definitely hear you. Okay. Well, Khurshid, this has been very informative. Can you let listeners know how they can find you and connect with you and, for potential clients, how they can reach out to you?
Khurshid: Sure. So my email is firstname.lastname@example.org. And our website has my bio and contact info as well, and that's greenbridgelaw.com. We have our full bench listed there and including our partners in Portland at Emerge Law Group. And yeah, I'd be happy to hear from folks.
Matthew: Great. Well, Khurshid, thanks so much for coming on the show, educating us, and good luck to you in the rest of 2020.
Khurshid: Thank you very much. Appreciate the opportunity.
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 best guest to you. Learn more at cannainsider.com/itunes.
What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at email@example.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.
Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye bye.