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What happens when biotechnology and cannabis collide? Here to answer this is Ronan Levy of Trait Bio, a biotech company that just cracked the code on how to create flavorless, water-soluble cannabinoids – and without using nanoemulsion.
Learn more at https://www.traitbio.com
- Ronan’s background in cannabis and how he came to start Trait Bio
- An inside look at Trait Bio and its mission to make hemp and cannabis into purer, safer products
- The value of water-soluble cannabinoid products and where Trait Bio is in the process of achieving this
- The risks versus benefits of using nanoemulsion in the manufacturing of cannabis products
- Glycosylation and how Trait Bio is using this instead of nanoemulsion to create water-soluble cannabinoid products
- How trait amplification works to increase the yield of cannabinoids in hemp and cannabis plants
- Trait Bio’s work with minor cannabinoids and why the industry is beginning to take more interest in them
- How yield differs between yeast and trait application
- Ronan’s long-term goals for Trait Bio and where the company currently is in the capital-raising process
- Where Ronan sees biotech and cannabis heading in the next five years
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 cannainsider.com. That's cannainsider.com. Now, here's your program.
What happens when biotech companies start focusing on creating compelling solutions for cannabis? Here to help us answer that question is Ronan Levy from Trait Bio. Ronan, welcome to CannaInsider.
Ronan: Thank you. Happy to be here.
Matthew: Give us a sense of geography. Where are you in the world today?
Ronan: Right now I am in Toronto, Ontario, which has really, kind of, become the epicenter of I think many things cannabis industry-related given the financial markets have largely been situated here. But this is where I've been for the last 20 years and this is where I call home.
Matthew: I would agree with that. I've noticed a trend away from some other U.S. cities and interviews I do where I'm getting more guests in Ontario. So that's definitely a trend that's going on.
Matthew: Ronan, can you share a bit about your background and journey, and how you got into the cannabis space?
Ronan: Yeah, absolutely. So I'm a lawyer by training, but I've been an entrepreneur by spirit for many, many years. And when I met the group of people who would eventually become my business partners, they were exploring an opportunity in the cannabis industry. And they were concerned about some reputational industries to get involved in such a nascent and little-understood industry, just given my nature of being somewhat contrarian and risk-taking.
Matthew: What is Trait Bio at a high level?
Ronan: At a high level, Trait is one of the, if not, the leading cannabis biotech companies. We are focused on solving some of the most interesting challenges and therefore opportunities in the cannabis industry. And we have a great team of researchers who are leading the way on that.
Matthew: Okay. Talk a little bit about water solubility, if you will, and what that means. And why are people even considering making water-soluble products? What's, kind of, the big value proposition there?
Ronan: Yeah. So cannabinoids, by their nature in the plant, are fat-soluble, which means they mix well in oils but not necessarily water-based medium, so water, juice, anything along those lines. And so the fact that it's fat-soluble creates challenges for a number of reasons. For one, it affects the bioavailability and absorption of cannabinoids. And secondly, from a product perspective, it's a lot harder to work with fat-soluble, essentially oils, to mix them into different products whether that product is a beverage, an edible, a vape or anything along those lines. It's just, it's more challenging. It requires high-intensity extraction to get fat-soluble cannabinoids out, often using toxic solvents. It creates separation issues. There's just a whole bunch of issues that go along with fat-soluble cannabinoids.
So there's a heavy amount of interest in water-soluble cannabinoids because it gets around a lot of the limitations with fat-soluble cannabinoids. You get faster onsets, better bioavailability. It's very easy to work with water in terms of formulation in products or water-soluble cannabinoids. In terms of formulation in products, you don't have to use other technologies like nanotechnologies, which have their own health risks to try and formulate products. There's just a whole number of benefits that go from water solubility and water-soluble cannabinoids and that's why we're focused on it.
Matthew: Can you just, kind of, mention what you're thinking with the nano-soluble risks there, what risks those pose?
Ronan: Yeah, so, nanotechnologies, there's utility to nanotechnologies. And I'm not going to suggest that there's not a reason to invest in nanotechnologies and the effort around them, which is they have great utility. But they also have limitations, which is, you know, for one thing, nanotechnologies and nanoemulsions, they can cause molecules to cross the blood-brain barrier, which when you're trying to develop cancer medications to target brain tumors is a highly effective, very desirable outcome.
But when you're looking at products like CBD and wellness products, which people are taking potentially for less dramatic health issues than, say, brain cancer, the risks associated with nanotechnologies are potentially large. They cross the blood-brain barrier, they can get into other organs like your thyroid, there are concerns around bioaccumulation, cytotoxicity, any number of potentially very concerning things that can result from nanotechnologies.
So when you look at them, and really, I think everybody has to do a cost-benefit analysis of whether the benefit associated with using nanotechnologies particularly in ingestible cannabinoid products, outweigh the risks associated with them. And, you know, from my personal perspective, and as a company perspective, we concluded that the risks certainly don't outweigh the benefits for cannabinoid products, at least as, you know, cannabinoid products are currently formulated. If it gets to a point where there's efforts in terms of drug development and real therapies that are evidence-backed in terms of treating other conditions, then certainly, it may make sense. But for general recreational and wellness products, to us, the balance certainly favors not using nanotechnologies.
Matthew: Okay. And so for a dissolvable cannabinoid solution, what do you think is the most desirable product? Like, if could wave a magic wand and solve the liquid solubility problem, where do you think the biggest promise is for in terms of creating products that the market wants?
Ronan: You know what? I don't have an opinion on what the market wants. The market is going to be driven by consumer preferences. I've always believed and having spent a lot of time in the cannabis industry, that there's going to be a strong demand for cannabis beverages. It's a form of ingestion for products that we're comfortable with that much of our social interaction has been built around.
And you haven't seen a whole lot of growth in cannabis beverages and I think that's for two primary reasons. One is, by and large, they don't taste very good presently or manufacturers have to use techniques to try and cover the taste associated with cannabinoids, at least fat-based cannabinoids or fat-soluble cannabinoids.
And secondly, because of the unpredictability of onset with fat-soluble cannabinoids, that when you ingest it, there's something called the first-pass effect, which essentially means that your liver has to metabolize that cannabinoid when ingested orally, which leads to the significantly delayed effect. You know, sometimes it's 45 minutes. Sometimes it's an hour. Sometimes it's two hours. And what too often happens is that people will ingest too much of a beverage or an edible and have a bad experience because they've consumed too much, no different than with alcohol.
And so when you look at water-soluble cannabinoids, A, the distilled cannabinoids that Trait has developed, actually are odorless, tasteless, and perfectly clear. So they're an easy ingredient to work with and really provide a solid foundation to develop very, very pleasant-tasting beverages or edibles without the need to coat those flavors or mask those flavors with sugar or otherwise.
But also there's evidence to suggest that the onset and bioavailability of water-soluble cannabinoids is much preferential. That you'd feel the effects within, you know, 5 to 10 minutes and in a timeframe consistent with alcohol as well because of the higher bioavailability, because more is getting into your bloodstream without having to be metabolized or in fact removed from your bloodstream by your liver. And you don't need as many cannabinoids to actually deliver the same therapeutic effect to a person.
And so water solubility in my mind really opens up a massive potential for cannabis-based beverages or cannabinoid-based beverages. But in the same token, you know, they open up the potential for different vaping technologies that don't rely on propylene glycol as the accelerant.
You know, it opens up the potential for different pharmaceutical products that'll deliver a much more tailored and precise PK, so the amount of active pharmaceutical ingredient in your blood. So there's a number of opportunities in which water-soluble cannabinoids are going to be relevant. But what piqued my interest about Trait, having been in the cannabis industry, was cannabis beverages and really opening up the potential around them.
Matthew: Okay. So you're attaching the cannabinoids through sugar for solubility, is that right? Can you tell us a little bit about that?
Ronan: Yeah, that's exactly it. So we use a process called glycosylation. Glycosylation is actually one of the most commonly found processes in nature. Many, many organisms use this process to... Detoxify is technically the accurate term, but it essentially means modifying the molecule in the body so your body can process it and ultimately excrete it.
And so glycosylation at its base form is just attaching a sugar molecule to another molecule. And so what our process does is, we can use yeast or other cells, naturally occurring cells, that when they encounter a cannabinoid, attempt to glycosylate it. Like, you know, that's what they're built to do. They attach the sugar molecule to it, and as soon as they attach the sugar molecule, it becomes water-soluble.
In many ways, it's very similar to fermentation, when yeast encounters sugar and they ferment that sugar into alcohol. It's very similar to what we're doing, except we're not fermenting sugar into alcohol. We're fermenting essentially a fat-soluble cannabinoid into a water-soluble cannabinoid.
Matthew: Okay. So it's like, kind of, how a motorcycle has a sidecar attached to it, bolted on where you have the water-soluble sugar, and then you're, kind of, bolting on, kind of, a stowaway to help get the water solubility for the cannabinoid. Is that right?
Ronan: Yeah, in a sense. You're taking on the fat-soluble cannabinoid, you're attaching a sugar molecule to it, and as a result of the water solubility, and I think the chemical reaction happens when you bolt down that sugar molecule, it becomes water-soluble. In fact, you know, this process is so common and naturally-occurring, that's what our bodies do naturally, actually. Your body will naturally bolt down the sidecar to a cannabinoid as it's trying to metabolize the cannabinoid and gets ready to excrete it out. So it's much more comfortable than attaching a sidecar to a cannabinoid in your body, but it's not an inappropriate description of how it works.
Matthew: Okay. And what is Trait Amplification, and why is that concept important to understand?
Ronan: Yeah, so Trait Amplified is a technology that we developed. Actually, it's one of the core technologies that we've developed from which many other technologies have sprung. But it is designed to try and increase yields of cannabinoids in hemp and cannabis plants. Our perspective on the growth of the industry is that for many products, people will not be looking to have dried bud as the end product to consume to vape or smoke, but will rather be looking for, you know, value-added products, whether it's beverages, or edibles, or lozenges, or anything else along those lines.
And so the key ingredient, the key focus, in terms of cultivation, should then be not the number of grams or ounces of bud that a plant can generate, but how many cannabinoids can be generated in it. And so Trait Amplified is a series of strategies that attempt to increase the number of cannabinoids, whether it's THC, or CBD, or any of the minor cannabinoids, increase the amount of yield per plant that cultivators can get from their cultivation efforts. And it's actually been quite successful.
There's a number of different strategies that go into it, but the first ones that we've put into the plant and seen to fruition have increased CBD production by a factor of four. So you're getting four times as much CBD in the plant relative to conventional plants, and three times as much THC. So it's really quite powerful technology in terms of increasing yields, lowering the amount of inputs that need to go into cannabis or hemp cultivation, and by extension also, lowering the environmental footprint that cannabis and hemp cultivation has because you don't have to have as much light or water to generate the same amount of cannabinoids per plant.
So it's quite an amazing technology that Dr. Sayre, our Chief Science Officer has developed, and has great promise for the future of the industry. And coincidently, actually, Trait Distilled, the water-soluble technology is a, kind of, evolution of Trait Amplified because the first strategy Dr. Sayre used to try and increase cannabinoid yields was to detoxify the cannabinoids synthesis process in the plant.
So when the plant is creating cannabinoids, that process is actually, kind of, toxic to the plant which is why you get cannabinoids only in the bud stored in trichome. But if you detoxify that process through glycosylation, you actually open up the plant to being able to grow cannabinoids in every single cell of the plant, not just the bud.
So that's where he started. His efforts increased yield as a result, but we then realized that you can take that process and do it outside of the plant, and do it through a fermentation system. So you could take conventional extracts and just put them into a fermentation system and change the fat-soluble cannabinoids into water-soluble cannabinoids after the fact. Yeah, so Trait Amplified is, going back to the root of your question, is our technology or series of strategies that increase cannabinoid yields in cannabis and hemp.
Matthew: Okay. So you're saying that cannabinoids are actually toxic to the plant itself that's why it's, kind of, not part of the plant, but, kind of, exogenous to it. It dangles off in the flower. But now that you can harvest the desirable cannabinoids you want in the plant itself, you could have, you know, higher density of what you're looking for as your output.
Ronan: Yeah, that's exactly it. I mean, by and large, cannabinoids were developed by the plant as a defense mechanism to, you know, keep it safe. And so you can understand why cannabinoids may not be in high concentrations, great to the plant. And so, if you can find a way to make them safe for the plant, you can grow a lot more of them. This is, kind of, the simple way of looking at it.
Matthew: Okay. And there's a growing interest around minor cannabinoids. Why is that, do you think?
Ronan: Yeah. No, there's a great amount of interest in minor cannabinoids. You know, I think there's a lot of reasons for it, which is there's more and more evidence showing that the minor cannabinoids have different therapeutic opportunities than THC and CBD. For instance, one of the most commonly discussed is CBN, which is one of the more commonly found minor cannabinoids and having potentially great therapeutic impact for people who have sleep problems.
And the challenge with the minor cannabinoids is that they show up in such small quantities, it's hard to do research on them, and it's certainly hard to produce them at enough scale to create products around them. And so a lot of groups have invested money into different technologies to create the minor cannabinoids so they can be scaled, so they can be researched.
And most of these groups, most of the other groups who are doing it are using yeast biosynthesis, which is a potentially very effective way of doing it that involves introducing the genetic framework for creating cannabinoids into things like yeast. But Trait has actually developed a process to create... We believe we can get to about 80% of the minor cannabinoids with a process that doesn't involve yeast biosynthesis at all. It's actually quite a simple process to generate those minor cannabinoids. But, you know, like, anything that's rare, there's always interest in value in something that's rare, and that's why there's so much interest in minor cannabinoids right now.
Matthew: Yeah, this is a point I want to, kind of, go a little deeper into, is, kind of, the difference between biosynthesis and Trait Amplification, what you're doing. Whereas Trait Amplification is where you're, kind of, tweaking the plant to get the most desirable attributes that you want as your output. And biosynthesis is essentially making the cannabinoids in a lab with yeast.
And could you just go over in little more detail why you think what you're doing is different and better just so people get that because I see this biosynthesis, and some people call it cellular farming, is becoming a big theme in the cannabis space, and I just, kind of, want to make sure people understand the contrast.
Ronan: Yeah. So I should clarify. There's actually two different approaches that we have within Trait, generating minor cannabinoids. So one is part of Trait Amplified, that technology, and what that technology essentially does is... Let me take a step back.
Our philosophy has always been that the cannabis and hemp plant is already optimized as much as nature can go to produce the cannabinoids. So to try and take the genetic infrastructure out of the cannabis and hemp plant and implant it into yeast, or algae, or any of the other cellular farming techniques to get those other organisms to produce cannabinoids and minor cannabinoids, it's a challenging process, right? You're essentially having to rebuild the genetic infrastructure of a cannabis plant in another organism when the cannabis and hemp plant has already built that infrastructure.
So our philosophy is instead of trying to rebuild it in another organism, why not focus on trying to optimize the plant to produce CBD, THC, or any of the minor cannabinoids? Whatever the genetic pathways are that are, you know, biosynthesis or the cellular farms are doing and putting into yeast, they already exist in the plant. So instead of rebuilding them, why not tweak them? Why not optimize them and get the plant to do it in the most efficient format? Because nature has invested hundreds of thousands, if not millions of years turning this plant into the best organism on the planet to do this kind of stuff.
Ronan: That's not to say that there aren't, you know, good reasons to explore yeast and algae biosynthesis as well. It just seems inefficient to us to try and get those organisms to do the work that the plant was designed by nature to do. So our efforts are on optimizing what the plant can do.
We have a second strategy for producing minor cannabinoids as well. That, you know, is an entirely different process and just subject because we're still in the process of filing pens around it. I can't provide a whole lot of detail to it. But it's a much simpler process than yeast biosynthesis. And so, just by virtue of it being simpler, it's advantageous in that way.
And secondly, for both Trait Amplified as well as this other strategy, you know, it's... I'm not going to say it's easy by any stretch of the imagination to get yeast biosynthesis to work in any organisms, but the challenges of cellular farming increase as you try and scale it. So it's a lot of work just to get it done on a super small scale, but it's not linear. It's not like, "Okay, we can do it in a small batch, so we can do it in a large batch. Just multiply it by 100 and it works that way."
Many companies have failed trying to scale yeast biosynthesis systems because it's not a straight-line expansion. There's a lot of challenges in scale. And so if you don't have to do that, why would you do that? And that's always been our philosophy and approach to all the technologies that we undertake.
Matthew: When you're trying to increase or amplify a specific attribute of the plant, let's say the CBD factor, are some of the cannabinoids easier to do than others? For example, is CBN easier than CBD or vice versa, or is, kind of, uniform in their difficulty?
Ronan: You know, I would say that it's more difficult as you get down into the minor cannabinoids. And that's just a function of the pathways from which cannabinoids are generated. So virtually, all cannabinoids come from CBGA and then within the plant, the plant will convert that CBGA into THC, and CBD, and other cannabinoids. But then there's, like, sometimes a secondary step and a third step where the THC, the plant then convert that into CBN.
For instance, CBN is a natural result of the degradation of THC. And so the further you go down those pathways, the more challenging it gets just because there's more steps that you have to introduce the genes to, to take the CBGA and to make it into THC, and then take the THC to make it into something else, and then make that other thing into another thing.
So you just see how the complexity increases because it's not always, you know, a single gene that does all the work, you have to start introducing multiple genes. So certainly, it's easier to hit the major cannabinoids in terms of any biosynthesis process. As you get into the minors, it gets progressively more complex.
Matthew: So do you adhere to the idea of the entourage effect then where the minor cannabinoids in the plant work together to, kind of, support, you know, holistic benefit? What are your thoughts around that?
Ronan: Yeah, I mean, I believe in whatever the evidence demonstrates. You know, and so the evidence around the entourage effect is anecdotal right now. But certainly, from my background, I helped start a company called Canadian Cannabis Clinics before joining Trait.
You know, anecdotally, the experience we had with our patients is that people seem to have better results when they were using either cannabis or cannabinoid products that had, like, the full spectrum or full milieu than cannabinoids as opposed to a single molecule.
So that lends credence to the belief that there is something to the entourage effect. But I remain very much open-minded as to whether the evidence supports it or not. But right now, the evidence that I'm familiar with or are aware of would suggest that there is some merit to the entourage effect improving the therapeutic efficacy of cannabis.
Matthew: And how big of an opportunity is licensing your IP going to be do you think?
Ronan: I think it's going to be massive. You know, the technologies that Trait have built, like I said before, are built around what I think are the biggest opportunities in the industry, and I think they are truly like the platform technologies that the future of the industry is going to be built on. You know, our water-soluble technology is certainly the most efficient and easiest to scale in terms of consistent results and deliverables. And because of the efficacy around, and the better bioavailability and onset of water-soluble technologies, you know, I think we'll be the only viable player in that respect. Other people are working on it certainly, but I genuinely believe our technologies are far superior in terms of the outputs, in terms of scalability.
Same with Trait Amplified, which is...you know, it's all cannabis producers and hemp producers are trying to lower their costs. And the orders of magnitude improvements that our technology has still, you know, not fully implemented yet because it takes...you take a phased approach to introduce and stack new technologies on top of each other. But, you know, we've conservatively estimated that we'd increase yields by three to four times, conventional plants.
And just by introducing one of our strategies, let alone the numerous other strategies in the pipeline, we've already achieved that. So the increases in yields that we will be able to generate are quite substantial. And as far as I'm aware, no one is doing that work at the level we're doing it at, with a team that's behind it, and achieving the same results. So I also believe that Trait Amplified is going to become a platform technology that almost all producers will end up using because those who are are going to have significantly improved cost advantages relative to everybody else.
Matthew: And where are you in the capital-raising process right now?
Ronan: We are not actively raising capital right now. We finished financing fairly recently. So we have more than sufficient cash to execute on our research and scaling plan for the next 12 to 18 months. And then, you know, as we get closer to that timeframe or if any opportunities come up, we may revisit that conversation. But as it stands right now, Trait is well-capitalized to execute on its vision.
Matthew: Okay. And where do you see biotech and cannabis going in the next five years? Where is this arc going to lead us?
Ronan: Yeah, I mean my instinct says it follows a trajectory very similar to what you've seen with the other major crops: corn, soy, rice, which is there's going to be heavy investment in terms of new technologies to create more robust, healthier, higher-yielding plants, because it's going to bring the cost of production down and it's going to enable innovation. You know, it's going to establish more certainty of supply chain, more predictable products.
You know, one of the challenges that still exist is growers right now may produce one strain in one lot using the exact same genetics, because nature is sometimes fickle, you'll get different cannabinoid profiles in the next lot. You're going to notice the exact same genetics.
So I think all the effort to produce consistent, robust, healthy high-yielding plants are going to be the direction that cannabis biotech and the cannabis industry is going to head in. And I think that's, you know, particularly supported by where I think the product demand is going to be, which is going to be in the value-added products of beverages, vapes, edibles, all that kind of stuff, pharmaceuticals as opposed to the flowers. So those groups that can produce consistently and at low cost are going to be the most successful. And so, you know, the technology will lead that direction over the next few years.
Matthew: Okay. Ronan, I'd like to ask a few personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Ronan: Yeah. My favorite author, by a long shot, is an author by the name of Tom Robbins. People often confuse him with Tony Robbins who's the motivational speaker. Not Tony Robbins, Tom Robbins. Tom Robbins...
Matthew: Yes, "Still Life with Woodpecker," right?
Ronan: "Still Life with Woodpecker."Actually, that's the exact book. And, there's been a couple of instances where I've been reading that book and the philosophy underlying that book is so life-affirming. It challenges you to get out there and lead the life that you live or you want to live. And I remember at one point, reading that book, lying in bed, and reading a particular passage about how one person can be more real than any other person. And I had to sit up in bed and, you know, really absorb that passage. And based on that, I took a couple of bold moves and changed the direction of my life, just based on reading one paragraph in a book.
Ronan: And so, "Still Life with Woodpecker," and his book, "Jitterbug Perfume," are my two favorite books. And the philosophy that underpins both of those books is similar. It's all about getting out there, living your life, taking chances, you know, not obeying convention, being true to yourself. And I think everybody would benefit from reading those books because they're A, beautifully written, but B, by trying to absorb that philosophy, I think you can lead a much better life.
Matthew: What do you think is the most interesting thing going on in your field apart from what you're doing exactly?
Ronan: This is a bit of a cop-out answer, but I think what we're doing is the most interesting work. And I guess there's one other answer I'll give, which is not as much of a cop-out, which is, there's a number of groups really, really working hard on formulations, and studying the minor cannabinoids, and seeing the health impacts that they have.
You know, there's been a lot of anecdotal evidence about how cannabinoids can treat, or stop the development of tumors, or kill cancer cells. And certainly, there's lots of in vitro evidence to support that. But there are some groups, some based in Israel that are taking that to the next level, you know, and creating formulations, and understanding the biomechanics of how and why they are effective at treating different conditions. And I think that's super exciting.
You know, it's one of those things that when you learn about the endocannabinoid system in your body, that you realize that, you know, we're, kind of, designed to work with these molecules, and it's quite fascinating. And the more work we do on all the different cannabinoids and the impact they have on our bodies and our lives, it's just fascinating to me.
Matthew: Here's a Peter Thiel question for you. What is one thought that you have that most people would disagree with you on?
Ronan: I am contrarian by nature, and so I'm always advocating being contrarian. I think the best business advice that I've ever learned was, "When everybody is running in one direction, you should be running in the exact opposite direction." And a lot of people disagree with that. A lot of people think it's safer to go with the status quo, to not ruffle feathers, to not, you know, create ripples. And I advocate to anybody, like, "Don't do that. Create ripples. Create noise." Don't create noise for the sake of creating noise. Create noise, you know, because it's true to who you are and what you believe, and don't let anyone tell you otherwise. And so, you know, get off the well-traveled road. Get on the road less traveled by because I think that's where you'll find fulfillment, satisfaction, happiness, challenge, opportunity.
And, yeah, you know, I tell people, especially if people come to me looking for advice about how to crack into a new industry or a new job, I'm like, "The most important thing as always is to be memorable. It's not to be smart. It's not to be witty. It's to be memorable." And I think a lot of people would agree with that but, you know, because logically it makes a ton of sense, but I think very few people actually live by that principle, and it's one I've always tried to live by.
Matthew: Great answers, Ronan, thank you.
Ronan: Thank you, my pleasure.
Matthew: As we close, can you let listeners know how they can find Trait Bio online and connect?
Ronan: Yeah. The best way to reach us is to visit our website, which is www.traitbio, T-R-A-I-T-B-I-O.com. You can find lots of information about our different technologies and our team there. And if you go there today, you'll see our most recent announcement, which is, we just announced the existence of a strategic advisory board. You know, like I was saying earlier, I think our technologies, particularly the water-soluble, have a lot of impact for future product developments. And the strategic advisory board that we just advised, I think, is reflective of that.
We have a VP from Coca-Cola joining our strategic advisory board. We have the President of Bacardi, the beverage alcohol company. And we also have a former Senior Executive from Wrigley Mars joining our advisory board. And I think all of them are excited to be working with us because they see the potential that these technologies have to develop amazing new products. So that's my final little plug for today.
Matthew: Great. We get a lot of irons in the fire. Good luck to everything that you're doing. And please be sure to circle back and let us know how things are evolving.
Ronan: I certainly will. Thank you so much for the time today, Matt.
Matthew: Thank you.
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Could mushrooms be the next cannabis? Here to answer this and provide us some key insights into the fascinating world of psilocybin is Max Montrose, President of Trichome Institute.
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DISCLAIMER: DO NOT USE ANY DRUGS OR SUBSTANCES WITHOUT CONSULTING A MEDICAL PROFESSIONAL. THIS IS FOR INFORMATIONAL PURPOSES ONLY.
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- Common misinformation surrounding psilocybin
- Max’s advice on how to achieve an optimal mushroom experience
- Where Max sees psychedelic mushrooms heading over the next 5-10 years
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 cannainsider.com. That's cannainsider.com. Now here's your program.
Hey, CannaInsiders. Here's three things you're going to love about today's interview. One, killer why and how the cannabis you are buying at your local dispensary may not be the strain you think it is. Two, what the term OG means. Hint, it's not what you think. Three, how the decriminalization of psychedelic mushrooms is gaining speed and what that means for you. Lastly, the information we are providing about cannabis and psychedelics in general is for informational purposes only. Please talk to your doctor before taking any drugs. Now here's your program.
Just as soon as we feel like we have reached a new stage in our understanding of the cannabis plant, more key insights emerge to help us grasp how this plant can change lives and help heal the planet. Here to help us open our minds and dispel myths about cannabis is Max Montrose, founder of Trichome Institute. Max, welcome back to CannaInsider.
Max: Thank you so much for having me back on the show. Happy to be here.
Matthew: Give us a sense of geography. Where are you in the world today?
Max: I am in good old Denver, Colorado, in my happy place, which is my greenhouse in the backyard.
Matthew: Great. For new listeners, can you give a high level overview of what the Trichome Institute is?
Max: Yeah. So for all those new listeners out there, we are an education company in the cannabis space that has a very different approach to teaching people about cannabis, the plant, what it actually is, why it's not Indica or Sativa, why THC doesn't equate to potency, why screen names aren't reliable. And how we teach those things are actually in very interesting ways. We take our approach more from the structure of how people teach wine experts to be wine sommeliers. But we also write other textbooks on cannabis, industry textbooks such as the Responsible Vendor Program, which is we're certified in the State of Colorado by health divisions, marijuana enforcement divisions, and we put together other curriculums. We run cannabis cups. We do consulting. We do a lot of different things in the cannabis space. But I think the most important thing to note is how and why we do things so differently.
Matthew: How about can you share a little bit about your background and journey and how you got into this cannabis space and how you started Trichome Institute? It seems like you're like the perfect age, place and, personality for this cultural zeitgeist. So I want to understand how you stepped into it.
Max: Yeah. I think the way you put it was perfect. And this, you know, this comes up from time to time how kind of perfect it is. My age, my passion, where I am. And, in all honesty, it really is kind of a perfect recipe. I feel like I am on this planet, at this time, this type of person in the family that I was placed in to do this work. And so I grew up with cannabis, when it was against the law on the black market, dreaming of some time when it would be legal in the industry. And the plant actually helped me get off of a variety of different pharmaceuticals when I was quite young, the plant started teaching me things, and how to observe it and work with it in different ways.
And I basically fell in love. I became enamored and I also became upset that it was against the law, and people would, you know, get in trouble for this thing. So yeah, I became an activist, you know, when the marijuana movement was literally happening in my own backyard. And I essentially grew up with the cannabis industry. When I was in high school, we were just beginning to fight for it and all throughout college. And by the time I got out of college, I started working in the industry. And the industry started slowly becoming more and more professional as I started doing different jobs in the business, as well as becoming just also frustrated with people's information based on this plant and patients' access to getting the stuff that they need. And that's really kind of what drove the need for education and legitimate education specifically. And so that's pretty much where the Trichome Institute came from.
Matthew: I had some cognitive dissonance when, you know, the first time I smoked marijuana, you know, as a young teen, and kind of waking up to the fact that it was so much different than the society around me interpreted. And then kind of from the outside world, I'm a criminal. But I know that there's something special here. And how did you kind of reconcile those two clashing thoughts?
Max: Well, I'll tell you a funny story that I don't tell most people. The first few times I was smoking cannabis, when I was just so blown away by how incredible it was that I could have so much control over my own self-alchemy. And placed myself, my mind, my body, my spirit into different places of understanding and exploration and how just unbelievably interesting that is. Just pure fascination. And I just wanted to try it all the time. And I was really young. And I was so scared of getting caught by my parents or, you know, the law because I know how illegal it was.
I actually used to dress up any camouflage and go down to the creek and like hide in nature and smoke weed in a ghillie suit. I was so scared to get caught. And people who know me, I'm like the weed guy like around the world, you know? And so it's funny like because I've got every single psychedelic drug you could ever imagine tattooed to my left leg. And people just know I'm not afraid whatsoever to tell the whole world how much I love this stuff. But boy, when I was a young teenager before I kind of grew into who I am now, I mean, I was really scared. Yeah.
Matthew: Yeah. That's funny. I love the camouflage. Oh, man, I wish we have a picture of that.
Max: Yeah. Little redheaded ginger Max hiding in the bushes, smoking weed.
Matthew: Oh, my God. And, Max, you talk about counterfeit strains. And I think it's important for people to understand what that means if this is their first time hearing you. Can you talk a little bit about that? And how if you go into, say, four different dispensaries in Denver or any city and buy let's say Blue Dream just because that's easy. Is that really Blue Dream? And how do you think about it differently than someone else in the space?
Max: Well, Blue Dream is my favorite example. So much so that when we discuss what the strain name dilemma is, where it comes from, what it means, and why it's problematic, we use Blue Dream as the example in the new interpening book, our 130-page hardcover. It's in our new course online. But it's also in like little cool videos on our Instagram and also YouTube. So like if you were to YouTube Colorado's most counterfeit strain, it's a leaf viral video that they did of me actually going around Denver buying Blue Dream, bringing it back to the office. And what we were doing is analyzing its inflorescence. And for people who don't know what that means, it's basically the elements of the flower structure.
And so we were essentially just putting them next to each other and demonstrating how the bracketing structure, the style and stigma structure, the length, the color, the robustness, the smell, the thickness between the bracketing structure was just fundamentally different between the different varietals of "Blue Dream" that I picked up just that hour. And two of them actually looked like, smelled like, felt like, what you would consider Blue Dream, if you had the ability to know that varietals typicity. And typicity is a new term for the cannabis industry. It comes from the world wine sommelier.
But, you know, a lot of industry OGs, if they think about the flavor, Durban Poison, or Ghost Strain Haze, or Jack Herer, these really classic strains that are totally real and true, they know those tastes and those flavors. They can almost taste them just by thinking about them. But these flavors are so unique, that there literally is nothing on the planet similar to them. You cannot describe to someone what Durban Poison smells like. It's kind of like explaining to a blind person a specific color pattern. It doesn't work.
And so what typicity is, is having that intimate relationship with that specific thing that you have to know from knowing it personally. So I can show you what Blue Dream or Durban Poison is in our expert level interpreting courses and classes to associate your senses with its typicty so you have that understanding. But how much of the people who smoke weed do that? And how much of the industry, right? Like the majority of the industry is kind of like Coors and Budweiser. You walk into a dispensary, they call it Blue Dream. You buy some weed and I guess it makes you high and you're happy. But for the people who care, is it Blue Dream? And, you know, it most likely isn't.
And then that's where we get into trouble because the majority of people who purchase cannabis buy cannabis based on two things, the strain name and its THC percentage. And those two things tell you the very least about what it is that you're engaging. And so I would say our approach is pretty different and serious by saying...we tell people to give up on screen names because they don't matter. And what does matter is your ability to know what you are engaging, the quality of it and how it will make you feel. On a big spectrum of psycho pharmacy, not one or the other because Indica and Sativa are something other people need to also better understand.
But we also do teach about strains that do deserve names. And so like in Northern California, like in the world of wine, there are some really serious, sophisticated OGs who deserve the utmost respect. And not just them but the specific strains that they invented, have been working on, perfected, and then continue to grow in the same way, in the same area, the same appellation within the same terroir. And when you do have that type of consistency, that's what's considered landrace, which is funny because that's the opposite of what the cannabis industry thinks the word landrace means. They think it's some wild plant out like in nature brought back. It's the opposite. And so those true land races with those true heritages that have a story to tell and a unique experience to experience deserve to be called what they're called. That's why we need truth and labeling laws. And that's why like the cannabis industry, you know, is slowly moving in that direction. But some of this stuff can get quite complex.
Matthew: Yeah. Now, you're proposing new terms replace Indica and Sativa. Can you talk about that and why it's important?
Max: Yeah, absolutely. It's super important because Indica and Sativa aren't correct. Now, from a, like, let's just all chill out perspective, it is helpful to have, you know, a communication, right? Like that's helpful. And so if it helps people to communicate that when you say Sativa you mean a stimulant. And when you say Indica you mean a sedative. Fantastic, right? Like I don't want to stop quality communication, right? But then you judge the Cannabis Cup. And so I get paid to fly to Oregon with my team of cannabis experts. And we literally are given 200 of the most gorgeous genetics, some of them, some of them we're actually wondering why it's in a Cannabis Cup.
And you start digging through the Sativa entries and these are the most sedative flowers, you've seen some of them, a handful of them. And vice versa. You dig through the Indica category and my whole team is looking around at each other. We're just like, "This is the sexiest stimulating flower of ganja ever. I mean, we're going to give it a great score on a quality perspective. But why is it in the Indica category?" And if that happens at the level of cannabis competitions, then you know that this is happening more often at the level of the dispensary. And so even if you're communicating terms like Indica and Sativa meaning stimulating and sedative, who's to say whatever nuggets in the jar is what you're trying to ask for when the terminology you're using is incorrect to begin with?
Matthew: Right. Oh, my God.
Max: Holy smokes. Okay. So...
Matthew: Can you describe the last one that actually won and what that was like? I'm just curious.
Max: Well, actually the best flower that won was 14% THC and was just the most gorgeous thing in the world. I mean, we rarely get 98 and 99 on our point scale and this thing was like tipping the radar in ways we've never seen before. And we announced to the audience that the winning flower was not the 32% THC, it was the 14%. And a lot of people were really shocked by that. But it's like I hate to break it to you. THC is not quality. THC is a molecule and it does something. And the rest of the planet and how it's composed and how it's grown and the smoothness of it and the cleanliness of it and the rest of its, you know, composition, chemical composition is what makes it it outside of just it's THC.
THC is not quality. It's a part of the plant. And then the funny thing is, and we crush this in our split busters episode with like cool graphics and everything to help people understand. But we just teach people why, you know, the 14% flower could literally get you two, maybe even three times more intoxicated than the flower at 32% THC. And it's because the flower with the really high amount of THC is super low in the rest of its other psychoactive chemistry. Dozens and dozens of other cannabinoids and terpenes due to its health and its quality. And so, yeah, people kind of need reeducation on what good cannabis is.
Matthew: Right. It's like saying, "Hey, the only measure of a good cake is it has a ton of sweetness." And, you know, that there's more to a cake than that.
Max: I have more analogies in my back pocket.
Matthew: Oh, good. Throw them out there. I know you got a switchblade full of analogies. Let's do it.
Max: Well, so one of our analogies when we talk about like THC isolate is how excited a lot of people and by people I really mean stoners are to have the highest THC they can get. Like this has been a mission in our culture for probably the past decade. Like can we achieve 99.9% THC? And we have. We've done it and it's isolate and it looks cool. It is kind of cool. And then what's really interesting is even freebase 99% THC, right, if you dab it that is still not half as strong as taking one like puff of flower of 20% THC in a bowl. And it's really fascinating.
And so there's a few things to this. One the analogy is, which would you prefer? A spoonful of sugar or a slab of chocolate cake?And because like sugar is crystalline and if you get THC to a crystalline state, there you go. Congratulations. And it on its own kind of sucks. But when you kind of mix it together and you put it together in the most perfect composition, you actually create this thing that is more desirable and in a lot of different ways.
Matthew: That's interesting. Now you mentioned that you discovered a seventh type of trichome in cannabis. First, can you explain what a trichome is for new listeners but also what you found there?
Max: Yeah. So trichomes are super cool.
Matthew: You named your company after the trichome.
Max: I did. Well, yeah, Trichome Institute. And it's more than they're just super cool. They're actually super important. The word trichome comes from the old word trichoma which means hairs. That's old Greek. And if you look at a sunflower plant or a tomato plant and then the plant looks a little hairy, it is their trichomes that is that composition that you're looking at. And so on the cannabis plant, cannabis is cool because it grows a variety of different types of trichomes. It grows two types of trichomes that are considered non-glandular, which means they don't grow a head full of fatty lipids that can and does produce chemistry.
And so those trichomes are cystolithic trichomes and unicellular trichomes, and my analogy for that is those are the little spikes above the buildings of every Starbucks that prevent pigeons from landing so that they don't, you know, take a crap on your head. Literally same point on plants. There's no difference. So the plant just grows it's like little spiky force field to prevent bugs and other things from getting near it. Outside of that, the glandular trichomes comes that the cannabis plant does produce, you know, two types of bulbous trichomes, sessile trichomes and of course everyone's favorite, the capitate-stalked trichome. The big, bad, beautiful, gorgeous mushroom looking gland.
And that gland is what photosynthesizes cannabinoids, terpenes, and flavonoids. The whole spectrum of it. And it does this based on two things. The first is the plant's blueprint, the DNA, and the genetic code that it's been gifted to produce the chemistry composition that it does. Kind of like our own genetics. And the second is its environment. And it's the same thing as us again, right? Like we are a product of our genes and our environment and so is cannabis. And so the plants can evolve slightly depending on where they are and how they're taken care of.
But when it comes to the seventh trichome, geez, I can rant. I'm sorry about that. Holy smokes. Are we even talking about the seventh trichome anymore? Okay. So yeah, so the seventh trichome. So if you're really hip to your cannabis science, you most likely have a copy of the "North American Cannabis Pharmacopoeia," which I believe is a 2012 publication, and it has been reupdated. But in this publication, they really break down the cannabis plant, cannabis inflorescence in a really great way. And so this is the scientific community, essentially doing what I did with the interpening book, except our pictures are 1,000 times more gorgeous. Their pictures are like kind of blurry in a laboratory and ours are like National Geographic quality. We're pretty proud.
But they just show you the different trichomes. They show you what they look like and they label what they are. And we have a photo in our book of the seventh trichome that we've never seen published in Science anywhere before. And it is a type of capitate-stalked trichome. And what's really interesting about it is instead of having a head like a mushroom, the head is more like a teardrop. And the tip of the drop of the tear is actually pointed outward, if you can imagine that. And what's really interesting about this type of trichome is this type of icon is the most dominant trichome type of tobacco.
I grow six varieties of tobacco, really interesting vines from deep parts of the jungle, native tobacco from the U.S., Caribbean tobaccos. I love tobacco. It's my companion plant with cannabis. And tobacco is covered in trichomes. And the types of trichomes that you see on tobacco are this type of trichome that we see on cannabis every blue moon. We saw it twice on a Cannabis Cup. We talked about six months ago, maybe a year ago now. Geez, yeah. And we do have one photo of it in our book, but we don't know much about it.
Matthew: Is that why in some cultures you see people smoking cannabis with tobacco together? Like I've seen in South America and some places in Europe where it's a joint consists of both tobacco and cannabis flower.
Max: Yeah, there's a few reasons for what's called a spliff. And, you know, that's the difference between a joint and a spliff is the tobacco combination. When I was...
Matthew: I never understood that. I've always wondered why that is?
Max: Yeah. So a spliff and that term is European. And the other way to consider a spliff is by calling it a European.
Matthew: Okay. You know, it's funny, I try to talk to people in other countries and I've asked people like, "Why are you putting tobacco in here?" And typically, the answer I get is that they don't even know. It's like they've been doing for so long that it's like why do you have like a line with your coke? And it's just like, "Well, I guess I like the flavor. But I'm not even really stopping to think about it much anymore because I've been doing it for so long." Like I can't get an answer here. It's always like, "I don't know."
Max: Yeah, yeah. And in Europe, that's just kind of how they do it. It's actually just kind of part of the culture, whether it's flower or not. That's just kind of what they do. It's just kind of their thing. But here's something interesting about spliff smokers, once you've got a spliff smoker on your hands, it's kind of hard to get them back to being simply cannabis smokers. So lots of people who do combine nicotine with their cannabis, it's such a different experience that actually when you do go back to smoking a joint, I could actually see why those people in Europe just never do. It's like it just doesn't almost make sense. Like if that makes sense.
Matthew: Yeah. It's kind of like once you have cream in your coffee. Like you're not gonna go back to black coffee. It's like the habit is formed.
Max: Yeah, correct. Correct.
Matthew: Yeah. Now, is there a smell determines leaving the plant? And why should we care about that?
Max: Well, yes, I mean, the terpenes in and of themselves are the smell of the cannabis plant. And these smells are in a state of evaporation. And if they weren't literally wafting themselves continuously in a chain of isomers the way that they are and do, you wouldn't be able to smell that. Like two feet from the plant. And it's kind of funny. Like it's kind of like a no duh sort of thing. But sometimes when you just give people that imagination for two seconds. They kind of get it a little more.
Matthew: That makes sense.
Max: Yeah, like if you could see them and, you know, my analogy for terpenes is they're the little beer bubbles on the size of your glass of your beer. And so if you pour a beer that is more clear than foggy and close to the bottom of the glass, like you can see that pinhead that's almost invisible to see. Then from that invisible, tiny point, it makes absolutely no sense how it can stem thousands and thousands and thousands of large gas bubbles from that point so much so that it creates the head of the beer when all of those little bubbles on the side of the glass together create the head. And the head of the beer is the total smell of the cannabis plant. It is the bouquet of the totality of all of the dozens and dozens or even hundreds and dozens of terpenes types in a constant wafting state from the plant.
So when you smell Durban Poison, you are not smelling the 6 or 12 or even 40 terpenes that your local cannabis laboratory, gas chromatography for the terpenes types. They're not telling you the other potentially hundred other terpenes in that arrangement that is making that specific smell, Durban Poison, that specific smell. And that's also why when you go to a lot of the some types of terpene companies who sell terpenes with strain names on them, when you smell the terpenes, and you're just like, "This doesn't even smell like weed." The reason why is there only combining the 6 or 12 of the types of terpenes let's say from that Durban Poison example. But they're not combining the other 150 that actually make that smell.
And so are they important? Yeah, they're important because not only can you smell them, they have a psycho pharmacy. And they're dictating the difference between your stimulating and your sedative experience. And so what happens if you have a cannabis industry that has a situation where it grows so much product and it takes so long to move it that, you know, 100 pounds later from a specific harvest by the time you're on your last pound in the dispensary, that flower could be sitting for six months or longer. And potentially in ways that might not have kept the cure in the best way.
And so if you approach, not even a dispensary. There's black market weed, too. We're just talking about cannabis in general. If you approach cannabis that you have a difficult time smelling, your face is doing chemistry. Your face is detecting the lack of terpene types that are there. And thus you can do something really easy. There is a lack of chemistry. What kind of chemistry? Stimulating and sedative chemistry. So what do you left with? Your run of the mill cannabinoids and that's kind of like a vape pen without terpenes in it. Like you can get high but you just might not go up or down. You'll get high moving forward, if that makes sense.
Matthew: Yeah. Now, we hear the term OG thrown around a lot in the cannabis community but people misunderstand it. Can you tell us what that means?
Max: Yeah, absolutely. So there's going to be listeners who are definitely going to disagree with this so listen up listeners. And I say that because it's funny. What's funny is even words like OG, people are so passionate about. Like the amount of passion people have for this plant, this culture and this industry. It's really intense. And so, to me, it's kind of funny, like how serious people get sometimes about things like the word OG. And so what a lot of people think it means is ocean ground. And what drives me crazy is I hadn't found one person who believes it means ocean ground and has had an ability to explain that to me in a way that makes sense.
And so if you just meditate on it for two seconds, it just doesn't make sense. It's because it's like because nobody grows weed at the ocean. Nobody grows weed at the beach. And, yes, the Pacific Northwest does grow the best weed in the world, from California to Oregon to Washington to BC. Like it's true. But when they're 100 or 200 miles inland, just because their geography on a map like comes near an ocean, does that mean it's ocean ground? It's just like it's just ridiculous. There has to be meaning and context of vocabulary. Which is why our new terms for Indica and Sativa are so cool. If you want to talk about that still, we can do that.
But so just to get this over with, OG does mean original gangster. And you have to pay respects to the original gangsters. Who are the original gangsters? All of the growers in the Emerald Triangle that literally risked their entire lives, their land, and their families to give this country the cannabis that's had for decades during its prohibition. And who respects them as gangsters? Gangsters themselves. So when gangsters are rapping in South Central LA about the really good gooey, sticky chronic without the seeds and the stems that's coming from up north, those dudes are paying tribute to the other gangsters because what they do is super gangster. They got helicopters coming after him for Christ sakes. Don't say it's not gangster.
And so people were also looking for original types of Kush in the '90s because when a lot of the Kush varietals were coming out of the Emerald Triangle, people wanted to know if it was the real kind, if it was the original, the OG Kush. Is this the OG chronic? And so OG comes from that culture and it comes from that place. And it comes from gang culture. And that's totally cool.
Matthew: Now, Max, let's talk...we talked a little bit about the pictures and your book being National Geographic style. But if we had your book out in front of us and its 130 pages, I believe, hardcover, and we were just a pop up a random page, what kind of information do you think would be a juicy little tidbit that people could learn about?
Max: Oh, I'm so glad you asked. I mean, here, instead of a tidbit, here's the whole kit and caboodle. All right? A lot of cannabis books are the same. A lot of them are the same. If you see hash books, they're all the same. Besides that the ones that have personal stories to them, there hasn't been a lot of newness to cannabis in a really long time. And what's really cool about my book, our book, what the Trichome Institute put together, because, oh, my God, I could not have done this by myself. Especially, Chef Brandon Allen, he definitely made this book what it is, 100%.
The whole book is brand new. It's the book that it shows you the new way of cannabis. I don't know of another cannabis book out there currently that educates people on what cannabis Appalachians are, or [inaudible 00:33:55] or typicity or how and why they're not Indica and Sativa what they should be based on science. Most people think the word marijuana is really racist. Our book covers why the word marijuana isn't and why it's super beautiful and why you should use that term. We also have a really cool YouTube on that, by the way, too, with a professor that's like a half hour long. It will blow your mind. It's super awesome.
But, you know, the book is the ability to say, you know, you don't have to...no, from here on out, if you understand interpening methodology for the rest of your life, no matter what situation you're in, whenever you're approaching cannabis, whether you're growing it, buying it, selling it, whatever, talking about it, your ability to understand it from an actual perspective with real words and terms and hold that conversation, but even more so dissect your flower for its quality and for its psychotropic direction, regardless of its lab test and what it's called, is the ultimate power in your own cannabis everything.
So if you're a consumer and you're consuming cannabis for specific reasons, like I want to smoke one type of cannabis to go to bed, another to do my work, but a different kind when I go to this concert. Strain names and lab tests aren't going to help you but interpening will. And so for a book to be, you know, over 100 pages of new cannabis information, we're super proud to offer the industry a way to look at this incredible plant in a way that we believe it deserves. It's real. This is science. This is no more black market culture. This is no more stoner culture. This is not Indica and Sativa anymore. If you want to actually know cannabis at an expert level, this book in our course interpening will most definitely get you there.
Matthew: Okay. Now, Max, we're kind of in an interesting parallel with cannabis with mushrooms. Just for people that know they may have heard some information on the news like mushrooms, Denver, what's the status of mushrooms and their legality in Denver where you live?
Max: So we're talking about magic mushrooms?
Matthew: Yeah, we're talking about psilocybin, right? That's what we're talking about.
Max: Yeah, yeah, psilocybin, magic mushrooms. The current legal status, where I'm standing right now they are decriminalized. And so what that doesn't mean is it doesn't mean they're legal. And it doesn't mean it's medical. And a lot of people kind of get tripped up on that. But what's really fascinating that I think the thing that people should pay attention to is the fact that magic mushrooms are a schedule 1 drug the way cannabis is today. And schedule 1 drugs are defined based on three things only. It is a drug substance that has the highest potential to kill you. It has the highest potential of addiction and it has absolutely zero medical benefit.
Matthew: That's so harsh.
Max: That is the definition of a schedule 1 drug. And what's really fun is I'm unaware of a schedule 1 drug where all of those things that it's defined by should most likely place every drug in that category in probably category schedule 3. And what's really interesting about category schedule 3 is that's where the United States government has chosen to place its version of medical marijuana, which has been legal and on the market longer than I've been alive. So the U.S. government knows the cannabis plant produces this molecule called THC. And they know it's medically beneficial. That's why they turned it into a pharmaceutical called Marinol which was made available on the marketplace in 1985.
Marinol because it is a medicine and it's so non-dangerous or addictive, it's in schedule 3. But our version of cannabis, the medical marijuana industry itself that serves the actual holistic plant, it's in the same category as mushrooms. It provides no medical benefit. And so it's really important to understand this kind of stuff because these are the reasons why we have a multibillion dollar federally illegal industry that's legal that's also illegal because it's legal, right? But these are the nuances that people have to understand so that they can help us navigate this stuff. So when I lecture on psychedelics, I teach people that the path to, you know, drug legalization, ending the war on drugs is it's a recipe. And follow the recipe. And the recipe is the same recipe the State of Colorado did with cannabis.
Our approach to decriminalizing it, then medicalizing it, and then legalizing it is boiling the frog. And the frog that we are boiling are essentially soccer moms and legislators. So if you can get soccer moms and legislators to take a big deep breath and know that mushrooms have a great medical benefit, Johns Hopkins University has been proving how they help people overcome addiction, depression, anxiety, and their greatest medical benefit with highest amount of evidence so far is helping terminally ill patients get over their fear of death, which is really, really important. So imagine, you know, you're going to die. Like this is your last year on Earth, Matt, say goodbye to all your friends and the smell of grass in the morning because you're done. And it's terrifying.
And if you had one substance that you could take and have peace with yourself because you took it and it gave you that peace, how could you take that away from someone who needs that? So we need medical mushrooms and we should have them. And there should be a system that takes care of this situation in a really serious and logical way. And so that's what's happening in Denver right now. And let's not forget Oakland, California as well. And Oakland did more than decriminalized mushrooms. They decriminalized entheogens. And entheogen is a sacred plant medicine. Peyote, ayahuasca, San Pedro, cannabis, [inaudible [00:41:10]. All of them. And so, yeah, this is a big deal, man. This is a really, really big deal.
Matthew: Now, if you were to jump on a subway with a friend and he only had two stops to tell that friend what you find most compelling about mushrooms right now and that limited time, what would you tell them? What would you share?
Max: I would tell them that if you take mushrooms the right way, set setting and skillset. Not a concert or your mom's basement. If you do mushrooms properly, they can change your life. They can put you in its place, in your place in a perspective that is positive and conscious in terms of personal growth. And I think a lot of the world needs that right now including me. It's the same thing as PTSD and what they're doing with MDMA. Same group out of Johns Hopkins maps. Yeah. And also, MDMA, schedule 1, even though it's curing people's PTSD, not curing, treating PTSD. So, yeah, I think this is important stuff to talk about.
Matthew: Well, when I talked to...some people are really on board with that they want to try mushrooms, but you said, you know, set setting and so forth. I am nervous about having a bad trip that seems like I would be out of control. And that's where the fear really comes from. I've been on the edge of having a bad trip before. But like when I just accept what's happening versus try to control it, that's when the bad trip just seems to go away. And it kind of goes back into a good place as long as you're in a fun...not fun, but just kind of a chill environment that's not gonna present too many negative surprises. But can you just kind of talk about how you would answer that question like, "Hey, I'm afraid of having a bad trip? What do you say when people say that?
Max: I'll say good, you should be afraid. You damn right, you should be afraid because if you're not, you're crazy. And it's because if you...you know, first of all, that fear of the unknown is you being your most human. It's a gift to your species to keep you alive. And so use that fear and that amount of caution to ensure that you don't do them wrong, that you do do them right. Be afraid until you're no longer afraid. Because you've done enough homework, you've done enough research. And maybe you've even set yourself up with a trip sitter.
Where I live in Colorado, there are actual trip sitters that you can hire. And these aren't just hippies and T-shirts like tie-dyed T-shirts, right? These are people who have gone to school for psychotherapy, typically at Naropa. And they're highly experienced with these substances. They've done them many times themselves and they know how to help you push through really difficult situations. And they're there for you. Like you're supposed to cry your brains out and have a breakthrough and it gets uncomfortable and it doesn't look pretty. It's not really normal in our society. It's perfectly normal in other cultures all around the world.
And so, you know, if you don't have access to a professional trip sitter, if you have access to mushrooms, you know, don't be afraid to ask a very legitimate, reasonable person who would be a good trip sitter to be there for you. And then also just know that there's a ton of misinformation about mushrooms as there is cannabis. And one of the things that's really frustrating is one of the largest information sources on drugs like mushrooms is Arrowhead. And if you go there and say, "Hey, how much is a dose?" They will say an eight. And that is insane. Because an eighth of mushrooms is three and a half doses. But you have to say like, "Wait, Max, if you're saying a dose is one gram of psilocybin mushrooms, what species of mushrooms are you talking about?"
Because out of over the 30 types of psilocybin species that not only grow around the world, but are legally shipped in spores to mushroom enthusiasts and cultivators all over the planet, how do you know that the mushrooms that you're eating are cubensis or are Golden Teachers, Purple Majesty. You know what I'm saying? And so mushrooms is something that you should, like cannabis, tiptoe with in terms of an experimentation phase. So micro dosing them by taking a tiny amount just to gauge it is what you should do. Maybe explore it a little bit further. And when you know, like, "Oh, this bag of mushrooms that I just so happened to have affects me in this way."
This Sunday, I'm going to plan a large dose, which means I'm going to take five times the small amount I took originally, maybe even 10 times and still know that I'm eating less than maybe 2.5 grams mushrooms, maybe 3 grams. Just don't ever exceed, you know, 4 grams of mushrooms unless you're ready for the big boy dose, which is considered 5 grams of mushrooms. But, you know, if you're taking 2 to 3 grams of mushrooms rooms in a safe place, your setup, you've got a game plan, you know what you're going to do in an 8-hour period, yoga, meditation, journal, draw, talk with your friend, go on a walk. You really could have an explosive experience in your own living room that could really propel your consciousness and your understanding of everything. You know, like a 30-year worth of therapy and get over some stuff.
But that's using mushrooms like purposefully. And sometimes mushrooms can be fun, like just eating a small amount at a concert or going on a hike and that's fine too. But it's just it's just not okay to just like eat some amount of some kind of mushrooms and not have a game plan and not know who you're hanging out with or what you're about to do. Because you're set, you're setting, your friends, what you're doing, what you ate could do the opposite of give you a 30-year burst through time. It could send you on a on a psychedelic hell for hours on end to the point where you actually might want to commit suicide. It's so psychologically bothersome. And that's a danger point to which is why people have to be really cautious about this stuff. And why we have to like go slow with it.
Matthew: Right. Now, what is the connection between mushrooms and Santa Claus? A lot of people don't know about this, but after you kind of explain it, they might see this in some of the artwork from years past.
Max: Yeah. And I don't know if I'm the best person to...
Matthew: That's okay.
Max: ...tell the Santa Claus story. But I never grew up with the guy. I'm a Jew. No, but the Santa Claus thing is fun. So, you know, we're talking about Amanita muscaria mushrooms. And that in and of itself is different because what we're not talking about is psychedelic mushrooms but we are talking about psychedelic mushrooms. Something really interesting about these psychedelic mushrooms that grow all over my state, they also grow all over the entire world. They are legal to possess and I guess, to use although be super, super careful because they don't have psilocybin in them. So the only types of fungus that are illegal are psilocybin mushrooms. And Amanita muscaria, the flyer agaric, the mushroom that's in your emoji on your cell phone, the Mario mushroom. The famous mushroom is the mushroom that we're talking about, the red one with the white spots.
Yeah, so the thing is the reason why you have to be careful this mushroom is let's say two are growing next to each other. Mushroom number one could be as potent as zero and mushroom number two could be as potent as two million.
Matthew: Oh my goodness.
Max: And the way that you actually gauge it is by smoking them. And the reason why you smoke them is to decarboxylate them. Similar to cannabis. Although what you're decarboxylating is the ibotenic acid, which is the part that will really mess you up, hurt you. So you actually have to cook out the ibotenic acid in order to get to the psychoactive part which is the muscomil, muscomil, muscimol.
Yeah, that's how you say it, muscimol.
And in Siberia, the Siberian shamans learned a really interesting trick of decarboxylization which is feeding these mushrooms to reindeer in that the liver of the reindeer can actually process the ibotenic acid. And, I mean, it totally makes them sick, but it just doesn't kill them. And while these reindeer are flying, literally flying reindeer, the shamans can easily catch them and capture their urine. And the shamans drink the urine of the reindeer which is just loaded with the muscimol without the IBO tannic acid. And, you know, when they drink it, they can see their reindeer flying even easier. And they begin flying themselves.
But what you have to think about like that geography of the planet, when it snows it can snow up to 20 feet and it doesn't melt the whole winter. And these Mongolian humans aren't living in skyrises. They live in I would say a half a story yurt. Like a single story yurt, right? And so imagine a whole community of people snowbound in yurts. You literally can't walk out your front door. So I hope you liked your family because you're going to be trapped in the same living room with them in the dark for six months. Going to the bathroom, eating, everything. And it's not a fun time. And it's something that they have to survive through.
And so, you know, one way that this pagan culture began this celebration is by bringing nature into their homes and having a huge feast. Kind of like a Christmas tree and a big dinner. Wink, wink. Yes, like if people don't know, all of Christmas is entirely pagan. And that's my favorite thing about the soccer moms that don't let their kids read Harry Potter because it's got witchcraft in it. It's like half their culture is witchcraft. Anyways. Anyways. Okay, so some of the men in this culture, their job is to take care of people who are trapped in the snow. They're snow bound. And how they do this is by they dig themselves out on a daily basis.
And how do they take out buckets of feces in urine out of a home and how do they deliver food and medicine into the house that snowbound? Through a chimney. And how do they get through this chimney while they're basically flying above these yurts gliding on the snow on...what does Santa use? A sleight, right? Like they've got a sled and what animals do they have up there? Reindeer? So yes, literally, this red mushroom with white all over it in winter time, these shamans dressed in these enormous coats are using reindeer and sleds flying all over the place delivering gifts through chimneys. And there's your Santa Claus, kids.
Matthew: Yeah. Gosh, it's so crazy about that stuff. It's so interesting how that stuck with the culture. Now, in terms of where you think mushrooms are going over the next 10 or 20 years or less than that, maybe next five or 10 years is it going to be we're going to be boiling the frog, as you said? But is it going to be we're going to stay in this kind of decriminalization state and at least in Colorado for some period of time?
Max: Yeah, I mean, you know, like how this following the recipe, you now have a community of people who just got really excited because of the legislation. And due to this excitement, you're starting to see the ideas of businesses popping up. It's actually been in the newspaper already. People doing micro dose psilocybin coffee businesses. Businesses where they provide the centers and the therapist where you can go and do a psilocybin treatment, kind of like I was discussing with a trip center, but kind of in a more of a legal and professional setting. But in order for any of those things to take place, the legislation has to push beyond it being simply not criminal.
Because it needs to have a medicalization or a legalization element to it in order for you to possess, give, take mushrooms and not go to jail. And so as these young businesses are becoming excited about this new frontier potential as they should be and as they should be doing their homework and being really, really, really cautious. There's going to be a community of activists who is going to be responsible for pushing the legislative envelope to the place that's going to allow these young businesses to do what they do. And something that I wish cannabis businesses did is give back to the activists that spent thousands of their free hours fighting tooth and nail, risking their lives sometime to make this multibillion dollar cannabis industry exists in the first place. Because when you participate a lot in that activism role, one thing you see is the industry that you helped to create sometimes they're not very aware of the hard work that went into it. And so paying your respects is an important thing, I believe. But, yeah, I think it's going to be a process, but I think the processes began if they get asked.
Matthew: That would be a great way of doing it is having centers where people who are nervous for the first time or even there for multiple times could go in and have one of their fears assuaged in a professional environment, know what kind of mushroom they're getting and have an idea of how it's going to impact them. And that would be a great thing if that could happen. Well, Max, a few personal development questions for you, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Max: So the interesting thing is as an extraordinarily add dyslexic, reading is difficult for me, even though I write books. And I also I just occupy myself as a workaholic to a point where I don't give myself a lot of opportunity to sit down and read books. When I do sit up, like self-help books that I listen on Audible, like when I take long drives just to kind of think about ways just to improve myself as a person. There's been a few of those. One has been "The Miracle Morning," which is super awesome. Another one is called "Unfu*k Yourself." Fantastic book. It's really good.
But like the books that helped me become me are like the book on "The Encyclopedia of Psychoactive Plants." It's like reading a dictionary. And that kind of stuff gets me excited. But I just literally like when I have the time, I'll get this big, heavy book, put it in my lap, and I just flipped through pages. And I'll recognize a plant that I've always seen in my whole life like down at the creek and like, "No way, that's psychoactive?" And I go down rabbit holes and I go online and I start learning and I start growing and I start practicing and I start researching.
And, I mean, I just literally just pick up just texts of plants. And I'd fall in love so quick with each plant and how they can do the things that they do that I must have them. I must study them. I must keep them. I must learn from them. I must try them. And I must teach other people about them. And so I don't really sit around and I'm not part of like Oprah's book club. I'm more, you know, kind of mad scientist with a big group of different books all over the place. And I pick and choose at them. And it's a little more crazy than it is organized. But beautiful things do come from it.
Matthew: And what do you think is the most interesting thing going on in your field apart from what you're doing?
Max: The most interesting thing? Well, I mean, apart from what I'm doing, I find it really interesting how people are growing and producing cannabinoids in ways where they're not using the cannabis plant whatsoever. They just pick what cannabinoid they want to grow and grow real fast. Actually, I was listening to one of your episodes about that not too long ago, Matt. Yeah. You know, I find that really interesting. But at the same time, I saw it coming years ago and it's like how all drugs are made. So it doesn't really blow my mind. It's just outside of what I'm doing in the world of cannabis that I find interesting.
But the thing that I find the most interesting that's really happening that does involve my world though is people starting to take cannabis seriously. And that means selling it more like wine and less like cannabis. And that means a lot of the stuff we were just talking about earlier. Like having the state of California actually designate a legal Appalachian for cannabis. The first time in world history that is huge. And for people who don't understand, every white grape grower in California wishes they could call their product champagne because they could sell it for five times more. But they legally can't because it's not from the Applachia of champagne France.
And so to give growers a name and an ability to sell their product for what it deserves to be sold for instead of competing with these McDonald's this coming out of the valley for 500 bucks a pound is going to allow high quality cannabis to exist and for people to experience it by treating it in a way where people care about it by giving it truth and labeling laws. And so that's important.
Matthew: What is one thought you have that most people would disagree with you on?
Max: Oh, my gosh. I wish my girlfriend was here. Let's see. One thought...I must fill this. I don't even know if I want to tell you.
Matthew: Please. Now you got to. I'm in a safe place. I'm in the proper mindset. I'm ready.
Max: Yeah? Okay. Let's just say I've got real, real serious concerns about how far along the problem of our planet's demise is. And the way that I understand it is potentially 50 years further than where everyone else seems to be right now. And it's terrifying because I'm actually experiencing it because I grow so many different types of plants outside inside in so many different ways. And I have for so long and I'm so attentive to each and every detail, every bug, every insect, what the dirt smells like everything. Even the air feels like. Everything.
And my little antennas and my radars are just going off in ways that other people don't experience and don't see and even don't even believe is real. And it's really hard to have so much like truth and knowingness in your heart about something so important. And then to be met with people who simply just shake your head at you and think you're crazy. And so, yeah, I would say the state of where the planet is and the fact that it is much, much, much, much worse than we really know and what's even being reported. And I know a lot of people do agree with that. So there's a lot of people who don't, a lot. And so I would say that that's probably a big thing that a lot of people would probably disagree with me about.
Matthew: Yeah. I noticed the drive in across the Midwest in the summer. My windshield used to be when I was young kid is covered with insects when you'd stop at the gas station or something. Like just totally like the whole grille the windshield and everything. And now it's like there's none.
Max: And the thing that's really frustrating with the people who don't agree with this is when they don't agree from their position of science, which is the fact that the planet does this naturally and always has, and the thing that jus, like, befuddles me is like, "No, duh, the planet goes between cooling and warming's." And of course we have evidence for that. I mean, it's like every single scientist says the same thing. But the idea that it's not based on humans, like the billions of us that didn't exist a few hundred years ago that do now and the millions of types of manufacturing and industry that...I mean, like it blew my mind that producing clothing actually produces more pollution than the entire airplane industry globally.
And I'm like, "Wait, what? Like making clothes is worse than that tens of thousands of airplanes just dumping fuel in the sky on a daily basis." Like people don't even have an inkling that the fact that trash is not against the law is going to kill us. If it was, there would be millions of new jobs to fell and a planet to save. And so it's just like it's insane that people choose to not understand what is so evident that humans and our industrial revolution and actually tying this into cannabis, this actually all has everything to do with cannabis. And what's really interesting is it's because the gentleman who were sitting around a room with each other, making the choice, whether the rest of the world was going to exist on a planet that was industrious from non-renewable sources or renewable sources was a choice that a group of men made in a room.
And we're talking the oil and car manufacturing, chemical manufacturing, and paper manufacturing. In the heads of all of those multibillion dollar industry strip ease in the United States since the 1920s have one common enemy, cannabis. It was the one plant that you could make anything out of. And Henry Ford was building biodegradable cars out of cannabis and running them on cannabis fuel with the diesel engine because Rudolf Diesel designed an engine to run off of renewable plants. So when men decided that they were all competition with each other greed. It was one or the other. He was either renewable plants that weren't going to pollute the earth or a limited resource and the one that they could control which was oil. Or paper from trees that took forever to grow instead of growing entire forest overnight in Kansas in your own backyard with hemp, and same with chemicals, and same with medicine, same with cigarettes and even same with alcohol.
And so that's why the cannabis prohibition exists in the first place. And, you know, if we just chose to make every piece of plastic biodegradable out of cannabis, make our cars biodegradable, run our cars on it, our paper, our oil, I mean, cannabis even can conduct electricity. There's nothing on the planet we can't do with cannabis, which is why it's been against the law. Has nothing to do with getting high. We have a fantastic pharmaceutical industry that's there for that. So I'm concerned about the planet and in ways that a lot of people disagree with. It's frustrating. And the one thing I hope that we could all just agree on is if you wanted a new way, a new industry, a new job, new opportunities, new everything, a new world, introduce cannabis and exchange for everything else we have and have fun with it. Because anything we're doing now we can do with this plant. It's the reason why it's in the Bible.
Matthew: You know, I think about this a lot, probably not as much as you but I think about it. And I feel like there's kind of like this psychological warfare of the Hatfields and the McCoys about like, "This is happening. This is not happening. And what's the solution?" And I was thinking, you know, the solution often is proposed like a tax. And most people think about taxes like this burden they've put up with. Like when I saw how Colorado incentivized electric cars like the Nissan LEAF and stuff and Tesla's, it was very successful, very successful, along with the federal tax credits. I'm like, "Why can't we just..." I mean, most businesses will not lobby against a credit. And if taxes all go to some huge bureaucracy, like a carbon tax, they might not use that in innovative ways.
So how can we just like make a starburst of the right incentives? And I think the answer would be tax credits that allow businesses keep more money by doing the right thing in a way that is so much faster and more effective than a centralized body could do. I don't know if that's good. That's probably not a complete answer. But I feel like it would get past like global warming happening, not happening, just caught like, you know, if you make yourself have a higher ecological sustainability score, you get a tax credit for this behavior, these type of behaviors.
Max: And there's a brewery in Colorado called Asher in Boulder. And all the beer is all, you know, non-GMO produce. But how they cook the beer, all of the energy that runs the entire brewery, they cultivate themselves from the sun and from the wind and even down to the internet, the Wi-Fi they provide inside their tap room is actually Wi-Fi that's solar generated energy. And so that's like...I just love the idea that if you choose to be a business to have a zero footprint, we're in a world now with so much technology that you could achieve that. I mean, it's like you don't have to be hurting our planet more. You could actually be reducing it. And I do so as much as I can and I'm going to try to start educating people in really just fun and simple ways how I try to reduce my footprint.
So maybe they can reduce those in the same way. But you know, the thing that's the most shameful about, you know, a carbon footprint talking about cannabis is like who in the hell...it seems criminal, I'll just say that, that in the state of Colorado the cannabis industry is not allowed to grow cannabis plants with the sun. And we have some of the brightest sun in the whole country. We're a mile high. And so we have to grow cannabis indoors. And when you understand how large the cannabis industry in Colorado is, we're talking like 800, 900 licensed cannabis grows, some of which have 5,000, 1,000 watt high pressure sodium bulbs in each of them, which is a street lamp apiece, 5,000 of those in a single warehouse times hundreds and hundreds and hundreds.
It is worthy of like making your stomach a little sick. Thinking about how much coal we're ripping out of the earth in throwing into the air just to grow plants under light bulbs because someone legislatively decided we shouldn't grow them outside. And to me, that seems like, you know, a handshake with a power company. Because how could something that serious, that drastic, with such an impact that's so wrong exist so prolifically? I mean, we've had legal cannabis in Colorado since 2000 from a medical perspective. And we have a really fantastic well-developed industry and we can't let a plant grow outside? Come on, man. So, yeah, yeah. All that kind of stuff.
Matthew: Well, Max, we covered a lot of ground today here. Please let listeners know how they can find Trichome Institute and your educational materials and your Instagram feed and all that good stuff?
Max: Yeah, so you know all the normal stuff, trichomeinstitute.com. We have tons of free videos. Lots of cool stuff in our shop, courses online, Instagram, @TrichomeInstitue. Same thing with all the rest of our social media. If you want to follow me and my adventures around the world personally on Instagram, I'm Max Montrose. And I would check out Spliff Busters on YouTube. Just type in Spliff Busters. If you enjoy listening to me crush cannabis facts, it's a fun show where we do a lot of facts real quick. So I think people have fun with that. And I think it covers the basics. Yeah. Thanks so much for having me on the show again, Matt. I really appreciate it.
Matthew: Thank you, Max. It's been a pleasure. If you enjoyed the show today, please consider leaving us review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback at cannainsider.com. We'd love to hear from you.
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By making investments in other companies, large cannabis brands are attempting to capture exponential growth within specific corners of the marketplace.
This not only works to increase ROI for investors, but it also provides these companies the chance to form strategic partnerships with rising startups ahead of the curve.
Here to tell us all about this is Narbé Alexandrian of Canopy Rivers, a cannabis venture capital firm and the $1 billion investment arm of the largest cannabis company in the world, Canopy Growth.
Learn more at https://www.canopyrivers.com
- Narbé’s background in cannabis and how he became CEO of Canopy Rivers
- An inside look at Canopy Rivers and how it works to identify strategic partnerships with Canopy Growth’s large portfolio of companies
- Vertical integration and why Narbé doesn’t believe in it
- A breakdown of the thirteen segments Narbé has identified in the cannabis value chain and which ones he predicts will be most profitable
- Narbé’s advice on the do’s and don’ts for entrepreneurs looking to pitch to investors
- Narbé’s investment philosophy and what he takes into consideration when deciding where to invest
- A deep dive into some of Narbé’s biggest investments to date, including PharmHouse and Headset Inc.
- Narbé’s shocking insight on the falling prices of products including dry flower, isolates, and extracts
- Where Narbé sees the industry heading over the next few years
Mathew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com that's cannainsider.com. Now here's your program. Some large cannabis companies are making investments in other companies to help capture the exponential growth of some corners of the marketplace. This has the effect of potentially increasing returns for investors but also allowing for strategic partnerships to form early with rising stars. Here to tell us all about it is Narbe Alexandrian of Canopy Rivers. Narbe, welcome to CannaInsider.
Narbe: Thanks for having me, I'm really glad to be here.
Mathew: Gives us a sense of geography, where are you in the world today?
Narbe: I am in Toronto, Ontario today. It's getting colder and colder as the days go on, so it's about 16 degrees Celsius, which I don't know what that translates into Fahrenheit but it's probably the first indication that we're gonna be entering fall.
Mathew: Okay. Probably low 60s, I would say, is probably the conversion roughly. But yes, it's funny how we still have this Celsius-Fahrenheit thing, I wish we'd all be on one thing, you know?
Narbe: I know, I know. I actually like the pounds more than the kilos. So I'm kind of a mix up of both the U.S. and the metric system from the U.K.
Mathew: And then when I'm over in the U.K., they say, "Oh, you know, 10 stone," or something like that. I'm like, stone? What's that? You ever had that one?
Narbe: I have no idea how big the stones are.
Mathew: Okay. So what is Canopy Rivers on a high level?
Narbe: So Canopy Rivers was a venture capital affiliate of Canopy Growth. We are the vehicle for them to invest in minority stakes in the company. The way that the company was pretty much founded was from the basis of Canopy Growth looking to make acquisitions within the space, that was back in April 2017. Some folks were open to being acquired, others weren't, so the thought process there was if this is indeed going to be a $500 billion industry globally down the road, there's gotta be multiple winners and strategies and operations that really pave the way. And no government is going to give a monopolistic advantage to a single company, so why not take the opportunity to take multiple shots at net in believing and investing in the long-term potential of this industry?
Mathew: Okay. And can you share a little bit about your background and journey and how you ended up in this space?
Narbe: Absolutely. I got started about a year-and-a-half ago. I've been looking at the space for call it a little over two years now prior to making the jump in. My background has been predominantly in technology venture capital. I spent the last 10 years looking at companies both from mentoring them to investing in them, buying them as well as white labeling some of them as well. So worked a telecom company called TELUS in Toronto and then looked at a bunch of companies through that platform, moved over to the largest government incubator in Canada, which is Mars Innovation. And then moved over to the largest tech VC fund in Canada, which is OMERS Ventures where we did deals on companies such as Hootsuite and Shopify and Way Financial, great successes. Built three funds with the team there. I had a number of awesome exits and really paved the way for venture capital in the tech scene.
Through that whole process, while I was looking at cannabis, it looked a lot like what technology did back in the early 2010s in Canada where you have some very smart operators but not necessarily the best investors in the space and in the sense that because capital is so hard to come by, there's a lot of thorns in every deal for entrepreneurs. So my thought process was if this is gonna be anything similar to the tech industry where the more companies are succeeding, the more money is going to come, the better the deals are going to be for the entrepreneurs, why don't we get ahead of that and build a long-term platform here which helps our portfolio companies grow to become the giants of the future within this industry?
Mathew: Okay. Now, you have a thesis that vertical integration doesn't work. Could you first define what vertical integration is and tell us why you think it's not a model that's viable?
Narbe: So vertical integration is what you're seeing a lot of the large MSOs and the LPs in Canada are doing in the sense that they're trying to do everything from seed to post-sale. So they cultivate, they extract, they formulate, they deliver into products, they create branded products, they sell those products in their dispensaries, they own the entire process from seed to sale.
To us, that is very remnant of what the tech industry looked like back in the early 2000s where if you were...it was 2001 and you were looking to create a surfboard e-commerce store to sell surfboards to the public, you'd actually have to develop everything yourself. You'd have to develop your own payment platform or your own e-commerce site, your own website, your own videos, your own pictures. Again, everything you'd have to do from scratch. You'd have to build your own server farm in your basement to house the input and output of data that was coming through. Everything you had to do on your own.
Fast forward to now and how the internet has developed, you have turnkey solutions for that. So for payment platform, you have PayPal, for any e-commerce platform, you have Shopify, for servers, you have Amazon Web Services. So you have all these turnkey solutions and so you can focus solely on what you want to do and what you want to do best just selling surfboards.
This the same thing can be seen on the cannabis industry for the very large players like such as the Canopy Growths where you have a ton of cash and you have talent all across the board, you can successfully vertically integrate. But for all the small to medium players which represent probably 98% of this entire industry, it's very hard to do so. You're really spreading yourself out too thin, you're trying to build a consumer product for the recreational consumer but also kinda going through clinical trials for the medical and pharmaceutical consumer, it's a very hard proposition to make.
So in our view, as industry progresses and continues to mature, we're gonna continue seeing how horizontal integration is going to come into play, which is companies are gonna be focused directly on what they do best. So what are the one, two, three things that they do very well and outsource the rest of it out. So I like to bring up PAX as an example because it is a common name within the cannabis industry. PAX makes vaporizers, they only make vaporizers, they don't fill the cartridges, they don't sell the cartridges, those are done by their partners. And then they don't actually make the different little piece of the hardware either, they get that from partners as well. So their sheer focus is on developing what they think is the best vaporizer in the world, and it is one of the best vaporizers in the world. So we think that the model of what PAX is delivered it's gonna be what we're going to see more and more of in the future.
Mathew: Now, you've identified 13 segments in the cannabis value chain. Can you tell us what those are and why they're important and how you came up with those?
Narbe: Yes. So through our analysis, we've come up with specific areas where we think that the cannabis value chain really extends into, and it kind of is the seed to sale of what we see in the cannabis industry today. So we start off with cultivation, this is where you're growing product and you're creating dry flower that goes into some other area such as extraction or even goes into a pre-roll. Then we have plant sciences which is looking at how the plant actually grows, fertilizer and agricultural technology, post-harvest processing, which is lab testing, and rolling machines and grinders, etc, extraction, which we all know well about, formulation and delivery, which is where biosynthetics come into play, encapsulation, vaping, software, cosmetics, pharma and biotech, consumer product goods, retail and distribution, and then media technology.
So we like to bucket companies within each of these categories. There's companies out there that do multiple things in multiple categories, which is completely okay, but we like to try to find out what is this company's specialization? Like when you look at the operators of the business or you look at what product traction they've had, in a few words, how do you describe this company? And the reason we do that is because we truly do believe that companies are gonna slowly focus on their strengths rather than try to do too much. So we want to find out what the strengths are and what the barriers are to keep other companies away from that.
Mathew: I often think about the Pareto principle, the 80/20 principle where, you know, 20% of the businesses make 80% of the profit but also 4% of...you know, if you drill on further, 4% make 64% of the profit. If you were to look at those 13 segments, it might change over time but where do you think in those 13 segments are the 4% that'll make up 64% of the profit, kind of like Apple does in the computer space?
Narbe: I'd say it really depends on the maturation of the market. I think that, in general, the market rolls around in five specific waves. The first one is cultivation and extraction. This is where you see a lot of value on early license holders of domestic cultivation within those countries. They can ramp up quicker than anybody else can, build out their facility, which takes anywhere from a year to 24 months and they can get the ball rolling. And that's where you see a lot of value there.
As the industry continues to mature within that geography, we move on to the ancillary industry, which are technologies and software and extraction and different formulation methods that really help the cultivation of just dry flower turning into an actual product. Then we move into consumer packaged goods, which we know well about, which are the products that consumers buy at the stores today. And the fourth wave would be pharmaceutical, which we believe the medical market is gonna be the biggest one, we just don't have enough clinical data for the large players to jump in and make a big splash.
And then the fifth wave is maturation, which we think is about 15 years from that standpoint. So to answer your question, what we believe is the hottest segment today really depends on the geography. If you're looking at North America, I think you want to really focus on the brand part. There's a lot of products that are entering the market today. Our analysis shows those are about 90 different SKUs, SKUs that are coming into the North American market per week. And so there's a lot of noise and there's a lot of companies developing product.
Right now, everything looks like a Sears catalog that there's no real differentiation, When a customer goes to the store, it's one vape or for the other vape, it's one dried flower or the other dried flower. There's no real brand value behind any of these companies yet and that's what everyone's racing to become. So that's probably what we want to see in the North American industry. When you go to Europe, you are all the way back to the beginning where it's the cultivation and production and the licenses that are playing out within those jurisdictions.
Mathew: That is interesting how that unfolds. How many pitches do you hear each year?
Narbe: So we have a very robust system of capturing the details of the conversations that we have. Over the last 365 days ended June 30th, we saw 1,523 pitches. So these aren't emails that we just put in our database but these are actual conversations we've had with entrepreneurs. And we make a very strong push towards having those conversations because there's no better way to learn about how this industry is moving forward than to get into the front lines and talk to the soldiers out there that are trying to build something within this industry.
So you hear about their pains, the problems that they have, what are the successes that they're seeing, how they characterize their competitors, what type of metrics that they think are key performance indicators. And through those conversations, you can truly understand how things are playing out. And I think that until you get to...I mean it doesn't have to be 1500-plus but at least to get up to a thousand companies under your belt, like you won't really understand how this industry is moving and what deals make sense and what deals don't make sense and where the...I'm gonna use a Canadian analogy here, where the puck is going versus where everyone else is playing at.
Mathew: Now, what do you think...since you've heard so many pitches, is there something that entrepreneurs think is important to talk to investors about but realize not that important and then conversely that is important that they generally don't mention and without being asked?
Narbe: Yes. I think the biggest piece that they always talk about, and I have a bunch of pet peeves probably of how entrepreneurs pitch, but the main one is talking about how big the industry is going to get. And when you're talking to an entrepreneur, especially us, that are synonymous with the cannabis industry, we know how big this industry is going to get it, we know it's gonna be a multi-billion dollar opportunity in the future and we're long-term thinkers here as well. We're not the type of people that want to put money down and talk about how long-term this industry is and then force the company to go public too soon. Instead, we're always thinking about how can we build a billion-dollar business out of all of our portfolio companies and build that out? So when you're pitching, like don't talk about how big the industry is going to get, skip that slide, save your time and talk about something else.
The one area that I wish more entrepreneurs would talk about it would be to skip the pitch part of the pitch and focus on what they're seeing in their space. So if you are a German cultivar or Italian cultivar and you're talking to an investor, don't assume they know all the details, the regulations, and the different parties politically because it is a lot of information for everyone to keep in mind. So to really stand out there, take some time and just educate your investor on the opportunity in that space. So if you're creating a brand in California, explain to them the number of brands that come out of California outside of cannabis and why that is so. It's because there's a lot of talent there, it's because there's a huge population there that you can service. So to stick to what you're good at and show that opportunity out there instead of focusing on the larger macro-level numbers.
Mathew: Okay. And can you give us some examples of how your investment philosophy has guided you in your investments?
Mathew: Absolutely. So our investments are based on a thesis-based approach. So we break the value chain up into 13 different buckets, we break that down further into 97 sub-segments. And each of those segments, we apply a 10-criteria basis to it. So it includes stuff like competitive rivalry, bargaining power of buyers and suppliers, barriers to entry, how big the market size could get, what exit potentials look like, what the internal capabilities are at Canopy Rivers through our ecosystem approach, all the way up to how can Canopy Growth actually help this company out potentially down the road?
So we do that assessment and out of those 97 sub-segments, there's about 12 to 15 areas that we do a deep dive on. The three that I like to disclose openly would be...one would be on brand, the second would be on biosynthesis, which is the creation of cannabinoids through labs, and then the third piece would be on the plant science piece, which is really truly understanding how this plant grows and how we can better understand how to keep it away from pests and microbials and all the bad things without actually messing around with the genetics of the plant itself.
Mathew: Okay. And you mentioned you take a minority stake but how much do you generally invest? What's the average check size?
Narbe: So we've invested anywhere from a million dollars to $50 million in any single round. So our check sizes do vary. We like to call ourselves lifecycle investors because through our domain expertise, we can see early companies evolving and us understanding how we can help them become bigger companies, and so through that process, you can get it for a bit cheaper through the valuation. So I'd say a typical check size is about $10 million to $15 million per portfolio company. And so it might be a little bit at the beginning but there's a milestone approach to putting more money into the company and growing that out.
Mathew: Okay. And what are some of your more noteworthy investments that you can share?
Narbe: So there's a number of them we can talk about. Farmhouse is one of our largest investments to date. Farmhouse is a joint venture between the Mastronardi [SP] produce family, the principles behind it, which is the largest greenhouse operator in North America, and Canopy Rivers. And we've developed a 1.3 million square foot facility based in Leamington, Ontario, which is the same longitude as Northern California that they cultivate the cannabis. Fifty percent of that cannabis has already been taken up by companies such as TerrAscend as well as Canopy Growth and 50% of it is still available. So this is going to be one of the largest and most highly automated facilities in the world. And we have some of the best-in-class operators to run this company.
I was actually speaking to someone this morning and I was mentioning Farmhouse and when we first brought Farmhouse into the picture and we were walking them through cannabis cultivation, and think of this group as being...they are the multibillionaires, multigenerational in terms of families that ran the company. And they look at cannabis cultivation and they said flat out, "For the first two years, you'll teach us how to cultivate cannabis and then after that, we'll teach you." So that's a very powerful message that we received.
Mathew: Any other noteworthy investments?
Narbe: Yes. So one of the investments I love to talk about a lot is Headset. And Headset, as many of you know, it's a data platform. And Headset originally came from the investment thesis of there's not enough data for brands out there. So we were walking through MJBizCon last year, which is one of the largest, if not the largest conference in the cannabis space. And some of the companies out there were showcasing some of the flavors they had, it was all uninfused.
So we tried one, which was the second-largest beverage manufacturer in all of the U.S. for cannabis. There was a blueberry soda, it tasted extremely sweet and very artificial. So we asked them how things were going with the flavor and they said, "Couldn't be better, it's flying off the shelf, we're doing very well." So we asked them how they came up with the flavor and their response there was they had this fantastic agreement with the flavor house in Kentucky and the flavor house sent them blueberry cola, they infused it with cannabinoids and now they're selling and it's doing very well.
To us, that was very counterintuitive to all the conversations that we've had with large CPG corporates that are out there that take about two years to formulate and understand consumer trends before they launch a product. So we saw that the cannabis industry really upside down, companies were just developing product not really looking at why they were developing it or what the trends were showing, so we went out to find data. We spoke to Nielsen, Nielsen didn't have any data on the cannabis space at the time. So we started talking to cannabis companies and any company that had the word data in their title and their mission statement, we went and talked to them. So we talked to about two dozen companies and through that entire process, we kept bumping into Headset.
And Headset was founded by the three co-founders of Leafly, which is the most successful exit on the technology space and cannabis to date, they sold to private tier. And right after their earn-out they went and started this data company that pulls in data from 20 point-of-sale providers, which represent about 90% of the entire industry to date, and take that data and show brands, hedge funds, traditional CPGs that you might not even think are looking into the space, but they are, how things are moving in the cannabis space. So at any given time, I can find out in real-time what is selling in what states or what province and what SKU and what flavor and what CBD to THC ratio that exists there. And that's a lot of powerful data for any brand manager in any cannabis company to understand what to create next.
So for example, one of the findings that we've recently found out is when we are looking at CBD to THC ratios and you're selling CBD products, whether they be through dispensaries or through traditional channels, consumers, for some reason, are choosing the 9 to 1 ratio way more than they're choosing the 10 to 1 ratio. This is a negligible difference in terms of amount of CBD in the product to THC, but it just shows how consumer psychology works. And it might be the consumer it looks at and says that 10 it looks like a big number but 9 doesn't look as big because it's a single-digit and that's driving their pattern there. So to try to understand that, try to understand how to build a product based off that data is a very powerful barrier to entry for any company out there.
Mathew: Wow. That makes sense. These little psychological nuances, double-digit versus single digit, that's funny. Now, you're really deep into this world of investing and talking about all these different investment philosophies. What skills from your background do you draw on most day to day that kind of help you do your job and give you kind of a lens that you can quickly zoom in and zoom out and, you know, make decisions?
Narbe: I think the biggest skill set, it's a soft trait, and that's to play the long game. So when we're talking to companies, a lot of times it's not the right time for us to invest. And that just could be the company's too early, it hasn't shown enough traction, the valuation is too high, or it's a space that we're not generally too bullish in. And in those situations, you have to treat the entrepreneur with so much care because at the end of the day, it is their baby and they've devoted a lot of time, energy, they've left their previous job at a big corporate to go launch something. So you don't want to treat them without the respect they deserve.
So in these situations, a lot of times what you want to do is you want to create a narrative around the company. So that might not be the right time for me to invest right now but maybe in six months or a year and a year-and-a-half they get there, and companies pivot all the time, companies change up every single time. Shopify was one of my portfolio companies back in my technology days. Originally, the company was created, it was a snowboard e-commerce store.
Narbe: Yes, exactly. And that turned into becoming a $30 billion company because they pivoted to saying, you know, "Instead of selling snowboards, why don't I just sell my platform that I created to sell the snowboards?" So the same thing happens in the cannabis space. So before anybody jumps to any conclusions saying that, "Well, this company will never make it," or, "We shouldn't do that," don't take that approach, and takes the long-term approach of saying, "It might not be now, it might be later, but let me just understand how this entrepreneur thinks of their piece of the industry, what are they seeing, what are the trends happening from regulatory perspective that could help me in my future?" and create that rapport with them.
And any deal that we do take to our investment committee comes with months and months of discussion with entrepreneur. Because at the end of the day, the relationship between a VC and an entrepreneur lasts almost a decade. On average in the tech industry, it's about 9.6 years. The average marriage in North America is about 10.1 years. So you're basically getting married to someone and you just can't jump to elope within the first phone call.
Mathew: That makes sense. Okay. So you talked about, you know, where the puck is going. When you think about the cannabis industry and how it's evolving, is there anything that you're thinking about that would surprise investors and people in the space that is not really on the radar yet that they might not be aware of?
Narbe: Yes, and I think one of the things that's rarely talked about is how quickly prices are going down for dry flower as well as for islets and that an extract. You're seeing so many companies coming online right now growing hemp and growing cannabis and it's really moving the entire North American industry pretty quickly. For a lot of these players, especially the small ones, they're slowly gonna get out-positioned because of the difficulties in scaling. So you have to really pick and choose the area that you want to focus in on. Are you producing for mass product? Are you going for the lowest cost? Are you are applying some tender love and care TLC to the plant to create craft cannabis, high-premium type smokable flower?
And you had to pick and choose where you're gonna be. For a lot of the companies in the space and a lot of investments that I see other companies are making, they're just picking a certain geography and finding a player and going after it and not necessarily thinking about what the product looks like, what the genetics look like, how the company can actually weather a storm of commoditization of a product, if and when both cannabis and hemp become further commoditized.
You look at the prices today, extracts are going down by low teens per month, the dry flower is going down by high single digits per month. So within 12 months, you would be looking at cutting that price in half. When is that going to stop? We don't know. So that's an area that we really do try to keep a very close eye on because, for example, in Canada, by 2021, we're gonna have an oversupply. And then once we have an oversupply, what happens there? Our international market is going to open up for export? Maybe, maybe not. And if they don't, what companies are gonna survive and what do you have to do in that day and age to be a viable partner for anybody trying to build a brand or trying to buy dry flower from someone?
Mathew: Good points. I do think about that a lot, it does seem like it's rapidly declining and if you're just kind of a middle of the road, not sure what your value proposition is or your skillset, it's just like, man, you're just going to get bounced out.
Narbe: Absolutely. Absolutely.
Mathew: So Narbe, let's go to some personal development questions here to help the audience get a better understanding of who you are as a person. Is there a book that has had a big impact on your life or your way of thinking that you'd like to share?
Narbe: Yes. Definitely, there's a book called "The Defining Decade." I read it when I was in my 20s, so it was a while back. And it's all about the snowball effect and just taking life by its horns and try to do as much as you can with it. So the book is actually written by a clinical psychologist that focuses on 20-something-year-olds. And that's an area where you just don't see that much research dollars going into because, knock on wood, 20 something-year-olds are very healthy both mentally and physically so there's not a lot of money that goes into that.
So her life work is on understanding 20-something-year-olds. And for lot of the adages that she talks about, and she brings up anonymously a lot of her patients, a lot of folks believe that they have a lot of time to do X, Y, and Z but, quite frankly, you need to really take every day as if that was your last day and do everything you can in that scenario. And after reading that book, that really opened my eyes to how much you can actually fit into a 24-hour day. So every day someone mentions to me how I juggle so many different things at work and at home and all these different things and, quite frankly, I can attribute it to that book and how it opened my eyes.
Mathew: You know, I think about this too but then I think most of the things that I do don't mean anything. Like 10 years from now, I won't even remember a few things about this year even, and those things that stand out are probably the things I wish I enjoyed more. So how do you make sure that you're doing something that's truly impactful versus kind of busy-ness or something that feels like it might be impactful but then it's not, or you get drawn into something that's not impactful? I mean, how do you kind of navigate those issues?
Narbe: I mean, at the end of the day, you have to do what you love to do and you have to find your passion. I used to be an accountant, a CPA back in the day, and I hated it, I hated that world altogether. And after reading that book, I took a step back and said, what do I love? I love technology, I love looking at different business models. And I got into the VC space. This is pre-cannabis actually going anywhere close to legalization. So I jumped into that space and I went to work there. And every once in a while you ask yourself, am I enjoying what I'm doing?
And the book itself also talks about the snowball effect of every conversation you have and everything that you do might turn into something in the future, which you can't even fathom, but in hindsight, it's 20/20 and it make sense. So whether it be, for example, I went to a party once that none of my friends were going to, but I had nothing else to do in that day and I met my wife there. And I would've never imagined that one conversation I would have would end up being my partner for the rest of my life. So it is about just taking those chances and just showing up.
Warren Buffet talks about luck all the time, he says, "Luck is made up of true two attributes, one is the ability to see opportunities and the ability to seize opportunities." And I think that's quite true. If you stay at home, stay on the couch and watch an NFL game and bet 100 bucks on it, you're probably gonna end up wasting 3 hours in your day and maybe you make 200 bucks off that but you're not really going that far. But if you go and apply yourself and consistently want to learn, there's a lot you can do in this world.
Mathew: Great points. It reminds me of some other technique I use where I do something that's uncomfortable but turns out having an impact down the road in ways you can think of. Whenever I go into a room or a party where I know a bunch of people, I try to find someone I don't know that looks like they're not talking or not engaging and just walk up and introduce myself. And usually those people have something interesting to say, it's just that we kind of default to the familiar, like, hey, I know these two people over here so I'm gonna go over there and catch up on, you know, whatever, and that has had a tremendous impact for me. But it's slightly uncomfortable to go up to people you don't know and just start talking to them.
Narbe: Absolutely. I love that, I love that comment that you made as well just because I think it's a defense mechanism of ours to go after what's comfortable. And if you go out there and tell yourself I need to go seek discomfort, I need to seek those scenarios where I have butterflies in my stomach and I just do it over and over and over again until those butterflies go away and then I find the next thing, you just keep on growing and it never stops. And then you get it becomes a bit of a game for you in the sense that you're always trying to find what that next big thing is.
Mathew: Now, what do you think is the most interesting thing going on in your field besides what you're intimately engaged with?
Narbe: I think that the aspect of biosynthetics is something that I'm very keen on understanding more. At Canopy Rivers, we've talked to probably four dozen companies both in the cannabis space that are developing biosynthetics as well as in the non-cannabis space that are developing food ingredients or synthetics or biosynthetics to truly understand what that path is to create lab-developed cannabinoids that are still organic in nature and still as good for you as the actual plant itself. So really diving deep onto that. And from our understanding, it's gonna take a few years until we get there but there's some really cool technologies that are coming out from some very well-known academics all around the world that are really gonna push the boundaries of what we understand about these cannabinoids.
Mathew: You know, here's the Peter Teal question for you. What is one thought that you have that most people would disagree with you on?
Narbe: I'm not a big fan of retail within the cannabis space. There's a lot of folks that are putting a lot of money into dispensaries and retail. To me, that is a short-term solution. At the end of the day, retail stores for cannabis are gonna end up going down the path of the dry cleaner model. You're gonna go to what's closest to you, not necessarily what has the best selection. And you see that in the liquor space. When you're trying to buy a bottle of wine, you don't drive 10 miles to go to that one liquor store that has all those vintages that one might want. Sure, there's a niche for that, of course, which is the connoisseur, but for the most part, we all go to the one that's closest to us because it's convenient.
And if you look at it from a convenient model, then it's all about location, where those locations are. But at the end of the day, every retail model has a cap on how much money they can make because there's just only so much traffic that can walk through your store in a single day. So I just don't see the retail model really playing out from a venture returns, so you can't really get that much of a bang for your buck in terms of investing. I do think retail has a lot of the importance for large companies that want to showcase their brands. So I do believe in specialty retail where you have Canopy Growth creating tweet [SP] stores that sell Tokyo [SP] smoke and tweet products and really showcase the brand and the messaging the way they want. But for the most part, the ones that are selling everyone else's product, it's a race to the bottom.
Mathew: Okay. Narbe, as we close, how can listeners learn more about Canopy Rivers?
Narbe: You can go to our site, www.canopyrivers.com. You can check us out on a bunch of different publications that were on. I'm always trying to find ways to talk about all the insights that we get from our 1500 pitches that we've seen. And we just announced yesterday after market closed that Canopy Rivers is actually going on to the TSX, so we graduated from the ventures platform to the TSX, so we couldn't be happier with that. And hopefully, through that process, we create more awareness for our company and our investors through the TSX big board.
Mathew: Right. And for people not familiar, that's the Toronto Stock Exchange.
Mathew: Great. Narbe, thanks for coming on, we really appreciate it. I'll let you go so you can go squeeze more into your day efficiently.
Narbe: Thank you so much, I really appreciate being a part of this.
Mathew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at firstname.lastname@example.org. We'd love to hear from you.
Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies, featured at CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies the entrepreneurs profile on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.
Since launching in 2016, LeafLink has quickly become the largest e-commerce wholesale cannabis platform with $1 billion in annualized sales as of June 2019.
In this episode, LeafLink CEO Ryan Smith gives us an inside look at what’s happening in the industry’s busiest marketplace.
Learn more at https://leaflink.com
- Ryan’s background in cannabis and how he came to start LeafLink
- An inside look at LeafLink and the ways in which it helps brands and retailers streamline the ordering process
- A breakdown of the companies using LeafLink and the number of new brands launching each week
- How the marketplace on LeafLink has evolved over the last two years
- A snapshot of the bestselling products on LeafLink and Ryan’s insight on up-and-comers
- The data points Ryan finds most interesting about today’s cannabis marketplace
- Ryan’s advice to entrepreneurs interested in creating a new cannabis product
- Ways in which brands and retailers can differentiate themselves in the competitive cannabis space
- Products LeafLink offers cannabis brands and retailers, including streamlined ordering, CRM, reporting tools, and fulfillment and shipment queues
- Where LeafLink is currently at in the capital-raising process
- Where Ryan sees LeafLink and the cannabis marketplace heading over the next few years
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 cannainsider.com, that's cannainsider.com. Now, here's your program.
In the old days, the most dynamic place to be in any big city was the central market. Goods were exchanged in the open-air environment with vendors yelling out prices, smells of food and tobacco smoke heavy in the air. This bustling environment is where hopeful entrepreneurs created new products and tested passerbys' reaction to see if they could make a deal. Today that central marketplace is online, but no less dynamic and bustling as it attracts more merchants and customers to congregate in one online bazaar. Today our guest is Ryan Smith, CEO of LeafLink, the largest B2B cannabis platform. Ryan is going to pull back the curtain and show us what is happening in the cannabis industry's busiest marketplace. Ryan, welcome back to CannaInsider.
Ryan: Thanks so much, Matt. Appreciate you having us back.
Matthew: Give us a sense of geography. Where are you in the world today?
Ryan: Today I'm in New York City. Was in LA just last week, so really going back and forth between the coast as of late.
Matthew: Okay. And you've been on the show a couple of years ago now, but for listeners that aren't familiar with LeafLink, can you just give us a high-level snapshot?
Ryan: Sure. So LeafLink is a B2B wholesale marketplace, like you said, for legal cannabis companies. We're working with four to five retailers that are licensed in the States. Just over 3,400 doors have placed orders on our marketplace for wholesale inventory and they buy from over 1,200 of the largest brands in the space. It's companies like everyone from Kiva, to dosist, to Wana, to Dixie, all very close clients of ours. And we streamline the way they do their purchasing. So it's centralized in one cart with the simplicity of a business to consumer marketplace in the B2B environment.
Matthew: Okay. And you're a pretty young guy. How old are you, if you don't mind me asking?
Ryan: Sure. I'm 28.
Matthew: Okay. So that's young. And what were you doing before here? And can you kind of just paint the picture of how LeafLink just came on the scene and what you were doing and how you came up with it?
Ryan: Sure. So I'm one of the co-founders here at LeafLink with Zach Silverman, who's our CTO. And we had known each other for a few years before starting LeafLink. Zach was at eBay previously. He and I each had started and sold companies, tech companies, actually, both in 2014. They were unrelated companies. And he was just an interesting person and, you know, hopefully, he thought the same. And we would catch up regularly doing some research and trying to understand how we could... We were always so interested in like enterprise solutions, marketplaces. And so, we began doing some research in the cannabis space and really were working on this premise that we believed, you know, all companies in the cannabis industry deserve as powerful, if not more so tools to run and grow their businesses and we just found that they weren't being supplied with any of those things. But we also saw this interesting opportunity to create a new marketplace dynamic that doesn't really exist in more institutionalized historical industries because they've been doing business the way their parents, you know, did business and their parents did business. Here you have these forward-thinking, tech-first, progressive minds in cannabis and we saw an opportunity to build something new in this B2B marketplace concept.
Matthew: Okay. And how many companies are engaging on the platform right now?
Ryan: So there are 1,200 brands selling to over 3,400 retailers in 22 markets. Most of our... How we define a market is a state, so California would be a market, but we also serve a couple of Canadian provinces. We're live in Puerto Rico, so we... You know, over 22 markets right now are live on the platform.
Matthew: And how many brands are launching each week or month? Do you have a sense of that?
Ryan: Yup. We're signing just... We actually had a record month, 2 months back where we signed over 100 brands in a month, sort of that breaks down to...probably somewhere between 15 and 25 brands every week are joining the platform. Yeah, we actually we're, you know, we're really excited to go into this year about seeing some additional movement on some of the East Coast states, but there were some surprises that came into line this year, like Michigan, like Oklahoma that we're really excited to get the platform live in and really, just kind of keeping pace with the natural growth of the industry.
Matthew: Do you have a sense of what percentage of brands that are out there on LeafLink? I mean, you're the largest, so you've got the most, but is there any that are just not on any platform at all? Do you have a sense of that or is it hard to tell?
Ryan: It's a little tough to tell because although we... I did some research on this one for you, but we do have these large lists of licensees that are at least by states, but not all licenses are always active. Sometimes the one license could serve multiple brands, but we're trending typically above 75% of brands in our largest states, getting as high as 95% to 96% in states like Nevada, and Michigan, and Colorado. I know California, we're in like the high 70s. And so, definitely, this can give you market penetration. And as far as like the largest, highest volume brands, they're typically on the platform.
Matthew: Yeah, I think that's helpful that your CTO and co-founder was at eBay because you think like, "What's the number two auction site, at least in the U.S.?" and no one can think of one because the network effects are just so strong with eBay. Everybody goes there because it's the biggest, most liquid marketplace and once those network effects are in place, it's just they get stronger and stronger and they reinforce themselves to some degree.
Ryan: Agreed. I mean, there's an interesting, I think, maturation happening even like after eBay, though. If you look at some of these marketplaces now that are launching for consumers are just selling antique furniture or like just a marketplace for finding a dog walker. We really believe strongly in this managed marketplace software as a service concept and building something where we're so deeply in bed with our clients and we're learning so much from every single day, but building it specifically for this industry, and it's the only thing we think about and there's a lot of value there. And I think that's even happening on some of the consumer offerings, but specifically on the B2B side, it's just so specialized that this managed marketplace concepts in that we're really revved up about internally.
Matthew: So I'm curious how... Since you were on the show about two years ago, how has the marketplace changed or evolved?
Ryan: The largest change for us has really been the scope. So the last time we spoke, it was in 2017, we were live in five states and like I said, now we're in over 22, including a couple of these Canadian provinces. I didn't know our goal in 2017 was to move $100 million in transactions. We call it GMV, but it's gross merchandise value, the value of the products on the marketplace. The goal in 2017 was to move $100 million, which we did. The goal in 2018 was to move $500 million. We closed out the year at just under $700 million. And then just in May, we broke $1 billion in GMV through the marketplace. This month we're trending to break $1.4 billion, which is great. And that, we think is now, you know, whereas we were probably moving low, single-digit percentages of transactions in 2017, once we break this 1.$5 billion GMV mark, that's well over 20% now of all legal wholesale cannabis transactions are moving through LeafLink's marketplace. And for us, we think that's obviously really important in terms of overall penetration of the supply chain.
Matthew: Okay. So that sounds like it's probably your number one metric or key performance indicator because it's just like a...it's a great way just at a glance to see how the platform's doing.
Ryan: Absolutely. Yeah. We're, you know, we're working closely with some other providers further down the supply chain and, you know, continue to capture information about how large the market is, but I'm sure you've been through all the white papers that come out and a lot of them are, you know, they're shaky at best sometimes in giving a full clarity and scope of the size of the market, but yeah, we do our best to always be growing that GMV number because for us that's the...I mean, it's the holy grail of the marketplace, is continuing to scale that GMV.
Matthew: So can you give us an overview of what products are selling the most on LeafLink and maybe some hot up-and-comers?
Ryan: So we released earlier this year, the, you know, the top 10 sellers in a number of categories on the marketplace and we're gonna be doing that again. Got a ton of exciting feedback from clients there and you actually, within LeafLink, you can even search now across some of these bestsellers. But in terms of like snapshot of different product categories, an interesting thing I've, and a lot of the team members have noticed is that there really is this provincial element to which products sell best in which states and we're starting actually to break this down as a potentially new offering for clients, but overall, cartridges right now are, you know, just around 30%, flower is around, you know, 20%, 25%, edibles around 20%. And what we've really seen in one of the bets we made early on in building the product was that brands were gonna be the future of the space and something that we've seen, particularly in more mature markets is the leveling out or reduction of flower as an end product and really becoming more of a raw material that is creating...you know, put into a concentrate and then actually cooked into, or moved into, or distilled into a larger consistent SKU branded product. I think there's a lot more margin there, and those are the products that seem to be scaling the most across these different markets.
Matthew: Okay. I think a lot about, like how do you categorize flower or cannabis oil because it would be so helpful if there was like some accepted, you know, universally accepted types of oil, like CO2 extracted has below this level of toxicity or lead, like safe levels. And that way, the market could get more efficient in terms of how it transacts. You know, know we could drive prices down or get more efficient. People would have a better idea of what they're buying, similar to how, like how wheat or corn or pork bellies are transacted. I mean, are we moving there or are you seeing like specific things requested when flower is sold or what can you tell us about that?
Ryan: The industry is moving there, but slowly, and I think the biggest, you kind of hinted at this, but the biggest challenge right now is the incredible amount of inconsistency across lab test results. And so, people... Like there should be, and a couple of companies are trying to do this, but there really should be like a standardized template state to state that everyone's gotten together on that provides all of the objective information required to know all the levels of what, you know, the different chemicals and metals that you said. You know, what... Is the product tainted? All these things are... And then we've heard so many stories from clients taking a product, splitting it in half, sending to two labs and getting completely different results. Within the platform, within LeafLink, we actually did just launched functionality that allows... People were always able to search and buy into because [inaudible 00:12:02] hybrid units for sale amounts, but now people can actually attach their certificate of analysis to show the retailers or the buyers the test results. There are these features that actually send that automatically to purchasing managers, so that helps give them more of a grade of the flower, but it would all be so much easier if there was some universally accepted standardization of lab test results, which I feel like we're still a bit of a ways away from.
Matthew: Okay. Yeah, that would be very helpful. Any entrepreneurs listening? If you go out there, there's a product idea right there for you. So, you know, when I am on Amazon or Booking or something like that, I can tell there's an algorithm that is managing what's shown to me based on the likelihood of me...what I searched for, my impression of what they think I want, but also, you know, there's a yield function here. Like if we show this impression to you, there's the highest chance possible that we'll generate some revenue there, meaning, you know, both parties will come together. Are you creating something like that or working on something like that or manage that in some ways so that what's shown between a brand and a retailer has the highest likelihood of, you know, yielding, let's say, an earning per click or something like that?
Ryan: Since we last spoke, we've launched an ad revenue line which has been incredibly successful. Most states are actually sold out and we're now in the process of releasing our second...you know, our V2 of ads and those are gonna be more closely tied to a lot of those metrics. There was a good amount of engineering work that went into that, but when you think about the marketplace, we have the purchasing community, we have the selling community at their points of action, and unfortunately, there's a lot of limitations around where brands can advertise and how they can get the word out about their incredible products, about their great medicines. And so, what we provided within our ad service is the ability for companies to do exactly that and really impact the purchasing. We actually have these like LeafLink ad report cards that we send around that share, you know, what the performance was, what the click-through was, how it potentially impacted card sizes, metrics like that, and we're looking to really continue to advance that all in the same line of just bringing a new, higher standard of what our companies and our space can use to grow their businesses.
Matthew: If you and I were sitting down right now having a cup of coffee with some cannabis entrepreneurs that wanna launch something successfully on the LeafLink platform, what would you honestly level with them about like, "Hey, you're gonna have a more uphill battle doing this and maybe a higher chance of success doing this or a better profit margin doing this." What would you tell them?
Ryan: Unless you're in one or two markets, I'd stay away from branded flower. I think that that's becoming... It was always competitive. It's becoming way more competitive. I think the world probably doesn't need any more vaping devices. They're getting so highly technical and scientific that it's hard for me to even...it's hard for us to understand it. I'm sure it's, you know, equally difficult for people who are hearing from 10 to 20 vaping companies, you know, every month. We've seen some interesting... You know, I think we're getting to the point that I really think it's...a large part of it is a quality and branding and price point game. I mean, part of when we say, you know, we want the industry to mainstream, which everyone does, one of the things that that means is you just...you're gonna get more involvement by, you know, bigger pools of capital, you know, smarter capital that have higher requirements for types of products that can be launched. And so, if you look at, I think one company that's done a great job and one of our great clients in California is dosist, they have really clean, consistent branding. They've, you know, distilled down the experience into understandable metrics. It's dosed, obviously, literally doses, but it's dosed in a way that's understandable even to the larger grouping of people who haven't yet tried cannabis products.
And so, I think if you were to make a product, it really should be thinking about less of the people that are already purchasing, more of the ones that are likely looking to replace liquor or some other...whatever else helps them relax, but in a way that it has education really built into and a consistency and a polished professionalism. That's just, I think what people are gonna demand more and more. And then there's other things that are, you know, even more granular than the product or the brand itself, but consistent pricing and like on-time delivery of product, manufacturing enough amounts that you're ready to deliver when an order's placed. There's like simple operational things that we've heard clients say good and bad, but sometimes the best things companies say... Like they assume the first things I said of it's a great product, at a fair price that, you know, their clients, their patients love, but then there's this other element of who shows up on time, who answers the calls when you know, when questions come in, if there's a broken package, who replaces it? When people buy things, sometimes boxes show up that have different items in them or different counts. All those things drive retailers and purchasing managers absolutely crazy. And so, having just a clean operation on top of a well-packaged professional good, I think that's where we're heading, but the space needs more of that.
Matthew: Great points there about purchasing manager. I mean, you talked about some ways that brands essentially disqualify themselves because they're not prepared or they don't know how to react or when something goes wrong, they're not there quickly enough. Is there any other things that you feel like purchasing managers like they think about that brands don't entirely care about enough where if they did, they would be getting more business?
Ryan: We just launched actually this program...well, earlier this year, we launched a program called the trusted seller program and we found it to be particularly powerful in a market like California that still has... I think I saw almost like two or three illegal shops to every one legal shop and it really is such a shame that there is an enforcement against unlicensed operators because what we see a lot of clients run into is, you know, if you're a shop and you're paying your taxes and following the rules and closing up at, you know, proper hours and then across the street someone's doing, you know, none of those things, it's sometimes harder to compete. So the frequency, something that we've seen, which is actually tied directly to success on the platform and how many units and volume brands are able to move is how quickly they were applied to sample requests and messages, how fast they were willing to hop on a call. We don't have any really review system within the platform, but we have now training modules that we put clients through and there's this badging system of trusted sellers that people could actually filter and search through because a lot of retailers, it's such a competitive space for brands that if a retailer isn't happy with a brand, there's probably only gonna be once or twice the same mistake made before they move to someone with a competitive product. And, you know, for, for both sides of the transaction, we encourage them to be as professional, as polished, as educated as possible to have really successful transactions. I think that's really what people are going for because everyone, you know, the companies that are growing, they wanna become more automated, replicate their success faster and the less errors within that process make it easier to do so. So I guess what I'm saying is there's operational challenges for a lot of these companies that we're trying to alleviate through education and trust and we began to productize some of that because it's something that we really feel is lacking in the space.
Matthew: Do you think if brands extended financing to retailers, that it would remove some friction for the sales process at all or is that something the market's not asking for?
Ryan: Well, every market has net 15, net 30, sometimes net 60 terms. What we found is ours has that too, it's just not structured. So what we see happen a lot is, you know, let's say, Matt, you're a purchasing manager, I'm a brand. I know you well. We've been working together for a year or two, I come by, I drop off a product and you say, "You know what? Right here's 50% of whatever I owe you. I'll get the rest when you come by again in, you know, three or four weeks." And then in the minds of a lot of the people, a lot of our clients, a lot of people in the community is that that's net 30 terms, but it's not, there's no contractual obligation there. There's no accountability if people move past those net 15, net 30 terms. And so, we have a lot of research. There's a number of white papers our team has studied around increasing transaction flow and companies growing faster when given proper net terms that are not too onerous. And so, we've recently launched a program called LeafLink Financial that allows clients to pay each other and we allow them to build in more structure around providing net terms and facilitating payments so we could lessen the pain of cash management, which is a huge issue for our LeafLink community and the cannabis community generally, but we could also have structure around net terms so that companies can grow in a responsible way and not get to the point, which is something that we've seen of having $15 million, $20 million in revenue and, you know, $3 million or $4 million in payments past 90 days due and they're having trouble making payroll. So it's a huge pain point. It's something that we're very focused on trying to solve.
Matthew: Okay. And you mentioned this last time you were on the show, but could you go over again how LeafLink makes money and what kind of fees, you know, a retailer or a brand pays?
Ryan: We started off the company really just charging a flat SaaS fee. It was important to maintain our position as an ancillary technology firm. We're not participating in transactions. So that is a monthly fee per brand to be on LeafLink. We launched ads, as I mentioned earlier, which has been, you know, about a fifth of our revenue through ads. And then the final revenue line. There's a few others that are kind of that are seedlings right now, I'd say, but the third is LeafLink Financial and the fees we charge attached to that financial product that's made available to the community.
Matthew: Okay. What about... We talked a little bit about flower already, but, you know, it's hard to launch a branded flower, but in terms of the price of where the marketplace is on cannabis flower wholesale, how does that impact transaction flow? Do you see a lot more increased transaction flow in the price drops or is there anything unexpected there?
Ryan: So on LeafLink, every state is its own marketplace. And so, there's variation from a state like Oregon to let's say Nevada, but people in Nevada can't see the price of those in Oregon, so there's like a...there's a state by state plateau or like an average that they tend to come to, but if you were to take the pricing of flower in Oregon, you know, and which at some point in the last 12 months could have gotten as low as, you know, $300, $400 and then you go to a place like Nevada and where there's products listed, you know, north of $1,200, $1,300, then, you know, that's...the variation doesn't exist as much within states, unless it's part of the brand's story. But if you were to look at the numbers across states, there's a significant amount of variation.
Matthew: So what kind of products do you think we'll see more of in the next year or two? You mentioned how dosist is making things just very simple and clean and clear. Is it just a move towards simplicity? Is there too much feature bloat now with cartridges and things or just, people are overwhelmed and they just wanna make a simple decision or where do you think the market's turning to? What's around the corner?
Ryan: Vape cartridges are probably gonna continue to grow, but I do expect, and I think there are some, you know, if not the winners, grouping of people that are winning very much so right now, and I'd imagine there's probably gonna be some consolidation around that in the next couple of years. There's a ton of money going into beverages right now, and it's a little confusing at times. I think a lot of it is based on R&D that's happening in Canada by liquor and non-cannabis beverage companies. It's just what they know. And so, I do expect that we'll probably see as a result of all that more beverage offerings coming to market. I don't know how that's going to be received, but I definitely know it's probably one of the categories as an industry that there's the most money, definitely the most money from the largest companies going into. I wonder how that actually impacts what we'll see, but I think the concept of non-sweet edibles, potentially beverages as well, things that are increasingly more similar looking to non-cannabis products, I think that's where we're gonna start to see this progression go because as the East Coast and states, even in the Midwest begin to transition, a lot of the states domestically that aren't on the West Coast don't have as much of a rich history of cannabis being a part of their local culture and I think that's gonna get factored into product creation so that we could...you know, brands will be able to appeal to new users, different user types, different patient types that may not be as familiar with the product from the get-go.
Matthew: It'd be interesting to see if there's more brand loyalty once some cannabis drinks start to take off. When I was in college, I worked on a beer delivery truck for a while and I asked one of the owners of the distributor, I said, "Hey, when there's a like a recession versus like when the economy is doing really well, like what's the difference in your business?" And I was shocked. He's like, "It's only about 1%. It's so consistent, you know, month to month." I was just absolutely...because he's like, "People drink in good times and in bad times." I thought, "Yup, there you go." You know, there's such an allure to the drink market because you can really hang your hat on it once people decide they're a Budweiser person or a Miller Lite or, you know, an IPA and they kind of tend to gravitate that and weave it into their life to some extent. So I can see why there's that interest there, but who knows if there's gonna be the loyalty like there is with alcohol. It could be a totally different animal.
Ryan: We shall see. I mean, this'll be when the recession eventually...whenever it comes, it'll be the first time that the industry's been this legally mature to...and see how it endures, but I'd imagine it's probably not too different. We'll see.
Matthew: Well, Ryan, I know you do a lot of interviews with, you know, candidates to hire them. I'm interested to understand... You know, we see studies come out and say, "Oh, these are the job skills that are, you know, trending and that employers are looking for," but you know, maybe in your last few hires or from a technology point of view, what do you consider the most important skills for a candidate to have when you're bringing them on board?
Ryan: Well, we just closed our Series B round. We raised $35 million like 3 weeks ago and we're really looking for...we wanna maintain this culture that we've built here of really, you know, hungry, execution-focused, trustworthy, high caliber, intelligent people. We actually have a number of cultural pillars that we really grade against their, you can see them on our website, but we grade against in the interview process. But one of the things we're going through now is, you know, we're a team of just over 80 people. We have almost 40 open roles and we're really bringing in more specialized skill sets and one of the things that's really important to us is to welcome people to the team that can take efforts that we've begun as, you know, as a few generalists here start some of these, let's say like a new product offering or a new revenue line and take that to the next level, but be able to pursue it and have the hunger to do it as a team of one, at least in the beginning. One thing that we're trying to control for is bringing on, you know, ABC grade person that has worked for an amazing company, has gotten to, you know, incredible schools, but they...you know, what if they come to LeafLink and the first day they wanna hire 10 people? You know, we still wanna maintain that scrappy cultural foundation, nature that we have as a company here at LeafLink and something we're really trying to protect against while at the same time trying to bring in increasingly, you know, skilled, hungry individuals that we can build together with.
Matthew: Okay. So it sounds like you mentioned having the generalist but then being able to focus, so kind of being able to go from Swiss army knife, do anything down to a scalpel, specialized skill and then move back and forth between those two things.
Ryan: And having team members with each of those different skill sets, however varied they might be, be able to work together and know the value of one to the other. I think that's, you know, another thing that we, you know, we've heard a lot of pain points around scaling startups is people tend to...everyone has a lot of ownership over what they do, but, you know, not being open to welcoming new faces, potentially even more experienced faces could really create gaps in our ability to grow. And so, one thing Zach and I have always been really excited about on some of the meetings, we're most pumped afterward are when people are taking ownership, or presenting new concepts, or executing on ideas, or even an interview, sit down with someone and we've had interviews where people are talking about things and it's almost as though they've been in our executive meetings and they're touching on topics that we're thinking through all the time and leaving those meetings excited, like what if we could bring that person here to LeafLink to build with them and have...you know, create with them for the LeafLink community and the cannabis industry. I mean, over 90% of the people at LeafLink wouldn't likely be in the cannabis industry if they weren't working here with us. And we take a lot of pride in that because, you know, back to what we said earlier about bringing a new standard, a higher standard to our clients where we believe they deserve, that's something that really keeps us motivated.
Matthew: You know, you've, raised capital before and you just closed a round. How do you feel like that has changed over the last couple of years? There's obviously probably more acceptance as you see more state legislatures creating favorable laws, but are the questions you're being asked different than they were two years ago?
Ryan: They are. They are. We, you know, we did our... We've raised $51 million to date. And when we spoke, I guess, Matt, when you and I last spoke, we probably had just closed our seed probably around...just had a seed round. And that round we did with a company called Lerer Hippeau, which is an institutional, you know, VC, great investor out of New York. And we were the first cannabis deal they did. And we took a lot of pride in being the bridge for them to get educated on the space and learn more about the industry. They've done three or four deals after us in the industry and, you know, similar to the deal we just did for the B with Thrive, you know, two and a half years later from that last deal. They've haven't made any other cannabis investments. We're the first bridge, but it's part of this like bringing knowledge to this larger audience about all the incredible things that are happening.
I'd say the nature of the conversation has definitely changed. There are people, there are funds that in the last 9, 12 months have been inbounding to us that we really couldn't get in front of three years ago and everyone knows the question of is it going to be a large industry, a great space, a powerful plan? Those questions are gone. There's inevitability. And even if we're on a call with someone now and they're not aware of those three things, there's probably something more fundamentally wrong with their operation or how they're thinking generally because it's just so clear. And so, the conversation and questioning is less around, you know, what happens. I mean, it was a little while ago now, but like what happens if Jeff Sessions wakes up one morning and says, "That's it?" Those questions don't really come up as much and it's really more now on, you know, how is the industry progressing. How... It becomes more of a conversation around our product and our team and what we're providing to the LeafLink community because it is at the end of day, we are a tech company and that's how we, you know, we wanna be seen. That's the value we wanna bring to our clients. And I think investors are starting to see that too. I do know that, I'm speaking from a technology ancillary company perspective, I do know that it's still challenging and a very...potentially very challenging for plant-touching companies to raise capital, particularly from name-brand funds or institutionally-backed investors. But even that's changing too. Like the idea of not touching a plant seems to matter less and less every day.
Matthew: Okay. Ryan, I like to ask a few personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Ryan: So I can give you a book that... Yeah, so there's one book that I'm reading now that I think I'm excited about it because whenever I start reading it, I have to hop off the book and onto the website. So it's called "The International Bank of Bob," and I don't know if you've heard of it, but it's about this online lending platform called Kiva, not related to the cannabis company, where you can lend, you know, $25 amounts to entrepreneurs.
Matthew: Oh yeah, I've done that. I've done that in other countries. Microloans. Yeah.
Ryan: Exactly. There'd be like a mother who needs more like sorghum to sell at her shop or, you know, wants to buy more fish and these small amounts make... And it's not interest-bearing loans, but it's basically around this concept of empowering entrepreneurs or people in developing countries to kind of like literally learn to fish and then they can grow their business and there's no interest on it, but they do pay it back. And I think it's just so much more valuable and aligns well with, you know...even though I think a lot of our cultural like execution and building and creation here at LeafLink... But this book, in the book, the writer, he was a journalist, started lending through the platform and then spent a couple of years going around and visiting all of the people that he actually lent the capital to in these developing countries and basically profiles them and like the impact that, you know, a $500 loan had on this family in Honduras, like things like that, which is really, I think, powerful, interesting and it plays into like value of network effect and community online and all of these things that we spend all day thinking about, but in a personal betterment type way. So I've really been excited about invest...or, you know, donating, investing, however you wanna call it, through that platform, but also then, you know, this book particularly is something I'm thinking about lately.
Matthew: Yeah. The repayment rate is amazingly high too for you think the difficult circumstances a lot of these people are in. So that's really cool. What do you think is the most interesting thing going on in the entire cannabis field right now besides what you're doing at LeafLink?
Ryan: On the regulatory side, there seems to be... I think we're at a boiling point of social acceptance and the regulations seem to be catching up. And I often wonder if we'll ever see full legalization in the way we ideally think about it. And so, I think a lot of like the states act and some of these other pieces of legislation that allow more access to financial institutions, I think that that could be nearly like de facto legalization. And so, I think regulators and senators and even just like the number of presidential candidates or potential candidates right now that support legalization, I think we're gonna probably look back in 10 or 15 years. And although it still may not be legalized, there's some regulations that are being pushed through in pretty creative ways that, you know, may be effectively legalization or at least create enough band...you know, room for states to pick their own way. So that's something that I'm really excited about. I think there's a number of... This plays into a bit on LeafLink Financial, but some regulatory tech offerings that are coming to market as well to further support banks and financial institutions to be more accessible to the cannabis community. I mean, it's really such a shame that because companies on LeafLink, companies in the space generally can't use a lot of these financial institutions that are just taken for granted, other industries are almost forced to operate as if they were drug dealers. And I think when that changes and some of the regulatory technology that's coming around on tools to know your customer and things that lighten the load of financial institutions to due diligence on...to have due diligence on companies will be like, you know, almost an unappreciated win. That's something that I look back on as pretty impactful. That's moving along quietly, not getting a lot of attention, but there's a lot of exciting progress there lately.
Matthew: And here's a Peter Thiel question for you. What is the one thought that you have that most people would disagree with you on?
Ryan: If you asked most people, I think they would agree that the smarter you are, the better. I think that there are other qualities that in terms of building a company, in terms of serving your client, in terms of getting to wherever you're going, regardless of what your goals are in life are potentially more. And I actually think if you were to think about intelligence on a scale of 1 to 10, I think there's a plateauing that starts to happen around 7 or 8 and then if you go even further, you start to get to this level of specialization that actually becomes quite limiting. So I'd probably say that intelligence past a certain point may not actually be that valuable and has like a diminishing return. And there's other things around, you know, being comfortable being uncomfortable, and making errors, putting yourself out there in ways even when you're not completely sure that are actually more valuable to get to where you're going.
Matthew: Great points, great points, diminishing returns on intelligence. There's other skills that can shore things up and take you across the finish line.
Matthew: So, Ryan, as we close, how can listeners find out more about LeafLink, retailers and brands, you know, apply to get online. Please give us the details there.
Ryan: The best way to find us is at www.leaflink.com. Well, you can also reach out to us at email@example.com or firstname.lastname@example.org. A bunch of us still get all those emails and we can connect with you there, especially connect to you with, you know, the teammates that are professional leaders in your geographic area. Feel free to reach out that way. It's definitely the best way to get in touch with us. And, you know, we love getting back within a day or two at most, so happy to connect that way.
Matthew: Great. Well, Ryan, thank you so much for coming on the show. Your business has really grown in the last couple of years and congratulations on all the hard work you've put in.
Ryan: Thanks a lot, man, and congrats to you on this podcast and we hear about it all the time. So it's an exciting growth too.
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