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Interview with CEO of Cannabis-Infused Beverage Maker, Mirth Provisions

adam stites mirth provisions

Adam Stites knew he had to be involved in the Cannabis Industry. After talking with friends and selling his last business he dove in creating Mirth Provisions. Mirth Provisions based in Washington State makes infused beverages and a sublingual spray.

Key Takeaways:
[1:31] – Adam’s background and opening of Mirth Provisions
[6:40] – Picking cannabis-infused beverages as the main offering
[8:24] – Adam talks about the Washington cannabis market
[10:28] – Mirth Provision product descriptions
[12:47] – Adam talks about where product ideas come from
[15:33] – Adam talks about how data is used
[16:34] – Adam compares and contrasts the Washington and Oregon Markets
[21:18] – Keeping an infused beverage shelf stable
[24:39] – Innovation in in-store marketing using refrigerators
[28:19] – What do you need to get into the market
[29:29] – Pricing of Mirth’s products
[33:19] – Adam talks about the infused product market in five years
[34:45] – Adam answers some personal development questions
[41:00] – Contact details for Mirth Provisions

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Read Full Transcript

While flower continues to be the hottest cannabis item in Washington State, the infused products business is also getting traction. Here to tell us about how his company is thriving in Washington is Adam Stites, Co-Founder of Mirth Provisions. Adam, welcome to CannaInsider.

Adam: Hey, thanks Matt.

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

Adam: Sure. So, we’re actively executing a national brand expansion. We’re currently in Washington State. That was the first state that we started in, kind of proof of concept. We then expanded to Oregon and Arizona last year with our Drift Sublingual Spray, and we’re launching in California in July, which I’m proud to announce. We just signed that deal last week.

Matthew: Oh great. And how about where are you sitting exactly today? Are you in Seattle? Where are you?

Adam: I am sitting at our new Portland, Oregon facility. So maybe 45 minutes south of our Washington operation.

Matthew: Okay, great. And before we jump into everything that Mirth Provisions is doing in the Washington market and elsewhere, let’s hear some of your background and history and how you came to start this business.

Adam: Sure. So it really started in November 2012. I was with a group of friends in Austin, Texas. We happened to be watching the election results come in, and saw Initiative 502, which was the initiative to legalize marijuana in Washington State, come on TV. We started to see the returns even from the eastern part of the state that typically votes a little more conservative, and we said man this thing is going to carry. I mean they hadn’t even counted all the votes in King County, which historically has been very supportive of cannabis.

My mind just started racing, and there were some friends and maybe a few alcoholic beverages, and we started to say hey, what’s the opportunity here and when is the last time we had a $10 billion informal industry with no real brands, and what if we could do something in here that was truly different and better and to build a brand. That was kind of the genesis of the idea. When I got home to Portland I met up with two friends who had an agency here in town, (2.42 unclear), Andy and Peter, and I said, hey guys I’ve got this crazy idea. What do you think about this? We met at a coffee shop outside of their office. They were not totally comfortable discussing it in front of their team, but we kicked it off together.

We started with our own theories of what we wanted to produce in products. They helped us really introduce a quantitative and qualitative research to the market and what we thought what products would really be best. As a result of that, we arrived on beverages, kind of the intersection of where consumer desire was and where the market hadn’t adequately produced products of the quality that we thought folks would want. So, as a result of that, we decided to enter the beverage business and using some other contacts and friends that I knew was connected with a gentleman who was a former head of operations at Tazo Teas here in Portland. So, he had one Tazo’s formulation work, and then after Tazo was acquired by Starbucks, he also went on to do formulation work for Starbucks up in Seattle.

So, specifically if you’ve ever had some of Starbuck’s flavored teas, you’ve tasted some of Michael’s work. So, he was really a formative part of the initial product formulation and in getting our manufacturing plants set up. So that was the genesis.

Matthew: Okay. And how about your personal background and work career?

Adam: Yeah, by the way, I love this question because people that you run into in the industry it’s such a wide variety because really no one, unless you are growing in the medical space prior, came from the industry. So, it’s such a wide variety of backgrounds. I think I fit that mold a little bit. So, my background was in ecommerce. I founded a paintball equipment ecommerce site that we grew to become the largest retailer of paintball equipment on the internet.

Matthew: Nice.

Adam: Then we grew the business through other acquisitions, especially nichey, commerce companies, grew the business to about $10 million in revenue. And ended up selling the business in November of 2015. So, that was really my background, B2C, consumer marketing fulfillment. Yeah.

Matthew: Are you pretty skilled at paintball strategy?

Adam: Not as much as I once was. Really when I was active in the business the guys who were active always tried to get me to come out with them so that they could use me for target practice pretty much. They were a lot better than I was.

Matthew: Yeah, I’ve heard that story where some friends go out. Yeah, we went paintball and there’s one or two dudes out there that are like Rambo, and they just light everybody up and you’re done. Is that your experience? Were they using your equipment?

Adam: The sales staff had a background as tournament players, and they were quite good. I started much earlier and was much more modest in my abilities.

Matthew: It’s funny that you got into the beverage part of things, because when I moved to Boulder that was one of the first things that really sparked my interest is I saw some people around five or six in the afternoon or evening and instead of having a beer or wine, they busted out a cannabis infused beverage. And I thought wow, this is really crazy. Not only is this market segment going to really be popular, but it’s also cannibalizing alcohol, which is just a major, major seismic shift, and I couldn’t believe it. So, I think you picked the right pasture and that’s important.

Adam: You’re absolutely right. We’ve been seeing a lot of data recently come across talking about how industry analysts for the spirits industry are already starting to factor cannabis consumption into their forward projection. So, I think that says a lot, particularly when we’re seeing states that are collecting more tax revenue from cannabis than they are from alcohol. So, originally while Andy and Peter helped to refine the process and thinking about what consumers wanted, I’m glad we landed on beverage.

Initially the genesis of beverage was really my first experimentation. I was coming back from a cycling trip in central Washington. I was driving my 1983 Volkswagen Westfalia across the Cascade Pass, and if you’ve ever been in a Westie, you know those don’t exactly set land speed records. So, I had a lot of time to think, and on that drive started really thinking about the concept of a coffee product and infusing a coffee. So, as soon as I came home I grabbed my French Press, brewed up a pot, infused some cannabis that I had into a thick crème sort of base, and that was the genesis, kind of the first product. And suffice to say, when you can’t really lab test what you’re working with that initial brew was a little bit stronger than I anticipated. So, I went for a little bit of a nap that day, but it was the beginning of the concept.

Matthew: Where are we right in the Washington market holistically, if you’re looking at a 5,000 foot level?

Adam: So, at a high level we’re seeing tremendous growth in Washington. So according to BDS, and the last data we had was January 2017, sales were up 71 percent over January 2016. We’re happy to see that beverage sales were up over that, up 91 percent year-over-year. So we’re outpacing overall market growth, and I think what’s driving that Matt is people’s continuing… our expectations and our perceptions with regard to cannabis are maturing. So, two years ago when you walked in to a retailer or a dispensary you’d expect to see flower, and consumers came there to buy flower and now they’re seeing a variety of addition new novel products. They’re seeing how they can integrate this into their life.

Folks like me, my background, I was a marathon runner, a triathlete. I don’t necessarily want to smoke or vaporize cannabis. It’s just not my preferred method to enjoy the plant. So I think a lot of other folks are saying hey, I’m not going to buy a joint. I’m certainly not going to dab, but would I try an edible? Would I try a beverage? Would I try a sublingual spray that’s discreet and I can take anywhere. So, I think as people are willing to try these products, they’re saying hey this is for me. I like this and I can control the potency or my experience and that’s why I think we’re starting to see in these more niche categories, greater growth.

Matthew: Have you considered an infused paintball where you can medicate your friends and family from afar?

Adam: Whether they like it or not. I love it. I think there’s an opportunity here. We should talk.

Matthew: So, if someone’s just hearing about legal and Drift for the first time, your products, how do you introduce those? How do you summarize what they taste like, what the experience is like, what they do for you?

Adam: Sure, absolutely. So we’ll start with Legal. Legal is our line of beverages, and they’re an all natural, phenotype-specific beverage where we pair specific strain blends with natural terpenes found in fruit to create a consistent effect. So, that means whether you’re in Seattle or Scottsdale, you’re going to have the same effect of the product, because again we have a blended set of strains, which results in a certain ratio of cannabinoids in concert with the natural terpenes that we were very deliberate in the fruit that we use. Lemonine, Lemon, ginger. It’s a very calming, relaxing terpene in concert with the strain blends that we use, which are more of an (11.13 unclear), a little bit more of a heavy decarboxylation step up the CBN.

So, with all of our products we kind of began with the end in mind. What is the effect that we’re trying to achieve and how can we use natural products to achieve that effect. So, shifting over to Drift. Drift is our sublingual spray. It’s the ease of a vape pen without the smoke. It’s fast acting. You spray it underneath your tongue, and our patented formula allows you to feel the effect in just a few minutes. It’s precise. We actually ended up spending about five figures on the atomizer that it met the requirements of a volume measuring device set by the State of Washington. And what that means is each spray is 106 milligrams, so you can precisely dose yourself. There’s no guesswork involved and it’s discrete. You can take it anywhere. And the only thing that people know is that your breath tastes amazing and you probably have a little bit of a smile on your face in a couple of minutes.

Matthew: Right. I can see where you would really want that diffuser or atomizer to be precise because if you get that wrong it could be a different night than you expected.

Adam: True.

Matthew: So, how do you create products? Is it a whiteboard situation? You talked a little bit about how in Austin with your friends you were thinking about it, creating Mirth and so forth, but how do you actually arrive at something like Drift? Was there a light bulb moment, were you kind of riffing with people you know in the industry or how does that happen?

Adam: Here’s what’s kind of unique situation. I woke up one Saturday morning at my girlfriend’s house and I said we need to go to the brewing supply store, Whole Foods and a lab supply store. It kind of came to me one morning an idea to take an ethanol extracted cannabis, which was an aqueous solution. So it was suspended in an ethanol, and then be able to make a sprayable version of that. So, that was kind of the first generation of Drift that was just a random thought one morning. So, I think it’s part that random inspiration. It’s part I love going out in the field with our sales team and just visiting retailers and dispensaries.

I shut up and I let our team explain the product and it’s great to listen to our retailers and our dispensary partners. We’ve come to be very close with a lot of these retailers and they’ll tell us straight what they’re seeing in the market, what’s working. So that’s another element. Again we’ve gotten pretty sharp at using quantitative and qualitative research to give us additional feedback. We do Voice of Customer sessions on new products with folks to get feedback. So, also attend the cannabis shows, attend natural food shows. Just really exposing yourself to the broader market. I think that’s kind of the data end.

What bounds all of this thinking is really our desire to do something that’s different and better. We don’t want to be the me too guys. We don’t want to log into BDS or another analytics tool and say hey, what’s trending. Chocolate bars, we’re going to give them the chocolate bars. We just philosophically, we don’t see that we could add a lot. If we don’t see that we can add a lot of value in a specific area or with a specific product, we’ll typically stick out of it, unless we can say we can be the absolute best in the world with this product segment. Maybe we’ll look for something else.

Matthew: Okay. Interesting. You mentioned BDS and there’s some other market data companies out there that kind of aggregate the dispensary data, what’s selling and can give you some insights there. You mentioned, hey, chocolate bars are selling, we shouldn’t make chocolate bars, but a lot of people are saying hey we should or we should make gummies. Do you think there’s kind of a self-fulfilling prophecy in some of the data out there because people all kind of herd around these notions of what’s selling and then maybe they’ll say well I’ll just make a glow in the dark gummy. That will be my unique selling proposition and I’ll just get a sliver of this market? What are your thoughts around that?

Adam: You hit the nail on the head. It is you’ve got everybody who I think there is a tendency to skate to the puck, and we want to skate to where the puck is going to be. Philosophically we don’t think that the world needs yet another, as you mentioned, glow in the dark gummy worm. What we need is to say where’s the gap in the market? What is the use case for this product? How are people actually using it? Is it, hey, I’m off work, I just want to relax. Hey, I’m out with my friends and I don’t like alcohol. I want an alcohol alternative. How is it being used and how can we do something that’s really great. Our test is, is this something that we’d be proud to share with our friends and our family, from the ingredients, to the taste, to the effect. And if we don’t feel good about that, we have no business making it. So, I think if you create great product that you’re really proud of, the rest of the business has a tendency to take care of itself.

Matthew: Now when you look at the Washington and Oregon markets, how do you compare and contrast them in your mind?

Adam: So, we’ve been spending a good amount of time in Colorado and we’ve had substantive with a couple of potential partners in that state and also in Nevada. We’re looking for partners in various states to support. But I’d say that Washington is very similar to Colorado in the respect that it’s more established market. For the most part the regulators aren’t constantly changing the rules. And the kinks for the most part are worked out and that produces a more stable environment from a revenue standpoint. I think Oregon is a bit of a constantly changing regulatory environment.

There may be what, two years, behind Washington in having an adult use market. I hate to say that they’re an example of a bad regulatory environment, but if you have five months of revenue decline in a state, I mean, Oregon has not recovered from the revenue highs that it saw in the summer of 2016. I think that speaks to if regulators get too aggressive or they’re not mindful of what the effects are. This has started to affect tax revenue in the state. I suspect, and we’re seeing this as well, that the kinks are getting worked out, but Oregon is certainly a new environment and one where the constant change in regulations has produced an environment that sales have not come back to levels that we seen in 2016 and that’s especially stark when you contrast that with the sales growth that we seen in Washington and in Colorado.

Matthew: Yeah. It’s an amazing thing when the revenue is kind of their measuring stick. They’ll probably respond somewhat quickly when they see it’s going down. At least I’m thinking they will, because there’s no regulators or state politicians that really like to see that happen if they can avoid it.

Adam: And I suspect it will get figured out. Certainly the regulators are doing their job to make sure that we have a safe environment, which meets the requirements of the Cole Memo, which of course is a moving target right now with the Trump Administration and Jeff Sessions. We’re not sure what that’s going to look like in a few months. Hopefully we’ll have some greater clarity on that, but they’re doing their best to create a system that is a safe place for all of us to operate in, consumers and folks in the market and the industry. And I suspect they’ll have it solved within the next few months. We’re seeing stability start to appear back in the Oregon edible market.

Matthew: I have a theory that Trump is not going to be as bad as we’ve all feared for the cannabis industry because I think he looks at his presidency kind of like the ratings of the show the Apprentice, like his presidency is a show and he has to keep ratings up. It’s not popular among viewers to do anything nasty to this rising cannabis movement, especially when states have already voted with ballot measures. So I think there will be a moderation there. At least that’s my theory. I could be wrong on that, but I think he wants good ratings. So, we’ll see what happens. Go ahead. You have a comment there?

Adam: No, I hope you’re right. I agree if you play out all the pieces on the chess board, it doesn’t seem to be in the administration’s best interest to step in and go contrary to the will of, I guess now, 30 states and the District of Columbia, contrary to the will of those voters. Whatever they’d be prohibiting, what does that essentially look like? Do they want to create an environment where there’s not product safety? Do they want to create an environment where they’re taking tax revenue away from schools and firefighters and police and channel that money to essentially a failed state at our southern border? I don’t think the alternatives are good at all. So, I tend to agree with you Matt.

Matthew: I want to pivot back to your beverage Legal because I don’t often get an opportunity to talk with someone that’s making an infused beverage, and I want to kind of understand the nuances around that. How do you make a beverage shelf stable? I mean it’s important in an edible, but in a drink it seems even more complex to get the homogenous and shelf stable and all the different things that go in around it. Has that been a learning curve for you and what’s that been like?

Adam: Oh absolutely. I think it’s very easy to make a beverage, but it’s very difficult to make a good beverage. So, to give you an overview of our product, we have our Sparkling Pomegranate, that’s our sativa blend. We use the same three to five strains in that beverage. So, that’s an uplifting, euphoric, energetic sort of high. We have our Sparkling Rainier Cherry. It’s very much a focused, clear headed high. Our Lemon Ginger is the indica blend, which people describe as a body buzz, kind of a smooth, freeing head high. Our Cranberry CBD is a one to one ratio of THC to CBD. Our newest product is our espresso mocha, which is a cold coffee. It uses a sativa dominant hybrid, very mild uplifting, focus, great Sunday morning kind of chilling out working on the crossword, around the house, put on some jazz, that sort of vibe on the product.

So, those are the five flavors, the five effects. Kind of going back to your question, how do you prepare those and how do you make those shelf stable, obviously like any natural product, there’s a pasteurization. You have to heat the product, but the tolerances when you’re working with a natural product like we are, when you’re working with coffees, when you’re working with fruits it’s very similar to cannabis. You have the volatiles, the terpenes on fruit that can flash off early if you’re not very careful in your pasteurization process. Because we’re not introducing benzoates or other heavy duty preservatives in the product, we have to maintain and extremely clean manufacturing environment. Just the tolerances for any air in the product is much lower when you’re dealing with a natural product.

Matthew: Okay. Then, we talked a little bit about terpenes, but how about preserving those in the beverage over time? Is there any special considerations around that or things you had to discover about the terpenes in a beverage?

Adam: Sure. So, we have terpenes from two sources in our beverages. The first is from the cannabis itself, and any time that you introduce heat to the extraction or the distillation of cannabis there’s an opportunity that you’ll flash off those terpenes because their flash point, the point that they turn into the gas, is much lower than the heat necessary distill the other cannabinoids. So, that also applies to the fruit source of the terpenes. So, when you’re doing a pasteurization or you’re warming the fruit, if you aren’t mindful of the temperatures, you can flash off the terpenes, which affects not only the flavor quality of the beverage but also the functional nature of those terpenes in concert with the cannabinoids.

Matthew: Now you’re doing some innovative things with in-store marketing with refrigerators. Can you tell us a little bit about that technology you’re using there?

Adam: Sure. So, for several years we’ve had a custom wrapped refrigerators/coolers in the store.
When you come into a dispensary or a retail store, you’re going to buy a beverage, you prefer to have it cold as opposed to ambient room temperature. So, that has been a dramatic lift for us in terms of sales. We see anywhere between five to ten times the sales of those retailers who store the product in one of our refrigerated coolers. But we’re also starting to develop technology around LCD fridges. It’s pretty amazing technology where we can have an animated front cover to the fridge that describes the product, describes the effects where we integrate a lot of the videos that you can see on our website for the consumer in the store so they can learn about the product.

We’re also starting to experiment with some even more cutting edge technology on our in-store displays and coolers. Cameras that can see the consumer, can determine the age and the gender of who is standing in front of the cooler and could dynamically shift the content based on who is standing in front of it. We can log that information in terms of who is standing in front of the cooler, the actions that were taken, whether the fridge was opened. So these fridges are almost like your smartphone where they’re connected via Wi-Fi or internet back to us where we’re aggregating this data. How many times was the fridge opened, looking at the potentials of sensors or pressure pads within the fridge to augment the data that we receive from a BDS or (26.20 unclear) .io to make sure there’s always a product on the shelf and to be able to react to quicker to out of stocks, as well as just understanding who is your customer.

That is a question that I can’t really answer. I can tell you what my anecdotal experience is, but with this sort of technology integrated in the fridge, I can tell you in any zip code what day of the week, who the consumers were and for how long they interacted with one of our coolers.

Matthew: Wow, that’s amazing. I’m so glad my home refrigerator doesn’t market to me as I pass by with Drum Sticks and chocolate cake. I’d roll away down the street if that happened. Okay, wow, that is really cool. That’s amazing. So do you take that data to dispensaries that don’t have a cooler and say, hey look what can happen if we put a cooler in here?

Adam: Absolutely we do with our base coolers. The cool thing is when you’re in 400 stores you can do trials of different sorts of point of sale, and with the access to real-time data that we have with some of the analytics providers, can very quickly ascertain the effect of any change in point of sale. And once we have a demonstrated proof of concept we can scale that out across the network of stores that we sell in.

Matthew: Do you think it’s prohibitively difficult for new small entrants to get into the infused products business if they don’t have capital or haven’t raised capital, I mean? You’re a smart guy with a background in a lot of different skills in marketing. Can you really just come in with a good product and make a dent or has there got to be a lot of different skills brought to the table, besides capital; marketing, formulation, creating brand equity and so forth?

Adam: So, I think if you’re going to go into a highly competitive, developed, large segment of the market, you probably need to have capital. You need to have a team to the extent that you have a product that’s truly different and better, that makes it easier, but then you have another challenge, which is communicating to the market why it’s different and better, which is kind of the space that we fell into. People come to a dispensary, they expect to see flower or they expect to see a vape pen. The other products are kind of new to the consumer and then onerous is on us, as the brand owner and the manufacturer, to communicate the benefit, why it’s different and better.

So, really to the extent that you’re producing something that is different and better, I don’t think you have to rely so much on scale of operations and being the low cost producer and spending the most on marketing, than if you in a larger but more competitive product segment.

Matthew: Okay. Now, we haven’t gone over pricing. How much does Legal the drink and Drift the sublingual spray cost?

Adam: So, in Washington a 10mg Legal we price it to retail between $4 to $6 a bottle. So, we really want the brand to be accessible to consumers who haven’t tried it yet. We’ve seen in stores some of the data show a consistent growth in units per sale. So, we believe what’s driving that are consumers who are okay hey, I’ll try this. If I have a good experience, I’m going to come back and buy a few more. So, that’s our 10mg product. In Washington we sell up to 100mg product. In Oregon it goes up to 50mg product. So the price does increase as the potency does. Our Drift sublingual spray, I would say an average retail is between $30 to $40 in Washington State. That’s a 100mg product, 1.6mg per spray. And it comes in our Wind River Mint, which is our sativa, our Cinnamon Springs which is our hybrid, and our Lemon Chamomile, which is our indica blend.

Matthew: Those sound like great flavors, really do. How do you arrive at the cost a product should be and how do you position that with dispensaries then so everybody is making money and everybody along the food chain is happy? Is that a difficult thing? You’re sourcing your materials and your inputs and you want to make a profit, you want the dispensary to make a profit, but you want the price point to be attractive to the end consumer. So, what are your thoughts around that?

Adam: Sure. So, we know we have to live within some bounds of reality in what a consumer will spend in a given market. So, we think our product is substantially different and better. Again, thinking about Legal, the fact that it’s all natural, the fact that it is phenotype strain specific, that we’re really deliberate in terms of the fruit that we use to create an experience. That’s a much different total experience than hey it’s X mg of THC with red dye #40 and root beer flavor.

So, we think that that product can command a premium price versus that theoretical root beer product. That being said, we can’t be so dramatically higher that the consumer says hey, I see the value, but I’m not willing to pay twice as much as an example. So, we kind of began, what is it, IKEA begins with the price and works backwards. So we recognize that there’s a range in pricing that we can be at. We have different products that are at different price points and we try to be in the competitive range of pricing but never the low price leader. We really try to differentiate as opposed to one price. We differentiate on our ingredients and ultimately on the effect and the experience that the customer has.

Matthew: Yeah, you know, it’s never a good idea to compete on price. It’s like a race to the bottom then because there always seems to be some market participant that says, well I’ll lose money for my first six months. It’s like their strategy to get in and there’s always those ankle biters that are going to do that. So if you compete on price, you may be competing with someone that’s willing to take a loss as part of their strategy and that stinks.

Adam: Yeah.

Matthew: High level question here. What do you think the market for an infused product is, specifically in the Pacific Northwest, I mean you’re expanding, but that’s where you’ve started? What do you think it will look like five years from now?

Adam: I think we’ll see the continued decline of flower. And I think you’re going to see people gravitate to specific brands. I think right now no one has their brand of product that’s their go-to brand in the same way that maybe there’s a certain vineyard that you really like or there’s a certain type of beer, that you know, I’m a (33.49 unclear) guy. I don’t think folks have self-identified to brands yet, but I think that’s going to happen in the next few years. And for us that’s really the opportunity where we like the opportunity for people to try our product and say hey, Legal is my go-to, I love that Cranberry CBD. So, I think what we’re going to see in a larger sense in the market is continued development of unique and novel products, and I think that’s a positive. I think to the extent that people get away from the only view of cannabis is rolling a joint. It removes some of the stigma and I think that’s a positive thing for our industry.

Matthew: Adam, I like to ask a few personal development questions to help listeners get to know you a bit. With that, is there a book that has had a big impact on your life or way of thinking that you would like to share?

Adam: Sure. So, probably what stands out the most is a book called Blue Ocean Strategy. And the idea behind Blue Ocean Strategy is you don’t compete in red oceans of blood, which are based on competition and at a lowest price. And it essentially says, create something that’s different and better, that doesn’t directly compete with anyone else in the market. And so philosophically I think that sits well with us, and we don’t think the world needs another me too product. The world needs creative people who are making products that are different and better.

Matthew: Right, if there’s a Coke and a Pepsi, be Dr. Pepper.

Adam: Sure or become (35.37 unclear).

Matthew: Yeah right, right. Good points. Is there a tool, web-based or physical, that you consider vital to your day-to-day productivity?

Adam: You know, I think probably going back to a book. I read this ten years ago and I still use the principles. It’s Getting Things Done, by David Allen. It’s very tactical, but I’m still using what I’ve learned in that book. Also a big fan of Sandbox for email management, reminders, follow-ups, that sort of thing. It could be a bear if it’s not managed.

Matthew: Yeah, so what does Sandbox do for you?

Adam: So, Sandbox essentially can keep track of emails that you’ve sent that people haven’t responded to. You can BCC a reminder and say Friday at and it will send you an email Friday morning asking you to follow-up on something. It will automatically sort your email into things that are not a priority. You can do a separate box. It doesn’t distract you with promotional emails. It will segment that and separate them.

Matthew: Very cool. And Getting Things Done, I read that book a few years ago and enjoyed it too. And the one thing I keep top of my mind is open loops where I don’t want to… open loops is this concept that there’s this background chatter of decisions we have to make like what’s for dinner. Do I have to get my oil changed next week? How about this or that? All these different things that we have to take some action on at some point and trying to close open loops so our mind has more bandwidth, because as much that doesn’t seem like those are important things, our mind is still kind of thinking about them in some way and there’s this churning going on. Is there anything else from Getting Things Done that you use day-to-day as your most important go-to tools?

Adam: Yeah and in the concept that you just described. I think it’s described as mind-like water in Getting Things Done, which is to the extent that you can take all these things that are floating around in your head and put them on a list. You pull them out of your head, which means your head is then available to be totally present and work on things that matter, as opposed to worrying about what you’ve forgotten. So, I agree there’s some general philosophy and that’s solid. Other elements that I like do it, drop it, delegate it. If you can do it in under two minutes, do it. Drop it, which is throw it away, don’t deal with it, or delegate it to someone else and ultimately defer it. So if it’s a project that you do have to do, calendaring it or tracking it somehow to make sure that it gets done. It’s a healthy way to deal with when you’re looking at a big inbox or a bunch of emails.

Matthew: So, then you use Sandbox to say email me about this in 30 days and then it’s out of your mind.

Adam: They number one way I use Sandbox, and this happens all the time, you’re working with someone on a project and they have a deliverable in a couple of days or next week. Hey Adam, I’ll get back to you on Thursday. So I’ll just CC that or BCC it to Friday at with a little not to myself, have I heard back from Robert, and if I haven’t, I ping him. I follow up. Everyone else on our team is using it. It gives the impression that we’re on the ball over here and I guess we are, but the software certainly does a lot of heavy lifting.

Matthew: Now you raised some capital at the ArcView Group. Can you tell us about your experience there?

Adam: Sure, yeah. So, at RT we oversubscribed in November 2016 and even after we raised the round, I went to the next few ArcViews just because the folks that you meet there and the connections you have and the relationships you build are so valuable. I really like the format. I like the folks who are involved, and it’s something that I’m going to continue to attend, even though we’re not actively raising a round right now. We are looking for partners in various states to have the exclusive on our product where they become our licensee or our specific bottler in that state. So it’s just been a great environment to meet with our current investors and then also speak to folks who are prospective licensees or partners in other states.

Matthew: Do you want to throw out which states you’re looking for partners?

Adam: Sure. Again any of those 30 states that have a legal adult use or recreational program are potential licensing partner plus the District of Colombia. I guess, I think D.C. is a little behind, but most notably right now Colorado, Nevada, Massachusetts, really any other state that has a current medical program in place.

Matthew: Okay. Before we close, can you tell listeners how they can find Mirth Provisions and pick up some products or find you online?

Adam: Sure, yeah,, and my RTH

Matthew: Awesome. Well Adam thanks so much for coming on the show today and educating us. We really appreciate it and good luck to you and with Provisions.

Adam: Hey, thanks a bunch Matt.

The Royalty Investing Model is Heating Up in The Cannabis Industry

marc lustig cannaroyalty

Marc Lustig CEO of CannaRoyalty joins the show today. While other industries have benefited from royal investments this is something new to the cannabis space. Listen in as Marc details the benefits of royalty investments for both investors and entrepreneurs.

Learn more at

Key Takeaways:
[1:16] – What is CannaRoyalty
[2:05] – Marc’s background
[4:07] – Royalty investing and how CannaRoyaly fits in the investing landscape
[7:08] – Marc talks about the timing of CannaRoyalty
[8:52] – Timing on big investments in the cannabis space
[10:16] – What do entrepreneurs get from a royalty operation
[11:59] – Marc talks about his investments
[15:29] – Marc discusses managing investor expectations
[18:35] – Do current policies make investors nervous
[20:54] – Marc talks about how much capital they deploy
[24:59] – Marc talks about characteristics of a strong brand
[26:02] – Marc answers some personal development questions
[31:54] – Contact details for CannaRoyalty

Important Update: What are the five trends that will disrupt the cannabis market in the next five years?Find out with your free guide at

Read Full Transcript

Matthew: Hi. I’m Matthew Kind. Every Monday look for a fresh new episode where I will take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Now here’s your program.

Cannabis is getting sophisticated in borrowing the playbook from other industries such as mining and oil to create licensing revenue streams for investors. Here to tell us about it is Marc Lustig of CannaRoyalty. Marc, welcome to CannaInsider.

Marc: Thanks for having me Matt.

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

Marc: I’m in Vancouver today. That’s where my home is, but it’s also convenient given all the assets that we as CannaRoyalty own, that are either in Canada along the west coach or in the pacific west coast of the United States.

Matthew: Yeah it’s a good thing to be up there. If you’re down there, down in the states, you’re a semi outlaw. You don’t know what’s going to happen. It’s a roll of the dice to be in the cannabis business still. So I think you’ve picked a safe harbor.

Marc: True enough.

Matthew: So what is CannaRoyalty, for people who are unfamiliar with this type of investing vehicle?

Marc: CannaRoyalty is a company focused on aggregating strategic assets in the cannabis sector, which looks to create royalty structured returns for its shareholders. A royalty is like a hybrid of equity and debt where the royalty holder is paid a percentage of the sales or income of the investee company.

Matthew: Okay. So, I’m familiar with royalty, just not in the royalties, just not in the cannabis space. I’m a big fan and believer of some of the precious metals royalty companies like Franco Nevada and Silver Wheaton and been following them for a while. So, this is kind of taking playbook from another industry and applying it to the cannabis business so I’m anxious to unpack that, but before we do, can you give us a little bit of a background on yourself, both personally and professionally, and how you got into this business?

Marc: Sure. So I have graduate degrees in business and science, both from McGill University. I spent the first part of my career in the pharmaceutical industry at Merck. The next 12 years I worked in capital markets in North America and Europe. I was always focused in some way on healthcare and life science companies. In 2014, with the passing of federal medical cannabis legislation in Canada, I founded a private company called Cannabis Royalties and Holdings Corp, because I saw an opportunity to create something different than the standard Canadian license producer model that a lot of your subscribers would be familiar with.

So my thesis was that cannabis is a healthier alternative as a recreational product than alcohol or tobacco. So it can compete head-to-head with those types of products in that market, but the real upside to me and over and over that, which is already very attractive, is the unlimited upside that I see that can come from cannabis as the plant, which has never really had a chance to be researched or have had a chance to have modern, technological research applied to it. So when you start talking about the therapeutic advances of cannabis what’s where to me you see a lot more upsides. So the combined opportunity was really what drove me to found Cannabis Royalties and Holdings Corp.

Matthew: So before I mentioned how the precious metals industry and even the oil industry does some royalty operations. Can you explain and give some context on royalty investing in terms of how they do it and then talk a little bit in terms of how exactly CannaRoyalty is in the royalty space? Kind of compare the two but also get a context and a background.

Marc: Absolutely, and I think it’s the right context to provide, and by the way CannaRoyalty previously the private company being Cannabis Royalties and Holdings Corp was very much structured off of Franco Nevada. And so it works the same way in the mining or energy sector as it’s been working in the cannabis sector, although there are some differences obviously. For the company receiving the financing as a royalty it’s non-dilutive equity, and usually doesn’t have the same encumbrance that a debt would. For that same mining company or energy company, which is producing, let’s say, an ounce of gold or a barrel of oil, part of the sale of that product in the future is paid out to the investor in the form of a royalty.

So instead of that underlying company paying a dividend to its equity holders or paying an interest rate to its debt holders. The form or payback to the royalty investor is a slice of the sales or net income of the underlying company. The key variables are the same for all of these examples, which is what is the underlying health and reliability of the underlying business? What is the royalty rate itself? What is the term? So for how long is this royalty transaction going to play out? It can be a very short term or it can be in perpetuity. And what is the security that underpins the actual royalty should things not go as planned?

So from all of those perspectives, it’s identical investing in the cannabis sector as it would be investing in metals or energy-based royalties. The key difference would be really just a function of the period of time that we’re in. Mining and energy businesses are very well-known and have been being invested in for hundreds of years. Cannabis, not so much. So the fact that people are still reluctant to invest in cannabis for a variety of the different stigmas that we’re all aware of or because of the fragmented legal paradigms that exist between even Canada or the United States or other jurisdictions, there’s not a usual flow of capital that you would typically see from investors into the underlying companies, and that’s actually where CannaRoyalty has benefitted and played, I think, a very important role.

Matthew: And why is now the right time? I don’t recall coming across any other cannabis royalty firms or investment vehicles. Why did you feel now was the time to take the plunge?

Marc: Well, I mean, it’s really been two years. So it was first started in late 2014, but it’s still the same point, which is that to me it’s absolutely ideal. The timing is perfect because on one hand you have all of this growth and innovation of completely new products and new markets, but on the other hand, as I was sort of mentioning earlier, that access to capital has been constrained by the realities of the cannabis sector, whether that’s legally or because of stigmas that exist. So you have a thirst on behalf of entrepreneurs to access capital, but you have an unusual situation where that capital, either because banks won’t lend to the sector or because unless maybe you’re a Canadian licensed producer and you’re public, in which case you can’t access capital, the rest of the companies that are really just starting out or that are new or may just not have the experience in terms of raising capital are finding it difficult and that’s the gap that CannaRoyalty is looking to fill.

Matthew: Marc, is now the time to make really big investments in the cannabis space before the dust settles? I think there’s a lot of investors or potential investors listening that are thinking hey, I want to kind of wait until there’s more public companies where I can get more competitive analysis and real good information. All the ducks have to be in a row for some investors, but there is a certain amount of opportunity in an opaque market. Would you agree with that?

Marc: I mean, I believe it’s absolutely ideal. You know it’s the classic risk reward paradigm. But I believe because of the growth and progress in this sector has really just started, that you’re able to reduce that risk at the moment without commensurately reducing the return profile. So actually the opacity of the market is also helping a company like CannaRoyalty. I like to think that we give investors access to deals that they wouldn’t have a chance to gain access to on their own. And so from the perspective that these opportunities exist and they need capital yesterday and we’re there to provide what I think is an elegant structure in a non-diluted way to the end entrepreneur, it really gives our investors that exposure to a diversity of assets in a structure that I think is smart and also provides a lot of upside.

Matthew: And so for the entrepreneurs out there listening, what is the benefit to them in a royalty model? Why would they be interested in working with CannaRoyalty or another royalty operation? What do they get?

Marc: I think it’s a couple things. First of all, at a very basic level a royalty is non-dilutive to equity. And so if you’re really starting a business and you need capital badly, a lot people who are entrepreneurs end up regretting that they sold off so much of their company at such a low valuation only to see it flourish and them not own nearly enough of it as they would have like to. There’s also the aspect that debt carries with it, especially bank owned debt, would carry with it a lot of conveyance and a lot of restrictions that could limit their business.

So a royalty I think sits as a very nice alternative to both of those aspects. Over and above that, now I will talk sort of specifically about CannaRoyalty. I think that our model and our effort to be a partner with our investee company has played out very well. So not only are we providing a royalty financing but I think we’re providing a lot of other strategic advantages to our investee companies. We have every interest in making sure that our partners succeed. And to the extent that our platform gets bigger, we’re able to provide our partners with access to new markets or to other professional services perhaps where they wouldn’t have had access to those without us. So I think that the royalty model, especially from CannaRoyalty, provides an entrepreneur with a lot of flexibility and a lot of support.

Matthew: Can you tell us a little bit about some of the investments you’ve made today?

Marc: Sure, I mean, in a short interview it’s tough to sort of pick a few. I would summarize it by saying that we own parts of companies doing medical research in Canada such as (12.12 unclear), which is focused on the treatment of concussions using cannabis therapy. We own a part of a company in Canada called Anandia [ph], which is a leader in the area of genetics lab and testing expertise. We own real estate and infrastructure in Washington. We have a royalty on a processing and extraction facility in Oregon. We own a big cartridge company in California that’s doing exceptionally well. We currently have five of our own fully owned cannabis brands in the area of edibles, skin care line, animal health and various vaporization formulations that are our own proprietary brands.

We’re also in the process of closing a large investment into a leading distribution company in the state of California what we’re very excited by. I mean, in summary, we have 24 separate and unique investments. I would actually see this growing to more than 30 by the end of the year. In total we dot the map of Canada, the United States, Puerto Rico and I see us doing deals in Europe and Australia as well in addition to other states, particularly in the northeast like Massachusetts and Maryland are the areas that I see us adding deals to.

Matthew: Okay. And what’s the typical or average size of the investments?

Marc: The minimum investment that we’ve made of that 24 would be somewhere in the order of a half a million dollars. The largest would be about $5 million, exactly $5 million to date. The size of the investment is growing as we’ve grown. There are opportunities that we’re looking at now that are in the double digit million dollar investment range. And so I would say that the investment size is growing. There’s not a particular number that won’t work. Obviously it can’t be too small anymore because it won’t really have the impact that I think the platform now needs to keep growing, but generally let’s call it between a million and $5 million.

Matthew: Okay. And so, you mentioned the U.S. and Canada. Are they equally divided in terms of investments or are you a little bit heavier in Canada at the moment?

Marc: No. We’re probably heavier in the United States, at least by a number of assets. We are in the process of adding a fairly significant Canadian asset to that mix. Like I said, we’re also looking in some new states to add some U.S. assets, and in addition to that, I would expect by yearend to have other deals done, certainly one in particular in western Europe.

Matthew: Now let’s switch gears a little bit to investor expectations. How do you manage the expectations of investors in terms of the returns they can expect and anything else that they might expect?

Marc: Well I think a big part of it is first of all pointing out that we’re a public company. So in Canada we’re listed on the CSC under the ticker of CRZ. In the U.S. we’re listed on the OTC market under the ticker CNNRF. With being a public company we obviously have a number of disclosure obligations. And so financial reporting and compliance is a major part of that. In addition to that, I mean, our website I think is an excellent source of information for our investors specifically. Our business plan is dynamic in the sense that if we currently have 24 deals and we’re moving up to 30 deals, that can generate a fair amount of opportunity to communicate with our investors as to how those deals are doing or obviously the closing of any new transactions.

I think as a result of that, people either have or are going to start to get a pretty good feel for first of all, how we’re generating results or revenues or income. And then in addition, how they can think about what the return profile may look like from various of our investments or developments in our underlying assets.

Matthew: Now how does that work when you make an investment in a company that is in a state that’s not that friendly to out of staters like a Washington comes to mind?

Marc: That’s a good question. I mean I would point out first and foremost, the very highest criteria priority, from a criteria perspective, is compliance. So if there’s a state that we can’t invest in because of what you’re talking about, residency for example, then we don’t. Clearly that’s the end of that discussion. In Washington, the way that we structured our royalty transaction is that we actually finance the acquisition of property and equipment for a tenant who is the license holder, who is a Washington resident. And then in that sense our royalty structure looks and feels very much like a rate, as a way to work within the Washington legislation.

As you’re well aware, different states have different paradigms and so I think one of the advantages of CannaRoyalty has been to figure out in which states we can invest and then within that, which structures we can invest in compliantly.

Matthew: What does the current federal policy do to the risk in your business? I’m thinking particular in the United States. I mean, are you getting questions around Jeff Sessions being the Attorney General in the U.S. and does that make investors jittery at all? What’s your sense there?

Marc: Well absolutely current U.S. federal policy or whatever that is going to look like could present a risk to some of our U.S. assets. There’s no other way to say that. I mean, to be clear, we’re only invested in businesses today where state legislation supports the cannabis sector. We go a step further than that, which is that we don’t directly grow or distribute cannabis ourselves, so we don’t own any licenses directly.

We’re providing elegant financing solutions to companies that have IP or brands or different solutions for the cannabis sector. So we, as I said, focus on the compliance within the state and within the structure. Our hope is that either because of significant job growth or the obvious tax revenues or the economic stimulation that the cannabis sector is providing , in addition to the strong public support that you see across the United States, that there will be positive unification of federal policy with the state policy. I mean, even Jeff Sessions, a lot of the things that we think that he’s pointing out as being concerns, we share those concerns, whether it has to do with the transportation of cannabis across borders or whether it has to be getting higher restrictions around the young people who shouldn’t be taking cannabis, restricting the access to young people having access to cannabis.

I mean a lot of those things make very good sense. So our hope is that the federal policy aligns with the state policy and preserves the right of the state legislation to conduct its cannabis policy. I mean, clearly in other jurisdiction, such as Canada or Europe, where we’re particularly seeing a lot of opportunity, the federal policy supports the cannabis sector. So the risk there is minimal.

Matthew: And how much capital are you going to deploy? In other words, when do you stop investing? I mean as more capital comes in, do you find new opportunities, or how do you think about that?

Marc: I mean, we’re seeing more opportunities today than ever in the two and a half years that we’ve been CannaRoyalty. The opportunities today are more exceptional than we’ve seen. We have a number of different sources of capital to be able to provide bigger and bigger deals, whether that’s either internal funding or external. I mean, to date we’ve invested approximately $30 million. We’ve raised approximately $45 million to date. So we have ample capital to go and execute a number of new deals, which is obviously what we’ll be doing.

I mean it would be easy to stop investing and sit back and collect all the various streams of return from the investments that we’ve made to date and wind things up, except our view is that we’re taking advantage of a unique period of time in the sector right now where the growth and innovation is rampant. And we have a model that I think supplies the capital in a way that gives our investors exceptional return potential at a time, as I mentioned earlier in this discussion, other investors, whether they’re equity investors or debt investors just haven’t gotten around yet to being there. So we look at it very much like a land grab, if you will, where we can put these assets together still at very good valuations and eventually that will end. The market will become more competitive, certainly when federal legislation does change and you do see pharmaceutical companies or tobacco companies or alcohol and spirits companies coming into this sector. It will make the competition for the assets that we’re currently aggregating much higher.

It will make the asset values a lot more expensive, and that may be the time where we would be in a position to debate whether we should continue or not, but for the time being we see this as a really open field with a great model, and again being able to provide our investors with a lot of exposure to deals that they just wouldn’t be able to get access to on their own.

Matthew: Do you think as more competition comes in and the spirits companies, tobacco companies, pharmaceutical companies come into the picture and they have obviously access to capital, do you think you would find yourself becoming less generalist and more focused maybe on a couple different verticals within the cannabis space, instead of being across such a broad spectrum?

Marc: Absolutely. I mean, at that time I think our company would create a very nice solution for any of those larger companies. Having said that, our focus is very disciplined. I mean if you were to really synthesize down the types of investments that we have in our portfolio today, it would really come down to research, IP, intellectual property brands and delivery devices would be the areas that we’re most focused on. So we don’t and have not yet invested in any broad based cultivation play. We’ve stayed away from some of the more general aspects of the cannabis sector that we think are at risk of commoditization. And I think our focus will only continue to get refined in the areas of brands and devices and things that can sustain and increase their value as more product development and innovation happens within the sector.

Matthew: You mentioned brands there. What do you think the characteristics are of a strong brand that has enduring brand equity?

Marc: Well first of all, I think that it’s protection in the sense that it can’t be copied or made easily by anybody else is probably the highest end of that spectrum. Beyond that it really has to do with the impact at the customer level or patient level, whatever the case may be. And all of our products, we’re most focused on quality and effectiveness. And so to the extent that we’re able to provide that for our customers or the patients, we think that that’s the most enduring quality behind brand equity.

Matthew: Yeah, building the protective moat, as Warren Buffet likes to say.

Marc: Exactly right.

Matthew: Okay. So Marc this is a time when I like to transition to some personal development questions to give listeners a sense of who you are. With that, is there a book that has had a big impact on your life or your way of thinking that you would like to share?

Marc: Sure, I mean, I’m very big into climbing, mountain climbing. I’ve climbed some of the bigger mountains in the world, whether it’s in Africa or Asia. Later this year I’ll be climbing in South America. So particularly books about climbing, especially Everest, which I have not climbed and probably won’t get around to in this lifetime, but particularly books around Everest and probably the significant thing The Assent on Everest by John Hunt, have been the greatest diversions for me from a very busy business and personal life, but also very strong inspirations for one of the things I really like to do.

Matthew: Is there a tool, web-based or otherwise, that you consider vital to your day-to-day productivity?

Marc: I’m pretty old school. I can imagine that a lot of the people that you interview would have a really sexy app on their phone or computer or something. I hand write a list every morning of all the different ideas and action items that I need to follow through on every day. What doesn’t get done on one day starts the list for the next day. I’ve become sort of paranoid about leaving things undone on that list. So unless I get them crossed off, it’s a good way for me to start a new day to make sure that things get followed through on. So I would say that’s probably my greatest tool for my own personal productivity, but again it’s in the dark ages, but I’m comfortable with it.

Matthew: You know, there’s something to be said for the tactile sensation of a physical list where you don’t have to turn on the glowing blue screen to get the answer. So I can understand that, and there’s satisfaction in crossing it off.

Marc: Yeah, that’s right.

Matthew: One last question. You being a Canadian, do you find the only difference between Americans and Canadians is that Canadians are just a little bit friendlier? Remember we’ve got a lot of potential investors listening.

Marc: That has not been my experience. I think that North Americans generally are very friendly. I just spent a week in Europe where I can’t really say that was the case where I was in Europe. I happened to be in Germany, and I just think North Americans generally are very friendly. I lived in Europe for four years, in London, where certainly the European perspective is that there’s a significant difference between Canadians and Americans, but myself being Canadian, but having a lot to do and basically spending half of my time, if not more, in the United States.

I’ve got so many friends and so many people that I really enjoy and like who are American that I’ve sort of seen through any of those perceptions that there is a difference. I look at it as one large convent, and generally I’ve been lucky because I think everyone’s been quite friendly on both sides of the border.

Matthew: That’s good. That was a great answer. We should put that in a political case study for how you conflated those two together to appeal to your investors.

Marc: And if we’re speaking offline, I know a lot of assholes in Canada. So I don’t really see it the same way.

Matthew: One thing, my cousin fishes with a lot of Canadians, and back when cannabis was illegal, he did comment that he said, it’s cheap for us to buy beer, but in Canada it’s cheaper for them to buy pot and it’s expensive for them to buy beer. I though oh, that’s kind of interesting.

Marc: BC Bud, which I’m sure you’re well aware of, has been as prevalent here in Canada as (30.19 unclear), which are the two large beer companies, like Canadian fixtures. But BC Bud, if it weren’t for the fact it was illegal, it would have been just as prominent as either of those two brands.

Matthew: Now, one last question before we close. Do you know what the national sport of Canada is?

Marc: Since you ask and because of how you asked it, I’m going to guess that it’s not the normal ice hockey, which would be the easy answer. I’m going to guess it’s Lacrosse.

Matthew: Oh, he’s right. That was good. I was hoping to trick you there. I thought you might go for that… what’s that game where you push the large thing across ice. What’s that called, where they roll the huge thing and then they have a little duster in front of it and it’s going on the ice.

Marc: Curling.

Matthew: Curling, I thought you might say curling, but you got it right. It’s lacrosse.

Marc: Our roots are based in native as anywhere else. Really it’s all about native settlers and lacrosse was the game of choice. It’s not that much of a stretch. I don’t even know, as a separate topic, whether you call curling a game. If someone does, I would like to understand how they justify that sport I should say, but anyways, glad I got that one.

Matthew: Yeah. Good. Well, as we close, can you tell listeners the best way to learn more about CannaRoyalty?

Marc: Absolutely. As I’ve mentioned, I think our website is extremely informative and dynamic, and being updated regularly, especially for a company that’s generating as many different new developments as we are. So that website is There is a way for anyone who visits that website to be added to our corporate investor relations distribution list, which I would say would probably be the starting point for anyone who is looking for more information about CannaRoyalty. Once you’re on that list, like I said, you can expect as a shareholder to get fairly consistent updates. I mean we generate a lot of developments that I think keep the investor or prospective investor or even interested cannabis enthusiasts in the loop on different things that we’re working on.

Matthew: Great. Well Marc, thanks so much for coming on the show and introducing us to this topic of royalty investing. It’s really something of interest to me, and I think this sector is only going to grow as the whole industry grows. So good luck to you.

Marc: My pleasure Matt. Thanks a lot of having me and congratulations on your show. I can tell you I get a lot of cannabis related media or reporting for different types of services, and I think yours is at the top of the list.

Matthew: Alright, can’t hear that enough. Thanks Marc.

Savvy Cannabis Investors Pivoting to Markets Beyond North America

anthony wile cannabis colombia

Anthony Wile is the founder of The Wile Group. The Wile Group International is a value-added venture capital firm focused on powering private investment opportunities. Anthony talks about the cannabis landscape and why he is investing in South America cannabis companies.

Anthony has a keen eye for trends and has been remarkably prescient in predicting large tectonic political shifts and business opportunities.

Learn more at:

Key Takeaways:
[1:24] – Anthony’s background
[4:04] – Status of cannabis legalization investments
[14:56] – Anthony talks about when the conversation around cannabis changed
[21:17] – Anthony gives examples of cannabis legalization unfolding
[26:12] – What role will Big Pharma and Big Tobacco play in cannabis legalization
[32:10] – Who do the government regulators really protect
[37:45] – Anthony talks about equatorial locations being ideal for cannabis cultivation
[43:00] – Why is Colombia ideal for cultivation
[52:37] – Flower to oil trend over the next five to ten years
[1:00:17] – Anthony compares and contrasts Canada and Colombia’s cannabis market
[1:05:29] – Anthony talks about block chain technology
[1:06:23] – Anthony answers some personal development questions
[1:14:29] – Anthony’s contact info

What are the 5 trends that will disrupt the cannabis in the next five years?
Find out with your free cheat sheet at

Read Full Transcript

As the walls of cannabis prohibition continue to fall around us, many of us assume it was the grassroots will of the people that made cannabis legalization possible. However, there are many that see cannabis legalization in the world in general through and entirely different lens. One of those with a different lens on cannabis and the world is our guest today, Anthony Wile. Anthony has a unique and refreshing perspective on a variety of topics from politics to international cannabis opportunities. Anthony, welcome to CannaInsider.

Anthony: Thanks Matt. It’s a pleasure to be here.

Matthew: Anthony, give listeners a sense of geography. Can you tell us where you are in the world today?

Anthony: Well I live in Toronto, Canada, and I also live part time in Medellin, Colombia. Those would be the two primary areas of living, and also from a work perspective, the majority of my time and energy has been spent in the country of Colombia for the past few years, and I anticipate it to be similar moving forward for quite a long period of time.

Matthew: Can you give us a little bit of a background on yourself, both personally and professionally?

Anthony: Sure. Well, I grew up in Canada, and went to a university, studied business, all those things and graduated and went on to work. Spent a few years working in the Canadian financial industry with a couple of the larger banks, investment arms. Before moving on to establish my own brokerage operations internationally, which at that time took me away from Canada at a fairly young age. I was about 26-27 years old when I became a non-resident Canadian and started living internationally and focusing on developing business opportunities abroad. That transitioned into a lot of different avenues, I guess you’d say, over the years, in terms of living and work related situations.

I’ve done business in many countries around the world, in Asia and Europe and South America, pretty much all over the world. And lived in several different countries over that time, with my wife and children. We’ve spent a fairly international, I guess you’d say, we’ve had a fairly international life experience. I don’t anticipate that changing so much. However, it’s always been reflective of where in the world I see or perceive financial trends to be emerging . That would be trends with sustainability over a mid to long period of time. Where we as a group, business group I’m referring to, felt it made sense to try and get in front of such trends, and then where in the world from a top down perspective, it made sense to be much like in the cannabis industry today.

We’ve identified Colombia, as a country that would be among the top, and in our case, our opinion would be the top choice destination for building business opportunities. So destination and living arrangements and business arrangements for me and my family and my business associates has always been driven by where the best opportunities are to develop ideas over time. We are a private equity group, primarily, who spread ourselves not too thin. In other words, we get involved with no more than two or three ideas over a five to ten year period, and we put our time, our money and our energy behind those efforts. In other words we’re all in when we get involved in anything that we’re involved with.

Matthew: You were one of the early voices talking and writing about cannabis legalization investment opportunities. Where are we today in terms of the cannabis legalization investment story, particularly in terms of internationally?

Anthony: Well, we’re very early. If we were going to use an analogy, I guess I would say we’re somewhere in the early part of the first inning of a ballgame. This industry has a lot of curves to straighten out in terms of regulatory synchronization, standardization of products. On many levels, there are a lot of issues to be addressed and a lot of stakeholders with different perspectives that need to be listened to, that need to be brought into the fold when straightening out those curves in order to get adoption by a greater portion of society.

At this time, you can certainly see there’s a lot of regional development occurring in countries like Canada, for example, which you have to put at the forefront of innovation in this space. I would say Colombia is very quickly now moving in that direction as well, based upon their regulatory and legislative maneuvering. Then at that international level, if you look at what the WHO and UN and other related bodies, NGOs and others are doing in this conversation at this time and how they’re helping to shape the future of where this is going, it is truly an international discussion and one that will require international support in order for this industry to become a global industry that rivals what you see with any other heavily regulated industry, such as spirits, alcohol, those sorts of things.

So there’s a lot of change, a lot of turbulence in some cases, and a lot of uncertainty that comes with that. You really need to step back a little bit I believe and pause. In an article I wrote in the Globe and Mail about a year ago in Canada, that’s one of Canada’s larger financial papers, and in that article I cautioned investors at that time to take a step back. It doesn’t mean you can’t make money in the marketplace off of the emotionally charged environment that often accompanies early trends or emerging sectors. No different than what we saw with technology stocks in the 1990s, but that emotional, in some cases irrationality can be very painful when regulatory and legislative changes occur that can dramatically effect revenue projections or other related concerns that should be of a concern to any investor who are looking to invest on fundamentals.

At least from our perspective as a group, we’re interested in being involved in developing businesses that are fundamentally sound and are looking to the future, planning as best as possible with knowledge and real-time information, and think with the trends, where they’re headed. Not necessarily what they’re doing today in any given marketplace, whether it be Canada or Uruguay or wherever it may be, but looking at the global synchronization and what that likely will lead to, and we think most investors who are looking for their capital they deployed in situations that will be standing tall post-fallout of whatever happens. It happens in every trend you’ve ever seen in history. There’s always a bubble. There’s always emotional instability that leads to that bubble as irrational investors run into whatever story sounds the best today, tomorrow, with very little due diligence. That’s an historical fact.

I mean you just have to go back and look at any of the big bubbles over time, and most recently you can take look at the tech stock industry. You can take a look at gold in 2006-2007. There’s many recent opportunities for analysis of said activity, but again there is opportunity out there. I think it’s just a matter of letting the global community and the regional governments that are part of that global community to work together to try and shape legislation that will allow for this industry to truly take root in a way that is sustainable over the long haul in all aspects. Not just from a profitability perspective, but environmentally and socially.

Matthew: I think you’re definitely right about the bubble aspect of cannabis, especially cannabis stocks, but it seems like they’re kind of blowing up into micro bubbles and popping and then blowing up again into a micro bubble and popping. I’m still waiting for the huge bubble. Maybe it just needs to be federally legal in a bigger market like the U.S. at some point before that happens. I don’t know, but I’ve been kind of watching that with interest. Also to your point about narratives, how we as humans become kind of aligned with a narrative and then assume that narrative is right. Over and over again I’m thinking tech stocks in the late 90s and then the housing flipping going on in the mid 2000s and whatever will come next. It’s kind of the tulip mania of the decade.

Anthony: I couldn’t agree with you more, and to add to your point. What you said at the first part of what you just mentioned here about New York and the U.S. To me this is as obvious as the day is long that this industry… when I said earlier that it was in the early phases of development it truly is. When you look at the global commission for drug reform and who the people are that paint that tape, in terms of the members of that commission, you’re talking serious names in global politics, from the upper chambers of finance and business. These are not small people, and the essence of what they’re driving towards and what they’re pushing towards, with a lot of support from a lot of governments, especially those governments in Latin America, is to see a wholesale change in transformation and the way the war on drugs is dealt with and to go in the direction of legalization and control channel distribution.

When you look at New York and you look at the United States I could care less what happened with Donald Trump and the charade of Hillary Clinton and that whole thing in the recent election, but I was certainly paying attention to what was happening in Massachusetts and in California and those different states that were voting for legalization. And when you see a state like California, I think it’s the fifth or sixth, I can’t remember the exact number, but largest economy in the world voting in favor. Of course that’s contrary to federal legislation in the United States. I mean how much longer can this, and I’ll use the terms again, charade continue in the U.S. with federal prohibition when you have 22 percent, as of today, of the population living in cannabis legal states, and somewhere north of 60 percent living in states with some form of cannabis legalization, medicinally or otherwise.

I mean there’s a point here where this changes, and I hear a lot of people talking about Donald Trump’s choices for this or that and how that will affect the industry. And I look at this as a very simple matter. It’s dollars and cents and Donald Trump is a business person first and foremost, more than he is an evangelical do gooder, if you will. Not to say that there’s anything wrong with evangelical do gooders here, but the point is that is not him, and the reality is is that this is a business and a business decision and all they have to do is you look at Canada north, and you say Canada is in the middle of going through a legislative policy implementation program here to legalize their industry, and that’s going to be forthcoming, and when it does, does anyone really think that the United States under Trump or anybody else is going to want to see dollars heading north for the weekends and otherwise to access cannabis from states that border Canada, and that’s a big border, that don’t’ have cannabis legal states at that time, or the cross-border loss of capital from one state to another.

How much longer will you (11.54 unclear) their ski resorts suffer under the pressure of Colorado ski resorts picking it up from the millennials and otherwise who choose to go there because they can enjoy legal cannabis at the same time. I mean, it has an effect on many different stakeholders that some point in time, and I would suggest sooner than later but we’ll see, over the course of the next two or three years, I’ll be shocked if we don’t see a change in regulatory policy at the federal level in the United States. And it’s also not going unnoticed in New York. If you talk to any investment bankers in New York, they see what’s happening in Canada. They see the enthusiasm that the public has for these cannabis stocks, if you will, and Wall Street doesn’t like to be missing out on let’s say revenue opportunities. That’s just not their nature.

So there’s a lot of pressure, a lot of pressure to come that will in my opinion lead to a opportunity for companies to access capital in New York. I expect at that time Wall Street will do what they always do, which is drain every last ounce of sweat, blood and tears out of the trend, like we saw with tech stocks, and that means that this first inning warm up that we’re seeing in Canada will likely become replicated in the United States, and probably taken to heightened levels of enthusiasm even more so than we see here north of the border today. So for a lot of reasons, mostly due to just the realization that today there really isn’t a lot of speculative activity feeding the general market. Gold is fairly stagnant. It has it’s days. It’s up, it’s down, it’s a little sideways. Oil is relatively, let’s just say deflated, at least in terms of investor speculative interest.

Also because of its low levels of pricing today has affected people’s appetite for alternative energy at related issues. So on technology spot you wouldn’t call that a trend. You don’t have a lot of competing trends in the marketplace for investor speculative capital, and the only real bright spot you can see on the horizon, and that is showing itself to be very bright, is this emerging cannabis sector trend, and we’ve been writing about this now for, I don’t e even know now, three and a half years or so, from a macro level perspective, dealing with these sorts of issues, and that’s also what led us to decide to get into this industry and then of course the next question was how did we get in and what was the best way to position ourselves for what we believe was sustainable long term approach that would yield the kind of returns that we would be looking for in anybody who tends to listen to what it is that we’re talking about.

Matthew: A few years back you correctly saw there were voices from the power centers that were starting to reframe the conversation around cannabis. Can you tell us when you first started noticing that conversation around cannabis changing, and what in particular made you feel that cannabis prohibition was ending?

Anthony: Well, I would say that there were a number of things that added into that. There’s not a light switch that just flipped on at some moment in time. I will tell you though, it’s kind of funny, the first time that anybody mentioned to me anything to do with cannabis I got a phone call from somebody that I had gone to the university with and hadn’t talked to for years. I think they came to me through my LinkedIn account or something, and said, what do you think about taking a look at a cannabis company opportunity.

That might be four years or four and a half years ago, and I said, geeze I don’t know what you’re talking about. I have no interest in cannabis. I really didn’t give it any thought at all. And over a period of a month or two and whatever it was after that, I started to notice more and more information coming out about cannabis. I just thought of it as some radical subculture movement that was in the process of evolving, that would never get any real traction or find any support passed a certain level. And then I started really digging into it. We have a fairly deep group of talented researchers that work with us on an ongoing basis and we started getting into this and saying let’s take a look and really see, is there anything behind this?

It started to smolder a bit, is what I’ll say, in our minds. A little bit of smoke started to generate and before too long we started to realize there’s something to this. This isn’t just a bunch of guys that have been growing in their basement, trying to knock on some doors and get some low level municipal government people onside and all that sort of thing. Of course all that happened too, but at the same time, wow, there’s quite a serious push here happening around the world. Many of the larger think tanks and brain trusts that have been pushing this forward, and credit to them. I mean, they’ve done a great job, I mean, in terms of moving the Hegelian dialectic, in this case, moving those posts very quickly. More quickly than most would have thought, and myself included.

I didn’t expect things to move necessarily as fast as they’re moving in this regard, but it became very obvious that there were extremely powerful financial hands behind it, and I would go back to that Global Commission for Drug Reform. When I really started looking into that, and looking into some of the financing that was happening behind some of the larger policy organizations that were really pushing, I mean global policy organizations, and then started having some meetings on a personal level with government leaders in Latin America, which fortunately I have some very strong relationships at the higher levels of politics, that enabled a better understanding as to where the real stakeholders’ interests were and what the thoughts were on an international level, which included having meetings in Geneva with several people who have a great deal of knowledge of what’s happen within the UN and the WHO and other organizations such as this, so that we could get a really firm grasp on we thought at least became the outcome.

To make it very clear, we went into this analyzing this trend and what we thought might occur with the attitude, as we always do, let’s find the holes in this, and let’s see why we shouldn’t as because we weren’t doing anything really at the time, why we shouldn’t do something, which is how we always approach things is looking for the negatives, looking for the holes in the story or the reasons why there fundamentally isn’t as much soundness as it may appear on the front side of the painting, if you will.

What we found was that the brush strokes were actually much deeper and much crisper and much better than we had anticipated they would be. We discovered that not only is the trend very much alive, but this trend seems to be fairly unstoppable, and there were a lot of reasons for it that became quite clear over time. And today, clearly what we can all see is that the train has left the station, that preverbal saying, but it is the case, and it’s moving quickly, and it’s moving at an international level. Anyone that was at the ([19:17] unclear) in New York last April, which we did attend, and had a lot of very good feedback, good meetings. What we do know and we continue to have active conversation.

We have lots of people involved with us in Geneva, who are actively involved in what we’re involved with, and we try to stay on top of everything that is happening that could affect anything to do with legislative policy or standardization related issues, any of these sorts of matters, which are critically important to understand in this industry from an investment point of view and to manage your investment portfolio accordingly.

So that is what I would say. To answer your question, we saw that there’s a lot of significant power at an international and regional government level. And from international business men and women whose voices more than matter in the global conversation of where things are headed in any industry. So this industry is not one that we would subscribe to as being driven necessarily from the grassroots entirely, but we would certainly give a large amount of credit to the grassroots as well and what they’ve done to push this conversation. Because without the grassroots support, we probably wouldn’t see anything close to what we do see today. So I wouldn’t make it an all or none scenario. I would just say it’s nice to see that it is something that has the attention and the support of the necessary components that it will require and has required in order to advance the conversation and the direction that it will continue to move in our opinion.

Matthew: To many people cannabis legalization is happening as a response to decades of pressure from grassroots activism. What you’re saying sounds like you’re attributing much authority to those in positions of power. Do you have any more accessible examples of other situations similar to cannabis legalization unfolding?

Anthony: Wow, that’s something I haven’t thought about. I mean, I guess, no I don’t off the top of my head. An example that’s a direct parallel to this, I mean, first of all it’s hard to find a direct parallel. The only thing you can really come up with where you an existing industry that is black, if you will, that is turning white, I mean you’ve got to go back 100 years ago to the end of prohibition. Most markets of course, even the tech market of the 90s, I’ll even go back further than that. I remember in the cellphone industry, in the dawn of the cellphone industry when the presentations were being given and people were raising capital for it and there were hundreds of companies that were startups trying to become the next big cellphone company.

There were people that would be in the room that would ask the question of who would ever want to carry a telephone around like that. It’s true, but in the moment in time, I mean, it’s a viable thing to think about. Historically speaking, I mean you see where we are today, sounds ridiculous, but at the frontend of any trend that involves new technologies or innovations or whatever it may be, you first must do a market assessment as to what the potential market size of those products may or may not be, and that’s the first buy in that any investor has to have before your numbers of what your percentage of potential possibility of market share might be.

So in this case though that’s not the case at all. Everybody knows that there is a live and booming global market for black market cannabis, and that there has been one for many many decades. That’s a totally different situation than dealing with any new market that might come along. So to give you a parallel that could be even close to that is difficult. The one thing that makes this such an explosively powerful market from an investor point of view, I’m talking emotionally again, is the fact there is no need for a water cooler discussion or an explanation about what is the product. You say what the product is, and immediately okay, I get that. I mean, we understand what it is. That’s perfect.

That makes a very simple, easy, mass marketable trend, if you will, for Wall Street or Bay Street or any street that’s involved in the financial markets to gain investor interest, and you don’t need to convince anybody that that market is a very profitable market. Again I would go back to the fall of prohibition and say that much like that era, you have a lot of regulatory oversight that falls into play. You have a lot of synchronization of efforts that come into play. Just look at alcohol. Why is it when I get off a plane in Prague or in Canada or wherever it might be, any city in the world practically and I want to buy a bottle of spirits; vodka, rum, whatever it might be, why is it that they’re all pretty much capped out at about 40 percent? How did that come to be? Was it somebody just wrote it down and they all agreed?

The answer is no. These things, these standardizations occur over time, and it occurs with all kinds of input from all kinds of people and party stakeholders or otherwise; social, political, all those things. That’s the same kind of process that we haven’t really started really yet to any great extent, getting to in the cannabis space. So as we move forward, what I see is simply that there’s an industry here that has obviously garnered the support of very large hands, lots of investors around the world. There should be caution flags. I believe more caution flags than less along the way for people who are paying attentions. At the end of the day just like in cell phones, just like in technology stocks, just like at the end of prohibition, you’ll have a few large hands that likely will be predominantly in control of the market, just like you had with most things in the world, if you look around. I mean, that’s just the way it is and likely that will be the way it is in this industry as well.

So there’s money to be made and on the speculation that that’s what you’re looking for is just to speculate, chances are you can buy and sell and do fairly well in the emotionally charged environment in which we find ourselves today in what you see, for example, Canada. At least for our perspective, again I’ll come back to the fact that we’re more interested in being one of those few that are left standing longer term. That’s the objective, that’s where the real long term multigenerational wealth and value will be created.

Matthew: One of the trends I see as potentially happening is hybrid medications of cannabis or a compound of cannabis with the tradition pharmaceutical. What role do you see Big Pharma and Big Tobacco having in the cannabis legalization landscape over the next few years?

Anthony: Well I see a dominant role. I think your question about the pharmaceutical industry, I agree with you 100 percent. There’s a lot of people out there that actually believe that cannabis is going to change the way that the world works when it comes to what is medicine and how medicine is distributed, all those sorts of related issues. I would argue that that is fool hearty and I would suggest that cannabis will fit to the way that the world has structured itself, with respect to how medicines are dealt with, regulated and distributed and otherwise. And then you just take a look at who controls the majority of what fits on the shelves when you walk into a pharmacy somewhere to buy your medicines or your doctor prescribes it or whatever it might be. And what you find, of course, are that there are again what I mentioned a few minutes ago. There tend to be a fairly small number of very large corporations at the end of the day who dominate the landscape in any given sector.

In the pharmaceutical industry it’s no different. If anybody really believes that some little tiny company out of wherever it might be is going to boot Pfizer or Roche or any of these other companies off the shelf anytime soon in extremely valueable markets, I think that’s kind of a fool hearty thing to believe. I believe what you said, and I agree with that entirely, there will be pharmaceutical companies who will pull certain molecules from the cannabis plant and utilize them as part of the makeup of existing drugs, in many cases.

I mean if you look at a company that has seven years left on a patent for some specific medication that cannabis may be able to be beneficial in that particular sector, that market, that niche, if you will, it’s clearly in their advantage to reformulate with slight modifications and file a new patent around the new modification. The trend in the pharmaceutical industry is towards more of a buy it bio-pharma make-up. I mean, that’s obvious as well. That’s factual. It has a lower period of time to get to market for the new products. It’s less costly, but still very costly, and that’s the other issue here.

I mean, at the end of the day the FDA, DMA, Health Canada, all these different organizations, some of us may know what regulatory democracy is, and regulatory democracy, for those who don’t know, is really built on the shoulders of those large corporate interests that dominate the landscape in any given sector. The regulatory hurdles that are put in place are, yes, they appear to be very onerous for them and for anyone else in the industry, but the reality is they’re really putting barriers between themselves and anyone else who would try to become competition to them because they can handle the financial costs. They have the ability through their consultants and their lobbyists and otherwise to move things along through the process.

They also have the ability to make sure that other things don’t get moved along through the process that could be a threat or otherwise. So I don’t see anything changing in the medicinal marketplace, with respect to who it is that’s dominating the shelves or the prescription pads of the medical community at large, but I also, back to your point again, do see the pharmaceutical industry recognizing the power that comes from harnessing some molecules, CBD or THC or whatever it might be, from within the cannabis plant and incorporating it into some of their existing formulations or perhaps developing entirely new formulations. Definitely I would not be betting significant amounts of capital on companies that were professing to be the new drug company in the game.

If they are fortunate enough to take something far enough, I would suggest eventually if it’s a big enough market and there’s enough money in it, they’ll be swallowed up by that large pharmaceutical company anyway, which is typically how that works. And those are big homeruns. If you’re part of one of those, by all means, fantastic, but at least I know from our perspective, we’d be more interested in supplying the molecules than trying to develop the formulations ourselves.

Matthew: You had a great point there about how the regulators operate. It seems like the regulatory bodies in the U.S. government are not so much there to protect the consumer as they are to protect certain corporate interests. Perfect case in point would be the electronic cigarette industry, which recently the FDA said, you have to go through millions of dollars of jumping through hoops in order to bring your electronic cigarette to market and who does that leave standing? Only the companies that can do that type of thing. It wasn’t a simply submit that your liquid is not toxic. It was you’re going to have to jump through these huge hoops, and the only people that can jump through those huge hoops are the huge players, and the huge players are the ones that the big tobacco companies that can afford that no problem, and then all of a sudden it kind of turns into this olic-opoly. Sometimes I hear people say well, I won’t try this or that drug because it hasn’t been approved by this government body. And I just think to myself, gosh, this government body is not there to protect you. It’s there to protect these corporate interests, and the corporate interests make it look like they’re doing it for the good of the people is through this body. Do I have that totally wrong, or is it true somewhere in the middle?

Anthony: Well, I’m not going to comment on any industry specifically like in terms of names or whatever, like Big Tobacco, whatever, but what I will say is I think you’re 100 percent right. And again, regulatory democracy works in all industries, whether it’s banking. It doesn’t matter what the industry is. Those barriers and, I’ll call it, the wickets you got to go through to get to the post, using a croquet analogy here, is that if they really are designed to be difficult. Politics, and you just look at the political system and how the political system works and where the money comes from that elects the politicians and where the special interest groups, who has the lobbying power in all industries.

The industries themselves fight for more and more regulation, not less, because they can afford it. They design it in essence by lobbying and putting the pressures in the right way to get the end results you’re looking for, and it doesn’t matter what the industry is, whether it’s automotive or whatever it may be, those rules, regulations and the overall structure is designed to protect their Holy Grail. That’s human nature. When I say human nature it’s a reflection of human nature. I’m sad to say that. I’m certainly not someone that’s pleased, as a free market thinking libertarian, to say that that’s a good thing. When you said, and I agree with you, that there are many people that say I won’t take this drug or I won’t do this because it’s not legal, it hasn’t been approved. To me, that’s a sick mindset.

It is just the way it is. It’s the way people have become, through fear mostly, the fear of the unknown and the safety and the assurity the governments and related regulatory supposedly are able to provide and are there to provide. They buy into that, and it’s something that has become universal across the board. So, it doesn’t matter what we’re talking about, whether it’s global warming, climate change, all these different issues. Fear is the number one means through which people have succumbed to the regulatory power and the almighty state as the protector to ensure that whatever it is that they’re doing, if it’s been approved, if it’s legal, if it’s got the seal of blah-blah-blah, that I must be okay.

Coming back to this discussion, I would suggest that one side is reality and one side is perception. Perception oftentimes drives reality, and the perception of the public supports this structural system, so therefore it exists and it is able to continue to be beneficial to those who are the enablers of the system.

Matthew: Right. And not to bring up global warming, because it’s such divisive topic, but no matter what side of the global warming debate you’re on, if that can be a centralized and taxed event, then there’s people that can benefit from it. So whether you believe global warming exists or it doesn’t, the solution that’s proposed will benefit certain parties over others and maybe not create a solution that anybody finds useful, but just takes more taxpayer money into a cul-de-sac where you never have any actual results you can do anything with.

Anthony: You’re right, sorry to cut you off there, but I just want to say something. Global warming, it doesn’t matter whether you believe it’s right or wrong. It doesn’t matter what your beliefs are, partially right, partially wrong, however you want to view it. The reality simply is again, perception. What is the perception generally speaking? And you can go to your child’s grade four play at school and you’re going to see the polar bear falling through the icecaps. I mean, everybody is being indoctrinated, whether you agree or not, with the global warming discussion.

So you should deal with the perception being the reality because that is what we need to deal with, and when you get back to the regulatory hurdles and those wickets of croquet that you need to get through to get to the ultimate stake, at the end, by having a strict and heavily regulated environmental and social, we can go into that too, that’s another aspect of social responsibility and all those other related philosophical, if you will, areas of concern these days corporately. All of those wickets just bring that bar, that entry bar, that competitive bar and they put it higher and higher and higher so that again, the bigger, more better financed, systemically inbred, if you will, companies, who are dominating the various sectors, are never going to really be of threat of losing their Holy Grail. And even if they ever did, though really poor management or just being badly organized and operationally inefficient business, at the end of the day, due to the fact that they have such an important social role in society, in terms of employment or otherwise, they’re going to get bailed out. Whether they’re an airline, whether they’re this, that or the other thing, the governments just will not let their friends in need ever suffer, because the governments work for their friends in need.

Matthew: Yes, that’s true. You talk about equatorial locations being ideal for large scale cannabis cultivation. Why is that?

Anthony: Well it’s very simple. Forget cannabis for a moment and let’s just talk about flowers and the flower industry and much of the vegetative industry that we all rely upon for many of the things that need a natural life cycle and the right climatic conditions to be ultimately the more competitive environments to grow things in. You look at the equator and the countries around the equator, especially in the more stable regions of the world, politically and economically, like for example, Colombia and neighboring countries, Peru, Brazil, Ecuador, those regions. At the equator you have a natural 12 on and 12 off light cycle.

You have environmental conditions to go with it, climatically speaking, that provide you with, in some cases in certain locations, not all locations are equal at the equator. Clearly there are some that are too hot, some that are too high in elevation and therefore too cold, and there are some that are just perfectly conditioned and in the right elevation, with the right mix of temperature and other related factors for producing large scale flower production, regardless of whether it’s cannabis, chrysanthemums or whatever it may be. And on the equator, you have for example, just take Colombia itself. Almost 20 percent of the world’s production of cut flowers comes from Colombia. Over 80 percent of the cut flowers purchased in the United States come from Colombia.

Why not California? Why not Florida? Well, the answer is because they can’t produce as competitively, from a price point perspective and from an environmental perspective as well. That’s a whole other issue, but they can’t compete with that environment. You can’t replicate it. It is what it is. When you go a few degrees north or a few degrees south of the equator incur greater costs, electricity and otherwise. So when you’re dealing with ground zero being the equator, and for most people maybe they don’t know this, but flowers in order to go in and cannabis now, we’ll go into cannabis, like chrysanthemums, it’s almost identical in that respect. They require 12 on, 12 off daylight to night light or night time hours of an environment of such. So 12 hours of light, 12 hours of darkness. Now that is your perfect conditions for natural flowering, the flowering process.

So the only thing that you’re really dealing with power or electricity for, on a very low supplemental basis is the first three or four weeks during the vegetative state when you are not looking to flower yet the plants. When you’re just taking them from seedling to the desired height level and then of course literally turning off that very little bit of supplemental light that was used to trick the plants into maintaining themselves in a vegetative state and then you allow nature to do its job. So when you’re dealing with that sort of an environment there’s a natural reason, pardon the pun, why Colombia takes, as an example. Ecuador, as well, is a very dominant country in the flower industry. Other countries in the region are also obviously active in the region.

Together though, between the Dutch, Holland who provide a lot of the genetics and a lot of the background material that’s necessary in the flower business. I mean of course the Dutch, everyone knows how big and powerful and important they are in the global flower industry, but the Dutch in Colombia, I mean it’s like a highway system that’s been developed over 30-40 years here. Those two countries work together like a Swiss watch. Half of the greenhouse operations that I’ve visited, at least for example in the country of Colombia, have a great deal of direct or in some cases a little more arm’s length type of relationship with Dutch companies.

So when you look at that the Dutch, then why don’t they do it all in Holland? I mean, for the same reasons. They understand that there’s much better economies of scale and gains to be gotten through large scale production in countries that are equatorial positioned. It really comes down to cost and having nature do your job. And in a world that’s consumed with the consumption of naturally produced and environmentally friendly products, and when you can do it at a lower cost, those are almost no brainer decisions to make as to why you would be there. Like I said, the flower business is a multibillion dollar a year industry and why aren’t they growing the flowers that are supplying the United States in Florida and in California, instead of buying them from countries like Colombia, who supply 80 percent of flower market for cut flowers in the United States. It’s because they can’t compete economically at all, not at all.

Matthew: Okay so, you mentioned Ecuador, you mentioned Colombia. You don’t spend time in Ecuador. Why is Colombia specifically ideal. I mean I was there over the summer time, I really enjoyed it, both culturally, weather perspective, food, the people, very clear form of Spanish is spoken there, so it’s easy for a Gringo to pick up on relative to some other places in Latin America. Why is Colombia so compelling to you as a country?

Anthony: There’s a lot of reasons. First of all, I’ve been living and working in Colombia for 15 years. Everything you just said I agree with, and I would even bold it. Most people out there, I think the misconceptions that surround Colombia, once you’re there it’s kind of laughable. Look, that country is poised for nothing but growth over the next foreseeable future, many years in my opinion. I like what’s happening on the political front. I think we’re going to continue to see progress made in that country. I think everybody wants to see peace. It’s just a matter of what the final shape of that peace process ultimately is, and it’s a learning experience for all the parties involved politically.

When I look at that country I see a country that has proven itself to be the dominant leader in the flower industry in South America. It’s the country that has the most support financially from the United States for a couple of decades. It is the battering ram, if you will, against communism and leftist policies in Latin America. It is the more capitalist country, and America’s best friend in Latin America. So you’ve got a country that has an infinity. For example, for Americans, there is not a backlash against Gringos, if you will, that you would experience in other countries in Latin America.

Look, I’ve been in them all and extensively. I’ve done business in a lot of countries in Latin America. And for me, Colombia offers the best mix of all that is necessary to be able to truly dominate in this industry. Why not Ecuador? Well Ecuador, it’s interesting. Ecuador has the potential to be an important player in the global cannabis industry. I wouldn’t discount it, and I wouldn’t discount the potential for that country to proceed, but what I would say is Ecuador doesn’t have nearly the level of international stability in terms of what people perceive is necessary to invest large amounts of dollars in the country. It has shown leanings that have been more in the direction of Venezuela at different times over the past several years.

It doesn’t have the level of free trade agreements or the number of free trade agreements and established economic ties with other nations that, for example, Colombia does, which virtually has free trade agreements in pretty much every Western country, all of Europe, Canada and the United States, all over the world and has developed industries and particular an industry that’s relevant where you have the workforce. I mean (45.45 unclear) the Association of Flower Growers and Exporters in Colombia has about 130,000 people underneath that organization that are workers represented by the association in the various flower growers operations in Colombia. This is not small. I mean, it’s massive. When you look at the infrastructure and the experience, technological innovation this is not backwards production in Colombia. These are like the Mercedes and the Portias of the car industry.

They’re operations work with incredible precision, with planning and procedures and environmental issues, all those issues that we all talk about. These guys are leading in those areas. So you’ve got an industry with all the expertise, all the knowledge that’s necessary, excellent universities that are there to work in tandem with companies that are developing in this industry. And you’ve got ease of international trade. You’re sitting in a country that has two and half hour flights to Miami. Direct flights to Europe. I mean you have ease and accessibility and both coasts covered; Pacific and Atlantic. The only country in South America that has that. So you can ship products by ocean freight or otherwise, and that’s what happens across the board.

Colombia is in the middle of a boom infrastructure-wise that is really designed to connect. It’s all the rural regions that have in some cases have been suppressed because of economic investment due to their FARC involvement or other less than savory organizations that made it difficult for business to grow in some of these areas, very fertile areas. Areas that have lots of promise to develop agriculture or other related industries, but it’s the largest infrastructure development program in Colombia. One of the largest ever to occur in Latin America. All of the ports, airports, highway systems, road systems to improve transportation.

So the amount of money and the amount of resources that are going into that country is really quite impressive. And the foreign investment protection and other related issues to give investors the comfort that their money is safe in that country, they’re all in place at an international level and otherwise, you really have a perfect mix of environmental, social, climatic conditions and otherwise for this particular industry. Let’s not forget that Colombia has certainly got a past with this plant that isn’t new. I mean you go back to the 60s and the 70s, it was one of the big three out there in the world, as far as its reputation is concerned, as a high grade, high quality cannabis production region.

I would suggest that the only reason it didn’t keep pace with the rest of the world, maybe in terms of its legacy in that regard, not that it was a good legacy by the way, so let’s not call it that it was. So I’m not trying to put a positive light on that. I’m just simply saying, and I won’t use the word indigenous because I’m not so sure what an indigenous strain is in cannabis, unless you go to the Himalayas or what have you, but I would suggest that, there are strains that have been there for a hundred years or more that have been cultivated. So, now I guess you would call them somewhat native strains, and there are hundreds of them. It’s a treasure trove to be discovered of opportunity in strains with that country.

So with the support coming in, also internationally from the post peace process agreements that have been struck with different governments to support the transformation of Colombia in these areas that need the help and the support, there’s about a billion-three dollars worth of capital coming in. United States I think is $450 million. European Union is three or four hundred million Euros or whatever it is, but the point is it’s a lot of money and these very same countries are very unlikely to put up doors that bar products coming from Colombia in a legalized, international environment for trade, which is forthcoming in cannabis without any doubt. And as that, it does occur, at least I believe and we tend to believe, those who are working with us that Colombia will receive a great deal of empathy and that the doors will be opened, because there’s no country in the world, none, that has suffered as much as Colombia in the war on drugs.

There’s no country that deserves more for its people and for the country itself if there’s going to be a legal scientific and medicinal marketplace developed around the world, and for these products to move around the world, there’s no country that deserves more the opportunity to participate to help rebuild and to help ignite these areas that have been so dramatically effected through the war on drugs. That’s why Colombia is it.

One more thing I would like to add to this about the equator. If you look at the equator and draw a line around the world that would pick up a map or take a look, what you’re going to see quickly is, and you can just put an X over the nations in the South East Asian marketplace, because they’re pretty heavily Muslim populated. The Muslim countries are not buying into this industry at this time. Look at the Philippines, I mean quite the contrary. There’s lunacy, what’s going on in that country with respect to how they’re dealing with the drug issue. So none of those nations over there at this time make any sense from a developing of this business perspective. If you look at Africa, you’ve got a couple of countries that are trying to get their feet on the ground and grow and develop themselves from an infrastructure perspective to compete in the flower industry.

Forget about cannabis, but just the general flower industry. Over time you could see some of the African countries developing themselves in this industry as well, but today they just don’t have what it takes to literally plug and play and get going, where only a couple of countries really do that are positioned like that. Again that comes back to Latin American nations and Colombia is the obvious leader in this discussion, when you put all of the issues on the table.

Matthew: So to kind of crystallize your thesis here, are you saying that in the beginning, we’re in the beginning chapters, beginning innings here, generally a lot of people aren’t going to make money in the first few innings, but like all industries, as they mature, we’re going to move to lower cost producers who can do things in mass and scale and bring down their cost dramatically, wherever that is in the world, it’s going to move into a slightly more commoditized phase and perhaps even then get away from the flower itself and maybe start getting into oils, as looking at it cost per milligram or something like that, milliliter of oil. Is that the general trend you see happening over the next five to ten years?

Anthony: Those are a lot of specifics but yes, generally speaking it is. I’ll go back to Colombia again, and I don’t know if you know this or not, but just yesterday the Colombian government, President Santos signed the decree that now paves the way for and sets forth the rules of the road for the industry. This is the cultivation side, and that just happened, literally. So this industry in Colombia I can tell you has been designed around with an only oil focus. There is no ability to produce flower for the purposes of end supplying flower. That is not the industry at all in Colombia that they can complete. A complete approach towards standardized oils, extracts and related products that can be made from said extracts and products.

We firmly believe that that is the future of the industry. Anyone that really believes that you’re going to have the support of the world and World Medical Association and the subsequent medical associations and thus there the doctors who do definitely take a strong lead from their associations and as a peer group would not endorse and will not endorse on rolling up flower and smoking it. The carcinogenetic effects and otherwise that have affected the tobacco industry and of course will affect the flower industry. Carcinogens are carcinogens. It doesn’t matter whether you’re sitting next to a fireplace and someone’s making a fire and you’re inhaling them or whatever it might be, they are dangerous and they are extremely unhealthy obviously, without getting into that. We all know why, and it’s just a matter to what extreme they really are causing all those damage, cancer and otherwise, but we do know that they are horrible for our health, and they are not something that will be endorsed.

Look, when you get into that part of it that’s one obvious. The other part of it is simply the standardization and governments, regulators like to standardize. It’s just part of that whole regulatory wicket structure we just talked about. And so you can’t standardize flower. It’s just impossible to be specific, but you can standardize oil. You can standardize it and you can refine it to specifics to meet whatever those standards are and in some cases it’s companies to set those standards. That’s another point is the UN and the WHO and these organizations take their lead from private sector. They don’t sit in a box and say these are the new rules, now go do this.

What they do is they work together to pay attention and monitor and in some cases participate in the planning side of thesis, the things that may work and may make sense, but then it’s up to private sector to take those forward. And it’s always good to have the international organizations and the powers that be, if you will involved in the planning side of any of these sorts of standardization movements, but those standardizations, once they’re proven out to be able to be carried forth and they’re tested, subjectively or otherwise and all of this data and research and the necessary peripheral support that is required in order to endorse or get behind, structural changes or standardizations in the industry. As that all occurs, that’s when you’ll see these industries become more in sync and the move towards certain types of ways of producing and what you’re actually producing become commonplace.

Now in Colombia the government has recognized that that is the future of the industry, and we think that they’re dead on right with that. And as a result, they prohibit anything to do with the production of cultivation of cannabis, unless it’s for the purposes of manufacturing it into standardized oils and at a very high level. So you’re not going to see an industry develop in that country that reflects the Cheech and Chong days of the seventies. You’re just not going to see it. We’re going to see something here that is leading the world from a technological and innovative perspective and one that maintains its bearing and its focus at all times in that direction.

Matthew: Your emphasis on the standardization of oils has my wheels turning about once we have standards in place that maybe international community starts to look at is hey we agree with these standards. Does that open the door then for creating derivatives options, futures, swaps and those type of things on oils where I can say hey, in three months I want to buy this grade of cannabis oil at this price, and someone will sell it to me, allowing for businesses to have some predictability in their input cost and so forth and hedging and so forth. Do you see that happening and if so, do you think that would happen in a place like Colombia or more in a finance center like London or New York?

Anthony: Well I certainly see it happening, and I also don’t see it happening in Colombia. I mean production yes, and the ability to participate in that market, yes, but I believe those are New York, London and other related financial centers, and it will happen. I want to clarify one thing here. There’s a difference between just saying oil, to this standard oil, to that standard and then of course branding and what premium oils or subpremium oils look like. I think molecules are much easier to regulate in such a fashion and to design financial instruments around, such as for example, CBD, the molecule itself or certain other molecules that could be commoditized in such a way.

Hemp oil could be very easily commoditized to meet certain standards. And then yes, you can deal with oils in that way of all types but there will always be… if you believe that there will eventually be, and I’m one that does, I’ll fall into the Richard Branson camp on this one, that eventually we will see, much like with wines, much like with other types of things, that there will be an adult marketplace and that it will reflect stories. It will reflect history, that it will reflect local passions of the vineyard and venture who is making these wines and whatever it might be. That becomes your branding. So those are not something that I see as commoditized products that would fall into that camp, but I do see general oil. Oil that could be used by companies that are making beverages or whatever it is, finished goods producers that need to be able to ensure that they can access oil at a certain price so they can plan properly in developing their end products.

I think it’s an important part, as it has been proven in any business, in any sector that there are people willing to facilitate that futures market, if you will, for the provision of said raw material, if you’re viewing it as raw material. Finished goods will always be a marketplace I believe for well-branded, well-marketed and well-positioned products, consumer ready products that probably won’t fall necessarily into that camp, but there’s a large market that will. So yeah, I agree with you on that 100 percent.

Matthew: Good point. I think the hemp oil or hemp in general does seem a better candidate for that. Less of a focus maybe on terpene profiles and so forth. So yes, I agree with that. Now I want to pivot to Canada. Just give us a snapshot of what you think is going on in Canada. Maybe contrast it a little bit to the United States and Colombia and your general thoughts and feelings about the Canadian market in terms of cannabis.

Anthony: Well, I would be happy to do that. I think there’s going to be several companies in this country that will do very well over the long haul, and I believe that those are the companies that are savvy enough and recognize that the best way for them to develop their businesses is to have a hybrid structure. One in which cultivation, the low cost, environmentally friendly cultivation can occur and does occur as part of their supply chain in countries like Colombia, for example. Because if you look at the oil market, that’s going to be, and it is, becoming quickly the focus of most companies in this business who see where things are headed. The question then becomes what’s the cost of that end product going to be for me.

If your cost structure is 50 or 60 or whatever it is, times more expensive for that feeder stock cannabis, the flower itself that’s needed to make the oil, your entirely uncompetitive against the guy next door who decides I’m going to source my flower that has been processed to a certain point into oil, and I’m going to bring in that oil and I’m going to then fine tune that oil in my facilities for my domestic market and supply the domestic market and focus more on the finished goods side of the equation. Focus more on the end products and developing that oil into whatever it is that fits for their given market.

There is where you’ll see, I believe, the strong survive. I think those who fight against that and are determined to anchor their cultivation strategy in a country that is just not climatically suited, other than seasonally, for large scale production of cannabis, I think they’re the ones that will fail. The ones to me that make sense are the ones that will look abroad, will strike the right distribution relationships, the right partnership kind of structures, bring in that oil and then finish there.

That leads to another topic which is this nationalization wave that’s sweeping across America and in many countries. There is much to that. No one is suggesting that it’s an all or none in a country like Colombia or Ecuador or any other. I mean you can build a factory, a high quality CGMP processing facility in any country and the costs are going to be relatively the same with that facility. You can make it a smart building in Canada, you can make it a smart building in Prague. You can make it a smart building wherever you want to make it, and your cost of human labor, when you’re talking about a scientifically driven and medicinal grade facility, it’s going to be the same more or less wherever you are. There’s not going to be any dramatic effect on your bottom line cost when you’re dealing with that level of expertise. You’re going to pay for what you get and get what you pay for.

So you need great human resources to really run the type of business we’re referring to. So what I would suggest is likely to occur over time is that you will have producers, if you will, who are going to focus more on their end of the marathon where they can really take for their domestic markets and for other markets as well where they’re also involved to do the finish goods processing. Then you can see, for example, a situation where you can have a Canadian company that is able to brand the products as long as they meet WTO rules and regulations for what must be done in order to meet said capability for marketing something that’s a made in Canada product, but you can have made in Canada products that have a certain component or certain amount of the processing in finished goods manufacturing occurring here, employing high quality jobs with nice wages and all those things and let the lower cost, so to speak, cultivation activity, which means a lot in these other countries, in Colombia and these sorts of countries where there’s immense poverty, which doesn’t go unnoticed at the UN level as well I would add.

That’s also a big part of the thrust of what they’re always willing to support, are countries that are helping lift people out of poverty and create employment. Well this type of employment in countries like Colombia where the average monthly worker is making $400-$500 a month working really hard and very productive people. Obviously you can’t compete with those sorts of numbers when you’re talking about labor. But that all adds in to the finished cost of the cultivation. So I see a finished goods marketplace where Canada and the Canadian companies that are smart and strong have aligned themselves to be able to access the components of the supply chain that they just can’t compete from a cost perspective in their domestic markets, and hybriding that into their existing structure and that’s where I see the market going.

I think the other ones I will say will be great shorts at some point in time in the future. Today I wouldn’t short any of them because as I said earlier in the call, there’s a great deal of emotional enthusiasm behind what’s driving this Canadian marketplace at this time.

Matthew: Before we close, I have a couple more questions for you. What do you feel about block chain technologies in general like Bit Coin, and do you think there will be any overlap or disruptions maybe to the financial industry or other industries, including cannabis with the block chain?

Anthony: Well I’m for any form of competing currency. I’m a person who has spoken out against, what I call, the manipulative control of our monetary systems for many, many years. Therefore I support any efforts that compete and bring private industry initiatives to the table, and I would suggest let the market determine for itself what they would choose to use or not use as a form of trade or savings, wealth protection, what have you. And if that includes in some way, shape or form being part of the cannabis industry or otherwise, great. But other than that, I really don’t have much to say on it.

Matthew: Okay. I like to ask personal development questions to help listeners get a sense of who you are personally. Is there a book that has had a big impact on your life or way of thinking that you would like to share with listeners?

Anthony: Well the book that would have the most impact on me would be the first, what I would call, real book that I wrote. And that would be because that was a learning experience that involved reading many books and spending many hours with many great thinkers who I respect a lot. But outside of my own personal experience, and that book is called High Alert, for anybody who wants to look for it. You can find it around the internet or what have you.

Harry Brown was like a father to me. Harry Brown, I don’t know if you know who that is or not, but he was a New York Times number one best seller. He ran for President of the United States twice as a Libertarian. Just a tremendous person, wonderful person. That book, How I Found Freedom in an Unfree World, is timeless. Anybody who picks that book up and reads that book and can say that it didn’t affect their lives, either didn’t read it or they’re lying. I mean it’s a fantastic, fantastic book and I would urge anybody to read it.

There are many great thinkers and many great books that I’ve enjoyed reading over the years, and I’m an avid reader. I love history, and I like in particular to follow free market thinking history and read more Libertarian and an Austrian economic type of material. It certainly has inspired me and helped frame my way of thinking and how I look at world markets and trends and what’s evolving in front of us. So that would be my answer to your question.

Matthew: You know there’s a lot of people that don’t have exposure to Libertarian philosophies that listen to the show. We usually get people that fall into kind of the left/right paradigm that don’t have… and we’re kind of cattle chuted into being either for the red team or the blue team, and we don’t hear alternative narratives, and I think you have a really good way of sometimes stripping away the hype from topics and looking at actually what’s going on behind the scenes. If you were to kind of, maybe in a few bullet points, just kind of talk about what that philosophy is for people who are familiar with it, because sometimes I think the way it’s portrayed in the press is that Libertarian philosophy is this fringe, weird thing. And in many ways, I mean, the founding fathers of the United States were much closer to, I would say, the classical Libertarian philosophy, Austrian economics than modern left/right paradigm.

Anthony: Well you’re 100 percent correct. They were. And modern left/right is, again, it comes back to that whole structural system. Even our political system reflects a two-choice system or a few choice system. In this case, two, which is replicated around the world. But look, it’s really quite simple. Libertarian philosophy is I guess you would say socially liberal and conservatively fiscal. Meaning that Libertarians believe you should stay out of your bedroom. It’s none of your business what I do with my life, as long as I’m not bothering you, leave me alone. It doesn’t have anything to do with disrespect for morality in its essence of you shouldn’t murder, you should do this.

Of course not, everyone understands there are rights and wrongs in this world. Libertarianism just leaves it up to us individuals to be personally responsible and bear the responsibility for your actions, whatever those actions may be. But to be responsible for the decisions that you make and whatever those decisions are they affect me and my body, and whatever I choose to do in this world, they’re mine. It also has a lot to do with the… that comes back again to, the ability to use whatever you choose to use as currency. I mean, if I choose to trade my cow with you for your horse, I should be able to do that without somebody standing in the middle and taxing me on that transaction, or someone else demanding that I actually use dollars to make that transaction so it can become a taxable event.

Currency, the way the monetary system is structured, the infringement across the board on our civil liberties, all of that runs counter to Libertarian philosophy. Libertarians believe in living together in harmony, but living and allowing and respecting your right to be who you want to be, whoever that is. You may say something I totally disagree with, but that’s your right to say that. You’ll find yourself extricated from social circles because if your opinion is one that is offensive, people just will stop associating with you and you will find you will suffer through the realities of human interaction. You don’t need that people regulate, for example, hate speech. I would rather know, by the way, if somebody has something to say that I consider for me at least offensive morally, and that’s again to be derived I believe by your own self what you define as your own morality, what you’re willing to accept and not accept.

At the end of the day I would rather know what people are thinking. Maybe we wouldn’t be in such a situation as we are today with “this terrorism thing”. If we knew more about what people actually thought rather than trying to regulate people to keep everything in their minds and be bottled up and create your free speech zones in certain places where you’re allowed to talk under monitoring and powers that be oversight. I mean it’s all ridiculous. So Libertarianism is focused on transferring more power to the individual, less power from the state and really respecting that the government’s role on behalf of the collective should be to protect those civil liberties. That also leads to the big discussion about war.

Again, if you start with the individual and the right for an individual to live their life the way they like it, you may not like how I live my life. I may not like how you live your life, but I’ll respect your ability to do so. You respect my ability to do so. And the big thing about democracy, and America is a Republic, so a constitutional republic. So people should stop calling it a democracy. That’s a bastardization of the reality of what the founding fathers created, and a democracy works counterproductively against the individual because 50+ a little bit of a percent can choose to enact rules, regulations and otherwise that run against my interests, and that is completely anti-libertarian on its face.

When you look at wars around the world clearly we all know we need to have as group, as a country, as a people, wherever we are, however we’re centralized and whatever nation we are, that we need to have the ability to protect ourselves against those who don’t respect civil liberty and individualism, and therefore a strong defense is your best offense. But when we start becoming the soothsayers of democracy all over the world, the ones running around trying to impose what our views now are of how others should live their lives and what they’re doing, whether we like it or we don’t, and of course that’s the we don’t like it side of the equation. Opposing governments and all these other things that have happened around the world. All we’re doing is running it further and further away from what the founding fathers of the United States created when they created the Constitution of the United States. And libertarianism is much closer to the realities of what the Jeffersons of the world and others thought, felt and believed. Very intelligent people, when they drafted what they drafted and subsequent documentation around that era that protected our liberties and gave us the blueprint to maintain a high standard of living on an individual level with a collective relationship that really set rigid boundaries on where the government began and where it ended. So that’s my answer to your question.

Matthew: Well, that’s great. I think this will be something a lot of listeners perhaps has never been exposed to or heard anything like you just mentioned before. So I appreciate you giving that information. Is there any way that listeners can follow you online or keep track of what you’re up to?

Anthony: Yeah they can. I don’t charge for anything like this. So whatever I do publically-wise. I post, generally speaking, up to a website called I don’t do this often. I’m really, quite frankly, very busy. I stopped publishing basically about a year and a half ago more or less on a fairly regular basis. I still do pieces once in a while for Huffington Post. I’ve done a few and different papers around that are interested in the cannabis story because it’s mostly about that that I’ve been writing. However, I’m also involved in real estate development in Colombia and other grassroots private equity kind of things on a personal level. So we do do some of that.

Occasionally I’ll write or do a show like this about those sorts of topics, and I do love by the way discussing issues and it’s a passion but it takes time to really love that and live that passion. I’ve had the pleasure of doing that for a lot of years and now it’s just as I say. I’ve just become so occupied and so busy with what we’re developing in Colombia, and I want to make a disclaimer here because I think it’s important. I do have a very large financial interest in Colombia with a company that is licensed. I won’t say its name because it’s not necessary, but I just want to make it clear so there’s no misconceptions out there. I do have a financial interest and I think I’ve given the reasons why I like and in our group at least at (1.16.15 unclear) why we like Colombia a great deal in this space. So a disclaimer on that. But would be the main place I would say for that. In the future there will be… there is something we’re building now as a new platform for Colombia focused publishing by the way.

So it’s a business related publishing effort, and when that surfaces in the next couple of months, I will take a chief editorial role with that voice for sure.

Matthew: Well, Anthony, thanks so much for joining us on the show. Again, that website is and the book is High Alert. I assume that’s on Amazon?

Anthony: Yes, I think so. I’m embarrassed to say. I’ve written a few but I don’t know. But if anybody wants to find a copy of that, you can download it from I believe it’s there for free. I think there are four or five books that I have written there that you can pull down and again there’s no charge for that. I’m pretty sure they’re there. You might also find them at the That’s a business that I’ve recently transitioned to, a new corporate branding, but the site is still live, and that’s just called And at either of those two sites, all those books I’m confident are available for download. As I said, I haven’t looked at them in a while.

Matthew: Well Anthony, thanks again and good luck to you in both Canada and Colombia.

Anthony: And good luck to you, and thanks for the invite to be on your program. I think what you’re doing is fantastic and you’re providing a great educational service to your listeners and congratulations.

This Stunt Man Couldn’t Find The Perfect Vaporizer So He Created His Own

seibo shen

Seibo Shen is the co-founder and CEO of VapeXHale.

A former stuntman Seibo began a crazy quest to find the best vaporizer. After trying hundreds of vaporizers he finally gave up and decided to make his own. He posted his plan online and got over a million views to his site that documented his quest to make the perfect vaporizer. The end result is the VapeXhale.

Hear about Seibo’s quest and why athletes from MMA and the NFL seek his advice on how to effectively use cannabis.

Key Takeaways:
[3:27] – What is VapeXhale?
[5:07] – Seibo’s background and starting VapeXhale
[10:01] – Seibo talks about his high-tech career
[13:30] – Seibo talks about passion in business
[17:33] – Seibo talks about his blog that started the VapeXhale journey
[18:57] – Developing VapeXhale
[26:11] – Concentrates and VapeXhale
[31:58] – Seibo talks about working with athletes
[42:01] – Tweaking cannabis for athletes
[46:55] – What sports benefit most by using cannabis
[49:29] – Seibo answers personal development questions
[1:00:40].0 – Contact details

Learn more about the VapeXHale and get a discount at:

Read Full Transcript

If you’re like me, you look out into the marketplace and see an ocean of vaporizers. However, there are few that really stand out. One company that goes to a near obsessive level, producing top of line desktop vaporizers is VapeXhale. I am pleased to welcome Seibo Shen, the Co-Founder and CEO of VapeXhale, to CannaInsider today. Welcome to CannaInsider Seibo.

Seibo: Hey, thank you for having me. I’m very excited to be here.

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

Seibo: We are in San Francisco, California. That’s our headquarters, and yesterday we were in Los Vegas, doing something called the ASD Show, which is the world’s largest retail show, and it was one of the first that wasn’t a cannabis oriented show. So we were really happy to represent our company there.

Matthew: Cool. So that was like a general technology-type show.

Seibo: No, it was actually… ASD was for retail. So believe it or not, they had a little bit of everything for everyone. There was furniture, clothing, just knickknacks that you could import worldwide, but most importantly, they started doing what they call Culture Plus, which I guess was euphemism for cannabis, without saying cannabis.

Matthew: That’s funny. That’s a funny way of getting around that.

Seibo: Totally, and what was interesting was, and sorry to go on a tangent, is they had things that would be in a gas station, and then they had things that would be in the highest end head shops. So anything from (1.56 unclear) to male enhancement pills, all the way up to $20,000 Quave bongs. So, it was just really interesting to see such a wide variety of people, with varying levels of knowledge of cannabis look at all these things for the very first time and listen to us talk about why our vaporizer and our technology is head and shoulders above others.

Matthew: I like how you said male enhancement pill there. Wonder what you mean by that? Could you elaborate? I’m just kidding, but I do always ask when I’m at a gas station, I always ask the cashier, I say, you got a lot of knickknacks all over by the corner here, the counter, what sells the best? I’m just curious, because they have so much stuff. It’s like right there, it looks like for a reason. I’m just curious, and they’ll tell me. It’s just interesting to understand the patterns of what people want.

Seibo: Yeah, I mean, what’s even more interesting is I went up just to see what the sales pitch was and the first thing the guy says is, you know the male erection is a very complicated thing. I almost walked away at that point, but I listened to the rest, and it was your regular kind of sales pitch about how the ladies would be more attracted to you, more satisfied and ultimately why you would be like the hero of your own movie.

Matthew: Oh wow, they really paint a picture there. That’s good.

Seibo: Absolutely.

Matthew: Give us a really high level view of what VapeXhale is, so people can understand.

Seibo: Yeah, absolutely. So just a high level overview. We really tried to designed a vaporizer that was really optimized for not only the health aspect of vaping, which most vaporizers do, but also to put an emphasis on the user experience. And what I mean by that is the flavor, the smoothness of the vapor and the efficacy of the activation level and efficiency of transferring the cannabinoids from a solid state into a gascious state. And because our methodology or our ideology was to create a vaporizer that really promoted a really high user experience, we ended up finding out that many of our customers tended to be very aspirational people, people that were in the top one or top five percent of whatever field that they were doing, whether businessman, artist, athlete.

Through that we were able to meet a lot of high performing individuals that were utilizing cannabis to improve their life. And we’ve really kind of settled on this mantra of promoting responsible cannabis use, and trying to help people utilize cannabis in a positive way that doesn’t take away from their lives but really enhances it. And we like to call, it’s not a pro-cannabis company, but more of a pro-responsible cannabis use company. And that is all the way from how you use it to how you’re ingesting it.

Matthew: You have an interesting background. Can you tell us a little bit about your background, and then why you got so obsessively involved--I say that in a good way--in creating VapeXhale, what you saw in the marketplace and why you started.

Seibo: Yeah absolutely. So if we just kind of rewind the tape back to 1997 when I first discovered cannabis, I was 21 years old, in college. At that time I had worked a couple years as a stuntman. I had been accumulating quite a few injuries, and my roommate was a fellow stuntman who consumed cannabis every single day. And for some reason for me it wasn’t that I was anti cannabis, I just looked at my roommate who had all the promise in the world, and he seemed to really lack motivation, and I thought it was because of the cannabis.

And ultimately one day, after I had swallowed another eight ibuprofens and was complaining about my stomach, he turns to me and said, Seibo, this stuff is awesome for muscle pain. You’ve been complaining about this a long time. Just try it once and see how it works. So I finally gave in. I tried it once and it was through a water pipe. And not only did I enjoy the physical sensation, but me and my roommate we just laughed. We talked about a whole bunch of different things that were kind of outside of my normal sphere of conversation, and I really enjoyed that intellectual stimulation.

I actually began becoming a much more sympathetic and empathetic person because of it because I don’t want to say like singularly focused type of individual, but I had this idea that I would some day become a profession athlete, and everything around my life from my diet to my training was leading to become a professional athlete. Never mind the fact I was only 5’7 and 125 pounds and my sport of choice was football, but there was just a little bit of delusion in that. Once I started consuming the cannabis, not only did it dissolve the pain, but like I said, it started dissolving my ego where I started understanding hey I’m doing these things because I’m actually a small, insecure guy trying to be macho.

Before I used to just think I was just a macho guy, and I was a little guy that knew how to kick ass. But it was really a lot of that confidence was really hiding the insecurity. The cannabis, in a weird way, it revealed it to me in a way that it almost made me paranoid, but once I got over it, I started seeing there’s a lot of self-discovery that could happen with cannabis. As we’ve been looking and working with other athletes, we started seeing a very tight linkage between emotional pain and physical pain, and started experimenting with how cannabis could be utilized to not just reduce physical pain but emotional pain through conversations and basically peer groups to help people feel like they’re not isolated or for whatever reason. We work with veterans and athletes.

The idea is how do we use cannabis, not to just promote physical health, but also because there’s so many emotional benefits that you can get from it. Help people better understand how to properly utilize cannabis without abusing it, if that makes any sense.

Matthew: Sure. That makes total sense. Now did you have an epiphany at all the first time you consumed cannabis where you said hey maybe these stoners who I always looked down on they were right. They were right this whole time.

Seibo: I definitely became an instant evangelist. I went from pointing to the frying pan with the egg in it to saying that we’ve been suppressed this whole time by our government. And I’ve basically gone to the other end of the pendulum, and about that time, I think, broadband internet started coming into proliferation so I was just spending so much time on the internet. And I guess, that’s a really good segue into well, I had all these amazing benefits from cannabis, but smoking it, there was still some sort of dissonance within me to smoke something that was going to make me feel better.

So I stumbled across something that was called a vaporizer. It was essentially a heat gun that you bought at Home Depot with some glass components that allowed you to channel the heat from the heat gun into some shredded herb and vaporize it. And instantly I felt like I was on to something and from 1997 to 2010, 13 years, I probably bought easily 125 vaporizers, just out of curiosity and that being my hobby. And finally after 2010, my wife looked at me and was like, you know what, instead of working on high tech, I think you should design one of these. You obviously have a lot of passion for it. What was interesting was it was something that I had been thinking about for quite some time and once my wife, verbalized it, it was all that I needed to kind of get off and just start sprinting towards creating this vaporizer.

Matthew: What were you doing in the high tech arena there in the Bay Area?

Seibo: Yeah, so really interesting story, and I’ll keep it short, is I worked in high tech. I was mainly in sales and business development roles. I had also worked for five companies as employee ten or earlier, and just really learned about not only how to sell software, but how to grow and scale companies. And after I saw that five times, I decided I think it’s time where I feel confident to run my own company, despite being a sociology major.

Matthew: Yeah, so I was just going to ask you, you’re a sociology major. You worked in sales and business development at tech companies, and then getting involved in developing vaporizers is quite different. Requires, I guess, some mechanical engineering, definitely electrical engineering. I mean, how do you cross that bridge? Is it just you’re so interested and passionate that you just delved in and just learned whatever you need to, to make it happen?

Seibo: You know, that’s definitely one part of the equation, and the great thing about living today is the internet is such an awesome resource for information. And I watched YouTube videos. I read a bunch of blogs, and ultimately what I ended up doing was I noticed that things like Twitter, Facebook, social media was becoming very prevalent and people were utilizing it as a way to either disseminate a lot of information quickly or to get a lot of feedback quickly.

So I started a blog called ‘The World’s Greatest Vaporizer’. And it was just a blog saying, I want to create the world’s greatest vaporizer. I’m a sociology major, although I work in high tech and I’m Asian. I am not an engineer. I need help. And within the first year we had over a million views, probably over 50 different actual engineers were contributing to all these ideas and essentially I just collated the ideas and brought them to a mechanical engineer who had a little bit of expertise in electrical, and he put together the first prototype for us that we took to Cannabis Cup, and we ended up winning.

Once we won Cannabis Cup, I was able to raise some money and really bring this thing to market. But the truth of the matter is a lot of the information that I did not know, I don’t want to sound like a hippy, but I just reached out to the universe of the internet, asked the question, and like I said, before the first year ended we had over a million views on that website. I like to think that’s why the vaporizer turned out the way it did, and it was because it wasn’t designed by one person or one team. It was designed by over 2,000 people that were actively participating in this thread, and I just had the wherewithal or the stamina to read through all of it and just kind of collate and pick out the best information and put that into the VapeXhale EVO.

Matthew: I’m sure a lot of people listening think that the destination of having a successful business is where it’s at, that’s where all the juice and energy comes from, but I have a feeling when you were going through this process of iteration and on this quest to create VapeXhale, you were probably in a real deep flow state, trying things over and over, thinking about them all the time. It’s like having a great book you can’t wait to pick up again. Was it just that sensation of ah, I feel like I’m on to something here?

Seibo: Oh man, the way you just described it, I had goose bumps because ever since I was little, I mean, I know that I have at least average native intelligence. I actually thought I was like a gifted individual when I was younger, regardless of the fact that I haven’t accomplished anything. I was just like I’m special. And as I became a 20 year old, as I graduated college and just started working, I really started like falling into this rut of okay, wait, I’m not special. Everything that I said wouldn’t happen to me. I will never be like my dad. I’m just like my dad, and I started seeing all these things where I was like, you know, actually I think I’m just a normal guy.

Ultimately once, my wife told me I could make vaporizers, another part of my brain just activated. It was almost like being in college again. Everything was exciting and new, and it really kind of taught me. I thought I knew what it meant to be passionate about something, but what I realized was all of my previous passions in life was just something that I was really interested in. And you are absolutely right. I mean without this passion for vaporization, there were at least, I can count, probably 20 times where I was ready to quit. Throw in the towel and just say I’m going to go back to my day job. I mean, I was making a quarter million a year working 40 hours a week.

I wasn’t stressed out. By that time I had figured out the code of how to just, I don’t want to say coast by, because I was in a sales position, but I figured out a formula that worked for me where I wouldn’t be stressed out at the end of each quarter trying to make my number. Without that passion, I definitely would have given up because it was much easier. I mean, I still make less now than I did before, but I’m much happier, but without that passion and that kind of fortitude, I definitely would have thrown in the towel many times. When I stumble upon other entrepreneurs or there’s other entrepreneurs that want to hear my story, I tell them it’s really important just to go all in on whatever you’re doing because if you don’t go all in, and you feel like there’s some sort of excuse, then there will always be that excuse in the back of your mind, especially if you fail.

So for example, for the first three years of this company I still worked my day job and I was justifying that I had a family and I had to feed the kids and blah, blah, blah. But in reality I was really just holding the company back because, you know, 40 hours of my work week was going towards my day job, and whatever I could contribute to VapeXhale would be what I could contribute. And ultimately when I decoupled from my day job, I mean, in the first six months we made more traction than the first two and a half years. And it really did kind of just cemented my brain that it’s really important to find what you’re passionate about, and then when you find it to really kind of attack it all in so that you don’t give yourself any type of excuse for your success or for your failure, and that’s the great thing.

It’s become very binary. Now I know this success happened because of my effort. This disappointment happened because my lack of effort. When I work for someone else I used to make all these excuses like, oh well my manager just made a bad call and because we were following his orders, this didn’t go through. Now I just realize that was a lot of just excuse making. And what I love about being an entrepreneur is the amount of accountability you have to have over yourself, and now I’ve been able to transfer that into my personal life as well and have much more engaging and rich relationships with my wife, my kids and my friends.

Matthew: That is great. That is a form of lifestyle design. It sounds wonderful.

Seibo: Thank you.

Matthew: Let’s jump into some of the specifics of you started this website, ‘The World’s Best Vaporizer’, first I’m just curious, how did you get traffic? How did people find out about it?

Seibo: So we actually linked it to a popular website. Maybe popular is a bit of a stretch, but it was a very popular underground website called ‘Fuck Combustion’. When I’m describing this to investors and they’re like what’s the name of the website. I’m super embarrassed to say the name of the website. As you can imagine, you know, they are anti-combustion people and really love vaporizers. So they had actually really good traffic despite that it was such a niche thing back in 1997, but yeah just through that we were able to kind of pick up and utilize their platform to get more eyeballs on what we were doing.

Matthew: Yeah that site is still around today. It’s definitely like the Fight Club of vaporization. I mean, these are committed folks there. So that’s cool. Okay so, you start this in a really public way and you get all these people coming to your website. I love the honesty that probably attracted a lot of people that can help you. What were the kind of things that jumped out to you early on, on how you wanted to make VapeXhale different or the problems you wanted to make sure you avoided that other vaporizers had in common?

Seibo: Yeah, so there were a few challenges that we wanted to address. As I said, I have been vaping since 1997 and became a huge evangelist of it. I’ve been really trying to get, you know, most of my friends, we’re all over 35 now, to convert to vaporization. And I had very little success, and what they told me was vaping isn’t as potent as smoking. Vaping doesn’t taste the same as smoking. Vaping also, like when you’re filling a water pipe, vaping is like drinking skim milk, if you’ve been drinking whole milk your whole life. It’s kind of the same, but it’s not the same.

So I went into this really trying to attack the user experience. I really wanted to address all those issues that people had about potency, about flavor, about the actual visuals of the vapor as well. So one of the things that I really ask the people was is there a way that we could improve the efficiency of the sublimation process of turning the THC crystal from a solid to a gas. And different things were talked about like increasing air turbulence within the air path, creating a vacuum to lower the boiling point of the repository of the flower.

So we took a bunch of these hypotheses. Another one was like doing Venturia Effect [ph], which is forcing a larger volume of air into a smaller chamber, and that also kind of tricks the boiling point of the cannabis or whatever is in that repository. So we did a combination of all those things to improve the opacity of the vapor. Once we did that we realized oh my goodness, this vapor is so thick right now that it’s making it difficult compared to other vaporizers to inhale because of the concentration of the vapor. So we ended up creating these hydra-tubes or moisture conditioned mouthpieces that sit right on top of the vaporizer that allow you to, or not allows you, that actually smoothes out and moisture conditions the vapor so that it’s much cooler and doesn’t dry out your throat, that way you can continue to medicate at the level that you want to without any throat irritation to get in the way.

I understand that. Some people listening might be like wow you guys need to consume that much cannabis to get to that medication level. And surprisingly the answer is yes. I mean, I’ve worked with a lot of NFL players and for me I may only need a tenth of a gram to get to the medication level that I need, but these guys that are over 300 pounds, I mean, I watched one of them take five dabs the very first time he ever dabbed, and he could handle it. And what we’ve come to understand is the more pain that you have in your body, I believe, there is some correlation between how much cannabinoids you can actually ingest as it bonds to all your CB1 and CB2 receptors to deal with the pain.

It’s a bit of a hypothesis right now, but like I said, we’re always trying to kind of think, you know, one step, two step, three steps ahead of what everyone else is doing because this is such a fascinating plant that I think just applying air to heat and then taking that heated air and applying it to the flower or the oil, yes, that is the basic nature of vaporization, but there’s so much more that you can do to ensure that the flavor tastes better, the potency is intact, and that it’s super smooth for the end user. I love Apple, and I understand some Android phone, you know, functionality-wise do have some more features, but the one thing about Apple products, what I do love is that, the design aspect is so great that something as complex as your iPhone, even Generation 1, it didn’t come with a large instruction set.

That’s when I started realizing the user experience is super duper important. How the person feels when they’re utilizing it. So we wanted to make sure that when someone used our vaporizer, because it is a plug in model and it’s not a portable, that they would just get so much of a better user experience. The way I like to describe it to people is like if you like to watch sports on your smartphone, think of that as using a portable vape, and when you get home do you ever watch sports on your smartphone. No, you turn on the HDTV. So we like to say our experience is more like an HDTV. It’s not better than a portable. It’s compatible. It’s actually, I don’t want to use the word synergistic, but they work together. It’s not binary one or the other, and that’s what we’re really trying to improve on. How do we keep making the user experience better for the user.

We are coming out with a lineup of portables, and I’m sorry to drone on and on about this question, but I think that this last part is going to make a lot of sense is when we started designing the VapeXhale EVO, initially, this was back in 2010, there were already several portables on the market that worked fine, but what we realized is with all technologies, things get smaller, cheaper and more affordable. And if you created a portable from the start, you would have that intellectual property of how it works, but the next generation would be smaller, longer battery life and probably a little bit cheaper. So we’ve seen that with the Pax1, Pax2, Pax3 or with the Firefly1, Firefly2. I mean, they’re essentially like the same device, but with extended battery life and smaller.

So for us we really wanted to understand the science behind mixing air with heat and applying it to flower and oil, and now that we’ve mastered that, now we can create portables that are leveraging this intellectual property and technology and really make portables that are head and shoulders above what the competition is offering, and we believe that just like our home unit has been widely anointed the best desktop unit, when our portables come out we’re going to see a similar quantum leap in performance for portables as well.

Matthew: Okay, so you’re working on portables right now?

Seibo: Yeah, we’ve been working on them for the last three years. So we just wanted to make sure that when we came out with a portable it would very much be like when Apple decided to make the iPhone. Something that was just so much different than the status quo that people would have no choice but to at least investigate what this new portable is like, but once they use it we’re very, very confident that this new technology will be one that really kind of changes the landscape of how people view portable performance and what to expect out of a portable.

Matthew: Now what do you tell people in terms of how to think about concentrates and combustion for the VapeXhale? I mean, do you have a concentrates extension and then you have a flower extension? How does that work?

Seibo: Good question. So you are right. It is one device that has two repositories. One for flower, one for oil and where I believe we really hit a homerun with the oil is that if you look at most of the oil consumption devices, whether it’s a vape pen, or a dab rig with a ceramic or titanium (26.31 unclear) you are essentially putting the oil right on top of the heat source. So you’ll either heat the titanium (26.38 unclear) or in the case of a vape pen, put the oil right on top of the nichrome wire heater. In both instances I like to say that’s more like frying your concentrate, and we’ve come up with the world’s first convection or hot air based way to deal with concentrates.

Previously I don’t think anyone had explored the concept of using hot air with concentrates because oils get viscous. Once it becomes viscous, it gets running and it can get dirty and sticky all over the place, but we knew that when flower vaporizers went from conduction to convection there was so many efficiency gained. So we really spend a lot of time to try to figure out a way to do “hot air” dabs, and as you can imagine, when you are using hot air versus frying your concentrate you use a whole lot less. It tastes a whole lot less smoky, and you feel a lot better because the vapor to smoke ratio is much higher in a convection based placed platform than conduction. And for anyone that is exploring concentrates that is graduating from the vape pen crowd, I really urge you guys to explore what we’re doing here because the convection based methodology, like I said, I believe that our device is just the very first version of this next generation of hot air based convection concentrates delivery tools because the efficiency gains just by themselves, let’s forget about the health claims.

Due to the hot air extraction, our customers are telling us they’re using about a third of the amount to achieve the same medication effects. So because of this we’ve created an ROI calculator on our website that allows you to enter in how many grams you consume a week and how much you paid per gram, and on average our $450 device pays for itself in 2.7 months. Sorry for this long-winded answer to your question about concentrates, but I do believe that in order for concentrates to be socially accepted, we have to get away from dabbing on a hot surface. And the whole reason why we created this hot air convection based concentrates consumption methodology is because I had some other parents from my school come over. They saw my dab rig, and that was the last time we ever had play dates with their kids.

They said that looked like a crack device. They didn’t know what I was doing. I could say it was for cannabis, but that didn’t look like any cannabis they had ever seen. And I just realized, after I started doing surveys, I have not met anyone that is outside of the industry over the age of 30 that has a wife that allows them to have a torch and nail or electric nail in the house. The only people that I found are people in the industry. So I saw this as a huge issue, and honestly, I mean, my wife was like you got to get rid of this dab rig. So I really started working over drive. I love dabbing. I need to figure out a way, and that’s when we came up with that concept for the VapeXhale. So part of the ingenuity was due to necessity as much as my entrepreneurial spirits.

Matthew: Yeah, there’s some truth around that. It’s like one thing if you’re in your twenties and you’re single and you pull out a dab rig, it’s another thing, like you were saying, it’s like parents come over for a play date and they see that thing and they’re like, what is Seibo into. Yeah, it’s a little crazy. I know what you mean. I’m glad you’re taking care of that problem though.

Seibo: Yeah, and you know kind of the next phase of what we’re really trying to work on here is how to help people come out of the green closet, because there’s many people like you, me, high performers that are cannabis enthusiasts and many times, obvious, the image that they portray of us is one of lacking motivation, sitting on the sofa, getting really good at role playing games on the video game console, but the fact of the matter is cannabis users are just kind of like you’re normal demographic of the country. It’s high achievers, low achievers, everyone in between, but I really wanted to highlight that there seems like there is a very high, an inordinately high percentage “successful” people that consume cannabis.

And I just want to really help them have consumption devices that are congruent with where they are in life. Just like, I loved Denny’s in college, but I don’t love Denny’s anymore. I like food that’s better. And I wanted to create consumption devices that were congruent with people’s palates as they grew in sophistication and wanted different ways of consuming their cannabis.

Matthew: That’s a good time to segue to you talked about high performing athletes just a little bit ago. Now you’ve said you’ve worked with some high performing athletes. When did you first discover that… what was their initial reaction when you started working with some of these guys and a light bulb went off, some of these athletes? What was happening there? How did they find you, and how did they come to start this initially, consuming cannabis for health reasons and recovery?

Seibo: Yeah so, interestingly enough, if you look at the price tag of our vaporizer, it’s $450, so obviously those that purchase it either really, really love marijuana or have expendable cash. And early on, every time an athlete would get busted in the news for cannabis, I would just Google them and learn more about them, and then just one day I started just checking our database to see if that name existed. And I was like, whoa we’ve got some NBA players, some NFL players that’s customers. Who are these people?

And obviously I’m just thinking, a huge kind of sports nut so I started emailing them, just introducing myself and saying hey, I’m the founder of this company. Thank you for buying this. I know that you can’t talk about this publically, but I’m just curious, why did you buy the device? How are you using the device? And about 80 percent of them were saying, not only were they using the device for recovery, but they were actually consuming before practice, before games. Some of these guys are UFC fighters. Some of them were consuming before they were punching and kicking each other in the head. And I had always consumed cannabis more on the recovery side.

Sometimes I would train on cannabis, but it just wasn’t for me at the time, but as I spoke with all these high level athletes, I really started thinking, well my first thought was okay these are just a bunch of young guys that like to get high all the time. No big deal. I’m not judging, but as I started speaking with them more, I started realizing, wow, these guys are actually performing better than when they are… we call it activated. I don’t say medicated. I call it activated, and essentially they are doing, kind of by accident or on purpose is, and you brought up this word earlier, flow state, is they are encouraging flow state while they’re training.

For some people they just need more focus. For me, when I’m doing Jujitsu, someone could be choking me out and I’ll still be thinking, oh, I need to return an email to Matt because I’m going to be late tomorrow. You really should be present when you’re doing these things. I asked these guys, can I come train with you guys? Can you guys show me what you do? And a lot of it was very non-structured. They just get high and start doing stuff, and then I started noticing, like hey guys when we take one dab and you guys do this, you guys seem to be a lot more focused, less horsing around. Let’s just stick with one dab instead of two dabs.

So I started being the numbers guy for these guys and started plotting and taking down the data like how much they were consuming, how they were performing and ultimately we started coming up with this template, and I wanted to see… Okay, so we were able to help high performing athletes perform better, and a lot of people were like well, they’re 19, 20, 21 of course you work with them, there’s going to get better. They’re at that age where they’re just supposed to get better. So at the age of 38, I decided hey I want to start competing with the Jujitsu teams.

So I started training, utilizing the techniques that we were talking about and really getting into flow state while I’m grappling. And I started competing, like I said, with the team. I’m undefeated. We all compete in an activated state. Six weeks ago we took home 10 of 14 gold medals. I have all the videos to prove this. We also have a documentary that shows us consuming right before the event. And most of these events in martial arts, they don’t have any specific rules. It’s more about steroids and things like that, but even if you don’t have the performance enhancement, the CBD, all the anti-inflammatory properties, they’re so good for your body anyway.

So we know that 100 percent of the athletes could benefit from utilizing cannabis for recovery, and about 70-75 percent of the athletes we’ve been able to successfully teach how to utilize the EVO to help them dose and titrate their cannabis, and then to compete at a higher level, whether it’s gymnastics, boxing, ballet, dancing, all of the above.

Matthew: So you mentioned a template there. I mean, we don’t obviously have time to go into a whole template, but you mentioned one dab, not two. Is there any other kind of quick bullet points you could mention as kind of optimization techniques?

Seibo: Yeah, absolutely. We have two different things. We have a CPA and CPF, not a certified public accountant, but a cannabis performance assessment and cannabis performance facilitation program. So during the cannabis performance assessment we get a base line of how you are when you’re sober. How fast you can run, how dexterous and coordinated you are. Jumping jacks, cartwheels, we have you do movements that are kind of challenging and difficult and kind of get a base line of where your physical abilities are without cannabis.

Then we start administering various amounts of cannabis and redo these tests and kind of see does it make you looser, does it make you more self-conscious and almost paranoid. And a lot of people physiologically react differently, and what we found is cannabis seems to invoke a state of homeostasis. So when you’re really amped up it can kind of calm you down. When you’re really tired it can kind of perk you up. So what we realized it because of this we needed to get the whole team to be on the same consciousness level initially.

So we started doing these breathing exercise called Breathifier, which is taken from Kundalini Yoga that is about five minutes of rapid breathing in and out of your nostrils. And by the end of five minutes, your brain, your blood is super oxygenated. You’re a little bit light headed from hyperventilating, but you’re very sharp and aware. Then when we administer the cannabis it allows you to… it’s like you don’t want to be so aware where you’re tense. You don’t want to be so loose where your reflexes are slow. So it’s kind of like this really delicate balance that we’re trying to achieve, and yes sometimes we miss the mark, but like I said, we’ve been pretty good at getting 70-75 percent of the people to be able to just relax and perform better.

And one of the things that is really simple to show someone is, okay can you touch your toes. Okay if you can’t touch your toes, are you close to touching your toes. A lot of people that are close to touching their toes, once we administer a little bit of cannabis, they can touch their toes, and then we let them know. We’re like look, you’re holding a lot of tightness in your lower back and your hamstrings. You’re probably not aware of that normally, but now that you’ve consumed some cannabis, pay special attention to your lower back and hamstrings and feel how tight they are. Many times once someone’s aware that they’re tight in a certain area, then they can start stretching it out more, working it out more and really kind of make the necessary changes.

Many times, believe it or not a lot of these athletes who are sensitive to their body, I think because they’ve been so conditioned to deal with pain, they don’t know what is pain versus what is an injury. We really kind of utilize cannabis to help them be objective with the way they’re feeling and to help them , like I said, not only improve performance but improve healing so that they can train more, which then improves performance. So it’s a really kind of awesome circle of life that we lead them through, and like I said, the reason I can speak about this so confidently is I’ve done it myself. I’ve gone through the program and, not to keep patting myself on the back, but I’ve competed four times now. The first time I competed sober. I went for about six minutes, I lost. The next three matches I competed in an activated state. The combined three matches was 1 minute and 52 seconds.

I just ended up destroying these people because I was able to not think about the text messages, the emails, my kids, my wife and just let my body go into flow state and do everything that we’ve been drilling for repetition, and it just comes out. And I like to tell people, for me, Jujitsu, I like to call it kinetic chess. And most people when they play chess they have maybe, set up traps one or two moves ahead and that’s kind of how my Jujitsu game is like when I’m in my normal state of mind. When I’m activated, my decisiontry and flow chart of moves it just exponentially increases and I’m able to see things that aren’t normally there. Like oh, there’s a pawn that I could take. I’ll take that. Oh, I’ll take that rook.

It’s really hard to explain, but once we help people achieve it, and they feel it for the first time, it’s easy for them to become believers. We actually had one really big skeptic. He was an ex-water polo player from Stanford. He actually wrote a scathing article about cannabis and athletics, and someone put him in touch with me, and after just two days, I helped him run a personal best for an eight mile run. And now he’s a huge proponent of this, and now we just got to back this up with more data so that it just doesn’t sound like a bunch of guys in a gym just doing whatever they want and maybe they win some tournaments here and there, but really get the imperical data so that we can speak about this intelligently and really kind of show the naysayers that this isn’t people just getting high. This is about increasing physical performance, and more importantly, the cannabinoids a neuro protectant. So if you’re in a high impact sport, your guy should be taking this anyways to protect their brain.

Matthew: You mentioned about anecdotally about 70-80 percent of people that are doing this CPA or CFA are getting the desired results, but for the people that aren’t is there any kind of insight you can provide around that, the 20-30 percent? How can you try to stay out of that 20-30 percent and stay in the 80 percent that are getting the desired outcomes?

Seibo: Wow, what a loaded question, but I’ll do my best to answer this one. Okay so, this is more a little bit of bro science and arm chair quarterback for me. Number one is I do believe that a very small percentage of people’s biochemistry just does not allow them to enjoy cannabis in this way where I could improve their athletic performance. But the remaining 20 percent or so people or 19.5 percent or so people I 100 percent believe it’s a psychology issue. Having worked with athletes, entrepreneurs, artists and just listening to them talk about what makes them tick and really looking at the high performers versus the middle of the pack and the low performers, you know, I kind of self-believe is a huge important factor.

If you look at any of these athletes, you ask them who is the best athlete, they’ll most like say themselves. The number 200 ranked fighter, if you ask him could he beat the world champion, he will say yes. Many times it’s not rooted in logic, but there is this really strong self-belief. One of the things that we really try to encourage is objective accountability. And there is no magic to what we’re doing. The magic to what we’re doing it just being objective and being accountable. So being objective is did this help me or not. If it’s not helping me, let’s stop doing this.

Being accountable is if I lost, was it because the coaches didn’t train me well, or was it because I didn’t put in the effort. There are just tons of people always making excuses for this, that and the other, and ultimately most of the people that can’t take advantage of the cannabis, they will always give me a million and one reasons why it won’t work, and very few reasons why it will work. And ultimately I’m like well, if you’ve conditioned your mind to think it won’t work, then it won’t work. One study I always draw upon is a few years ago, they had a bunch of famous sommeliers drink wine and try to tell the people where they thought it was from and what the quality of the wine was.

They took the expensive wine, put it in the cheap wine bottles and the cheap wine and put it in expensive wine bottles. As you can guess the sommeliers were just wrong about everything. They were super embarrassed and they asked for a second test. During the second test, they actually put some sensors on their brain, and they saw that when the sommeliers were about to drink an expensive bottle of wine their pleasure receptors started going into overdrive. So this kind of showed that the anticipation and belief that something will be good actually stimulates some sort of neurochemical change in your mind.

Ultimately I am a believer that with the proper mindset, anyone could almost do anything. Obviously there are limitations. Like Shaq will always dunk on me. It doesn’t matter how much I believe I could dunk on Shaq, that will not happen. A lot of these things about self-belief and performance, and that’s why I do believe the sports psychology or psychology in general is so interesting because as I’ve grown older, I’m 40 years old now, one of the things that I’ve really come to discover is most of the things that were getting in my way or that I thought were getting my way was just a mental issue that I thought all these people were judging me. No, no one was even looking at you Seibo. That was all in your head. Just little things like that.

We’ve kind of taken those experiences and really tried to distill it down. Like what I said, to distill it down we call it objective accountability, because we believe that if you could distill something down to those two things and be objective and accountable for yourself, then you can start making the improvements that you need to make, either in your athletic career, business career or personal life.

Matthew: Yeah. Great points there. I think one thing that would be helpful too is if there was some test that would show us how we metabolize cannabis. Are you a fast metabolizer or slow metabolizer? If there was some objective way that we could start to hone in on that, that would really help. If that exists out there someone, let me know. Just email me at feedback(at)cannainsider(dot)com, but I think that would be a super helpful way. Is there a particular sport that… I mean, it sounds like you’re into the Jujitsu world. So perhaps you see the most in Jujitsu, but is it football, mixed martial arts? Is there one or two sports that comes out as having the most cannabis users that benefit from optimizing or recovery with cannabis?

Seibo: Yeah very good question. So you name those two sports, football and mixed martial arts. Kind of more broadly I would say anything that has high physical impact, either to the body or to the brain. Obviously the cannabinoids have shown neuroprotective qualities. Where the numerous research studies that have shown this, I had always thought that is why, despite being a very disciplined person, I just always wanted to smoke weed, especially when I was boxing. And my hypothesis is that my body was kind of like pushing me towards doing something that was good for it even though in my mind I was like, don’t smoke anymore weed. Only once a month.

When I was first introduced to week I was super scared about being addicted so I kind of gave myself these weird limitations. And more recently, Reggie (47.50 unclear), who is the chief scientist at Steep Hill, we had a discussion and he was telling me that in these preliminary studies they have shown another cannabinoid, CBG, to not only be a neuroprotectant, but showed neuroregenerative properties, and I know that’s a huge claim. So this was just some initial research that they saw. The impact is something potentially being neuroregenerative, it’s huge, and that’s why I do believe a lot of athletes that are in these high impact sports where there’s CTE or traumatic head injuries, a highly disproportionate percentage of them use cannabis.

At least for myself is that when I take CBD before exercising that also increases my capability to recover quicker. I used to just take it after practice, but now I’ve been taking it before practice as well and just noticing that, you know, it’s almost like the tin man who gets his joints lubricated. I just feel like, wow, I ingested this. I have an extra 15 degrees of extra stretching in my shoulders and different areas, and it’s really remarkable. Like I said, the main thing is we want to capture this empirical data so that we could speak from a place of data versus just anecdotal stories.

Matthew: Seibo, I like to transition to a couple personal development questions to let listeners get to know you a little bit better personally, although I feel like I know you personally after this interview already, but let’s jump into those questions. Is there a book that has had a big impact on your life or way of thinking that you would like to share?

Seibo: There’s a couple good books. One of them is the 48 Laws of Power. It discusses office politics, but I look at it as a book more about human nature. And the reason why I love this book is that even though it discusses office politics and talks about how people would be trying to get over on you to get ahead, it really just talks about human nature. For example, if you and a coworker are up for a promotion, and you’re a single person, but he has a wife and three kids, even though he might be a nice person that likes you, because this will benefit his family so much, he may go above and beyond to compete against you where you might think this guy is betraying my trust.

In reality, all he’s trying to do is make a better life for his family. It kind of really put office politics into context because I had always thought people were colluding with each other like let’s “F” this guy by all of us get together and make his life hell so he quits, but it’s usually nothing like that. It’s everyone is super busy, everyone protects their best self-interests, and they operate that way. So once I got to that, I started realizing these things that people do, despite some of them being negative towards me, they’re hardly every personal for personal reasons. So there’s no reason for me to take offense to them. So that’s really helped me kind of deal with all the different personality types I have to deal with while running this company.

Now the second book that I really, really like is The Four Agreements by Don Miguel Ruiz. This is almost like the exact opposite of The 48 Laws of Power. This is a book about how you need to love yourself, how if you never love yourself, you can’t really give yourself the full version of yourself to other people. It was like a self-improvement book without being a self-improvement book, if that makes any sense. And it was only a 70 minute read. It’s pretty big font, but it was so impactful. I mean, when I was reading it, I don’t ever cry, tears were just coming down my eyes because I was just thinking man, I’ve been leading this weird Type A, alpha male existence for what? For what, to impress other people.

The Four Agreements really started shining a light. If you really work on yourself and you make yourself the best version of yourself, they you can really start impacting the world in a positive way, because you’re doing it with some sort of clarity, with some pureness and it’s not just… For example, when I was younger I saw Bill Gates, and I was like, I want to be like Bill Gates, but I wasn’t too sure exactly why I wanted to be like Bill Gates. I just knew he was super rich and famous. Through reading this book it really helped with a lot of self-discovery. Okay, this is what Seibo likes for these reasons. This is what Seibo thought he like because of these false reasons, and it goes back to being objective and accountable. I think these are just little lessons that I’ve learned from each of these books.

I really encourage your listeners to pick these books up because they’re short reads, probably just a couple hours each, but have really benefitted me as far as reducing my stress levels, The 48 Laws of Power. And then The Four Agreements, to be able to love myself. I know it may sound weird, but I kind of just really disliked the version of myself when I was younger, and I think that’s why I was always striving to be the best because I was not satisfied with what I was. After reading that book I realized, what I am is very special already. Let’s just foster the best version of Seibo. Not Seibo trying to be like Steve Jobs, not Seibo trying to be like Bill Gates, but Seibo just being Seibo.

What I found is once I started doing that, I don’t know, it’s just like the universe just started giving me stuff. The right people enter my life. The business transactions start happening better. There’s a lot of transparency in what I say. People don’t feel like I’m saying one thing and doing another. It’s just a wonderful feeling to live in a life that way because I had always been so concerned about image, especially being an entrepreneur now. I had learned about The Four Agreements before being an entrepreneur, and then I found being an entrepreneur, brought me back to that whole phase of my life again where I gave a fuck about what other people thought of me and place such a big emphasis. And that was causing me to make some really bad business decisions and I had to reread The Four Agreements, and rebuild that confidence. Like, Seibo, you know what you’re doing. You don’t need to impress these people.

These people are telling you all this stuff because they have limited data points to make their decisions. So, just believe in yourself. Be yourself again, and once I started doing that, the company started rocking and rolling again.

Matthew: Yeah, great suggestions there. Now is there a tool, web-based or otherwise, that you consider indispensible to your day-to-day productivity, other than VapeXhale?

Seibo: I was going to say, my VapeXhale, but I think most people will talk about some sort of productivity tool or something that really helps with efficiency, but for me, not to sound hokey dokey, but I use a meditation app called Brain.FM. It has four settings like nap, sleep, energize and meditate. And they range anywhere from 10 minutes to 30 minutes. And typically in the morning that’s the first thing I do, like a 10 to 20 minute meditation. At lunch I will do the same, and then right before bed I do the same. And I do believe that the practice of having that, it really just allows me to recharge my batteries.

I eat healthy, I exercise, and I do a lot of the physical things that someone would think would keep you healthy, but I really found being able to exercise the brain or just not think about anything other than that guided meditation that you’re listening to has been instrumental in helping me feel rested. If I do that routine and only get a few hours of sleep, I feel 100 percent. If I don’t do the routine and get six or seven hours of sleep, for some reason it just seems like the level of sleep is not the same unless I have that practice. So I really highly recommend anyone, especially living in this crazy day and age where just expressing a political opinion, 20 people jump down your throat, that you really need to spend time by yourself and kind of have that self-development time for yourself so that you don’t just get caught up in the business of this world and get taken away.

What I’ve found is by doing that, I started getting some of my own consciousness back. And I mean that when I’m very busy I almost feel like I’m on auto pilot. I’m just this autonomous robot that does sales calls, that does meetings, that gets on an airplane. It’s just like very formulaic. And by doing this, it’s like oh okay, that’s what Seibo does during the day. He does love it, but Seibo still needs some hippy smoking time, and just meditating and just thinking about anything I want to think about or nothing at all, and really just watching myself evolved from an objective point of view. Now that my wife has joined me, I mean, our relationship is so much better than before.

I mean, we’ve always had a great relationship, but now that we practice this together it’s like we have a deeper connection. So there’s so many benefits, I think, from having a practice like that where it’s individual. It could be with other people, and ultimately I believe if you know yourself and treat yourself and love yourself very much, then your purpose on this Earth becomes much more clear to you.

Matthew: Normally I only ask two personal development questions, but I got a third one for you. Is there any public figure, actor, politician, anybody, if you could pick only one person that looks like they probably don’t consume cannabis and you would like them to take a huge rip off of VapeXhale, who would that be?

Seibo: This is such a great question. So this individual has never publically spoken about it. I do have a hunch he may consume cannabis, but it was be the astrophysicist, Neil deGrasse Tyson.

Matthew: Yeah that’s true.

Seibo: He’s the guy that really got me into science. I was basically a sociology major. But the way Neil deGrasse Tyson could break down complicated topics and talk about so simply that a layman could understand, he really blew my mind. I had read so many books on quantum physics, and after reading ten pages, I’m like, what did read. None of that stuck in my head. And when Neil deGrasse Tyson would explain it, it was just like oh okay. He would use normal things like this is a shoe. Just imagine the shoe was the universe and the shoe laces are the energy that’s expanding and contracting in the universe.

Just these weird analogies, and I was like, man, if I could ever sit this guy down and enjoy one with him, how awesome would that be. We would have probably… I could ask him all of my alien questions and then he could use his astrophysicist background to tell me, yes, that’s plausible or that’s completely idiotic Seibo.

Matthew: Gosh, he would be a good choice. I hadn’t thought about him. I watch the NetFlix series, Cosmos, where he was the narrator and walks you through everything, and he does do a great job of explaining very difficult concepts very easily. Visually stunning show too. I don’t know if you’ve had a chance to see that, but it’s incredible.

Seibo: Oh, it’s one of my favorite shows. I mean, I remember seeing the original with Carl Sagan when I was younger. To be honest, there were times when I was watching that show non-activated, and the universe itself is just so fascinating I felt like it was getting me high. I was like whoa, just getting goose bumps, just hearing him explain these concepts. Fact is definitely more strange than fiction, especially if you watch Cosmos, it will just, like you said, blow your mind with just the way the universe works.

Matthew: Well Seibo, this was a great interview. In closing, can you tell listeners how they can find out more about VapeXhale and follow you?

Seibo: Yeah absolutely. The best place is our website, or the word “vape” and then the word “exhale” after it. The company that we work with the athletes for is CannaAthlete, and you can find that at And our social channels are just VapeXhale and CannaAthlete, and if you guys are ever interested, I answer every single email. My email is I love hearing people’s feedbacks. Like I said, I answer every single email. I want to know what you guys think about what we’re doing with cannabis and athletics, what you guys would like to see in future products, and I really like to be engaged with our customers as well because like I said, the first model was created by the people for the people, and want to really continue that tradition because cannabis technology is moving really quickly and we want to make sure that we produce products that are really hitting the requirements of not just the patients, but also the rec users, as well as anyone aspiring to be the best versions of themselves.

Matthew: Seibo, thanks so much for coming on CannaInsider today. We really appreciate it. Good luck to you.
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