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Cannabis is Eclipsing The Alcohol Industry with Torsten Kuenzlen

torsten kuenzlen

Torsten Kuenzlen is CEO of Sundial Growers in Canada. Torsten’s background is the alcohol industry, and he has been very outspoken saying that cannabis is going to outgrow alcohol soon. Learn why and how he thinks this will play out and why the cannabis industry is poised for paradigm shifting expansion.

Learn more:

Key Takeaways:
– Torsten’s background in the alcohol and soft drink industry
– Why Torsten left the alcohol industry
– Bringing best practices from the alcohol industry
– Why measuring your grow in square feet makes no sense
– Why brand matters and how to create a great brand

Click Here to Read Full Transcript

When cannabis prohibition initially started ending, many people said, one day cannabis could be as big as alcohol. Today that is no longer a conjecture, as tectonic shifts are happening in alcohol and cannabis industry, especially in Canada and soon the rest of the world. Here to tell us about it is Torsten Kuenzlen, a former alcohol executive and CEO of Sundial Growers. Torsten, welcome to CannaInsider.

Torsten: Thank you so much. Glad to be with you today.

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

Torsten: I'm actually in a small northern Moroccan fishing village called Cabo Negro and I apologize in advance for any audio quality issues that might bring with it.

Matthew: Oh, no problem. No problem. Tell us at a high level, what is Sundial Growers?

Torsten: Sundial Growers is one of the largest cannabis companies in the world actually these days. We're based in Calgary, Canada, and with Tilray having gone public last week, I think we're now the largest private licensed producer in Canada.

Matthew: Okay. Can you tell us a little bit about your background and journey and how you came to get involved with Sundial and what you were doing in the alcohol industry prior?

Torsten: Sure, so I spent 25 years in the fast moving consumer goods industry specifically with Coca-Cola and Molson Coors. I was in senior management roles around the world, worked and lived in North America and Asia and in Africa and now I've come to cannabis here really through alcohol because the distribution system through the provincial boards and actually many of the retailers, it's very, very similar in cannabis as it is to alcohol. So the Molson Coors experience in Canada has been particularly helpful.

Matthew: Okay. And having been both in the alcohol industry and now in the cannabis industry, at a very high level, can you orient us on how you think about where we're at right now in terms of where cannabis is at and where alcohol's at and how the alcohol industry might be reacting or investing or getting involved with the cannabis industry?

Torsten: Yeah, of course. I think in general, I see cannabis and alcohol actually being in a very similar stage in terms of development and if you look at the consumption in many geographies and many segments, consumption of cannabis and alcohol are actually already very similar. The obvious difference is that alcohol is largely legal around the world where cannabis is just beginning that journey. So in many ways, I think the parallels are clearly there and I think what we're going to see here in the next decade or two in cannabis is going to eclipse the pace with which alcohol has developed over the last 80 years, especially since prohibition in North America.

Matthew: Okay. And, as you entered the cannabis industry, you kind of had some best practices in mind. Just the way things were done in the alcohol industry. I mean anybody that's been to a brewery or something knows how automated all is. How do you think about bringing consistency and automation and brand building from the alcohol industry over to cannabis?

Torsten: I think that's ultimately going to be the competitive advantage of the largest brands and companies in the cannabis industry. There's no doubt that cannabis, like alcohol, really like any fast-moving consumer goods industry, is based in a brand promise. And that brand promise starts really with a superior quality product. I think that's something so far from what I see in the industry is being a bit overlooked. I think there's a bit of a danger that many of our competitors are going to go in with a non-advantaged commodity product and we're going to take a different route. At Sundial we strongly believe that the overall brand promise starts with a highly differentiated quality product and that that needs to be paid off in every step that the consumers and the retailers touch our own brand and consistency and quality stand out. One of the reasons why we at Sundial are building what's the largest modular purpose built cannabis facility in the world, we'll be able to produce ultimately over a 100 million grams of highest quality cannabis. And we really think that that sets us apart in being able to formulate and then deliver on very differentiated brand promises to cannabis consumers.

Matthew: Okay. So you think cannabis has an edge over alcohol because it's not a liquid. Can you talk about that a little bit?

Torsten: Yeah. When you think about which choices do you have to consume alcohol, it's liquid, liquid or liquid. And in the fast-moving cannabis industry, it starts with combustibles and that probably here in the first year in Canada will probably be 80, 85% of how consumers can consume it. But then that's gonna rapidly evolve. So in three to five years, we believe it's going to be a third combustible, a third concentrates, and a third edibles and drinkables. So in that sense alone, cannabis has an advantage because it can be consumed in so many different ways. Whereas in alcohol, there's only one form and that's drinking it at this point.

Matthew: Okay. And how long do you think it will take for those three categories you just mentioned to eclipse alcohol in terms of revenue in Canada?

Torsten: In Canada, It'll be interesting. I'm sure it's going to be within the decade. I wouldn't be surprised if it's actually within the next five years. So as we look at the trends and the demographics and how the age profiles are moving and reacting, we think it's gonna be fairly quickly. I think there is the famous example in Aspen in Colorado where within four years, in 2017, cannabis actually outsold total alcohol, so that's beer, wine and spirits combined on a revenue basis. So I'm pretty confident that it's not going to be too long before cannabis is gonna be at least as big as alcohol.

Matthew: Yeah. How do you see the alcohol industry responding to this threat or opportunity?

Torsten: It's interesting. We've obviously seen some of the big alcohol players already respond and many others looking at the opportunity. What is interesting for me coming from the beverage world is not surprisingly beverage companies respond with cannabis as a beverage and I personally think that that's gonna be a bit short-sighted. I think the great versatility of cannabis, of being able to consume it in different formats is something that sets it apart from many other product categories. So, therefore, I think the alcohol companies, or maybe beverage companies in general that only see cannabis as the liquid, are gonna have a hard time building a brand that really is going to spread itself against the different formats. So what I mean by that is, one day the consumer might want to eat a chocolate to consume the cannabis, on another day, they might want to smoke it. On a third day they might want to use oil or an infusion. So I think that versatility, if the beverage companies are not careful that they're at full linear, is something that they might miss out on.

Matthew: Okay. And we talked a little bit about brand, but in the alcohol world and the soft drink world, there's more opportunities to advertise. How do you go about getting in front of prospective clients or customers and building that brand? It seems a little bit more of a challenge compared to the other industries you've been in.

Torsten: For sure it's more challenging, but at the same time it's, of course, a great opportunity as well. So we think that the regulatory environment is gonna start off very tight and that's probably the right thing to do. And the final regulations have actually not fully been released so it's still evolving, but we will clearly look at all opportunities that present themselves. I think the line between education and marketing needs to be carefully considered and that's a big opportunity for the industry as a whole, but also the major players. Because as consumers that might even be new to the category enter the category first time, there's a big need for them to be educated about the differences between different products, how to consume them and to make always sure that all consumption experiences are positive experiences. So we believe that in store, in partnership with our retailers and the provincial boards we'll have a great opportunity to tell the story and to educate the consumers to the difference between the now legal alternatives that they have versus what they might have experienced in the dark and the gray and black market before.

Matthew: Okay. Can you tell us a little bit about your products? Calm, Ease, Flow, Lift and Spark. What's important to know here?

Torsten: What's important I think in general for the industry is that we need to be careful not to get stuck in the past and that we speak a language of THC and CBD and the strain names that are off-putting and non-self-explanatory to consumers. And that we really enter a new realm in the cannabis industry where we're talking about the benefits that consumers could derive from the product and then we have the education so consumers understand which of the cannabis products in which format might be best suited for their specific needs. So our five brands basis are really built around need states and motivations and therefore underneath each of those need states are more detailed granular spaces if you want. So if you take a brand like Calm. Under Calm, they will be subspaces that might be more for consumers that are looking to be less anxious and are looking for a product that might help them in that regard. There might be other consumers that are really looking for help with sleeping better. So I think the five brand spaces as we've defined them today, are really just opening spots to tell stories and educate consumers so they can make educated choices.

Matthew: So even though you're in Morocco right now, you're based in Canada and that's where Sundial Growers is. Constellation brands which many people would probably recognize as being the parent company of Corona beer invested in a Canadian cannabis company, Canopy Growth. And recently they said that investment has already paid off to the tune of $700 million. I am, I think that's on paper. What do you think about Constellation's strategy here? Are investments in cannabis companies enough for these big alcohol conglomerates?

Torsten: I think Constellation was obviously very smart. They were the first large player to go into aggressively. And by buying a large stake of Canopy and being part of the increased share value of the company, they've been able to participate in those gains. I think more importantly though, what they have is they have access to an industry that they didn't understand and through partnerships with cannabis companies, I think alcohol companies and by the way completely other vectors, pharmaceutical companies and a non-alcoholic beverage companies, cosmesceutical companies. I think all of them have an opportunity to buy themselves in or create partnerships in other ways with the leading cannabis companies to understand this new industry and then come up with product and solutions that create whole new markets that expand for them into additional opportunities and leverage the know-how that the cannabis companies are building.

Matthew: Okay. Now, this is one thing that I think about a lot in terms of the cannabis companies in Canada. We've talked about brand and the reason I keep on bringing it up is that essentially the LPs, or licensed producers, to protect their profit margin over time will need to have a brand that resonates and otherwise it's just gonna be a race to the bottom on price and people will just be comparing on price and no one wants that if you're the cultivator. So you're looking for something and that's like a loyalty of a Coca-Cola or a Budweiser. I mean, I don't think that exists yet. Is there a brand that people are asking for or it's done through the mail still in Canada, but I mean, where are we on that journey? I mean, how does one even achieve that because you're getting the cannabis through the mail. I know there's dispensaries coming soon, but I just don't see the bridge on how that's going to happen right now. That probably can only happen once the dispensaries open up or if it's word of mouth when people make their decisions online before they order. Tell me what do you think I'm missing there?

Torsten: That's a great question, Matthew. I really think we're just out of the starting blocks of what's going to be a marathon. We literally haven't even passed the 100-meter mark, especially as it comes to brand building. You mentioned examples, Coca-Cola, Budweiser, Absolut, [inaudible 00:13:11]. They are often great brands, and when you close your eyes for one second and then you think forward 10, maybe 20 years, what do consumers really want? They want to have a consistent brand experience and they want to have that not only in every city in the country that they might be in but also in other cities that they go to. That's probably nowhere more true than for cannabis, so I have no doubt that 10, 20 years from now there will be brands, hopefully Sundial being one of them, that will be like the Marlboro and the Budweiser. So as consumers transcend countries and continents, they can always go to the brand that they trust. So how do we build those brands? I really go back to the point of it all has to start with a superior product.

If we end up in a situation where the consumers can tell the difference between a really bad cannabis and really good cannabis, then I think will be a struggle for the industry. But we at Sundial are doing everything we can to make sure from the look, the smell to the consumption experience and the taste and the aftertaste that all of those things are optimized so that the consumers have a great experience. I believe the way that brands are going to be built as the industry really opens up in Canada on October 17th, is that consumers that have consumed will go to a dispensary or they might order online, five, six, seven different brands and they might just order a gram and they're going to compare them all and they're going to try them. They're also going to compare them to what they might have used before. And ultimately I am convinced that consumers are going to be willing to pay a premium for legal over an illegal product and more importantly, for great product over a mediocre or bad product. So I think for the cannabis industry in the next years, it will be absolutely essential to ensure that every consumption experience will be a superior experience and that the consumers can tell the difference between the non brands, the commodities strains, and those brands that are going to be the Coca-Colas and Budweisers of the future.

Matthew: It's a funny thing because I remember the Pepsi Challenge back in the day where consumers were blindfolded and John Scully, who later became CEO of Apple after Steve Jobs started this and he blindfolded people and said, "Hey, you know, take a sip of this drink and this drink and which one do you like better." And most people said Pepsi yet Coke had much more market share and still does. So there's something about the resonance of a brand we're already familiar with. It's like there's a tremendous gravity or inertia to the brand that gets there first and just so cements that product category in the mind. I mean, I know that Pepsi did take some market share from Coke during that Pepsi Challenge. And people blindfolded I think still think it tastes a little bit better. But they just don't want to... They're just so loyal. When you think about that Pepsi Challenge and then you know, think about the cannabis industry, is there any lessons to be learned there?

Torsten: I think that's actually a great comparison Matthew because what happened in the Pepsi Challenge was that two very well established brands really tried to change the tone and to be fair, it worked for Pepsi. Now I will say Pepsi did cheat a bit, so the product that they used for Coke was a bit warmer and a little flatter, whereas the Pepsi was very fresh out of a glass bottle. So I think there was a little bit of tinkering going on to make sure that the results went Pepsi's way.

Matthew: Never.

Torsten: But in a new industry like ours, I think that's why I am so convinced that product is going to be the great differentiator in the beginning that's gonna drive brand loyalty because that brand awareness does not exist.

And we asked consumers across Canada or the world for brands, they can't play back any brands literally, it's a white canvas. So the opportunity for us to clearly define a differentiated brand promise with the delay that you mentioned earlier and then ensuring that the consumers get exactly what it is that they are hoping to get and that that is better than anything that they might be able to get from other brands. I think it's gonna be a tremendous opportunity for us to get a foot up on the competition.

Matthew: Okay. One thing that you kind of challenged people to think about is to stop talking about the size of a grow in terms of square feet and that makes a lot of sense. Maybe, how do you talk about the productive capabilities of a grow if you don't use the square footage?

Torsten: No, I think the only thing that really matters is the yield, the amount of product that you can produce and if you are able to produce more product on a smaller square foot basis, then obviously you know the yield is the important metric. There are obviously new growth trends developing, vertical grow, multiple tier grow, so maybe the square foot is going to be replaced by the cubic foot. But I think in addition to quantity, when you really want to understand the potential of different licensed producers in cannabis companies around the world, you would be amiss to not mention quality. It's easy to produce a lot of bad cannabis, it's somewhat harder to produce a little bit of really good cannabis. It's really hard to produce a large quantity of highest quality cannabis. So what we are attempting to do at Sundial is really have the most premium cannabis and have better at scale and I think that will set us apart from many of the other cannabis companies that exist today.

Matthew: What do you think the optimal growing environment does look like? I mean, you mentioned cubic that talks about going vertically. Are you considering modular grows, purpose-built grows? What's your kind of vision for how it will look for you?

Torsten: We are experiencing clearly with not just the provincial boards, but also the retailers and the consumers, that they are beginning to differentiate the licensed producers, the cannabis companies, depending on how they grow. We do know that that a modular purpose-built facility, fully indoor, no exposure to light, it's going to produce the highest quality cannabis and then comes to details like the quality of the irrigation system, the nutrient mixes, how good your recipes is, the quality of your growers to really curate those different strains that you either have or develop over time as we continue to breed better strains. It's a combination of those things that I think are going to make the biggest difference and deliver those superior products.

Matthew: Okay, and then as a CEO, how do you balance short term, medium term, and long-term goals to ensure you're not wasting your time, but you're also not being short-sighted and focusing on the things that really matter?

Torsten: Matt, that's another fantastic question. Of course, in the short term, all of us in Canada are focused, fixated on October the 17th, which is the day that it's gonna become legal for adult use cannabis in Canada. At that point, as many of us as possible want to get as much product out there as possible, but we all want to be 100% sure at Sundial that that first product delivers against the brand promise that we're going to make. So we are keeping an eye on the near term. Obviously also for financial purposes as we have a burn rate until we get to revenue and profit, but we're going to be really cautious in putting our brand name on product until we're 100% sure that's gonna deliver against the promise. Ultimately, the Coca-Colas and maybe the Budweisers and the Absolut Vodkas, they never took the shortcut on quality and neither will we, so it will be a long-term game. I think the biggest LPs almost over the hump here with three months away from being revenue and profit generating and then I know that Sundial will take the long-term view, always do the right thing for the brand, never compromise and therefore ensure that we consistently deliver a superior cannabis experience.

Matthew: Torsten, I like to ask some personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Torsten: One book that I keep rereading every time I take on a new challenge, it's called "The First 90 Days." And "The First 90 Days" is really set up as you change roles or change companies or maybe both that you reground yourself and really stay open to learning a new industry. And it's been quite humbling for me to enter the cannabis industry that I literally knew nothing about when I started working here in the first quarter. So I've been patient with myself and I encourage everyone that makes the transition into cannabis or really from any industry in any other industry or a big change in responsibilities to read that book and just follow some of the guidelines and be conscious with what we do because nowhere more than in a new industry I think is it dangerous to come in and think we know because we've been in Fortune 500 companies, we've seen similar issues around the world. It was really important for me to get grounded and to speak to our growers and to speak to industry experts and to listen to the provincial boards and the retailers and the competitors in the way that they were framing it up to then take my time in the first 90 days to figure out what of what exists will be helpful and I should embrace and at the same time what might be the areas to challenge so that we at Sundial have an opportunity to take cannabis to a new level and differentiate us from our competitors.

Matthew: And what kind of fish are you going after there in Morocco?

Torsten: Unfortunately very small ones so far. So this morning I was out with my son, it's his 15th birthday today, and the biggest one we call it wouldn't make it even into an appetizer, so we're still gonna go back out and try and catch that big one. But the change is the challenge of course.

Matthew: Yeah. Well, at least in Canada there's some big fish to be caught when you get back.

Torsten: We will try and put our best fisherman on it and get the boats out there and we're sure we're going to pull some big ones onto our boats.

Matthew: Well, Torsten, thanks for coming on the show with us. Tell our listeners how they can find Sundial Growers and find your product and connect with you online.

Torsten: You can find us at Go to our website and then if you have any questions, there's multiple opportunities and contacts there to get in touch with us. We'd love to hear from you. Always open to ideas. Your listeners are a very educated audience, so all feedback is always welcome now and in the future as you'll be able to enjoy our products when they come to market.

Matthew: Well thanks Torsten. Good luck fishing and good luck with adult use or recreational use in Canada and we look forward to hearing from you in the future.

Torsten: Thank you very much, Matt. All the best to you and your listeners.

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 What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out what your free report at

Have a suggestion for an awesome guest on Cannalnsider? Simply send us an email at We'd love to hear from you. Please do not take any information from Cannalnsider 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 Cannalnsider.

Lastly, the host or guests on Cannalnsider or may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial adviser 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 Cannalnsider episode soon. Take care. Bye-bye.

Cannabis Stocks are Taking Off – Interview with Alan Brochstein CFA

alan brochstein cannabis stocks taking of

Alan Brochstein covers the cannabis investing space through his subscription membership site 420 Investor and through his investing news site New Cannabis Ventures.

In this wide-ranging interview, Alan and Matthew Kind discuss some of the most noteworthy IPOs in the cannabis space, how the US and Canada public markets differ, and how the cannabis stock landscape has changed and is changing.

Learn more at

420 Investor

What are The Five Trends Disrupting The Cannabis Industry?
Find out with your free cheat sheet at

Click Here to Read Full Transcript

Cannabis stocks are a hot topic, particularly in Canada, but now also on U.S. exchanges with the IPO of Tilray. Here to tell us about cannabis stock investment is returning guest, Alan Brochstein of 420 Investor. Alan is a chartered financial analyst and a contributor to "Seeking Alpha". Alan, welcome back to CannaInsider.

Alan: Hey, it's great to be back. Always good to talk to you.

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

Alan: I am smacked dab in the middle of Houston, Texas.

Matthew: All right. And I'm in Edinburgh, Scotland.

Alan: Nice.

Matthew: So, you've been on the show a few times over the years, and you shared a lot about cannabis investing. But how has cannabis stock investing changed since the first time you were on four years ago? And then you were on kind of a couple years ago, and now you're here again, it seems like it's really exploded recently. But what's kind of your 20,000-foot view to kind of give people a sense of where we were and where are we now?

Alan: Wow. So, four years ago I was the sheriff of the Wild West, Matt, and it know, I was very hesitant to tell anybody they should invest. It was really a dangerous environment, all the stocks, you know, weren't that many, were on the OTC. And then, you know, that was a problem in and of itself, but it was also just the real cannabis industry wasn't reflected in the publicly traded market at that time.

And even a couple years ago, there were some things going on that were interesting, and I was one of the early adopters of a bullish thesis on Canada, and we probably talked about that a couple years ago because in October of '15 is when Justin Trudeau was elected. So if it was any time after that, that thesis became very prominent. But I have to say, and is not just exactly recently, I can walk you through kind of when things really changed. But as we sit today, it is radically different. But let's go back just a little bit.

So, I can recall speaking at the Houston CFA Society in April a year ago. So, you know, about...what would that be? About 16 months ago. And I told them, I said, "I never would have dreamed of standing up here and speaking to this audience, really until very recently." And I think what was going on in my mind at that time was, everybody was aware of the bullish thesis in Canada, but finally the dollars were showing up, and there were these very large capital raises that started taking place in early 2017 in Canada. And I told my audience at the Houston CFA Society, that this was a global industry, that there were a lot of different things that were going to unfold, but to keep their eyes on Canada because that was really the center of the action.

And so if you fast-forward from that presentation which was in late April just six months, we have what I think has probably been the most important event in terms of the development of the global cannabis industry. And that was the cross-border, cross-industry investment made by Constellation Brands into Canopy Growth. And that really lit a fire under the investors, and... So we've seen a lot happen since then. And, you know, it goes much deeper than that, but I think that was the big change. And we can talk more about how things have changed, but the difference is we are now seeing the U.S. cannabis industry finally benefiting from all this capital raising.

Matthew: So Constellation Brands is a huge alcohol conglomerate that...I can't remember their flagship brand. I think it's Corona maybe, but...

Alan: That's one of them, yeah. They have many...

Matthew: Yeah, they have others, but yeah, they're huge. And so they...

Alan: Wine, beer, yeah...

Matthew: They invested in one of the Canadian cannabis companies, and that turned out to be a great investment. It didn't...

Alan: Yeah, it did turn out to be a great investment, but I don't think they were looking at it as just a near-term financial investment. I mean, it's really about... So, if you think about who are really the industries that could be impacted by the positive developments of the cannabis space, two of them really come to mind. And that's the pharmaceutical industry and then the alcohol industry. These are pure substitutions. Some people would throw the tobacco industry in there, and I don't really think that the tobacco's not a substitution thing.

I think that's more of like, this is really a crappy industry where there are some parallels, and maybe they can get into the industry. It's not the exact same thing. And so I think for Constellation Brands, who had announced a whole year earlier that they were looking at the space, it was a very thoughtful process where they really decided to go with what they perceive to be the best of breed. And it was a deal that was structured not just as an investment, but as a strategic alliance to develop a product that doesn't yet exist.

Matthew: That's pretty crazy. Okay. It's hard for people...the landscape is so different because in Canada it's these massive, massive companies, the LPs, and in the U.S. everything is totally the opposite where it's fragmented. So it's kind of hard for people to get their mind around, and it's also federally legal in Canada. You can raise capital, have a bank account, so it's different in all these ways. But you were saying that the U.S. is starting to get some benefit on that. I wanna go into that in a little more detail later. But talk a little bit if you would about mergers and acquisitions and what we're seeing there and what your general sense of that is.

Alan: This has been a big theme as well, consolidation. And in Canada today there are... Actually yesterday it was at 40, today it's 41 companies that are trading publicly, that are either licensed producers, and that's all they do, or they're a holding company that has majority know, that... Basically, there's 2 companies that are holding companies, and 39 that are just LPs. But even some of those LPs are looking more like holding companies.

In any event, that's a lot of public companies for a country of 38 million, you know, with a nascent cannabis industry for consumers and kind of a maturing one for medical. And so my thesis a long time ago was that they would give out too many licenses, and there would would be really difficult for many of the smaller companies to even survive. And so the way it's played out, Canopy Growth was the first consolidator, and they bought Bedrocan Cannabis in late 2015, and that know, it was a big deal at the time. Now you wouldn't think of it as a big deal in terms of market cap, and it was a deal that ultimately didn't really work.

Then Canopy came back and bought Mettrum at the beginning of 2017, but it was really... And when my thesis really took off was after that Constellation deal. Because, you know, what were the other large players going to do, now that Canopy had this big cash infusion and strategic partnership? So the thinking was that there'd be consolidation within the industry, consolidation of more cross-border, cross-industry type of things, and yes, that's been the answer. And there's also now some of these smaller companies are partnering, and there have been two recent examples of that where two smaller publicly traded companies that don't really have substantial sales yet used excess cash that had been raised through equity sales to purchase...and they also used stock. But to purchase private LPs of a similar size actually.

So, we've seen Aurora Cannabis, which is now actually the largest in terms of sales, do a consolidation in the industry where they bought essentially what was number three and number four behind them. So, two, three, and four all merged, and so now bigger than number one. It's really fascinating. And we also saw, Matt,'s not a very well-known company, but it's a global tobacco player called Alliance One International, buy control of a smaller licensed producer in Canada, and then...I'm trying to think. There's probably been some more. But I think you get the picture, there's a lot of consolidation.

In the United States, it's crazy. Because like you said earlier, I'm gonna disagree with something you said about there not being huge companies. There are some huge companies. Huge. But I think where you're 100% correct is because of the fragmentation, they're not able to scale necessarily the way a Canadian company might from one facility. So, you basically have these holding companies in United States that are very large, and, you know, one of them recently...Acreage Holdings, and it's a small world category.

I've known their CEO for more than half of my life. It's kind of funny. I went on a trip with him to Myrtle Beach 30 years ago or something. So, it's really funny the way sometimes your paths can cross in life. But Acreage has operations in I think now 13 states. And they raised...they've never revealed their financials publicly, but this part is public. They just raised $119 million as a private company. That's not what they're valued at, that's how much they raised, $119 million. I say it's crazy, it's really not crazy. But when you and I were talking four years ago about this, I never would have imagined, right? So, it's major leagues now.

Matthew: It is major leagues. Which brings us to Tilray. Can you talk about that a little bit?

Alan: Yeah, sure. So, for those in your audience that aren't familiar, Tilray is one of the largest LPs, and it was private. I think most people knew it was a large LP. And that was confirmed when the documents came out, and in fact, I think it's...I wanna say $7 million-a-quarter run rate. It puts them I think at number four right now. And Tilray was 100% owned by Privateer until they sold some outside equity in it earlier this year. And the company has had a very scientific approach. They checked a lot of the boxes in terms of they're international, they have a high amount of their sales in extracts rather than flower.

And the other box that they checked was that they had different geographical and types of production. So, they had their flagship out in British Columbia that's an indoor facility, and then they also have an Ontario greenhouse that's in development. So really a well-positioned company that's been operating for a long time. I mean, they did something...I think it was kind of smart. It's definitely interesting. And that is, rather than list in Canada, they decided to go straight to the NASDAQ, and not even list in Canada. Which is really kind of odd.

We have seen the leading companies, and we're gonna see more of this in Canada go from the... Look, when we were talking about this four years ago, if we talked about it, they were all on the CSE or the TSX Venture, all the companies in Canada. But more recently they have worked...some of them have worked their way up to the Toronto Stock Exchange. But the Toronto Stock Exchange is not's not held as highly as the New York Stock Exchange or the NASDAQ globally.

And so Tilray decided to kind of I think one up everybody by just going to the NASDAQ. And so the IPO was done at a price that I told my subscribers at 420 Investor I thought it was a fair price. Which just goes to tell you I don't know what I'm talking about because it doubled right after. So, I didn't see that coming. But just so everybody understands, the only shares of Tilray that could or that still can trade, are the IPO shares. So is a very small amount of the total number of shares outstanding for the company. So, you know, it's artificial, in my opinion. And so there was a lot of interest. And so I say it was smart because, you know, I think it helped them to get a lot of...a lot wider audience actually.

Matthew: So you think there's a bit of a prestige premium going right to one of the bigger exchanges because there's more liquidity in international exposure perhaps?

Alan: Yeah. Well, just to be real clear, yes, what you just said. But really what I'm getting at is, I think that... Look, there's lot of investors in the United States that have been either blind to this whole cannabis theme, or maybe burned by it in the past and burned by the OTC scams and what have you. But probably a larger pool is really just waking up to this. And so the fact that it trades on the NASDAQ for traders is just awesome. You get like pre-market trading, after-hours trading, all the stuff. So traders like it, investors like it because, like you said, it is prestigious.

So, I think what happened was that they really got an expanded audience. I mean, at this point in time the only companies that trade on the NASDAQ and the New York Stock Exchange that are competitors of Tilray, are Canopy Growth and Cronos Group. There will be more very shortly, but that's it for right now. And so I think you can look at how Cronos performed when it moved to its additional listing on the NASDAQ, they were the first, and then you can look at Canopy Growth, how it performed when they moved their listing or...they didn't move it, I'm sorry. When they added the New York Stock Exchange listing, you know, people saw gains. And so there's a little bit of a pattern there. So, I think people were really excited that this opportunity was there, and it's a scarce...but it's just three companies, it's pretty scarce still.

Matthew: Let's talk about valuations because that's on everybody's mind. Are they reasonable in general? How are they different in Canada? What are your general thoughts about valuations?

Alan: Well, first I should say I'm smart enough to be able to say a valuation is high or not, I'm not smart enough to say what that means for the stock. For instance, Amazon I've always thought was a high valuation. I think most CFAs would have agreed with that, but it just goes up. And I have a lot of examples like that. So, I always caution people, be aware of valuation. It matters more when the stock is going down, than when it's going up.

So, I think number one, I've been saying this for a long time, that if you just take like a dollar of revenue generated or even expected to be generated, depending on how you're looking at it, in Canada or United States from the cannabis industry, it's valued a lot more highly in Canada. And so there's a lot of reasons for that. There's more of a global opportunity for Canada, it's not federally illegal. There's another really good reason, and that is, oh yeah, 280E taxation. So, there's some issues that suggest that it should be higher.

But what I was saying for a long time was it's just way too much higher. You could look at companies generating more revenue, and they're trading at a tiny fraction of the valuation of the Canadians. But these things can persist for a long time until they stop persisting. And just the way investors work, they wanna see signs that that valuation gap is starting to close.

And back in April when Donald Trump and Cory Gardner, President Trump and Senator Gardner came to an apparent agreement, you know, we haven't seen it in writing, right? But when that was announced, and when there was some follow-through a couple months later, that really changed everything. And all of a sudden we saw the confidence of investors and operators in the industry just skyrocket. And the confidence, it could be overly optimistic, but I don't...I think it's just probably good enough. If Jeff Sessions isn't gonna win, then we're all gonna win. We don't necessarily have to have all the reforms take place that people are anticipating, we just have to have an environment where they're not gonna make things worse in my opinion.

So, that started a cascading effect of the stocks going up, money coming in, and so we've seen that valuation gap close. There's some really good examples of kind of leading U.S.-focused companies that have seen their share prices go up since April, while the Canadian stock prices, many of them have gone down. So, when investors see that going on, and they feel like they have the technicals behind their back as well as that valuation story, you know, maybe it happens.

Matthew: Well, let's talk about two recent IPOs and kind of compare and contrast them. First, MedMen and then Green Thumb Industries or GTI. What do you think of those two? And how do you think about a high level, and what's important to know there?

Alan: So, this was really the first...these were the first two examples of kind of that post Trump-Gardner and taking advantage of the new optimism. And so we had already seen some of the stocks performing better, and then those guys...GTI was very quiet about it. MedMen everybody knew was going public because they had talked about it publicly. But they both came in about the same time, first MedMen. And, you know, that company has revenue. It's not as substantial as what they tell you they're going to have, which is very substantial, but they do have the revenue.

And it's a very well-known company, they're very promotional, people know who they are. And I think they're smart. They have a flagship in New York, and I think most people say, "Why do you need to have such a fancy store on..." I think it's on 5th Avenue. I forgot exactly where it is. But, you know, very expensive real estate in Manhattan. And it's because it's a marketing tool, for not necessarily just their stock, but for their brand, let's call it. And not necessarily to sell cannabis to people in New York City. At least for now. In the future, yes.

And so that was a very expensive valuation. So you asked about these valuations, but that one was not in line with my comments about the U.S. being much cheaper. That was not, I mean, clearly. The company had a few issues with investors, I think, and they ended up addressing them. The stock didn't perform very well at first, and then it actually moved to a new high price and now it's pulled back. But I personally find it to be expensive still, but I'm optimistic that it can grow into that valuation perhaps. And they definitely are very aggressive, and, you know, that's gonna either benefit them or hurt them. We'll see how that pans out.

GTI on the other hand, I think they rode the coattails of MedMen because MedMen came out with that very aggressive valuation. GTI looked downright reasonable. A lot higher revenue, and a lot lower valuation. A lot. And so just for raw numbers, I think we're talking about two-and-a-half billion in Canada versus one billion. So it's like 40% of the valuation of MedMen, but with higher revenue. And it was kind of interesting. And GTI, out of the Midwest, not as promotional as MedMen. Probably a better business quite frankly, but anyway investors loved that one too, and that one did very well. And it ended up doubling, roughly, and then they sold more stock and then now it's come back down pretty hard.

Matthew: There's a psychology to it there because you want...on the day of your IPO you wanna see a pop, you wanna have there be excitement around it. If it's over-valued, you don't wanna see it go down, so you wanna see it go up. So, it's kind of tricky getting that number right.

Alan: I think. One of the criticisms I've had for several companies that have... And you know, most of these aren't IPOs by the way. And to be real clear, neither of those was true IPOs. An IPO is when you have a company that's never traded publicly. Most of these companies including those two were reverse mergers, is what we call them in United States. They're called RTOs in Canada. But to your point, yes. And I think some companies that have done IPOs, or that have, even Tilray, and it worked for them. But they had just sold stock in a much lower level not that long ago in a private placement before they went public.

And I kind of liked that they did that, Matt, because I think it's smart to sell your stock a little bit cheap. You want your investors to be really happy. They'll be happy to pay a higher price in the future if they've already made some money. And other people will see it and they'll see a nice stock chart. I think one of the worst things a company can do is get really greedy on their pricing, and then their performance as a company may be great but their stock could be going down because they got too greedy. So, it's a good point you raise.

Matthew: Yeah, there is a lot to it. I mean, I feel for the people involved trying to do that and trying to figure it out, like how do you arrive at the perfect price. And I think a reverse merger, maybe that...for people that aren't familiar, can you just talk a little bit more about know, the specifics of what that means, just so people can visualize? People aren't familiar with that term.

Alan: First of all, I have to confess. I didn't know anything about this until I started studying the cannabis space. It's not something that's very common among real companies. It's really something that a lot of fake companies do. But it's been the path for many real companies because like in the United States there's very hard to do a real IPO. There have been a few companies that have done it, but let's see if I can simplify it.

So, a lot of times there's a stock that trades, and there's no business operations. But they have...some people will call it a shell, that may not be the right term to use. As a matter of fact, that can be a very wrong term. So I'm not...I don't get into the intricacies, but just to explain how it works, there's a company that has this stock that's outstanding, and they agree to acquire another company. But it's really the company they're acquiring, it's gonna be the surviving company. That's what a reverse merger is.

And so in the United States, I mean, I can remember Can Labs. They had to give away 50% of their company to get this done. It was one of the stupidest things I've ever seen in the financial world. But in Canada where a lot more of these take place... And that was extreme by the way, that's not even how bad it is usually in the United States. But in Canada, you know, I think it's a lot more reasonable. I've seen deals get done at like 3% to 5%.

And so basically it's a way to fast track going public, as opposed to going through the process of filing a prospectus with the SEC in the United States or with the Ontario Securities Commission or whatever province it might be up in Canada to go public. So, as an know, there's examples of these RTOs working out really well. And everybody should remember, that's how Canopy Growth went public, that's how Aurora went public, it's how Aphria went public. But we have seen some direct IPOs more recently. And I personally think that's a better way, but I think it's more difficult and it takes more time.

Matthew: You know, we're introducing that, what a reverse merger is and talking about that. There are a lot of complications when investing in general, but specifically in the cannabis industry with cannabis stocks, what are some of the mistakes or pitfalls you see new cannabis stock investors make that are avoidable?

Alan: Unfortunately, I keep saying the same thing. I think one of the things I notice is, you know, a lot of people don't know how to read the filings, and that's fine. But you should just be aware. If you don't read the fine print, you get what you deserve. And I think that's point number one, that there's a lot of information in the filings. And I always tell investors, and a lot of people find this surprising, and it's still the case that there are many companies that trade in the United States that don't file with the SEC, yet the OTC markets allows them to the trade. I always caution against that. So that's a mistake that people make, number one.

I think number two, there's this concept that I've noticed, even within my 420 Investor community, that people like the new. Like, if it's new, they like it. And that's what happened with Tilray, in my opinion. And so there's this concept that if it's new, it must be good, and if it's old, it must be bad. And I think that's flawed thinking and the idea... You know, if somebody pays 20 cents for something three months ago, and all of a sudden it's for sale as a public company at $1, you know, you and I would look at that a little bit suspiciously. And I think a lot of people don't really know how to do that, how to evaluate that, Matt.

So, and similar to that, I think a lot of investors take these companies at face value. And one of the things I've noticed recently over the last few months, there's some companies out there and they like to talk a big story, and people like that. Let's face it. Most of the investors in this space are men. I'm not making that up, that is very statistical. Most traders are men anyway. And there's a testosterone thing going on here I think. It's who's got the biggest grow? You know? And I don't think that's the way to invest. Whoever's got the biggest grow, that's not gonna be necessarily the best company. And by the way, it may not turn out to be the biggest grow. So, these are some of the things. There's a lot though.

Matthew: One thing I notice, maybe you could talk about a little bit, is that, well, as you mentioned, people get caught up in narrative. Because I think just as humans we're geared to sitting around the fire and sharing narratives. And narratives have a very powerful place in our society. But also I noticed that there's the excitement level when the cannabis stocks are skyrocketing, is when people start to come in, new, interested people, where I say...

Alan: Oh my gosh, yes, I should have said that.

Matthew: When it's down, when it's like...when you feel like you're gonna puke if you buy a share, like, "I feel disgusted even thinking about buying it," like, that's when I become interested.

Alan: I should have mentioned that too. Look, I run a subscription service, so I'm painfully aware of this. And I actually had...I had to do something that I think it was smart, but some people think it may not be smart, and... I basically stopped my growth because I noticed right to your point that the cycle, that when the news media is all over it and the prices are going up, that's when people want to subscribe to 420 Investor. And when it's down and out, they don't.

And so what I was experiencing in my business was a lot of churn. People would come in, and they'd come in after the prices would go up, and they'd start to buy, even though I wasn't telling them they should buy, and then they lose money, then they get mad at me, and they quit. So, it's all my fault, right? So, I went from monthly to annual subscriptions, which obviously slowed my growth because people don't necessarily wanna pay for a whole year upfront. But then what ended up happening I think was better for everybody. I have less turnover, and then the people, they're not just gonna quit when the prices are down, they're gonna keep getting information for at least a year.

But even beyond my own personal experience, what you say is 100% right. And I get a lot of questions like, "What's going on in Canada? The prices have been dropping and all the news seem so good and they're about to legalize..." I think a lot of retail investors just don't understand the cycle, and they come in at the top. It's just the way it is.

Matthew: Well, maybe they can learn from what we're talking about here. So, I get excited now...

Alan: No, they're not going to. I've been saying this for years. They're not going to. It's human nature.

Matthew: Yeah, I know. But if you can train yourself to, like, I feel sick pressing the "buy" button, that's when it ends up being good.

Alan: That's a good thing.

Matthew: So, talk about ETFs a little bit. Are there any ETFs? Are there any coming? What do you think about them? Would that be a good thing? What do you think about ETFs?

Alan: So, this is a new development since our last conversation, and there are some ETFs. And I was really negative on the first one. It came out in April of 2017, so a little over a year ago. Now, I wasn't negative on the people or anything like that, but I just felt like the structure wasn't so great. And it's tough. So everybody should understand, no ETFs are gonna be able to really invest in like U.S. cannabis operators. Not really. Because of the federal illegality and trying to get a custodian agent and all that, these efforts have been stymied.

So the first one that came out, and it's's massive, and it's done very well in terms of asset gathering, and just the fact that its universe has appreciated in value, so has the fund. And that was Horizon's...or what do they call it now? Marijuana Life Sciences or something like that? But HMMJ, and it was a real IPO, and it traded on the...trades still on the Toronto Stock Exchange, and they've really improved.

And the reason I didn't like it was they had some things in there that were large and I thought kind of deluding the whole concept. They had like a massive position in ScottsMiracle-Gro, which...that's become more of a cannabis stock, but it's still not that much, it's still the wrong kind of grass, not the kind of grass we're talking about. But that was a big one. They had this Insys Therapeutics, which is just a disgusting company, and nothing to do with cannabis but synthetic cannabinoids. And like I said, I just wanna say it again, they're a disgusting company. And, you know, they were caught and just paid $150 million fine for doing illegal activities in their marketing.

You know, so stuff like that was in there. So, that was my main criticism. But now, it really is a much better ETF. I don't have any reservations. And so there have been some other ones. This one was really funny, but it used to be a, oh God, Latin American real estate ETF that failed, so they decided to turn it into a cannabis fund. And they did this weird thing. The same one, this is now's MJ, and I can't remember the name, Harvest, Prime Harvest or something.

This is traded on an NYSE Arca, and the funniest thing was they did this right at the end of the year when there was a hoopla over California legalizing, and I'm not kidding you, I think that uninformed...I don't wanna call these people ignorant, but it is the right word. Uninformed people looking to capitalize what was going on in California invested in this ETF, they got all this money flowing in, and it had zero exposure to California, it was a very weird structure. It was like 50% Canadian licensed producers, 50% Japanese and Scandinavian tobacco companies. I mean, it was just crazy. It's like... And I'm looking, it's like this company has nothing to do with cannabis, it's not even close. It's like zero. And that's the way that one looked. And I really still don't...I would never send anybody to that.

But there's some other funds that have developed, that aren't ETFs, that I find actually kind of interesting. I haven't really formally recommended any of them yet, but I've definitely been following them and this is a topic of great interest to me because there are some funds out there that are publicly traded in Canada, that are investing in private companies. And so it gives the public a way to invest in private companies which have better valuations often in pre-public. And, you know, I'm watching those very closely, it's very interesting to me. There's a handful of funds out there.

And then there's another fund that trades...I'm trying to remember. Yeah, it trades publicly as well. And I think he's just investing in public companies, but still, you know, I think the guy is really smart and knows what he's doing. And I don't really like to recommend these because I'm not comfortable enough yet to do so, they tend to be relatively illiquid and small at this point, Matt.

Matthew: I mean, are we gonna get like an iShares or some huge ETF company, BlackRock to come out with an ETF in the next one year, two years, five years?

Alan: I don't think so. I think unless we get some banking law changes, that's a non-starter, unfortunately. I think we're headed there, but I think your time frame was a little off. Maybe you'll be right though. At least I hope you are.

Matthew: I think that would be cool. I mean, it would just make things a lot easier, but I think maybe we're gonna need to see federal legality, it sounds like, before that could...

Alan: I don't know if we need federal legality, it's just this banking thing. I think these financial institutions have everything to lose and nothing to gain, unfortunately. So, you know, why bend over in front of a steamroller to pick up a penny or something? You know?

Matthew: Right.

Alan: They have too much to lose, in my opinion.

Matthew: Well, talk a little bit about position sizing. I mean, there's risk in a portfolio but some assets or securities are more risky than others, yet sometimes someone might have the same amount of capital in their portfolio invested in let's say Coca-Cola as they do a highly volatile cannabis stock. So, how do you kind of frame the discussion around position sizing?

Alan: So, a few things on that. So, I've done some surveys in my community, and I've just been astounded sometimes. So, I ask the questions, kind of separate questions to kind of get at the whole picture. So, I'll ask them, "How much of your assets are invested in the cannabis space?" That's one of the ones I ask. And I give the ability for them to say more than 100%, which would mean they're on margin. And you'd be surprised how many people have more than 100% of their money invested in the cannabis space. These are my subscribers. So I'm sure it's worse outside.

So, without going into all the information, I think this is another issue that some people face. Because if you're gonna invest in a company that's gonna go up 10X, do you really need to have... I mean, if you get it right and you have 100% of your money, great. But the chances are you're not gonna get it right. So, I think the people that make...that have the hardest time when the market's in a correction or down cycle, like we are right now, is that they have too much money in the sector and they have too much money in the individual name.

And I run several different model portfolios, and know, I will admit that my position sizes can be pretty big. Like, I think I have rules, they're capped at 20%. And that's a lot. You know, I don't tell people how much of the money I put in the sector. I wouldn't run that model portfolio with all my money if I were a subscriber, and I try to make that point often. So my model portfolios which have some different goals and time frames, like right this minute, I think the two longer-term focus ones have 14 names in...13 names in them. Sorry, 13. And then the more trading oriented one is at seven names right now.

Matthew: Now, I want to circle back to what you were talking about with reading SEC filings and different regulatory filings. And I'll admit, you know, you get into the weeds on some of that stuff, the language and the legalese, it's's so dry. But you actually read a lot of this stuff. Is there anything really egregious that you recall looking through some of these where you said, "Holy cow, unless someone read this, they wouldn't have seen it, and it's really egregious, and they should know about it."

Alan: Yeah, the most egregious thing I see, and you are right, they hard to read. And these companies obviously face lawsuits if they don't disclose certain things. But the thing I find lacking sometimes, and it is hard to read but oh so important, is the capital structure. And it kind of bothers me. Some companies do a great job of this, and they really lay it out there.

And just to be real clear what I'm talking about, you know, the capital structure consists of the number of shares outstanding, of course, and everybody puts that in there. That's easy to find. It's all this other stuff, the warrants and the options and the convertible notes, all these things that if somebody were gonna buy the company, they'd have to take this into account. In other words, these people have contractual rights to buy securities. Whether it's through conversion of debt, or through the exercise of warrants and options. And so this is the part that bugs me the most, because some companies don't seem to do as good a job as others, and there are some very tricky things in there. And the more scammy the company is, the more tricky it can be.

Matthew: I imagine. And just for...

Alan: Convertible preferreds. And let me give you give a great example actually so your readers can...listeners can appreciate this. There are these preferred stocks, and just to simplify what a preferred stock is, there' the capital structure you have debt in equity, equity is called stocks. Common stocks, what everybody knows, that's what trades on the exchanges typically. And the common stockholder is last in line if there's ever a bankruptcy. That's the way to think about it. Debt gets paid before anybody, and the common shareholder, he's the owner, and he's the one that gets screwed. He's also the one or she's also the one that makes the most money if things work out. So that's the riskiest part.

And they have these preferred stocks, and preferred stocks, we could talk for hours about how they work. But there's different things about them, like the voting rights, the conversion rights, rights to dividends. There's all sorts of things that make these things tricky, and they typically don't trade publicly, and most people don't even understand them. So the example I wanna share with your listeners is, there are actually convertible preferred stocks out there in the capital structures of companies that allow the holders, which is typically management or the financiers of the company, to own a constant percentage of the company.

Now, that may not strike anybody as being meaningful, but it means this. If a company goes out there and just issues stock willy-nilly, then they don't dilute themselves. These people just get to a constant percentage of the company and it creates a very perverse incentive or disincentive to keep the share count down. And it's gross, it's really...there's no reason for that. And I've caught some companies doing this, and it's unbelievable to me. I don't even think it should be legal quite frankly, but it is.

And some of them don't disclose it very clearly. You have to do things like... You have to leave the SEC document, if they're even an SEC filer, and you have to go to like the state website, Secretary of State website and get the corporate papers basically to find out how these things work. It's unbelievable.

Matthew: I think people are getting a sense listening that there's a lot of investigation work, and it's just reading and talking with other people, and kind of iterating the conversation and involving it that you get the golden nuggets and find things out. I imagine there's not a lot of huge ahas, it's more like just putting in the work and figuring out who's the best by just understanding the playing field day after day after day of reading everything and talking with everybody. Can you tell us a little bit about the community you have with 420 Investors, what they can expect, what the benefits are to joining so they can get a sense?

Alan: Yeah, sure. So, first of all, I've been...I launched 420 Investor literally five years ago, September...actually almost five years. September...mid-September of 2013. And we now have about 870 to be exact right now, in our community. And the nice thing about it is you don't even have to care what I think. There's so much to the community, the interactivity between the other members.

But, you know, I try to show leadership, there's a lot of different ways I communicate with the subscribers. So they're gonna hear from me. I have a focus list first of all, and so I take what's literally about 700 companies and distill it to 26 or 27 right now that I'm... You know, I tell people, "These are the ones I'm most interested in." Although I do pay close attention to a lot of other ones. And so I'll share information about those companies kind of in a real-time basis. I run model portfolios, three that are like real-time model portfolios and one that's a monthly model portfolio for Canadian LPs, and typically those three would involve my focus list names for the most part.

We have a chat on Wednesday...or Tuesday nights. Used to be on Wednesdays. Talking Tuesday. And that's a good opportunity for people to ask questions and... I do 10 videos a week, a very long one on Saturday morning and two a day during the week except on Friday just one, where I'm kind of for the most part talking about the stocks and not the companies, but I integrate some stuff about the companies as well. And I think people get a lot of information from those videos, but it's really one way. So, during the chat, they're able to ask some questions, and even if they can't participate live, they can email in questions. And it gives everybody a chance to hear my perspective on things they care about.

And then, gosh, the crown jewel I think is the forum. And the forum, oh God, we get about 190 discussions a week. And people can pay attention and subscribe to actually forums about the stocks they care about, and there's a lot of off-topic forums. People like to talk about the music the like or what have you. So, there's just a's a very large offering, and... You know, I've never been in a community like that. It's not something I personally have ever done, and I sometimes wonder why people do it, but then I think about how much people pay for cable TV and they just sit there and watch it. I have to tell you, this is a lot more interesting than cable TV.

Matthew: Well, Alan, I'd like to ask a couple of personal development questions to help listeners get a better sense of who you are personally. Is there a book that's had a big impact on your life that you'd like to share?

Alan: Yeah. And I remember you've asked this question in the past and I remember...I don't remember if it was the first time or the second time, but your guest the episode before me had said like one of my favorite books, it was by Clayton Christensen, and I don't even remember. Let me tell you the truth about me. I read, read, read, read, read, I just don't read books.

Matthew: What was something else you read that you find super helpful, that you think people would value?

Alan: Oh my God, SEC filings.

Matthew: SEC filings. So they're valuable but they'll put you to sleep.

Alan: I am's kind of sad how focused I am. Almost everything I read about is about the cannabis industry. And, you know, a lot of it is news, and there's stuff out there that people are publishing that I read too, but it's funny. I don't have like a great answer for them. I'm just like reading, reading, reading all the time, and there's nothing that really stands out as like, oh yeah, this is my go-to place for reading.

But I wanna get's a repetition, but the Clayton Christensen series actually I think was just fascinating. And I use it in the cannabis industry, and I think, you know, this whole idea about cannibalizing yourself... You know, I should tell you the name of the book. I'm not even remembering it. But Clayton Christensen is a professor at Harvard, and he basically said that companies need to innovate and basically cannibalize themselves, or they're gonna lose out.

And I think this is so appropriate in the cannabis space because most of these companies are starting out as flower producers. And we all know that flower is...becomes a commodity, and yes, it's 50% of the market, but that's not where the money is made. And so these companies in the space are going to have to continuously innovate. And if you're a big flower producer, you better start coming up with products to get rid of your...the way you're selling your flower, whether it's pre-rolls or what have you. It's called "The Innovator's Dilemma", Matt.

Matthew: Yes, yes, I was just gonna say that. Okay.

Alan: Sorry, I was not remembering the book. That was a very influential book, and I try to draw lessons on that for the cannabis industry as well.

Matthew: You know, we're talking about flower and extracting the oils, making edibles and having drinks. Like drinks and edibles and different consumables are kind of the next phase that are emerging. Like they've been around for a while, but for the general public, they're kind of becoming on the radar. And then after that, it seems like perhaps it's gonna be dialing in the exact experience you wanna feel, and...

Alan: Yeah, that's a tough one, but you are right.

Matthew: If they can crack that code and do it every time, you know, that's kind of the holy grail. There's another personal development question I wanna ask you. Actually two more. I'm gonna slip in an extra real quick. Is there a tool that you use that helps your productivity that you'd like to share?

Alan: So, I'm so boring on that. I think in the past I've told you LinkedIn, and I've found LinkedIn to be a great way for me to network with people. And I know that sounds silly, a lot of people, but that helps me a lot. And I would say...I don't think I've ever answered this one before, but in some ways, it's embarrassing, in some ways it's kind of cool.

We are able to do so much with running our business in "New Cannabis Ventures" on Google Docs. And, you know, we have a two-person business, so maybe that's why it's a little bit more scalable. If you had more people, it wouldn't be scalable. But with two people, I think we have like a 24-page document where we're keeping track of everything in our business. Whether it's receivables, whether it's new prospects, charitable contributions, we give 2% of our revenue to charities in the cannabis space, all these things we're able to track in Google Docs. It's pretty amazing. I don't know if you've ever used it before.

Matthew: Oh yeah, I love Google Docs. Especially I think the kind of killer point with Google Docs is that you're all literally on the same page and you can comment together on the side, you can roll back the history and be like, "Oh, I know that we had a really good sentence in here about XYZ but I can't remember," and you can roll it back to last Tuesday at 3 p.m. to see what was there.

Alan: Yeah, you're talking like their Word document thing. The one that I'm using is more their Excel knockoff. But yeah, to me it's pretty fascinating, but I'm sure there's... We're probably gonna have to move to some real software at some point and as we get larger, and... That's probably the issue, it's just not scalable.

Matthew: Well, my last question is really more about...a question about society as a whole. And it's about a recent "New York Times" article that said back in the mid-1990s there was 8,000 publicly traded companies. And as of I think it's 2016, there's only 3,627. And that means the number available, stocks available for the average Ma and Pa or the average American is shrinking, and private equity is growing and then the average person doesn't have access to that. What do you think that says about society as a whole, that the ways of accumulating assets that most people can grasp and have access to is shrinking?

Alan: So I have to call a little bit of offsides because this is...goes well beyond my expertise, but I can still weigh in on it from my historical experience. And so I think one of the things it says is not about society, it says about the complexity of Sarbanes-Oxley actually. And especially post-2008. I don't know when you said...what was the first date that you were using? 2000 or...

Matthew: The first was the mid-1990s there was 8,000 and then 3,600.

Alan: So, I think the financial crisis and Sarbanes-Oxley and all that really...I guess that Sarbanes-Oxley was before the crisis.

Matthew: That was Enron, wasn't it? Was that...

Alan: Yeah, exactly. Post-2001, so not too long after you talk about. It just became much harder to be a publicly traded company. So, you're seeing fewer of them. I still think there's plenty. And to your point about access to private equity, I mean, there are publicly-traded vehicles for public equity from what I understand.

I don't know that there's a big social issue, Matt, but a little bit outside my expertise. I feel like there's plenty of stocks out there beyond the cannabis space, and, you know, just a lot of the companies have gotten a lot bigger. And I think it's...I hear this all the time. It's expensive to be a public company, and the risk that people take as an officer of a company, to many just aren't worth the risk. It's not just the risk, it's the hassle.

And I think another point I would say is, I think it probably reflects the maturation of our society. We're not quite like Japan yet, but we're definitely an aging society and our growth rates have slowed. Don't tell President Trump I said that. Actually, they've probably picked up a little bit. But, you know, that's's just kind of the demographics, and I think that may be a symptom of that as well.

Matthew: Well, Alan, this has been really a fun conversation as always, it's a topic that most...everybody is interested in right now. Do they wanna raise capital or they wanna figure out how they can get into some investments that would make sense for them personally. If you could just throw out your websites and let people know how they can find your investment service and your other news service, that would be great.

Alan: So, for people that just want free access to what I think is good information, that would be New Cannabis Ventures. It's publicly facing, and the website there is New Cannabis Ventures, with an "S" on the end, dot-com. And there's a lot of resources there that are geared towards helping investors learn about and attract the market. And then there's things that you can sign up for, that are easily found, like our social media or our app, which has like over 100,000 active installs, or our weekly newsletter.

And then for those that really want more guidance and to be part of a community, 420 Investor, and that's all one word, 4-2-0-investor, O-R at the end, dot-com, and...I'm trying to think. What is it? @Invest420 is my Twitter handle too, and if you were to go there, you'll find links to everything basically.

Matthew: Well, Alan, thanks so much for coming on the show. We really appreciate it and have a great rest of the summer, and we wish you all the best.

Alan: Thanks, it's always great to talk with you.

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

What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@ 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 on CannaInsider.

Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episode soon. Take care. Bye-bye.

Delivering Hemp Derived CBD Internationally with Henry Vicenty of Endoca

henry vincenty endoca

Henry Vincenty is the founder of Endoca. Henry has an outdoor hemp grow outside Barcelona Spain. Learn how he is leading the way delivery healing cannabinoids internationally.

Learn more at:

Key Takeaways:
– Henry’s background as a scientist and genetic researcher
– Bringing pharmaceutical best practices to cannabinoid science
– The most popular hemp-derived CBD products
– Living off the grid to create the most healthy plants
– Personal development questions
– Google AI assistant calling a hair salon, see video

What are the 5 trends disrupting the cannabis industry right now?
Learn more at

Click Here to Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode, where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at, that's Now, here's your program.

The hemp and cannabis markets are quickly busting out of individual countries and expanding across the globe. Different from years past, the consumers of new countries that come on board, ending prohibition, increasingly have a sophisticated appetite for well-thought-out products right out of the gate. Here to tell us how his business is helping people around the world with healing cannabinoids is Henry Vincenty, founder of Endoca. Henry, welcome to "CannaInsider."

Henry: Thank you very much. Thank you very much.

Matthew: Give us a sense of geography, where are you in the world today?

Henry: I am in Barcelona, in the mountains of Spain, so I'm enjoying the sun today, as always.

Matthew: Good, good. And I'm in Edinburgh, Scotland. And Henry, what is in Endoca on a high level?

Henry: Well, Endoca is a company that provides cannabinoids to the people around the world that are pharmaceutical grade, and, yeah, we're delivering the quantities that is needed, this is basically what we do.

Matthew: Okay. Well, I wanna get into more about the pharmaceutical grade, but first, can you share a little bit about your background and journey, and what you were doing before you started Endoca, and what sparked the need to create Endoca?

Henry: Well, yeah, of course. Of course, it's a small story, but let me try to make it short. So, I think it happened while I was studying genetics in the University of Denmark. And I was traveling in Africa, working on projects to increase the lifespan of people who are living in zoo area. They were suffering from AIDS. And up while implementing the mainstream medicine and the mobile clinics I was building, I saw that the drugs were not providing people with any solution and only making things worse.

So, this took me to another journey, I think, where I would start rising questions about everything that I learned in university and start looking the alternative ways, how we can restore the immune system without the nasty side effect. And at the same time, as I remember correct, there were people marching the streets, they were shouting for legalizing cannabis in America, especially for I saw some banners people were saying that it helps them to overcome AIDS.

So, that really kicked the whole scientific, you know, curiosity in me, and I was like going back to the university and trying to find out what's up and down. And I saw like thousands of articles talking about this and I was saying asking myself, "Why aren't this available to people? That this is so effective that people are marching the streets already and saying it helps them, why isn't available?" And then, I found out it's too complicated.

So, I decided to make CBD available as one of the cannabinoids that can help people, and make it available online so people can get it, and not wait for the governments and pharmaceutical companies to do the trials and wait for 20 years. Because if you have a problem today, you need a solution today, you can't wait for 20 years for some trials to be finished. So, I think that's how the whole thing started.

Matthew: Okay. Yeah, you mentioned that in Africa, you saw that some of the things and solutions that were being tried weren't working, what was not working?

Henry: Well, the whole way of looking at the problem was wrong because symptom treatment is not the solution for people who have AIDS. Now, I don't know, I mean, how many of you knows what AIDS is, but it's an acquired immunodeficiency syndrome, which is umbrella of 20 other diseases when your immune system is down. So, when I saw that we were giving people nasty chemicals to remove the symptoms, I was like, "Okay, something is wrong here because we're just making it worse."

And even the chemicals we're giving them had the side effects of even, you know, making the immune system even worse. And the solution even was more simple and clear, which was, of course, the nutrients, and vitamins, and minerals that people didn't get because the people in the rural area, their biggest problem was nutrition. They just didn't get the food and the vitamins and minerals, so they were suffering from a total other case than what's like normally understood of AIDS. I think that answers the question, it was more the whole idea of how it was approached, I think it was totally wrong because there was no improvement.

Matthew: Okay. So, the immune system was already compromised, and then, adding nasty chemicals just made things worse.

Henry: Yeah, yeah. And that's what triggered my, like, real curiosity, why are we doing that? I mean, who gave us this knowledge that we should do it like that? I learned that we should do like a little bit different approach, that you should try to restore balance and not, you know, make it worse. So, yeah, that's how it all started.

Matthew: Okay. And so, you went back to the drawing board and you said, "Hey, it looks like hemp and cannabis are having an impact." And did you talk to any of the scientists in Denmark or anything about why solutions were being used that don't work or was no one really asking those questions besides you?

Henry: I think it's not popular to ask these questions in this type of business because it's a big problem, and people, you know, they have this dogmatic thinking of, "This is what we do," and we have solved the problem, and it's actually people's own fault, and I think it's very difficult to talk about it. So, what I did was I was more like interested in, "Okay, how can we understand this?"

So, I spoke with professors, neurologists, and actually, nobody knew too much about it. And that only increased my interest in it even more because that was like, "All right, really, nobody looked into that angle," which I think is kind of the correct angle, is this, how can we restore the body, how can we regulate the immune system that impacts lean and all other things, and how can we restore the body without using chemicals? I think that's a basic question.

Matthew: Yeah, good point. So, why did you focus specifically on CBD? Was it the reach that you felt like you could achieve with a hemp-derived product?

Henry: Well, actually not. Because I was looking at all cannabinoids and I saw that the ones that were most used on the streets were the one called THC, you know, and this is why people were marching the streets. But nobody knew about cannabinoids 10 years ago in that range we know now, so they were like, "Okay, look, cannabis, it helps me, now I just need it." And I tried to get governments to give us license to provide people with different cannabinoids, also THC, but it looked like THC was a very complicated cannabinoid to work with because it has been stigmatized, and it's like people look at it as a drug, especially the governments.

So, I said to myself, "All right, let's give other cannabinoids a chance and make it available to people so they can make a choice. If they want, you know, to go to the streets and buy something that's illegal, or just buy cannabinoid that doesn't make you high but has all the medicinal properties." So, it was more like the approach of how can we make this available today, you know, without doing too much research as we see that people are using it? I mean, 2.5% of the global population is using cannabis today.

So, I was like, "Okay, let's make pharmaceutical grade safe products available to people who need it, and the quantities they needed, and let's see what happens." So, this was how the whole CBD started 10 years ago, it was by making it available and shaking the paradigm that everything is in. Because everybody was thinking of cannabis and THC, this is it, nobody even knew anything about CBD.

Matthew: Gosh. Okay. Now, tell us a little bit about your grow in Spain, how big it is, anything else that might be interesting about it?

Henry: Well, we grow a lot of hectares, it's 1,000 hectares we grow in our company today, this year. In Spain, we have also grow operation, but we're more focused in Spain on the genetic program because we're breeding our own seeds, we have our own gene banks where we're trying to improve the different varieties we have, and then put them to the fields. So, in north Europe, we grow most of the hemp, but in Spain, of course, we do also hemp, but it's mainly the gene bank.

Matthew: Okay, got it. And how many...? I'm trying to remember how many acres are in a hectare. I think it's like a 2.4 acres in 1 hectare. So, for people that aren't familiar with hectare, that's most people in North America, there's 2.4 acres make up 1 hectare. So, now, last time we spoke, Henry, you mentioned that you wanna grow hemp just like corn. What does that mean and why is that important?

Henry: Well, you see, 10 years ago when we made the CBD available and other few cannabinoids, we saw that the demand is huge, and it's actually on a side where I think everybody should have it in their home as a vitamin C and stuff like that. So, if you want to supply the whole world, you have to make solutions that are scalable. I mean, of course, you can make it in your greenhouse and, you know, go with the scissors and do whatever people are doing these days, and be a real artisan. But I think if you wanna have an impact on the world, you have to have it available in big quantities, high quality, and it has to be price efficient.

And right now, the only way you can do that is by growing like our grandparents grew hemp, or corn, and using the equipment that's already there in industry. It's very difficult, you know, to supply the whole world using scissors in a greenhouse, which I see is the kind of a trend right now but I think it would go away, because hemp grow very nicely outdoors like any other crop, and it's a very robust crop. So, I think it is the only way to do it unless you want some special hemp that is, I don't know, in a special flavor, controlled environment, cloned from special plants. I don't know, I think that's a recreational side of it. But if you're looking at it medicinal and, you know, as a large-scale industry, you can't do it in greenhouses, you have to do the outdoor.

Matthew: And how do you feel about the difference of plants grown inside with no natural sunlight versus outside or in a greenhouse?

Henry: Well, I think that outside is what you get. I mean, if you grow anything outdoor, take a tomato, grow it in a greenhouse, and then go and grow in the mountains like we do, you will have different flavor, you'll have different texture, everything will be different, even the vitamin content will be different. So, I think, the most important is always to say, "Okay, how can we do it in the best way as nature intended?" And I didn't see any results here where you can grow in a test tube, or in a greenhouse in a basement better than you do can grow outdoor. I mean, if you look at the complexity of all the molecules inside, there are over 400, you get much better results outdoor.

Matthew: Okay. And tell us a little bit about how you extract the oil from the plants to create your products.

Henry: Well, what we do is we take the hemp we harvest after drying, we put it in big vessels, and we pump CO2 through it. It's big high-pressure vessels, and CO2 is...I mean, as you all know, and it comes from here, we capture it, compress it, and wash it through. And then, what happens is the CO2 will flow out with the cannabinoids and waxes in other plant material that will create an extract, and it will evaporate. And we will reuse the CO2 again and again, so we only lose very little of it. So, you can say it's a very green technology not only to grow hemp, but we use air to extract it.

Matthew: Okay. Was it a learning process when you first started with the extraction, and how to do it, and kinda get the desired outcome that you wanted?

Henry: Well, of course, because I'm not an expert in this area. When I started, I was more studying genetics and how the body works, this was a very tough learning curve but we had to learn it because not many people were doing it.

Matthew: And what delivery methods of CBD are most popular amongst your customers?

Henry: I think the capsules because they don't have this special hempy taste. I mean, people who love hemp, love the drops, but I see capsules as like the number one as, you know, people are used to take capsules in many different forms, vitamins, and other things. So, I think capsule is the most important and most popular right now.

Matthew: Do you see any new delivery methods kind of becoming popular or gaining tractions, like suppositories or anything like that?

Henry: Well, the suppositories are very important for people who have problems eating it or need a very localized solution. If they have a problem, you know, somewhere else, you can't eat it, it's better to put it somewhere else. Now, what I see of the future is we're working a lot on vaporing the cannabinoids, and I see that a lot of trend is going towards instant effect, so we need to vaporize it. And we've been working on technology for a long time, how can we do that without adding nasty chemicals to it? Because right now, all the vapes you can buy, it's always with something in it, and it's not good for your lungs. So, we'll develop some products that we're gonna hopefully send on the market, where you can make cannabinoids without getting any chemicals into your lungs.

Matthew: Okay. You've mentioned you had a pharmaceutical background, what kind of testing do you do on your plants, and on the oils, and so forth?

Henry: Well, we follow general principles of pharmaceutical production, it means from seed to final product, we test everything to make sure that the product is clean and can be consumed by people in hospitals because we sell and we also give to people in hospitals. So, we have a certain...we can say, there are some rules we have to follow, and in the pharmaceutical world, it's all about purity and traceability. So, when we harvest, we know where we harvest it, when we dry, we know when we tried, what time, what temperature.

We test to see if there is any mold or any pesticides that came from maybe other farmers who were using some chemicals that went to our plants, we're testing for all that before we put it into extractor. After extraction, we again test if anything happened on the extraction, something unexpected, where we test for chemicals, for bacteria, for all things that can be tested for. And then, in the end, when we release the product, we again test for the same thing because you never know what happened in between, maybe someone made a spill somewhere we didn't see in the lab. So, we test again for purity, of course, if there is nothing else inside that we want to be there, and then, of course, also for the cannabinoid content. We have to make sure that you get what's on the labels. So, if it says there are 1,500 milligrams, it has to be that because patients are relying on accurate information.

Matthew: Okay. Any other best practices you brought over from the pharmaceutical industry in terms of standards, your facilities, or anything else?

Henry: Well, I think it's the only way to do it. If you produce something that people have to put into their mouth, and if their immune system is not strong, the only way to do it is follow the general pharmaceutical guidelines. I mean, this is where you really play safe and you make sure that whatever you're doing, you're doing the best you can.

Matthew: Okay. Now, we're talking a lot about the immune system and it's really important because a lot of people have immune problems right now. And why do you think there is so many immune system problems in this era? Wasn't that something that generally plagued past generations yet we seem to have a lot of autoimmune difficulties in the population? Why do you think that might be?

Henry: Well, that's a very interesting and a very deep question. Well, if I should answer a bit more superficial on it, I think the biggest problem is that people are not living in homeostasis, not in balance. What it means is they are consuming more energy than they're using and this creates a cascade of reactions in the body. For example, I mean, you eat things that are not good for you. I think, if you did it in small proportions, maybe that will not affect you that much, but when you eat too much of it, and you need every day, you'll have huge problems in your system because your body is created of billions and billions of small factories that react to the surroundings.

And the moment you start doing things in a wrong way that's not giving you the most effective way of living or surviving, or fighting the entropy, because, you know, what we do as humans is we are racing against entropy every day. So, if you don't have the best possible starting point, you start creating a lot of problems. And especially what you eat is, I think, the biggest, biggest problems of what you said because it creates everything from inflammation to nasty problems.

So, I think, what I can say to everybody and if anybody is interested in it, is really look at what you eat, and eat less, and try to eat better. Raw food is, of course, one of the most ideal ways to get out of these problems, but if that's difficult, well, just eat less. I mean, if you can eat one time per day, you will help your body a lot. And, of course, sugars and carbs, it's one of the worst things you can do.

Matthew: Yes. So, you sound like you're pretty clean living out there in Spain, absorbing the sunshine, getting vitamin D.

Henry: Of course, yeah.

Matthew: Good. Good. That makes a lot of sense. Can you tell us about any other cannabinoids that excite you, that you think are on the broad map? I mean, the public was generally engaged with THC first, now they're learning about CBD, is there any other cannabinoids you feel like is gonna capture the public's interests in terms of the benefits they can receive?

Henry: Well, I think that's yet the universe we're exploring right now. What we can see is different cannabinoids have different side effects. I call it side effects because if you don't need the effect, it's a side effect, because when you take THC to fight cancer cells, but you get high, that's a side effect. But sometimes you need it because if somebody has a problem and they can't forget they've problems, sometimes THC will help them because they need to forget the problem. So, you see effect and side effect is really something that can be discussed.

Now, regarding different cannabinoids, well, we have a lot of cannabinoids available, we're testing them out. But what we can see is mainly, they are interacting with your endocannabinoids system and creating homeostasis. Of course, they give you different side effects, no doubt about that, but in general, I mean, if you have a problem and you take a lot of CBD, question is, will CBG, or CBC, or other cannabinoid be better? I don't know, because I always say, take whatever you have available, as long as it comes from hemp or cannabis, I'm sure it's gonna help you to restore the homeostasis because this is what cannabinoids do in general. They go and they bind to your receptors in your body, go through the cell membrane, and they restore the balance, which is the key. It gives you the chance now to get out of the different problems you have. Of course, you need discipline to stop eating sugar or whatever was causing the problem you are having, but to aim and say any other cannabinoid is a wonder, I don't know.

I mean, we have cannabinoids available, we're testing them out, but we've seen, in general, they're working on the same way, creating homeostasis. Yes, you know, CBG is very good for inflammation, you can see that, but I can't prove that it's better than CBD, not yet. I think we will need many years to come before we can say something scientific about it, right now, we just say this and whatever cannabinoids you have available, grab it, use it, you'll not regret it.

Matthew: Yeah, good points, good points. So, you're in Spain, there's a lot of differences between the Danish culture and the Spanish culture. What were some of the things that you noticed when you first moved over there? One of the observations I've had about people from Denmark is they're very good at foreign languages, why do you think that is? Is that because not many people speak Danish?

Henry: I think that's one of the reasons. I mean, if only 5 million people speak Danish, you gotta learn other languages or you'll have communication problems.

Matthew: Yeah, that's a good point. Do you speak Spanish pretty well?

Henry: Well, I'm working on it. I know several of the other languages, but you see in Spain, I'm living in the mountains, off the grid, so I don't need many people besides few scientists and some crazy people in the woods, you know?

Matthew: Okay. What other languages do you speak?

Henry: Well, I speak, of course, English, Danish, I understand Swedish and Norwegian. I've been working on French for some time but I start to forget a lot of it. And then, the Spanish is, of course, something I'm still working on.

Matthew: Do you think Catalonia will separate from the rest of Spain?

Henry: Well, that's a tough one, I don't know, man. But I know that many people will be happy if that happens, especially in the region of Costa Brava and the Catalonia, but I don't know, man, it's difficult to say, you know, politics, it's not something we can predict.

Matthew: Right. Now, the Danish have a strong tradition of bicycling everywhere, do you see a lot of that in Spain, do you miss that from Denmark?

Henry: Well, you know, a lot of people will go by bikes here but the infrastructure is not there. But the beauty thing is, now that I live in the forest, off the grid, I can go by bike every day, nobody bothers me. So, I don't go much to the supermarkets, we are self-sustainable, so we grow everything we need. So, yeah, I enjoy going by bike just almost by myself. But I know it's a problem in the city because they don't have the infrastructure like they do in Denmark.

Matthew: So, you're totally off the grid. Do you produce your own power then like through solar, or do you have electrical setup?

Henry: We produce everything ourselves. Because we think, listen, if you wanna change the world, you gotta start with yourself. And if you can't do it, what can you then do? So, we're trying to do everything in the most balanced way so that we can say, "Hey, at least we did it."

Matthew: Yeah, that's great, to lead by example.

Henry: Exactly.

Matthew: So, tell us a little bit about how you eat because you talked about food, and eating raw, and eating once a day, things people might not be used to hearing about. I know a lot of people in the paleo community or the keto community maybe eat just once a day, but I haven't heard it from a lot of people that are talking about just raw food. Can you tell us a little bit about how you eat?

Henry: Oh, yeah. I mean, of course, you know, you have to have a lot of discipline whenever you wanna change something. And I think the most difficult task as you notice is when you travel, things change a little bit, but if I stay in one place for longer time, I try to eat one meal a day in the evening, limited to like 2,500 calories, because you don't wanna eat too much. And then, eat as much as you can, vegan, so like peanut butter, vitamins and minerals, of course, I take supplements that we sublimate, extracts from blueberries. But mainly stay raw food, raw food is very good, you know, beans and salads, very good for you. Of course, peanut butter is very good source of protein.

And then, if you only eat one time per day, magic happens in your body. I think, if anybody's interested, you should do some research on the subject called intermediate fasting, it's beautiful, it changes everything in your body and makes you much more efficient, and helps you to create homeostasis, so this is where I try all the time. When I'm traveling, it gets messed up because the times always change, so then, you know, it's not that easy. But if you stay one place for a longer time, I think that's one of the best ways to do it.

Matthew: I've definitely tried this and I'm currently just doing 13-hour intermediate fasting. I have an app called Zero, Z-E-R-O, you can get for free on the App Store. And there is something, you know, to taking time to let the body recover. I am not as gangster as you going one meal a day, that's inspiring, I wanna try that to see, I think it would be hard transition. But then, I think, one of the problems is that you have to really eat quite a bit, do it for that one meal, but then your body gets to digest that and it's got this other time.

Some people say that if you're not eating, your body can get rid of cells that have mutated and get them out of the body much quicker, so there's benefits to your body can go into more maintenance mode. Do you think there's anything to that?

Henry: Well, I think there is a lot of things we have to explore, but one thing is for sure, it's very positive, and it looks like this is what our ancestors did, I don't think they had so much food lying around like we have today. And we see from a genetic point of view, I mean, I studied genetics so this was my angle to it, that you can actually change the transcription of your gene code. It means that when you start eating different, and like we say in the regiment of only one time per day, you change everything, you change even your hormone balance. So, for example, if you are male, you can produce more testosterone. It means you can live more, you can become stronger and much faster.

But it's a little bit against the mainstream science, but, I think, you know, in the time yet to come, people will realize that this is what's happening. So, you know, self-discipline, I think, is the key to many successes in the world, and in the life, and I think food is one of the most important things in our day today because nobody looks at it as they should. It's not just, you know, fuel, it is really who you are. So, I believe in this, what you are is what you eat, you know?

Matthew: Yeah. And your study of genetics, are you talking about like epigenetics, that realm of study?

Henry: Well, not only that, it's also just the physics and genetics, where you look at genes and cells, how they are functioning. And the question is, how do we create the best environment for the body, which is a lot of cells with a lot of DNA inside, how do we create the best environment so they can perform in the best way? And this is what genetics is all about. Now, of course, you can go to many branches and study, you know, different angles to it, but I always keep it in a simple main form and looked at how can we really do that?

And I saw that the genes in your body, really, you know, it's not magic or anything, the genes you have in your body react to the environment. And our job is to create the environment so they can perform best way as they are in our body. So, I hope that answers the question.

Matthew: It does. I've asked you a bunch of personal development questions but I just wanna ask you a few more before we close. Is there a book that has had a big impact on your life or your way of thinking that you'd like to share with listeners?

Henry: Well, yeah, I think there are many books, just to say one, it would be discriminating all the others. But, I say, if somebody has time today, maybe they should look at George Orwell, "Nineteen Eighty-Four," because a lot of things are going on around you that was written 100 years ago, I think that's a fun one to start with.

Matthew: That's a good one. You know, also "Brave New World," it looks like China is more of the George Orwell version, and the western world seems more of the Aldous Huxley "Brave New World" kind, where people don't really see what's happening, it's more in the background.

Henry: Yeah, well, that's also part of it. I mean, if you read George Orwell, "Nineteen Eighty-Four," you will see that different countries are mentioned and how they behave is also mentioned. I think we are following the path very well.

Matthew: Yeah. Well, how about, is there a tool, web-based or otherwise, that you consider important to your productivity?

Henry: Yeah. I think AI is one of the things we're spending some time on, and quantum computers, this is what people should really spend their time on.

Matthew: Quantum computing, yeah, that's a big one. In fact, they say that's the new arms race amongst the big powers is quantum computing, you can crack any code with a quantum computer. It's almost hard for the human brain to conceptualize quantum computing as being something they should pay attention to. Why do you pay attention to it, why do you think it's a big theme?

Henry: Because it's like we're going from horse-backings to airplanes and nobody's paying attention. And I'm like, "Guys, it's happening in front of our eyes, it's there, and people are still sitting on horsebacks and saying, 'Nah, it's not there.'" So, I think it's really a topic that we should really all of us pay attention to.

Matthew: Yes. In fact, Google just passed the Turing Test, which is a test I think was created by a scientist in the 50s. It says, "When we can't tell when we're talking or interacting with a computer, that computer will pass the Turing Test." And there's a link, I'll include in the show notes of this interview, which shows Google artificial intelligence calling a hair salon to make an appointment, and the person on the other end has no idea that they're talking to an artificial intelligence.

It's just amazing how the artificial intelligence has little human characteristics, where it says um, and uh, and this little slang words where you really just can't tell it's artificial intelligence. So, there's all these applications that we're just not even gonna know they're gonna happen until boom, they show up. So, I'm with you, I watch that closely as well.

Henry: Good.

Matthew: Now, Henry, if you were to do something totally outside the cannabis or hemp industry just for fun, what would it be?

Henry: Well, I don't know. I mean, I'm not only inside the cannabis industry, I look at other plants and herbs, and looking how they can help humans to solve different problems, so I'm already doing it. We're not just doing cannabinoids from cannabis, we're looking at all different plants in the world that have amazing properties, which we will learn more about in the future.

Matthew: Henry, do you look at ayahuasca?

Henry: Of course. Of course, that's also natural molecules inside that have a lot of potential in our society to solve many problems. So, that's what I'm talking about, well, that's what I'm doing most of my time, besides cannabis, is exploring nature and all the molecules in there, and plants, and how they can give us or help us, human, to create a positive effect.

Matthew: Yes, I agree. And I've heard ayahuasca is getting quite popular in Spain, so...

Henry: Oh, yeah.

Matthew: Cool. Well, Henry, as we close, how can listeners find out more about Endoca, and find your products online and on social media?

Henry: Well, you can go to, I mean,, and I think everything is there. From there, you can have access to YouTube, Facebook, and all other platforms we have.

Matthew: Okay. Well, Henry, thanks so much for coming on the show today. We'll let you get back to your hot fudge sundae and fried twinkies.

Henry: Yeah, thank you.

Matthew: And keep us updated on everything you're doing, it seems like you're doing a great job, so good luck to you.

Henry: Well, I will. Thank you very much, thanks for having me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at

Have a suggestion for an awesome guest on "CannaInsider," simply send us an email at feedback at, we'd love to hear from you. Please do not take any information from "CannaInsider" or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Emotional consideration may be provided by select guests, advertisers, or companies featured in "CannaInsider."

Lastly, the host or guests on "CannaInsider" may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another "CannaInsider" episode soon. Take care, bye-bye.

Using The Power of Ritual To Create Product-Market Fit – Justin Singer

justin singer of Stillwater Cannabis Foods

Justin Singer is the co-founder of Still Water Brands. Stillwater is focused on cannabis consumers that really don’t see themselves as cannabis consumers because they feel uncomfortable with the existing methods of consumption. For example, it is very confusing for a first-time cannabis consumer to understand why they don’t want to eat a 100mg infused chocolate bar, but instead, need to break it up into 10 or 20 pieces. First-time consumers ask, “wait, why do I need to break this bar up, isn’t a bar one dose?”

Justin and his team at Stillwater initially focused on rituals consumers are already comfortable with such as making a cup of tea. Stillwater’s water-soluble beverage additives including their best seller Ripple have resonated with a traditionally unrecognized and underserved market category.

Now Stillwater is going to offer their infused additives to other businesses.

This is a riveting interview you won’t want to miss.

Learn more at:

What are the five major trends disrupting the cannabis industry?
Find out with your free cheat sheet at:

Click Here to Read Full Transcript

Here on CannaInsider we often talk about why having a me-too product won't work in the long run. It's imperative to have a unique selling proposition to keep competitors at bay and protect your profit margins. Today I'm pleased to have on the show an entrepreneur who identified a market that is not being properly served and who has created product-market fit. I'm pleased to have Justin Singer of Stillwater Brands on the show today. Justin, welcome to CannaInsider.

Justin: Thanks for having me.

Matthew: Give us a sense of geography, where are you in the world today?

Justin: I'm sitting at home right now in Boulder, Colorado.

Matthew: Oh great. And I am an Edinburgh, Scotland, sunny Edinburgh. Well...

Justin: Lovely.

Matthew: Tell us what is Stillwater Brands at a high level?

Justin: Oh, I mean, at a higher level, the brands, we're actually now Stillwater Foods.

Matthew: Stillwater Foods, okay.

Justin: Yeah. So we make soluble cannabinoids for scalable production. That's our nutshell description. But that sort of encompasses two business lines. One, brands which is consumer branded products. Today that means THC-infused products in Colorado and then Stillwater ingredients, which is scalable commercial ingredients, primarily hemp derived for B2B sale.

Matthew: Ah, that's a helpful thing so you don't have to work on the solubility yourself. If someone else's cracked that code, they can just buy it from you.

Justin: Exactly. We believe for this industry to really scale, you need to have a platform for growth so that people can focus on brands and on marketing as opposed to on all of the intricacies of getting cannabinoids to work in food forms. So to function more like the food markets already do today.

Matthew: Yeah, you got to specialize, right?

Justin: Indeed.

Matthew: But what if you have an unmarketable specialization like me? Like I'm a puppeteer and I can't really seem to do anything with that.

Justin: Well, you seem to be doing pretty well with this podcast.

Matthew: Okay. Good. Good answer. Good answer. Okay. So share a little bit about your background and journey and give a sense of how you got to this point.

Justin: Sure. So, let's see, my background, I was in The Manufacturing Institute at Michigan and their undergrad business school and then did a JD MBA in Columbia in telecom law and finance. Then had the foresight to graduate in 2009 into the worst recession in generations with no work experience and a couple graduate degrees. Was great strategic thinking there. But no, luckily, I ended up landing as an intern at a small venture capital fund in New York called IA Ventures which at that point was just three guys sharing space with the startup for 17 million friends and family. And I managed to latch on there and become full timer and stay until we had raised, you know, 153 million across two funds from institutional LPs to 30 investments the whole nine yards.

Matthew: Okay. And can you tell us a little bit about the companies you invested in?

Justin: Sure. So IA was started by a guy named Roger Ehrenberg who before launching the fund had been a prolific angel in New York and also had run DB Advisors which is Deutsche's quant hedge fund platform. So he had made deep contacts into the big data space in doing that, and that's who's seeded the fund. So we were focused on tools and technologies that were leveraging big data. This was circa 2010 before big data was quite the buzzword that it's become today. But that's what we were focused on, was companies that were working with massive datasets or building tools to help analyze those datasets. A great example of a company that we invested it was actually the first investment we made when I joined was a company called Trade Desk, which went public last year. It's a DSP on the tax base.

Matthew: Cool. And you also taught entrepreneurship in New York City. Can you tell us a little bit about that?

Justin: Yeah. So that was a great class. I taught that with Jerry Newman who is fantastic angel investor in New York City. I met him while co-investing at IA. The class was in the Engineering School of Columbia, and it was called Managing Technological Innovation. But we looked at it as sort of demythologization. I screwed up that one. We looked at it as...

Matthew: Let's try to get through this, demythologize. Okay, there we go.

Justin: We looked at as demythologizing entrepreneurship.

Matthew: Okay.

Justin: So we taught it to undergrads who hadn't already been through the Steve Blank school. They didn't have exposure to all the blogs and all of the startup corpus that's available today. And we were focused on showing them that, you know, the biggest impediment to being entrepreneur is believing you can be an entrepreneur. And then beyond that is actually finding a market and identifying products that people want to purchase and that you can deliver profitably.

Matthew: Right, okay. And what have you taken away from your VC experience that you've brought to obviously, you know, raising capital for your own business? That's an extremely important skill set that you are able to shift over. But when you look at what other entrepreneurs are doing, you know, how do you kind of see that with your VC head on and kind of your entrepreneur teacher hat on, what do you see?

Justin: You know, in its ideal form, VC is sort of an outside-in strategy prospecting for outside in, inside out execution. As a VC, I developed some ideas that have really guided the strategy as we've developed this company. You know, I saw from above that a lot of the most interesting new markets were often created more by regulatory change than necessarily by technological innovation. But I did see that where new industries were created by technological innovation, it often presented itself as a product innovation, but it was really a process innovation. I guess one way to tie that together as you say, as a VC, I look first at the market then deeper at the problem and then you try and build personnel around that because personnel is policy. So when it came to this company, I came at it from a perspective of first marijuana and the regulatory changes around it. We launched this company in, you know, January of 2014 right after Colorado went legal. And it was clear that this was an industry with established demand. People have been using marijuana and cannabis derivatives for generations. It's been enormously popular.

The question was could you apply existing technologies to a new industry with established demand in an efficient way? And could that open up the customer base if you were able to succeed there? So we started with marijuana, then we dug deeper in and decided that the biggest problem was that the industry was basically just a black market turned legal. It was overserving people who were already its best customers and was underserving people who had the potential to become good customers. And that was through the pushing of super high dose products. So not to jump ahead too much, the other point that I just wanna make in terms of strategy in being a VC is I think I learned really early on that it's very important to define who you are as a company from the get go. In our case, we defined ourselves as a food company from the start. Not a marijuana company, not a cannabis company, not a hemp company. We were a food company that was using cannabinoids. That has guided our strategy from day one and it's guided who we hire, what tasks we put them on, what projects we choose to pursue, and which projects we choose to ignore.

Matthew: Okay. Was there any ideas that you examined, but then threw away because you didn't feel like they pass muster?

Justin: Yeah. I mean, in the early days before we hit on food, we were looking at ancillary businesses. My background was in technology and my cofounder's background was in technology. We were looking at things like the ad business and, you know, we were also looking at different and digital players, and we just didn't feel like it was enough in the stream of value creation. You know, the one joke that we always had in VC was who was going to be the Yelp of X? The answer was Yelp. Like the general purpose tool tends to win out over time because they have the broader base. So when we were looking at the digital side, we just weren't seeing the opportunities for scale that you generally associate with tech. I mean, the idea behind the tech technology valuations is that it has access to a global market with very low supply chain costs. You have distribution that is just available through publicly supported internet. That's not the case with consumer packaged goods. These were markets that were extremely nascent and had no infrastructure available, that you couldn't just do the typical thing of like picking a super narrow and specialized niche and hoping that everybody was gonna catch up and trying to extract your value out of it, because there wasn't a niche to steal. Like this whole space was emerging out of whole cloth.

Matthew: Yeah. You know, you talk about the need for specialization, and that's a focus of yours. How do you really refine what it is that you're specialized at? You said you're a food company, is a specifically beverages? And then is it specifically how to do light touch-infused medicine and drinks? I mean, is that [inaudible [00:10:16]?

Justin: I don't think that's the right level of precision today. I think it might be, you know, five years from now. So can make this with an example. We, when we started on the food angle, we looked at traditional food startups. If you're gonna launch a food company, you go out, you find a co-manufacturer, you got out and you find a flavor house, and then you find a distributor, match those three things together with a concept and hopefully you come up with a product that actually gets play. That wasn't possible in the cannabis space. There were no flavor houses that were licensed. Vertical integration was a requirement by law and you couldn't get the economies of scale or that you would get out of a distribution network. And there were no distributors anyways in Colorado.

So we had to start from the very basics. And to operate in that whole ecosystem, I mean, it requires an ecosystem. You need to have flavor houses, distributors. If those don't exist, you sort of have to create them yourself. So specialization is great and important, but you got to set it at a level that makes sense in the context of your market and where it exists in its maturity level. For us, we set that as we don't do extraction, we don't do cultivation, we don't do retail. We do everything between extraction and the consumer. So we take oils that are tightly specified from vendors who we trust at very small subset who can beat our spec. We convert it into food ready forms. We package it into a food product and then we sell that to dispensaries and market it to consumers. That's our niche right now.

Matthew: You have kind of two things going here. You have your products, and then the B2B side of things. Why did you feel the need to do the B2B right away? Or did you feel like, "Hey, this is an opportunity I didn't wanna let someone else fill?"

Justin: Well, I would say we didn't do it right away by any stretch. So there's a saying that got drilled into me that, "Platforms are easy, ladders are hard." Everybody wants to be a platform. Platforms are scalable. They have fantastic economics. You can act as a gatekeeper. Creating the platform is the hard part. We looked at consumer branded goods as a ladder. That allowed us to refine what we were doing, learn how to actually produce at scale, learn what people who are producing at scale care about, have a direct line to consumers about what they care about. Understand just that whole setup to make sure that we were making a product that both the consumers wanted and that manufacturers valued. And we were our own manufacturer in that instance in that we were dog fooding it. We also, because of the uncertain regulatory environment, wanted to launch in a place where that environment was more certain and I could have comfort that the state would stand between me and the federal government. That's why we chose Colorado because we felt like it had the most robust regulatory regime and offered the most certainty to invest against.

So we spent two years building up our IP, building up our expertise, talking to consumers, developing products, developing manufacturing processes. And then once that business was established and clearly had proven successful, and we had gotten this great product rippled that had broken out within it and we saw this as a plastic ingredient that can be useful to others, that's when we felt comfortable to move into the industrial hemp space, which we always viewed as a market with less regulatory certainty. Certainly in 2014, less so today than it was four years ago. We have now reached the point where given our existing base of operations, plus today's regulatory environment, we feel comfortable moving into ingredients second.

Matthew: And what do you think that liquids are the ideal medium for delivery for cannabis and hemp?

Justin: You know, I don't know if it's liquids per se that are ideal, but water solubility is certainly key. Water solubility seems to promote a more rapid absorption of cannabinoids into the bloodstream. I say "seems," we have done blood tests. We have actually sat there and put IVs in people's arms and drawn blood every 15 minutes and then put them through a high resolution drug screen to figure out what the actual absorption of THC is. And we do know that ripple absorbs according to a different curve than you would expect with other edibles. Other edibles you see nothing, nothing, nothing and then you see the hepatic absorption through the liver two hours in and boom, people are way too stoned. With ripple, you see immediate onset within 15 minutes. Peak onset, 45 to 60 or peak absorption, 45 to 60 minutes. And then they like tail off over the course of the next two hours. And we validate that through empirical data. I don't know that that is entirely attributable to it being any liquid but it is attributable to it being formulated as water soluble.

Matthew: Okay. That's interesting. Yeah, that is a big problem with edibles on that delayed onset. And then people keep on eating more saying it's not working, it's not working. And then they have a rocket ship ride to a different galaxy. And...

Justin: Well, we realized early on that like the two things you had to give people in order for them to get comfortable in edibles again, especially after, you know, the Maureen Dowd experience, all of the bad stories people have about pot brownies, you have to give them two things. One, you have to give them a self-regulating product. That means that the feedback loop has to be tight enough for them to know and control what they're doing. So you drink a cup of our tea or a cup or liquid with ripple in it, you know where you're going before you're done with that cup within 15 minutes. You can decide whether to have another cup already knowing where you're going to be with that first one. And the second thing is you have to put it in a format that doesn't require them to self-identify as a drug user.

So we chose tea as our initial product because it shared all these great characteristics with marijuana. It was functional. It was organic. It was natural. It was ritualistic. But most importantly, people could consume it for functional reasons and not think of themselves as a drug user. And that's a huge hurdle that people have to overcome to get to the mass market. I think a lot of the products out there today, if you're overly medicinal, if you're smokable, if you're inhalable, these people, they have an audience for sure. But if you're trying to reach seniors, if you're trying to reach folks who never smoked pot in their life but are interested in the medicinal benefits, you've got to give it to them in a form that allows them to maintain who they are.

Matthew: Yeah. That's a good point. And, you know, with beverages, we all kind of think, "No. Like, hey, if I have a glass of beer, this is what happens. If I have a tea, this is what happens." So it's a nice unit of account in a way that where you can start to make it your benchmark.

Justin: Yeah. And this goes back to the origin story of our company is that in the early days of the industry, the industry broke the one serving one dose paradigm. So, like you said, you know what one glass of wine is, you know what one shot is, you know what one shot of whiskey is, you know what one beer is. Those are all essentially the same. But you take a brownie with 100 milligrams, and that's a one serving confection with 10 to 25 servings of THC. And it scares the hell out of people because it doesn't conform to their expectations. So like in the early days my grandmother, 92, she has diabetes, her husbands had Parkinson's. She was just interested in finding a pot brownie so that she could feel better. The only thing I could find her had 100 milligrams. I had to cut it in 20 pieces and individually bag each morsel and tell her to eat half of that and then wait two hours. Like none of that was working for her. She was never going to become a part of this industry with that type of product as a popular option.

Matthew: Yeah, that's a good point. And which of your products is most popular now? Did you say ripple?

Justin: Yeah, ripple is by far. So within ripple, our 10-milligram pure 10 THC SKU is the most popular. But we also have a balanced five, that's five milligrams THC, five milligrams CBD. And then our 20 to 1 CBD, that's 10 milligrams CBD and half a milligram of THC. And those two are equally popular and together as popular as the 10 milligram. One thing we've noticed, the CBD products are gaining rapidly in the market. It's great. The more dispensary owners promote it, the better it seems to do. You know, like I said, the dispensary sales channel is tough. It's geared towards heavy users just by virtue of path dependence. But the wellness demographic, I think is and always has been a larger market than recreational intoxication. So providing lower dose products to people who don't want to get stoned, who just want to feel better, is the larger opportunity even if it's hard to push in a dispensary channel.

Matthew: Now this type of product requires some very specific knowledge in terms of beverages, creating a shelf-stable product and more. How did you go out and find somebody that could help you with that? Can you tell us a little bit about that?

Justin: Yeah. I mean, again, it starts with owning, being a food company. Like when you think of yourself as a food company, you look for people who understand food. We started out by looking for a food scientist. In the early days, I did a bunch of diligence. We realized that people were...that manufacturers working with high calorie, high fat food forms because THC and other cannabinoids are fat soluble. And in order to put it into a healthy water-based form with low calorie counts, you needed to render it water soluble. Well, first threshold question there is, is that possible? So I started out talking to a bunch of food scientists just to sanity check is it possible. They all said, "Yeah. It's a solved problem in food science. It just hasn't been applied to this before." And to do it for a natural component like a cannabinoid is hard. It requires effort and especially to get it to a high level of consistency.

So we were fortunate enough in the early days to meet someone who came on board as an advisor and ultimately became our lead scientist and/or head of Product Development Manufacturing. And, you know, he came from Mars where he had spent 25 years there as a senior food scientist, focused in the new product development groups and had launched, you know, 80 brands over the course of his time there. So he was absolutely perfect, he understood pilot scale up, he understood high end scale up for national branding, and he also understood functional foods and product development. So from there, it really became a matter of probing his mind to understand what made him tick and understand what the structure was within Mars for developing these things and then building outwards from there.

Matthew: Yeah, that's a key hire for sure. Someone that has that kind of knowledge set, that's great.

Justin: Yeah, I mean, it helps us see around corners that other people don't even see. Understand. Like, we don't just look at this as like, what can we shove pot into? We look at this as what are forms that naturally fit with cannabinoids? How can you deliver them safely to consumers? And I mean both in terms of consistency of dosing and in terms of food safety, when you don't have a reliable supply chain. It's not like delivering to a Walgreens where like you know they're going to refrigerate it immediately, it's gonna be delivered and refrigerated trucks and it's going to be checked every day to make sure that it hasn't expired. Like, you have to account for the fact that dispensaries are small businesses, for generally, they don't have the most robust infrastructure in place. There isn't a distributor channel that regularly does channel checks. So you've got to find products that fit into that channel that you are targeting.

Matthew: Okay. And tell us more about the supply chain with your business. How has that been? What kind of discoveries have you made? What kind of challenges have there been and how did you surmount those?

Justin: I mean, it's a tough supply chain. One of the problems is that it is vertical. It started off vertically integrated so you a lot of people doing a lot of things not very well. But they were making money, so they're hesitant to give it up. You also have a lot of people who, when they make money, this space has not attracted the most ethical people. There are plenty of ethical folks, let's be absolutely clear about that. There's some great entrepreneurs in the space. But there's also, like any space, more so than other spaces a share of charlatans. There's a lot of things that you can just promote and market versus actually produce. It's a lot easier to describe a thing than make a thing. And in our supply chain, we found a lot of people who were very good at describing what they did and very bad at actually doing that thing. It was terribly risky.

So for instance, we source our oils from extractors. We run a big recall risk in terms of pesticides. Then that is part of the supply chain that we don't have a direct touch point to. And we found some suppliers, who were willing to go back to the cultivators for us, actually get all of the documentation around pesticide usage and testing and deliver that to us as a precondition for sale on the oils. That was a requirement on our part, we didn't understand why anybody would do otherwise and yet we lost some vendors because they just said, "We don't wanna take responsibility for that." Like, ensuring quality in the supply chain has been hard. And we've had to reach into places that we initially did not want to or didn't think we would have to. And we've done it because ensuring quality and consistency is the most important thing to our brand and to our growth as a company.

Matthew: And you mentioned that Stillwater products are available in Colorado, what are the expansion plans beyond Colorado?

Justin: Yeah, so Stillwater brands products are in 20, 25 dispensaries in Colorado right now. We also have brand...there are products out there that are powered by our ingredients in another 250 stores across the country outside of the state. We are not focused on state by state THC expansion. I think, I said that we see ourselves as a food company. Above that we actually see ourselves as a cannabinoid company, whether that comes from cannabis and THC or hemp and non-psychoactives, I am somewhat indifferent to in terms of which area we pursue most aggressively at any given point. The state by state THC expansion is an iffy strategy to me. The nature of being a product manufacturer is that you wanna get economies of scale. You can't get that with state by state supply chains.

You also can't ensure quality across 50 states when you don't have a single supplier to work from. If you have to work from 50 different suppliers, it becomes really, really difficult. So we're more focused on opportunities that offer a national footprint. So that's hemp, that's Canada, and Europe. We recently signed a deal with the Green Organic Dutchman to provide a ripple ingredient platform to them for their efforts in producing non-psychoactive infused foods and beverages in Canada and the EU, as well as Jamaica. So we see that as a much more interesting opportunity in the long term than simply going to another state. That said, California is kind of, you know, its country all of its own, so I think you'll see us there sometime next year.

Matthew: Was it difficult at all to get into your first dispensaries in terms of, you know, getting purchasing manager, dispensary owner, bud tenders excited about it? How did that process work?

Justin: You know, it was hard. We launched with a 2.5 milligram micro dose tea, again into an environment where the traditional product was 100 milligram brownie or chocolate bar. A lot of people looked at us and said, "Why the hell would I recommend it to a 2.5 milligram product? I take 300 milligrams for breakfast." And we had to explain to them, "That's great. This product isn't for you. And not everybody who walks into your store is like you. In fact there are many more people who are not like you than who are like you." And we found a couple of dispensaries early on, The Farm in Boulder was great partner for us who were really intrigued with the idea of offering a product that was for people who weren't already in the dispensaries and can broaden their consumer base. So it was a differentiated product, we had a unique form factor in the tea stick format, we had great flavor. We were one of the very first products that just didn't have a hash-y taste with it.

So we were offering a lot of interesting value propositions and nobody else was and for dispensaries that could get over the idea that not all products had to be 100 milligrams and max out the regulatory limits, I think we had a pretty clear path. Ripple also was just a really well executed product that was differentiated. You know, people had tried sugars or whatnot but not everybody wants to add sugar to their food. Ripple was just odorless, flavorless, water soluble THC that could be added to anything. That was unique and it was a really well executed form of that idea. I think time and time again, it really comes down to execution. Anybody can claim to do a lot of things. To actually put it on the shelf exactly as you described, that's what gets word of mouth going. And that's what gets organic growth going which is just super important in industry where there's not the ability to do traditional marketing. You need word of mouth so, and the only way to get word of mouth is to deliver on your brand promise.

Matthew: And how has Boulder been for you in terms of networking in the cannabis community, especially compared to New York City, which is like...I don't know, I can't even gather how many multiples sizes it would be, you know. Boulder's probably 200,000 or 300,000 and New York City is like 10 million.

Justin: I mean, Boulder is fantastic. I've been coming out to Colorado my whole life. My wife and I love it here. Our dog loves it here. We just had a kid here. It's got a fantastic food scene, especially on the startup side that dovetails really well with what we're doing. Like I said, we see ourselves as part of the food scene even as much, if not more so than the cannabis scene. I think there's good stuff going on in the cannabis community, I'm really proud to be a part of it. It's just a good state. The regulatory bodies are trying very hard and they're doing a good job. On the whole, I've been impressed with the improvement over time. I think altogether I wouldn't have wanted to start somewhere else.

Matthew: Okay. One more question about the, you know, working with entrepreneurs and the VCs experience. Did you notice any trends in entrepreneurs that were successful in raising capital and then also the ones that took that capital and then went on to success versus the ones that weren't able to raise capital or did raise it and weren't able to get traction?

Justin: I mean, the number one predictor of being able to raise capital is being a sociopath.

Matthew: Tell us more.

Justin: No, I mean, raising capital is a completely different thing from actually running a business. Raising capital is often highly correlated with extreme overconfidence, bold claims, and telling a great story. There's a quote somewhere that like, "Raising capital is investor story time." And that's true from the bulk of investors. So, I always want to be careful to distinguish between success as measured by raising capital and success as measured by creating a cash flow, positive, growing business with solid fundamentals. The former, I don't really know any like, business way to predict that. Raising capital is almost an independent variable compared to business execution. It's unfortunate in these days, but I do think it's pretty true.

That said, I think the quality that is most common amongst successful entrepreneurs or people who...and you can define that in any way, raising capital, having successful business, whatever it may be, is just being in the right market. Choosing the right market can heal almost all wounds. I think Mike Mobbison said, "If you're good poker player, your time is better spent finding bad poker players than becoming a great poker player." It's the same for markets. If you pick a rising tide, your boat's gonna rise. If you pick the best team, won't be able to succeed in a terrible market.

Matthew: Right. Good points. And now speaking of capital raising, where are you in the capital raising process and are you looking for accredited investors?

Justin: So we're doing a round right now, small round where we look at capital raising as, you know, a series of checkpoints with a defined goal and reason for raising the capital. Right now, we're raising enough money so that we can continue our growth plans and set ourselves up for the time when cannabis or hemp is legalized at the federal level. With McConnell's farm bill, we're hoping that if that comes across, then that will open up institutional capital. So we're not raising a huge amount of money, we're raising enough because we can't deploy a huge amount of capital. I think you can have to match the amount of capital you have to the environment you're operating in.

So we're doing that right now. I'm looking for sort of pseudo institutions or well-structured private equity firms that can help provide an on ramp to institutional investors in the next phase. And we are also talking to value added accredited investors, although we have a pretty high minimum at this point. We've got a pretty short cap table, it's a bunch of very smart guys who are like...oh, and women who I like a lot. And I like keeping it that way because good, close knit investors are the most important thing in the world, especially when you keep them well informed of what's going on.

Matthew: Okay. And any accredited investors that meet those filters, is there a way that they should reach out to you or just through the website or what's the best way?

Justin: I mean, they can email me at and I'd be happy to chat further.

Matthew: Okay. I'd like to ask a couple personal development questions to help listeners get a better sense of who you are personally. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Justin: All right, so I'm gonna cheat a little here and give you three.

Matthew: All right, yeah. Let's do it.

Justin: So the first one, "Administrative Behavior" by Herbert Simon. So Herbert Simon, father of decision theory, organizational theory, cognitive science and also artificial intelligence. So a hell of a resume there. This book came out originally in the '40s. It's an examination of how organizational decision processes work. And it really helped me to learn to think of and frame my business as a series of decisions. And helps you to judge progress by the quality of information and the quality of the decision making progress as a process, as opposed to just big fluffy goals. Second one is, "Out of The Crisis" by Deming. So that was the book that really got me in on systems thinking, focusing on consistency as a platform for growth and just really essential-ness of coherence. And then a similar to that, "Good Strategy, Bad Strategy" by Richard Rumelt which in my view, was the best strategy book I've ever read. And that is just a real focus on coherence and direction. So you start out within the right direction, and you just keep learning and keep evolving, defining the problem set that you're facing with specificity. And ultimately, the better you understand the problem, and the better you understand how the problem applies, converts into money, the better chance you have for success as a business.

Matthew: Great recommendations. Your second book recommendation there of Deming, that was the gentleman, American gentleman that went over to Japan after World War II and kinda helped them get things going. And they kind of took his vision and applied it to their auto and manufacturing businesses. Is that right?

Justin: Yep. The Toyota production system is actually Deming. He was the first guy to think about quality as a form of consistency. And we take that, we have very much internalized his view of quality. We think of consistency. When like, all of our packets, our doses of ripple, each dose is plus or minus 2%. We don't go for 15% variance. Everything we do is with that tight level of precision, and that's how we define quality. It's setting a target and then hitting it exactly every time.

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

Justin: Yeah, we're big fans of Google Apps Script. It's a platform that Google has, sort of a JavaScript platform for back-end scripting of all of their services. So you think of like, what VBA is to Excel, Google Apps Script is to all Google services. So we use it to hit the APIs of our various inventory management systems of the state database tracking, put all that data together into formats that are into spreadsheets and places that are easy for our staff to access and work with. It also does some workflow help for us, automates a bunch of things. We found it to really be the glue that holds the organization together.

Matthew: Wow, so just a reference, the VBA you're talking about is Visual Basic which is like, you're using a coding language to supplement Excel if some people do that, and you're doing the similar thing with Google Apps. And so are you pulling in data from third parties to make like, key performance indicator type dashboards and things like that or?

Justin: Exactly. We track everything very tightly. And we finally have enough data for that information to be meaningful. But we pull that all in from, you know, we've got our CRM, we've got the state metric database, which we were the first company to request access to their API, and it confused the hell out of them to be honest. Honestly, when I was a VC it was easier to get access to Twitter's fire hose than it was to get access to the metric API as a licensee. Then we have a couple other supplemental tools that are manufacturing tools and then an additional tracking tools for...because we track information about our cannabinoids over and above what the state requires. And the state database doesn't really handle that well so, we have a sidecar database. And we use Google Apps Script to bring all these things together and present them in a unified way. So we have a good sense of what's going on with our business on any given day.

Matthew: Okay that makes sense. Justin as we close, tell listeners how they can learn more about Stillwater and find you online.

Justin: Sure. So our address is That's

Matthew: Well, Justin, this has been a great interview. Thanks so much for coming on the show and telling us everything you're doing with Stillwater. Good luck with the brand...

Justin: Thank you.

Matthew: ...and keep us updated.

Justin: I will. Thanks so much.