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An Update on Vermont Cannabis Legalization

vermont cannabis legalization

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Matthew: Hi, I’m Matthew Kind. Every Monday and look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www(dot)canninsider(dot)com/consulting. Now here's your program.

To give us an update on cannabis legalization in Vermont I’ve invited Eli Harrington, Editor and Co-Founder of Heady Vermont on CannaInsider today. Welcome Eli.

Eli: Thank you very much Matt. Great to talk to you today.

Matthew: Eli to give listeners a sense of geography can you tell us where in the world you are today?

Eli: I am in Burlington in the great state of Vermont on the shores of Lake Champlain.

Matthew: Oh great. Yes you know Burlington is very similar to Boulder in many ways where I live. The pedestrian walk I discovered is designed by the same person.

Eli: Right. Yeah, yeah I think your Pearl Street is our Church Street.

Matthew: Yes and I think very similar.

Eli: Yeah exactly. Well I’ve heard that too and the Vermont/Colorado comparison gets made a lot as far as us being a sort of smaller, weirder cousins.

Matthew: Right.

Eli: I’ve yet to go to Boulder so I’ll look forward to finding out for myself.

Matthew: Well tell us about your background. How did you get involved in the cannabis scene in Vermont?

Eli: Well for me personally it started out with I call him the “Godfather” and he’s a really close family friend. My uncle was dying of lung cancer when I was I think eleven or twelve and he was just in rough shape with the chemo and at the same time our family friend Mark Tucci had started his MS treatments and so Mark was really one of the original patients who helped my uncle out a lot and at a young age I came to understand cannabis as being a medicine. I went to college at Brandeis which is a very liberal place and very known for social justice.

I had experiences being around the plant myself but it was really when I saw this group and then saw the first event they had this past summer in July. I said if these people who are business people who have started Magic Hat Brewery, founded Jogbra, writers, Vermont secessionist’s, really just interesting eclectic group of people who are also very conventionally successful in this Vermont way and so I was really intrigued to see more about what that meant and at least participate however I could and understanding if this serious group of people are going to try to make it happen and the politics might line up this year this seems like a chance to get involved.

Matthew: So you’re saying there is a group of people in Vermont that want to secede from the United States kind of like Texas and do they have any traction at all? Do they feel like it’s possible?

Eli: I mean this is a; you should look it up The Second Vermont Republic is what they’re called. It’s a small group but one of their members Rob Williams is a writer and he’s part of the cannabis collaborative group; a really interesting guy. I think Bernie has probably brought a lot more attention to the Vermont Secession movement. I won’t speak for them. I love the ideas as an 8th generation Vermonter. I think it’s really cool to explore and think more about public policy but yeah don’t look for anybody in Vermont to take over any federal facilities any time soon or anything like that.

Matthew: It’s an interesting concept though. I mean just looking at the size of our country. It’s just Alaska, Hawaii, people in California being managed all the way from D.C. I mean just from a practical point of view is our country just too big and too diverse to be managed centrally? It’s something to think about.

Eli: Well it’s funny and cannabis really is one of those issues that shows there are a lot of I think social issues that show where those divisions can happen and Vermont is some place; Vermont was an independent republic for 14 years before it joined the U.S. and Ethan Allen kind of was a militia. The whole concept of Vermont was really a rugged individual taking self directed action with a small group of people who didn’t want that foreign control.

Matthew: Yeah.

Eli: So it’s funny. We’ve kind of come full circle in a lot of the mantra which now has almost run its course calling it the Vermont Way right which is such a cliché but it’s one that appeals to our sense of pride. It’s interesting to see how all of these paths intersect and what can we do here in Vermont that’s markedly different from other states? Having a small state, having a lot of access to our representatives through the legislative process it’s interesting to give people context. In Vermont we don’t have ballot initiatives. It’s forbidden from our constitution so we can’t just have a group of people get together or a couple groups of people get together, collect some money, and do a campaign. Part of the reason that it’s coming through the legislative process is that that’s really the best option we have. So it’s interesting because we are such a small place that we can be almost a political laboratory in different ways if you look at the GMO labeling laws.

Matthew: Yeah, yeah I’ve noticed that so that’s one of the reasons I wanted to have you on the show is that even though Vermont only has a population of like 600,000 range it has kind of an out size presence in terms of what it does and kind of being on the bow wave of change and I thought it was great how Vermont says hey we want to label GMO’s; just hey what’s wrong with just knowing if there’s GMO’s in our food and did the food industry kind of sued Vermont on this. Is that right?

Eli: Yeah, yeah. There is a whole back and forth and a lot of threats and I know when Monsanto sends you legal letters those are serious threats. So it took a lot of concerted effort and I really give the politicians at the local level; these discussions started a long time ago and it kind of speaks to the culture in Vermont as far as people being very conscious and also very involved. That we’ve gotten to the process of having our congressional delegates standing up and helping to make this happen and really hopefully it changes consciousness at the national level too.

So there are still 50 states with two senators each and ours do a great job Senator Leahy and Bernie Sanders. It’s quite the dream team but it really started from a long, long time ago and I think it is interesting. Like I said it’s kind of being this political laboratory and we’re pragmatic people. What’s wrong with knowing what’s in your food? What’s wrong with having a label that says if there are GMO’s? You can still choose to buy it or not buy it.

Matthew: Yeah. That’s when you really see the power of corporations come out and they want to suppress just having a simple labels thing if something is GMO or not. It’s a little scary. It also kind of dovetails on the topic of the DARK Act. Are you familiar with that?

Eli: No, no.

Matthew: The DARK Act was a bill at the federal level. I think it’s still floating around congress that would make it federally illegal to put on any food if any part of the food has a genetically modified organism in it.

Eli: Wow.

Matthew: And it’s shocking to see the number of representatives that would vote to literally keep us in the dark. I’ve come a long way around on this topic because I know this is a cannabis related show but at first I was.

Eli: No this is relative.

Matthew: Yeah.

Eli: And its important people caring about I think cannabis has had a big part too. You look at all the pesticide recalls. People are just generally more conscious about what’s going on and also about sort of what happens when they’re not directly involved as activists. The system as it is; the status quo does not favor the individual who might or might not be being harmed from a genetically modified organism that we don’t understand yet. And who can’t make that choice. It’s very ([08:48] unclear).

Matthew: Eli for people unfamiliar with Vermont’s legalization status and efforts can you kind of frame where Vermont is right now especially relative to other states?

Eli: Yeah sure thing. So Vermont has had a very small medical program that started about a dozen years ago. It’s still very limited as far as the conditions. Chronic pain is one but mostly AIDS, Cancer, MS. So there are less than 3,000 patients in the state and only four dispensaries. There are caregivers allowed but it’s a one to one caregiver to patient relationship. So there is no recreational market or personal use market so the only people who are legally consuming cannabis in Vermont are the 3,000 registered patients.

Matthew: Okay.

Eli: Yeah so there’s a lot of room to grow here. The legislature is currently considering a bill that will allow for personal use starting in 2018.

Matthew: Okay.

Eli: That will not allow for edibles. Right now edibles and concentrates are only allowed for patients who are registered and the dispensaries that serve them. So this bill in 2018 right now would not allow for personal cultivation so there’s no home grow. It would allow for a limited number of cultivation licenses at different tiers. So under 2,500 square feet, under 5,000, and under 10,000 and I think over 25,000. Again so we’re looking at a very small scale for what would be allowed and that would be starting in 2018 so personal use for X amount of retail locations probably not more than 14 throughout the state and a limited number of cultivation licenses starting January 2018.

Matthew: Okay. I was going to ask you why is there so few patients? Is it just because the list of qualifying conditions is so tight or what’s the reason that there’s only a few thousand people?

Eli: Yeah I mean I think that’s a big part of it. The application process isn’t that onerous but you have to have a six month relationship with a physician and that most likely means that it’s your primary care physician right or a specialist.

Matthew: And then the physician prescribes it for you or what’s the connection between a physician and getting a card or the ([11:17] unclear).

Eli: So the physician has to basically approve it in order for your application to be approved.

Matthew: Interesting, okay.

Eli: So you do need a physician and not just any physician. You can’t walk into any office of somebody who you know might be favorable. It really has to be a relationship of six plus months and even the qualifying list of conditions.

Matthew: Yeah let’s go through a couple of those. What are the qualifying lists? Is it pretty onerous in terms of its not many things that can get a wide swath people in the door?

Eli: Yeah that’s exactly it and I’ll give you an example but American’s for Safe Access gave Vermont I believe a D for our grade yeah and so the eligible conditions Cancer, HIV-AIDS, MS, Wasting Syndrome, severe pain, severe nausea, and seizures.

Matthew: Mm-hmm (affirmative). See your patent though is that sounds pretty general it’s not.

Eli: Right. That can be, that can be. Generally speaking though I think it’s been people have been hesitant to go through. One you do have to register with the state as a patient when you do it. Also I think within the medical community I’m not a doctor and there are a lot of physician’s here who have done a lot of great work in the cannabis world and brought a lot of education forward.

But I think it’s still the kind of thing that has been hard for people to want to make that ask and because the group has been small here in Vermont and the program has been conservative. Vermont marijuana is not really in the news unless it’s a bust except for this year to this level of detail which is too bad because there have been a lot of efforts to reform the medical and open up the conditions more and more which are being affected now that everybody’s having conversation. So I think everybody understands that medical will be reformed as part of this process and it’s a question of how. I think a lot of people would rather see more dispensaries, more caregivers, more patients, and try to break in.

Matthew: Tell us more about the caregiver model there and how that works as some people might not be familiar with what caregivers are and in Vermont specifically what the caregiver relationship is.

Eli: Yeah so in Vermont it’s a one to one relationship so one patient may assign one caregiver. Basically if you qualify as a patient you’ve got your application in, you pay your I think it’s fifty dollars for your annual fee, and then you get your card in the mail. You have three options. You can grow your own and the limit is seven mature plants and two immature. You can register for a dispensary and I say a dispensary because you can change it but it’s difficult otherwise you are locked into one dispensary. So you choose a dispensary and there are only four of them in the state and they’re all about an hour a part okay.

Matthew: Okay.

Eli: So there’s a map that I’d be happy to share and people can see on the Vermont; the state government medical marijuana page that shows the number of patients in each county. So those are your; you have those two options grow for yourself, choose a dispensary, or you can designate a caregiver. So a caregiver can grow your designation, your seven plants and two immature plants in a single indoor facility. The caregiver must also apply for a card and they have to be twenty-one years old and free of drug convictions.

Matthew: Okay.

Eli: So again it’s a very restrictive system and the caregiver area is a place that could probably grow more here in Vermont but it all starts with allowing more patients. I think streamlining the process a little bit more. Things like PTSD which people understand more and more. Even the qualifications for chronic pain and one thing that’s really, really significant that I can’t forget to mention the UVM College of Medicine is hosting the first medical marijuana class at the medical school level which is happening right now this semester. So I think that the medical community there’s some interesting medical research going on here. The Vermont Patient’s Alliance have some physicians involved who are doing some really cool research and I know that’s a big part of interest for us here in Vermont.

Our scale being what it is we’re not going to have the kind of volume and production that places out west are. I mean what’s the future of cannabis here in Vermont? I think it’s a lot of research and development. At least we hope there’s a high quality of life and it’s a place that young people and scientists are drawn to naturally and researchers.

Matthew: I need some infused maple syrup.

Eli: Oh my God I mean the food; unfortunately the edibles were the first thing to be compromised in the legislation.

Matthew: Yeah tell us about state of edibles because a lot of people listening are interested in edibles and infused products and concentrates so Vermont is ([16:40] unclear).

Eli: Yeah I think everybody’s interested in those; everybody’s there.

Matthew: Those are forbidden in Vermont currently?

Eli: So right now the dispensaries are able to produce edibles for their patients.

Matthew: Okay.

Eli: There had been loopholes where patients could be making their own concentrates. Although I think we’ll see some of those be closed unfortunately the police have busted a few. They’ve called them clandestine labs. They’ve been really small, amateur, BHO operations. It’s weird. They only come out during the legislative sessions. Crazy.

Matthew: But you can’t; so you’re saying that only the dispensaries, these three or four dispensaries can make their own edibles, concentrates, and infused products and only for their patients is that right?

Eli: Well right and patients can produce their own if they’re growing for themselves.

Matthew: Okay.

Eli: But again there’s not a lot of that happening.

Matthew: People are just like hey I just want to get flower. Let’s cover that base before we get into anything more exotic.

Eli: Well and you know I don’t know what the dispensaries sort of sales look like. I would imagine edibles are extremely popular there and concentrates they’re really you can’t go in unless you have a; they’re very small low-key operations that really operate kind of more on demand for patients than in any kind of retail context.

Matthew: Do they grow there at the dispensary or how does that typically work? I mean is there sometimes you see a dispensary with its own grow facility attached to it. Is that typically how it’s done in Vermont or is it different?

Eli: No I’m not familiar with the specifics of each one but I know the one here in Burlington does not have; their cultivation is not here in Burlington.

Matthew: Okay.

Eli: And these places are all super discrete. Unless you know where they are, unless you’re a patient there’s no signage, there’s no walk-ins, there’s not even; usually it’s called by appointment.

Matthew: Okay.

Eli: For everything. So it’s really small low-key operation and to get back to the question of the edibles and the concentrates it’s really, really unfortunate that that was kind of the first political compromise that was put forward where edibles are something that will be right now in the proposed legislation even when flower is allowed to go on sale in 2018 edibles would not be. I think what everybody is thinking is that as there’s more comfort and familiarity with edibles that if there’s a personal use market there will be a personal use edible market probably pretty quickly. I think the market forces demand that there are edibles and it’s really just a question of let’s not even bother addressing that right now on the personal use side because there’s so much sort of set up in education. We’re really taking a lot of steps forward quickly here in as far as thinking about personal use and what the dispensaries and the home grow and the caregiver system has been.

Matthew: Right. That’s all medical. We’re talking about all medical marijuana and getting a card and so forth but what about in terms of recreational? You mentioned in 2018 is there a possibility for full recreational use coming out in the months or weeks ahead? Is there any talk about that?

Eli: Doubtful. We’ll see what the wrangling looks like in the house. That seems like kind of a no brainer right that once we pass a legalization that people shouldn’t be getting citations.

Matthew: Right. Is it decriminalized?

Eli: It is decriminalized in Vermont. So right now it’s a small civil fine.

Matthew: Oh good.

Eli: One or two hundred bucks which is nice and opponents have said look you have decriminalization already. The States Attorney here in Chittenden County will probably be our next Attorney General has said we have decriminalization that’s enough but really we know that there’s a huge demand from Vermonter’s already. We know that 80,000 people this is from the RAND Corp study that was commissioned last year; we know that 80,000 Vermonter’s are partaking illegally. They might all only be risking fines but they’re all technically criminals.

Matthew: Right.

Eli: And especially if you’re somebody who’s a parent or who is really worried about that and doesn’t want to access the underground and doesn’t want to have to be breaking the law or trying to seek out a drug dealer. It’s a huge concern. So the decriminalization really is not enough and even there are a lot of provisions in this law that leave a lot to be sort of demanded as far as the criminal penalties even as far as the home grow.

Matthew: Okay.

Eli: I mean frankly as someone who’s covered this recently for the last six months and been paying close attention the amount of enforcement has not gone down. There was a story that made kind of national news about a little kid talking about his stepdad being a magical farmer and this led to police finding a home grow operation. You can’t defend if the police walk in and there’s a bowl smoking in the living room in the same room as the kid nobody can defend that but it’s one of these campy stories that people kind of laugh at. There are real consequences here and again on the criminal reform part there’s a lot this legislation doesn’t address but one of the main things that is being proposed is having a control board.

Ideally not one that’s regulated by the Department of Public Safety. I think having the police be in charge of the medical program has not been a win for patients and potential patients. So I think that what I’ve at least thought and advocated for is that if we can start with a control board that’s got some transparency, that’s got some accountability, that’s got some expertise that’s not to biased or self interested that’s a start and that’s something where we understand that the political will is there. From our most recent poll 55% of Vermonter’s according to Vermont Public Radio support reform and that number has been pretty steady for the last three or four years.

So the political will is there. How clunky it is at the beginning and how it looks on paper and how it unfolds if you look at it on paper right now what the bill is, what it allows for, and sort of how it lays out with even nothing happening until 2018 there are a lot of people who aren’t satisfied with that.

Matthew: Yeah. 2018 is a long time to wait.

Eli: It is a long time and I mean looking at the regional politics right like New England is a small place. There are 100 million plus people within a one day drive of Vermont and there is a lot of I think enthusiasm to be the first personal use market in New England and serve all of these people and in Vermont it makes sense. You come here to drink our amazing craft beer. We’re called Heady Vermont. Everybody’s probably heard of Heady Topper. We’re not affiliated; we’re fans but people come here to drink our beer and ski and look at the leaves and stare at the trees anyways right. So I think in New England there are definitely some people who are thinking of it as a race to be the first market.

Matthew: Yeah.

Eli: There’s going to be a huge one and people will definitely drive from Boston to here or from Boston to Portland, Maine or maybe to Montreal.

Matthew: Yeah.

Eli: That might happen before anything here. So that’s been a big part of the conversation too is well if Massachusetts does this we’re going to be affected so we should be proactive and think about our own context here in Vermont and I think that’s something that’s really been a net positive for people all over the northeast and people all over the country. I mean look at the Supreme Court ruling coming out of Colorado thinking about what neighboring states how they can and can affect your cannabis policy.

Matthew: Yeah that was just thrown up I think what yesterday?

Eli: Yeah, yeah exactly.

Matthew: Yeah so the other states Nebraska and; was it Nebraska? Well two states that complained.

Eli: Yeah it was Nebraska and Oklahoma.

Matthew: Yeah they complained about Colorado saying hey this is affecting us. We have to have more police presence and so forth but the Supreme Court threw that out so that’s pretty cool.

Eli: Yeah it’s amazing and I think here in New England it’s even that much more relevant because everything is so much closer together. I mean 3 ½ hours for you guys out there is nothing. That’s like a commute to work for some people. For me I’m in Boston in downtown at the Celtics.

Matthew: Yeah.

Eli: Or I’m at Fenway so with that much mobility I think that New England as a region is going to come along very quickly and it’s really worth people paying attention to how it unfolds because there’s cronyism everywhere, there’s protectionism everywhere, there are people who have interests in keeping the status quo in every different state. So whatever your end game is whether you’re somebody who wants to be in the business, whether you’re a patient, whether you’re just somebody who cares about public policy and your politicians and how they act. It’s really worth paying attention to how this shakes out especially as we learn more and more about the financial consequences.

Matthew: Sure.

Eli: I mean the numbers that are coming out of the news of how big the market is I don’t think there is surprise to people who have seen it operating or are paying attention but those are big numbers and I think that’s also driving a lot of the mainstream discussion and be naive to think it’s not.

Matthew: Yeah.

Eli: So I say that I want Vermont to be first not because of the money and not because I think we’re the smartest, crunchiest people to do this but because I think everything is a process and there’s so much infrastructure to build here in New England as far as the education, as far as the political structures, as far as the everything, the regulation, testing, all of this stuff. So I think it’s great that the conversation is happening more and more and frankly I’m sitting here looking at a Bernie Sander’s poster in my living room and that’s one great thing that now I say Vermont and people at least say Bernie Sanders. Ben and Jerry’s and maple syrup are cool too.

Matthew: And fish right?

Eli: Yeah, yeah and fish exactly.

Matthew: Yeah.

Eli: So between all these things how could we not.

Matthew: Well this has been very enlightening Eli. There’s not a lot of huge news coming out but it’s good to get an understanding. I think for business owners it’s probably potentially too early to do anything but start a dispensary.

Eli: Well there’s a lot of other activity here and one thing that we’d really be remised not to mention is Vermont has really, really loose hemp laws.

Matthew: Yeah let’s talk about it. What’s going on with the hemp?

Eli: Yeah well there’s a lot of really interesting stuff going on with hemp here. We have like Kentucky very loose state laws. Our Hemp Program is monitored by the Department of Agriculture and basically at the state level anyone who submits an application fee with I think it’s twenty-five dollars to the Department of Agriculture and shares the details about where they’re growing and how much they’re growing is allowed to grow hemp here by Vermont State Law.

Matthew: That’s interesting.

Eli: So there have been people who have been growing hemp here in the past on really a small scale. Again with everything in Vermont the scale is small and people really kind of have to realize that even when it comes to our agriculture. So there have been people. I was just talking earlier with JT Bedard who’s the founder of the Vermont Hemp Company. They’re doing research with the University of Vermont which is really neat. He’s actually got some hemp seed in a beer up here. It’s called Saisanja. It’s made by Stone Corral up here. So there’s some cool activity there and because of the CBD laws at the federal level there is an opportunity that I think more people are looking at for getting involved in hemp here in Vermont and probably even involved in CBD specific extractions.

Matthew: Yeah. Well the CBD front looks a little uncertain. It sounds like the FDA is starting to step in and trying to put the cabash on CBD’s probably to protect the drug lobby.

Eli: Right but it’s one of these things. It’s such a nuance this year right and when you have physicians talking about we believe that these CBD specific strains that are really, really valuable and then we have physicians who say that a lot of the stuff marketed to that market actually needs to have either the entourage or the ensemble effect however you want to call it. So yeah it’s really one of these issues that as somebody who covers it and tries to interpret this to a larger audience and try to inform people and engage them explaining the CBD paradigm is really tough and seeing how it’s going to shape out.

One thing that’s cool up here there’s hemp being grown for; one thing these guys are looking at is the hemp for soil remediation and trying to help prevent agricultural runoff into our lake which is a huge issue with a lot of agricultural states. So I think long term industrial hemp is where it’s at and I think it’s really, really exciting. So I’m really proud that Vermont has those kinds of hemp laws and that we have kind of the energy that’s moving forward on that front whether it gets directed towards a CBD therapeutic/medical market, whether it gets directed towards seeds for beer or other things, or whether its fibers and building materials. I think that’s really, really a great effect of this and similarly whatever happens with the political process people being more aware of the challenge of patients. And in the medical program and I think that if hemp and medical and patients and farmers and researchers in those fields benefit from this process ultimately we’ll find our way along.

Matthew: Well Eli in closing can you tell listeners how they can find you online and follow the progress of Vermont’s cannabis legalization?

Eli: Yeah absolutely. So our website is called www.headyvermont.com. So it’s www.headyvermont.com. I have a personal blog called Vermontijuana and just do some stuff on social media with that but generally speaking yeah at Heady Vermont we’re really being inspired by outfits like The Cannabist. Some of the other more mainstream blogs. I mean obviously the ([32:40] unclear) High Times. I’ve been in touch with people from the Emerald and all over the country. Really seeing when people try to bring a journalism experience really I’m not, you’re recording this, being inspired by publications like that and blogs like these I think has really helped the amount of awareness.

Even I saw High Times being reposted on Mashable today. All of these publications and all these activists and all these journalists who have brought more attention really inspired us and hopefully we can follow their sort of lead and get people engaged more here in Vermont and in New England generally but yeah Heady Vermont we’re locals. Monica Donivan is our publisher, my co-founder a really talented photographer and publisher. She’s been great. So we’re going to keep working with this. We are looking for contributing writers. We want to host expertise from across the country. We have medical hemp in business sections in addition to the New England one’s and then eventually we’re going to hopefully get into events. I mean we really want to; my tag line has been #elevatethestate.

So that’s really the ideas that by sharing more information, by getting more people involved we can eventually start hosting more events really just bringing the level of knowledge, education, and engagement up. So I love to have people reach out to us. You can reach me at news@headyvermont.com and find us online easily on Facebook or Twitter.

Matthew: Well Eli thanks so much for coming CannaInsider today. We really appreciate it.

Eli: Matt thank you very much. Like I said before I’ve been listening to the podcast for a long time and it’s really been a huge source of education for me and also inspired me to really get on the stick and get out there myself so thank you very much and I look forward to talking to you again in the future.

Matthew: Thanks Eli.

Eli: Alright cheers from Vermont.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.


Eli Harrington of Headyvermont.com gives an update on legalization in Vermont.

Key Takeaways:
[1:39] – Eli talks about how he got involved in the cannabis industry
[4:13] – Eli talks about social issues in our country
[6:20] – Eli discusses the food industry suing Vermont
[9:00] – Vermont’s legalization status
[11:48] – Eli talks about what conditions a medical marijuana user has to have
[13:47] – What is the caregiver relationship in Vermont
[18:19] – Eli talks about how the grow facilities work in Vermont
[20:15] – Possible recreational use for Vermont
[28:27] – Eli talks about Vermont’s hemp industry
[32:13] – Eli’s contact details

Important Update:
What are the five trends that will disrupt the cannabis market?
Find out with your free guide at: https://www.cannainsider.com/trends

Handling Cash and Outsourcing Cannabis Employees

stephen sullivan ms mary staffing

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you looking for a fulfilling and lucrative career in the cannabis industry? Visit www(dot)cannainsider(dot)com/careers. That’s www(dot)cannainsider(dot)com/careers. Now here’s your program.

If you’re looking to break in to the cannabis industry or you’re an employer struggling with finding the right people to help your business grow, you’re really going to enjoy today’s interview with Stephen Sullivan of Ms. Mary Staffing. Welcome to CannaInsider Stephen.

Stephen: Thanks for having me Matt.

Matthew: Stephen before we jump in can you tell us what Ms. Mary Staffing is and how you serve clients?

Stephen: Sure. So we are a full service HR agency. We do payroll processing, recruitment, HR consulting and we’re serving the cannabis industry.

Matthew: And what were you doing before Ms. Mary Staffing? How did you get into this business?

Stephen: Well I was working staffing and engineering in IT. Then I wanted to bring the typical staffing model to the cannabis industry.

Matthew: Okay. Now many people listening may not understand that the cannabis businesses that touch the plant have a very difficult time paying employees and doing a lot of the things that normal businesses take for granted. Can you tell us about the cash issues dispensaries face and how you help your clients overcome those cash issues?

Stephen: Yeah it’s definitely difficult to run a business without a bank account, especially when you’re talking about payroll. So what we’ve done is we’ve implemented a PEO model that co-employment model where we step in and we hire dispensaries or cultivation facilities’ employees and we become liable for employment taxes, worker’s compensation and the client just pays us and we are able to accept cash. We work with a number of transportation companies like Blue Line Protection Group, NPS International. We’ve worked with both of those companies.

Matthew: Now Stephen, the PEO concept might be a little bit foreign to a lot of people listening, but it has a tremendous value for certain industries. First what does that acronym PEO mean?

Stephen: It’s Professional Employer Organization.

Matthew: Okay and so how does a Professional Employer Organization partner with an employer and how does that help them?

Stephen: So we step in and we go into what’s called a co-employment agreement with the dispensaries to where their employees now become our employees and we handle benefit administration, unemployment claims, we basically become the business owner’s HR department.

Matthew: This is really valuable for people listening. The problem is here is that most dispensaries don’t have a bank account. All they have is cash. So when they enter into an agreement with a PEO company like Stephen’s then Stephen can then accept that cash and pay the employees of the dispensary in direct deposit and he can also go to the state and federal level and pay those taxes on the dispensary’s behalf. And also this avoids the cash penalty. Now what is the cash penalty Stephen?

Stephen: Well the cash penalty is a 10% fee that the IRS charges if you pay your employment taxes in cash.

Matthew: So what other ways do PEOs help businesses besides just payroll?

Stephen: Well we become the full HR department for the business owner. So we do benefit administration, recruitment, making sure that the business owner is compliant with employment law, we also have employee handbooks. Basically anything HR related we can handle for the business owner.

Matthew: What are the type of things that you’re doing in compliance from an HR level because there’s weird little things I know in the HR world like if you don’t have a poster up or if you’re not doing things right, there’s like all these little pitfalls that you don’t know about that can kind of jump up and slap you. Can you tell us about one or two of those?

Stephen: Well you mentioned a couple ones. So when we first start working with a client we do what we call a free audit where we go in and we make sure that the business owner has those posters and has their employee handbooks and everything in order. Employment laws are constantly changing so that’s something that business owners have to stay on top of.

Matthew: What kind of staffing, what kind of positions do you help with staffing? Typical or what are your most popular?

Stephen: Our most popular, as you can imagine, are bud tenders, retail managers, trimmers, growers and everything in between kind of your harvest or your assistant growers.

Matthew: Now I’m really interested in attrition because there’s a lot of people trying to get into the cannabis industry, but from your point of view when you come on or what you hear back from employers when they let someone go, what are the typical reasons that someone leaves the cannabis industry or the positions that you see that kind of fall into the biggest bucket so we can understand why people leave.

Stephen: Well if you’re talking about employees quitting, usually it’s to move to a different… I see a lot of transitions between businesses within the cannabis industry. People come in and they get skills at a particular dispensary and then they move to another one.

Matthew: Okay. Is there anything where it’s involuntary where they’re leaving and you see…

Stephen: I have seen some cases where they were let go. Some employees were caught stealing product or stealing cash. I have seen cases of that.

Matthew: Yes. Pretty common I hear with trimming is kind of rampant with theft because you’re sitting around and you have huge amounts of cannabis and it’s something that happens when you have that valuable of commodity. Now I know this is a strange question, but do employers require drug tests and if so, what kind of drug tests?

Stephen: We’ve actually never had a request from any of our clients to do drug tests. We have the capability, just have never had anybody ask to do so.

Matthew: Yeah, that would be a funny kind of Candid Camera if we said we want to see if you test positive for cannabis and just watch their reaction. Now can you give us some examples of intermediate or executive positions that you’re starting to see more employers ask for?

Stephen: Intermediate I would say kind of your assistant retail manager, even some managers I would place in that category. Executive positions more of your facility managers, of course partners within the business. Maybe a consultant partner as well.

Matthew: Okay, now let’s say you just took on a new client and they’re a pretty average client in that they don’t have everything just perfect yet. What are the mistakes you see that most dispensaries have in common or maybe not mistakes but things they can do better?

Stephen: Employee handbooks are definitely something that we notice a lot with our clients, with new clients, that they don’t have proper handbooks. A lot of times, as you mentioned earlier, the posters that they’re supposed to have up aren’t up which is why we offer a free audit to any of our new PEO clients.

Matthew: Now from when you started this business to where we are now and where do you think we’re going in the next couple of years, how have the staffing and employer related needs evolved and how are they evolving?

Stephen: Well it’s constantly, rapidly evolving especially with regulations that business owners have to stay on top of as well as employment laws that are constantly changing and then now the new healthcare, Affordable Healthcare Act which requires employers to stay on top of benefits for their employees which can be a challenge for small business owners.

Matthew: Yeah and there’s some kind of magic number where if you’re over a certain employee count, the Affordable Healthcare Act behaves one way and if you’re under it, it behaves another way. What’s that number? Do you know?

Stephen: Fifty, fifty employees.

Matthew: Okay so after 50 what happens?

Stephen: You are required to offer health benefits to your employees, full time and part time.

Matthew: So I imagine that there’s going to be a lot of employers that magically start changing behaviors at the 49 number, somewhere around there, unintended consequences. Okay. Now what about employees from non-cannabis industries transition to the cannabis industry? How is that done successfully because there’s a lot of people listening that are not in the cannabis industry but they want to be in it. So how can they make that transition?

Stephen: I would say look at your past experience and your skills and really figure out what you want to do in this industry. If you have good customer service or retail experience, you’re most likely going to be better going the retail, bud tender route. If you kind of have a green thumb, maybe cultivation. It really depends on what you enjoy doing.

Matthew: So I want to circle back to this PEO concept for people, and again it stands for Professional Employent Organization. Is that right?

Stephen: Yes, Professional Employer Organization.

Matthew: Because it’s kind of a new concept still but it’s very very powerful in that if you’re an employer, you just write one check to Ms. Mary Staffing or whoever your PEO is and they take care of everything and it’s a great way of outsourcing the stuff you’re not great at. And in terms of cost is there any kind of ballpark figure of what this costs a dispensary owner for your services?

Stephen: It depends on how many employees and how frequently payroll is. We base it off of that and then it’s a percentage of gross payroll.

Matthew: Okay got it. So if you do a monthly payroll, it’s cheaper than if you do it every couple weeks?

Stephen: Right yeah, if you do it compared to a weekly.

Matthew: Now is there any other tips or information that you think would be valuable for people trying to get into the cannabis industry to make sure they stand out in one way or another?

Stephen: Well there’s several resources out there now. If you don’t have knowledge of strains, definitely tap into those resources to learn about the actual product before you try to get into this industry. That’s something that I see a lot. People don’t know much about marijuana but they want to jump into this industry.

Matthew: Okay. Very cool. Now Stephen if people want to learn more about Ms. Mary Staffing, how can they do that and tell us what state you’re in as well.

Stephen: Well we’re in Colorado, Washington State and Oregon at the moment and we’re rolling things out in Nevada here within the next month or two.

Matthew: Stephen is there anything strange in Washington’s law where it would prevent an employer from working with a PEO?

Stephen: Yeah the way Washington State has their marijuana laws set up it makes it very difficult for PEOs to operate, even staffing agencies to operate. So we just work under what’s called a direct placement staffing model.

Matthew: What does that mean exactly, direct placement?

Stephen: We still help with the recruitment, but instead of paying payroll through us we just charge a percentage of the annual salary as say a one time direct placement fee. Kind of like paying a consultant.

Matthew: Got it, that makes sense. Now Stephen can you give out your website for listeners?

Stephen: Sure it is www.msmarystaffing.com.

Matthew: Okay great. Well Stephen thanks so much for being on CannaInsider today. We really appreciate it.

Stephen: Yeah thanks for having me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guest to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.


Stephen Sullivan of Ms Mary Staffing (a cannabis staffing company) explains why it is often a way better deal to outsource your staff to his company. He also talks about how your cannabis company can legally handle cash.

Key Takeaways:
[0:57] – What is Ms. Mary Staffing
[1:42] – Stephen talks about the cash issues dispensaries face
[2:39] – Stephen explains how a Prof. Employer Organization helps employers
[4:51] – Stephen talks about the staffing aspect of Ms. Mary Staffing
[5:28] – Why do people leave the cannabis industry
[6:55] – Stephen talks about intermediate and executive positions
[7:29] – What can dispensaries do better from an employer perspective
[9:15] – How can someone make the transition into the cannabis industry
[11:11] – Contact details for Ms. Mary Staffing

Learn More:
http://msmarystaffing.com/

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: https://www.cannainsider.com/trends

Innovations in Hemp Science with New West Genetics

Wendy Mosher & John McKay

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

There’s so much news coverage of recreational and medicinal consumption of cannabis that we often forget about the massive impact the legalization of hemp will have on society as prohibition ends. I’ve invited Wendy Mosher and John McKay of New West Genetics to help us understand the promise and technology of hemp right now. Wendy, John welcome to CannaInsider.

Wendy: Thank you Matt.

John: Thank you Matt.

Matthew: To give listeners a sense of geography, can you tell us where you are in the world today?

Wendy: Sure we are in beautiful Fort Collins, Colorado.

Matthew: Great. Home of Colorado State University.

Wendy: That’s right.

Matthew: Okay. Wendy can you tell us a little bit about your and John’s background and how you came to get into the hemp genetics business?

Wendy: Sure. So John McKay is a professor at Colorado State University in Plant Genetics. John and I are married. We’ve been together for almost 20 years now. My background is a lot more varied than his. I have degrees in both art and in education. So in our early years together, like the first eight years, I would try to plug my ears and black out all of the science and the genetic speak. I found it a bit too boring. That was against my will. I somehow absorbed it, at least the big ideas. So I’m decent at interpreting between scientists and non scientists which leads me to New West Genetics.

So when Amendment 64 passed we got excited. We thought oh this could be a really cool opportunity to use the skills that both John and our partner Rich, Dr. Richard Fletcher, who was John’s former grad students. So he’s our third partner. We thought this is a great opportunity to use those skills that both of them had been developing over the 15 to 20 years of their study and hence New West was born.

Matthew: Great and what specifically does New West do for a layperson to help them understand?

Wendy: Sure, so New West Genetics combines modern genomics with traditional breeding to create industrial hemp varieties that are adapted to the U.S. So we kind of intersect three large industries; agriculture, bio tech and cannabis. So we’re not only breeding into the seed desirable market traits like specific cannabinoid profiles, but we’re also breeding in desirable ag traits. So formity, good germination, high yield, etc. so that we can make this a scalable crop that can compete with the likes of corn and soy.

Matthew: John in your mind do you see a distinction between hemp and cannabis? I know a lot of people get very emotional when it’s the same plant and then other people say they’re the same and you shouldn’t have these distinctions. As a scientist, where do you weigh in on this?

John: Yes, I think there’s a distinction. It’s a manmade distinction but I think it makes sense. So the 2014 U.S. Farm Bill for the first time defines hemp in the U.S. as cannabis sativa having less than 0.3% THC. As you know, THC is the abbreviation for tetrahydrocannabidiol and that’s the psychoactive substance in cannabis. So 0.3% is a very low number. If you go into some of the dispensaries in Colorado, some of the marijuana they’re selling is labeled as being near 30% THC, so 100 times more potent than hemp. So cannabis plants have a large number of current and potential uses, and I think having this legal category of hemp that has no drug value and no recreational value allows us to take advantage of hemp and develop hemp without concerns that people might have about Reefer Madness or whatever you want to call it.

Matthew: Yeah good point, and that still exists. I travel around the country, I see the Reefer Madness. What a successful propaganda campaign that was. It still to this day lingers.

John: Yeah it’s pretty impressive, and yeah when you leave… after being in Colorado just a little while, when you go somewhere else you kind of notice that the stigma still exists in other places. So back in the 1950s or earlier, I don’t think there really was much of a distinction between hemp and higher THC varieties. Cannabis was used for robes, paper, fabric and some of it was also high in cannabinoids and had been used sort of recreationally for thousands of years. And then in the 1960s the Israeli scientists isolated tetrahydrocannabidiol and demonstrated that it is the psychoactive component. It wasn’t until then that we could actually use science or chemistry to sort the two types.

Matthew: Wendy, what kind of license do you need to grow hemp?

Wendy: In Colorado hemp is governed by the Department of AG. It’s very simple. You must apply to them for a permit to grow. You provide them with the GPS locations of all your crops. You agree to submit to random testing of the THC levels by them and you provide them planting and harvest reports. It’s a fairly straightforward system that has been working very well.

Matthew: Would you say it’s a functional market? How would you describe the market to somebody that’s not familiar with it?

Wendy: This is the $100 million question. Hemp Industries Association, their most recent data is from 2014 and they estimated that about $620 million were sold of retail sales of hemp products. So what is unclear is whether they’re tracking imported CBD and there’s not a lot of data to track that market because it’s so emerging. So there’s three main markets. There’s hemp for cannabinoid extraction. There’s the grain market for consumption and fiber use and of those three I would say that fiber is in its greatest infancy in the U.S. There’s people were having some really innovative applications but they still need to be maybe commercializing and if they are commercializing, they need to be made a little more competitive. There is a market for CBD from hemp and other cannabinoids and it’s sort of growing in fits and starts.

One of our major pains in the U.S. is that we have to compete with foreign imports. I can tell you over 2015 I saw prices between $1,000 a pound and $25 a pound. So I would classify that market as slightly volatile. The grain market is a little more stable and better studied of course. Canada has been growing hemp for grain for a while. And the majority of the hemp grain products that we consume come from Canada. We import 90% of what they grow there. They’ve been steadily increasing their acreage to meet the demand and the majority of that is for human consumption. What’s interesting is that we’ve had here in Colorado surprising success in the grain for animal feed market. So there are new markets opening as we speak and as people become more and more aware of the benefits of hemp and as regulation looses up. So I just like to plug the Hemp Business Journal out of Canopy and Boulder. They’re actively working on tightening up the data for this market so keep an ongoing eye out for their reports.

Matthew: John looking at the imports from Canada, why is the seed sterilized? I’ve heard that it is but is that true and why is it?

John: That is true or that’s at least what the law requires. So we’ll go back again now to the 1960s. So as I mentioned in 1964 THC was discovered. Just before that there was something called the Single Convention on Narcotic Drugs that was implemented through the United Nations. It listed cannabis sativa as being an illegal narcotic but allowed in Article 28 for the production of hemp for industrial purposes and this is where you start seeing this industrial hemp term come. So you could still grow cannabis for fiber and seed, but then the U.S. rolled out Controlled Substances Act which lists as a Schedule I drug the species name Cannabis Sativa which is rather unusual. There’s not other species listed there, usually just extracted compounds such as opium and heroin.

So this caused basically hemp, THC free hemp plants to be in the same controlled category as heroin. Over time there rules were relaxed to allow imports of hemp fiber and grain for animal feed. And then up in 2001 the DEA published a news release saying that they had changed the rules, effective immediately, and that hemp seeds were not back as a Schedule I drug. This hemp industry’s association, which was spearheaded by the companies Nutiva and Dr. Brawner’s Soap sued the DEA and won and since that was settled in 2004 and since then they’ve been importing sterilized grain or extracted protein and oil and selling them largely as human foods in places like Whole Foods. So it’s kind of a complicated story but that’s why the hemp has to be sterilized to enter this country still.

Matthew: Interesting. John what’s it like on the university setting there at Colorado State University? Is the university helpful in your research and study? What’s the relationship like?

John: So I’m a professor in the College of Agriculture at Colorado State University. I have a 75% or 9 month appointment there. I’ll say the university is helpful. I work there so I’m not going to complain about them on the air. But part of the reason that we started New West Genetics is that the university is risk adverse and was slow to come into research on hemp even after the farm bill was passed. In addition universities mostly do the research part of R&D and not much on the development side. For example, my colleagues at the university here do very detailed studies of diesel engines and can actually visualize the combustion inside the engine, but they don’t make new engines and sell them.

So it’s a similar thing on the plant genetics side. Eventually, with regard to CSU, the lawyers did investigate all of the details, consult with various agencies and decided it was not a major risk for us to pursue research in industrial hemp. And all along it was clear that there were interesting research opportunities in hemp for many different types of researches at the university from the College of Ag all the way to Engineering and Textiles.

Matthew: John when you’re looking at the study of hemp at a high level what gets you most excited? Where do you see the biggest opportunities?

John: Well I’m a geneticist so genetics gets me most excite. This species has a lot of unique traits such as cannabinoids, but it also shares a lot of core processes with other plants. And so we can then investigate what’s similar and different about the genome and the genetics of this species. A few years ago our Canadian colleagues published a draft genome. This was largely of the Purple Kush strain of marijuana. That’s a great start and gives us a glimpse of what’s in there. That genome is highly fragmented and we still don’t know what genes are in that DNA sequence. So there’s a lot of work to be done in just characterizing the genome and how much that varies within the species. But then as we do with other crop species, once we have all of that we can take this genomic approach to predict what particular genes and/or which particular varieties or genotypes of the species might have traits that would make it most suited for a particular market segment be that grain or fiber, etc.

Matthew: Okay that makes sense. Wendy, what customers is New West serving now and what customers do you hope to serve in the future?

Wendy: So we’ve had great success, as I said before, in the animal feed market and the food market in general actually. There are some novel uses coming out over the next couple of years that I think are going to be surprising and exciting for consumers. I can’t talk about them yet as we’re under NDAs with our collaborators, but that’s going to be some fun development. And of course we’re also active in the cannabinoid extraction market. We have both raw flower and extracted cannabinoids. Remember those are sort of short term goals for us. Our main goal is to create seed cultivars for sale to the Ag community who would then sell their crop to those end use markets that I just referred to because it’s a nascent market, we need to set up and foster that value chain and have those end use processors ready for our farmers so they see the reason to grow.

So we’re initially greasing those wheels, but our ultimate product will be seed genetics and other intellectual property. We see our customers for that as either larger Ag companies or even more recently we’re seeing some larger cannabis companies that are interested in looking at intellectual property acquisitions. And by the way we are entering Colorado Department of Ag’s hemp certified seed trials this year, and if that goes well our first variety will be available for our foundation seed growers for the 2017 season.

Matthew: And what’s their primary motivation, Wendy? Are the cannabis growers looking or hemp growers looking for better yields, less pests? When they’re coming to you they’re saying I need to solve a problem or I just want to have a better yield or is it both?

Wendy: So you mean farmers? Is that what you’re asking?

Matthew: Yes.

Wendy: So farmers are looking for an additional crop option actually in Colorado. So we’re working with more conventional farmers in both conventional crops and organic crops, but they’re looking for another Ag option. The prices and the commodities market is out of their control and a lot of times those prices are not enough to sustain unless you’re a gigantic farm. So it would be very helpful for them to have another option to turn to when wheat prices are down or corn is down.

Matthew: Yeah a little more speculative though in that there’s no futures market to hedge hemp currently.

Wendy: Sure.

Matthew: But maybe that’s an opportunity at the same then.

Wendy: Yeah someone not so risk adverse, yeah.

Matthew: John do you see any way that plants respond differently from the inside, being grown inside versus outside and what are some of those differences?

John: In terms of the plants themselves, there would be some differences. There’s a lot less light inside no matter how hard you try. If you buy the most expensive, high intensity lights, you might approach about 40% of the radiation of sunlight. So the plants will be overall probably branchier and less dense in the form that they grow in. But really there’s not going to be giant differences depending on at least between those two categories of inside and outside because there will be variation depending on how you grow them outside and how you grow them inside.

I think the biggest difference in terms of production is just the sustainability of it. So hemp can be grown outside. It can be bred to be locally adapted to the local conditions so you eliminate the need to have greenhouses, heating, cooling, lights and all of these other imports that make the carbon footprint and economics of indoor growing very costly. In addition, because people invest so much in indoor production, the one big advantage of indoor production is that you can do year-round production. And so once you make that investment, people do back to back production resulting in a resident population of insects and diseases that are only a problem in the greenhouse setting. So these are organisms that can’t survive outside in Colorado. For indoor production you end up, you have this venin environment year-round where you start building up some of these pests and diseases that you hear about in marijuana production and then people end up trying to save their crops by using dangerous pesticides in some cases. I think that’s not a sustainable approach and I think that almost all goes away when you move to an outdoor production system.

Matthew: John can cover what crop uniformity is and why it’s important in your mind and why perhaps maybe farmers or others should be considering it?

John: Sure, yeah so for a given plot of a given crop species, say you’re growing corn or wheat or soy beans on your farm, uniformity is almost all advantageous. So if all of the plants in a plot are at the same height and at the same level of maturity, then you can go in and mechanically harvest that. You’ve set your cutting bar, are the plants are the same height and you can efficiently harvest all of that grain or whatever you’re trying and in the end that’s an economic efficiency that translates into economic efficiency for the consumer.

So at the scale of the farmer, say with multiple plots, then uniformity and the ability or the availability of seed that produces a uniform crop allows a farmer to predict how much yield they’re going to get from a given acre. So they have so many acres to produce on every given year. They’re small businesses with a single shot at production a year. So farmers spend a great deal of time considering what to plant. So hemp if they know there’s a variety that produces X pounds per acre and they know the cost of the inputs and the value of that crop, then they can make the best economic decisions for their given farm for that year. If you have a non-uniform crop, you can’t make those predictions.

Matthew: Okay.

John: Just to be thorough, you want uniformity at the local scale in a given year but you also want to maintain crop diversity. So over year after year you need to be rotating different crops in there and similarly it’s necessary to have a diversity of genotypes of a given crop species. So for corn for example, each growing region has different locally adapted cultivars. In addition, as acreage increases, the insects and pathogens will adapt to whatever resistance mechanisms the plants have. And so it’s necessary to have a diversity of genotypes out there that slows down the evolution of resistance.

Matthew: John I know that some of the combines get kind of gunked up with the hemp resin oil. Is that a problem you hear about often and what do farmers do with that?

John: I think at the combine level the resin isn’t a problem. The fiber can be more of a problem for these European fiber types that are three or four meters tall in some cases. Hemp is famous for its long, strong fibers. Those are not particularly friendly to pieces of harvesting equipment. As far as the resin if you cut up some floral tissue off of hemp, you’ll get resin on the scissors for example, but if you think about the whole plant; leaves, stem, seeds and the floral tissue, it’s only a few percent cannabinoids when you take it as a whole. And so in Canada and Europe they are using combines and other mechanical harvesting approaches for hemp. Some of those are engineering designs around the morphatype or the shape of the plants, the genotypes that they have. And then the solution we’re working on is to actually breed the plant so that it’s in a form that is most optimal for existing harvesting equipment.

Matthew: John you mentioned the difference between hemp and cannabis is a manmade distinctions. However, there’s people that still say well I want CBD oil from hemp or I want CBD oil from a cannabis flower. Why do you think there’s some of that persistent conflict? Is it because there’s more refinement needed when it comes from hemp or to get like a clear oil? What is that exactly? Why is there some tension between those two communities at times?

John: That’s an excellent questions maybe for a philosopher. Some people don’t believe in evolution or that manmade greenhouse gas emissions accelerate global warming. I was looking at… I saw a recent article in the Washington Post that about 30% of Americans think Barak Obama is Muslim. So it’s hard to know why people say things that usually doesn’t necessarily have anything to do with facts. There might be some motivation to distinguish the two markets because of competition, but the fact is cannabidiol is a molecule with a defined structure. So if it has that molecular structure, it’s cannabidiol. So all the same cannabinoids exist in hemp and marijuana and it’s just the amount of THC that distinguishes them. The forms of the molecules are identical in both forms of the species.

Matthew: Okay. And John what are some of the most innovative uses you see with hemp right now? I know I’ve heard about I think it’s Mercedes or some German auto maker using hemp resin to make fibers or some sort of composite for a door panel or something like that. Do you hear about things like that and what’s exciting you the most right now?

John: Yeah so I think there are a lot of innovative uses. Hemp has been used for a long time traditionally for rope, textiles, paper. It’s unique in that it has these very long, strong fibers that are resistant to rotting and organisms digesting it. So it was used for rope and sails because it lasted longer than any of the other natural fibers that people were using. There’s also been, and I think things will continue in the more high tech end of textiles. Colorado has a sort of high tech outdoor clothing industry that I think would be very amenable to incorporating the benefits of hemp textiles. There’s also cosmetics. Hemp oils have been used in cosmetics. I mentioned Dr. Brawner’s earlier. They’ve been sort of activists and advocates for hemp production but they use it in their soap products.

There’s a large existing market of food and feed of the grain for animals and humans. If you go into Costco you can find Nutiva Organic hemp heart type products, the crushed grain or the oil or protein and then as you mentioned moving forward there’s been more high tech stuff like composite materials where the fibers are molded with polymers. There’s interests for airplane wings and other types of uses to replace carbon fibers with hemp. There’s some industry in Europe in building materials. It’s added to concrete to make a light concrete or to use in insulation. So I think there’s a lot of emerging markets. Some of these are going to require a lot of research and development before the market develops. Some are really just about developing the consumer market with existing technology.

Wendy mentioned the cannabinoids. So obviously THC is the psychoactive one. There’s a lot of interest in non THC cannabinoids and it’s really wide open at this point. My first question is how many cannabinoids are there. We don’t actually really know that. Some of them are quite rare and haven’t been characterized at the molecular level. The next question is how do they effect humans. How do they interact with human physiology? We know some of the binding sites for THC and a little bit about binding sites for CBD, but we don’t really know how any of the rest of them interact with human physiology.

Matthew: Wendy, how do you see the intellectual property aspect of your hemp research evolving over the next few years? I should say the intellectual property around hemp in general. Do you see it changing or morphing or evolving in any ways?

Wendy: I see it becoming intellectual property will play the same role that I plays in any other crop. It’s going to bring clarity to who created what, who owns what. There won’t be any more arguments about who created Girl Scout Cookies, the likes of that, which in turn brings some stability to markets. There’s numerous opportunities, not only on the breeding side which we’re on, but in engineering in general. We just talked about all those applications and products and just plant discovery in general. I think Hemp Industry says that there’s a potential 25,000 uses for hemp.

So I think the cool thing is that we have so much technology to improve at right now. It’s not like those other big crops in the latter half of the last century where they had to improve slowly as technology advanced along with them. We have incredible technology available to us now and because of prohibition we couldn’t use it on cannabis. So over the next few years I predict we’re going to see an explosion of discovery in intellectual property activity. I think that’s exciting.

Matthew: I hear that hemp is being used quite effectively for insulation in housing and building too. That’s really a promising development I think.

Wendy: Yeah, construction in general. Places like Hawaii are very vested in creating their own construction materials on site because it’s so expensive to get them there. So they have a very active hemp program and they’re looking at those applications. Things like Hempcrete and also replacing drywall with some kind of hemp composites. So yeah.

Matthew: Now Wendy you recently pitched at ArcView. Can you tell us about that experience, what it was like?

Wendy: Sure. In general ArcView was fun. It was a very fun conference. There was a lot of energy. It was a little bit younger of a crowd than other pitch events we had participated in. So throughout 2015, we fundraise in a variety of ways, not just with ArcView. We worked with Rockies’ Ventures Club with our advisors at the Innosphere and we worked a deal through Rocky Mountain Hemp Association which is now National Hemp Association. Fund raising in general takes time. You have to kiss a lot of frogs as people say, and nobody was awful. Just in some cases, in many cases it wasn’t the right match. So we chose carefully. People are kind of aligned with our culture. Every single one of those avenues was unique and interesting and certainly a tremendous learning experience. If anybody out there is thinking about fundraising, I would highly recommend utilizing your local accelerator whether it’s the Innosphere. If you’re in Denver, Rockies’ Venture Club. They were just invaluable in getting us pitch ready and I give them a lot of credit for our fundraising success.

Matthew: Are you open to new investors Wendy?

Wendy: We are not actively fundraising right now.

Matthew: Okay, and in closing, how can listeners learn more about New West Wendy and follow what you’re doing?

Wendy: Please go to our website www.newwestgenetics.com. That’s www.newwestgenetics.com and hopefully if this airs before we’ll see some listeners at the Northern Colorado Hemp Expo in Loveland, Colorado on April 1st and 2nd.

Matthew: Great, well Wendy and John thanks so much for being on CannaInsider. We really appreciate it.

Wendy: Thank you for having us Matt. That was fun.

John: Yeah, nice to talk to you.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.


Wendy Mosher and John McKay PhD are the founders of New West Genetics.
New West is leading some interesting innovation in the hemp arena.

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?
Find out with your free guide at: https://www.cannainsider.com/trends

Key Takeaways:
[1:51] – Wendy and John’s background
[3:01] – What is New West Genetics
[3:50] – John talks about his opinion on cannabis and hemp plant distinction
[6:13] – Wendy talks about the licensing to grow hemp
[8:47] – John talks about the seed sterilization
[11:24] – John discusses the support he gets from the University of Colorado
[13:05] – Biggest hemp opportunities
[14:37] – Who is New West’s customer base
[17:09] – John talks about the differences between inside and outside grown hemp
[19:48] – John discusses crop uniformity
[24:25] – Differences in CBD oil from hemp and from cannabis flower
[25:55] – Innovative uses for hemp
[29:15] – Wendy talks about intellectual property’s future evolvement
[32:19] – Contact details for New West Genetics

Dissolvable Cannabis Strips from Oakor

Josh Kirby of Oakor

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

As the cannabis grows it’s getting harder for entrepreneurs to make their products stick out in the crowd. Some are going out of their way to offer a unique experience that is not a “me too” product. One such company is Oakor. I’ve invited Josh Kirby, founder of Oakor on to CannaInsider today to tell us about his unique product and how to stick out in a crowd. Josh, welcome to CannaInsider.

Josh: Thanks Matt. Thanks for having me.

Matthew: Josh, I like to give listeners a sense of geography. Can you tell us where you are today?

Josh: Yeah I’m in Seattle, Washington right now.

Matthew: A lot of cool things coming out of Seattle. I keep on hearing innovative things. Do you agree with that? Do you think there’s an innovative surge in the cannabis industry in Seattle?

Josh: Yeah it’s definitely an interesting market with a lot of really, really unique things happening.

Matthew: What is Oakor? Can you explain it for the listeners?

Josh: Yeah. So Oakor is a cannabis brand that’s focused on bringing smokeless cannabis products to consumers with a main focus on trying to destigmatize cannabis as a plant, as a form of medicine and as an industry in general.

Matthew: Okay and how did you get into the cannabis industry?

Josh: I actually got into it kind of by accident. I was working with a couple friends on trying to start some business. We didn’t really have any sense of direction other than we wanted something with either changing laws or changing technologies. We ended up falling into the medical cannabis industry. I moved out from New York to Seattle to start Oakor. As soon as I sold my first product and started getting patient feedback , I just immediately fell in love with the industry and fell in love with everybody who’s playing the game out here.

Matthew: Now can you describe your dissolvable strip and what that is for someone that’s never seen something like that before?

Josh: Sure. So the easiest comparison is it’s essentially a breath strip. The only difference between it and say a Listerine strip, aside from the fact that it has THC in it, is that it goes underneath your tongue. So it’s designed to be sublingually absorbed which mean all of the active ingredient in it gets pulled through the membranes and the capillaries inside your mouth directly into your bloodstream which makes it fast acting and it makes it super efficient.

Matthew: The thing that really stuck out to me about what you’re doing here is (A) it’s so different. I mean if someone’s coming into the cannabis space and they’re listening right now and they’re like hey I’m going to make a brownie, it’s like good luck. I mean the person at a dispensary has probably got so many different options for chocolate and brownies, I mean, it’s not to say it’s impossible but something like a dissolvable strip really catches your interest because it’s discreet and there’s a lot of different ways you can consume that easily without making a big stink. I mean it just seems like it solves a lot of problems. On top of it if you have bad breath, does that help too Josh?

Josh: Not as much as you think. It’s not as much of a breath strip as it is just an efficient way to absorb cannabis. So if you have bad breath, this probably isn’t your solution.

Matthew: Right, right. Now what are purchasing managers in dispensaries what are they saying when you show them this for the first time?

Josh: You know it’s a total mixed bag. Some people get it right away. We have a lot of people who are just like wow, this is exactly what I’m looking for. My friends and I had this idea forever ago, I’m so glad somebody did this, and then we get people who are just totally confused by the concept and it takes a while to walk them through. So it’s kind of all over the place and that’s what we expected with launching a unique product. There’s no real story you have to tell when you hand someone a pot brownie, but handing them an oral dissolving film infused with cannabis is a little different.

Matthew: Circling back to the Washington market, would you describe Washington or Seattle’s market as functional?

Josh: Yeah so I would say it’s functional and getting more functional every day. There’s been some challenges in Washington that other legal states haven’t had to face. Colorado for example had a very well-regulated license to medical cannabis market so when they wanted to take the switch over to rec it was very easy for them to just say you guys get to start selling to anybody 21 and up now. But in Washington we didn’t have the luxury of having a well regulated medical market. It was kind of gray area for years and years and years. Taking those unregulated businesses and just allowing them to sell cannabis to anybody 21 and up wasn’t really an option. So because of that we’ve been dealing some interesting fallout from the medical market transitioning into this recreational adult use market. But overall I think everyone has been doing a great job in keeping their head down and pushing things forwards. It’s just been a rocky road getting there.

Matthew: Washington’s a very popular flower state. Is that, being a non-flower, more discreet company, do you see that kind of pivoting in edibles and infused products kind of taking more a foothold now?

Josh: We thought that that was going to be the case, and you’re totally right. Washington is definitely a flower market. Our assumption was that as the market matured and as it moved further into the recreational space we would see that change happen and we would get closer to that 50% edible saturation like you see in Colorado and California. But what we’ve been noticing actually is flower has stayed about three-quarters of the entire market over the last year and edible sales have actually gone down a little bit. It’s a really interesting space.

Matthew: You’re mentioning that there’s kind of a mixed bag in response to the strips, the dissolvable strips. I mean people that understand it they get it right away, but for the people that don’t get it, what’s their objection? What are they not seeing?

Josh: That’s a good question.

Matthew: They just don’t see why someone would want to have it that way versus something else?

Josh: Yeah I mean one of the main push backs we get is why would I have this over a brownie or why would I carry this around if it’s so small or if the dosage is so low or if the price point is too high. We get things from all over the board.

Matthew: So it’s like a circular tin correct? The Oakor dissolvable strips, it’s a circular tin. Is it circular little strips that you put in your mouth?

Josh: Now they’re actually squares. We tried to make them circular at one point. We were able to do it. There was just a lot of waste created from that. So we decided to stick with the square shape.

Matthew: Okay so you have the squares and what kind of dosages? Do you have sativas, indicas, hybrids since they’re CBD focused? What can you tell us about the strips with that?

Josh: Yeah so we have eight different varieties of the strip right now. We have an indica, hybrid, sativa, a one-to-one which has 10mg of CBD and 10mg of THC, a two-to-one which has 10 CBD and 5 THC. A low dose strip which is 5mg of THC and then an extra strength strip which has 20mg of THC. All of our baseline of strips have 10mg of THC per strip and each tin comes with 10 strips in a pack.

Matthew: Now most people are familiar with THC and also most people are becoming familiar with CBD, but when you hear the one-to-one ratio can you just explain why someone would want that?

Josh: Yeah so there’s some interesting effects when you combine THC and CBD and there’s a lot of speculative research out there about why this effect happens. A lot of people call it the entourage effect. What I notice specifically when I consume CBD in tandem with THC is that a lot of the undesirable effects of THC are mitigated. So I never tend to have any sort of paranoia, any sort of uncomfortable feeling or badly racing thoughts whenever I take CBD in tandem with THC. And I don’t come from… I personally don’t have any glaring health issues so I can’t really speak to the efficacy of CBD and THC for my personal wellness, but we get a lot of reports from people saying that the one-to-one and the two-to-one rations, that combination of CBD and THC really, really help them with the different ailments they have.

Matthew: What about onsets with a strip versus some sort of other edible? Can you give us any anecdotal information about how quickly you feel the medicinal effects of a strip?

Josh: Yeah. So in general because it’s a sublingual dose, meaning it’s absorbed underneath your tongue, it goes directly into your bloodstream. So the onset can be four to six times faster than a traditional edible. If I were to take a brownie, I have to eat that brownie. All the cannabis is bound to the fat molecules in the brownie. So it goes down into your stomach, your stomach acids have to break that down, then those cannabinoids get absorbed through either the lining of your stomach or the lining of your intestines. They pass through your liver and then they hit your bloodstream. And then from your bloodstream they have to travel all around your body and find your cannabinoid receptors. And they have to go all the way up to your brain and cross the blood/brain barrier before they can hit the ones that make you feel the high effect. But with the strip you’re getting those cannabinoids directly into your bloodstream which means they’re hitting your cannabinoid receptors much, much faster.

So depending on what you’re doing, like if you’re being pretty active, you can feel the effects within ten to fifteen minutes because your blood is moving around your body and that’s the carrier for the cannabinoids. But if you’re kind of just sitting or maybe you just ate a big fatty meal or you’re watching TV, then you’re not going to feel the effects for probably 30 or so minutes. But in both cases it’s still faster than eating an edible.

Matthew: This is a very unique product. Is it difficult to find a manufacturing partner or the equipment to make something like this?

Josh: Yeah it was actually totally impossible to find a manufacturing partner. When I first came up with the idea for the product I spent about two months in my kitchen at home trying to figure out how to make it because I couldn’t find anybody that would help me out, and I ended up creating a handmade breath strip process that we still use today.

Matthew: Great. This is a barrier to entry. Someone can’t just decide to do this overnight and be in competition with you. So that’s a great situation.

Josh: Yeah exactly.

Matthew: How did you come up with the name Oakor? What does that mean?

Josh: So it’s named after the street I grew up in in New York. I come from a very small, conservative town in upstate New York that’s not too keen on pot. And when I moved out here I wanted to pay homage to where I came from and I also wanted it to serve as little reminder that even though I’m in a very pot friendly state, the war is not over yet so to speak.

Matthew: What other states besides Washington? Are you focused just on Washington right now, solidifying your exposure there before going elsewhere?

Josh: No, we actually have manufacturers in two other states right now. So we launched in Washington about two years ago, and since then we’ve opened up in Connecticut, which we’re in every dispensary in Connecticut in their medical market, and just recently we opened up in California as well.

Matthew: As a cannabis startup, is it difficult to get financing? Can you tell us a little bit about that journey?

Josh: Yeah so as anybody who probably listens to your podcast knows, you can’t find financing through the traditional methods with a cannabis company. A bank is not going to give you a loan. It’s pretty hard to IPO to get money that way. So you’re really resting on either angel investors or friends and family, and that’s the route we took. It took us about a year just hitting the pavement trying to find someone who was willing to even talk to us and eventually we found an old friend from an old company that we were working on that was willing to give us a loan to fund the R&D and the initial build-out of the product.

Matthew: What do the strips retail for?

Josh: So that depends on where you are, which market you’re in. In California, which is our biggest market currently, the strips retail anywhere between $15 for a tin to $25 for a tin.

Matthew: Okay. Any other products in the works?

Josh: Yeah, yeah. We’re working on a whole bunch of new products. We should have two new products out on the shelves in 2016, and they all sort of follow the same similar model that the slips do where they’re sort of a traditional product that people are used to with a nice tweak on them to make them more efficient ways to absorb cannabis.

Matthew: Which of the strips sell the best? You kind of gave us an outline of all the strips you offer, but which ones are the most popular?

Josh: Our two most popular varieties right now are definitely the CBD only variety, which is just 10mg of CBD in a slip, no THC and the extra strength variety, so the 20mg of THC.

Matthew: Okay. You’ve really done something unique here. Again congratulations to you Josh. For any aspiring entrepreneurs out there, do you have any words of wisdom as they develop their products, apart from don’t compete with you?

Josh: Yeah don’t make a breath strip. Just you know be yourself. That’s really all you can do. It’s a tough journey to get from an idea stage of something to actually getting it on the shelves and assembling a team behind you. And if you’re not true to yourself through that journey and you’re not constantly questioning why you’re doing it and who you’re doing it for, you’re never going to make it, or if you do make it, you’re not going to be happy with yourself.

Matthew: Great point. Be your authentic you, and if you don’t know who your authentic you can you take a 20mg strip? Does that help you discover that?

Josh: It’s definitely helped me find it before.

Matthew: Alright well Josh please give out your website and let people know how they can find you.

Josh: Sure, so our website is www.oakor.com. That’s www.oakor.com.

Matthew: Great. Josh thanks so much for being on CannaInsider today. We really appreciate it.

Josh: Yeah thanks so much for having me.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.


Josh Kirby is on the cutting edge of cannabis innovation. He is creating a dissolvable strip you put on your tongue and it dissolves. Learn why cannabis companies are having to innovate to survive.

Learn More:
http://www.oakor.com/

Important Update:

What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: https://www.cannainsider.com/trends

Key Takeaways:
[1:59] – What is Oakor?
[2:21] – Josh talks about how he got in the cannabis industry
[3:09] – Josh discusses his dissolvable cannabis mouth strips
[4:30] – The reaction to his product
[5:12] – Is Washington state’s cannabis market functional
[7:17] – Reasons some purchasing managers push back on getting the strips
[8:16] – Josh talks about the different varieties of strips
[11:35] – Finding a manufacturer for the strips
[12:11] – The meaning behind the name Oakor
[13:09] – Getting financing as a cannabis startup
[14:09] – Josh talks about future Oakor products
[15:07] – Words of wisdom for entrepreneurs
[15:48] – Contact details for Oakor

Using Data to Make Business Insights with Cy Scott from Headset

cy scott CEO of headset

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

As the cannabis industry continues its growth curve, accelerating passed the $3 billion mark, the industry starts to get more grown up needs. One of those needs is using data to make intelligent decisions at the cultivation and retail level. To help us understand how to use data to help improve customer experience and your bottom line I’ve invited by Cy Scott, cofounder and CEO of Headset to CannaInsider today. Welcome back to CannaInsider Cy.

Cy: Hey Matt it’s great to be back.

Matthew: Cy to give listeners a sense of geography can you tell us where you are in the world today?

Cy: Sure I’m up here in the Pacific Northwest in Seattle, Washington where it’s nice and rainy these last few weeks.

Matthew: Yeah you’re originally a California native, if I remember correctly. How is that going transitioning to being now a Seattle resident?

Cy: Yeah it’s great. We love the area. It’s a great mix of technology and we love the adult use, recreational space that’s happening in cannabis up here. So that’s been great, but I do miss the sun from time to time.

Matthew: Yes, yes it’s almost like a myth in Seattle, the sun. People talk about the sun, but I don’t see it.

Cy: That’s true except when everybody visits for some reason the sun comes out. So everyone kind of gets a little fooled, but it’s not bad and it’s pretty beautiful up here so I really shouldn’t be complaining.

Matthew: Cy I want to jump into what you’re doing at Headset. A lot of interesting things there, but first let’s remind listeners about Leafly, how you got started in the cannabis industry and what Headset is now. And I just want to remind listeners that Cy has been on the show before and that is Episode 20. So if you go to www(dot)cannainsider(dot)com/20 you can hear all the in-depth details of what Cy was doing previously at Leafly, but with that Cy, can you give us a little background on how you got into the cannabis industry, what Leafly was, why you started that and then now what you’re doing with Headset?

Cy: Sure thing. So for that tale we have to go all the way back to the year 2010. So five, I guess six years ago now myself and two others, Scott Vickers and Brian Wansolich started Leafly. And five years ago really does feel like a lifetime in the cannabis industry with the all the change.

Matthew: Yeah it does.

Cy: Yeah it does. I mean so much has changed and there’s just been so much progress, and you know I’m really excited to see what the next five years holds. But we started Leafly. Basically we saw the cannabis industry as a real opportunity in a real growth market and we’re founders, we’re entrepreneurs and startup guys and then that’s what we’re always looking at, but we also enjoy cannabis. When we first got access to a dispensary in California way back it really opened our eyes to the variety of strains that were out there. Doing some research we found out there wasn’t a lot of good resources that had good strain information available, and we thought there’s something here that we can pull together, some sort of website and app to help people share their knowledge of strains and where to find them. That was the beginning of Leafly.

We decided to take it to kind of a more mainstream approach that I think cannabis hadn’t been treated as at that point. You could kind of see it starting, but it’s very different than it is today where you see a lot more mainstreaming, a lot more people opening talking about it. So that was kind of the beginning of Leafly and you know we started that and it’s doing great and it did great and we ended up selling it to a company called Privateer Holdings which has been doing a number of investments in this space. Once we did that we were really able to scale up and like you mentioned moved up here to the Pacific Northwest to be closer to them and also to the recreational market as it unfolded. Yeah, we recently left Leafly. Now it’s been about six months. Went out and raised some money and started Headset.

Matthew: Great. Now having sold a business myself, there’s almost like a grieving process or a funky transition whenever you sell a business. I mean it’s something you started. It’s part of your identity and then you’re kind of tearing it out of yourself and your cofounders and giving it to someone else. And everybody that sells a business no matter what there is a little bit or a lot of change in the course of the business because different people have different ideas. Sometimes it’s better, sometimes it’s worse, sometimes you can’t tell if it’s better or worse until years later. But is there anything you can tell about that process that maybe people don’t think about because there’s this idea like I sell my business and then I’ve got this golden trophy. There’s an exit and an exit is very important, but how do you feel about the whole transition from starting Leafly and then having Privateer, which has a great reputation. You have a good partner acquiring you, but you’re no longer the captain of the ship in a certain way. So what’s that whole transition like?

Cy: Yeah it’s a great question. I think you kind of hit it on the head there with a lot things you’re saying. Just like startups, a lot of people equate the startups to have an emotional rollercoaster. There’s a lot of highs, there’s a lot of lows, and I think that kind of the same thing when you sell a company. It’s very, very exciting to have an exit. And having an exit is really important when you’re doing startups, and when you want to do more than one. So that’s great. It’s also you’ve built something of value that someone wanted to purchase and that’s huge.

With Privateer it was a pretty unique exit because they brought us back on. They bought the company from us and then we stayed on basically to help operationally and keep it going, and we did that for about three years with them. During that time we were really able to access resources that we couldn’t get on our own early on with Leafly. So in the beginnings of Leafly we had great traction. We had a lot of users. We had customers, everything that that a typical startup really looks for when you go out and try to raise money, but we really struggled to get any sort of investment capital back in 2010. There wasn’t a lot of money flowing into this space. It was strictly medical at the time. While everyone recognized that an opportunity was there I think that most investors were just a little anxious about it. And it really wasn’t until I502 and Amendment 64 in Washington and Colorado respectively passed and we saw adult use markets coming in that investment really started pouring into the industry.

So with the Privateer sale it was really a good deal because they were able to essentially fund us which helped take Leafly from a bootstrapped nights and weekends project to a full time, and with those resources we’re able to build a great team and you know it’s in very good hands now. It continues to grow month over month by all measures, and we still have a great relationship with those guys and wish them the best and wish them a great success. It’s hard to put into words I guess what it’s like to sell a company, but it’s overall very positive and I look forward to doing it again at some point with Headset in the far future here.

Matthew: So you transitioned from Leafly to Headset. So you went from a business that focuses on consumers now to a business that focuses on other businesses and they have a lot of different wants and needs. So let’s dig in to what Headset is. If I was a business owner in the cannabis space and you and I were having coffee, what would be some of the first; how would you frame the problem that Headset solves?

Cy: Sure. So if we were sitting down talking about Headset, I would like to describe it as a platform that enables your cannabis company to really optimize your operations by giving you insights into your everyday decisions. We call it Cannabis Intelligence. Headset is a product of years of conversations with people in this space from large scale retail chains to small growers and really kind of understanding their wants and needs and the biggest issues that they’re having. One of the most common thing that we heard was really just having a lack of access to good data and good insights. What’s happening at their locations, but also what’s happening in the overall marketplace.

So we really wanted to create a platform that helps solve that, and the best way to sum it up is really all about optimizations. So we’re really giving you a new lens, a new way to view your business so that you can really optimize and maximize your revenue potential. And with Headset we’re able to do that by analyzing data from a wide variety of sources and presenting that in an actionable way so that you can use that information to make more informed business decisions. So that would be decisions like how to best optimize your inventory if you’re a retailer or maybe you’re a product manufacturer. You know what kind of products should you be offering. Understanding what’s going on in the competitive landscape around you and being able to identify opportunities and again just really maximize those revenue streams for yourself.

Matthew: If you were put into the position of being a dispensary owner or perhaps owning a cultivation facility, if you were to sit down and look at the metrics that they have in place, most of the folks that are running these businesses aren’t really focused on the data piece. That’s where you fit in. So if you were to sit in their shoes, how would you orient yourself? Okay you look at sales, yeah that’s super important. Then you look at well which strains are selling the most, and then perhaps what else would you look at? How would you determine the health of this business and start to make insights?

Cy: Sure. Yeah it varies depending on the type of business that you have. We like to think of Headset as that super smart analyst or data scientist that you have on your staff that’s giving you insights to save you money and help you earn those additional revenues. And for a retailer, those things like sales are obviously very important, and what we try and do because you can get sales numbers out of your point of sale, but what we try to do is really create some more sophisticated reporting and some deeper analysis on numbers like that. Some of the stuff we really want to help retailers with is understanding their inventory and their assortment, how it’s priced, what kind of promotions they’re running, what kind of brands they’re carrying, what kind of brands should they be carrying, which brands are performing and which brands or product segments have the best margin and the best turn for them.

So for retailers it’s really kind of looking at stuff like that. It’s also looking at how you’re doing now compared to previous. So kind of always understanding the trajectory of your business in the context of how long you’ve been open. So a lot of these companies are new so they don’t have a lot of historical data, but you can start to see trends. And for the companies that have been open for more than a year we’re able to compare your operation compared to that time last. So a lot of those things are really helpful just to kind of understand what’s going internally. So right not it’s really hard for these companies to get that kind of inside out. The more sophisticated retailers out there are kind of building these reports on their own and trying to do a lot of Excel and pivot tables and really spending a lot of money on internal staffing to kind of get those insights and we wanted to make that really easy for them through a nice app that they access on their mobile phone or on their desktop that’s well designed.

It’s simple, intuitive. Everyone is really busy and they don’t have a lot of time to struggle with some of this stuff so we really wanted to make it real simple. So providing those types of insights and a real easy to use kind of well designed package. And design is really important to us as you can see with what we did with Leafly, taking a very design forward approach. We’re doing the same thing with Headset and we think it’s really reflected in the app now. And there’s other problems for product manufacturers, for growers that we solve. It just definitely varies for a product manufacturer. It’s really understanding their product line and where do they invest. Where do opportunities lie? Should they create a cookie or should they create a brownie? What’s selling out there? What are their competitors doing? How’s the pricing look like? What kind of opportunities for sales do they have? What kind of market coverage do they have compared to competitors?

For growers it’s what strain should they be investing in? Are people more interested in hybrids, indica, sativa? Is there regionality? Is there seasonality? So presenting that kind of information from the market data we collect but also from their own internal data as far as what’s selling for their brand because maybe their brand specializes in something that’s a little different from the market. So kind of marrying those things together and really giving it to them in a nice package is what we try to do.

Matthew: Okay so Headset can help a dispensary owner look and see okay here’s the velocity of the strains and how they’re selling. Blue Dream number one, this is number one and maybe Star Dog is number two and they can kind of see what’s selling at their own dispensary but then Headset can offer insights more to market level too like hey, in the Seattle market maybe you can say Blue Dream is number three overall and there’s two other strains ahead. So maybe you’d consider adding two other strains or different edibles and so forth so there’s both dispensary insights and then market insights that are married.

Cy: Absolutely. Yeah we feel that both are really important. So we do, we do share that. So we’re able to share market data at the aggregate level so they can understand what distribution looks like for some of their products that they carry across the market in general and even with their competitors. We’re also able to help them understand aggregate sell thru data so if they’re underperforming and over performing for certain segments or certain brands or even certain product lines we can help them with that. We also try to help them with this turnover problem where we’re seeing a lot of strains come and go as they run out of stock. So really helping them make sure that they never hit those costly out of stock events or if they happen to, giving them insights into other vendors that might carry a similar or if not same strain so they can backfill. That kind of stuff is really important.

Again, it all just comes down to optimizing the business because once you get; you have your store. You’re getting people coming to your store by using services like Leafly, but what we really want to maximize that revenue per square footage. So bringing in those insights from what’s happening internally as well as the market is very important for that.

Matthew: Now how does Headset integrate into the point of sale or how does it get the actual data to then analyze? How does that work?

Cy: Yeah so we do have integrations with point of sale software. So we’ve worked closely with some, others have APIs available and we just have methods to kind of get into that data, and there’s a number of point of sales that play in this space. We’re even seeing some from outside of cannabis that are now coming in, particularly in the recreational markets. And so we support all those guys and then we also support accounting software. So for some of the product manufacturers we will connect to services like QuickBooks and things like that. It’s very critical to kind of get that data. I mean obviously to be able to give you those insights we need access to the data and we don’t want it to be any sort of manual process, but we also take privacy very seriously. We never share that data out in an attributive form or anything like that. So while we work with the data and we integrate with these point of sales it’s just to give you your business intelligence as a store owner.

Matthew: Are you focusing on Washington out of the gate as your core market?

Cy: Yeah a lot of that is because it’s our backyard. Also it’s a pretty interesting market. I don’t know, Matt, you’re based in Colorado I believe right?

Matthew: Yes.

Cy: And so I don’t know if you’ve had a chance to come out to Seattle or Washington recently but the market is really coming together. It’s a really interesting space, and we think it’s a good model. We anticipate Oregon looking a lot like this and potentially California. So it’s really great to kind of start here. Also geographically it’s easy for us to work closely with our beta partners and get that kind of feedback we need, but we understand we’re not strictly Washington and just like with Leafly we want to cover all markets. So we will be rapidly expanding this year into other spaces, recreational and medical.

Matthew: One of the problems not just for a business owner but for everybody is the amount of data. People are drowning in data. So to have information curated for us is very helpful. However not every variable or key performance indicator deserves the same weighting. So that being said, when a business owner is looking at their dashboard, they’re looking at sales, they’re looking at the turnover, but after that how do they get to the next level? Because all dispensary owners are looking at those things. It’s great to have it beautifully presented, but then when you dig in and you try to differentiate yourself and make decisions based on data, what would you advise there? Are you starting to dig into what each individual bud tender is doing or what are some other things to look at?

Cy: Yeah that’s a great point, and that’s something that we set out with Headset to really try and change. Data is great, but insights are really where it’s at. Insights are only as good as you use them, and if you don’t use them they expire. If you don’t know how to use them, it’s even worse. So we really wanted to create a platform that’s very intuitive, very easy to use to kind of pull those insights out for you. So if you were looking at a graph or a chart and you’re trying to make heads or tails of like what is this really telling me. What are the key pieces of information? What we like to do with Headset is we actually pull that out and just present it to you. So you get the key pieces of information and then you can go and look at the chart to really understand okay how are they coming to this conclusion and really analyze that chart and maybe come to additional conclusions from it.

So that’s one thing that we really try to do, and it’s not an easy problem. It’s much easier just to present all the data and figure it out, but we understand there’s varying levels of sophistication in this industry. A lot of these companies are small to medium sized businesses with small staff. So we really needed to create a platform that is very easy to use that they can access from anywhere, on their phone on the go and just get that kind of insight and that kind of intelligence at a glance. So that was one thing. Yeah a variety of reports. Also you mentioned bud tenders.

So with the retailers we’re really trying to help them understand what’s happening in their store. So not just inventory sell thru but what their employees are doing. As I’m sure you’re well aware, bud tenders, particularly in recreational but also medical, they have a lot of purchasing power so they can really drive the purchase because people come in and there’s not a lot of brand awareness quite yet. There’s a huge variety of strains, not to mention types of products. So a lot of consumers come in and shoppers, they’re looking and are just kind of overwhelmed and the bud tender is really source for sales for these stores. So really helping them understand what the bud tenders are selling as far as brand affinity. So is this bud tender selling more of Brand X or Brand Y? And that’s really useful in a lot of ways. If you want to run a promotion for Brand X, you can look to which bud tender on my staff is selling the most of Brand X and you use that as a training exercise for the rest of your team or maybe learn some insights of what they’re saying that’s doing so well and selling so much of this.

Also their category, how they stack up. So you may find that some bud tenders do really well at selling topicals and other might do really well at selling edibles. So really understanding that, and you can use that as a store owner or a store manager to really pull some levers to try and really optimize your employees, and if you want just kind of a broad range of what they’re selling versus category versus brand, you can look at some of this Headset data to really help make those decisions and really change the way your business is run.

Matthew: It is amazing to your point about the ability of a bud tender to sway the purchasing decisions. It seems like the ones that when I’m purchasing more they do a really good job of making a connection with the person. It’s not just a transaction. It’s a connection and there’s an understanding and an empathy and it can make a huge difference in not only the revenue for a dispensary, but how happy the customer is walking away and feel like they got what they wanted and what they needed. Strangely some dispensary owners just think well hey I can just have this person train the others, and that bud tender may not know why they’re great. There just might be something innate to them. So it’s maybe something where they shadow them or something like that. So it is worth a lot of study there. Now you’re saying you can break out how much a bud tender is selling in flower and edibles and so forth which leads me to my next question. Initially Seattle seem much heavier a flower market. Is that starting to turn a little bit where we’re seeing where edibles are becoming more popular or is flower still the thing that people are really interested in?

Cy: Yeah, no it’s definitely in Washington we’re seeing a lot more of the package goods. So edibles, beverages, even topicals. I think it started with a lot of flower just because every kind of had to start from zero here for the recreational side. Colorado, all the dispensaries, a large number of them were able to turn over and become recreational. So they had things like edibles already. Where while Washington had edibles for the medical market. That was a whole new license and a whole new kitchen and everything was so different. So it was basically everyone started from zero. So flower is obviously the easiest thing to produce because it grows and you process it, you dry it and you package it which is interesting here, all packaged based on weights. But yeah it’s definitely over the year plus, it’s been a little while now that we’re starting to see more and more brands. We’re starting to see more consumers kind of heading that way and more concentrates. Obviously flower is still dominates and I think flower still dominates the majority of sales, but we are definitely seeing it increase in edibles.

I think a lot of it for the recreational consumer that’s just now getting back into cannabis or is going to these retail stores for their first time here, you know, a flower can be a little overwhelming too. It’s like do you want to go start drinking coffee, it’s buying coffee beans and grinding it up and doing a pour over coffee versus just buying something ready to go or pod for your coffee machine, really easy. I think there’s consumer demand we’re starting to see more of and also brands starting to address that. We’ve got some really interesting brands here that are popping up in the edible scene and some really interesting products. It’s very exciting and it’s just the beginning. Like I said early on five years ago a lot of the edibles we would see in California were packaged brownies in a Ziploc and a Avery label. And that Bang chocolate bar I think popped up around then and you could kind of see well this is the kind of the direction it’s going, but now it’s getting very sophisticated, and it’s really pretty impressive.

Matthew: You’re right and to your point it’s interesting to see kind of regional differences. I have a theory that places that have bad weather the people tend to be inside focusing on things a lot more and people in nice weather are outdoors not as focused perhaps and it’s definitely so in Seattle. We’re having an entrepreneur on the show soon that’s making dissolvable breath strip and out of; it’s not a breath strip, it’s like a dissolvable strip you put on your tongue and it has either CBD or THC in it. So there is some really interesting things coming out of the Seattle market and I look forward to highlighting those more. Now next steps, rest of the year. Here we are early 2016, what do the next 12 months look like for Headset? What are you going to be focusing on? Where are you going to be going strategically?

Cy: Sure so we’re just now coming out of beta for our retailer product. So probably by the time this podcast is up we’ll be live in Washington for retailers. So really pushing into that space. Meanwhile we’re in the middle of developing our product manufacturer processor edition. So like we talked about earlier, different types of companies have different problems, there are some overlaps for sure, but we really have dedicated kind of experiences for the different types of companies. So really focusing on the process or a product manufacturer coming up, and then expanding into other markets. So 2016 is going to be a huge year for us.

We just started Headset probably about July last year is when we started fund raising. We left Leafly in June and spent some time just kind of thinking about what’s next. We wanted to stay in cannabis. We love this industry. We think it’s going to be a huge, obviously so does probably everybody listening, it’s going to be a big market and we really want to see it succeed. So we kind of set out to figure out what that was and landed on the idea for Headset. So we’ve spent the last four or five months fund raising and then we were able to do that relatively quickly and then dove right into building. We’re just now kind of coming out of that. So I’m really excited to get it in the hands of customers. We’ve had it in beta for a bit now and have gotten a lot of great feedback so that’s a positive reinforcer. It keeps the team motivated, but I’m really excited to start getting it into customer’s hands and expanding into other regions this year.

Matthew: Cy are you still looking for investors for Headset?

Cy: We’re not. We did the seed round last year. A relatively small seed round, we wanted to keep it small. We raised money on an idea and a team. We love our investors and we love the group that we pulled together and we’re really privileged to have the investors we do and they all come from, you know, some point in cannabis. They have some connects. So along with the finances we also get a lot of support, a lot of insight into the market as well as a lot of connections. So that’s been really helpful. But this year we’re planning on doing a Series A, so probably sometime in the middle of the year while we’ll be doing that. And we wanted to have a product, get some customers, get some traction before we go out and raise a bigger amount. So this year we’ll be out there again looking for investors. So yeah that’s coming later, definitely probably middle of the year I would say, but right now we’re good on the financial front.

Matthew: How can listeners learn more about Headset?

Cy: So I encourage listeners to head over to www.headset.io, that’s www.headset.io. While we’re pushing into new markets, definitely sign if you’re interested in getting early access. We do betas usually before we roll out the platform for each market. So if you have a cannabis business, retail, if you’re a product manufacturer or grower and you’re interested in these types of insights before anybody else, sign up and we’ll reach out and we’ll get you connected and we’ll get you on the platform.

Matthew: Awesome. Cy, thanks so much for coming on CannaInsider today. We really appreciate it.

Cy: Yeah thanks Matt, great talking with you.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.


Cy Scott was a co-founder of Leafly, the wildly popular cannabis strain exploration app. Cy and his co-founders left Leafly in 2015 and founded Headset. Headset has its sights set on helping cannabis cultivators and retailers use data to make educated decisions to help their business.

Learn More:
http://www.headset.io

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year? Find out with your free guide at: https://www.cannainsider.com/trends

Key Takeaways:
[3:15] – Cy talks about his background and how he got into the cannabis industry
[6:35] – Cy discusses the transition from selling a business to starting another
[9:32] – What is Headset
[11:53] – Cy talks about how business owners use Headset
[17:21] – Integrating with point of sale systems
[18:33] – Cy talks about Headset’s core market
[20:25] – Cy discusses different areas of data for business owners
[24:58] – Flower versus edibles as it pertains to the Seattle market
[28:12] – The future of Headset
[30:57] – Contact details for Headset