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Master Cannabis Cultivator on How to Create The Optimal Cannabis Grow

James Lowe of Mjardin Cannabis

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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.

With so much change in the cannabis cultivation space it is important to stay abreast of advances in cultivation operations and technology. That is why I’ve asked James Lowe, President of Cultivation and Co-Founder of MJardin to come on the show today. James has a sterling reputation in the cannabis community for his wealth of knowledge and best practices in cultivation. Welcome to CannaInsider James.

James: Yeah thanks for having me.

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

James: Located in Denver, Colorado at the moment.

Matthew: And what’s your background James? How did you get started in this industry?

James: My background is actually in design management and project management. We got or I specifically got into the industry through starting off with just handholding with ownership and guiding them through the design and permitting process when the state of Colorado forced the commercial world to kind of come from below ground and go out into commercial facilities and be permitted and have their certificate of occupancy. So we put a team of designers together and helped around thirty or forty Colorado based groups navigate that process over the course of a year or two and then from there we morphed from a design group into a full blown cultivation management company.

Matthew: Right so the management company you’re talking about is MJardin. So tell us what is MJardin? What do you specialize in and how do you help clients today?

James: MJardin’s focus is on the turnkey management of commercial cultivation facilities. So we provide all the typical assistance that the consultants out in the marijuana world provide, design, licensing, support but only in the context that it also is part of a long-term management contract. So we come in and the vast majority of the time 100% staff the cultivation facilities and run the day to day operations as opposed to providing quarterly support or a single person that might assist a owner with their day to day operations. We actually perform 100% of those activities by MJardin employees.

Matthew: Yes and that’s something to really; is a key differentiator because a lot of the cultivation and consultants out there are kind of there if you need them but you’re actually in there doing it and that’s a big, big difference.

James: Yeah absolutely. We’re essentially kind of a non equity partner that is with the licensee for the long haul.

Matthew: Yeah so can you explain what that means by non equity partner and how that’s different maybe perhaps from the way some other cultivation consultants do it and how MJardin’s compensated?

James: Yeah I mean we’re typically a cost per pound. So we work with the licensee to develop a staffing protocols and how the facility is going to be run and then we in terms of that labor cost we don’t mark any of that labor cost up and we simply; our management fee is collected on a per pound basis. So outside of the raw cost which the licensee pays for whether it’s the labor, the cocoa, the fertilizers, whatever those may be they pay for those. We don’t mark any of that up and then we simply collect a management fee based off of production so that our interests are lined with the licensee’s interest as well. If we can’t successfully cultivate we’re not billing any fees and therefore since we are just a professional fee based setup we’re not asking for any equity in anyone’s deal. So the licensee keeps their equity for their own purpose whether that’s to raise capital or obviously keep it for themselves.

Matthew: I’ve had the pleasure of walking through a couple of your grows and it immediately becomes apparent that when you’re walking through with someone like James he’s looking at things in a very different way than someone who’s coming in as a novice looking at it seeing these plants and lights and tables and everything. James when you’re setting up a grow for the first time what are the big elements in your mind that you think hey I have to execute well here or we won’t have healthy plants?

James: Ultimately what we’re doing is; our job is to have whatever genetic that we’re growing we’re there to express it as best we can and in order to do that we have to have environmental control. The best growers in the world can’t do anything if the plant isn’t thriving and the only way that it can thrive is to be being grown in a perfect or close to perfect environment and obviously that’s the number one step or the number one thing to do when getting these places setup is to make sure that we’re staying within a budget. A lot of people’s downfall happens when they; I want a 1,000 lights but I only have money for 700 and all of a sudden corners start getting cut. So we have to make sure that we stay within the confines of the licensee’s financial situation. So those extra 100 lights don’t do you any good if you have mold issues or temperature issues or whatever the cause may be. So first and foremost is having a grip on what the final cost will be with our initial designs and not discovering that too late but then ultimately we want to maximize the space that we’re using.

We’re not proponents of compartmentalized grows. We look to the general horticulture industry to see that vast acres of cut flowers and hydroponic vegetables are grown in wide open greenhouses. They’re not cutting these facilities down into small basement size rooms. So by looking at that we make sure that we can maximize production in the square footage available and not get caught up in figures of I can grow three pounds a light or I can grow two pounds a light or four pounds a light or whatever the number is. The real question is how much marijuana can I successfully pull per square foot per year because three pounds a light is not a measurement. It doesn’t give me any context as to how much space that light is taking up. It doesn’t give me any context to how many successful yields were accomplished over a certain amount of time. So that’s how we; those are the main factors on how we approach a new facility and maximizing the value of the clients license.

Matthew: Looking at soil what kind of growing medium do you use or consider and why?

James: I think all; there’s no best soil. There’s no best hydro system. It’s all about what the clients objectives are, what their marketing objectives are. I mean if we’re looking at organic production we’re probably going to look at some soil based system. The vast majority of our facilities are not looking for organic production. They’re certainly looking for clean production but from an organic standpoint most people are onboard with the increased production they can get from some hydroponic or at least traditional fertilizer blends. So for the most part we use cocoa fiber. It provides faster growth than soil or peat moss blends but it also provides a little bit of a buffer for some of these larger facilities.

We can look at aeroponics or we can look at other systems rock oil, Hydroton but the cocoa fiber we feel provides kind of the best of both worlds. We do get accelerated growth with it but we still have a buffer with a large mass of roots so that we’re not looking at; we’re not running into situations in a large facility where we might only have minutes or hours to fix a problem. The cocoa fiber gives us that margin of safety that ultimately is extremely important and when choosing a soil or a growing medium you have to ask yourself and there’s a lot of variables in play but you have to ask yourself at what point is the risk profile not worth the reward and we do recognize that there are grow mediums that I might be able to get higher production out of but we just like the risk profile and the production associated with cocoa as opposed to; certainly as opposed to aeroponics or even potentially hydroponic mediums such as rock oil.

Matthew: Yes that’s kind of borrowing an ideology from the financial community which is risk associated return meaning you could probably get something a little bit better but then you’re introducing a lot of variables that could ultimately hurt the whole grow in some way.

James: Yeah absolutely maybe I could get 5% better yields with maybe a rock oil or an aeroponics system or something else. Maybe even 20% better yields whatever the number may be but it only takes that one failure to totally wipe out what could amount to; it could take you years to build back up with that one crop loss cost you.

Matthew: Turning to water and keeping your plants hydrated. In touring in one of your grows I saw that you had a special wicking pad or something similar to that. Can you describe what that is and why you use that?

James: Yeah. It’s called a capillary mat. We don’t use them everywhere and it’s a company called “WaterPulse” that we acquire ours from but it’s essentially a ebb and flood bench without the flood and so the benefit of that capillary mat is that instead of force feeding we’re relying on the natural capillary action of the growing media. So what happens with a drip system or a flood bench system or really just about any other system is that when a irrigation zone turns on you are watering at the frequency of the thirstiest plant for lack of a better term. So what that can lead to is situations where if I have a lot of strains in one zone and yet I am watering at the frequency of the thirstiest plant it’s at the detriment of the plant that might be the hardiest and doesn’t necessarily need as much watering and you can get into situations where you have ammonia toxicity from slight overwatering and it has nothing; it appears as a nutritional issue but it really has no bearing that we know. The fertilizer composition is correct it’s just a result of over watering.

So the benefit of the capillary mat is that when I have multiple strains in one zone instead of a drip system turning on and gravity pulling that water down or a flood bench system flooding and everything being fully saturated now we are relying on the dryness of a pot to absorb water. So just like a sponge you put a wet sponge and a dry sponge on one of these capillary mats the wet sponge is just going to stay at its current water holding capacity whereas the dry sponge is going to sit there and start to absorb water and the same is true with the cocoa fiber. So in addition to automatically watering the plants like any hydroponic system it also regulates the amount of water being delivered to various plants in the same irrigation zone so the plant that’s already a little wet is not going to be watered as hard as the plant that is very dry and needs more water. So we end up without ammonia toxicity issues in a irrigation zone with multiple different strains.

Now some of the benefits of the or excuse me that specific benefit starts to not be an issue when facilities get larger and larger and now maybe I only have one strain per irrigation zone or two strains per irrigation zone and those strains are matched and require watering frequency; a similar water frequency. We might start to look at a more traditional drip system or flood bench system or some other hydro system when we don’t need that benefit.

Matthew: So this is fascinating to me. So the flood table is indiscriminant. It sends water down the table to everybody in kind of equal measure but the capillary mat says okay it’s more surgical. It says this plant needs a little more and this one needs a little more. Have you noticed when you switched from like I’d say you were doing a flood table then you switched the capillary mat and do you see like wow the results were pretty clear that it’s a more uniform grow? What were the biggest changes you notice when you switch over to a capillary in some instances?

James: I mean it’s maybe that down turn of leaves and the vegetative state where we might have a couple different sizes of plants mixed together as everything’s filling out their pots. There’s some irregularity in growth at that point and that’s when the ammonia toxicity shows up most commonly and so we’ve seen the increase just a healthier vegetative plant which leads to a faster growing vegetative plant. Green from an entire tray being 100% green; nice, soft leaves as opposed to a leaf that is starting to discolor, turn down, and curl and get that slight yellowish tint to it. So in general we just don’t see ammonia toxicity anymore which is an important thing to achieve.

Matthew: Yeah so when the leaves turn down and they’re droopy like that are they typically yellow or they’re just drooping?

James: Yeah there starts to be some yellowness, maybe some necrotic areas. It’s subtle. It depends obviously on the degree of ammonia toxicity that’s being experienced. There’s obviously other issues that can cause the same kind of appearance so you don’t want to go down the wrong rabbit hole.

Matthew: James in terms of climate, temperature, humidity what is optimal there to help your plants thrive?

James: We’re generally; with carbon dioxide we’re generally in the mid to high 70’s with our flower areas. We run a little bit warmer than that in vegetative areas to increase growth and then 45 to 50% humidity in flower. 50 to 55% humidity in veg and we like to have our cloning separated from our veg because we do do root zone heating and so we like to run that climate a little bit cooler so that ultimately with the root zone heating the microclimate around the plant itself is still the same as what it would be in the normal veg area.

Obviously if we do that in the vegetative area and we’re still adding that root zone heat we can get situations where that microclimate might actually be a little bit out of spec and a little bit warm. Not the end of the world but we generally run a little bit higher humidity and a little bit higher temperature in our veg rooms because there’s less risk of bud rot or any other issues and we do. There are some benefits there. Once we get to flower we want to mitigate any risk of bud rot or powdery mildew that we can so we go ahead and drop the humidity slightly lower.

Matthew: So let’s say we’re looking at a 5,000 or 10,000 square foot grow. Is there any ideas around making sure the humidity and temperature is uniform within that whole space so there’s not little pockets of cold or something similar?

James: I mean the key is airflow. I mean there’s depending on your facility there should be a spec that you are designing around to get a certain velocity of air movement and for that air movement to be continuous from one side of the facility to the other that’s going to not only keep the environment consistent but it’s also going to help reduce risk of condensation where leaves could be touching and water forms and now is a breeding ground for any number of molds and so that air movement keeps that condensation from occurring. If it does it helps to dry it out fast and then obviously like your question asked it obviously keeps the temperature and humidity consistent throughout the facility. Dead spots are your enemy.

Matthew: Yeah. In terms of lighting what do you like these days? I mean is it the double ended lights or what are you using typically there?

James: Yeah we’re using the double ended HPS fixtures. We are running numerous LED tests and they’re there. I mean they’re pretty much on par with the double ended HPS and they’re definitely ahead of the Chinese knockoffs. The name brand and not all the name brand units but there’s a few of them that definitely perform better than others and when looking at those units with their ability to put light on target at the price point they’re at to us they are still a better option than LED. There are some double ended HPS fixtures out there that are on the cheaper side that you probably; the LEDs beat out. Our issue is just that with some of the warranties that are out there on the LEDs they’re not the best in the world. I mean it’s one thing for a Diode to last ten years and we don’t need to change our bulbs and all that good stuff that LED promises but when I’m spending thousands of dollars on a fixture and my warranty is only a year or two or maybe three then that’s a little bit of a concern for me to build; to invest in something assuming that it’s actually going to last ten years. So for us I am sure within the next year or two there will be continuous LED improvements that will make it the go-to choice or price will come down but in our opinion it’s just not there quite yet.

Matthew: In terms of height of your indicas and sativas how tall are each in general at harvest would you say?

James: It varies based off of the state regulations. Where we deal with the plant count we have to maximize the production per plant. If there’s no plant counts to deal with our plants get smaller and smaller and smaller. So Hawaii being an upcoming new market I think their limitation is 3,000 plants per facility. In Colorado it’s based off of patients. Even on the rec side there’s plant count limitations. States like Maryland and Nevada where you have no plant restriction or plant count restriction at all we’ll see the smallest plants. Here in Colorado we’re typically in the for our systems we’re typically in the three to four foot range but it’s not such an important on an indoor facility. The important thing is making sure that we are capturing 100% of our canopy. That we’re not wasting light, that we’re not wasting space, and regardless of how tall our plants are when they achieve that as long as those primary goals are being met our yields will stay the same regardless of how big the plant is.

Matthew: When an investor or business owner is putting together a proform or they’re trying to come up with numbers and estimate their ROI and their expenses and things like this is there an industry standard range on yield per square foot or something you see typically?

James: It’s all over the place. If you always want to be conservative I mean when you’re trying to woo a client or certainly what we see competition doing is making the claims of; they’ll typically speaking in pounds per light which we hate to talk about but everyone wants to dream of massive numbers and that’s great on particular strains but you really have to look at the fact that whether you’re a wholesaler or a dispensary you need 10, 15, 20 strains or in some cases many more than that and the yield profiles are going to vary widely between all of those strains.

So our standpoint is certainly on a financial side of the equation is to be conservative and we typically model and depending on what the scenario is in play that 30 to 40 grams per square foot per harvest but the number ranges up into the 60 grams and the 70 grams with some strains per square foot so; but you just can’t build a financial model around your best performance strains.

Matthew: And you’ve mentioned getting an extra harvest each year because of the way you grow. How does that work exactly?

James: Well it’s just an efficiency. It’s not wasting days, not wasting time. I mean it’s filling on a schedule, harvesting on a schedule. Making sure that there’s no tasks that could only take a day that could instead take a week. I mean it’s just a matter of all protocols being followed and all schedules being kept at all costs and for us not looking at extremely long flowering strains. There’s so many strains out there. We don’t think that it necessarily makes sense to be unless there is a purpose. I mean there could be strains that just need to be grown but for your general purpose strains there’s hundreds and hundreds of strains out there that don’t take 75 and 80 and 90 days to flower and in the commercial world unfortunately for better or worse it doesn’t necessarily make sense to go after those sort of strains.

Matthew: If you could kind of turn back the clock and go back a few years to when you were just starting out in this industry or just starting to help clients what would you change about; you probably focusing on a lot of things now that you would say hey this wasn’t as important. I probably should have focused on these things and not on these things. What would you go back and tell yourself five years ago or three years ago about what’s more important and what’s less important?

James: I think compliance is everything and we always make sure that we’re operating 100% compliantly but the rules are always changing and luckily we have a really great group of guys and contacts that are always assisting us and working with us to stay ahead of that but that legal side of things and that compliance side of things can really start to bog a company down if they’re not prepared financially to deal with it. Luckily we were but we could have probably been more prepared ahead of time to understand how important that compliance team is and how detailed they need to be and how many individuals there needs to be to kind of stay on top of that thing because no matter how good of a grower you are, no matter how beautiful your dispensary is, no matter how good the product is if you can’t stay on top of the rules 100% of the time; not 99% of the time, not 99.5% of the time.

It only takes; depending on your state it only takes one violation by an employee that could be at the bottom of the food chain but can put you in jeopardy. So really kind of appreciating that dynamic which we certainly do now and like I said we’ve always been able to maintain compliance but we’ve made that part of our company so much more robust now than what it was years ago.

Matthew: Looking at Colorado since recreational cannabis became legal how have you seen the consumer taste change from flower to edible to vape pens and did anything surprise you in those changes?

James: I mean I think it’s no secret that edible demand and vape pen demand keeps going up month over month and we’ve seen the increase just like everyone else has. I don’t think; it certainly hasn’t surprised us. I think the question will be is how far it goes but it’s my suspicion that it will at some point overtake flower sales and the amount of product being grown for vaporizers and edibles here in the next few years. There’s probably a lot of people that disagree with that but I’m certainly not surprised by it and the good part about that is it’s a different growing style and a little bit easier growing style when you’re growing for what’s essentially resin production instead of bag appeal. So it should lead to lower costs and lower prices for the consumer in the end.

Matthew: You have a up-close view of the different types of cannabis dispensaries and different types of consumers. Some are just looking for hey I want the cheapest price per gram or per ounce and others are looking for more like of an artisanal quality cannabis flower and experience. I mean tell us a little bit about that range that you see here in Denver. What’s it like? Is it really that big of a spectrum and when you go in what’s the consumer taste like?

James: I mean the vast majority of consumers I feel are looking for a quality product at a bargain price and then you’ve got; you do have your connoisseurs and that’s true of just about; alcohol industry is the same way. I mean you’ve got millions upon millions of gallons of Budweiser and Coors being sold throughout the world and you’ve got; there’s still a lot of connoisseur beer out there. There’s a lot of the same on the spirit side of the equation but I don’t think cannabis is any different there. The vast majority of people are looking for not necessarily a low end product but they want value with an acceptable quality and no matter what we’re talking about here when it comes to the regulated cannabis market everything is for the most part there’s very few people that are able to stay in business that aren’t growing fairly decent product.

So we’re not talking swag bud here by any means but they do want a value product at a good price but there are a number of dispensaries in town that have low volume sales, connoisseur only buds at a higher price and they’ve found their niche and they are successful at it but as the industry develops and maybe one day starts to cross state lines I believe that you’ll see very large players that are providing a 95th percentile product instead of a 100th percentile product that at very low prices.

Matthew: Turning back to cultivation best practices. In terms of pests and diseases how do you mitigate those risks without going crazy?

James: Design is paramount. You can’t escape bad design so it kind of all happens on day one and assuming that we do have our environmental protocols in place or standards in place and they’re met and the environment is being kept that’s the number one combatant. If our humidity is low whether or not mold spores are present they’re not going to be an issue. The same is even true with a lot of bugs. Spider Mites being probably the number one issue that people face. It’s a whole different battle dealing with Spider Mites if your environment is hot. Every seven degrees of rise in temperature can see 100% increase in how fast a Spider Mites lifecycle is. So it’s really not difficult to combat these pests when the environment is as it should be but when your environment is compromised safe practices, safe pesticides, safe insecticides are not able to keep up with the increased growth rate when the environments out of whack.

But regardless of that it’s really all about; for us it’s having our IPM staff at the ready. These guys are entomologists on hand. They are able to predict problems before we even know that there is a possibility of something depending on seasonal changes, temperature changes, environmental changes, and then coming up with a plan of attack to deal with anything in a safe; with safe pesticides whether they be and inorganic doesn’t necessarily mean safe but whether they be some sort of organic pesticide, a biological pesticide, some mineral based suffocant the key is to always change it up and not rely on one or two products so that there’s never any resistance being found in your facility and it’s paramount to do it in a safe way because there’s still as you see in Colorado there’s still so many hot tests coming back for pesticides that people are still falling back to some of these products and I guess crossing their fingers that they’re not going to get caught and that’s just completely irresponsible and above all else you’ve got to make sure you’re using safe products.

Matthew: Are there any other mistakes you see new growers make in high frequency?

James: Maybe. Probably not knowing their limitations. I mean everyone is an expert. Everyone has the best way to grow marijuana and you talk to 100 different growers you get a 100 different methods and the reality is it’s just like corn, just like soybeans, just like tomatoes. In the end there’s really only going to be a handful of accepted methodologies that make sense in the commercial world and that just hasn’t come to pass yet because the industry is so young and there hasn’t been the billions of dollars spent on research that have been spent on all of these other crops and so over time we’ll see tried and true methodologies start to kind of rise to the top and some of these 95 other ways to do it people will stop doing it and the problem is there’s so much ego in this industry that no one wants to think that there’s maybe a way to do things that’s better than their method and so what will happen is because there is no economic filter right now that gets rid of the ideas that may not be so good because everyone’s profitable even if there not that productive and so what happens is people have ([40:06] unclear) or they’re blind on and they start designing facilities that are double the size of their last facility and they’re still maybe based off of methodologies that may not be so great and then one day and probably in Colorado it’s going to be in the sooner than later.

But at some point that economic filter kicks in and prices drop and things become competitive and all of a sudden that method that people were so such about all of a sudden is causing them a lot of problems and they can’t keep up in the price war. So I guess the advice would be and we have to remind ourselves as well but the advice is to be everyone’s still learning and you’ve got to stay nimble and you’ve got to just know your limitations.

Matthew: That’s an excellent point and one I think is not talked about enough. I mean the ego can really hurt you and everybody’s probably seen someone that’s committed to an ideology crash and burn but having that humility and ability to say I don’t know everything and I’m constantly looking for a better way. The Japanese have a term called “kaizen” that they use in manufacturing and that is continuous improvement. The cake is never fully baked. We’re always looking for a way that we can improve and we don’t get dialed into a dog mud that can come back and bite us in the butt later. Germane to that are there any stubborn myths you see around still James about growing cannabis that persists and you just can’t believe that people persist in certain ideologies?

James: Not so much. We’re kind of in our own bubble and so I don’t get out to kind of see what people are stuck doing. I think that the one thing I can say is that a lot of people and a lot of big companies even took a lot of their knowledge when things were being done on a small scale and systems that worked on a small scale and made sense in someone’s basement and have now blown those up on a massive scale and so you see facilities setup very similar to how a basement grow may have been setup except that now that basement grow isn’t 200 square feet it’s 10,000 square feet or 20,000 square feet or however big it may be and so I believe there’s a lot of things that do work and do make sense in the basement that still find themselves out in big commercial operations.

Matthew: In terms of big commercial operations there’s a growing interest in greenhouses and you mentioned tomatoes and some other typically considered produce for growing in greenhouses and outside perhaps. What do you see happening with greenhouses and cannabis cultivation in the years ahead?

James: Well I think there will be a large shift to greenhouses obviously. I mean there’s lower costs involved. We’ve got a more complete lighting spectrum. We’ve got in most cases depending on your glazing we’ve got access to UV light. There is for us; there’s people that probably think you can’t grow as good a cannabis in greenhouses and that may or may not be true but the California market has probably given a bad name to greenhouses and that’s only because there were a lot of hoop houses that people utilized to get an extra crop out of or may have used; tried to use all year round but they weren’t necessarily state of the art high tech facilities and so sometimes the product that came out of them; obviously it was better than not getting a second harvest that year but there may have been a negative connotation with greenhouses because that second harvest it wasn’t the quality that it needed to be but it was also coming out of a very basic facility up in the mountains somewhere.

A state of the art greenhouse which can cost a substantial amount of money; it’s not done to save money. There should be different motives for going to a greenhouse. Obviously your operational costs will save money but your initial installation can be quite expensive to get it to the state of the art that it needs to be to be competitive with indoor facilities. But we think; we certainly think that’s absolutely possible.

Matthew: When you look out on the horizon are there any technologies or developments apart from greenhouses that gets you really excited?

James: I spoke a little bit negatively of LED’s earlier. We’re a big proponent of what’s coming in lighting and we think that that will be the next big thing for indoor facilities and other than that I believe actual research going into the processes around the cultivation of cannabis. I mentioned there’s vast amounts of money that gets spent on all these other crops right now. Most of the R&D being done for cannabis is really just trial and error in the growing environment. Now we certainly are and we’ll see and I expect other people probably will as well to do true research in controlled laboratory settings on the cannabis plant specifically not just; right now people are looking at the gnome, they’re looking at other things which are all exciting but for us being a cultivation company what excites us is true laboratory university grade research being done in controlled chambers.

Repetitive tests that truly mean something as opposed to I put an LED in this room over here and I saw better production so it must mean the LED’s are good. I mean it might mean that they’re good. It might mean that whatever you were testing in that room it might be good but we look forward to the day where we truly can provide scientific backed 100% verifiable data that says this product makes sense or this light makes sense or this hydroponic system makes sense. So we look forward to being able to provide that to our clients in the very near future.

Matthew: As I toured a couple of your grows James I noticed you have a lot of people working there. You have electricians, you have trimmers, you have people on the retail and the dispensary side, and every day I get emails from people saying hey I want to get into the cannabis industry so bad. I have no idea how to do it. Do you have any stories or can you tell us about a time where you may be promoted somebody that just showed promise who really wanted to get into the industry?

James: Yeah I mean we always try to promote from within. I mean there’s a certain amount of trust that’s required in these facilities and we can always hire someone with a great degree and experience in related industries but we’ve got guys who started at the bottom and now manage big facilities and they’ve learned every task in the company and they’ve developed trust with us and a degree of confidence that we were able to put these guys in multi-million dollar facilities. Likewise we’re always interested in hiring individuals with degrees in horticulture or some plant related field.
We like people that are excited about the cannabis plant but we’re always a little concerned about old habits die hard and we’re always a little concerned about a person who has the five years of underground experience and knows how to do things which sometimes that they work well with certain systems. Our system is very much science based so we’re always eager to talk to that person who doesn’t know how to get into the industry but has that science background or horticulture background and wants to figure out how to break into that industry. We are more than happy to talk to them.

Matthew: James in closing can you tell listeners how they can learn more about MJardin?

James: Yeah our website MJardin.com. www.mjardin.com. It’s not the best representation of us at the moment but its being rebuilt here very soon but it will give them all the information and we do post job openings there. There’s a link that people can go to and submit resumes and then they’re always welcome to call us up as well if they don’t see a position open at the time. We’re always collecting people’s information because we’re always expanding into new spaces so there’s always a new opportunity on the horizon.

Matthew: James thanks so much for coming on CannaInsider today and educating us. We really appreciate it. I was very impressed with your grows, your skill, and your team and thank you.

James: Absolutely. Thank 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.

James Lowe, President of Cultivation at Mjardin gets real and reveals how top shelf cannabis is grown and all the best practices it takes to ensure a healthy harvest. We talk lights, irrigation, soil mediums CO2 and more.

Key Takeaways:
[1:42] – James talks about his background
[2:41] – What is MJardin?
[5:56] – How to set up a cannabis grow
[9:05] – James talks about his preferred growing medium
[12:30] – James discusses the “capillary mat” and what it does
[18:00] – Climate, temperature, humidity
[21:13] – James talks about the lighting aspect of the grow
[23:15] – Indica and Sativa heights at harvest
[26:42] – Getting an “extra harvest” each year you grow
[28:27] – Lessons learned in the grow room
[30:49] – Changing consumer tastes
[34:59] – Mitigating the risks of pests and disease in your grow
[38:31] – Biggest mistakes made by new growers
[41:52] – James talks about people’s ideologies in growing
[43:38] – The future of greenhouses in cannabis cultivation
[48:33] – James talks about promoting his people from within
[50:16] – Contact details for Mjardin

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

Technology is Helping Growers Get Vital Data For The First Time

Eli Duffy of Grownetics

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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.

A very interesting and exciting thing happens when prohibition ends. Entrepreneurs with skill sets outside of the cannabis industry start to turn their sights on cannabis and bring their talents to a field that did not exist before. One such company is called Grownetics. Grownetics is currently in the CanopyBoulder Accelerator program here in Boulder, Colorado and they’re merging together their technology and cultivation in fascinating ways. I am pleased to welcome Eli Duffy, Co-Founder of Grownetics to CannaInsider today. Welcome Eli.

Eli: Hey Matt, great to be here. I’m very excited.

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

Eli: Yeah we’re in powerful Boulder, Colorado. I know that’s getting a lot of mentions now, and we’re actually at the Impact Hub which is a co-working space for socially impactful companies that actually want to improve the world. So yeah I’m recent here, I’m sitting here in Boulder and I know you’re from Boulder Matt so that’s where Grownetics is and we plan to be here for a while.

Matthew: Great. Eli before we jump into all the exciting things you’re doing at Grownetics give us a little background on yourself. How did you get into the cannabis industry?

Eli: Yeah so I graduated from university in May of 2013 and when I was in college I had an app company. I sold a few apps. I had a promotions company but nothing that really got me out of bed in the morning and nothing that had the ability to improve the world and I had been involved with cannabis for a while and I knew it had medicinal benefits. So I moved out here about a year and a half and I learned to grow. I was a grower and it’ll be two years in February and while I was growing in the garden I noticed a tremendous amount of inefficiencies. It was like they’d never even heard of technology. They thought it was the 1800’s. So I developed an app and then I met; really quickly I realized that the best way to solve this problem was through hardware; agricultural and inefficiencies.

So I met my great Co-Founder Vince who spent six years in China launching home automation systems. A big hardware guy and then our other Co-Founder joined the team; Nick and he’s a full stock developer. He’s been programming since the fourth grade. Actually started getting paid in grade six so he’s a savant-like and just to put this in context for your listeners Matt I met Vince eight months ago and I met Nick in July. So we’re extremely fast moving. We’re very passionate, very smart tech guys who love growing and I couldn’t be happier with this company and moving out here. So everyday we’re excited and we are extremely excited and can’t wait to see where Grownetics is in a year.

Matthew: Yeah that’s the great thing about living in a place that is kind of cramped and everybody’s shoved in together like Boulder or Denver. You bump into people in ways you can’t if you’re living in a spread out city. You meet people more incidentally which is something I love.

Eli: Yeah it’s great. Just the conversations in the coffee shops are extremely high level which to me coming from the East Coast near D.C. where everyone’s mean and stuck up it’s actually nice. People say thank you. You wouldn’t think so it’s good.

Matthew: Okay. Now let’s tell us; let’s dig into what is Grownetics exactly? How should we be thinking about this?

Eli: So to simplify it we’re the future of grow technology. We create integrated software and hardware tools for optimized cultivation. So anything in your garden that has to do with optimization, analytics, data we can do. So if your lights are too low we can say raise this a meter and you’d increase yields. We can also add nutrients with the press of a button. It’s analogous the self driving car Matt for the grow room. So we automate everything and then we use that data that we’re collecting every five seconds to actually improve the grow and optimize it. So it’s very advanced not only within the cannabis industry but also with agriculture in general and we’ve had a lot of agricultural players and companies reach out to us because they’ve been very impressed in the full automation and optimization in what we’re doing within our gardens.

Matthew: Now Middleware is a big part of Grownetics value proposition. However that term is somewhat esoteric and techy. For a layman that is not familiar with that term Middleware how should they be thinking about it and how can that help their cultivation facility?

Eli: Yeah Middleware in general allows hardware to communicate with software but from our point of view and for us specifically what’s really proprietary about what we’re doing is our Middleware can connect to any hardware and pull that data into our analytics and optimization engine. Meaning that we’re always going to be using the best agricultural sensors and hardware’s on the market; meaning we’re always going to be at the forefront of optimization within grows. So we are the platform for optimization rather than a hardware company producing specific little parts.

Matthew: Okay so you’re hardware agnostic in a sense?

Eli: Correct. We can connect to any hardware’s so you don’t have to redo your garden if you would like to use us. Now we do recommend and actually implement hardware and that’s the easiest for us if it’s a new grow just because we can do it the way we like but growers who I know are very picky. I deal with them every day and every grower is the best grower that’s the old joke. It’s hard to tell them not to use a certain system and what we do that is very proprietary with our Middleware and it’s advanced not only within agriculture but within technology is this ability to connect with any hardware and use that data to actually improve the grow itself.

Matthew: Okay so let’s say I’m a business owner looking at my Grownetics dashboard for the first time. What information is at their fingertips and what jumps out at them that they love to have?

Eli: Yeah so we’re really excited about this dashboard. When I was growing I would have an Excel sheet and it would say plant 57 or trey 57 rather and I’d count 1, 2, 3, 4, 5 until I got there. This is boring Matt and we don’t like this and we think growing should be fun and we do. I mean why not you only live once. So we want people excited about growing and there’s a lot of studies that show that people remember things visually and spatially much better than they do just data points. So we actually created a Sin City for your grow and I don’t know if you; I think you told me you’d played this Matt.

Matthew: Sure, sure I’ve gone to Sin City.

Eli: And many people have. Exactly so just as you would be geeking out and building your own city we want growers to be able to do that with their garden. So we have a drag and drop mapping system and any time after you create your garden that any plant needs any sort of maintenance the plant will actually buzz up on the screen and you can visually see where your garden is. Now another thing in terms of our dashboard that we’re doing and this is modeled off the very popular thermostat Nest is we’re showing growers real time how much money they’re saving, how much energy they’re saving, how much resources they’re cutting, and when we get the numbers in or when their harvest is done their overall quality in yields and how those have improved. So we want growers to get instant feedback in how their growth improving and that’s; because if you’re measuring things constantly and you see the results of using our system you’re not only going to be more engaged but it’s going to be much more beneficial to the end user.

Matthew: So Grownetics is proactively telling a cultivator this is what; this plant needs attention. This one hasn’t gotten this attention, this or that and it’s integrated with the environment of the grow space?

Eli: Correct and what’s really great about what we’re doing is we have; any plants have ranges. There’s a lot of things that growers measure to improve agriculture and improve their plants and when these things fall out of range it’s been scientifically shown that this isn’t the most beneficial for the plant. So nutrient levels for example or CO2 so what our system can do is we can either notify the grower that these ranges CO2, nutrient levels, PH whatever they are have fallen out of range or our system can actually automate itself so we can actually improve and put these metrics back in range. So you technically wouldn’t even have to be in the garden. You could be on some beach somewhere. I mean moving the plants from room to room we haven’t figured out yet but knowing our team it wouldn’t be too long before we have that as well.

Matthew: So in terms of ROI or return on investment how does Grownetics help cannabis growers. I mean you’re saying they’re telling them there’s certain data that’s coming in real time so you’re saying hey yields optimized 10% over last month or how does that work? How do they visually see how they’re improving?

Eli: Yeah so up top we have our metric system which shows how much labor hours, how much energy usage that we’ve cut based on our analytics and our optimization engine and we have a lot of numbers coming back from our first grow that are very, very beneficial in our favor and if you’d like those numbers in private you can contact me but in terms of actually releasing how much money growers are going to save we have our estimates and we have our first grow with the data coming in but we’ve chosen with a lot of backlash from other people to make these numbers public around February when we have three studies going because any good scientist knows that one case study is not enough. So we’re going to release these publicly in February but right now we do have some numbers coming back so if you’re interested in that please contact me directly and I can’t promise I’ll release them to you but.

Matthew: Okay.

Eli: Yeah. You Matt you can see them. You can see them Matt.

Matthew: Oh thank you.

Eli: Just not public. Yeah of course.

Matthew: A lot of cannabis growers are reasonably efficient and I see them making improvements from just being basement growers or garage growers or things like that in the past and they’re getting better but what are some simple ways that you can see someone going from let’s say a small basement grow to maybe a 5,000 square foot grower that can really have an impact? What kind of variables should they be looking at and dialing in?

Eli: So the most important thing I’ve found for growers which has nothing to do with Grownetics and its not beneficial at all for me to say this is the most important factor is the genetics. Where you’re getting your sources. So I could play basketball for the rest of my life. I could get done with this interview, go practice, and then practice tomorrow and I’m never going to make the NBA. That’s just the fact of it. I don’t have the genetics for it and it’s the same thing with cannabis. You need great genetics to have great yields but in terms of something that’s going to be the most immediate benefit for a grower is getting your nutrient schedule down right.

So there’s a lot of recommendations from a lot of good brands out there but that’s the easiest and quickest way to see an improvement if you’re not already doing that but when you talk to great growers they’ll tell you and this is some; what hippies have been saying for years is you actually have to pay attention to the plant by plant and give it care and listen to it. If it’s slumping you need to stake it so it stands up straight. So all these growers that I speak with on a weekly basis they always say that paying attention to the plant by plant is the best way.

If you can have that power and you have enough time and what Grownetics allows growers to do is to kind of ignore all the stuff that doesn’t really matter and the day to day things like checking nutrient levels yourself. We have machines do that and that way if you do have a problem in your grow and you want to actually dial into the plant by plant level Grownetics can help facilitate that.

Matthew: So when someone implements Grownetics right away they don’t have any data because it’s brand new but three or four months down the road after there’s some data that’s collected how does a cultivator look at the historical data versus the recent data and make intelligent insights that can help their grow?

Eli: So right now we are in a very exciting time at Grownetics and within the next six months we are going to implement and poise to implement machine learning which we already have the ability to do. So that’s what’s getting a lot of eyebrows raised and that’s really our vision within the next six months is to actually make effective machine learning where we’re going to have all this data; these proprietary optimization algorithms that we’re creating and we’re going to give this data to the machines where they’re going to make little adaptations that you and I can’t even see Matt and over time these machines; these machine learning algorithms are going to improve yields, they’re going to improve quality, they’re going to reduce energy, and this is on the forefront of technology.

Now to get back to your question in terms of before we get to that point is because we control all the hardware growers can run their own experiments from batch to batch or even room to room where you’re only testing a different nutrient or you’re only testing a different level of lights and because we control all the hardware we can set a baseline where we can have an effective A, B testing. So anybody who’s into software or who’s built websites before might be familiar with when you’re doing an A, B test you only change one variable and this was extremely difficult before Grownetics because there’s so many factors in the environment. But because we’re actually tracking everything and actually automating everything we can help growers test these theories that they have in a very scientific way and by abiding by the scientific method.

Matthew: This is really exciting because other industries they kind of have fiefdoms and rigid beliefs and there’s a whole industry around keeping things the same or just marginally improving things and one of the great things about the cannabis industry is that it’s just exploding in so many different directions and there’s not those; a lot of historical belief systems. There’s still some rigid belief systems around growing and so forth but there’s so many new entrepreneurs coming in and there’s not all this historical legacy sludge that grimes up everything. It’s just all fresh and new and people can try things and adopt them quickly. So this is really exciting to see.

Eli: Thank you Matt. Coming from you someone who is a big name in the industry interviewing a lot of companies that means a lot and I totally agree. I mean the cannabis industry itself has allowed Grownetics to become what it is because if you were; the reason why this system doesn’t exist is (a) because you need an extremely talented and passionate team to pull it off which we have and (b) is because if you were to increase yields by 5% of tomatoes ten years ago no one cares because the margins on tomatoes are so low but when cannabis growers are making so much money and so much depends on the quality of the cannabis and actually the yields themselves because they’re making so much more per gram than you would a tomato. This allows for the need and the value proposition to actually optimize and improve a grow to be prevalent in the market and that’s what we’re seeing.

Another great thing about the cannabis industry is the feedback loop. So when we go to; if you go to Whole Foods or you go to Trader Joe’s or you go to King Super’s and you buy a tomato you know that it’s organic or not and you can look at it but you don’t know the nutrient density, you don’t know every property but because the cannabis industry; the Marijuana Enforcement Division actually regulates that people need to test their batches we can see how much CBD’s were produced, how much THC was produced, and because growers are already required to do this legally we can actually show the final results of our system and how much we’ve improved quality in yields which would be much more difficult to do in a tomato grow where growers aren’t going to invest as much per acre as they would with Grownetics and with the cannabis system and actually make a lot more money using our system because of the price that cannabis is selling at.

Matthew: Yeah and I definitely thought prices would be down more than they are right now because there’s so much efficiency in cultivation but it’s between $2,200 and $3,000 a pound right now wholesale because of all these new requirements for testing on cannabis and there’s a; cannabis has to pass more rigid testing now in Colorado. I thought it would be much more affordable to buy in the wholesale market but it’s still quite high $2,200 to $3,000 so there’s still quite a bit of opportunity in the cannabis space in the short term and intermediate term here in Colorado with prices that high.

But switching gears to microclimate. So I want to talk about that a little bit. So everybody’s familiar with a microclimate. Maybe they walk over a mountain ridge and they see that the whole landscape has changed. The trees are greener, there’s more water, the altitude; just the whole variety of things are different in an environment,but a microclimate within a grow is not something we often hear about. What is that exactly and how do we try to make the microclimate come into the rest of the climate so it can be managed more easily?

Eli: Yeah so the technical answer to this question is we’re going to touch on; if I talk about our 3D sensing network but in terms of more of a broad view. So each grower has their flower room, they have their vegetative state room; their veg room, and some growers have multiple gardens. What we want to do is we don’t want to optimize for a room. We don’t want to optimize for a grow. We want to optimize at the plant by plant basis because why we’re building this is to grow the best food and medicines sustainably at scale and we believe that to really actually come through on this vision that we have we need to be as specific as possible and really show not if your rooms not functioning properly but if you’re plant isn’t functioning properly. So we are going to optimize in the plant by plant level.

Another thing that because we’re optimizing on such a small level and we have all our analytics and machine learning algorithms imagine you’re a grower and you have five different grows. If one grow or even one room is performing better our data and analytics system can read why that’s happening and actually in real time optimize your other grows even if they’re in a different state. That’s the power technology is giving this industry right now and that’s why we think it’s so, so, so important to get as specific as possible so we can use that information; that data we’re gathering and actually transfer that to these bigger grows.

It would be analogous Matt to if you’re in a big lecture hall and you have a professor and there’s 300 students or you have your own personal tutor. While you can still learn and still be a great student in a larger setting we feel that by optimizing at the plant by plant basis in these microclimates we can actually help the overall vision of this company and what we’re trying to do. If you’d like me to get into the actually 3D sensors.

Matthew: Yeah let’s talk about 3D sensing. What is 3D sensing?

Eli: So most of the agriculture automation stuff in agriculture the most they would do is tell you how much humidity is in this room, how much CO2’s in this room. We can actually detect if the humidity is lower on the lower part of the room closer to the floor and one closer to the ceiling and actually make sure that we regulate these levels; the same thing with CO2; same thing with practically anything. So we’re getting as specific as possible and we’re testing the environment at multiple levels within the room and within the grow which makes what we’re doing (a) more accurate, and (b) more efficient. Because we’re going to such a small level that we can actually adapt our data and adapt what we’re doing in the garden based on not just what a room is doing and not just what a plants doing but based on multiple levels of environment within the room and that’s what our 3D sensing lets us do.

Matthew: How is Grownetics different than the other cultivation technology solutions out there would you say?

Eli: So we are the first ever optimization platform and this goes back to what we were talking about with the older agriculture industries before cannabis. So there are other older agricultural companies that can dispense CO2 into the environment or add nutrients even with the touch of a button but what they’re not doing that we’re doing is collecting data extremely and rapidly. We’re collecting ten million data points a month from a single grow on average and using that data to actually improve and optimize the yield and optimize the quality and we’re really going to see the big benefits of that when we implement our machine learning algorithms which like I said we’re on the cusp of it.

So the ability of that like I said and our Middleware to connect to any hardware sets us apart based on our technology and I know this isn’t what most business people like to hear or what most people think when they think of competitive advantages but I got to tell you Matt I have the best co-founders anyone could ever ask for. Just the passion and the excitement every day and the people we talk to is just incredible. So our team I’m extremely confident in it and I love working with these guys; Vince and Nick but extremely important is our why.

We know that we want to build this company to actually improve the world and help it and grow better food and grow better medicine and we believe cannabis is an extremely powerful medicine. So that is the driving backbone of why we’ve grown so fast in just eight months we’re at the forefront of this industry in terms of grow optimization and why every day I just see the excitement with our team and we have a bunch of people every day hitting me up and if I haven’t responded to your emails forgive me of people who want to join our team; extremely talented people. So anybody out there you can have better technology, you can have a better business strategy, but if you don’t have your why and you don’t have that passion and that vigor that everybody on your team knows that they’re doing something great and they’ll go through the little bumps that are inevitable in a startup that’s going to make a company successful.

What we believe, what I believe and I think that’s what we have that all of these older agricultural companies can’t touch for days. So we’re really excited and aside from our tech that’s what we bring to the table.

Matthew: In terms of what it costs to get into Grownetics do you have any price points you could mention?

Eli: Yeah so currently we’re doing our early adopter program. I have one more spot left and these are grows at cost. I’m actually turning down grows right now and I don’t mean to offend anybody it’s just we’re growing very fast and we’re hiring right now and we’re going to wait for these two more but early adopters to be implemented but we have one and this will be at cost. So if any growers or dispensary owners are interested in joining with our early adopter program please contact me and like I said it’s going to be a drastically lower cost.

In terms of our pricing model in February we’re going to charge between $5,000 to $10,000 dollars a month depending on the size of the grow for our full system including hardware, including support which has been very minimal in our first grow and the reason we’re doing this Matt is because speaking with growers it’s a cash flow issue. People would way rather pay a monthly fee that’s more reasonable than a big upfront fee and we’re so confident in our system that we’re offering a 30 day money back guarantee as well when we launch this pricing model. So yeah between $5,000 to $10,000 dollars a month and we do everything.

Matthew: Eli in closing how can listeners learn more about Grownetics?

Eli: So our website is www.grownetics.co. That says .co not .com. So www.grownetics.co and if you guys would like to contact me personally Matt is it smart to give the email on this podcast?

Matthew: Sure if you like to take chances go ahead.

Eli: Okay I’ll do it. Please guys don’t make me regret this. Founders@grownetics.co is the email. So if you guys want to email us if you’re interested in joining the team. We’re growing very fast like I said. If you’re interested in other issues and also if you’re a grower that would like to get the most cutting edge advanced system on the market at a drastically low cost and this is a great opportunity if I can say Matt in our early adopter program for these smaller grows to actually be on par with these larger grows that have much more resources. So this we’d love to get a local company to really help them jump to the next level in terms of cultivation. But we’re open to anyone so if you’re interested in that please contact me.

Matthew: Now I know we have a lot of listeners in California and Nevada as well is this just local to Colorado for now?

Eli: So there’s a lot of factors. It’s more about working with early adopters. Now we do have a back log of orders in terms of February of these new grows coming on so we’re open to all that but in terms of our early adopter program it’s really on a case by case basis and like I said we’re getting a lot of demand right now. There’s a lot of things going on so I just want to make sure we don’t spread our resources to thin.

Matthew: Okay.

Eli: But Nevada and California are definitely places where we would like to have one early adopter just to have a foothold in that area and I love California and Nevada as well so it’s a good excuse for me to get down there.

Matthew: Okay. Well Eli thanks so much for coming on Canna Insider today. We really appreciate it.

Eli: Thank you Matt. I really appreciate it. I love your podcast and keep doing this man I love it.

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.

Matthew Kind discusses technology in the grow room with Eli Duffy, CEO of Grownetics.
Learn how to maximize yield and collect data to help your grow.

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:
[2:20] – Eli talks about how he got into the cannabis industry
[4:33] – What is Grownetics
[5:43] – Eli explains what Middleware is
[7:13] – How business owners use the Grownetics dashboard
[10:20] – Eli talks about the ROI on Grownetics
[11:50] – What variables should growers look at when expanding a grow
[13:43] – How cultivators can look at past and present data to help their grow
[19:13] – Mitigating microclimates in a grow
[21:24] – What is 3D sensing?
[22:24] – How Grownetics helps yields
[24:54] – Grownetics price points
[26:15] – Contact details for Grownetics

100% of Cannabis Businesses are out of Compliance

cannabis compliance

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.

One aspect of the cannabis that is growing leaps and bounds is compliance and for good reason. Cannabis is perhaps the most regulated industry in North America and the cost of fines and penalties can be large, but the cost of having to stop business temporarily can be much greater. To help us understand the hot topics around cannabis compliance I’ve invited Steve Owens of Adherence Compliance on the show today. Steve, welcome to CannaInsider.

Steve: Thank you Matt.

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

Steve: I’m located in Denver, Colorado today.

Matthew: Great. And how did you get into the cannabis industry? What’s your background?

Steve: I have a few friends that are in the industry and my background is a Bachelor of Science in Finance and International MBA. I’ve got about 15 years of experience in management consulting and enterprise software delivery. And then most of my experience is in telecommunications with companies like Verizon, AT&T and satellite providers as well implementing large scale enterprise software systems. So I had a couple friends come to me in industry and they said how would you take care of compliance and they basically put the manuals in front of me, and then I evaluated basically the regulations, came up with a codification model if you will and then went through and pulled out all the regulations and came up with a prioritized checklist of everything to go through. And in the end we came up with some, about 300 questions per auto type. So we have medical dispensaries, medical cultivation, medical MIPs, and then also the retail side as well with the stores, cultivation centers and MIPs.

Matthew: Yeah it’s a funny thing, you know, looking at business in terms of offense and defense, you know, everybody is so focused on the offense piece of sales and rightly so. I mean we need sales. It’s the oxygen and blood of a business, but defense is so important too, and it can just as easily derail you and derail your revenue. So it’s something I feel like it’s not as much emphasis on but you know if you integrate it into your business, you know, it’s a healthy thing to do and it’s something that a lot of your competitors aren’t doing. So you know you could do that, it could be a value proposition for your business.

Steve: Yeah. I definitely agree with that.

Matthew: Steve, give us an overview. What is Adherence Compliance?

Steve: We are a software and data company that’s focused in the regulatory and financial compliance in the cannabis industry. We offer software as a service and we also do specialize consulting services and develop specialized consulting programs for our partners. Our clients are license owners, banking partners, certified resellers, insurance providers, investors, things of that nature. And then we have a couple of different programs with our compliance app. Our Score Compliance App as we call it. We have a reseller program where we will sell a compliance business in a box if you will, and we’ll ship an iPad for a designated state be it Oregon, Washington, Colorado, what have you, and then they can basically start doing compliance audits in that state.

So it’s a way for a resellers once they’re certified and they go through our training process or for consultative businesses that are already out in the industry that want to add an additional line of revenue to their practice. We also do custom programs. So we’ve developed compliance programs for our banking partners going through AML, Banking Secrecy Act and what have you there with FinCEN requirements. And then also with insurance providers we work with them as well and develop custom programs to do stuff like on-site underwriting for cannabis businesses. And they utilize our software and our customized checklist to basically go through and do that.

And then finally compliance data. We’ve got a couple of exciting partnerships coming up in the beginning of January which we’ll be doing a couple of press releases on, but this is where we feel the focus of our company is is with the data because at the end of the day, after 326 or 328 now, audits we’ve provided in Colorado, we’ve got a lot of statistical information, more than 120,000 data points on compliance data for Colorado. So statistically we know where these businesses fail, and we know where they need to focus their time, efforts and revenue to get within compliance. So overall that’s what we do, and then we’re expanding into various states, all states that serve medical and retail licenses.

Matthew: Yeah there’s a big data component to this and we’re going to touch upon that later. But before we jump into that and the statistics you have, can you tell us a little bit about the white paper that you wrote addressed to the Colorado Marijuana Enforcement Division? What are some bullet points from that that we should know about?

Steve: Yeah the Marijuana Enforcement Division is part of the Department of Revenue and they’re the licensing and program administration authority for the State of Colorado. And they have a stated goal of 100% auditing these businesses within the next three years. There’s approximately 2,800 or more licenses in Colorado, but only about 35% or so have actually had licensed premise inspections by MED officers. So you’re looking at 65% or some 1,700 licenses that have never been visited by the state regulatory authority, and I think it’s because the process is very manual, very paper driven, and so essentially to go ahead and audit these businesses effectively, they need to automate the process, standardize it and then come up with a automated solution if you will on how to basically go through and audit these businesses effectively, gather the information they need and then to use the information to make the compliance call turn Colorado better.

Matthew: So Steve what are the top compliance infractions you see regularly? The things you see day in and day out?

Steve: That’s a great question Matt. I think the most frequent one we have now is labeling packing and product safety. So what we see in the industry is you have large scale MIP providers, and these guys produce edibles, concentrates, what have you, but they will ship product to a store or dispensary. And when they ship that product it is the store’s responsibility or the dispensary’s responsibility to make sure that that packaging and labeling is compliant. So they have their required statements as needed, like the ethicacy statement, the pregnancy statement. You know driving while impaired statement, so there’s required statements that we need to have on these products here in Colorado for medical and the retail sense.

So essentially these MIP providers aren’t following the compliance regulations. Either the font size is too small. It’s 1/32 vs. 1/16. They’re missing the required statements on there. They don’t have the unlawful for the use outside of Colorado statement. So they’ll ship these products to these stores and dispensaries and they do it via transport manifest. Once that store or dispensary accepts that, transport manifest is intake in the METRIC system, and collects it on their side, then they assume that liability and they assume that risk. So there is not a client that we have right now in a store or a dispensary that passes labeling and packing and product safety. Every single client we have right now gets an infraction because they carry some of the largest MIP providers out there that are missing these things. And we’re trying to do our best to educate these large MIP providers and let them know that you know they’re transferring liability and they’re transferring risk to these other licensees, and then we want to make sure that public health and safety is hugely important in the industry and that’s a foundation of labeling, packaging and product safety.

Matthew: Wow that seems pretty basic for 100% failure rate, just having the wrong font size on a container, a MIP. If you’re hearing MIP for the first time, that’s a Marijuana Infused Product. So what happens if someone gets caught with one of these infractions? Is there a; during an audit is there a financial penalty or what happens?

Steve: There can be. There can be. One of the things with the Marijuana Enforcement Division, they will come in and you may have an MED officer that will let you know it’s not compliant that you need to correct it or you could have an MED officer that would actually write up a violation and then they would basically provide you a notice of a violation. You would have to do a response to the violation and then you could go down the show cause hearing process that’s currently backlogged. We can talk about that in a little bit, but that’s the process that you would go down and then you would be looking at a fine and a penalty and perhaps you know a meeting or a hearing with the attorney general or the assistant attorney general for the State of Colorado.

So that is some of the issues that you run in when you transfer these, and then if they find multiple infractions, and then they add labeling and packaging to it as well, I mean at the end of the day it’s public health and safety. So I mean you have a citation level, a violation level and then public health and safety. And public health and safety is what we try to avoid here in Colorado to make sure that you know the health and safety of the public is indeed in place.

Matthew: In terms of cultivators, do you see something that cultivators typically do, not moving away from the MIPs companies, is there a lot of ways that the cultivators are typically out of the compliance that you see regularly?

Steve: For cultivation yes. A lot of them on the rec side we see holes or missing areas in their standard operating procedures. They won’t have the required information on the detailed application log. Every time they do an application of chemicals or pesticides to the plant itself they have to fill out this detailed log and it’s very specific on the components of the information that it requires. If you look at it, it needs to cover Department of Agriculture, EPA and State of Colorado requirements, and you have to make sure all of that stuffs there, all the way down to the applicator number, you know, the EPA registered applicator number and things like that.

So we see that as a huge infraction and then also tagging plants in METRIC is another issue that we see a lot as well. Here in Colorado once a plant is bigger than 2” X 2” in the pot or the bucket that it’s growing in and once it’s taller than 8 inches tall it’s technically out of the clone stage and then into the veg stage. And then you have to affix the RF ID tag to the plant itself and then mandate it’s state tracking. And we see a lot of this happening where you’ll go into a room that is early veg and the plants aren’t tagged yet just because they’re falling behind in processes and things like that, but if the MED were to visit they would put all of that plant matter on administrative hold and then more than likely you would have to destroy it. So we see that across the board at cultivation centers here that if anything runs afoul or the testing results aren’t correct or if you failed contaminant testing which is occurring more and more often here with the product recalls in Colorado, then they basically do administrative hold on plant and then you have to go through the whole destruction process, video it and do the entire process.

Matthew: For listeners that are in other states that are wondering, you know, how much similarity there is between let’s say Washington or Oregon or now Nevada is coming online, I mean, is there a certain amount of overlap in best practices between the states in general?

Steve: No that’s a great question. What we’ve seen and we’ve probably codified about six states now, each state is a silo. Even the vocabulary is different when you go from state to state to state. I mean seed to sale is something that is common, but we see about 20% that is applicable here in Colorado that would be applicable in California, that would be applicable in Washington, that would be applicable in Oregon. It’s also the different regulatory agencies that you have. Here in Colorado we have the Marijuana Enforcement Division which is part of the Department of Revenue. Up in Oregon we have the Liquor and Control Commission which manages the cannabis industry. Washington is 502I, and then also you have the Liquor Control Board in Arizona that runs it. And then it’s the Department of Health and Public Safety I believe in Nevada that runs the Marijuana Enforcement Division if you will or the regulatory authority.

So not only is it despaired or disjointed in each state as a silo if you will when it comes to compliance regulations, they’re run by different groups within the state as well. So that’s something that we see that you know unfortunately we can’t have a common standard set of regulations because each state is evolving at their own pace. And some states like Maryland come in to Colorado to review what we’re doing here to get a better idea of what’s worked and what hasn’t worked, and those people are doing a great job. Oregon is doing a wonderful job with their inspections upfront before the stores open and things like that and also business readiness checklists. I think they’ve really learned on some of the mistakes that have been made previously in a couple of the other states, but yeah unfortunately it’s very disjointed and then each state is a silo.

Matthew: When you go in and do an audit for the first time for a MIPs company or a cultivator or some cannabis company where do the scores kind of; what’s the Bell Curve of scores? What’s the average score? Where do most people fail and what’s the reaction to how they’re graded by you?

Steve: You know that’s a great question. We’ve recently went through, as I said before, we’ve done about 328 audits here in Colorado. On those we’ve done 78 audits for medical dispensaries, 106 for medical cultivation, 18 medical producers which are MIPs, 44 retail stores, 69 retail cultivation and then 11 retail producers or MIPs. Of that there’s been over 4,000 infractions. We know the average infraction per audit is right around 14 to 15 infractions per audit and then the average score is right around 84% when we look at that. And then on top of that each audit section we have we’ve broken it up in to logical sections across all states.

So if you look at it you have licensing, the license premise. You’ve got specific questions related to the audit type itself. So if it’s a retail producer, you’re going to have very specific questions to that audit type. Transport to warehousing, marijuana testing, business records, labeling and packaging, product safety, enforcement and discipline. So we also look at previous enforcement actions and discipline history because if you have been in trouble before in a license capacity, you’re more likely to get another audit or inspection or have more frequent audits or inspection because of your previous history. So that actually counts against you in our format that we have.

We also look at local procedural federal agencies which high level IRS things like 280 structuring, anti-money laundering questions and things like that. We also look at detailed inventory, OSHA requirements, Department of Agriculture. It’s a pretty holistic process. I mean going through and doing about say 280 compliance points for a medical dispensary. It gives you a really good snapshot of what the compliance culture is and then for an MED officer, regulatory authority, when they walk in, you know if everything is upfront and the person or the business is; has their facility binder with all the required information in and they have their standard operating procedures and everything is right there ready for review for the investigators, it makes the compliance and the audit process so much easier. But if you are not organized and you’re not ready when they come in, then they roll up their sleeves. They call their counterparts at the regulatory authority and then they do a more thorough and deeper audit.

So we’ve gotten a lot of information. We know the top labeling and packaging, product safety. I talked about that. There’s missing statements. So that would be the number one thing there. We know with licensing it’s undocumented financial ownership interest. So essentially some of the businesses have loans or they’ll have a percentage ownership with somebody that’s outside of the state of Colorado and at this point right now in Colorado that’s technically not legal. So it would not be a compliant thing. Same thing with business records, missing required business records, on and offsite. There’s different requirements there as well. So we really have a lot of information and a lot of data on this and statistically we can tell these businesses where they’re going to fail and then for us banking partners, insurance partners and also investors now you want to know what you’re buying. You want to know what you’re buying for the license itself, and then we also have our score which replicates across to a value.

So if you score in the 90s or higher, you have good degraded compliance. If you score in the 80s, we couldn’t refer you for a bank account. We couldn’t refer you to one of our insurance partners. If you score in the 70s, that’s medium to aggressive closure risk. So we kind of have a classification model too for investors that will value a business based on their score because at the end of the day a license is a privilege to sell, cultivate or manufacture marijuana, and if you’re not a compliant business, the value of your business significantly lowered.

Matthew: You mentioned you statistically know where a business is going to fail just because you have so many data points now for all these different cannabis companies. Can you give that information to us in an easy to digest format so we can understand where most businesses do fail or where they’re failing or what the risks are?

Steve: One of them, the biggest area and most businesses I would say about 80% have issues. But if you look at inventory, and we’ll just take Colorado as an example, you’ve got your physical inventory which is your on-premise inventory. You’ve got your inventory in a point of sale system and let’s just use Biotrack as the example. And then you also have METRIC which is on the company, it’s fairing well but it’s the state mandated inventory tracking system for chain of custody here in Colorado, and then you’ve got your accounting system which could be QuickBooks or Xero, but those are four disparate systems that I need to keep reconciled every day. Every single day I have to make sure that physical matches point of sale, point of sale uploads correctly into METRIC and then the METRIC information obviously I want to make sure I have that in my accounting records so I can pay my taxes, excise tax, etc.

So if you take Colorado, that’s a challenge for any business to manage four despaired systems. So one thing we see here in Colorado is inventory is probably the most challenging thing. You know the inventory system METRIC can go negative. So a package could go down to 0g and then enter into negative grams if you don’t use first in/first out accounting. So things like that can happen where the inventory gets. And as you can imagine as time progresses you’re moving further and further away from compliance, acceptable compliance limits. So you’re deviating further and further and further away from being compliant.

And then for your inventory it’s your revenue, revenues, deposits, deposits, taxes, everything is all wrapped up in your inventory. So at the end of the day the inventory is the most critical thing and then it’s chain of custody in Colorado. So if you’re missing more than 3g for this, you have to notify METRIC and do an adjustment and etc. So it’s a very detailed process that you have to go through, but that’s one of the areas we see where businesses need to really invest in a full time inventory manager and make sure that they’re inventory is spotless because of the regulatory implications of it.

The other thing too, transport and warehousing. We see common issues in basically the transporting of products. Sometimes we’ll see a car that doesn’t have Colorado plates. Well it’s got to have Colorado plates because it has to be registered with the Colorado DMV. So they will be doing transports that have an out of state license plate, that’s technically non-compliant. So we know that transport and manifesting we have to make sure that things are appropriate there. For marijuana testing, do you have all the required batch testing for that as well. So we can kind of go through it and we have some areas with signage and advertising. These businesses do really well. They don’t really have a lot of problems there. Local procedural, we don’t see many issues there, however you will see a city and county piggy backing on a fine that the state might give. So the state might give a $10,000 fine for some occurrence or some infraction and then the city/county can go out and duplicate that as well.

So for these businesses out there that are operating you have to be proactive, you have to have a proactive mindset and have a company like us come in and really evaluate everything that you’re doing and then provide you a list that you can use to correct those infractions immediately. And then it also shows when you get auditing accomplished by a third party entity such as us, you know, that’s not owned by a dispensary. We’re not involved in any licenses or anything like that. We’re an independent third party, but once you bring us in and we start doing these things for you it also speaks volumes that you’re acting within good faith of your license which is a requirement of a license itself. So that’s some of the things that we see overall.

Matthew: Would you say there is a effective enforcement by the MED right now?

Steve: That’s a great question. I would say they have significant challenges. If they want to; if the MED wants to audit the remaining 60%+ of these businesses that are out there, I mean they’re in disparate locations. They’re spread out geographically all throughout the state. There’s 2,800 licenses and growing daily. There’s new areas like Parachute, Colorado that are just opening up and things like that. I don’t see them catching up unless they use some type of automated solution where they can go out there and statistically evaluate everything on a common level.

So until they can; with the process they have right now they would have to probably triple their staff and I don’t know if they have the budget for that, and then on top of that you have to train the staff, and then the regulations are growing every six months. So we’ve got about two hundred pages or so each for medical and rec. So it’s not something that’s easy where you can send out a criminal investigator to one of these marijuana businesses and they know what they’re looking for right. They need some type of whole training and process and everything to go through.

So I see the challenges they have ahead of them is huge but you know it’s not something they can’t overcome if they look at this programmatically and understand at the end they really just want to collect the evidentiary data, store it and then go through and do these audits as fast as they can. And then on top of the regulatory component, so here in Colorado we have three levels of audits. And you have a level one that will incur on application and licensing and it also occurs when the folks at the MED go through and do a remote check of your inventory for METRIC and they look for certain flags, you know, for any adjustments, repeated adjustments, destruction of plants, burning of tags. You know they look for common things like that, and that’s a level one audit that they do actually off-site.

A level two audit is when the MED officer, criminal investigator would show up and then do a license compliant audit at your license premise, and then level three is where they bring in the Department of Revenue. And then the Department of Revenue will go through your books as well to make sure that you’re properly doing everything as per Colorado requirements. So there’s different levels of audits that the MED has to do, and then they’re doing I think a good job on the level one audits and working with METRIC and getting statistics because there’s a lot of information that METRIC has. We just don’t hear a lot about it. But working with them to get the level one audits done, those throw up the red flags. They do the level twos and the level threes, but as you can tell, I mean 60% or more haven’t been visited by licensed investigators So it’s challenging for them unless they address it and go after it from a programmatic fashion.

Matthew: When I met with you recently you were carrying around a tablet that helps you to create your compliance reports for your clients. Can you tell us about that, what you’re doing with the tablet and then what your clients receive in terms of where they’re in compliance and out of compliance?

Steve: Sure. So we use iPads and that houses our SCORE app. Our SCORE app is; it stands for Statistical Compliance Risk Evaluator, but essentially our SCORE app, depending on the audit type. So if I go in and I show up at a cultivation or a retail cultivation center I will have a retail cultivation audit. Then when I go through and do them I would answer all the questions inside the iPad. It takes notes and photos as well. What we’ve really developed, and we’ve been in business since June of 2014 when we first launched, but we really developed the first statistical risk assessment of a cannabis license from a regulatory so the first risk score for the industry if you will, and that’s basically what these scores are.

So when we go through and answer the questions, you know, it’s obviously yes or no for the questions that we’re going through. If it is an infraction, if we find a plant without an RF ID tag, something like that, we can take a photo of it and we can also enter in notes. So if you have a specific infractions from a MIP provider, we can put the name of that MIP provider into the note and that comes through on the report. And then the report that we deliver, it’s basically set up in the categories that I talked about a little bit earlier with licensing, license premise, labeling and packaging, but we’ve got those 13 different subsections and then all of the infractions would fall within there.

We prioritize and rank those and then make sure that when you’re starting on the top one, you’re obviously going after the one that’s the most prioritized which probably would be public health and safety. So anything that interfaces with public health and safety is against licensing would have obviously a really heavy weight to it vs. seeing the size of a sign. The size of the sign wasn’t 12 X 12, it was 8 X 11, that’s technically not compliant, but you’re probably not going to get a fine or a notice of a violation for that.

So we go through and assess that, we provide the detailed compliance reports and then again they can utilize us to come in there and help them to improve their compliance or the list itself, the detailed compliance report that we provide. It gives them a list of everything they need to focus on, and then a lot of our clients will have us come in three to six months later again and do another audit or if there’s new updates, the regulations which we’ve just recently had, we’ll go through our clients and do another audit as well.

Matthew: It’s not all bad new with clients and scary audits. Do you have any examples of clients that were somewhat out of compliance and then turned it around and made it a strength for their business?

Steve: Yes. We’ve had a client essentially they were going to lose their license because of over 24 months of METRIC violations in their software system and the inventory tracking system. We were able to intervene and then put an action plan in place and review that with the MED and then the MED gave us a stay, so we were able to; oh god, it took about ten days of work, but we were able to get so much progress on the correction of inventory and reconciliation of inventory which here in Colorado is required on a daily basis, that we were able to put a plan in action in place that would help this client come out of where they were at. And then in this case, in a lot of cases for these businesses out there, a shutdown is almost the death penalty because they don’t; they don’t have a lot of cash to basically continue on and do operations when they’re closed. So they’ve got to keep the doors open, they’ve got to keep product moving and stay compliant as possible.

So we’ve saved a couple of licenses out there definitely in this industry which is great. And then for a lot of our clients a lowest score we’ve ever seen is a 41.6. This would have been immediately shut down if it was visited by MED regulator, but fortunately we were called in first and we were able to get them on a path to compliance, and they are much better for it. They’re operating really well. They score in the high 80s on that which is a considerable improvement. They almost doubled their score at least. So we’re out there making I think a difference out there and we’re trying to legitimize the industry as best we can and then we also have baking partners.

These are banking providers that will accept a cannabis business, and they enter in the proper SIC code and all that information, but so what we can do is if one of these businesses scores in the 90 or if you have a business or licenses that score in the 90s, we’re able to refer you to one of our banking partners to set you up with a bank account so you can start doing everything legitimately because you know the banking industry and everything else that’s going on now, it’s moving forward at a snail’s pace. There’s small banks, really really small banks that are dipping their toe into it right now.

The large banks are staying away because of the federal mandates that are out there. But for the small, smart banks they’re putting in compliance programs where they do their due diligence upfront. Because obviously if a cannabis business is doing money laundering or something like that, then the bank could be held liable. The bank could face criminal action. So there’re very very intelligent banks that are stepping into the market to kind of develop these compliance programs and perhaps set up five to ten initial accounts and then they enter suspicious activity reports as needed you know on these things as far as their banking requirements. We’re able to kind of make a difference there and try to legitimizing the industry as best we can.

Matthew: Now we talked about the big data component a little bit. Is there anything else in that area that interests you or think people would want to hear about in terms of understanding how big data and these cannabis statistics you have connect?

Steve: Sure. So if we look at an audit event that we have and let’s just say we’re looking at a dispensary and we know the dispensary had seven infractions and they scored an 87.6, we go through and look at the various categories and we see that it had one infraction in licensing, one infraction in license premise, but it had two in labeling and packaging and one in business requirements. We’re able to kind of go through and for a business that essentially has any issues for business records required it’s very specific on the documentation that you need to have onsite for six months and then three years offsite for businesses like that.

So what we can do, across when we look at our data we know that 17% of the infractions come from a licensed premise. We know that about 11 to 12 percent of the infractions come from inventory and inventory issues. We know now that with labeling and packaging pretty much they’re not failing the entire section of label and packaging, but they are getting infractions and they are getting public health and safety infractions which are a little bit more weighted than the other questions that we have as per MED guidelines. So we definitely have information like that, and then the average scores as well. Going into a business and scoring it in the 70s, we can statistically say that yes, if the MED officer came in, you’re probably looking at least $40,000 to $50,000 in fines. And right now when we go through that as well as when we go through these questions we know that from METRIC reconciliation, if you don’t reconcile METRIC at the close of business every day here in Colorado, you have, you’re subject up to $10,000 a day per occurrence that you don’t do it.

So if you didn’t update METRIC on one license for say five business days and the MED came in and audited you and found out that information, technically they could give you a fine of up to $50,000. Now would you pay that, not necessarily, you might be able to go in front of the attorney general, plea down to get it to a certain level and then they’ll put you on like a six to twelve month, probably twelve month probationary period where you’re not able to get in trouble. You can’t have any more infractions, you know, and things like that. But if you have an open dumpster in the back of your facility that doesn’t have the lock on it and there’s marijuana fan leaf or marijuana product in the dumpster, that’s a public health and safety issue where they can shut your facility down, and then that will cause you grievance there, and possibly you will have a show cause hearing. You will have to go through that entire process. That’s going to be more impactful, you know, shutting your operations down for a significant amount of time.

So we’re able to go through and if any of these infractions, if they have specific infractions that we know about we know that those are do not do right. And then if you’re on probation here in Colorado and you have more infractions you can get what they call the death penalty where you’re ban from the industry up to eight years. So yes, so statistically knowing what we know and knowing where the biggest infractions are for each specific section that we do track, you know, we’re able to help these businesses statistically improve.

Matthew: Steve in closing I know Adherence Compliance is growing rapidly, are you seeking any outside investors at all?

Steve: We are. We’re basically going through the process right now with investors, also equity partners and investment banks. So yeah there is significant interest. We’re doing, as I said, the preliminary rounds. So if anyone is interested in learning more, they can always reach out to us and we’d be glad to provide a review of; a detailed review of kind of what we do, our investor deck and things like that.

Matthew: And how can listeners reach you? How do they find out more about Adherence Compliance and then if they want to reach out to you as an investor, how can they do that?

Steve: Sure. You can open up Bing or Google and type in Marijuana Compliance or Marijuana Audit and I believe we show up first in the top one or two in the search rankings. Our website is www.adherence-corp.com and if they want to reach us 720-616-3900 is our business line.

Matthew: Steve, thanks so much for coming on CannaInsider today we really appreciate it.

Steve: Thank 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 CannaInsider, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

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Steve Owens is the founder Adherence Compliance. He has audited hundreds of cannabis companies and not one has had a perfect score. Hear detailed information about all the ways your cannabis business can be out of compliance and what you can do now to bring your business back into compliance and limit your exposure to harsh penalties or even closure of your business.

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

Key Takeaways:
[1:49] – Steve’s background and how he got into the cannabis industry
[3:32] – What is Adherence Compliance
[5:53] – Steve talks about the white paper he wrote
[7:01] – Steve discusses the top compliance infractions he sees the most
[10:30] – Steve talks about cultivation infractions
[12:34] – Are there common best practices between states
[14:41] – Steve talks about reactions and scores to compliance audits
[18:52] – Steve gives some data points on where most businesses are failing
[22:31] – Is there effective enforcement by the MED
[25:39] – Steve talks about the compliance reports a client receives after an audit
[31:24] – Steve talks about big data and cannabis
[35:22] – Contact details for Adherence Compliance

Are There Sommeliers for Cannabis? Interview with Max Montrose

Max Montrose

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Just as a sommelier helps wine enthusiasts understand the most optimal way to experience wine, a master of interpening has studied the art and science of cannabis to helps their clients make the best choices for their needs.

Max Montrose, founder of the Trichome Institute walks us through how to take your knowledge to the next level.

Key Takeaways:
[3:43] – What is the Trichome Institute
[4:31] – The ROI of educated budtenders
[8:56] – Max talks about customer engagement
[11:00] – Max discusses the textbook used by the Trichome Institute
[14:33] – Max talks about light bulb moments for students in the classroom
[17:14] – Adding oils to vape pens
[22:26] – Max talks about interpening
[27:53] – What is nutrient lock
[30:50] – Max talks about the second interpening class
[36:46] – Misconceptions in the cannabis industry
[40:25] – Max discusses live resin
[49:33] – Max says all Indica and Sativa edibles are fake
[54:30] – Different strains for different individuals
[59:17] – Max’s advice to people looking to get in the industry

 

Read Full Transcript

Get your coupon code for 10% off all Trichome Institute Online courses and certifications. Interpening tools, courses, responsible vendor and more

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 atwww(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.

The cannabis education space is red hot with many students wanting or needing to develop their insight and understanding of cannabis in order to keep pace with the industry. To help further our education I’ve invited Max Montrose of the Trichome Institute back to the show. To give us a brief on not only cannabis education but some interesting trends that are emerging right now. Max welcome back to CannaInsider.

Max: Matt thank you so much for having me back.

Matthew: Max you’ve been a guest in the past but for new listeners can you remind us where you are in the world?

Max: Sure. I am born and raised in Denver, Colorado and I’m still here because it’s...

Matthew: Yeah.

Max: Yeah why would you be anywhere else I love it here.

Matthew: You’re like a; that’s a rarity. You’re like a Sasquatch or some endangered creature. There’s not many left.

Max: Well it’s true and when I tell people I’m from Denver the next thing they ask me is where are you really from? I have to defend myself and explain the streets I was born on and where I grew up actually in the city of Denver yeah so. It’s cool.

Matthew: They say Denver is becoming the next Austin would you agree with that or do you like to draw no parallels to your home city?

Max: Well I tell you what a few years ago one of the sayings that was definitely true was you could get anywhere in the city of Denver in ten minutes or less and Denver is a huge city. That is no longer true. The fact that we have I think they said something like 4,000 people are moving to Colorado a month right now. It is just; it’s absurd and so I’m now dealing with LA style traffic on my regular Denver streets and things have just definitely changed and construction is going up left and right everywhere. The economy is booming. People are happy. You can be gay and walk down the street holding your partners’ hands and no one cares the same way you can smoke a joint walking down the street. Everyone just lets everyone be who they want to be in Denver so it’s really cool.

Matthew: That’s great. I think a suggestion for you might be a jetpack to get where you want to go from A to B would you consider that?

Max: Well not only would I consider that but I’ll tell you that the guys who are doing the jetpacks are in Boulder and they’re predicting that you can jetpack from Denver to Boulder in within six or seven years; have that technology available so that would be totally cool.

Matthew: That’s the next thing I’m going to do immediately after this interview is learn more about jetpacks but switching gears let’s talk about Trichome Institute. Can you tell us what that is again for people that aren’t familiar with it?

Max: Sure. The Trichome Institute is a cannabis education company that is designed to help other cannabis education companies. So what we do is we build a variety of different types of education and curriculum for the public, industry members, governments, and even physicians within hospitals.

Matthew: Okay. Now I’ve had the experience of going to a dispensary and working with very knowledgeable bud tenders and then going to other dispensaries and working with some pretty new or unskilled bud tenders. In your opinion how can someone that has gone through cannabis education impact the customer’s experience in the dispensary? How they feel, how they walk away? What are your thoughts there?

Max: I mean to answer that it’s really night and day to get the difference of the experience of working with a bud tender who really understands cannabis from not just a personal perspective but a more in-depth scientific and medical perspective as well so that they can actually help their customers. And so what we try to do is we try to inform bud tenders that sometimes the best product to give a customer isn’t your favorite product. What you need to do is evaluate who your customer is and what their needs are and what they are trying to avoid. And so what we do is we really breakdown cannabis. Not in a way that’s too complicated to understand, but we definitely teach bud tenders how to evaluate people’s tolerance and needs and then equip them with the education and the vocabulary to explain why it is that these variety types, terpenes, and cannabinoids will affect them in these certain ways. What to avoid and what to look for.

Matthew: Yeah and there’s a huge variable I mean there’s many variables but just one is thinking about how people metabolize cannabis differently. Some people are fast metabolizers, some are slow metabolizers. Five milligrams could put them on the floor and it’s just so I mean that’s why you start low and go slow, but what other kind of things are you thinking about if you’re behind the retail counter that you want to make sure you give an optimal experience to a customer in a dispensary?

Max: Sure and so what I heard you just say was words five milligrams and start slow and what I think you’re referring to was edibles.

Matthew: Yeah.

Max: And the variable difference and so I tell people who I teach that edibles and smoked flower are too different drugs.

Matthew: Yes.

Max: The reason why I say that is because it’s true. When you metabolize Delta-9 THC because it’s not water soluble and your body’s goal is to make it water soluble so that you can excrete it out, your liver metabolizes it by changing the molecular structure from Delta-9 to 11-Hydroxy THC which is a different, slightly different but different molecular structure that affects you in a different way and it can affect you 2 to 6 times stronger and the effects can last 2 to 6 times longer than smoked flower and what’s really interesting is there is some people in the world whose bodies cannot actually receive 11-Hydroxy for whatever reason.

It’s not psychoactive to them the way it is to other people, and so it is actually true that some people cannot feel edibles and that all of our systems are different; our GI tracts and so yes we’re going to metabolize them differently and we’re going to get different experiences from that, but explaining to bud tenders why it is that you’re going to experience something different allows them to explain to the customers why you need to go slow. It’s actually possible that you could serve a customer an edible and they won’t feel the effects for up to four hours, not two hours and so it’s really important to teach people the specific type of information.

Matthew: Yes. It is amazing how much difference there is from person to person where it can take hours and then they start to take more because they say it’s not working. I’ve seen that trap over and over and then when it does hit they’ve strapped themselves to a rocket ship so that’s definitely something to pay attention too so back to the dispensary. Dispensary owners and operators certainly see the point of sale; see the sales figures coming in every day and they’re wondering what can I do to increase engagement. We talked a little bit about how bud tenders can create an optimal experience but do you feel like there’s a disconnect from just a business owner that’s looking at their point of sales figures and thinking they’re doing good or doing bad. I mean it’s not really measuring engagement in any way or how customers walk away and how they feel.

Max: Right. So I think what you have to look at is the culture of the specific dispensary and so in Colorado we have a thousand dispensaries. We still have more cannabis stores than public schools, Starbucks, and McDonald’s combined. And so there are tons of different types of cultures in the cannabis industry. There are a range; from gangster to hippy people engage in cannabis, and so there are the unbelievable dispensaries that are just like your caring mother who just wants to know you and help you and see that you’re doing well and know your name and develop a relationship with you as a patient.

Those dispensaries exist and unfortunately there’s also dispensaries who see this as nothing but a moneymaking opportunity and don’t necessarily care who you are or if you’re enjoying your products or not. They’re just concerned how much they’re selling to you. And so you can’t really generalize the situation. You just have to understand that there are different types of situations out there but between the two types of cultures of those types of dispensaries that I kind of outlined both the staff members still need more education. They still need to understand more about the product and understand how to evaluate a customer; either a retail customer or a patient.

You have to explain to bud tenders that people who come in to get some relief from there PTSD you really have to start to stay away from Sativas at first, but because people are so different it’s possible that Sativa might be the thing that really helps this PTSD patient which is why it’s so crucial to have the experimentation phase which is something we go over in our textbook and within our curriculum.

Matthew: Let’s talk about your textbook a little bit. What’s the name of it?

Max: So it’s the National Cannabis Industry Textbook and what the Trichome Institute has done is instead of running around trying as hard as possible to fill our classes in the past year and a half, we’ve dedicated all of our time in curriculum development. And so where the Trichome Institute differs from most other cannabis schools is the difference between education and curriculum. And so education is information given to you and whether you absorb that information or not is really depending on are you a good listener, are you a good note taker. For me I’m not a good listener and I’m also not the best note taker and so.

Matthew: What good are you Max?

Max: I know right and so instead of lecturing at you and telling you cannabis information, we’ve taken a textbook and insured that there’s no misinformation by having it reviewed by some of the authorities of cannabis in law, science, and medicine as well as my personal expertise over a decade of working with this plant and then we work with curriculum developers to create workbooks for students that they work in with the teacher while they’re in class and get to take home with them and keep so that they maintain the information. And so we are really trying to bring academia to the cannabis industry.

The reason why I started the Trichome Institute is because of my unbelievable frustration with the lack of cannabis education that exists, and the education that does exist is just unbelievable the amount of misinformation that’s in there and how many cannabis schools that exist that have never verified the information that they’re certifying you in. I would almost go so far to say that there is a hefty amount of cannabis education that currently exists in the country that I would consider criminal based on the idea that it is really expensive and what you’re paying for you could easily Google, and that there are people who are teaching bud tender certifications who have never bud tended before.

There are people who are getting into the cannabis education realm because they can see its potential, but they’ve never used cannabis or grown it or sold it. And so it is something that does take an element of experience across the board. And so what we do is we really put the experience of what it means to be a bud tender in a patient, in a caregiver, in a grower and all of these complicated cannabis products with an element of science and medicine and law and review.

Matthew: That’s great. Now you mentioned it; before we started the interview you mentioned you were lecturing yesterday and giving a class. When you’re in a classroom setting or going over the textbook with students I’m sure there’s a lot of light bulb moments, but is there any specific moment you see over and over again where things kind of seem to come together and make sense for students?

Max: Totally. We see the light bulb go off on a variety of topics. When I explain to bud tenders that edibles and smoked flower are two different drugs it’s like the aha moment. Oh that’s why it feels so different and that’s why it works that way, and then you explain to bud tenders things about dabbing concentrates. I hate to break it to you bud tenders, but the majority of types of dabbing that exist is really dangerous. The product that you’re smoking is dangerous and the way in which you’re making the product is dangerous and the way you’re using the product is dangerous but does it have to be? No.

There are actually safe ways to make concentrates, concentrates that are clean and not dirty, and there are safer ways to dab then other methods out there. And when I explain to bud tenders that what wax is is it’s literally wax from the plant cutin which is the waxy outer layer of plants that protect them from UV lighting, and it’s just a mixture of cannabinoids and actual wax. And if you were to winterize and separate the wax what you would get is literally wax you could make a candle out of. So if you’re someone who dabs wax multiple times a day just imagine dripping hot wet candle wax onto your bowl and just smoking that every day you’re smoking.

You’re getting wax into your lungs and it’s not okay and the thing is is that there’s no science about this. There’s no research about this and people in legislation don’t understand what dabbing is. They don’t even know what’s going on. And so there’s a lot of aha moments where we can explain to people the pros and the cons. We don’t just say everything is terrible because it’s not, I mean sometimes I take a dab when I need to go to sleep at two o’clock in the morning, but how am I dabbing and what am I dabbing and why do you need to know that and why do you need to relate that to your customers to keep people safe. So yeah there’s a variety of aha moments.

Matthew: There’s kind of; there’s a broad spectrum of opinion on the vape pens and what is being used to cut the cannabis oil into a viscus medium that can be used I mean vape pens have a lot of advantages. They are discrete, they’re portable, people like the effects, but there’s a lot of difference of opinion on what should be in this oil when it’s vaped. How do you weigh in here? What do you think about adding certain oils I mean propylene glycol or coconut oil or some other natural oil?

Max: So you definitely don’t want to smoke coconut oil and polyethylene glycol is just confusing because some people say it’s in what do you call that antifreeze or windshield wiper fluid or whatever but at the low levels that it’s in the cannabis it’s acceptable to smoke but the FDA hasn’t really confirmed that. At the end of the day vape pens are very convenient and you can pretty much use them anywhere and you can get a desired intoxication from them. Unfortunately you can’t get high or stoned from them because of the lack of the terpenes that are working synergistically with the cannabinoids. That would be the ‘entourage effect’ which is what makes cannabis variety types unique from each other in the first place.

And so if you take away the uniqueness of the cannabis and just strip it down to its basic psychoactive molecule THC oil which is what these vape pens are you’re intoxicated but you’re not stoned and you’re not high. And so what you’re seeing is a lot of these vape pen technology companies understanding that where the difference in the highs come from is the terpenes and because terpenes are an oil why the hell don’t you just mix the oil in with the THC oil to make it more viscous. You don’t have to have coconut oil. You don’t have to have polyethylene glycol. You can use terpenes and the terpenes will help the high. And so I think what you’ll see in the future is an evolution of vape pens becoming more strain specific and healthier to use.

Matthew: That’s a great idea for a way to evolve the vap pen. I vote yes. Great thought there Max.

Max: Yeah well here let me just give a bunch of startup companies some multimillion dollar ideas. Mersen helps THC Delta-9 specifically cross the blood brain barrier. It’s a lubricant and so if you’re vape pen is 20% THC and there is 0 Mersen in there, maybe you’re only getting 13% of the available THC and then by the way your THC is 50% of what you paid for because the other 50% of the vape pen is polyethylene glycol which literally costs a penny. And so adding Mersen and maybe a little bit of D-Limonene would product an effect that would gauge a stronger high that would be more uplifting and elevating instead of this boring run of the mill THC high and that’s why Marinol is boring and why patients who say that they take yes prescribed medical marijuana. I know that sounds crazy because it’s illegal but for over twenty years we have had Dronabinol (Marinol) on the market, medical marijuana, pharmaceutically prescribed by the FDA. It’s boring because it’s just THC. It’s not; it doesn’t help patients alleviate symptoms the way that raw flower does.

Matthew: So do you use a vape pen ever just even out of convenience or it’s a vanilla to you, you can’t get your desired outcome?

Max: Well you know most vape pens that I try to use they just really scratch my throat and people who know me well; especially my business partner he just looks at me cockeyed. He’s like how the hell do you smoke spliffs full of tobacco and raw flower and you don’t cough once and you hit one little vape pen and you just can’t stop coughing, and I look at him and I’m like dude I don’t know. It’s weird. They really scratch the back of my throat and dry it out and I think it’s just these weird chemicals that are in it and so I really don’t like them.

But I have found a little I guess what you’d call a hole in the wall producer of new vape pen technologies that is utilizing terpenes in a proper way; not in an improper way and using organic flower that has had no pesticides on it because you know remember when you run these plants through these intense CO2 systems that it’s also concentrating whatever pesticides and fungicides you sprayed on the plant and you are ingesting that too, and that when they’re concentrated at those levels they typically become higher than what’s legally acceptable when you just spray them on the plant. You’re allowed to spray chemicals on the plant at this ratio of PPM but there’s been no oversight of what’s to happen when you collect all the plants in the room and condense it into grams of oil and those toxins are also combined and so there’s still a lot of work to be done.

Matthew: Well let’s talk a little bit about Interpening. That’s a word that you’ve coined. Can you describe what that means?

Max: Yeah so Interpening means to interpret terpenes along with the biological bud structure based on original geography. And so through cannabis genomics where we are using DNA to research where cannabis comes from around the world through its massive hybridization in the black market over decades. What I do is I teach people to forget the strain name because they’re either made up, mixed matched, or whatever you’re reading online that informs you about what the strain is is not going to be what you’re going to find in the dispensary due to cannabis morphology and the differences between where you grow it.

There’s a million different reasons why strain names don’t work, and if you pick up a copy of The Hemp Connoisseur a THC magazine which goes nationwide soon. Currently in Colorado in every dispensary. I’ve got a four page spread in the middle of it detailing the history of strain names and solving the problem, and so a wine expert is a sommelier and a beer expert is a cicerone. A cheese expert is a monger and a coffee expert is a cupper and you have tobaccoers and chocolatiers. You have all of this expertise; experts in these fields but there’s no such thing as a cannabis expert and what does being a cannabis expert mean?

Something very fun that I get to deal with on a daily basis is the fact that everyone in Colorado is a cannabis expert. It’s true. They really are; all are. But what we’ve done is we’ve taken the approach of what being a sommelier is and how you evaluate and assess wine by assessing it visually and then you assess the odor and then you assess the taste. And what sommeliers can do is believe it or not these people can take one sip of wine from tens of thousands of bottles you could put their way and they can tell you what zip code on planet Earth it grew and what the weather pattern was that year and probably history about the family who grew that specific grape without even looking at a label.

And what we do is we have classes where we teach people how to interpret terpenes. The things that you can smell that you know gauge a certain effect based on the pharmacology of the specific terpene ratios that are strong. In conjunction with breaking down the structure of the cola to see where it comes from because the landrace genetics are very distinct from each other. And so we look at the most distinct features and then we try to slowly bring them together to see the pattern of hybridization somewhere in the middle.

And so within my classes we have live cannabis samples full of botrytis, powdery mildew, jar rots, spider mites, fungus gnats, unflushed bud, chemical burn, nutrient lock. I mean if there is something wrong with cannabis that could be sold to you on the black market or in a dispensary, we put it in your hands and let you experience what that is while we’re teaching it to you. And then once we’re done with all the gross stuff we move onto the more delectable cannabis that’s sold and we breakdown how to assess the difference between cannabis variety types.

And so what this means is if someone puts information about Golden Goat online and what that strain is, and they’re putting this information online from California, and then you’re accessing Golden Goat in Colorado, it might not be the same plant and chances are it’s not the same, and if it is the same, the phenotypes will change drastically due to the different environments that they’re grown in because environment does affect the plants. It’s evolution. Cannabis evolves like light speed depending on where you put it.

So this is something that people are really starting to appreciate and dispensaries are starting to line up and send their bud tenders to this course which is actually something that surprised me. I thought the public would be more into this than bud tenders, but I think dispensary owners are really seeing the value of what happens when their staff takes a course that really just teaches them so much more about cannabis flower and how to explain it and break that down to the customers. It becomes impressive. When you walk into these dispensaries where every bud tender knows what terpenes and cannabinoids are and they can tell you what they do and how you should utilize them, that’s the difference between the night and day dispensary of people who know what they’re doing and people who don’t.

Matthew: Great point. It’s the trusted advisor role. Do they know something more than you that can help you and that’s a huge advantage and that does translate for the business owner as well. People come back, they have a positive experience, and everybody wins.

Max: Correct.

Matthew: Now there’s one thing you mentioned nutrient lock which is something that I haven’t heard before could you just talk a little bit about what that means?

Max: Yeah so within nutrient lock. So Matt dude have you ever walked into a hydroponic store?

Matthew: You mean while all the supplies are available and lights and things like that?

Max: Yeah.

Matthew: Yeah.

Max: Okay. I mean how many hundreds of different types of chemicals did you see for sale?

Matthew: There was a ton.

Max: It’s just unbelievable.

Matthew: Yeah.

Max: And what these people’s job is is to sell you as much of that stuff as they can. And so when you go into a hydroponic store the guy behind the counter’s job is to make sure that you walk out with six or seven different bottles of nutrients. What’s interesting is a lot of people will look at the N-P-K value, the nitrogen, potassium, and phosphorus on the front of the bottle but they don’t really turn the bottle around and look at the percentage of a inert ingredients and what you will find is a lot of these places sell bottles of water; 99% water for a $100 and you just don’t catch it if you don’t read the fine print.

And then another thing is is they’ll tell you to combine all of these nutrient lines together and they’ll sell you some $700 pack of an eight bottle something with a PPM chart and all this stuff, but a lot of people who grow either in their basements and unfortunately in the professional industry don’t really take the time to understand the chemistry and what you have to understand is is these are different properties. Different salts and different molecules that are interacting with each other, and I’m not kidding when I say I’ve actually seen people mix all of their nutrients together outside of water and then pour water into this toxic soup that they’ve just poured all of these different chemicals into to and then they feed their plants this.

And so what happens is is that the salts interact with each other in a negative way and they lock themselves together and when the plant tries to drink this it locks within the plant and it kind of blocks the plants ability to absorb good nutrients and water and all of these other things, and then of course if you don’t flush these salts out of the plants system, it’s just unbelievably salty and that’s the kind of cannabis when you smoke it it hurts and you cough really hard. And so nutrient lock just comes down to the order of operations in which you place your nutrients in the water at the proper temperature pH and part per million before you feed it to your plants.

Matthew: We talked a little bit about your entry level interpreting class and I notice I said it correctly this time Max, not interpening sorry.

Max: Hey thanks man.

Matthew: So what about the second level interpreting class?

Max: Yeah so like cicerones and like sommeliers there are multiple levels of achievement. And so level I and level II education is basically the same. Within level II education you get to work with me a little bit more in-depth and we go over the different molds and properties together more than we would in just a general information of what interpreting is which is kind of level I. And then what we do is we pass out a test and it’s ten jars of cannabis flower and you have to get eight out of ten correct before we’ll consider you a level II interprener and for a lot of people this is really hard and the reason why it’s hard is because interpening just by itself is not easy.

What you’re looking for are very, very tiny differences. You’re looking for not bud that is just absolutely covered in powdery mildew but a flare of PM on a side of the bud or the smell specifically of Botrytis and then being able to pick out the difference between and Indica, Indica hybrid, 50/50 hybrid, Sativa hybrid and a Sativa. And so there’s five quality jars of those variety types and there are five negative qualities and you have to pick them out in the correct order during the test and like I said eight out of ten passes.

People who have been growing for years and years do really well on this test and it’s because they’ve been looking for Botrytis and powdery mildew and bugs and understand the strains and the variety types more than some bud tenders who have been in the industry for three or four years and really know quite a bit about cannabis but haven’t experienced necessarily all of the negative qualities that we teach. And so there is a level III Interpening and we are definitely considering what a level IV would be like and that would basically be an extreme cannabis expert similar to how a level III master sommelier is looked at.

And so these different levels of achievement just basically inform the world that you understand more about cannabis flower than most people do because I haven’t seen any cannabis school out of more than fifty that I’ve researched that provide this level of education or even bring live flower into class and let their students interact with it in the way we do, and we have microscopes out and flashlights and it’s really cool. When you go to our blog and our website at www.trichomeinstitute.com you can see some videos of what class looks like and how this all pans out, but within Colorado there’s the Colorado THC Cup. And the THC Cup I’ll just say that I prefer over other Cups because it’s very legitimate in terms of how they go about evaluating the cannabis and it’s very even in terms of many other things.

But within the THC Cup starting this year the connoisseur judges all must be level II certified interpeners or higher. And so there are the People’s Choice Awards where the public can judge the buds. The public knows quite a bit especially here in Denver, but there are really connoisseur’s in the industry who stand out. And so there are connoisseur judges whose judging has a little bit more weight to it when it comes down to the final answer. And so now you need to be trained and certified in dissecting cannabis flower before you’re allowed to say you know what dissecting cannabis flower is and looks like to make cannabis judging more legitimate.

Matthew: Interesting. So by attending one of your level I or level II classes then do they satisfy the requirements for this type of judge; to be a judge in this type of thing like the THC Cup?

Max: So everyone passed level II. So not everyone gets eight out of ten jars correct on the test but if you don’t, you’re still a Level I Certified Interpener, but because you didn’t prove that you can see and smell the difference between cannabis variety types and detect faulty structures to buds you are not at the level to be a connoisseur judge. We do have people, many people who have passed level II and some people who get ten out of ten jars correct, and those are usually growers who have grown for twenty years but still tell us at the end of the interpening education that we have blown their minds with that much more information we’ve given them than they’ve ever known before and that some of them look at cannabis in a little bit of a new way even though it’s been a part of their life for so long.

So yeah the level II; people who pass the level II test they are eligible. And what we do is we offer people to the cannabis, sorry to the THC Cup who are typically people who pass ten out of ten. But yeah I’m really excited that Interpening is taking off and people are taking cannabis education and judging more seriously and bringing more elements of science and understanding to it.

Matthew: There are a lot of cannabis enthusiast business owners and inspiring entrepreneurs and investors listening right now and by and large they’re much better versed in cannabis ideas than the average person on the street, but are there any stubborn misconceptions among this group that still persists you think that surprises you?

Max: Oh absolutely all day long and that’s why I made the fly comment that everyone is a cannabis expert and it’s just; it’s unbelievable how many people you’ll run into who really believe they know what they’re talking about, and people who have attended two or three cannabis conferences and really feel like they truly get it but have never spent time in a grow room actually growing and understanding how complicated the growing procedure is, and how complicated the curing procedure is, and how complicated the legal aspect is, and how complicated informing patients is with all the cannabis misinformation that’s out there. I still run into people who are even OGs and what I mean by that is some of the original gangsters who’ve been doing this stuff way before it was legal, who have been growing for twenty years and because they figured out a method that worked real well for them twenty years ago they’ve just kept to it and have refused to be open-minded about new information and new sciences and new practices and new technologies that are really helping the industry flourish.

And so anybody who says that they are an expert and that they know everything that there is to know about cannabis, and that they’re the best grower, and they produce the best product those are the people who I don’t trust upfront. I trust growers who are honest about the fact that they’ve grown for a while and there is never a point in the world of cannabis where you can stop learning something new because it’s true and that’s why I love cannabis and why I love educating people about cannabis is because I don’t stop learning new things, and I dedicate two hours a week to studying something new about cannabis and I have; you should see my list of things to research and catch up on. It is pages long.

Matthew: Yeah.

Max: There’s so much more that I need to know. And so people need to really be open-minded and also open-minded to the fact that people in the black market generally have a better understanding of cannabis then some people who have graduated with honors from some Horticulture school. Studied how to grow tomatoes but have never grown cannabis.

Matthew: Right.

Max: And so what you need to do is understand that the kid in dreadlocks with the Bob Marley t-shirt might know way more about growing and curing cannabis flower then the prestigious academic kid who just graduated from some Horticulture school. And so there need to be a blend of those two. Those two people need to hang out with each other and learn from each other and teach other so that we can move cannabis forward because there is still so many in’s and out’s and particular things that people need to know but can only know from experience alone. And so if you’re new to the cannabis industry it is very important that you partner up with someone who has experience or you access quality cannabis education and information from people who have that experience so that they can share it with you so that you can really understand it fully.

Matthew: Now let’s switch gears and talk about live resin. What is live resin and why is it captivating the cannabis community right now?

Max: So the theory of live resin is captivating the cannabis community because the theory has been proven true and there is a lot of product out there that’s called live resin and maybe at one point in time was live resin. But when I go shopping and I ask to see their live resin almost eight out of ten times what I’m looking at I wouldn’t consider to be supreme quality live resin. And so there are lots of terms to try to describe something similar; live sap or holy water typically in an extraction process because terpenes are such fragile volatile compounds they get obliterated almost instantly during the extraction process which is why you don’t really have vape pens that are strain specific.

And so what live resin is it is the science of understanding how to preserve your terpenes within your concentrate. And so wax is nothing but cutin, paraffin, and cannabinoids, and a slab of shatter is literally nothing but cannabinoids and what live resin is is it is the cannabinoids plus all of the specific terpenes captured from the cannabis flower that was extracted with the cannabinoids. It’s not a reintroduction of chemical terpenes like one or two or three of them in with the cannabinoids it’s not that. It’s a whole extraction process and the whole process is done freezing and that’s because terpenes are the most sensitive to heat.

And so the term live resin means that the resin from the Trichome glands is alive. And so a plant starts to decay into necrosis within four hours of being separated from the root system. And so under a four hour period, most likely under a one hour period the plants, the buds, and the sugar trim are all packed into freezers. It’s not flash frozen because it’s not liquid nitrogen. It’s not cryogenically frozen because it’s not a $100,000 cryogenic freezer. It’s freshly frozen. This plant was cut and it was put in the freezer in a fresh state and those Trichomes are frozen and then the extraction process using Butane is done completely freezing and when it’s decarboxylated, not decarboxylated, when it’s purged at the end from the Butane the purging process is done at an extremely low temperature to preserve the terpenes and is also why it’s not decarboxylated.

And so what you get at the end result when you smell a healthy splat of live resin is this sneaky smile creeps across my face with excitement because I feel like I’m smelling the bud right off the bud. The fresh plant as it’s wet and fresh and sticky which is a much different smell than when it’s cured. And so when I smell this live resin it’s kind of like this holy shit experience and you smoke it and it’s just unbelievable. It’s so, so good because it is the whole cannabis flower with all of the entourage effect happening simultaneously in a concentrated extract form. It’s really incredible. Unfortunately as I said when you walk in the dispensaries and they say here’s my live resin, when I look at it and I say I wouldn’t buy that what I mean is the majority of live resin that I see is nucleated. And so most people don’t understand nucleation but it’s not hard to understand I guess once I explain it. And so what nucleation is is it’s a chemical process where moisture strives to bond to a cooler surface in an attempt to condense as a liquid. This is what we call condensation. It’s the same chemical process.

And so if you keep your live resin in the fridge to preserve it which you should and then you take it out and put it on a counter to share with a customer, moisture in the air will naturally attach itself to the surface and when this occurs the water molecules will attach to the residual butane molecules and create a fractured bond within the oil itself kind of holding all the terpenes in and will fracture it into a crystalline state and this is actually the science behind “auto buttering”. And so a lot of dispensaries sell butter and what butter is is it’s basically shatter or resin that has been fractured from either particulates that have destabilized the oils causing the bond to kind of erase. And when I say the bond imagine a cup of water where you fill it up to the point where it should be spilling over and you can obviously tell that the water is above the lip but why does the water not spill over the lip? And it’s because the water molecules are holding on to each other because they want to be bonded.

Matthew: Surface tension right?

Max: Surface tension correct and so when you extract these terpenes which are an oil with the cannabinoids it creates this surface tension in the same way. And what that does is it actually keeps the terpenes plugged into the extract. It maintains it. When water hits the butane and starts to break up that oil bond and it starts to crystalline and that crystal pattern starts to spread throughout the product the auto buttering phase what’s happening is that bond becomes extremely porous and when that happens all of the terpenes are now escaping out of the porous crystal structure rendering the product more cannabinoid than terpene totally defeating the whole purpose of live resin.

And so if you walk into a store looking for that fantastic live resin that I described to you earlier and what they show you is just this gritty, crystalline amber color looking product if you smoke will it get you high? Absolutely and it will probably taste much better than anything else you’ve tried, but if it was in the consistency of honey and more sap like than in a crystalline state it would be better.

Matthew: And so if you’re a business owner somewhere in the cannabis spectrum right now listening and you’re saying hey what Max is saying about live resin is really interesting. I want to do it the right way. How should they think about incorporating live resin into their business I mean what’s the right way to do this?

Max: Well the right way to do it is to understand how to set up the extraction process the correct way because that’s really the key. I mean there are so many operations around the country. I mean more than dozens, hundreds of operations who have multi hundred thousand dollar extraction systems whether they are CO2, Butane, Hexing, Propane but they’re just not set up in a way to product live resin. But they could be and so what that comes down to is working with someone who knows what they’re talking about and that all just kind of comes down to connections and availability for consultations. I am not an extract expert myself, but I know a couple. And so it’s all about kind of who you know and who can help you figure out some of the newer technologies that come onboard. And what’s really fun to watch in the cannabis industry is the race to the next technology. The next cool thing or making the last cool technology better in the first place. And so it’s just fun man I love this industry.

Matthew: You recently told me that all Indica and Sativa edibles are fake. What does that mean?

Max: That means I’m going to piss off a lot of edible companies. That’s what that means. And so it’s the same idea Matt as I described to you about why vape pens kind of suck in the sense that they’re not strain specific due to the extraction process that kind of obliterates fragile terpenes which is what causes strain specificity. And so you’re not only extracting your cannabis oil in a violent way, I mean violent. These freezing, pressurized extraction chambers that just splat the oil it’s an extremely violent process which is why live resin is so unique and it’s very delicate.

And so you’re basically destroying all the terpenes while you’re extracting it and then let’s go one step further and bake them into cookies and throw them in the oven at over 100 degrees Fahrenheit. By the time you get to a temperature that decarboxylizes Delta-9 in the first place you’ve already burned away all your terpenes. And so if you have Golden Goat in its let’s say a term pure Sativa although that’s arguable, but let’s just say it’s pure Sativa and then let’s say you have a pure Indica like a Bubba Kush and they’re both exactly 20% THC. If you smoke them why does one make you high and the other makes you stoned? If it has the same ratio of CBD, THC, CBN all that and the difference is the terpenes like I keep saying.

And so the idea that you can extract these oils in such a violent way and then throw it in an oven to remove some of the toxic properties purging it and then throwing it in another oven to cook a baked good or a gummy or something like that, there’s really no room left for terpenes. They’re gone, and so what you have is you have Delta-9 THC in whatever milligram percentage you have and then that gets converted into a new molecular structure anyways, 11-Hydroxy, after your liver processes it so that it becomes water soluble. So at the end of the day when I say edibles are a different drug I really mean it. I mean it is a different molecular structure. It doesn’t have the entourage effect on it. Someone in one of my classes said well they eat a Sativa edible and they feel like it’s a Sativa. And I’m like well it’s possible I guess if you only harvested Sativas and if you extracted it in a really gentle way and cooked it in a gentle way and purged it in a gentle way to get more of a Sativa dominant effect that might carry through with the 11-Hydroxy.

That’s possible, but I’ve visited and have worked in lots of extract facilities and edible making facilities where they don’t just harvest Indicas or Sativas to make extractions from. They purchase, trim, wholesale from hundreds of dispensaries across the state and combine hundreds and hundreds and hundreds of cannabis variety types into a mixed blend that they then extract from. It is so hybridized. But before they even extract that like when they say its strain specific by the time it’s wrapped and packaged and on the shelf it’s to me kind of just a marketing thing. I don’t feel like it’s legitimate.

If someone could help me understand how I’m wrong in this idea I’d love to learn why but just kind of thinking about it generally and thinking about how the chemistry works; thinking about how the extraction process works and then thinking about my own personal experience to me I think you have a better chance of tricking yourself into thinking that there is a strain specific edible because that’s what you believe you’re taking in. And so yeah I don’t really believe that there are strain specific edibles at least not any that I’ve seen yet.

Matthew: If you were to walk into your favorite dispensary with a listener that has never been in a dispensary before and help them find a strain that’s a fit for them what questions would you ask them and then as they evaluated the strains visually and in terms of fragrance what would you encourage them to look for and notice?

Max: So one of the coolest things about the human body is how the nose knows and I have no idea how the nose knows, but I know that it does. And so it’s this really just unbelievable thing that our body can do where you could blindfold a person and let’s say you put up to their nose feces or vomit or a dead animal carcass. The reaction of the human body will be to jerk backwards, to get away from it and it’s a physical chemical response that tells your entire system that alarms will go off that this is something that you need to stay away from. That’s incredible. It is it’s really cool and then you think about things like fruit that just smell so sweet and so luscious and they’re so good for you. And so when I work with patients in the dispensary I explain to them that your nose knows what your body needs and wants, but everyone is different and the most absolute thing in the cannabis industry is there’s no such thing as an absolute.

And so every class that I teach I ask who here has coffee make them tired and one person will always raise their hand in the room, and I say who here experiences Benadryl makes you hyper and one other person will always raise their hand. I haven’t had it not happen yet. And so what that means is that everyone is different, and so generally Sativa is for the morning, generally Hybrid is for the afternoon, and generally Indica is at night. Generally Indica is for people with PTSD and maybe Sativa is for people with MS, but because you’re different and I don’t know who you are and you’re not that experienced with cannabis here’s what we’re going to do. I’m going to utilize my interpening skills and help you guarantee that you’re going to get an Indica, a Hybrid, and a Sativa variety for you to go home and experiment with so that you can gauge for yourself what works best for you. I don’t want to tell you what works best for me. I want to help you find out for yourself what works best for you and then make sure that you keep getting what you want. And so that would be my approach in the dispensary setting.

Matthew: That’s great information. Now are there any particular strains you’re enjoying right now and please if there’s any dispensaries you like there’s a lot of people visiting Denver. What are some that you go to and what strains would you pick up if you were going out today to get something?

Max: Unfortunately as a trainer between so many dispensaries and training people in interpening and being a Cannabis Cup judge and advising people in the cannabis industry I’ve made it a rule for myself to not tell people where I find cannabis to be utterly disgusting and where I find cannabis to be fantastic and delicious and I wish I could explain to people where those things are but I just won’t and so sorry but hopefully we’re actually designing some technologies that will help people understand out of the one thousand dispensaries in Colorado which ones should you go to and why. We’re having interpeners visit some spaces and breaking down some of these dispensaries to help out of towners figures that kind of stuff out. Within strain names; within the theory of interpening strain names aren’t real but within the cannabis community and the OG community strain names are very real.

Matthew: Right.

Max: They do have lineage and they do have history and they do come from specific breeders who deserve credit for the amazing work that they’ve produced and given to the world and so within the very small OG community I respect strains and strain names completely and so therefore some of the Face/Off OG and the Raskal OG that I’ve been experiencing has just been unbelievable and I just cannot get away from my favorite Sativas in the Durban Poison, Golden Goat, and Island Sweet Skunk category. I truly love the more luscious, organic, and smaller garden grows that I find around Denver, Colorado.

Matthew: One of the questions I get multiple times a day is how do I get into the cannabis industry. Do you have any suggestions or advice for listeners looking to break into the industry?

Max: Dude I get that question every day too, all the time. And what I tell people is first of all understand that the cannabis industry isn’t a hundred percent cannabis. Every dispensary that exists needs a lawyer, needs a doctor, needs a professional plumber for the grow and professional electricians and H-VAC and marketing and packaging and advertising and human relations and training staff and I mean it just goes on and on. And the reason why Colorado is booming from the cannabis industry is not the cannabis itself. It’s really all of the people who are finding jobs supporting other jobs and other businesses and other pop-up businesses and picks and shovels businesses and side businesses. It’s unbelievable how much opportunity there is if you’re creative enough to see how to plug yourself into the equation and utilize skills that you have.

And so a lot of times when I explain that to people a light bulb goes off and they’re like oh shit well I’m a marketer and there’s marketing to be done in a brand new industry and it’s like yeah man get to it. There’s so much to do and then there’s other people who are like no, no it’s the cannabis that I really want to do. I want to be a grower or a bud tender or I want to manage a shop or start my own or start my very own cannabis school.

Matthew: Right.

Max: And what I have to say to that is cool. If you don’t have the experience, cannabis is way more complicated than a lot of people think, and so it really does require experience. And so that being said getting legitimate training, legitimate education with legitimate certifications is what matters. The responsible vendor certification that the Trichome Institute provides is certified by the Marijuana Enforcement Division in the Colorado Department of Public Health and Environment who is reviewed. It’s the government that has reviewed our education that we already had previously reviewed by lawyers, doctors, and scientists. That comes with a healthy amount of experience. And so that is what I mean by serious education. Do not be fooled by getting a bud tender certification online or from a cannabis education road show or a cannabis school that looks good on paper, online, or sounds good but doesn’t really provide you with the information that you really should have or need or paid for.

And so getting trained, getting educated, getting connected and immersing yourself in the industry is really the best way how to do it. Owners, managers of dispensaries will favor bud tenders who come in with the Responsible Vendor Certification, a bud tender certification, an Interpening certification and if you’re a cannabis school out there who’s listening the education and the curriculum that the Trichome Institute has been designing is designed to be turnkey for you to re-educate other people with. If you want to start your very own cannabis school in whatever state you’re in we have done all of the hard work in preparing the curriculum and the education and building these textbooks so that we can help the whole country limit cannabis misinformation by providing this quality type of information and helping to educate more people so that people do get into the industry.

It’s also important to educate doctors. Doctors are terrified to recommend cannabis because they’ve never done it before. They’ve never studied cannabis before. I’m still baffled beyond words that most really intelligent physicians that I know have never heard of the endocannabinoid system. The part of the body that balances all of your health and well being in complete homeostasis I mean the amount of education for the legal system, for legislators, for doctors, scientists are just getting into it is just as crucial as it is for any budtender and so if you want to get into the cannabis industry be serious about it. This is no longer a stoner operation like it was back in 2009 where we were literally buying pounds out of people’s basements and retailing it to patients.

This is a professional industry and it’s being treated as professional and it’s becoming corporate and so there is a lot of room for intelligent, dedicated people who take their job seriously and want to be a part of a flourishing new industry and I think it’s a really great thing and the Trichome Institute can definitely help you get there. You can go to www.trichomeinstitute.com and follow us on our Facebook and Instagram and pretty soon in the next month or so I will be releasing really fun two minute educational videos where I walk around the neighborhood and explain where from earth does powdery mildew just appear from and why or how many other plant species have Trichomes and are they active and what do they do.

And so if you’re interested in getting constant updated free cannabis information sent directly to your inbox please sign up at www.trichomeinstitute.com under our contact page to be updated with more education that’s coming out and when we travel around to different states and provide certifications; all that good stuff.

Matthew: Max thanks so much for coming on CannaInsider and educating us today. This was very, very helpful and I learned a lot.

Max: Cool. Well Matt I can’t thank you enough for having me back on the show. I love your show. I think it’s one of the most; if not the most professional cannabis show, radio show that there is so thank you so much for doing what you do and helping so many people understand cannabis better.

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.

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