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Ep 369 – What Do New Hemp Laws Mean for California? Top Cannabis Lawyer Weighs In

jeffrey welsh vicente sederberg

A long-debated bill establishing new hemp rules just gained final approval in California, ​​but what does this mean for the market and how should we prepare? Here to help us answer that is Jeffrey Welsh, Partner at Vicente Sederberg & co-founder of Composite Agency. 

Learn more at https://vicentesederberg.com

Key Takeaways:

[1:37] An inside look at Vicente Sederberg, one of the largest cannabis law firms in the US

[4:56] Jeffrey’s decorated background in entertainment and how he came to join Vicente Sederberg

[12:04] Emerging growth opportunities in entertainment and cannabis

[16:46] How celebrity brands could help destigmatize cannabis and draw in more consumers

[21:57] The Trailer Bill and what this means for California’s cannabis industry

[25:41] Assembly Bill 45 and the end of prohibition on smokable hemp in California

Click Here to Read Full Transcript

[music]

Matthew Kind: Hi. I'm Matthew Kind. Every Monday, I 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-Ainsider dot com. Now, here's your program.

Sinead Green: Along debated bill establishing new hemp rules just gain final approval in California, but what does this mean for the market moving forward and how should we prepare? Here to help us answer that is Jeffrey Welsh, Partner at the Vicente Sederberg and co-founder of Composite Agency. Jeffrey, thank you so much for being here today.

Jeffrey Welsh: Sinead, it's my pleasure. Thank you so much, excited for our conversation today.

Sinead: I'm so pumped to have you on here and before we get into your background and all the amazing work you do in California, first off Jeffrey, can you give us a sense of geography and let us know where you're sitting today?

Jeffrey: Sure, yes. Right before the pandemic, I moved to Northridge, California, which is just what we call the Valley here. It's hot basically year-round, but it's now officially the end of summer. Things are cooling off a little bit, which means it'll be in the low 90s, early 80s this weekend. That is where I call home these days.

Sinead: Oh, nice. Very cool. Talking about California, obviously, you're no stranger. You've lived there for many years, but you do so much work there and so many cool projects. I'm so excited to get into this, but first off, Jeffrey, can you give us a snapshot of the Vicente Sederberg and the work you do there?

Jeffrey: Sure. I'm one of three California partners in Vicente Sederberg who is the nation's largest cannabis and hemp-focused law firm. Ironically, I found out about VS back in 2010, which was my first year of law school at Pepperdine in Malibu, California. I had gone to law school to be an entertainment lawyer. I come from a performance background in music, in saxophone particularly, but in 2010, I started working and discovered the cannabis industry in large part because VS actually wrote the law in Colorado, excuse me, that was the nation's first adult-use law.

Way back in 2010, my law school roommate and dear friend and business partner, Luke Stanton and I, hatched a plan to start our own cannabis-focused business law firm when the time was right in California, which we did in 2015. Ironically, right before the pandemic hit in 2019, as a result of lots of great conversations with the VS team, we decided to join forces and bring our book of business into the VS fold, mostly because a lot of our clients, Sinead, were looking to expand operations into other states. It was just such a wonderful compliment that we had a relatively small, but successful law firm joining the best in the business and the firm that we modeled our own firm after.

I've been with VS now for two years. We really handle anything and everything in the regulated cannabis hemp and emerging therapies spaces, really outside of litigation. We have a very small litigation department, we don't touch on criminal defense either. A day in the life of a cannabis lawyer is extremely varied and unique and that's what keeps my day to day extremely fun and unique because there are new challenges, that we're dealing with on a daily basis as we're going to dive into and chat about some of the things we're focusing on.

Sinead: I imagine, gosh, the last few weeks alone have just been probably a whirlwind for you, haven't they, Jeffrey, just with all the recent developments and all the-

Jeffrey: Oh, yes, which is great. I'm thankful to be in a space, it's evolving always for better or worse. It's certainly great job security with constant new developments and regulatory changes. Everything regarding, like new emergency regulations in California that just came through and we'll talk about the recall election and AB 45 and the provisional licensing issues, all these things are something I work with our clients on a daily basis on.

Sinead: That's great. Lots to unpack in this interview. I'm so excited to get into all of that in a second here, but you glossed over this, but I don't want to get through this interview without talking about your background in entertainment because you had a very impressive background in entertainment as a saxophonist. Can you tell us a little bit about your musical roots and maybe you share a few of your proudest accomplishments as a saxophonist?

Jeffrey: Sure. Absolutely. Really, I decided to do my undergraduate studies and my graduate studies in music performance. I did my undergraduate studies in music conservatory called the Hart School of Music, which is in West Hartford, Connecticut. Tremendous experience and really honestly, musicians and lawyers, being a musician taught me the art of dedication and frankly, hard work. The concept of spending eight hours a day in a practice room, that was my college experience. Obviously, I had a fun time, but I really learned how to sink in and really focus on myself and hone my skill set, which certainly was very helpful during law school and even developing your own business and practicing law, growing a healthy client roster and working with people.

After the Hartt School, I decided to do my master's at the University of Southern California here in LA, where I got my master's degree in saxophone performance as well. My goal at the time was to be like a touring musician and studio musician. I did some fun studio gigs. I'm on a couple episodes of Family Guy as a saxophonist, which was pretty fun. I was a sub for the Los Angeles Philharmonic in the Hollywood Bowl. I've had the opportunity to perform at Disney Hall in downtown LA and also the Hollywood Bowl, which are tremendous experiences for me.

Toured and recorded for a while. I tell this story a lot, but realized shortly after graduating from USC, that I needed to explore the business side of music. Part of it was leaving gigs, particularly like larger gigs, if there were celebrities we were performing with or larger entertainers. I would always see their managers and lawyers seemingly leaving in much nicer cars, than all the musicians. I'm certainly not a guy that money is my only focus, but always felt like I might have a really unique skill set. I've always been a people person, I've always really enjoyed being around people, and that side of me, I felt incomplete, honestly, as just a musician and that's not a slight on anyone who's a musician, whatsoever. I'm just speaking to my journey specifically.

That curiosity is really what led me to law school, in the hopes of being a music entertainment lawyer. Ironically, it was that curiosity that evolved into cannabis. 2010, like I said, is when I started law school and that's really when I discovered cannabis law. Now, California cannabis law in 2010 wasn't what I do today. It was keep your clients out of jail. We had a limited regulatory structure with some corporate formation in place that acted as an affirmative defense. I don't want to get too far in the weeds on California cannabis law 10 years ago.

That subsequently evolved into, particularly as a founder of my first law firm, into really utilizing my skillset with people into aggregating a pretty roster of some of the most well-respected brands in the State. I'm fortunate, Sinead, to still be able to perform and record pre-pandemic. I could perform once a month in LA, either at cannabis events of our clients or at nightclubs. At this point, I either performed saxophone with DJs or I'll DJ myself and play saxophone at the same time.

If anyone is out there curious what I sound like, it's like basically house music with saxophone on top. Groups like Big Gigantic and Grease are definitely some of my inspirations, as far as who I try to like model my performances after these days.

Sinead: Gosh, that's amazing, what you said. You said you're in a few Family Guy episodes, is that right?

Jeffrey: Yes.

Sinead: Oh my gosh. My brother-in-law is quite possibly the biggest Family Guy fan. He is constantly making references that go right over my head. I'm going to have to share that with him. He'll find that so cool.

Jeffrey: It was a very memorable experience and honestly, a lot of that work, what was really most interesting, Sinead, was that also, one of my reasons for pivoting out were my teachers at USC who were teaching me, were the same people who were then my competition. The studio music scene in LA is very small, and one of my teachers at the time is the guy. His name is Dan Hagens. If you've ever heard saxophone on any movie, he's the guy from Catch Me If You Can. He is Lisa Simpson from the Simpsons. He is the sax guy, he does the Grammy Band, he does the Emmy's Band, he does the Oscars Band. He's the guy. He was now the guy I was competing against for gigs. I recognized it's such a small space. He was not an old guy, so I realized, hey, this might make sense for me to differentiate myself a little more meaningfully as well, because there's just not that many sax gigs at that level.

I'm glad to give you some extra context to [crosstalk].

Sinead: Oh my God. Like you said, I find it so cool that you decided for, various reasons, not just the competitiveness there, but to pivot to the law side of entertainment and help facilitate some deal flow between those industries. Getting it into that, Jeffrey, can we talk about celebrity brands a little bit in cannabis because I feel like from Seth Rogan to Willie Nelson, Jay Z, we are starting to see a lot of unique celebrity brands in cannabis, but if you can give us an overview of where we're at with that and where you see that heading.

Jeffrey: Sure. It's one of my old tired sayings, but what I always say is music in cannabis is peanut butter and jelly. There are very few things that go better together. That was such a complementary fit to me. That's what really drove me to try and bring this gap, to create a way for the entertainment world to more meaningfully work or activate themselves in cannabis and hemp.

Right now on the celebrity side of things, I see two really different buckets. I see, still to this day, groups of talent that aren't doing it right. You'll see brands that are out there, where it's very clear the brand ambassador or the celebrity is just looking for a paycheck and they're not meaningfully involved in the brand. The brand itself is not really a natural extension of the celebrity themselves. There isn't that like genuine thread that binds the two and cannabis consumers are smart and we're picky. There's a lot of choice, particularly in California, as to cannabis products.

You're going to have your super fans, so regardless of whether a brand has that authentic connection, you might still sell some products. Most consumers here aren't going to pay a premium, like a 15% to 20% premium just because you're buying a musician's cannabis. That to me is unfortunately still the largest bucket of celebrity brands. I'm not talking about celebrities getting involved or investing generally, just celebrity brands and that's most of them.

The groups you just touched on, I think, like Seth Rogan's brand, in particular, Willie Nelson's done a great job. I don't want to like pick on the Marley family. To me, Marley Naturals is a great example of what I brought up first. There's no authentic, really connection between Marley and the cannabis products. I think that's the struggle to sell those products really speak to that.

The groups that are doing it right is quite the opposite. I think first and foremost, they're not looking at cannabis as a short-term win. It takes a while to create that trust with the cannabis consumer, because say you're a fan of Seth Rogan and say you smoke cannabis, those two don't necessarily have to align. They're not mutually exclusive. Just because I love Seth Rogan, doesn't mean I'm going to love his cannabis, particularly if in California, I can get an equally good product for $40 an eighth, instead of $65 an eighth. A group like House Plant, what they've done is they've differentiated themselves. The brand optics are beautiful, the flower is preeminent, but they've also differentiated themselves by one, Seth being meaningfully involved. Seth also really understanding the importance of walking the walk, as it relates to social equity initiatives or giving back to a community that has been disproportionately affected by the war on drugs. Groups House Plant are really doing that.

Then, you add in the other differentiator, which is their accessories are beautiful talking pieces of art. I think really approaching celebrity brands as, hey, we have to get meaningfully involved, this can't come off as a way for the celebrity to get a paycheck and how are we going to really differentiate ourselves and get the brand ambassador or celebrity really involved. Do the meeting greets, do lots of Instagram, Facebook lives, stuff, depending on what you can do specific to social media.

I think I've unpacked that. I'll pause there and see if you got any more questions because I know I just--

Sinead: Oh no. That makes total sense. I was curious because in most other industries slapping a celebrity's face on a product, they tend to see some success with that, but with cannabis consumers, I feel like, like you said, they are a little bit more savvy. They're a little bit more set in their ways, maybe a little bit more educated and they know, which products they already like. I wondered with some of these brands that aren't, maybe, like Seth Rogan, his name is almost like synonymous with cannabis, I feel like. I saw recently Cheech & Chong have partnered up with Eighth Icon Holdings to start another brand there. Cheech & Chong again, they're very synonymous with cannabis. It's almost, those are really targeting cannabis consumers.

Are we going to start to see celebrity brands that really peak a broader public interest and then maybe, help broaden the industry and maybe help to lessen some of that stigma, maybe normalize it. Do you think we'll start to see some of that?

Jeffrey: I'm glad you're bringing this up, Sinead. That's the core thesis for me, is that look, it makes sense for Seth and Snoop and Wiz and Willie, and we know they're the usual suspects. That just fits into their core brand, but where the opportunity is, where the opportunity to change hearts and minds are with people that you wouldn't traditionally associate with consuming cannabis. That's how we really convert the people who are on the outside looking in, is utilizing celebrities for better or worse, as a way to get people to be educated and to try rust the plant. That to me, is the most meaningful way we can really start to bridge that gap.

That goes to also, one of my other thesis in entertainment, which is utilizing non-psychoactive cannabinoids as a stepping stone because you don't have the regulatory challenges. If you're dealing with someone who's, maybe 60 plus, they may have smoked cannabis in the '60s or '70s, but the cannabis today is much stronger. It's different, there's a lot more choices, there are strains, there are different products. The ability to introduce someone who's maybe never smoked cannabis or who hasn't smoked cannabis in 40 years, to a topical CBD product that's going to help them with some aches and pains, to me is the perfect entryway to having them explore that curiosity and to opening that door further, once we get to federal legalization.

The demographics that currently aren't being targeted can really start being effectively targeted. Those are also demographics that I think would benefit the most from relatively regular use of the plant. For me, I am a almost daily cannabis user at night, it's part of my evening ritual. Is that for recreational use or for medical use? I'd argue a little bit of both, but I wouldn't say I have a true medical need to consume cannabis.

I just told you my mom just got in town. My mom is in her 60s and absolutely benefits. I always get her topical products and she loves vaporizers and so I always get a couple of clients vaporizers because then she can enjoy the product in a way without her getting too stoned, frankly. She can't smoke California Flower, it's just too strong for her. I'm lucky to have my mom, of course, but my mom's lucky to have me as it relates to cannabis because I can be her education gap. I can bridge that gap for her, explain what the terpene profile is on the back of the product.

That said, my mom obviously cares what I say, but I don't have that weight. I don't have 10 million followers on Instagram, that to me is one of the most exciting evolutions of our space, and something I remain bullish about is continuing to push and find people who are willing to basically support and defend the plant and all of its amazing uses.

Sinead: Absolutely. That's such a great point and like you said, some of these recent developments in California are only going to expedite that. We've got the Trailer Bill, we've got Assembly Bill 45. There's a lot of stuff going on right now, that I think is only going to aid that.

Maybe we'll start with the Trailer Bill and talk about the new industry regulations that has just put forth in California, could we talk about that for a few minutes?

Jeffery: Absolutely. You just summarized my week, Sinead. That's been 80% of my phone calls this week. Look, this was good for the industry in California, and for those not in the know. Essentially, California's cannabis regulatory structure are three different agencies, and this new Trailer Bill consolidated those three agencies into one, creating what was the Bureau of Cannabis Control into the Department of Cannabis Control. it went from BCC to the DCC.

With the advent of the DCC, came 400 pages of emergency regulations, that were released, I believe, middle of last week. When I say that's been my week, this week has been spent working with my team. I'm so fortunate my team is just so impressive and we've already created summaries. If you go to Vicente Sederberg or just search Vicente Sederberg DCC or emergency regulations, California you'll land on our page with our summary. It's good for the industry in the long run, Sinead, it's challenging initially, because with new processes mean hiccups and inevitably mean a little bit of a loss later, in terms of productivity and effectiveness on communication.

The reason it's good long-term, is that these agencies and I'm not blaming the agencies specifically, it was just the nature of the beast. Pre DCC before these agencies were consolidated, they didn't really communicate effectively with one another. I might have a client that has a cultivation license, which was one regulatory body, a manufacturing license, which is a different regulatory body, and a retail license, which is a different regulatory body, and trying to communicate or get them to communicate with each other, was extremely challenging.

The concept of having one point of contact, as it relates to the regulators instead of three or three different agencies, it is encouraging long term. The challenge now is that particularly during these times, like during COVID, they're dealing with a massive agency consolidation, brand new rules, so now, the analysts and people working for the DCC are now getting flooded with requests about how to interpret these new rules. That in conjunction with provisional licensing, which we'll talk about, means there's a massive logjam right now. To process a license in California right now, we're quoting like four to six months for the DCC, from the day you submit a license application, until you receive approval.

I think as we look to the future, this is going to get better and more efficient and I do think this is a sensible move long term, it's just right now we're dealing with the reality that things are going to slow down when you implement a new meaningful process that affects tens of thousands of businesses in the state.

Sinead: Absolutely. Vicente Sederberg, you were so instrumental in overturning the smokable hemp ban in Texas. You mentioned there are going to be some hiccups here and there, but ultimately, you think this is going to be very good for California. Could you maybe discuss some of the parallels there and give our listeners a sense of what Assembly Bill 45 is and how, maybe, you see some parallels there between California and the Texas market?

Jeffery: Sure, absolutely. Another hot button topic and I've got to give a shout out to my colleague Shane Pennington, who was instrumental in helping to overturn the smokable hemp ban in Texas and I'm sure he'll be back to work in California now. Luckily, we've got him on our side and a great team. Look, like we talked about before the interview, Sinead, it's two steps forward, two steps back. It's not a lack of progress, but I don't quite understand the thesis or rationale here.

Again, to summarize what AB 45 is, it's basically, the California Legislature has given final approval to this Bill, that really allows a formal pathway for hemp-based CBD to be used in foods, beverages, and other products in the state. That is wonderful, that's the two steps forward because as you and I both know, Sinead, it's not just California, it's everywhere in the country if not the world that, specifically in the US, it's clear the FDA has not approved hemp-derived CBD as being generally regarded as safe for human consumption, and everyone's doing it regardless. You can find CBD additives everywhere, online, at your farmers market, at your local coffee shops, everywhere. It is absolutely everywhere.

It's nice that California is providing that pathway, but at the same time after this wonderful news in Texas, it's also banning smokable hemp. My concern about this Bill is that they are checking off one box and creating a whole new separate set of issues, which is that hemp cultivators, there could be some litigation that stems from this new regulatory pathway we're heading down. I just feel like if you're going to allow people to ingest CBD, then and I would consider inhaling or smoking hemp, a different form of ingestion, understood.

Look, if you're allowing cigarettes to be sold and regulated appropriately and cigars to be sold and regulated appropriately, to me it's nonsensical why you wouldn't provide a pathway to properly allow for the regulated sale of smokable hemp products.

I don't know if you've ever tried a hemp cigarette? I've had like 10 of them in my life, and 9 of them were terrible. I don't necessarily envision it being a massively popular product, except for the fact that hemp cultivators are now starting to produce hemp, that basically looks like cannabis, and supposedly, if they're able to harvest it and keep it fresh, it does taste amazing. I think if we have a regulatory regime that allows for the sale of this, then we'll see the products evolve because for the most part, most of the hemp cigarettes I've tried in my life had been extremely dried out and extremely harsh. I think that's just because there are a ton of legitimate businesses really trying to evolve this but, Sinead, the obvious low-hanging fruit here is that hemp can be a wonderful cessation device from smoking nicotine.

I'm not going to sit here on this podcast with you and argue that smoking anything is healthy for you, but I'm quite sure, and I'm not a scientist, that smoking hemp cigarettes is better than smoking cigarettes. Smoking hemp flower does not have the same additives that smoking a pack of traditional cigarettes has. This is when we can get to a further, longer deep-dive into what type of money is behind these types of Bills and this type of legislation. You probably know what I'm hinting at, but big volume, big corporations always have their hands on some of this stuff.

Sinead: Gosh, absolutely. Assembly Bill 45, there is much to unpack in that alone. I feel like, Jeff, we'll have to do a follow-up interview at some point to really dive into some more of the stuff. We'll have to do so.

Jeffrey: I'm coming back, Sinead.

Sinead: Absolutely. Jumping into some personal development questions, I know you live and breathe cannabis, but you're very multifaceted, you've got so many other interests and we've touched on a few of those in this interview. I wanted to dive into those a little bit here, too. The first question, is there a book that you feel has had a big impact on your life or maybe your way of thinking, that you could share with the listeners?

Jeffrey: Sure. I would like to share it too, if you don't mind. They share a similar thesis. The first book is a book called Shantaram by Gregory David Roberts. I don't know if you've heard of that one.

Sinead: I haven't.

Jeffrey: It's essentially a massive story of redemption. It's a true story of basically a guy who spent like eight years in the Indian underworld. He was an armed robber and a heroin addict, escaped from an Australian prison to India, where he lived in a Bombay slum. He then reformed his life, and acknowledged the opportunity we have for this short one life we get to live, but still kept his edge, which is part of what makes it interesting.

He establishes a free health clinic in India, joins the mafia, is doing crazy work, is like a street soldier, he then falls in love. It's an epic tale of redemption and personal evolution and development. I won't spoil it for anyone who hasn't read it. I can't recommend that book enough. It's long, but it's also just one of those that once you commit the time to get into it, I couldn't put it down, I've read it like three times. Also interestingly, it was written by the guy, Gregory David Roberts, he wrote this about himself. The book was actually destroyed, the first two versions of it were destroyed by prison guards. Talk about a testament to the human, he wrote this entire book, but once you see it, it's not a short read, like three times.

Sinead: Oh my God.

Jeffrey: It's really like a saga and I generally stay away from the word epic, because it's overused in Southern California, but it's just a remarkable achievement, a brilliant, vivid story. It's compassionate, it's about human evolution, and it's also about redemption and that goes to my next book. Probably, my favorite all time book is The Count of Monte Cristo by Dumas. I actually just read the unabridged version for the first time over the pandemic. I'd read abridged versions a bunch of times. Again, similar themes.

It was an interesting question, Sinead, because it made me think about that for the first time in a really long time, and I found it very interesting that both of my favorite books are around the topic of redemption and evolution. I think I connect with those books in large part because of my evolution and that for me to change career paths, while I was a successful musician and to change completely and become a lawyer and then start my own business in an emerging space. Starting a cannabis law firm in 2015, which is what I did, was something a lot of people thought I was crazy for doing and thought it was essentially career suicide. I really resonate with those books because to me, it helps reinforce that while, of course, taking other people's opinions and particularly people you trust and love into account, if you have that fundamental belief in yourself, that really nothing is impossible and I really try and take that approach.

Obviously, books are not music, but music is probably my largest draw of inspiration, specifically, but those books are a reminder of you go through a hard day and then you read about someone like Mr. Roberts and his life and what he went through. I won't spoil any of the Count of Monte Cristo, but man, you want to talk about a story of redemption, it's my favorite story of redemption of all time. It's obviously one of the classics, but it's powerful and it's inspirational.

Sinead: Absolutely. That's great. I'm definitely going to have to bump those up the reading list. It's funny, Jeff, what you just said there, you said music is your greatest inspiration. That actually is so convenient because my next question for you was, I never want to ask, especially with an audio file like yourself, I never want to ask what's your favorite band because that's just an impossible question to answer, but-

Jeffrey: That'll be five hours later.

Sinead: Exactly. Jeff, say right now, if you were to end this interview and go put on some Spotify, what would you want to listen to right now? What's your favorite music at the moment?

Jeffrey: I have been relatively hooked on Rüfüs Du Sol for like a year and a half now. I basically have their entire catalog, as far as on the sax. If you're not an electronic music fan, I just think Rüfüs Du Sol-- I listen to everything and so the question's hard, it just depends on what I have. Frankly, if I need to focus, I'm probably not listening to Rüfüs because then I'm just going to listen to Rüfüs. They did just drop a new song today.

Me as an electronic musician myself, as a DJ and I do some producing and obviously, play saxophone, I'm always particularly inspired by electronic artists, who meaningfully differentiate themselves and actually perform instruments. I think too often people consider electronic music to just be like very heavy beat-driven, dance-focused and DJs. Rüfüs Du Sol, they do DJ, but they also create just to me, some of the most beautiful music I've ever heard that really resonates with me. It's inspiring, it's wonderful to listen to, it's relaxing, it also helps that the themes of their music are usually focused on love and to me, there's not really a better feeling to focus on than that.

I know that's focused on in lots of music everywhere regardless of genre, but there's something specific about them that I connect with directly and I think part of it is because playing sax with their music is a perfect complement to one another. Really, any of my new shows that I've been doing, my last show was like three weeks ago, I'll certainly always throw in a Rüfüs track that I'll play the melody along with or do some improvising with and it's usually one of the favorites. It's usually a top three favorite every time.

For me, it's also an opportunity to spread love, spread good energy, and hopefully, the audience living that experience, I'm leaving them with something to think about, whether that's something for themselves. That's what their music does for me, it helps me get inside myself in a good way and really think about my evolution and how I need to continue to evolve. It's always powerful when music has the ability for you to get introspective. Introspective doesn't mean it has to be massively productive, right? It can just be, "Hey, I'm just taking this music in and just like breathing it in." I am a massive Rüfüs fan, as you could probably tell. I just saw they dropped a song this morning and I haven't gotten to listen to it.

Sinead: Oh my gosh.

Jeffrey: That's probably why I said them first and foremost. Your question would also depend on if it's Friday night, I'm listening to something a little more upbeat. It just depends.

Sinead: I'm not familiar with them. I'm going to have to go check them out. Jeff, maybe for listeners who either would love to get connected with you at Vicente Sederberg, or maybe just come attend one of your gigs and SoCal, how can our listeners get connected with you, and maybe see a list of your upcoming gigs?

Jeffrey: Sure. I appreciate that, Sinead, thank you. My Instagram handle has all of my music and relevant cannabis updates. My Instagram handle is at J D Welsh, W E L S H. I'm also happy to give everyone my email, but it's a bit of a mouthful. It's j.welsh@vicentesederberg. You can also easily contact me if you just type my name, Jeff Welsh in cannabis, in a Google search, it'll bring you right to my page on our firm website, and then you could just email me directly from there. That might be easier. It might be the easiest way to get a hold of me.

As for all my music stuff, that's on my Instagram, but also my SoundCloud page, which is just Jeffrey, J-E-F-F-R-E-Y.welsh, W-E-L-S-H is my SoundCloud handle and got some new mixes on there, got some songs on there. I'm always happy to chat with anyone and everyone about music or cannabis or hemp or psychedelics. I hope our listeners can tell from this conversation, I'm a talker and I always like to connect with like-minded people.

Look, that doesn't necessarily mean that if you disagree strongly with something I said, or want to pick my brain or want to challenge a position I took on here, I always welcome that too, as long as that's coming from a place of respect and good energy. I'm always welcome to those conversations.

Sinead: That's amazing. I appreciate everything you've said here today, Jeff. This has been such a great conversation, so many amazing takeaways and just appreciate it so much. Thank you again, Jeff. All the best to you and everything you've got going on this year. So excited to see what you do and very much looking forward to having you back on

Jeffrey: Sinead, this was a pleasure. Let's stay connected. I hope everyone tuning in enjoyed themselves. Yes, let's stay in touch here and you have a wonderful weekend and I'll talk to you soon.

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 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.

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.

[00:44:49] [END OF AUDIO]

Ep 368 – Are Terpenes-Infused Products the Next Big Thing? Expert Says Yes…

kevin koby abstrax

As new studies shed light on the benefits of these powerful plant compounds, terpenes could become the biggest thing in wellness since CBD. Here to tell us more is Kevin Koby, co-founder and Chief Science Officer of Abstrax Tech.

Learn more at https://abstraxtech.com 

Key Takeaways:

[1:03] Kevin’s background in chemistry and how he came to start Abstrax

[1:55] An inside look at Abstrax Tech, the leading innovator in terpene sensorial experience

[2:44] A breakdown of terpenes and how this segment has evolved over the last couple of years

[4:44] How terpenes enhance the flavor and effects of cannabis through the entourage effect

[6:51] Abstrax’s Type 7 licensed lab testing versus standard cannabis testing

[10:50] Exciting takeaways from Abstrax’s “Man vs. Machine” experiment with Max Montrose

[14:02] How Abstrax’s terpene research is taking cannabis to new heights

[17:07] Abstrax’s terpene infusion products and the biggest trends Kevin sees among wholesale clients

[20:32] Where Kevin sees the terpene market heading over the next 3-5 years

Click Here to Read Full Transcript

Matthew Kind: 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.

Sinead Green: Today's guest is the leading innovator in the fascinating new field of terpene sensorial experience. I'm pleased to welcome Kevin Koby of Abstrax Tech to the show. Kevin, thank you so much for joining me today.

Kevin Koby: Oh, thank you.

Sinead: I'm such a big fan of Abstrax, really looking forward to getting into the nitty-gritty here in a second. Kevin real quick, can you give us a sense of geography, where are you joining us from today?

Kevin: Yes, I'm actually at our Type 7 lab in Long Beach, California.

Sinead: Awesome. Okay. I definitely want to talk to you about the lab because I know it's quite an involved operation there. Really looking forward to hearing about that. First off Kevin, before we jump into Abstrax, can you tell me a little bit about your background and what you were doing before Abstrax?

Kevin: Yes, absolutely. I actually, I'm formally trained as a chemist and I got to do synthetic chemistry in two different research labs at my college at UCSB and learned a bit about synthesis, which has a bunch of different components of chemistry in there. Then after that, I went to work at Gros, I worked at analytical lab for some time and then I went straight into manufacturing for a while. Then I built and managed pretty much all the lab and manufacturing for prelarge [unintelligible [00:01:43] at the time in the medical market. Once the law came through, we started Abstrax. Once it became recreationally legal is when we started Abstrax.

Sinead: Okay. Very cool. Okay. Jumping into Abstrax, what is the company on a high level? Can you give us an overview of the company?

Kevin: Yes, I would say to best characterize this, we would be the premier cannabis flavor house. We're focused on designing the experiences of all cannabis products and to make that happen, we're just focused on the signs of cannabis and cannabis terpenes. That is the gateway to cannabis experience in our minds. Yes. We have multiple facilities to actually research the cannabis experience. We partner with growpartners. We have our own extraction facility here in Long Beach. We do R&D here, like analytical R&D, and then we also have a separate research building and a manufacturing building as well.

Sinead: Awesome. Okay. Pardon me, to my listeners, if I start geeking out too much, but I've always been very fascinated by terpene. Kevin, can you give us for our listeners that maybe aren't familiar or maybe need a refresher on terpenes. Can you tell us what terpenes are and why they're important, why this segment has evolved so quickly over the last couple of years?

Kevin: Yes. Terpenes, I guess on the most basic level, they're a class of organic compounds and that's how you describe it in chemistry, but in our industry, we've a colloquial-- We'll just use this as a word to describe all the aroma and the flavor of cannabis. That's what this word has evolved into in our industry. There's a lot of things in there besides Terpenes that give flavor and aroma, but that's we call it in this industry. It's just all the flavor [unintelligible [00:03:41] terpenes.

In the past, I would say like the '80s and '90s, all the breeders were breeding for high THC content in cannabis. Then as the industry grew, they sought after like more unique characteristics and there's all these flavors in cannabis, but all of those are very recent. Those didn't used to exist really, or at least if they did exist, you wouldn't know about them because they're just all over the place.

In the 2000s and on, they really bred for this really unique cannabis, like sensory profiles where things smell like grapes or berries or creaminess and that's what we would all call the terpene profile. That's what gives it that smell and taste. That got even more popular as soon as the dawn of extracts and vapes really came to the scene during the medical market and going to the reg market, that's when we started seeing a whole lot of traction around terpenes and interesting terpenes.

Sinead: Okay. Very interesting. Most of our listeners they might have heard of terpenes multiple times at this point, but they're probably a little bit more familiar with cannabinoids. I feel like just speaking of THC, for instance, that is the component that packs the punch and maybe dictates the amount of high terpenes. Would that dictate more the type of high? Is that how it works?

Kevin: Yes, one way we like to say it is THC and CB are like your gas pedals and the terpenes are like your steering wheel. That's one analogy we use. I think another one is just understanding the entourage effect. If you have a super high THC profile with no terpenes because it was super hot or it wasn't cured right, it'll get you so high with all the THC, but if you get a lower THC flowered with a lot more terpenes that will definitely have a better effect than the previous sample. We would call that the entourage effect. An entourage effect is some of the parts is greater than any of the individually combined. That's something that is super interesting to us. That's something that's really the key between cannabinoids and terpenes and how they interact in your body.

Sinead: Got it. Okay. Yes. Terpenes, they don't only contribute to the experience like the flavor and aroma, but they also contribute to the health side, like your energy levels, your focus, your calmness, is that right?

Kevin: Exactly, exactly. Right.

Sinead: Okay. That makes total sense. Jumping into Abstrax, this company is really the pioneer when it comes to terpene sensorial experience and just all the research and development you guys have done over at Abstrax is just really fascinating. Lots of big things that I want to jump into here. First off, can you tell us what differentiates Abstrax testing from just your standard cannabis testing?

Kevin: Yes. I'm glad you asked that question. I think it's not particularly fair to compare the two, I know the cannabis testing labs, their business model is the EQC based on a state guideline. They have to have certain requirements for their instrumentation, but they have great instrumentation, the regs are very high, so they have to have very good instrumentation. They're searching for predetermined anywhere from 22 to 44 terpenes and they can detect down to, for terpenes case, parts-per-million, they don't need to go any than that.

For the sake of argument, pesticides and things like that, sometimes they're testing down to parts-per-billion and they're going for strictly QC. When we're going and we're analyzing profiles, we are more on a exploratory mission, and so we're detecting down to parts-per-quadrillion. If there are any math nerds out there, parts-per-billion, 10 to the -9, quadrillion 10 to the -15, we're getting the numbers that small in powers.

Then we also detect-- We can qualify and quantify any compound in there and we can separate all of them. In any given cannabis sample, we're not detecting for 22 or 44 terpenes through, quite literally detecting 400 and more in each sample because that's how much are in there. Then we're able to qualify what they are and then quantify how much there is. All those little parts in there, they don't seem that important, but a lot of the character of each strain is those small characteristics.

Sinead: Right. Yes. That's really fascinating. Just the precision you guys are offering cannabis is just mind-blowing. Kevin, you mentioned, you're currently sitting outside Abstrax Type 7 licensed lab. Tell us a little bit about what you do there in terms of extracting and replicating and what exactly makes a Type 7 licensed lab? What qualifies you as that lab?

Kevin: Yes. When the regulation went through California and they started allowing cannabis, you had to go through this new licensing process whereas before it was a lot different. Long Beach was the only place that offered open enrollment. We filed for open enrollment and the regulations in Long beach are extremely high compared to other jurisdictions, so we figured if we could make it here, we could make it anywhere.

It took us a while to get this building up and running, but we finally did it and now this building that we constructed it, it was meant to be a very versatile Type 7 lab where we are extracting cannabis, making cannabis products, but also honing in on the methodology and also honing in the different flavors and aromas and how to be the all-encompassing research facilities. It's like we want to understand everything about cannabis. We want to touch it however we want, go eat all the [unintelligible [00:10:04], California is the best place for it and see what it's all about.

You can't really do that with a testing lab license or any other type of license. You need to have the versatility of using whatever you want, any [unintelligible [00:10:17] person, for instance. We constructed this lab, we put all of our analytical instrumentation in it, and we're doing hydrocarbon extraction day in, day out. We're doing analytics on extracts, flowers, inputs, everything. This is where any papers we're writing about cannabis are usually coming out of the work we're doing here. We also like to leverage the work we're doing here and see if we can help out universities that can't otherwise touch cannabis and try to do collaborative studies that way as well.

Sinead: Okay. Very, very cool. Kevin, we actually had Max Montrose on the show a few weeks ago. We've had him on multiple times, but very recently you did the man versus machine experiment. Can you tell us a little bit about that and your partnership with Max?

Kevin: Yes, that was a really fun whole project that we did together. Max Montrose, I mean, guy's a legend for everyone that knows him, but he's developing and interpreting which is almost like the new [unintelligible [00:11:21] program for any cannabis enthusiast who's getting to know cannabis. I think it's different to what I think cannabis, personally speaking, it has a lot more dimensions, a lot more variability, and a lot of different profiles. That it can produce genetically as well as like from soils and everything else that you can use with it, but Max Montrose developed this program where he can more or less predict how a flower is going to make you feel depending on how you do a sensory analysis of it. Smell it, see how it makes you feel on your face or in your olfactory.

There's a specific way he does that and he teaches that. We want to put it to a test. We have this very sophisticated analytical technology, we built an algorithm based on peer review journals, giving weighted scores to what individual terpenes would have an effect on someone. Every time we do an analysis, we put through this program, we would call it terpenelytics and it spits out the highest likelihood of how this is going to make you feel. Max Montrose is doing something very similar. Had him fly out, we gathered eight different samples, we did our terpenelytics on it to see what the scores would be, how it made you feel, what the terpene profile and everything, and then we had Max in a room and a bunch of people just go through and smell each one and try to give us the same data.

To his credit, he got seven out of eight right which was pretty actually astonishing for any scientist sitting in the room would be like, "Holy shit." The only one he didn't get right was one, I wouldn't even say he didn't get it right, it's just that he didn't really give an analysis on it because he said, "I've never seen this before." It was a totally new type of flower.

It was nice to surprise him with that as well as essentially validate two different methods as well. That was a really great project. Since then, our relationship has only grown.

Sinead: That's great. Man, what a guy. The fact that he could pinpoint that many, that's crazy. Any of our listeners that are really interested in terpenes definitely go check out that interview with Max that we had a few weeks ago because he's definitely the terpene king I think. That's probably a good name for him, but that's amazing. Tell us about the different ways your research is taking cannabis to new heights and you guys are across the board on all the different sectors you touch. Consumer education, product development, medical research, just so many things that you guys really have a hand in. Tell us a little bit about that and where you would hope to see Abstrax really taking cannabis over the next few years.

Kevin: At any given time we have at least 20 R&D projects that are in process so it's a lot of R&D projects. It's the most that I know about in the industry, I don't know what everyone else is doing. I think something that we do, that's a bit different than everyone else, is that we're trying to lift up and bring as much collective knowledge to the industry as we can as a company.

A lot of the way that we do that is just collaborating with universities. There's a lot of really great universities out there. We've one of the best in the world here in the US and a lot of them are very eager to study cannabis, and they're trying to figure out how to do that most effectively, where can they make impacts. Because this is a plant that has a research prohibition on it, which is extremely rare and now we're almost allowed to touch it.

There's still laws around it being Schedule 1, once it gets to Schedule 2, then universities will be a bit more free to experiment with it. We have several different collaborations going on like at UMN, we're doing a genetics research project to see what type of terpene trait or terpene [unintelligible [00:15:51] like genetic traits are heritable or not. That's one thing we're doing. At Western Washington University, like I was saying earlier, the entourage effect is extremely important to not only the cannabis plant, but cannabis community as well, and to the people, all the cannabis enthusiasts. We're trying to work on measuring the entourage effect over there and we've had some good results so far. At UC Riverside, we're studying how vaping smoking cannabis can affect lung tissue and things like that. These are all very controlled studies, our R&D takes a long time. It's good to plant these seeds now and see where they grow.

Sinead: That's great.

Kevin: Oh, yes but it keeps us [unintelligible [00:16:41] engaged too, right?

Sinead: Absolutely. Cannabis, there are just so many just question marks I feel like with particularly, like you said, to measure the entourage effect. That's just around the corner. Thanks to you guys, that's going to be massive. Lots of great things ahead.

Kevin: Thank you.

Sinead: The research and development side of Abstrax is really just one component at this point. You guys also you have wholesale products, you've got your own in-house products. Tell us a little bit about that and maybe we'll start with your own in-house products. I know you guys just recently came out with a new Cloudburst Series. Can you tell us a little bit about that?

Kevin: When we originally started, we were recreating a lot of our favorite cannabis profiles, which were in high demand at that point in the industry, and then we ventured off to making cannabis profiles that are accentuating the trade that we and our customers really loved about certain products like the [unintelligible [00:17:50], we want to accentuate that, bring that character out. I feel like we've been progressing so far that now we're at the Cloudburst Series and the Cloudburst Series is our same spirit. We're building a flavor on top of the terpene backbone but now it's just all forward flavors.

We've wrapped back around to almost the traditional flavor house, but all of our flavors are all built on top of the terpene backbone that will have the entourage effect when it's used with cannabinoids. I think we're really excited about that. We've gotten a lot of really great feedback, not only from cannabis consumers and manufacturers and big brands like that, but also just from the beverage industry or the alcohol industry, people that want to take inspiration from cannabis and apply it to just your average consumer packaged goods.

Sinead: Very cool. What would you say have been the biggest requests and what trends have you been seeing among your clients?

Kevin: There's probably a couple of different trends there that you're talking about. Locally, it's really like local communities like different flavors, and so I think that could embody this. Embodying of this is like when you go to the movie theaters and you see the icing machine. In every community and zip code, they're usually different just because those are the best flavors for that community. If you go to Hawaii, it's like pog and then if you go to California, it's cherry, but then if you go to Michigan, they have grape or something like that.

We service 32 countries and all 50 states and everyone has a very different palette for certain things. Grapes in Michigan is different than grapes in California, but not only like a different palette or things, they're different preference of the flavors that they want. Then once they figure out the type of flavors and the type of experience that they want, then it comes down to product application. We have a lot of people making edibles, making gummies, making beverages, [unintelligible [00:20:07]people are using these for vapes. There's a large variety of uses that they use these for. Now we're making sensory kits, we're also making analytical standards and our product portfolio is growing at least every week.

Sinead: Wow. Okay. Yes, I'm curious, you guys you're really leading the charge when it comes to the terpenes market. Where do you see the market heading over the next three to five years?

Kevin: Yes. I try to think of the terpene market as a piece of the flavor and fragrance industry, and we're still separated in the cannabis industry while it's not federally illegal. If you're looking in the flavor and fragrance industry, the terpene category is definitely growing than all the other parts in that industry and that industry is growing as well so I'm projecting growth.

Sinead: Yes, absolutely. With Abstrax, I know a few things are under wraps, but what do you guys have on tap for the next couple of years? Any big projects coming up listeners should know about?

Kevin: We have new stuff coming out all the time. One thing we just released this month is a new nude enhancement terpene formulations. To make those, we have the terpenelytics program which is doing all the peer reviewed journals, but then we wanted to take it a step further. We went to a few dispensaries. We had the flower that they're selling to their customers. We have the customers fill out surveys based on the product that they're getting, knowing that we have the terpene profiles for the products that they're getting. Then we collected a ton of data, something like a daily data points or something like that.

We had to write this code, which ended up being like the artificial intelligence code to try and predict the surveys from the terpenes that consumers were experiencing and what isolates would predict what mood state these consumers were having. This code gave us these theoretical formulations. We went ahead and made those formulations. We had some flavors input, of course, we don't want to make that flavor that no one wants to try.

We had adjusted them with our flavors and then we went ahead and we wanted to confirm those results or go back to the drawing board. We held a more organized sensory panel with random participants, with Dr. Avery Gilbert, who's actually this top-tier flavor and fragrance guy. He's in charge of all these sensory panels and everything, so the guy knows how to do it.

We had this organized sensory panel and what happened was that we essentially confirmed that these theoretical formulations you made are actually in part of these mood states that these consumers and these participants have. Now we have that as a total formulation to put under something like a Cloudburst Series so that we can target mood states as well as flavor profiles. I think that's mainly what our customers are coming for. We have a ton of stuff coming out all the time.

Sinead: Yes. That's maybe too broad of a question because there's so many projects and lots of big things ahead. Really excited to see what you guys do but Kevin, before we wrap up here, I love to end the show with a few non-cannabis related questions just to give the listeners a feel for you and the man behind the curtain. First off Kevin, are there any books that have had a big impact on your life or way of thinking you could share with us?

Kevin: Yes. Thanks for asking that. My dad gave me a book recently called Principles by Ray Dalio. He's the world's largest hedge fund manager, I believe. He wrote a pretty good book about, pretty much any instance in life, pretty much can have a protocol for smooth sailing essentially. I'd recommend that book.

Sinead: Oh, that's great. Okay. Yes, that sounds really interesting.

Kevin: I'm going through that right now so that's top of my head.

Sinead: Cool. Very cool. That sounds really fascinating. All right, so next question. I never want to ask what's your favorite band? That's such an impossible question to answer, but what is your favorite music at the moment, or maybe your favorite band that you're going to a lot lately?

Kevin: Yes, I was jamming to Mick Jenkins before we started this call.

Sinead: Oh, nice. Okay, I'm not familiar with them. What kind of music genre is that?

Kevin: It's rap. You should definitely look it up. He's definitely a cannabis enthusiast.

Sinead: Okay. I'll have to look him up. Awesome. Wrapping up here, Kevin, you really have your finger on the pulse with the terpene side of the cannabis industry, but what would you say is one thing going on in the industry right now that might have a big impact over the next few years, but you think it's flying under the radar right now?

Kevin: I think we all got our eyes on federal legalization and how that's going to pan out or what steps that's going to take to happen and who's going to prepare and how. We're all going to prepare if we like to or not, but how are we preparing? That's the biggest thing that I'm looking at every company in the industry with. How are they preparing for federal legalization and how are they going to get affected by that, right? Hopefully, it's not going to be like a shakedown, but we want to prepare for the worst and hope for the best.

Sinead: Absolutely. Yes. That's, as you said, a good rule of thumb for the industry at large so that's a good little piece of advice there too for our listeners. Thank you for that Kevin. Kevin, thank you so much for coming on the show. This has been such a fascinating interview and just really looking forward to seeing what you guys do over the next few years. Thanks again and best of luck to you and Abstrax.

Kevin: Yes, thanks for the opportunity and letting me come on.

[music]

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 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. 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 your 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.

[00:28:06] [END OF AUDIO]

Ep 367 – GenTech Puts New Life into Old Instruments, and Labs are Saving Big

yvette pagano gentech scientific

With the demand for cannabis testing services on the rise, one company has found a way to provide top-tier equipment at a quarter of the price. Here to tell us more is Yvette Pagano of GenTech Scientific, a supplier of quality refurbished laboratory equipment for the cannabis industry.

Learn more at https://gentechscientific.com

GenTech’s $25K for 25 Years Giveaway: https://gentechscientific.com/25000-for-25-years

Key Takeaways:

[1:14] An inside look at GenTech Scientific

[1:52] Yvette’s background in manufacturing and how she came to enter the cannabis space

[7:18] GenTech’s biggest customers in cannabis and the company’s wide selection of lab instruments

[10:26] How GenTech sources its equipment from universities and laboratories across the world

[12:48] How GenTech is able to save clients up to 70% on top tier lab equipment

[17:50] The first steps to starting a cannabis lab

[20:48] GenTech’s training and education programs for cannabis labs

[25:20] Where Yvette sees the cannabis testing market heading over the next few years

Click Here to Read Full Transcript

Matthew Kind: 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 dot com. Now, here's your program.

Sinead Green: The cannabis testing market is seeing some major growth opportunities as demand for testing services continues to outstrip supply. Here to tell us more is Yvette Pagano of GenTech Scientific, a supplier of quality refurbished laboratory equipment for the cannabis industry. Yvette, thank you so much for joining us today.

Yvette Pagano: Thank you for having me.

Sinead: Absolutely. It's such a pleasure to have you on, and I'm really looking forward to hearing about all the cool work you're doing at GenTech. First of all, Yvette, can you give us a sense of geography, where are you joining us from today?

Yvette: Yes. I'm calling from Western New York State. I'm at work. GenTech Scientific is located in Arcade, New York. That's about 40 miles south of Buffalo, and it's a rural community.

Sinead: Okay, great, awesome. What is GenTech on a high level? Can you give us a snapshot overview of the company?

Yvette: Yes. GenTech Scientific buys, sells, and services analytical lab equipment. We are industry agnostic and also brand agnostic. We buy equipment on the market, refurbish it, and we sell it to labs and research facilities, so they can conduct their research and perform testing on everything including cannabis.

Sinead: Okay, awesome. Yvette, before we jump into the nitty-gritty with GenTech, I really want to get a sense of your background because I know you are relatively new to the space. We've talked previously, and I know you've been a longtime consumer, and you've enjoyed cannabis for many years now, but you really only got into the space professionally a couple of years ago. Can you share a little bit about your background and what you were doing before GenTech?

Yvette: Yes. My previous life, I was a CEO president of a precision machine shop. I worked in manufacturing. That's milling, turning, and mill stamping. Was a global company, so I definitely understood how to make money in a commoditized market. It was a family business and record sales, record profits, and doing well on that end, but family businesses can be difficult. I felt like I took it as far as I could, and I got a great offer to sell my shares, and I did. I left that industry, and I don't know if you call it a midlife crisis, but I'm like, "What am I going to do here?"

I knew I did well enough on the sale that I didn't have to get a job instantly but not good enough that I could just retire. I really did a lot of self-exploration and corporate coach and find your why and in the end for me, I am very passionate about cannabis. I care deeply about the industry and social justice and advocacy and normalization. It's just always been a part of my life and when I started at car engineering, my previous company, 2006, I didn't even know you could work in cannabis.

Then all of a sudden, I had this clean slate. I made a determination that somehow someway I was going to become a part of this industry and be on the right side of history and get in the game. I joined up with some guys in Toronto, Merchant Bank, and did some consulting in the space, and that's really how I started meeting people and attending conferences and being part of different groups and COVID and all that. Eventually, I found my way to GenTech, but I have been an accredited investor and doing those kind of moves for the past several years.

Sinead: Oh, wow, okay. I feel like there’s no better segue than that to jump into GenTech because I feel like you've only really gotten into this space as a company a few years ago. How long have you been serving cannabis and what percentage of your customer base is in cannabis?

Yvette: GenTech has been around for 25 years. They have been serving a variety of industries since they started. Our biggest percentage as an aggregate is academia, selling to universities and research centers around the world. The previous owner, he sold to a private equity about a year ago. GenTech is now a liquid capital portfolio company, but the previous owner, he just a smart guy. He saw it pretty early, right around 2014, he said this is going to be big. He was pretty proactive. He sponsored normal, he started going to some trade shows, and positioning himself as an industry leader and making GenTech an industry leader.

I give him a lot of credit for who are having that foresight, but the core thing for GenTech is we're testing. We're testing and research. You have to test your cannabis. You have to. You need instruments that can perform the test to your cannabis. There are six major tests that an accredited lab needs to do. GenTech sells the analytical lab equipment that allows you to conduct these tests. Just like you're building a house, you need a hammer, you're building a testing lab, you need an HPLC machine, and that's what GenTech does. Just like a used car dealer, we find the equipment on the open market, we're brand agnostic.

Agilent is a really popular brand in cannabis testing. We sell quite a bit of Agilent, CyEx, Waters, Thermo, Fisher. We get it from brokers. We get it from labs that are closing, trade ends. We buy internationally. We pick up this equipment, and then we refurbish it, and then we offer it to any industry, but particularly cannabis startup labs are really hot for the product because they've got these unmet needs in the marketplace, and we're the tools to do the job, we're the machines who run the tests is basically what we have.

Sinead: That's great. In the cannabis space, you said it's mostly labs, but do you also, are many of your clients also growers, dispensaries, manufacturers? Who makes up your cannabis client base?

Yvette: Yes. The cannabis clientele, a lot of it is research, academia, Colorado State [unintelligible 00:07:38] they're a pretty big client and they've got a pretty active cannabis research within their facility. That is a big person for people who will take it, but it's these accredited third-party labs who are really verifying that your cannabis is good for sale, and then your big manufacturer. A dispensary or a retailer, they don't really have a use for testing equipment. By the time the product's to them, it's tested, it's packaged, it's ready for sale. The other businesses on the supply chain will use our equipment.

Extraction's really big. You're doing extraction, you're making oils and stuff for your vape pens. In order to do that, you use solvent. One of the tests is to prove that your dissolute or your oil is solvent-free. Send that to an accredited third-party lab and they would use one of our instruments and they would determine that. Mass spec is really the preferred instrument for that. If you're a big extractor and you want to know before you send all this dissolute to an accredited third-party lab if it's truly solventless, you may also buy a mass spec, and you may run your test in-house. You say, "Okay, this is solventless, now let's go send it to the accredited third-party lab for that seal of approval."

If you're growing, you would want some of our equipment because you have to be able to test for mold and for pesticide. Again, you're going to be sending this out to an accredited third-party lab, but you yourself might want to get a heads up and be able to run these tests in-house. If you're on the food and beverage size and you're making a brownie and you're curious how potent it is, if it's got 30% THC or how strong is my brownie, you would want to use HPLC machine, and that's the preferred way to test for potency. Again, you might want to do that in-house when you're in R&D phase and keep trying different brownies and getting the potency and then when it's all said and done, you would send that brownie out to an accredited third party lab and they would verify, or they would also confirm, so different people on the supply chain are using it to check and double-check and do research.

In the end, if you want to sell cannabis legally, it's got to be tested and it's got to be tested by an accredited third-party lab.

Sinead: Absolutely. Okay. Very interesting. And so where do you usually source this equipment because it's not, this equipment isn't just specific to the cannabis industry and what we use it for. This is equipment that is used across various industries, and in cannabis we're now starting to adopt a lot of those practices from other industries…

Yvette: That's a good question. Where we get the equipment is pretty much on the open market globally. Anybody listening right now, if you have a lab that is closing or you have equipment that's obsolete, or you bought the wrong equipment and you're looking to get out of it, you want to sell it, GenTech would love to make you an offer on it, so please contact us. There's also brokers, so there's people that literally that's what they do, so we work with certain brokers. We're very close with the university community so a lot of times when universities are selling or they're looking to upgrade or change around their lab, they'll come to us.

We get a lot of trade-ins because we've been around for so long, eventually somebody will need something new. Sometimes people buy stuff for an experiment, like we just bought something back from Cornell university and they went a different direction. They lost their funding for that specific thing. It was in food science. They just didn't need the machine anymore. There's nothing wrong with it. They just literally weren't using it so we bought it back, so those things will happen, technologies change and certain things like that. Like I said, kind of like a used car dealer, we just get them wherever we can get them and based on our reputation and our ability to buy.

Sinead: Okay. Very interesting. That's something I was curious about because the supply and demand gap right now for cannabis testing is still insanely wide and I feel like part of that is just, particularly with laboratories, it's really expensive to start a lab. Right now we're seeing so much demand for these testing services, but there aren't a lot of facilities available right now. I think that's partly to do just with how expensive it is to start those so can you tell us a little bit about the ROI GenTech offers laboratories, and maybe tell us a little bit about the saving opportunities. Instead of buying new, how can these laboratories really benefit from going through GenTech and getting their equipment through GenTech?

Yvette: I think that's the reason why we do so well with universities, because they truly, truly understand the value of refurbished. Refurbished is just a fancy word for used and so our equipment here at GenTech is certified refurbished. We guarantee that the equipment will perform at the OEM, original equipment manufacturer standard. If you relate it to a car, if you say, "Hey, this car, when it was new from the factory could go zero to 60 in five seconds", then GenTech will certify that our used 2017 Agilent can go to zero to 60 in five seconds for that kind of an analogy, be able to perform the same tasks and get the same scientific result. Just like a used car, these machines, they lose their value when they go from brand new to used.

If you wanted to do, we're basically 70% off. 70% off retail is a good way to think about it. If you want to be a full-scale, accredited cannabis testing lab in US, you need to be able to do six major tests. It's heavy metals, it's terpenes, it's potency, pesticides, mold, and if you went to Agilent, which is one of the most prestigious brands, and you bought all this equipment to do all these tasks, brand new, it would be 1.2 million dollars, and it'd be great stuff. If you went to GenTech and you went with Agilent, but instead of a 2021 brand new, you're going with a 2017 or even a 2010 piece of equipment, you're, for a complete cannabis testing lab, all in, definitely under 400,000.

We're going anywhere between 200,000 and 400,000, depending on, again, exactly what test they want to do, where they're located, et cetera, but it's a tremendous savings. You can either do double or triple your throughput if you were going to buy new, all of a sudden you can buy three machines and get that many more tests done or you can just get in at a lower price point and be able to start monetizing your investment quicker because you paid less for your CapX, your capital expenditure.

Sinead: Wow, that's a steal. Man, that's insane.

Yvette: Listen, I always say the biggest problem with GenTech is not enough people know about GenTech. I believe that with my whole heart, I'm like as soon as the cannabis industry knows what we have and what the price is and what the equipment is capable of doing, it's really hard to resist.

Sinead: Right. Oh my goodness. I can only imagine, as you said, as more people hear about GenTech and you guys get the name out there, you're going to start seeing some major- just I feel like an influx of customers. How are you preparing for that demand? Do you think you'll ever run into any issues with your supply chain or do you think you'll be able to really meet the demand there?

Yvette: That would be my best problem ever is that, we can't get enough used equipment fast enough to turn around and sell it. Again, there are certain pieces of equipment. There are particularly hot certain brands and so certain things turn faster than others but right now, we are able to keep up with the demand and I'd say 25% of our clients are cannabis-focused. Like I said, we've got our food and beverage, our [unintelligible [00:17:13] big pharma, oil and gas, so we have all these other industries that are also contributing to our equipment.

They're [unintelligible 00:17:22] an HPLC machine they, they were testing for pesticides, maybe they were testing for fruit or whatever. You can test anything for pesticide so the method for testing agricultural products for pesticides, that's been around for a really long time. Now you're just taking the same idea, same machine, but you're just testing now pesticides in cannabis.

Sinead: That makes total sense. It's just amazing. Just the savings that you guys are offering. I wanted to ask you how you think it's best for a lab to go about budgeting if they're trying to get off the ground and they're trying to prioritize which pieces of equipment they want to outfit their lab with first.

Yvette: We want business really, really bad. We want you to buy equipment like crazy. I'm telling you the number one thing you should prioritize is getting yourself a good lab technician or a good chemist or both. That's what you need to think about if you're setting up a lab. If it was super, super easy, everybody would do it, and we have seen labs fail, and it's not because they didn't buy elite equipment from GenTech, it was because they didn't know what they were doing. My background in manufacturing, I know how difficult it would be to set up an ISO-compliant, manufacturing shop floor because I've done that, I have lived that, so there are strict regulations.

Again, just like my background's in machining, if you buy the best horizontal mill, seven-axis, this amazing mill, it's not going to produce these great parts. You've got to have a skilled guy who can come in and program the thing and read the prints. It's the same thing, whether you get refurbished equipment or brand new equipment, if you don't have chemists and intelligent quality people who know how to run the equipment and they understand chemistry and electronics, you're not going to be successful. That's my first piece of advice is, if you're green, no pun intended, make sure you get with a partner who has set up labs and who understands what do you need to do.

For an accredited lab, there's six major tests you need to be able to perform. Most people seem to start with potency, so it seems like the intro one is being able to test for potency. That's in HPLC machine but again depending on what you're curious about or what you're trying to do, would lead you to which equipment you would purchase in what order.

Sinead: Okay, got you. First step, if anyone out there listening is thinking about going this route, like you said of that, first step is to get a technician, someone who knows what they're doing. If our listeners don't have a background in that, I can see that would be a problem.

Yvette: Yes.

Sinead: That said, at GenTech you guys do offer training and education, don't you? Can you tell us a little bit about those resources that you have there?

Yvette: Yes, so we do offer training and education. We'll install the machine so you have to pay for an install. If you purchase a machine from us in the US or Canada and you want it installed, then we refurbish the machine. We ship the machine out to your facility and then one of our technicians comes to your facility and hooks up the machine. During that time, they provide training and familiarization. They'll help you get one of your samples through and make sure the machines are working but, again, sadly, we don't offer--

I've never used an HPLC machine before 101 training, so we request that the person that we're with has got some experience in chromatography and has used a machine in the past. We do have some partners that that's sort of all they do. They do the method development. They both happen to be women. They'll help you spec out your labs and decide what equipment you need and where you're going to put it and how everything's going to be networked together. There are outside consultants that we partner with that we can lead our customers to.

At GenTech, we're really selling the equipment, and then training the customers on how to use that equipment is our core offerings. We also will service obviously, so if your machine is broken, even if you didn't purchase it from GenTech, our technicians will come out and we'll service you. We are global. It's called TeamViewer but it's basically a way for our technician and the remote technician to look at the same thing at the same time. We are able to do team viewer sessions for clients that are in other parts of the world to try to help them diagnose and train over the phone. Those are the main ways that we connect with our customers in terms of training and education.

Sinead: Okay, very cool. That's awesome.

[crosstalk]

Yvette: Wait, I have to do-- Can I do one more thing [unintelligible [00:23:29]

Sinead: Oh, absolutely. Go ahead.

Yvette: In GenTech, like I said, we're with a pretty rural community, so literally in our backyard right behind the building, it's called the Arcade Attica Express and it's this big choo-choo train. People come, it's like a tourist attraction and they ride the Arcade Attica Express. It's a two-hour train ride through beautiful western New York. They have different promos, [unintelligible [00:24:00] like a drinking one.

Sinead: Oh my god.

Yvette: Kind of as a joke but not a joke. We ran a campaign called Train on the Train and we were like, "Hey, you can always come to GenTech and train here on our shop floor." Check out the instruments you're going to buy and train here at our facility and anybody who can make it to Arcade for some training can also get a free train ride on the Arcade Attica Express.

Sinead: Oh my gosh. That's amazing.

Yvette: It's amazing, funny, and cute.

Sinead: Oh, that sounds so fun.

Yvette: Sadly, my little gimmick didn't work but I'm going to run it again next year. I'm getting someone on that train at some point [chuckles].

Sinead: Maybe it'll be one of our listeners.

Yvette: I hope so.

Sinead: It sounds so fun. You mentioned one of them is more of a-- I don't know what the booze cruise equivalent would be for a train but whatever the--

Yvette: I hope so. Ale on the rails.

Sinead: Ale on the rails, oh, they did. They found a nice rhyme there [chuckles]. That's awesome. That would be [unintelligible [00:25:06].

Yvette: Yes. If somebody calls, they might be able to arrange a special event since we are friends with the conductor.

Sinead: Oh my god. That is amazing. That's so cool. Wow, that's so fun. Very cool. Yvette, I wanted to turn to some personal development questions here in a second but before we turn to that, I wanted to get your opinion on the federal legalization timeline and how you think that's going to impact Canada's testing market which at present is getting some pretty amazing estimates from now to about 2026? How do you think federal legalization is going to impact to that estimation? Where do you think things are heading there?

Yvette: I think it's all coming up roses. For a company like us, I, myself, am completely for federal legalization personally. I would expect it within the next 3 to 5 years. My favorite news clip is that and I can't remember his name but the Governor of Wisconsin and they're always asking him how he feels about 20 million of his state's dollars like going into Illinois. I think they just have to keep asking that question to enough governors. I think it's going to be very similar to gay marriage in America. I think you're going to get enough states that are leading it and then the other states are just going to go like dominoes because it's just where the country's headed.

Obviously, even if you look at it politically, you've got 55% of Republicans in favor and I think, I don't know, 70% of democrats, so I think it's definitely coming sooner rather than later. In terms of how it's going to affect the testing market and GenTech specifically, again, I think it's going to be extremely positive. Every state is going to have their own rules and regulations and we've got the equipment that's going to meet those requirements. You think about alcohol, that's legal everywhere, but in Pennsylvania, you have to buy a keg from a bottle shop and in New York, you can get a keg in a grocery store.

In California, you can buy whiskey in the grocery store. They have different rules depending on what's up. They might say, "Well, in New York, the potency can't go above 30% percent and in Massachusetts, the potency can't go above 25%." GenTech doesn't care because our equipment is going to give you the result. I just think as cannabis comes on and it's more accepted, there is going to be most likely a federal, a standard, and then I think each state is going to have their own nuances and special rules. As long as things continue to move forward, there's more acceptance of the product. There's more demand. More states go legal, then that's just going to require more testing, more compliance and we've got the tools to meet those needs.

Sinead: That's great, man. We have so many guests who are dealing with this, so many Californians who have to constantly change with the regulations changing almost on a weekly basis. I can definitely empathize and it's definitely a bit of a headache but at the same time, this is the stuff that I think it's really going to bring cannabis up to speed and really help to destigmatize and really, hopefully, normalize it so we get to a point where things settle down. Regulations are a bit more concrete and companies like GenTech are really helping us get there, I think so. Yvette, before we wrap up here, in a second here, I want to share your contact information with our listeners in case they want to get in touch with you and maybe take you up on that train ride.

Before we get to that, I've got a few just really fun questions here to wrap up the interview. The first one, are there any books that you have read that have had a big impact on your life and your just general way of thinking that you could share with the listeners?

Yvette: Yes. I'm an avid reader. I read constantly. I always have one fiction and one non-fiction book going. I've read a lot of great books in business and leadership. I would say the one that changed my life and it just came at the right time, but it's called Becoming Your Best, and it's by Stephen Rob Shallenberger. They're corporate coaches, and I got introduced to them and their book a couple of years ago when I was leaving my previous company, so I think it came probably the right time in my life. BYB, Becoming Your Best, so I really drank the Becoming Your Best Kool-Aid. I've read that book multiple times, I've got the Becoming Your Best Planner, I listened to their weekly podcast. In terms of becoming a better leader, setting goals, having a personal vision, that one really spoke to me the most, I think, in my business life.

Sinead: Okay, very cool. I'm going to check that out. Wrapping up here, Yvette, I want to ask, if you could go back and give yourself one piece of advice when you first entered the cannabis space, what would you go back and tell yourself?

Yvette: The one piece of advice I would give someone is if you do your DISC profile, I'm very trusting, that's like, my personality is I'm a very trusting person. That can serve you well. I did make a couple of financial commitments, what I was doing, investing in cannabis, and I was modeling other people that I admired and thought, okay, you make an investment in this company, and you know, they'll give you a board seat, or you make an investment in this company, and then you can get some title. Then you're betting on yourself, and you're an investor, and so I did that a couple of times, in the beginning, assuming that I was going to get that board role, or I was going to get that job offer, and it never came.

I would say if you're going to be investing your money, and you just want to be an angel investor, that's awesome, but if you're investing your money, and you're trying to bet on yourself and invest in a company that you can maybe have more of an active role in. That was a tough lesson for me to learn, and that's what I would tell somebody else is just be careful with that. Just getting writing.

Sinead: Yes, that's a great piece of advice. I really appreciate that Yvette. Well, Yvette, wrapping up here, how can listeners find you guys and connect with you?

Yvette: Well, I am on LinkedIn, Yvette Pagano. I'm active on LinkedIn, I check it every day, so that's a great way to just connect with me is on LinkedIn. We have our website, which is GenTechscientific.com, and we have a blog that's pretty active. We do, like I said, we have the train on the train thing, but we actually do Tech Tip Tuesdays. These are really good tech tips. Anybody who's like a lab manager, or is actually working with this equipment, we ask our technicians what's your hardest problem, and then we do a little interview about it.

I would say just check out our blog, we do a lot of free content, it's really industry-specific and around analytical equipment and testing in cannabis. Obviously, you can certainly call us for a quote, so we're 585-492-1068. The best way to getting back is probably on LinkedIn. Then we will have a booth at MJ Biz, so anybody listening who wants to meet us in person and talk to us about their analytical equipment needs and meet with the technician and really understand what we have to offer come to our booth at MJ Biz, and we would love to see you.

Sinead: That's great. All right, well, Yvette, thank you so much again for joining us today and telling us a little bit more about GenTech. This has been such a fascinating interview and I'm really excited to see what you guys do in the years to come and really just wish you the best of luck with everything you're doing over the next year. Thank you so much, Yvette.

Yvette: Thank you and I forgot one thing, they're going to kill me if I don't say that. We have been in business for 25 years, and to celebrate, we're having 25,000 for 25 years, so we're actually giving $25,000 off the purchase, a GenTech refurbished instrument. If you're interested in signing up for this, go to our website, it's 25 for 25, but some lab is going to get a really nice piece of equipment at an extreme discount. We would love for your listeners if they do need any analytical equipment, please enter our drawing for 25 for 25.

Sinead: Oh my god, I'm so glad you mentioned that. Wow, what a deal. Okay, so I will definitely include that in the show notes for our listeners. If you are interested in GenTech and the 25 for 25 deal, I’ll have all that information in the show notes, so go check that out. That's great. Yvette, thank you again, and just all the best for GenTech and look forward to seeing what you guys do over the next few years.

Yvette: It was a real pleasure. Thank you so, so much for the opportunity to be on your show. I really appreciate it.

[music]

Matthew Kind: 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.

Promotional consideration may be provided by select guests, advertisers or companies featured in CannaInsider. Lastly, the host or guests on CannaIsider may or may not invest in the companies with 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.

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Ep 366 – How To Use Equity Crowdfunding To Launch Your Cannabis Business

davina kaonohi element apothec

While not the most traditional path, equity crowdfunding can be a great way for cannabis brands to raise capital – but only if know what you’re doing. Here to walk us through how she’s successfully crowdfunding her CBD wellness brand is co-founder and CEO of Element Apothec Davina Kaonohi. 

Learn more at https://elementapothec.com

Key Takeaways:

[1:05] Davina’s background in e-commerce and how she came to start Element Apothec

[5:49] How Davina took inspiration from her aunt’s homemade tinctures to formulate Element’s CBD products

[7:48] Why Davina turned to equity crowdfunding and how she’s successfully targeting investors

[11:36] Equity crowdfunding vs traditional crowdfunding

[13:38] How to create a killer marketing campaign through storytelling

[17:54] Element’s efforts to bring transparency to CBD and do away with sketchy “proprietary blends”

[24:04] Davina’s goals to grow Element’s product selection and expand the company over the next few years

[26:02] Where Davina sees the CBD skincare space heading over the next 3-5 years

Click Here to Read Full Transcript

Matthew Kind: 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 C-A-N-N-Ainsider dot com. Now here's your program.

Sinead Green: While not the most traditional path, crowdfunding can be a great alternative for cannabis brands looking to raise capital, but only if you know what you're doing. Here to walk us through how she successfully crowdfunding her new CBD wellness brand is co-founder and CEO of element Apothec Davina Kaonohi. Davina, thank you so much for joining us today.

Davina Kaonohi: Yes, thank you so much for having me. I'm really excited to have this conversation.

Sinead: Absolutely. I'm so excited to have you here and hear what you guys have in the works at Element Apothec. First off, can you give us a sense of geography where are you joining us from today?

Davina: I'm in Los Angeles, quite warm and sunny today.

Sinead: Oh, nice. Davina, thank you so much, again, for joining us and before we dive into element, I know this is a new space for you. You only really got into cannabis about a couple of years ago at this point, even though you've been using it and it's a big part of your family for a long time now. First off, I wanted to talk to you a little bit about your background, can you tell us what you were doing before element and why you decided to start the company?

Davina: Before launching Element Apothec I was doing strategic consulting for startups, mostly in the e-commerce space, and helping them set up their leadership team, their operational and strategic business goals. I just loved it because you could come in early and really help to drive the direction of the business and help them really think about big decisions that they were making in terms of the growth going forward.

I also had touched on helping a niece of mine build a social media app, which was quite a fun experience to be involved with. Then leading into Element Apothec, I think for me, it really was that I liked what I was doing, and I felt like I could make an impact, but I still hadn't figured out my why of exactly when I woke up in the morning what really drove and motivated me. Recently, doing Element Apothec has showed me that that's what it was, but I was at this turning point in my career trying to figure out what was next for me.

At the same time, my great aunt had come to me with these amazing products that she had created. I can tell the story in a little bit more about that and asked me to help build a website and I did that for her, but she still didn't really know what to do with it and basically handed over the business to me. I was really passionate about CBD and cannabis and wellness and living a clean lifestyle and alternative remedies. It just really made sense that that was the direction that I went. That led to the launch of Element Apothec.

Sinead: Wow. That's something really fascinating about your story is what you just touched on with your aunt there. You officially launched the company in December 2020. Is that correct?

Davina: Yes, right in the middle of the pandemic.

Sinead: Great timing, of course. Really, you guys you're so new, but Element really has been in the works now for about a decade if I'm not mistaken and it actually started with your aunt formulating her own tinctures. Can you tell us a little bit about that and the family collaboration aspect at Element?

Davina: We say we're a new company but we're almost a decade in the making, and because my great aunt was initially diagnosed with medical conditions and autoimmune diseases and the medications that the doctors prescribed to her she actually was allergic to some of the preservatives or many of the preservatives and those medications. Her prognosis with that wasn't good.

They gave her a couple of years to live and most of that would probably be bedridden, not with a good quality of life. A sister of mine-- I have two sisters-- is a grower and had some high CBD ratio plants and so she gave her some flour and said, "Hey, there's this great recipe. It's almost like a Rick Simpson oil you can make that and I've seen it help people that have used that before," and then gave her her first plants to start growing. She set up a little grow cabinet in her living room for her. She started creating tinctures. She started putting the oil that she was making in lotions and bath soaks and everything bomb. She didn't really realize that it would help her as much as it did. It did end up making a huge difference in her life to the fact that she was able to get out of bed, she started using her extra time to learn about essential oils and other plant-based remedies.

People also took note of her health continuing to increase and the lifestyle that she was now leading that she wasn't expected to and would come and say, "Hey, can you make me this? Can you make me that?" Over these 8, almost I guess like 10 years now she's created over 40 custom formulations because people would come and say I have this, I have that, can you make me this and every ingredient was never used for a scent or for a texture it was used to basically serve a very specific purpose of being able to help whatever the person might be-- To support whatever they might be experiencing.

Sinead: Wow, that's just such an amazing story. I know you from there, you took her formulations and you've got a medical advisory team now, but you took them to a formulist and had them take a look at the best ratios and all of that. Can you tell us a little bit about the next steps you took from her formulations, the OG formulations, and how you really dialed them into what is now Element Apothec?

Davina: The next step that happened after my great aunt came to me and she basically said, "I want my products to go from the kitchen to the world," and so that's my mission. With that said, I also understood that we were asking people to put products in and on their bodies and I wanted to make sure even though she had the experience and had been creating these products that from the medical science perspective, that they really were safe, that the ratios were right, that we really were going to have highly effective products.

We brought on our Chief Medical Advisor who's an integrative medical doctor and triple certified gastrointestinal doctor, who specializes in gut health and microbiome brought in Dr. Swathi Varanasi, she came on as a co-founder and Chief Scientific Officer who's an integrative pharmacist and a cannabis medical provider. We really looked at the products that we were creating and then we added on our integrative dermatologist and said, okay, let's look at these ratios that have been created, the ingredients that are here.

We want to make sure that they're as safe and effective as possible. We also looked to some of the other minor cannabinoids because there's just becoming so much incredible research on the values of incorporating those in higher levels than just your typical full spectrum or broad-spectrum oil. From that, that was the final formulations that we ended up launching with Element Apothec.

Sinead: Absolutely. Very cool. Just thinking about the timeline here, you dialed in on the formulations. Obviously, the next step there is you think about how am I going to fund this business so that's where you turn to crowdfunding, which I find so cool because we aren't seeing a lot of CBD companies do that just yet. It is it's a great alternative but it is tricky and it requires, as you know, some killer marketing and it's no walk in the park. Can you tell us just a little bit about that whole process and your logic behind it?

Davina: Yes, so in launching the brand we didn't want to just be a home-based business, which is fine and I think amazing if that's the path that you took, but we wanted to go big with the brand and really get our products into as many people's hands as possible. With that, there's a lot of money that's involved to make that happen, the cost of the manufacturing and the packaging and all of your marketing and thinking about what would be the best way to raise that money and also a very competitive space because we did have conversations with some investors early on.

Although they were interested, they wanted to see a little bit more traction before they were willing to write the checks that we felt that we needed. We looked at alternative options of what could get us the money we need right now to launch the brand, start getting some early traction, build the company up in terms of the value proposition and then be able to go back out later and raise additional money. We looked at the ideas and ways that people were doing that and equity crowdfunding came up.

There's two types of crowdfunding. There's crowdfunding where you can sell a product or pre-sell a product and people in exchange give you money for that or there's equity crowdfunding, which is what we did, where people are actually owning a piece of the company in exchange for their investment, and we had some perks or people got some free products and stuff for different levels. It seemed like a really viable option and not only were you getting the attention of micro investors, but at the same time, you were also building awareness of your products and your brand, so you're getting this, it's like a double opportunity almost with it.

We had friends and family that were interested as well and participating and wanted to help. We thought, what a great way for them to get involved, invest a little bit of money into the company, and own a piece of the company, and join us along our journey as we build this brand. We looked at different platforms or some-- We ended up working with Wefunder with their start engine and Republic and we felt really fortunate, especially in the competitive space that we were selected to be one of the companies that they worked with. Yes, it's just been an amazing, crazy roller coaster ride of fundraising, but it's been quite exciting as well.

Sinead: Yes. Wow. Okay. I alluded to this earlier, you just reached this huge milestone, you're currently sitting at just over $100,000, and you've got a goal of $500,000. Is that correct?

Davina: Yes. We are now about 119. We've had some investments come in since we last talked, which has been great. The Wefunder campaign will be ending, but we'll be continuing to fundraise through just a traditional convertible note now that we've been able to hit these milestones, the interest of other investors has piqued and some other opportunities that we've had. Yes, so we'll continue along this fundraising journey for a while, I imagine.

Sinead: Absolutely. Yes. I do want to dive into equity crowdfunding a little bit more here because most of our listeners are probably more familiar with platforms like Kickstarter, where you-- For the project to go through, it has to be fully funded, so this is a very different format where you've got this goal, but it seems like you're able to work with the funds and it's a lot-- In some ways, a lot more flexible. Can you tell us a little bit about how that works and what you are using the capital for and what you plan to use it for as you reach that big 500,000 number there?

Davina: Yes. The way that equity crowdfunding works, like I mentioned, which is different is that you're actually giving equity in exchange for the investment just as you would if you were raising Series A and raising $5 million, but it's on a much smaller scale. Each of the platforms do have specific requirements like on Wefunder to get funded to actually be able to hit the first milestone is a 50K mark. They do have some opportunities for some companies to come in at a lower level recently, but when we started with them, that was you had to hit at least 50K, and then once you hit 50K, you can start taking your first withdrawals from that which helped us to fund our initial inventory run, our marketing, all of our packaging.

As we continue to grow and expand and look to raise more money, we're looking at launching additional product lines, deep investing into marketing, bringing on a sales team, just expanding all of the things that we're doing now as well with education and focused on building a community and establishing more of a presence online. That's really what we'll continue to use the money that we currently have raised and use the additional money as it comes in from other investments.

Sinead: Okay, that makes total sense. Very interesting. Going off of that, I wanted to talk to you about the marketing side, you guys obviously have got amazing products, but even amazing products don't sell themselves, especially when it comes to crowdfunding. What did you do to really develop your marketing campaign there and what advice would you have when it comes to really hitting that nail on the head with marketing and really finding your target audience?

Davina: Yes. It's interesting with crowdfunding, especially in the cannabis CBD space, because a lot of times companies depend on Facebook and Instagram advertising to get a big kick on their marketing strategy. Unfortunately, we had some troubles with that, and Facebook and Instagram would deny our ads even when they would go to Wefunder or to other landing pages, so we had to get really creative. We'd looked to do-- We did some ads on programmatic which were open to us.

We've focused heavily on building our email list so we could focus on reaching out to people that way. I did a lot on LinkedIn of just personally connecting with people and I'm spending-- I'd dedicate an hour, two hours every day just to outreach and sharing our campaign and letting people know what we were doing. It just involved a little bit more than maybe what a traditional company raising on an equity crowdfunding platform might have to do, but at the same time, as we were making all those connections and conversations, we also were building brand awareness and getting people interested in the products, so I don't know, it was a great-- I think, overall great experience, but yes, the marketing and thinking about it, because you'd look at these equity crowdfunding platforms, and you'll see companies raising a lot of money, you're like, "Oh, it's easy, we'll just launch on there, and everybody's going to start investing all their money in our company." Then you realize that's not the case.

There's marketing firms that are specifically set up just to help with managing that and posting on, like I said, on social media channels. Going into it for us was like, "Okay, this is going to take some work, and it's going to take a little bit more work than we thought." They do have their own investor networks, and a lot of these platforms will share when you first launch and different milestones that you hit, so you do have access to other people that you might not otherwise have had, but definitely, it depends a lot on the company itself to provide that marketing to get the word out there about your campaign.

Sinead: Absolutely. Okay. Yes, that makes sense. I feel like at this point too, like you said, there are so many obstacles when it comes to digital marketing and advertising in the CBD world, and hopefully, we'll see some changes there in the next few years, but I feel like CBD brands, they just have to make more of an effort with their storytelling than I think in other industries. Would you agree with that?

Davina: Yes. The story really is everything that we are as a brand, and why we're so passionate about even the way that we continue to operate. It was very intentional from the beginning that that is our core, and that's something that we can't ever forget. We were very purposeful of making sure that we're not just another CBD brand, we're not just hopping on the CBD bandwagon, or looking at a catalog and picking products, which is great, and I think it gives people quick access into the industry. For us, we wanted to show who we were and what we stood for and doing that through the story I think helps people recognize that, "Okay, there's something a little bit different about this brand and how they started and their medical team and the passion that we put behind having clean, safe products," and I'm passionate about the ocean and the environment, and so we built sustainability into it. All of the things that we do I think really is because of this story, and so we'll continue to market and lean into that as we expand also.

Sinead: That's great. Something that, like you said, that really differentiates you, that element from so many other CBD brands out there right now, it's just that dedication to transparency and to your quality. You really are trying to lead the charge away from additives, and as you've mentioned, preservatives, not hiding behind proprietary blends, as I've seen on your website. I see that messaging across the CBD world all the time. It's amazing how often I see that word 'proprietary'. Can you tell us a little bit about how the CBD world and even the skincare world falls short on transparency in the ingredients that we're currently using?

Davina: Yes. To talk about first, why because I think that's also why we're so against it is, a lot of companies, a lot of the ingredients that people use are not great. We even in hunting for manufacturers had a difficult time finding manufacturers that were willing to work with us to test products and create products that have shelf life stability without using some really well-known preservative that we just aren't comfortable using in our products, and so they can hide behind proprietary ingredients. Also if you have under a certain percentage, you don't even have to list that ingredient on your label, which is just horrifying to me that that happens.

The reason for that is because I think if it's in such low quantity, it's not going to really have an impact on you, but you have to think about how much ingredients we put on our bodies and in our bodies every single day, and the accumulation of those benefits over time, there's no way that that's good for us. In thinking about the products that we created and why when my great aunt first started, she needed those products to be clean, safe, and preservative-free, and also ourselves being conscious consumers, I always look at the ingredients. I'm the one who tells friends like, "Hey, do you realize what you're putting in your hair on your lips," or, "You should really check out that company and make sure that the products are safe," and so for us, we felt like people deserve to know everything that's in the product.

They deserve to know at a higher level why we use these ingredients. We partnered with a company called clear for me, they're actually behind Ultra's clean beauty movement that powers our ingredient list and database. People can see what the ingredient is studied for and researched and why companies might use it because we felt like people really deserve to know this information and we don't need to hide behind any proprietary ingredients or any mislabeling because they should know exactly what they're putting in and on their body and be able to make informed decisions about the products that they buy.

Sinead: Absolutely. Yes. Something I've read recently which is so shocking is the number of ingredients and chemicals in the US that we use that are banned in most other countries. I think there are something like 1,400 different ingredients that we use here in the US.

Davina: Yes.

Sinead: Yes, like Canada and the EU just absolutely forbid these ingredients.

Davina: Yes. It's something we're so passionate about. Of course, we have to hold ourselves accountable, but we have something called our never, ever promise which is our commitment that we will never use any of those band ingredients in any of the products we create and that's abiding by European, Canadian, Japanese standards because again our health and wellness matters. If we're putting things in our body that are banned other places, we might want to think about why we're actually using them here.

Sinead: Yes. I would agree. I certainly don't want to put something on my body that is banned in most other countries. Gosh, it's really crazy and something you mentioned earlier was how difficult it was to find a manufacturer that would work with you to find alternative preservatives and work with you on sourcing really high ingredients. If I'm not mistaken that alone took you almost a year to find a manufacturer that would do that. Is that right?

Davina: Yes. It took us a while to go through that process. We would start going down a path with somebody and then they kept trying to push us to their products that they already had and we're like, "No, that's not what we want. Onto the next manufacturer," and through that process, because especially if you're working with someone and you're testing out the products and working on the formulations, it's weeks of time that you're spending with each person of going through that. We did spend a lot of time doing that, but I am happy that we did that because, again, we didn't want to sacrifice or take the easy path. One manufacturer came to us and said, "If you don't use this preservative, then we're just not going to work with you. It's too much work."

We're like okay. That was after several weeks of conversations with them. You do the work and you put in whether it's for manufacturing or focus on your packaging of finding packaging that's going to be sustainable for you or ingredient sourcing. That was another thing with a lot of the manufacturers, is they have their established relationships with ingredient providers who are very specific about using eco cert and organic ingredients, really clean products. Obviously, that also takes work for them to go out and find these suppliers that have these specific ingredients that we were using.

Some of them also said, no, it's too much work. We don't want to do that, but that's okay. More power to them and we're fortunate to find one and we're actually in conversations with a couple more as we're looking to expand some of our product lines as well. I think there's a little bit of a shift happening where people understand that conscious consumerism is really becoming valuable and companies are looking for really good manufacturers to partner with.

Sinead: Absolutely. Yes. It's so great to see companies like yours helping to spur on that conscious consumerism in the CBD space. That's amazing. You mentioned some expansion goals. Can you share a little bit about that with us or is it still under wraps?

Davina: There's a couple things. We have a new tincture we're launching just in a couple weeks, which I'm excited to share that is called Be Well. We believe that everyone deserves to be well and it's amazing. It has CBD, CBG, and CBN at pretty high ratios. As well as turmeric, and, lemon and lime, it's just a great nightly tincture to take. I love it. Every night I take it, I sleep so well and wake up feeling great in the morning. There's some other expansion opportunities. We have had some people come to us because of the medical advisor and expertise that we have with formula products that are looking to add CBD. We have a cosmetic formulator and a macho company which is really cool. We'll be working with them to help them create products that'll be powered by Element Apothec.

That's pretty exciting and then in terms of other expansion, we're just also really focused on education. It's a huge part of Dr. Swathes mission and so we're launching an education platform which is a CBD health and wellness certificate for all of our customers and our brand strategic partners to just have more information about CBD and cannabis and our EndoCannabinoid system and understanding better products and how to buy them and what to look for. It's amazing all of the things that are ahead for us.

Sinead: Yes. I'm so excited to see what you guys have in store over the next few years and speaking of, where the cannabis industry as a whole is heading. Like you just said, I feel like that estimation just continues to grow year after year. Where do you see cannabis skincare specifically heading and where do you see maybe consumer preferences and the different products there heading over the next three to five years?

Davina: Yes. There was just a report that came out with incredible numbers in terms of the growth for CBD beauty and skincare products. I think as people start to understand the benefits and looking at CBD or CBD as ingredients, we're a body care wellness company. We're not just a CBD company and as that changes in people look to the benefits of having CBD or CBG or CBN as an ingredient in the product especially when you look at skincare, it has amazing anti-inflammatory benefits and anti-aging. So many of the things that people are concerned with with skin and some of the medical skin conditions that it can support, that people will be looking to have the best product that works and the best product that works may have the ingredients of CBD, CBG, other cannabinoids in it.

I definitely see a lot of growth and it's just really bringing the awareness again, the education of why would I want that ingredient in my product? How is that gonna help me for skincare because I think a lot of people still think about ingesting it and are skeptical to put the product. We were at an event in Chicago and we were giving out samples of the lotion and letting people try it and one woman's like, "Does it have that stuff in there?" I'm like, "What's that stuff?" She goes, "That THC or CBD stuff," and I said, "Yes, let me tell you about it. It's an amazing ingredient," and she was like, "No, I don't want to learn. I don't want to understand it," but another woman asked about it and she goes. "I'm afraid, is it going to do anything to my skin?"

I said, "No, actually it's going to benefit it, and here's how it's going to benefit. The values for it's amazing for nourishing and supporting, providing relief and has a skin regenerative properties," and she goes, "Okay, I'll try it," but I put it on her hand, she was still really nervous about it. You could tell, she kept looking at her hands, like something is going to happen, but she came back an hour later and she ended up buying our lotion. She said that her hands just felt so great. She couldn't stop thinking about maybe why this ingredient made the lotion feel better than other ingredients that she had been using. As we all work together to educate, I think the skin care's really going to be an incredible opportunity for people to get in and build products around that.

Sinead: Definitely. Yes. I really couldn't agree more. I feel like skincare is going to be such a great bridge for the CBD and cannabis industry. Just make it more accessible and normalize it and really broaden the public interest around it. That's great. Davina, I want to wrap up with a few, fun personal development questions because I know CBD is a big part of your life, but it's not the only part. I'd love to ask you few questions. First one, is there a book that's had a big impact on your life or way of thinking that you could share with listeners?

Davina: Yes. I'm a huge fan of Brene Brown and I constantly go back and reread like Daring Greatly I think I must have read like 20 times whilst I'm here, listened to it because I think the idea of being vulnerable and putting yourself out there, there's daring to lead. I just think it's something that's much more needed for everyone to drop their shells, to look at their past and to accept it and to live life with courage and vulnerability. That's something I am really thoughtful about. Another book that I recently read is called Give and Take. It's the idea, something we talked about about even partnering with competitors but the idea in the business world of being a giving person or giving company instead of trying to hold all of your IP or proprietary stuff or not sharing and how those returns come back to you in multiples. It's something that I think about all the time as we're building the business, but personally, I'm a huge Brene Brown fan.

Sinead: Interesting. I'll have to check that out and add it. I ask this question every interview and I've got quite a reading list going here so I'm going to have to add that to it. That's awesome. Next question, what is your favorite music at the moment? Do you have a band or maybe even just a whole music genre that you're really into at the moment?

Davina: You know, it's funny because I always go back to Hawaiian music. I love alternative music and classic rock but I love Hawaiian music. I think it just takes me back to my days visiting my dad when we were young in Hawaii. It's what inspires me when I need inspiration and what calms me down when things are stressful. There's a particular artist called Keali'l Reichel. I used to also do Polynesian dancing when I was younger [unintelligible [00:31:33] It brings back so many emotions and memories that I tend to go back to that all the time.

Sinead: I definitely get that. I've never been to Hawaii but I'm dying to go. It looks just so beautiful over there. It's definitely been on my bucket list for a long time so definitely hope to get over there in the near future. That's great. Davina, wrapping up. One question I have for you, I know Element is still very new and you really only launched last December, but you've been working towards this for some time now. I wondered if you could go back and give yourself one piece of advice when you were first starting Element Apothec, what would you tell yourself?

Davina: I think just to start sooner. There's goods and bad, but we were so focused on coming out of the gate with everything so polished and done. We were a pending B corp and then got [unintelligible [00:32:31] certification, we wanted this, we wanted everyone to really trust and believe us, which I think we could have done along the journey with people. Maybe launched quicker with one or two products and just started that process. That's where I go back and think all the time because we launched, we kind of missed the holiday season. We were like, "We should have just launched with the first couple products," and we could have gone along this journey as it happened instead of trying to have everything so fine-tuned before. Maybe that would be probably what I would think.

Also, understanding of just having patience about how long it takes to actually build a CPG business because we thought we were going to launch these products and we're so different than so many other companies out there and we know these have helped hundreds of people. My aunt's sold these products, so we're going to sell like thousands in day one. Well, it takes a lot more time to build brand awareness and to get people used to your products, especially in a competitive space. Also, just having a little bit more awareness of the amount of time and money that it would take to actually launch the brand and being able to better plan that from the beginning is definitely something for anybody new that's getting into this space or launching a business I would definitely think about.

Sinead: That's great. That's some really great actionable advice for our listeners who are just up and getting going and maybe experiencing a few of the same challenges you experienced. Thank you so much for that. Davina, thank you so much for coming on. This has been such a fascinating interview. Really, I've so enjoyed talking to you and can't wait to see what you do at Element Apothec over the next few years.

Davina: Thank you so much. I enjoyed the conversation. It was great talking to you. I just love being able to tell our story. It's just amazing when you have that opportunity, so thank you.

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