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This Canadian Company Is Revolutionizing The Retail Experience…With Music

ben kaanta westleaf

The Canadian cannabis market continues to mature and flourish under a liberal national legalization policy, and here to help us understand the latest trends in Canada is Ben Kaanta, COO of licensed producer Westleaf Inc.

As a vertically integrated Canadian cannabis company, Westleaf has significant assets operating under development across the value chain. The company builds and operates cultivation, extraction, processing, manufacturing, research and development, and wholly-owned retail. 

This includes Westleaf’s new retail brand Prairie Records, a unique dispensary that creates an unparalleled purchasing experience celebrating the inherent tie between music and cannabis.

In this episode, Ben shares with us an inside look at Prairie Records and where he sees the Canadian cannabis market heading in the next few years.

Learn more at https://www.westleaf.com 

Key Takeaways:

  • Ben’s background in mechanical engineering and how he came to enter the cannabis space
  • Differences Ben has observed between the cannabis market in the US versus Canada
  • How Westleaf has evolved since it was founded in 1992, including the scope of its grow operation and the products it currently manufactures
  • How Westleaf came up with the idea to create a record store retail experience
  • A deep dive into Westleaf’s strategy in determining where to position its dispensaries
  • An inside look at the Prairie Records dispensary and the unique customer experience it works to create
  • The capital-raising process involved in launching Prairie Records
  • Westleaf’s upcoming initiatives and Ben’s insight on what Canadian cannabis will look like in the next 5 years
Read Full Transcript

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

The Canadian cannabis market continues to mature and flourish under a liberal national legalization policy year. Here to help us understand the latest trends in Canada is Ben Kaanta, COO of Westleaf, a licensed producer, or LP, in Calgary. Ben, welcome to CannaInsider.

Ben: Thank you, Matt. It's a pleasure to be here.

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

Ben: So today, I'm actually located in Calgary, Alberta, which is home to Westleaf's headquarters.

Matthew: Okay. And I'm in Chicago. Tell us, what is Westleaf at a high level?

Ben: So Westleaf is a vertically integrated Canadian cannabis company. And what I mean by that, some people toss that term around, is that we actually own control or have interests and assets across the traditional value line of the chain. So that includes cultivation. So we actually grow our own product. We have extraction and manufacturing capabilities where we will extract the oil out of the flower trim and convert it into end products. Additionally, we have product branding and we actually have our own retail spaces as well.

Matthew: Okay. Ben, can you share a little bit about your background and journey and how you got into the cannabis space so we can get some context of how you ended up in the great white north?

Ben: Yeah, happy to do that. So I actually started off as a mechanical engineer, worked on ion thrusters and some other research for NASA. From there I went into product development for biomedical instrumentation, primarily on cancer diagnostics. And that led me to a company where I did operations, and oversaw the startup of several particle accelerator-based cancer therapy centers. There's actually, while I was working there, a friend of mine introduced me to Mjardin, who you've had on this show before, and at the time they were one of the largest producers of legal cannabis based out of the United States. So I worked there for a couple of years as their director of operations where we saw the cultivation of several indoor and outdoor grows and as well as some greenhouses. And that was a great time, and several colleagues and myself, we eventually split off and developed our own small company doing similar type of work, but mostly on the advising space.

And between that and in our time in Mjardin, we'd actually consulted in 11 different U.S. states, 5 countries, operated in 24 different facilities and we designed over 40. And so we really loved it, but one of our first clients was Westleaf. And we started working alongside them for several months and they actually asked us to join them early on and we said, "You know what, we're kind of enjoying our own thing." But we watched them develop their strategy and how they're going about their process for working in Canada and their retail strategy. And we fell in love with it and we just couldn't say no after a while, and we decided that we had to be a part of them. So we ended up joining them all as executives.

Matthew: Okay. Okay. So you've been involved in the U.S. cannabis market and now in the Canadian cannabis market. What are kind of the differences between the two? How do you compare and contrast those in your mind and keep them separate? What are the big themes and how they're different in your mind?

Ben: Yeah, so as you know, the United States is kind of funny in that there's not one contiguous market. So every market there is a little bit different. That said, there definitely are some things that are unique about Canadian cannabis I've seen. And I'll break it down kind of by the different verticals here. So if we look at on the cultivation side, one of the things we noticed is that since Canada's program was originally started as a medical program with mail order, that really drove the cultivation companies be focused more on efficiency more than quality.

So, just like a brief example on that, when you look at product at a dispensary in the United States, typically it's hand-trimmed and there's a...very much concern is put around the aesthetic appeal of it. Whereas what we'd see in Canada is that there are using processes that valued just getting that product from harvest to the customer as fast as possible, and little things such as using whole bunch of machine-trimming versus hand-trimming would reduce the aesthetic appeal, but also knock off a lot of the trichromes on the extraction.

And another piece we've seen is on the extraction side, right? So this is similar to other young markets. There aren't as many products available. And so, for example, today, you can only get extracted oils and capsules. And on October 17th, they're gonna be opening that up to more products such as vapes, edibles, topicals, things you might see more in the United States markets. But what that means is that today's extractors really don't know how to make all these other products. And then finally, I would say that on the kind of the retail and branding side, this is why one of the biggest differences that we've seen, Canada is very restrictive on what you can do. So if you got to buy cannabis today at a retail store in Canada, what you'll find is that 80% to 90% of the label is warnings and facts from Health Canada, and you have the small little space about the size of a U.S. postage stamp where you can put your brand. So there's really not a great opportunity for people to brand up here.

Matthew: Good point. So how do you brand? That's kind of a difficult question. It's kind of word of mouth, I guess, is experience and aesthetics. Some of the things you talked about are gonna become a big, big part of it. Also, there's a lot of challenges to vape pens and vape cartridges, you know, viscosity, and kind of the additives to make sure it all works properly. So I'm sure there will be some hiccups in the beginning that you've seen in the U.S. that you can bring over. Is there anything else that you feel like gives you maybe a little bit of advantage having worked in two markets?

Ben: Yeah, so I'd say there's several different things there. And you touched on a few of them. You know, so one is aspect. You know, we've worked in these 24 different cultivation facilities, so we've learned a lot about what works well and what doesn't work well. And one of the things that we're seeing is companies who are going big, they're announcing these, you know, million square feet facilities. And we've seen this happen in the United States before where people will do this, they'll take an old greenhouse and they'll think, "Hey, this could grow great tomatoes, surely it can great cannabis." And what they don't take into account, that cannabis is a unique plant and it's held to different standards such as the microbials. And so they'll grow a bunch of product, but it will all fail. So on the cultivation side, we were very thoughtful and careful about when we designed our facility, about making sure that we can go craft at scale.

And on the extraction side, you're absolutely right. There's a lot to do with the viscosity, but also even whose hardware you use and how often it will fail. And so to that end, we actually partnered with a company out of Denver called Xabis. And so they've developed over 24 different form factors and 200 unique skews working in multiple extraction labs across the United States. So we wanted to take their skill sets and knowledge because we recognize that there's a lot of mistakes that people are gonna learn the hard way and why not fast forward ahead and just cut to the end working with experienced people.

I think the one other thing that we've seen, you know, when I look across the United States markets and how many we've seen kind of mature, is that you'll see the economic shift throughout that value chain. Early on there's a lot in cultivation and some in retail. But the best thing to do that we done is to be vertically integrated so you can control that whole value chain. So those early stages you can capitalize on, you know, where some of the good profit margins are and the cultivation side, but over time it will shift. But additionally, you wanna have control over your supply chain. You know, even on the extraction side, we've seen companies who struggle to make sure they're getting good, consistent feedstock for extraction. And by us growing our own product, we can make sure that we're providing high value and good quality product for our end consumers, but also for our retail stores to pull through and for our extraction facility to use as feedstock.

Matthew: Okay. And just a practical question here, I'm pretty quick to spot Canadians when I hear the word of about instead of about, or when they say A to Z. But other than that, I really cannot tell I'm speaking with a Canadian. Is there any little things that you do, little idiosyncrasies that reveal your American-ness and kind of out you to your new Canadian countryman?

Ben: Yeah, it's funny you mentioned that, there's that and a couple others I've found. Yeah. In general, it's interesting to me. Calgary is very much like Denver where it's a busy city, right on the prairies up against the rocky mountains, but there are few things, I think, give me away. One is I've had to learn to say washroom instead of bathroom. Another is that I found that when I use my credit card, and this is just a funny little thing that, sometimes they'll require me to give a signature, whereas the Canadian credit cards almost never require you to give a signature. And then the final thing that I've certainly saw that some this weekend is that you do not go hiking in the mountains here without bear spray. There is a lot more bears up here.

Matthew: I bet you don't wanna find that out too in the wrong way.

Ben: No, you don't. So they're pretty serious about that. And I appreciated it this weekend.

Matthew: Although in boulder I did have a bear family live in our tree out front, a mother and two cubs, and they came back more than once. And you hear him in the middle of the night and that is up close and personal because you can...they breathe so loud, especially the mother is that, it's like, you can feel their breathing like through the wall. It's just unbelievable. Like the power of those creatures. And to watch them scale up a tree, they can just fly up a tree in just a moment, they're up.

Ben: That is amazing.

Matthew: I hope to never have to out run one of these things. So you carry bear spray, and have you had to use it yet?

Ben: I have not. But it's interesting when you read the directions, they say to make sure to aim down the nostrils of the beast, which I'm kind of concerned. I didn't wanna to get that close, that my aim would be that good.

Matthew: Yeah. There's a lot of YouTube videos of people shooting bears and mountain lions pretty much in the face with those things and it really seems to work. I mean there's a lot of power that comes out of that bear spray. You guys seem to shoot it pretty far.

Ben: Yeah, yeah. Thankfully I haven't had to use it yet or practice it, but it's good to know that it works.

Matthew: Yeah. Okay. Well enough about bear spray here and wild animals. Let's get back into cannabis. Okay. Now tell us how many licensed producers, or LPs, there are in Canada.

Ben: Yeah, so the last report I saw that, which was May of this year, 2019, was that there were 175 approved licenses, which is up from about October last year when it's 132 when it first become more technically legal. But according to Health Canada, there's actually like 614 applications in the queue as of March of this year. So there's still quite a people, a number of people in the queue, and they've recently made some changes where they are making it so that they're prioritizing applicants who've actually built out their facilities, which is great, because there's a lot of people who have an interest in it, but not everyone has actually gone through the work to design and build out a facility.

Matthew: Okay. And what types of products are available for consumers to buy right now?

Ben: Yeah. So right now you can buy flour and pre-rolled joints. You know, on the more traditional side, as well as they have derivative products that are quite some right now, so oils, such as tinctures or sprays and capsules. And we actually have our own brand of a store. It's called Prairie Records, which we sell those and we really focus kind of on the higher standard portion of that chain.

Mathhew: Okay. And then, what's coming down the pike in terms after October 17th?

Ben: Yeah, so they're gonna open it up pretty well. There's still gonna be a lot of restriction on the branding side of things, but they are opening up vape cartridges. So I expect to see a broad market there. And as you know, in the United States, in markets where extracted products are available, you know, it takes up typically, you know, 50 or more percent of the market. We expect to see a lot of vape cartridges coming online. Additionally, they are saying they're gonna allow concentrates, you know, so the shatter and wax type of products. Candies, beverages, chocolates and topicals are some of the different things. They're all going to be coming online there. And it's gonna be a slow roll is what we're all expecting. You know that October 17th will happen, then you'll start to see more and more products kinda coming online towards the end of this year and the beginning of next.

Matthew: Gosh, I would think that's gonna be a huge demand out of the gate. It's like getting this whole new spectrum of products that you didn't have access to before. I mean, that's exciting.

Ben: It is.

Matthew: Okay. And what's the scope of your grow operation? Give us a well more detailed what that looks like.

Ben: Yeah, so we have a grow operation that's coming online up in Saskatchewan. It's in the Battleford area. And so that place is gonna be about 100,000 square feet when it's fully built out, a little bit over than that, and able to produce 14,000 kilograms of dried cannabis flour in the course of a year once it's fully built out. But we also have a extraction facility that we're building right here in Calgary. And that's gonna be...we're finishing up construction actually as we speak right now. So it's gonna be coming online here this summer and it's gonna be able to produce or actually process about 30,000 kilograms of cannabis feedstock per year. So that's quite a bit. And from that we're gonna be able to produce all those products we discussed. So of course, day one type out products such as the, the oils and tinctures and gel caps. But then we're very much interested in targeting all these other products that are gonna become available to us, such as the edibles, the vapes, topicals, and other high value products.

Ben: How about your background in engineering from NASA, particle accelerators, and everything you were doing before? Do you use that to solve any automation or growing problems or think about things perhaps differently than another executive mind?

Ben: Yeah. So it's hard not to look at things and see problems or ways you can improve, particularly in a young industry. You know, recently one of the areas that we've been looking a lot at is the harvest process. So when you have a crop and you have to harvest it, there's a lot of labor that goes into that. And because there's a high chance of microbial contamination during that period because the plants have been cut down, it's lost a lot of its natural defense mechanisms. A lot of people are touching it. We really wanted to focus on how could we reduce the labor, but also the microbial contamination while maintaining a process that will end up with a high value product? So we've been looking a lot at what are different tools that we can use. And you know, even from just moving the product from point A to point B, as well as helping the people in their work so that they can optimize that and decrease the labor and microbial contamination.

Matthew: Okay. And you mentioned Prairie Records, the dispensary brand, but since we're in a audio medium here, it's kind of hard to express what this looks like. I've seen pictures and the design concept and it's really interesting. Can you kind of walk us through what it would look like to walk into a Prairie Records dispensary? What that look and feel of it is like?

Ben: Yeah, happy to. So this is actually one of the things that really stood out to us, and one of the reasons that the three executives here from Colorado all joined the Westleaf team. So if you look at most dispensaries or cannabis retail places, you'll notice that they kind of gravitate towards one or two different tropes. One is the head shop, you know, so you'll see a Cheech and Chong posters on the wall, tie dye. And I think there's still a place for that in the market, but it's not what's going to attract millions and millions of new users to the market. Right? That is intimidating. The other is you see what people try to say is the Apple Store of cannabis.

Matthew: I've seen a lot of that.

Ben: Exactly. And there's also nothing inherently wrong with that in my opinion. You know, it's a very clean aesthetic. It can be warm and inviting, but it also isn't any different, you know, so there no real way. If you're just another one of those, how do you stand out against everyone? You know, if you were to remove the color palette, it would be hard to tell apart some of those different stores. And we really wanted to do something different. So at a Prairie Records store, right as you walk through the door, the first thing you'll notice is it actually looks much more like a modern day record store. The difference is when you start flipping through the stacks of our records and you are looking at those sleeves, what you'll find on the sleeve is different names of strains or cultivars. So you'll see you a Blue Dream or Girl Scout cookies on there.

And when you take it over and you flip it on the back, you'll find just a little bit of prose on how this type of product might make you feel or what kind of inspired this different cultivar. You'll also find a bunch of information about how much CBD and THC there, what's the strength of that strain, you know, what are the different ways that we offer it such as a pre-roll or just flour. And even a little bit about, you know, what music this pairs with. Is this more of a sleepy time type thing or is this dancing on the sunshine as you walk into our store lab, broken down those different sections? So it really kind of plays off of this instinctual tie that we've all had between music and cannabis.

Matthew: Okay. It's a great idea, really is a great idea. If you can't be first in a category, create a new category where you can be first and own that. So if anybody tries to do that after you, it'll be a comparison. Like, is this as good as Prairie Records? So that's really cool.

Ben: Yeah. And the other thing is you mentioned that as, you know, we talked about some of those branding restrictions that make it really difficult for LPs to stand out. And what we do by having this experience where people can walk in and they have a tactile experience with something and they're flipping through it, they're looking at an album that has colors and it represents the brand that LP wants to promote, it allows them to give branding and an environment that otherwise wouldn't allow that. So with our own products as well as with our other partners, they can flip through there and they can actually see something the way that that LP wishes that they could brand it.

Matthew: That's really cool. And tell me a little bit about how you decide where to position a dispensary. I mean, what's the thought process there? I know, you know, some companies say, "I wanna be close to like a natural grocer or a high end wine bar or coffee shops." There's a lot of different strategies there. I only know, I think Kensington's Lane neighborhood I'm familiar with in Calgary. Maybe you can just touch a little bit about what's your thought processes there.

Ben: Yeah, some of that is similar to the aspects you said there, which is we're focused, I would say, on finding high caliber location where there's a good foot traffic, touristy areas or high traffic areas. But we're also trying to find areas that kind of line up well with the vision of, you know, we're looking for something where there's maybe some recreation going on there and socialization, but we're trying to get it so that there's listening emotions of happiness, discovery, enjoyment. So a couple of examples. Our flagship store right now in Saskatoon is on Broadway Avenue, which is a great walking street. You know, lots of hip cool bars and restaurants along there. It's a very vibrant, energetic community. So it fits in perfectly. You walk past our store, there's great music playing, you walk away then, you hear the music and you can start shopping. Similarly in Calgary, we're gonna have a store located at Palo Stater [SP], which is a music venue. And so it's fantastic for people who, you know, are going to that concert. Boom, we're right there, and you can stop in and experience our store.

Matthew: Yeah. What's kind of the cultural norm in Calgary versus let's say a city like Denver in terms of consuming cannabis outside? What do you see there, just anecdotally?

Ben: It's pretty similar in many ways and that, you know, it is frowned upon to consume largely in public, however, you walk down the street and occasionally get the usual smell of cannabis.

Matthew: Yeah. And where are you in the capital raising process, and what's the process been like since you got started raising capital for Westleaf?

Ben: Yeah, so we started over a year ago, actually really kicked off with a strategic partnership with Thunderchild First Nation, which is an indigenous band in Saskatchewan. They invested $8 million in the company, and it's its largest shareholder, and actually the former chief sits on our board of directors.. Yeah. So that started off and then a few different things including the vertically integrated strategy really kind of put us on the map. And since then we've developed agreements and supply agreements and investments with companies such as Xabis, Tilray, Vivo, and Candera that have allowed us to kind of leverage that and continue to grow. And then I think the one other thing that's pretty unique is that we were able to secure about up to $24 million of debt financing from ATB Financial, which is one of the first traditional lenders I know of to enter the cannabis space in Canada.

Matthew: Okay. I just wanna circle back to extraction really quick. So I'm guessing you're probably doing CO2 extraction, that's kind of the way you're going?

Ben: Yeah, that's correct. We're focused right now on CO2 for several different reasons. One, it's very clean and it's also very diable, something you can dial in. And Xabis has a quite a bit of experience on that and they've got quite a number of years of doing extraction on that.

Matthew: Okay. Okay. How do you kind of measure in your mind how much capacity you need when this market changes on October 17th and you'll be able to have all these extracted products, and how are you kind of gauging how much you should have ready? I mean, that's kind of an art and a science, I guess. What do you do?

Ben: That's exactly what it is. It's part art, part science, and part crystal ball. You know, the great thing is that we do have other markets such as Colorado and Washington and California to look at. That said, you know, so you can predict a little bit about what the market demand is gonna look like. And I always look at, you know, we've done quite a bit of modeling on different markets and what we've seen is that there's micro and macro trends, right? So within each market, as it comes online, there's an adoption rate, but then when you look globally, you'll see that there is overall a greater acceptance going on for cannabis and particularly CBD. And so that's kind of amplifying things. But then there's this last piece of we all kind of know what the other LPs are doing, but you don't know for sure.

So, when you come to your production forecast, we've made it so that we can be quite dynamic, an ability to just scale up or scale down how much production we want to do based upon what are the needs and demands of the market and what else is going on in this market, how much white space is there to grow in different areas?

Matthew: Okay. And how do you think the Canadian market will mature and evolve over the next five years?

Ben: Yeah. Well, so I think there's a few things. One is, you know, we are seeing globally there's more and more acceptance, and I hope that continues and I've certainly seen that as a trend. I've seen some of the negative stigmas being shattered there. You know, I think more and more people are coming up out about how they use cannabis. You know, whether it's for recreation or it's to help treat some mild conditions such as anxiety or depression or other concerns they may have. Additionally, I think that I suspect what we'll see happen over time is that some of those branding standards will relax a little bit over time. I think that people will start to see that the parade of horribles isn't happening and that there are ways that if we want to try to muscle out the black market, you have to learn how to compete with it. So there's things there of...and the black market today in Canada you can find well-branded products for cheap, and that have higher dosing of what would be allowed today under the current regulations. And so I expect that Canada will try to combat the black market by attacking those items.

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

Ben: Yeah. So there's been a few. You know, one that really stands out, and this guy does a great Ted Talk. He's a gentleman by the name of Daniel Pink, wrote a book called ''Drive.'' And what he does, he looks at what motivates us, and he really looks at and he explores intrinsically versus extrinsically motivated individuals. And I've always really found, I enjoy working more with people intrinsically motivated. And so I found this to be a great read of, you know, what is it that helps reward those people and then how do you make it so that people are more likely to be intrinsically motivated than extrinsically motivated.

Matthew: Oh, cool. I think I ever read a book from him called ''A Whole New Mind,'' and I thought that was excellent too.

Ben: Yeah, he's great.

Matthew: Yeah, he really helps you see things in a different way. Is there a tool that you or your team use that you consider valuable to your productivity?

Ben: Yeah. So, you know, it's interesting, I've been watching Microsoft kind of evolve over the last few years and they have a product out called Teams, which is a very similar to Slack, which is a kind of an instant messaging chat tool. But it's really cut down on how much we need to use email and it gets people just quick updates and anyone can go in there and check in on the status of a project. Additionally, it allows us to collaborate much easier on documents. And so it used to drive me nuts when someone would send out a press release, for example, to eight people and say, "Hey, everyone, can you take a look?" And then eight different people are exchanging emails and sometimes they're talking about the same thing, sometimes not. And this allows us to all work on the same copy and to be much more efficient.

Matthew: That's a great idea. How frustrating is that when you have a spreadsheet being updated by so many different people? It's madness. That makes sense, or Word doc. What do you think is the most interesting thing going on in your field besides what you're doing?

Ben: Yeah, I think there's a couple different aspects going on. You know, one is that there is a lot of focus in the United States and in other nations about what could happen in the future with cultivation, for example, and where is that production gonna be done. I also think it's interesting to watching it now that Canada has done a federal legal program. There's two different things that kind of in mind. One is a medical research. As I mentioned before, I've worked in biomedical instrumentation but I also worked in cancer therapy. And, you know, with that heavy analytical background, one of the things that I really would love to see more of, is some great research that shows, you know, how can this plant help people and get rid of some of the stigma of that. Another thing is that, you know, with all of these new products coming online and market access, I expect it's gonna be a lot of innovation in Canada on new products and different ways to deliver it. And we have a few things up our sleeve, and hope to talk about those in the future.

Matthew: And then a Peter Thiel question for you. What is the one thing that you believe that most people would disagree with you on?

Ben: Yeah. You know, there's been a lot of talk about cannabis and the cultivation of it becoming a commodity, and I think there's an aspect of that's true, but I actually disagree in that I think that there's always gonna be a space for people who can grow a high quality product that really speaks to a certain market. And so that's something that we've really focused on and we put a lot of our strategy around, is the ability to grow craft at scale. You know, we're not gonna be everything to everyone, we're not gonna be the person with a million square foot facility that's just pumping out a lot of basic product. But I think that there actually is a space for people who are not growing a commodity.

Matthew: Ben, as we close, please let listeners know how they can find you and learn more about Westleaf.

Ben: Yeah, so you can find out more information on our website, which is www.westleaf.dot. And additionally, if you wanna learn more about Prairie Records, which I definitely recommend checking out, you can go to prairierecords.ca, or you can check us out on Instagram and Facebook at prairierecords.com

Matthew: Well, Ben, all the best to you. We wish you good luck, and keep us updated on how things progress in Canada, and I really want to see a one of the Prairie Records store in person so I can experience that.

Ben: Yeah, please come to visit us. It's a fantastic store. We have an amazing staff who are extremely knowledgeable, and they're beautiful stores.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more cannaninsider.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 feedback@cannainsider.com. 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 for companies featured at CannaInsider. Lastly, the host or guests on CannaIinsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingling you're listening will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episodes soon. Take care. Bye-bye.

Ep 267 – Hemp Entrepreneur Building a Global Hempire

paul benhaim elixinol

The hemp and CBD market are going global in a big way, and renowned hemp pioneer Paul Benhaim is here to help us navigate the waters.

Now the founder and CEO of CBD brand Elixinol, Paul has been involved in the hemp industry since 1993. His first commercial endeavor in the space was a hemp-based nutritional bar that quickly moved from a few thousand bars per year to multi-millions and is now sold under numerous labels across the world.

This lead Paul to found the industry-leading brand Hemp Foods Australia, which continues to provide the highest quality hemp food products available.

In this episode, Paul shares with us his insight on the market and the products he sees gaining momentum worldwide, including CBD powders and liposomes.

Learn more at https://elixinol.com

Key Takeaways:

  • Paul’s personal journey through the hemp industry and how he came to start Elixinol
  • An inside look at Elixinol and its mission to provide the highest-quality CBD products in the world
  • The most profitable products around the world and Paul’s predictions for future bestsellers
  • Japanese customer behavior versus that of American customers
  • Paul’s insight on different markets including Latin America
  • How Paul believes 2018’s Farm Bill will significantly change cannabis’ global mobility
  • Where Paul sees the price of hemp shifting in the next 1-3 years, especially as more and more companies move online
  • New hemp-based protein and food innovations Paul is developing through his Hemp Foods line
  • Paul’s advice on how to build customer interest and loyalty through packaging without overspending
  • Paul’s insights on what the cannabis and hemp landscape will look like globally over the next 5-10 years
Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider.com. Now, here's your program. The Hemp and CBD market are going global in a big way. Paul Benhaim, founder of Global Hemp and CBD brand, Elixinol, is here to tell us how the market is evolving and what to expect. Paul, welcome to CannaInsider.

Paul: Good day. Nice to meet you.

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

Paul: Today, I'm in London, England.

Matthew: Okay. And what is Elixinol at a high level?

Paul: Elixinol is the number one provider of hemp-derived CBD products on a global scale.

Matthew: Okay. And Paul, can you share a little bit about your background and journey, and how you got into the hemp space and came to start Elixinol?

Paul: Sure. Love to do that, Matt. I started off in the hemp industry about 25 years ago in the early '90s where I developed the first commercial hemp food product, actually in the United Kingdom where I am today. Which kind of feels like a roundabout place to be in my journey right now. So, when I developed that product in the early '90s, there was no commercial hemp products or cannabis products that existed.

And I saw the benefits of the nutrition from the hemp seed itself, containing omega-3 and omega-6 essential fatty acids, as well as a very high-quality form of protein which, and I was studying food and nutrition at the time, and that's how I discovered hemp. Then I discovered all of its many different uses, and I decided to make it my mission to take high-quality hemp products to as many people around the world as possible.

So, I've done that through my journey, from the hemp snack bar that's now in all the supermarket chains around Europe. I created the first hemp milk, which was turned into a hemp ice cream in the early '90s. And then I created hemp pastas, hemp breads, hemp sauces, hemp tea, hemp soups, hemp everything, basically. Until I moved to Australia at the turn of the century, where I was headhunted to come and create the industry there from scratch. Which, after working with some politicians, I thought wouldn't be such a hard thing. It wouldn't take long to persuade them based upon the science that I was aware of to allow hemp as a food.

That journey took a little longer than expected. It took 17 years, in fact, to allow hemp as a food there. And that little pause, I guess, in my commercial career did allow me to write nine books on industrial hemp and continue to support others around the world in becoming experts at communicating and creating the highest quality hemp products. That led me to creating Hemp Foods Australia, which is one of the companies that we own today. Before, it was actually legal as a food, it was completely legal business. And what we recognize is that we could grow the seed, we could produce the product, and we could sell the product as long as we didn't sell it for human consumption.

So we told people to rub it on their skin, and that seemed to work very well, with politicians coming to our factory, congratulating us on how many jobs we had created in the local area and region. We won export awards, all for a product that wasn't allowed as a food that everyone was eating quite knowingly, it seems. So, that irony obviously ended with a change in legislation, better late than never. And it was during that time actually that I founded Elixinol.

Elixinol is more focused on the cannabinoid content of hemp products. And those hemp products now are 45 different SKUs in the market with Elixinol. Elixinol was actually founded in Boulder, Colorado. It seemed the most sensible place five years ago, and we started that business mainly because of the support of legislation, and I had enough of, I guess, changing laws.

Even though I still find myself doing that today, and employing regulatory and compliance people who continue to lobby around the U.S. in the states as well as having similar people here in Europe where we are based today. So, that company in Boulder, Colorado really has spread out globally. We now have subsidiaries that we partly own in Japan, we have subsidiaries in the Netherlands, Spain, United Kingdom, and other places now in Europe where we're just entering. Which is two out of the three companies under Elixinol Global. The third company is a medical cannabis startup for pharmaceutical-grade high THC products for Australia only. And those three companies were all rolled up under the Elixinol Global banner in an IPO to become a public company in Australia just over a year and a half ago.

Which has been a journey in itself, of course, moving into the public arena. Working with tier one companies such as Deloitte's and the like, to ensure that our company not only produces the highest quality products, but actually has the highest quality systems, which I fully support to know that we can grow around the world to continue my mission of ensuring everyone has the benefits of the natural hemp plant.

Matthew: Okay. So, 45 products. That's a lot of products. Can you give us a sense of what your best selling products are in the U.S., U.K., Australia, and Japan on a high level?

Paul: Sure. Well, maybe we'll start off in Australia, because that's relatively easy. Because of the legal situation, there are no medical cannabis products yet, so they are coming soon, we believe. There are no CBD products because that's considered medical cannabis in Australia. So, hemp foods are our best selling products. And we think the newest product that we've recently launched which is frozen hemp burgers are expected to be our best-selling product here in Australia right now.

In the U.S., obviously, the hemp-derived CBD products are our best selling items, and our classic capsules and tinctures are very popular. Capsules, because a lot of people still don't like to taste what they're having, which is fair enough. And our tinctures are very popular because they actually taste good. So we have different flavors like cinnamint, which is a mixture of cinnamon and mint, and due to our production methods we are able to ensure that you don't have that really super bitter taste that some people get from CBD.

Our latest products that look like they may take over in the not too distant future include our high bioavailable liposomes. So, that liposome is basically our way to ensure easy access for our body to absorb the cannabinoid content from those products. And the other product that is now launched in Albertsons and Safeways around the U.S. one of 13 products in that chain, U.S. national retail chain, is our CBD powders.

So, that's a very easy way for people just to enter into the world of CBD, for like $2 or $3, you can buy a sachet of powder that's also high bioavailable and water-soluble powders that taste really great. You just mix it with water, and can have it any time of the day or night. So, we think that is probably heading into that number one or two spot. We'll see how that goes over time, of course. Hope that helps.

Matthew: I'm curious, do the Japanese take a different approach to trying and then regulating CBD, adopting it into their culture, because, I mean, we kind of have this in the Western world, or the, I guess, the former British colonies. And it's kind of like something that's evil that's now becoming not evil. Do they have that history with the plant, or how do they look at it?

Paul: Well, the Japanese culture is quite different and is very unique in itself, of course. So, cannabis actually has a super long history in many cultures around the world is what I've discovered in my studies. And one of those cultures is in Japan. Where hemp has been very much revered, particularly for the emperor, which is the equivalent of the royal family, I guess, in Japan. And the use of hemp or cannabis in ceremonies, in temples as well. So, hemp is really seen as this thing that's nearly untouchable. It's only for the very special people. But that means that it is in their culture. Sadly, the mainstream culture in Japan is still very much against anything that relates to the drug. So they're very anti-anything THC at this time.

Of course, there's a movement like everywhere else that is moving to change that, and I have no doubt that that will change over time. But I think that will take quite a way. So, for us to get CBD into Japan, it took a number of years to work with the authorities to get all the tests and proof that our products were basically THC free.

So, we only export our completely THC-free products into Japan, and we have very special licenses and paperwork to ensure that those products are of the highest quality. Japan is known for very stringent import regulations. So, we worked very closely with the government officials for many years, which led me to actually meeting the first lady of Japan, which was an excellent opportunity for Elixinol to, you know, connect itself with, I guess, the people most respected within the country. That's probably why we've been in the Vogue Magazine and Elle Magazine many times now. We were recently on the Tokyo train stations, and now sold in, you know, you can even buy Elixinol CBD products in the Tokyo Airport. It's promoted as a jetlag reliever over there.

But, the Japanese I think, really use CBD mainly for relief of stress and anxiety because it's a very fast-paced culture. It's very active. And I think anything that brings the population into more balance or homeostasis is very healthy for them. So we very much support that use over there. So, I really do feel that there is a tipping point being led in Japan right now. And a number of other Asian countries are watching very closely and feel like they will be hot on the toes of that country also.

Matthew: Can you give us a high-level overview of your revenue now that you're a public company just to give us a sense of scope and scale?

Paul: Sure. Last year, in 2018, we turned over nearly $40 million. And that was more than double the year previously, and we're on a continually steep growth curve as we move through 2019 now. In my opinion, we're just beginning our journey and we really feel that 2019 is the transition year. Since President Trump signed the farm bill at the end of 2018, the kind of conversations Elixinol has been having have really increased in their significance.

So, those conversations and due diligence with these companies is a process, we say, for this year in 2019. And I think you'll see some of the results of that before the year end, which I think, ultimately, will lead to significant increases in revenue in 2020. I don't think we'll be the only people that will be benefiting from the interest, but I do believe that we're one of the few companies, because of our vertical integration, high-quality systems and controls for stable and safe products, that we will be taking advantage of that more than most.

Matthew: And what about the Latin American market? How do you see that?

Paul: I think Latin American market is very interesting. And we've had definitely a presence in that market for some years now. We see a lot of press about different businesses looking to rely on the Latin American market particularly for the low-cost supply chain. And, don't get me wrong, I'm sure Latin American countries have that ability. We believe everywhere has that ability including in the U.S.A. We're using, I guess, scale high technology and efficient systems that we can meet or match, you know, even Chinese prices, who we also see as competitors in the global scale of things.

So, I think, for us, Latin America is more access to the markets that will open up in Latin America, because, like everywhere around the world, is that there is a need for these hemp-derived CBD products for many different uses. So, I think we're looking at it from that perspective and have been having some very long conversations for quite some time with some great organizations there. Again, similar to everybody else, everywhere else in the world waiting for clarification of legislation before any really big moves are made. So, we generally don't talk about Latin America and what we're doing there in detail, but I hope that we can do that one day in the near future.

Matthew: Okay. And you've been educating people about hemp for a long time. How has that changed over the last few years and contrast that to previously?

Paul: I think, you know, previously, my education was really on, you know, what is hemp, all of its different uses, and actually people understanding, you know, everything about a plant, really. Most people didn't know, even today, there is still, you know, some clarity required. You know, what's the difference between hemp and marijuana, for example. So, you know, I still explain to people that it's actually still the same plant. They're both Cannabis Sativa. And the main difference is really from a legislative perspective, which is related to the tetrahydrocannabinol or the THC content. So, those conversations still indeed happen.

But I think, you know, generally, the conversations are much more move towards inspiring people about how they can be successful in this industry and why it's still worth getting involved, in any level, even if you're, you know, just a reseller. The growing market and demand for this is still very significant. So, I'm very happy to move more to the inspiring stories of our success rather than just the basics, which a lot more people really do seem to understand these days.

Matthew: Where do you see the price of hemp moving in the next one to three years? And in your mind, do you see it as kind of an international price and then you break it down by countries, or do you look at it with kind of a country view and then say, "Well, this makes sense in the context of a global hemp price."?

Paul: That's a good question there, Matt. And I think the answer is not clear yet. And the reason it's not clear yet is because we don't know how fast or how big this industry will grow to. All we know is that it's growing fast, and it's growing a lot bigger. And what we can see is blue sky. We don't know where that ceiling will be. But at some point, there will be a ceiling. I don't think that will be in the next year.

I think it will be more in the three to five-year range, if I had to put a number on it, but please don't hold me to that because, you know, there is a lot of disruptive technology in hemp and CBD products. But when that ceiling is reached, I think you will see more of a commodity-based price. But at least in the farming side and the raw material side, I think there will always be a space for high-quality branded product goods and that's where Elixinol has positioned itself.

Matthew: Okay. And so, just in terms of the mechanics of how you get the hemp, are you contracting with farmers then, and they produce the hemp for you, and you just have a relationship with a bunch of different farmers? Is that how it works?

Paul: Well, something like that, basically. You know, with 25 years of experience in growing hemp around the world, one thing I have learned is to respect farmers. And I think we all need to respect farmers for the food and anything that they grow. And that comes out of me recognizing how hard it is to actually farm in this world, particularly if you're naturally farming.

So, all of Elixinol's products are farmed without chemicals. Most of it is certified organic. But all of it is without chemical farming. And that's not an easy thing to do anywhere around the world. So we continue to ensure that we don't put all our eggs in one farmer's basket we'll say. But we also want to have a control. So, the way we've done that is we've invested in a partnership with one of Colorado's largest water rights holders. Water is the equivalent of insurance policy in farming.

So we have a 50% stake in that farming venture. As well as that farming venture, you know, obviously knowing the cost of farming, making sure others know that we know the cost of farming, we're able to negotiate excellent contracts with other partners. And one of those other partners we've worked with for nearly four years I think now. This is our fourth year that we've been contracting out to them. This year, we're actually contracted out to a number of different farmers throughout different states in the U.S. as well. Mainly so we don't have to deal with that farming risk.

You know, we think we've got some of the best prices for farming that exists, even though we're contracting those out rather than owning all the farms ourselves. But the most important thing is that we don't have to focus on that risk. Ultimately, the raw material, you know, is not a major part of our costs still. You know, it's all in the formulation and creating the high-quality products, where we add our value in the most way.

Matthew: Do you feel like there's a need yet or in the near future for a hemp futures market where you can kind of hedge your risks, or you can lock in prices, and another side of that coin that the farmers can also lock in their harvest and have some sense of a sureness that they'll get a profit, and that type of thing, or is that just not a necessary component or talked about much yet in the hemp community?

Paul: There are some people who have pitched that business model to me, and I actually do find it an interesting business model. I think it requires the entire industry to jump on that to make it viable. And I think that is a possibility in time. But, again, it's like, you know, when is that time? Is that in 1, 3, 5 or 10 years? So, I don't know where that is. And, again, you know, right now, that's not how it's done in the industry. There are a lot of people promising many years, in the last few years I would say, many people have promised that they're gonna be growing tens of thousands of acres of hemp and be able to produce it far cheaper than anybody else.

And most of those people who've made those claims to us have failed. And I don't hold it against them. I think, you know, I actually kind of try to warn them to be careful not to scale up too much, because, you know, I don't wanna see farmers being hurt. Anything new, even, hemp is known to grow as a weed and it does grow excellent when you know how. But it's like, you know, it's getting a relationship with the plant that does take some years. So, that's why we're focused on, I guess, the people that have been growing for a number of years rather than the people who say they're gonna grow the most and the cheapest. In a few years, we'll see where that leads us, of course.

Matthew: What has been harder than you thought it would be managing a business on multiple continents. So, when I've spoken to you, you've been in different places, and I've spoken to a few people at Elixinol and they're in different places. You got a lot of moving parts. What's been trickier as you kind of, the business grows, than you had anticipated?

Paul: Well, I never anticipated anything to be easy to be honest. But, you know, there continue to be a challenge apart from the legislative environment, which I wish there was one form of legislation globally. But it's extremely complicated in that form. You know, and we're trying to be a global brand, so, that brings its challenges in itself, of course. Where being a global brand means global teams. So, actually managing four global teams has its own challenges. Because it's not just about replicating a structure in one country in another country, because, I guess, those teams, you know, for example, the European team has to speak with the U.S. team to understand where they're going with their brand, and same with the European team.

You know, so, Europe, U.S., and Japan are on three time zones. So, how do we all connect together regularly to ensure that we're all headed in the same direction? And that, from, you know, an executive level is the biggest challenge. So, you know, I always anticipated that people are the most important part of our business, because they make that high-quality product. By having high-quality people, you will create high-quality systems and products. So, they are all connected. But it continues to be, you know, not always that easy to find the best in the world, which is what we aspire to in every aspect of our business.

We have recently brought on a new board member, you know, to the global level, who has had experience about building global, I guess, structures in a similar way for very large multinational companies. One of them based in Japan, actually, a multi-trillion dollar business over there that had, you know, entities all over the world. So, you know, when I find those problems, I find the best possible people I can, and I do my best, you know, to bring them on with the team so that we can grow with the best experience that we can possible.

Matthew: Okay. I've been following a trend in terms of the plant-based mimicking-type meats, where they taste like meat but they're plant-based, like the incredible burger and so forth. And I know you're big in the hemp-based proteins and so forth. How do you see that evolving to kind of replace meat in the diet?

Paul: I don't know if it's about replacing meat in the diet. And I think that's the myth that we have to bust here. Is that there is definitely a growing vegan and vegetarian interest in the world, and it's been there for a long time, and it is growing. But I think there's a bigger segment of the market that continues to eat meat but wants to eat less meat, and wants to eat more healthy foods. And I think it's that market that's looking for a more of the plant-based protein alternatives, is where this trend is growing from.

So, yes, we are seeing some successes with beyond meat and incredible burgers, but, you know, the incredible range, I believe, is genetically modified. So, you know, we think that we can create a plant-based alternative that is still completely natural, and that's the hemp burgers that I mentioned earlier that we've just recently launched in Australia and expect to take global at some stage also.

Matthew: And can you tell us a little bit about Nunyara. Is that what you're referring to? Or, what's Nunyara?

Paul: Nunyara is a medical cannabis startup. And the reason most people haven't heard much about Nunyara is because it is relying on the Australian government office of drug control giving us licenses that they told us would be about 20 working days over a year and a half ago. So, nearly coming up to two years now, in fact, I think. So, you know, when we get those licenses, I'm sure we'll talk about that more. But, basically, it is a business that we have only one employee for right now, that has very advanced plans. We've bought land, we have super advanced plans for high-tech cultivation and manufacturing of pharmaceutical-grade medical cannabis of all forms.

And just like Elixinol, we're not following what other people are doing, we're not following the Canadians or the Europeans. We actually have our own plan. Of course, we watch what everybody else is doing, and we think we have some novel and very interesting and unique ways of doing that. We're not trying to be, you know, the largest entity in the world making medical cannabis. We think we have a very strong niche in what we've developed, and I hope to be able to talk about that. Again, dependent on what the Australian government allows.

Matthew: Okay. With so many products, and a direct-to-customer brand, packaging has got to be a big part of what you're thinking about, packaging and marketing. How do you think about communicating your message so it resonates with customers in the packaging and branding?

Paul: Well, that's a very large subject that we are actually in a significant process for, mainly because, you know, we started off very small. We had some great packaging, great ideas, great branding at the beginning. But we've grown kind of organically in a lot of ways. So we've added a product on, added another product on. And we recognize that we've got to a stage now where we have to come back and relook at the entire range. Not just that we've got publicly today, but all of the many new products in development that we have in our pipeline, and look at them and going, "Okay, what is the overall message that Elixinol wants to portray and who to?"

So, we've spent some significant resources in defining the answers to those questions. And, again, 2019 for us is in that process of internal change. And I think you will see the results of that coming out next year. And it is a science and an art together. So there is a lot of science. There's a lot of data that is required to make those kind of decisions, and there is a lot of creatives that happen in the background.

You know, without giving away any of what's coming, I can say that, you know, the video that my team pitched to me for the changes that we intend to come brought a tear to my eye, not just the first time I watched it but even the second time I watched it. So, I think it was very powerful and I think will reach a lot of people, and really does resonate with the massive global change that hemp CBD products are making on the world.

Matthew: Now, where do you see the industry in 5 to 10 years? I know, with regulators, it's very difficult. But, I mean, can you paint a picture of what you think it will look like and how it will be different that it is 5 to 10 years from now, not necessarily your products, but just the marketplace and consumers in general?

Paul: I think in 5 or 10 years, we'll see much more of a big picture, where hemp and CBD products, or cannabis products, or probably most forms are widely accepted. They are known, you know, and people know what they're for, and there'll be a couple of, a few maximum winning brands, we'll say. Some brands will be known for, I guess, you know, more of a gimmick. So, you know, if you read it, you know, like a tiny amount, say a few milligrams of CBD to, you know, a two-liter bottle of water. Well, you know, it's probably not gonna give you any effect but makes you feel good that you're taking a bit of CBD mainly. So, there'll be maybe a brand like that. And then there'll be brands like Elixinol that, you know, are known for their high-quality products.

So, you know, it's like, if you wanted like an ibuprofen for a headache, you wouldn't go for a Nurofen or Advil or something. You'd going for a brand name that you would respect. I think when people choose to have CBD, they'll also choose to have a brand name. And I think there'll be more than one or two brands mainly because there are more than one or two uses of hemp-derived CBD. So, I think, you know, there will be different brands focused on different aspects of the market. But there will no longer be, you know, hundreds or if not thousands of brands trying to grow as there are now. And that gap is already, you know, expanding from the top, say, 20 companies to the other thousand or so companies out there in the world.

I think there'll always be, you know, your small mom-and-pop brands. It's a bit like, I guess, microbrewery, that always be lots of microbrewing maybe like wine, fine wines. There'll always be those forms of hemp and cannabis products. But I think there'll also be a few major brands that really can just get it right and do everything on a very scalable level, you know, on a global scale particularly. And I think that long-term picture and that long-term vision is truly what we continue to workout on a daily basis.

We're not trying to cut corners, or just get large amounts of revenues quickly. We are focused on ensuring that we have that long 5 to 10-year plan in process. And I think, you know, we'll see results of that before that time, of course. But I look forward to it just being an everyday products, you know, not too dissimilar to how Colorado is starting to see these products today. I expect that will happen globally.

Matthew: Paul, in this point in the interview, I like to ask a few personal development questions to help listeners get a better sense of who you are as a person. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Paul: I mean, there's probably been many books...not so much. I mean, maybe at the beginning the first books that I read on "Fats and Oils" from Udo Erasmus were very inspiring to me personally, and that's what led me on the journey which brought me to hemp. So, I guess that definitely had a very significant effect on my life. But at that time, I was also reading many books. I was actually studying in the Himalayas. So I was reading lots of different books about different religions particularly about the Buddhist and Hindu religions and many others.

And it wasn't that, you know, I don't feel that I, you know, became any, or followed any particular religion, but I think recognizing what was a common message is that, you know, all human beings are connected and ultimately there is no difference between any of us. There is just a different perspective between all of us. So, learning about perspectives from people like Ken Wilber, another Coloradoan, really, I guess, inspired me to see that from a science perspective, and as well as the Buddhist it gets more a spiritual perspective. But they were both two ways for me of saying the same thing.

So, you know, I treat everyone and see everyone ultimately as an equal in this life. And that all opinions, you know, really count, whether it's a person, you know, packing a box at the end of the day, or highly paid corporate advisers. That, you know, everyone has an opinion that needs to be heard. Everyone has a need for food, shelter, and connection. And I think it's always important to remember those things. And that's what I learned from those books.

Matthew: Apart from email and smartphone, is there a tool that you or your team use that you consider valuable to your productivity?

Paul: Yes, eyesight. That's a tool that I find very important, where we look into each other's eyes and communicate that way. I think it seems, you know, something that we often take for granted, but I think actually doing that consciously and actually being present with one another is an extremely important tool. And I think, you know, even though people say, "Oh, well, we always look at each other, and it's just something we normally do." I think bringing consciousness to that, just like bringing consciousness to anything, really, you know, brings more of that connection that I was just talking about earlier.

Matthew: Okay. What is the most interesting thing going on in your field in your opinion?

Paul: That's a very hard question to answer, because everything is so interesting right now. You know, the word boredom seems like this outer space place that I couldn't even imagine in my wildest dreams. So, everything is really very interesting when we're growing at such a high speed, with so many new people joining our team. So many new people, you know, learning great things, with so much development, and pushing boundaries in all levels of our business, not just from systems, or products, or formulations, but people, and places, and feelings. So, there's so much out there to be questioned. And yeah, I think you've just got to. If you're part of the industry, I'm sure you'll get that answer.

Matthew: What's one thought you have that most people would disagree with you on? This is a Peter Thiel question. It can be about anything. It doesn't have to be about the cannabis industry.

Paul: Well, I mean, I think, you know, I'll bring that back to the same answer I gave you before, which, you know, I think is true which is, you know, that we're all the same. All of us human beings, we all have this connection, ultimately, underneath our differences. Whether we're one side or the other. Whether red or blue or from here or there. I think some people would disagree with that. I think Donald Trump would say that the Chinese are different from the Americans. And I say, well, under it, we're all the same. And I think we just got to see everything from each other's perspectives. And that's not always simple. Don't get me wrong.

You know, saying we're all the same, and we can all be connected, and we are all equal is much easier to say than actually to do in different situations. So, I don't envy, you know, our politicians who have to do that on a national scale. But, ultimately, I think we all need to strive to that on a global scale. And whether we manage to get there in this lifetime or the next, it is...and whether people believe me or not, that is definitely what I strive to and I strive Elixinol to stand for as well.

Matthew: Yeah, it's weird how we have this kind of programming that like some other group that has a different color skin, or whose food smells different, they like projecting problems onto them, and then, as I travel around the world in different countries, I see like people are fundamentally the same. They just want good things for their family, and health, and, you know, it's like. There's some, I don't know if it's just background propaganda like, nope, that group over there is different. And they're really not. I agree with that. Well, this is like We Are The World here. This is Kumbaya. That song with We Are The World. No, okay. But, Paul, as we close, let's tell listeners more about how they can find Elixinol online, and follow your work, find your products wherever they are.

Paul: Yep. I mean, our corporate website is elixinolglobal.com, but I think for people who are looking at our CBD products, elixinol.com will lead them to access to the best hemp-derived CBD products in the world. We have elixinol.eu for the European Union, and elixinol.jp for Japan. But we have hempfoods.com.au for hemp foods. But they're all available via elixinolglobal.com, which is our global group. And I look forward to connecting with any one of your listeners and to any of our team so that we can move towards and be that change that we want to be in the world.

Matthew: Well, Paul, thanks so much for coming on. You're building quite a hempire here. And I wish you well with everything you do. And we'll watch closely as this grows.

Paul: Thank you very much, Matt.

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

Ep 266 – Everything You Need To Know About The Latest Trends In Cannabis – with Roy Bingham of BDS Analytics

roy bingham bds analytics

Roy Bingham is the CEO of BDS Analytics, which produces the leading market trends reports, analyses, and consumer research in the cannabis industry.

Not only does Roy know EXACTLY what is selling in dispensaries, but he also has definitive data on which cannabis product trends are accelerating and which are fading.

In this interview, Roy shares his insight on where cannabis is heading in the months and years ahead.

Learn more at https://bdsanalytics.com

Key Takeaways:

  • Shifts and trends that are beginning to take hold in cannabis
  • BDS Analytics’ statistical modeling methodology and how the company projects accurate market data
  • Roy’s clientele at BDS Analytics and how they benefit from the company’s market data
  • How much CBD is selling and how this currently varies by geography
  • New cannabis delivery systems and Roy’s projections for their success
  • BDS Analytics’ latest insights on cannabis consumer behavior
  • Acceptors and rejectors and why they are important to the cannabis industry
  • BDS Analytics’ recent partnership with leading data provider IRI
  • How cannabis has evolved over the decades and Roy’s insight on the industry’s future
Read Full Transcript

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

Hi, CannaInsiders, you are really going to enjoy today's interview with Roy Bingham of BDS Analytics. He's going to take you behind the curtain and tell you not only what is selling in cannabis dispensaries right now, but give you context as to what's driving those sales. My biggest three takeaways from this interview were one, it's great to start a business that already has shown to be successful in other industries as Roy will share about. It not only helps you raise capital, but it gives you confidence that there's a better than average chance that the business will work.

Two, consumers more than ever want control of their cannabis and CBD experience. Before, consumers would settle for general control, but now they want granular control. For example, in the past, a consumer might be content with the product that helps put them to sleep. But now they want something that allows a pleasant twilight experience that enables them to read without a racing mind before going to sleep. Three, the kind of business you choose to be in really matters. For example, Roy's business has two big benefits that jump out at me. First, it allows clients to have a clear sense of the reality of the marketplace instead of speculating about what's happening. Second, it helps clients make decisions on their strategic direction. This is like having a clairvoyant in your boardroom. It's a huge benefit and one reason people pay a good sum for BDS insights. Okay. Enjoy this interview, and if you like it, let me know what you liked about it by sending a tweet to @cannainsider. Enjoy the show.

Today we welcome back Roy Bingham, co-founder, and CEO of BDS Analytics. Roy is a regular guest that brings important data about what is selling in cannabis dispensaries right now. Roy, welcome back to CannaInsider.

Roy: Thank you, Matthew. Great to be back.

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

Roy: I'm just at our head office, which is in Boulder, Colorado. Kind of nice to be back at head office. I spent a lot of time on the road as I'm sure most entrepreneurs do in the cannabis industry, but I've actually got a full week here.

Matthew: Good. What a nice, a nice place to be this time of year. So, for new listeners, can you just give a high-level snapshot of what BDS does?

Roy: Yes. Absolutely. So, you know, before I came into the cannabis industry, I was involved in developing products and selling products in the dietary supplement space, especially digestive care products like probiotics. And in order to figure out which products to develop, we needed data. We needed to know how big was a category, how rapidly was it growing, and what were the leading products in those categories and therefore, which attributes and characteristics did they have so that if we launched into that market, what was a reasonable expectation for sales, and what would our product have to look like in order to win? Well, that data was available in the dietary supplement space, in the natural products world from a company called SPINS, which I actually helped found over 20 years ago. And then also in the food drug mass places like Walmart, Walgreens, CVS, etc., you could get that data from two other big companies, Nielsen and IRI.

That data simply didn't exist in the cannabis industry. And so, four years ago we started BDS Analytics to pull in that data, to give the insights to the growers, producers, and brands so that they had the advantage that other people have in other industries. And that's the origins of BDS Analytics. We call it sales tracking. We've processed more than a billion transactions through our system now. We focus on the big western states of Colorado, Washington, Oregon, California, Arizona, Nevada, which are about 70% of the current legal U.S. cannabis market. And we can provide all sorts of insights on categories, subcategories, brands, items.

So, that's the starting point. And the next area is that our clients came to us and said, "Great. But now I need to know who the end consumer is." And so, we have a lot of experience on our team doing consumer insights work. Much of that is based on surveys, and we have done surveys now with well over 70,000 people about who they are, what they want, what their behaviors, attitudes, and beliefs are, when do they consume, how do they consume, why do they consume, to give tremendous insight to our clients about the consumer of today and also the likely consumer of tomorrow. So, that was the other really fundamental thing that I needed to know when I was doing sales and marketing was, "Who are they?" and, "How can I position my brand and my products in order to succeed with the growing categories of consumers?"

And then the final area of focus for us is what we call industry intelligence. So, it's bringing all of this information together with a regulatory data with our partners, Arcview Market Research, and we published a book called "The State of Legal Cannabis Markets," coming up as its seventh edition. And then we have cannabis intelligence briefings, which we publish on a monthly basis about a specific aspect of the industry. And that is very useful to people who are already in the industry, and also to big companies that are observing the industry, as well as to financial services, people who are investing in or developing products for the industry.

Matthew: Wow. That's a lot that you're doing Roy and that I can see why your business is growing because that's really important data I would want to find, you know, in the industry starting to sell something or just an industry observer. That's a critical piece.

Roy: Yeah. You're quite right. Six years ago there were... Sorry, four years ago there was six of us, and now there are 45 people in BDS Analytics.

Matthew: Yeah. It's a whole different set of challenges once you start to grow like that. Well, Roy, it's been over a year since we spoke last. What, in your mind, are the big shifts or trends that have changed since the last time you've been on the show?

Roy: Well, of course, the first thing is that there are more dispensaries and there are more dispensaries in more states. There is more adoption by consumers in the fully legal states, the 21 plus states. We have now 32% of the adult population, 21 plus, who have consumed in the last six months. That goes up about two points every six months as we repeat our surveys. So, it's just more consumers coming into the industry. Now, every state varies significantly. And so, in Colorado, for example, we now have about 700 dispensaries, and the market has slowed down. And the reality is the medical market is declining, the adult use market is still growing. But if you look at it overall, there's almost no growth in the Colorado market now.

California has also swallowed hard with the introduction of its regulated market, and the very high tax burden that was imposed and various other regulatory issues meant that California actually shrunk last year relatively to the previous unregulated market in California. Whereas other states like Oregon are still growing strongly about 20% per year. Arizona, a medical-only market, but a large medical-only market is growing very strongly, and we've all probably heard of the growth of the Nevada market as well, which is also very good. But, of course, some of those states have hundreds of dispensaries, and some of them have relatively limited numbers of dispensaries, therefore doing much higher volume. And so, everyone should be looking at the individual variations between those states.

Now, in terms of consumer behavior, we see a lot of consistent patterns. So, consumers, despite the regulatory structures, are fundamentally similar from one state to the next. And so, we've seen consumers adopting certain categories of products and subcategories of products in a fairly consistent way. We continue to see flour taking in declining percentage of purchases. It's actually growing in quantity in most states. It's just that the price of flour products has declined significantly whereas concentrates are now about 30%, in fact up to 37% of revenues in some states. And concentrate prices have either increased or at least held steady. And then ingestible products, typically around 15%, again, there's regional variation there, and they have either held steady or in fact, increased in some cases. And of course, there are all sorts of reasons for that that we can get into due to, you know, the convenience and the fact that many of these people are relatively new consumers and they're choosing convenient forms of consumption. Convenience really is one of the top five influence for consumers these days.

Matthew: Yeah. That makes a lot of sense. I wanna just backtrack a little bit now that we've a broad overview and just understand a little bit more about the statistical methodology and how you project market data accurately. Could you just give us a snapshot there?

Roy: Yeah. So, we have partnerships with hundreds of dispensaries. And what we do is we create a panel in each of the states. And those dispensaries give us all of their point of sale data from their point of sales system. They give us access to that data. We have to do a lot of processing of that data to make it useful. And then what we need is a statistically significant panel in each state in order that we can project total activity in that state. It's one thing to just have panel data that says, you know, "In our limited panel, this brand is doing very well," but what our clients want to know is on a statistically significant basis across the entire state is that brand doing well and what is its market share and growth.

So, we put a tremendous amount of effort into having a demographically balanced panel of dispensaries in each state and processing somewhere around 20% of all the transactions in the state. And we found at that level we're usually very accurate. Many other industries, about 10% of the data, is sufficient. This is a very dynamic industry, tremendous numbers of new product introductions and very rapid growth of certain products and decline of others. And we found that we needed to get up near the 20% of all data in the state in order that we could project accurately total activity. So, why do those dispensaries join our panel? Well, they get the service for free in return for giving us the data. So, all of their data is anonymized and aggregated into a big database, but they can look at their own data and see how their store is doing, and they can compare it to the averages in their market. And that enables them to make smart decisions like which new products to bring into the dispensary, how to price those products, etc.

Matthew: Okay. And just to give listeners a sense, who are your typical clients purchasing subscriptions to BDS Analytics?

Roy: Yeah. It's a very big range these days, Matthew. First off, it starts with the brands in the industry. So, 70% of the top 50 brands in the United States already subscribe to our service, and they're using it in order to figure out their market share, which products to develop, and for sales and market tracking. And then in addition to them, we have people who are studying the industry very closely starting off with the big Canadian licensed producers. Many of them are subscribing to the data because they see that the U.S. trends are likely to be what will apply to them in Canada, number one. And number two, of course, they all have aspirations or have already made moves into the U.S. market. So, they want to know who the major companies are and who the prospective partners are for them.

But it goes far beyond the cannabis industry these days. So, many companies in what we might call adjacent industries like healthcare, like beverage alcohol, some aspects of consumer packaged goods are expecting that there's some impact of the growth of legal cannabis on their industry. And so, they start off very often wanting to understand, "Who's the consumer and is the consumer an overlap with the consumer of my products?" So, now, you know, the world is dominated by about 13 beverage alcohol companies, they represent the vast majority of that industry. And almost all of them subscribe to our consumer data, and in many cases our market tracking data, and certainly our industry intelligence data as well.

And then on top of that, now we're seeing a lot more interest from healthcare companies, people who do OTC products like sleep aids, painkillers, for example, are very interested to know, "Is this displacing sales of my products? Is there something that I can do to minimize the impact, if it's negative, of cannabis on the sales of my products? And is this actually an opportunity for me rather than a threat?" So, you know, the big over-the-counter companies. And then, of course, you know, the pharmaceutical companies who are long-range developing cannabinoid products. And then in addition, now we have this phenomenon of the growth of the CBD market, CBD from hemp being sold in general retail outside the dispensary channel. Obviously, we have tons of information about CBD products that are sold in the dispensary channel. And we've organized that very thoroughly because the people who are shopping in the dispensary channel are the cutting edge consumers who are now influencing others who might be shopping in Walgreens or CVS and looking for CBD products.

And so, there are many companies that are now producing CBD products just for general retail, not for the dispensary channel, who are looking for data in that area. And that can include people like dietary supplement companies, natural products companies, health and beauty aid companies. And they're also subscribing to data. And last week, we announced our partnership with the leading data company in general retail, IRI. And IRI and we are organizing all of the data about those transactions that includes CBD so that our clients can get a holistic view of what's going on, not just in dispensaries but also in the food drug mass world with regard to growth of CBD. It's a huge undertaking for us, but we have a massive partner in IRI to help us do it effectively.

Matthew: Now, I hear you mention IRI in your past too. Like, did you know them from your previous life in this kind of general business?

Roy: Yes. So, you know, there are two companies that dominate the provision of market tracking data in North America, and they are Nielsen and IRI. Nielsen tends to be a little better known because they also measure consumer consumption of advertising. And so, they're quite known for the Nielsen Ratings. IRI doesn't bother with that. They focus exclusively on tracking what is selling in any kind of a major channel and organizing all of that data. And their clients include 90% of the Fortune 500 that are selling consumer products. So, by working with them, we're able to get this cannabinoid data as well as cannabis industry data to most of the major decision-makers in the consumer packaged goods world.

Matthew: I can see where that'd be really valuable cause the dispensaries are kind of the bow wave of CBD preferences. And then they lag behind as they enter into Target and CVS and Walmart, Walgreens. So, that makes a lot of logical sense to partner with them. Is there anything you're seeing in terms of CBD, like trends or highlights that, you know, people should be thinking about, about how it's selling or how it's infiltrating into consumer preferences?

Roy: Yeah. Absolutely. I mean, the first thing is the rate of growth of CBD products in the dispensary channel. So, we have, and this is hard to do, but we've looked at 150,000 items that are being sold in dispensaries, and we've determined which of them are primarily being sold because of their high CBD content. So, of course, they also contain THC and other cannabinoids as well, but if CBD is a major feature of the product, then we have captured that fact in our database. So, now when we look at the trend, we see that four years ago, CBD products represented 3% of sales in dispensaries. And that includes strains that are known to be very high in CBD sold as flour as well as concentrates, ingestibles, and topicals.

Now we're seeing that that 3% has grown to 11% of sales last year. So, all of the categories have grown. But within those categories, the CBD-containing products have grown even faster. CBD does extremely well in topicals, for example. Topicals is less than 2% of sales in dispensaries, but CBD-containing topicals have outperformed to the point where salves, and bombs, and lotions, now 80%, 85% of those products contain a high CBD content that's very prominently displayed on the product. So, we've seen massive shifts in the dispensary behavior. And of course, this is a guiding light for what's going to happen in, as you said, CVS and Walgreens and Rite Aid and the like.

Matthew: Okay. And in terms of, you mentioned, just the growth of the different states, you know, Colorado is kind of flat, Arizona's, you know, doing pretty well, and Oregon's growing 20% year-over-year. Is there any other variances by state that kind of jump out at you?

Roy: Yes. There are many actually. As I said, consumers are fundamentally the same, but the market can evolve differently because of constraints. So, as I said, Arizona is a medical-only market. They narrowly failed to pass adult use in Arizona, but it's a large medical market because the criteria to qualify for medical use are relatively broad. And they have gone very much quicker to concentrates than other states, and concentrates represent a much higher percentage of the market, and interestingly, ingestibles are relatively lower in Arizona. And I think some of that is to do with the availability of products.

As you know, brands find it very difficult to cross from one state to another. Some of them are succeeding in doing that now by setting up partnerships or setting up completely separate entities in each state in order to meet the federal and state-by-state guidelines. And so, some of them are now moving into Arizona, but really each state is its own production, cultivation, manufacturing, and branding environment still, with the possible exception of California and Colorado where there's quite a bit more interaction between the fairly well-established companies now. So, that's an example of regional variation where you see concentrates especially for vaporizer use being higher. In California, concentrates are also high, 33%, 34% of sales, and the vape portion of concentrates is nearly 70% of total sales. So, 500-milligram cartridges are the most popular products in that market. And yet we see in Colorado where you've got a market that has about 30% concentrates, but vape products are less than 50% of sales in Colorado. And dabbables are still quite popular in Colorado, whereas they're a much smaller percentage of the market in most other states.

Matthew: Okay. There are some new and interesting delivery systems for cannabis. What are they and how well are each of them doing? And any kind of highlights you can give us there?

Roy: Yeah. I think that the first thing to recognize is, as we discussed earlier, convenience is really important to consumers, and they're also looking for a brand and product experience that they can trust. So, the starting point for these alternative dosage or alternative systems is controlled dosing and experience. And that really matters to them. In fact, 33% of edibles consumers have told us that they prefer low-dose products, less than 10 milligrams. And if you look within that category, you'll see microdose, you know, less than 2.5 milligrams sales have grown over 100% last year. And so, that's what a lot of consumers are choosing. They are looking for these less than 2.5-milligram experiences and also with a high CBD content.

We're also seeing consumers looking for a promised experience that they feel confident about. So, it's not just dosage, it's actually they're guided by moods and effects. And currently, that represents, you know, mood and effect statements being made on the product represent about 5% of sales in 2018 but it is also growing significantly where people are putting tranquility or energy or relax or sleep, etc., in the branding of their individual products. So, that's just another overall macrotrend that we're seeing. So, to recap, they're looking for convenience, they like mood and effect, they're very interested in good dosage and control. Of course, consumers want discrete products, and they're treating, you know, health and wellness conditions that run the full gamut from, "I need to relax," all the way to, "I have pain," maybe, "I have severe pain," or, "I have chronic pain," and PTSD characteristics, for example. And so, we're seeing different behaviors in all of those categories.

Now, when we come down to the specific new formats of delivery of product, sublinguals have done well. They've grown 53% in the last year, but what's done really uniquely well within that world is dissolvable sublinguals. They've actually grown at 3320%. And what we mean by that is strips typically. There are a number of products that have recently come onto the market, and they may also combine... So, they are all of those things that we talked about, aren't they? They're convenient, they're discreet, they seem to have accurate dosage control. In some cases, people are making a mood and effect statement and associate it with those products, and they're there for health and wellness. They look like a more medical-oriented delivery system. And very often they also contain CBD. So, that's the sort of six out of six important trends. We use a trends score card. So, that's one area that has really taken off.

Topicals is a very interesting area of growth. I mentioned that they are only about 2% of the market, but they are very important to the boomer group and boomers overindex in their purchasing of topicals, especially for pain relief. I'm a little familiar with that because I am just a boomer myself, and I also try to run marathons and do silly things like triathlons and the aches and pains can be quite significant afterwards. And so, we've seen people adopting topicals, some of the faster-growing companies in the industry are topicals companies. And again, you see a more medical application for health and wellness. As I said before, a lot of CBD products are in that category and especially targeting the boomer.

Then I think another really interesting area is beverages. It's a small portion of edibles. It's really only 6% of edibles sales at the present time are in beverage format. And by that, we mean drinks, powdered drinks, teas, shots, etc. But when you get into the detail under the top of that, you actually see that what's doing very well are the teas, the discreet kind of dosage formats, dissolvable products. So, before, it used to be a can of a product and it might have 50 or 100 milligrams and obviously very uncertain as to how you gonna feel after you've taken it. Now you're looking at these microdose products, dissolvable or teas and they've been doing very well. I think another interesting area, it's interesting to everyone, let's face it, is sex aids. Okay. So, we've also seen considerable, a number of companies launching both topicals, edibles, and inhalables for that matter with "this will improve your sex life" type of message as well. And there's been a significant improvement in that category and significant growth. That's just a few examples of some of the things that come out of the data that, you know, are not very obvious until you dive in below the hood and look at the subcategories and even the sub-subcategories.

Matthew: Wow. That's fascinating. Now, you mentioned that you survey people that visit dispensaries about their behaviors and beliefs, and beliefs kind of stuck out to me because beliefs don't necessarily have anything to do with reality, but they influence our decisions. Is there anything in terms of behavior or beliefs that kind of jumped out at you in terms of, was it back to, "I want convenience," or micro-dosing, or that type of thing? Or is there anything that was just a straight up unusual about the beliefs or behavior?

Roy: Well, I think what's very interesting is that people don't understand a lot of products and they certainly don't understand CBD products. In fact, in both the United States and Canada, 69% of people incorrectly asked the question, "Will CBD products make you high in the same way that THC does?" So, there is a false expectation out there that CBD will have a psychoactive effect. And so, we've got at this same conclusion a number of different ways in our questionnaires. And the concern behind that, of course, is that people are gonna try a CBD product, they're not going to feel, in most cases, much different. Some people tell me that there are small psychoactive effects that certain people will notice. And then they're gonna say, "Well, it didn't do anything for me. So, I don't think I'm going to bother with it again."

And that is one of the concerns that we could be seeing a CBD bubble, especially in the general retail world. Because remember, most of the CBD products that have good anecdotal support for them are sold in the dispensary world right now in conjunction with some element of THC and other cannabinoids. And, therefore, people may be feeling different because of the presence of the other cannabinoids and especially the THC. Now we're moving into this new world and we expect it to be very large despite this concern of a possible bubble. We think the CBD market outside dispensaries will be over $15 billion by 2024, but it's products that just come from hemp extract. And of course, they tend to be moving in the direction of an isolated molecule as well of just cannabidiol. And I'm not sure that people are gonna notice and therefore stick with all of these product formats.

Matthew: Okay. Can you talk a little bit about the concept of acceptors and rejectors, what is happening there and what we should know about it?

Roy: Yeah. Sure. So, I mentioned earlier on that 32% of consumers in the adult use states have consumed in the last six months, 32% of the population. The next category is what we call acceptors. So, they've answered questions which say, "Are you likely to become a consumer some point in the future now that it's legal and readily accessible?" And they said, "Yes. I haven't consumed in the last six months, but I probably will consume at some point in the future." That represents around 35% of the population. And then you have what we call rejectors. They represent about 30% of the population and they're people who've said, "I've not consumed in the last six months, and I don't intend to consume." And they will often say, "It doesn't fit with my lifestyle. I don't know how it's going to make me feel." Those are many of their reasons.

So, what's really interesting is that every six months when we complete our analysis of these markets, we see about two points. So, about two of those, roughly 30% of people, move from rejectors into acceptors and about three or four points of acceptors move into consumers. And so, it's really important to understand who those acceptors are. And then the encouraging thing is that the rejectors are also changing their attitudes with regard to cannabis consumption. And the fact is that 90% of the surveyed U.S. population now believe that cannabis has valuable medical effects. So, even among those rejectors, many of them are saying, "I think it might be useful for certain people, just not for me."

Matthew: That's great. Okay. So, where are we in terms of industry consolidation? You've mentioned that some brands are having success, you know, moving their brands across state lines, maybe through licensing or partnership, but where are we in terms of consolidation from your viewpoint?

Roy: Yeah. I think it's really beginning to happen and it's gonna be a powerful phenomenon for the next several years. In fact, I take myself back to the days when I was in the early stages of the natural products industry, you know, and Whole Foods only had 19 stores back in 1997 when I got involved there. And they, of course, consistently rolled up and established new stores and became the dominant chain of natural grocers. Well, that's not yet happening when it comes to dispensaries, although there are many multistate chains of dispensaries now and those didn't really exist 18 months to two years ago. There may be the odd dispensary chain that was very dominant in one state and had a few locations elsewhere. Now we're seeing dispensary operators who are in a dozen states.

And that's going to continue because there are tremendous efficiencies associated with having large operations on the dispensary side, and also on the marketing side, and the consumer acceptance and adoption. So, you know, one day there will be a Starbucks of cannabis dispensaries, there'll probably be a Walmart of cannabis dispensaries, and there'll probably be a Whole Foods. And I think we're seeing the beginning of that. But also you mentioned brands, and we have started to see some acquisitions of some leading brands. Select Oil Cura Cannabis was purchased by Curaleaf for a stunning amount of money, $1.2 billion. Select Oil was the leading brand in both Oregon and California, still is. And so, that's a very important move that was made by Curaleaf recently.

And we expect to see a number of other brands where they really emerged as a truly respected brand, not just the discount product that's out there that happens to have very good distribution. But people are actually saying, "I remember this brand. I've tried these products. I trust these products. I'm even willing to pay a premium for these products because I'm confident in them." And those, of course, are what the consolidators, the acquirers are looking for as opposed to something that has a branded name, but is always sold for 20% less than the list price and therefore has significant sales. But it's really not because people are choosing it because it's believed to be better, it's just because it's cheaper.

Matthew: Okay. That is a stunning figure with Select. Wow. So, the brand messages or the brand evolution is really happening with the multistate operators and different brands. It sounds like one of my takeaways here is that, you know, brands that can deliver a certainty of outcome and start to appreciate nuance like, "Hey, I want some outcome that's not necessarily sleep, but more like twilight and you can give me a microdose that creates and enhances that experience I want." Like, that's a premium. Being able to kind of control and tweak to that level of granularity. Would you agree with that?

Roy: Yes. Absolutely. That is the key.

Matthew: Yeah. Okay. Now, just a broader level question here. How have you seen the professionalism of the industry evolve since you first got into it?

Roy: Yeah. The people in the industry have changed significantly. Over the last couple of years, we've seen a lot of people coming in with backgrounds in consumer packaged goods, and beverage alcohol, and some from the tobacco industry as well who've, you know, dedicated the last 20 years of their lives to developing products, to selling products, and also on the cultivation and manufacturing side. So, we're gradually seeing mainstream operators as individuals recognizing the opportunities in the cannabis space and crossing over. And of course, they speak the same language as the rest of Corporate America.

So, it's a little bit of a different experience, not necessarily to say that they're better than the people who were long established in the industry, they just use different terminology, and they have different familiarity with things like data. Many of them are very used to the kind of product that we provide because they used it in other industries. So, we don't have to explain its benefits, they're already there. Whereas the entrepreneurs, younger, typically entrepreneurs who got things going on a state-by-state basis, may have done that largely based on their own instincts and their own connections and relationships. And in some cases just developing products that they like themselves or that their family or [inaudible]. And that was good enough back in the day. Now you have to actually use data in order to target specific markets and recognize exactly what you're competing with and exactly who you're appealing to.

Matthew: Now, just for anybody that's listening that's interested in BDS, and they think, "Hey, if I get a subscription here I'm going to be overwhelmed with data, and I won't know how to make it useful." Is there some sort of training period, or training videos, or something to get new clients acclimated to, you know, the benefits of BDS?

Roy: Yeah. So, what a great point. So, you know, way back in my career, I worked at Mckinsey at a big consulting firm and we consulted to the Fortune 100. And what I often saw in those companies was analysis paralysis, a huge amount of information floating about but nobody really able to make decisions based on that. So, we have put a tremendous amount of effort at BDS Analytics into making sure our data is actionable. So, it's easy for our clients to access, to understand, to dive into the specific category, subcategory, or question that they're addressing and then come out, you know, after only 15 minutes and say, "Oh, I know what I need to do. Now I need to create a new product that looks like this," or, "I need to change the pricing" or, "I need to increase the CBD content of my product," or, "make a statement about the benefit of my product on the packaging." So, we make it as simple as we can.

We do also provide training for all of our clients. It's a software as a service system, but we give you at least an hour's coaching on how to use the service. And then we'll follow up because the best thing is then to go in, use it and discover things that you don't understand as you do it and then come back to our account management team. And of course, as I mentioned earlier, we're growing rapidly, where a lot of that is adding account management people to help our existing clients.

Matthew: Okay. Roy, I wanna pivot now to some personal development questions. And since this is your fourth time on the show, I'm gonna ask you some different ones. I remember your favorite book was "Innovator's Dilemma," I believe, but I'm gonna ask you some other questions today.

Roy: Yeah. Well, I think my favorite book was "The Count of Monte Cristo."

Matthew: "The Count of Monte Cristo." [crosstalk]

Roy: Clay Christianson. He was one of my professors, so I liked [crosstalk]

Matthew: That's what it was. Okay. "The Count of Monte Cristo." That's a story of deep revenge, right? And resentment?

Roy: Ah, yes. It is kind of, yes. Yes. Although ultimately, I suppose I see some optimism in this story.

Matthew: Okay. Okay. So, with that, what is the most interesting thing going on in the cannabis space other than the part of it that you're in?

Roy: Yeah. So, I think, you know, it's one of those grass is always greener. You look over at something that you don't know much about, and you think that must be cool. And in my case, I don't know very much about the scientific research that is going on at the present time, but I get excited every time I hear a little bit about it. I just think that there are enormous opportunities, you know, people say you know, "My child is a scientist, or they're at college, or they're doing the graduate studies now. Should they be interested in the cannabinoid space?" And the answer's gotta be, "Yes." I mean, there's tremendous opportunity to develop life-saving and life-changing drugs or, I don't know whether they're drugs, but products that will have tremendous impact on people's lives. And so, getting into the research on these cannabinoids, and what they do, and how they do it, and which conditions they can be effective with, it's gotta be really exciting.

Matthew: Okay. And here's a Peter Teal question for you. What is the one thought you have that most people would disagree with you on?

Roy: Well, as you know, I'm English. I have been living in the United States for 25 years. I actually became a US citizen two weeks ago, which is...

Matthew: All right. Congratulations.

Roy: [inaudible] I was very excited about that. For 25 years, I've been living here using a Green Card, but now I can actually have political opinions. And so, growing up in Europe, you do have a different perception of certain terminology. So, in Europe, the word socialism is not a dirty word. And so, when people like Bernie talk about us being a social democrat, that has a very different meaning to someone who grows up in Europe typically. And so, although I went to Harvard Business School, and I've done all of this business-related stuff, and I'm clearly a capitalist, I believe that capitalism can live alongside socialism in a sense, and that we can come up with a structure for the economy where people are rewarded for hard work, and for brains, and for applying capital to build businesses. But at the same time, the benefits of that can be more fairly distributed to create a more healthy overall society. So, not everyone in America would agree with me on that. More people as a percentage in Europe would agree with me. But, of course, we also have the rise of a lot of nationalism in Europe as well at the present time. So, it's certainly not a universally accepted theory.

Matthew: Yeah. And the first time I met you, Roy, you and Patrick Ray were at the CanopyBoulder Accelerator. I know he obviously still is, but you were kind of talking about bringing this concept that you've seen work in other industries over to the cannabis space. And it was really just an idea. Now, you mentioned you have 45 employees, and it's become this thriving business in a category that's just only gonna grow. What are your general thoughts about what's been the most challenging and rewarding parts of this journey for you?

Roy: Well, I think, you know, the most challenging part for me is that I recognize that I had to be in Colorado in order to start this business and then built a team here in Colorado. And that took me away from my family in Rhode Island and my wife didn't want to move out here. And, in the end, unfortunately, that led to a divorce and not spending very much time with my children. And so, that's been really the hard sacrifice. You know, the positive is the excitement of building a business, getting great colleagues around me, creating 45 new jobs directly. Fortunately, I picked the right business partner in Liz Stahura and she's done a fantastic job, and now we brought in some wonderful additional people into the business.

And so, my job now is more of a management role and maybe to some extent, a mentoring role as I'm sort of the granddad of this company and a public face of the company type of role. And so, I've got more comfortable with public speaking and getting the word out about what we do and what we've learned. And it's easier because we have such fascinating data. So, I'm able to at least talk with facts behind me rather than making it all up. And let's face it, in the first year or two, we were a concept company without really a lot of data to support any of what we were saying, just belief that it was gonna be valuable. And now we have hundreds of clients. And so, that's pretty darn exciting. And when people quote us as the definitive source of data about the cannabinoid space, I always get, you know, the hairs on the back of my neck prickle up.

Matthew: Roy, as we close, please tell listeners that are interested in finding out more about dispensary data and the survey data and everything you have going on with IRI how they can learn more about BDS Analytics.

Roy: Yeah. Probably the best first place is the website, bdsanalytics.com. You can get an overview of our services there. There are many opportunities for you to complete a form on the website to enable the right person within our organization to contact you. And don't hesitate to send an email even to me, roy@bdsanalytics.com. I'll either get back to you or make sure it gets into the hands of the appropriate person.

Matthew: Well, Roy, thanks so much for coming on the show and educating us about what's going on at dispensaries. That's really valuable information.

Roy: Thank you, Matthew. It's been a pleasure. It's always fun to talk with you. You ask such great questions on behalf of your audience, and I look forward to doing it again in a year or so.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at 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 feedback@canadainsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or it's guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies, entrepreneurs profiled on the show. Please consult your licensed financial adviser before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle 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.

How Hemp Packaging Is Saving Our Oceans – with Ron Basak-Smith of Sana Packaging

Ron Basak Smith sana packaging

As the cannabis retail environment gets more competitive, retailers are looking for ways to stand out and make a statement.

Here to tell us more about this is Ron Basak-Smith, CEO and Co-founder of a new company known as Sana Packaging that’s providing cannabis retailers with sustainable hemp-based packaging solutions.

In this episode, Ron shares with us an inside look at Sana Packaging and how the company is working to fix the cannabis packaging problem and eliminate pollution.

Learn more at https://www.sanapackaging.com

Key Takeaways:

  • Ron’s personal background and journey in the cannabis space
  • An inside look at Sana Packaging and its mission to make cannabis more sustainable with eco-friendly packaging solutions
  • Sana Packaging’s two different packaging products, including 100% plant-based hemp plastic and reclaimed ocean plastic
  • Why packaging for cannabis retail is broken and how Sana is working to fix it
  • The cost of Sana Packaging’s sustainable products versus traditional packaging
  • Sana Packaging’s current retail clients and where Ron sees the company expanding in the years to come
  • Ron’s experience at CanopyBoulder, a seed-stage business accelerator that helped Ron start Sana Packaging
  • Ron’s insights on what the cannabis packaging landscape will look like in the next 3-5 years
Read Full Transcript

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

As the cannabis retail environment becomes more competitive, retailers are looking for a way to stand out and make a statement. Here to tell us more is Ron Basak-Smith, CEO and Co-founder of Sana Packaging. Ron, welcome to "CannaInsider".

Ron: Yeah. Thanks for having me, man.

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

Ron: Yeah. So, I am in Denver, Denver, Colorado.

Matthew: Okay. Great. And what is Sana Packaging on a high level?

Ron: Yes. So, Sana Packaging, we design and develop sustainable cannabis packaging solutions.

Matthew: Oh, that's good. You've got your escalator pitch, boom, right down. It was very succinct.

Ron: Yeah. Yeah.

Matthew: Okay. Can you share a little bit about your background and journey, Ron, and how you got started in the cannabis business and specifically starting Sana packaging?

Ron: Yeah. Myself and the co-founder, we were really just disgruntled cannabis consumers, creating a ton of waste ourselves, and said there has to be something better that we can do for the industry from a packaging standpoint. And so, we were in grad school together, Sana Packaging started as a school project, class project, and, you know, it just blossomed from there. We continued through, once graduation. We went through CanopyBoulder accelerator, raised the rest of the summer, and then launched our first products in July of last year. And now this year we've officially left their pilot phase program and, yeah, selling product in the market.

Matthew: What school was that that actually started giving you real-world practical skills? I'm just always amazed when I hear it.

Ron: Yeah. So, James and I were in grad school getting our MBAs at CU Boulder.

Matthew: Okay, great. That's a good place to be in grad school. You might not even ever want to grow up if you go to CU Boulder.

Ron: Yeah. I was just trying to extend my not growing up. So, I said I could go back to school and hang out in Boulder for a couple of years.

Matthew: Yeah. Can you describe your two packaging products so people can get a sense of what they are?

Ron: Yeah, yeah. So, we have a pre-roll tube and a container right now. You know, we kind of looked at the industry and said, "What are big volume movers of plastic?" and, you know, obviously, there's the flower packaging and then pre-roll packaging. Just, you know, a lot of plastic there. And so, the container is kind of a multi-use box. It can be used for flower concentrates, edibles and, you know, the tube it's about 110 millimeters, so it's king-size pre-roll, smaller vape pens. And then we're actually coming out in June with a shorter tube as well, so that would be for big carts.

Matthew: Okay. So, we know what they are now, but can you give a sense of the aesthetic and the look and feel?

Ron: Yeah. Yeah. So, the two main products are made of two different materials. One of them is a hemp-based biocomposite, so it's a brown, very natural looking biocomposite, and the other one is an HDPE. It's a white, reclaimed ocean plastic. And HDPE is High-Density Polyethylene, similar to the plastic you'd find in, you know, milk jugs, laundry detergent, stuff like that. And our container, you know, from an aesthetics standpoint, it's, if you imagine like a Tupperware container, very similar to shape like that. And so, the idea there is that they nest inside of each other taking up a lot less space from a shipping and storage standpoint.

Matthew: Okay. So, they're eco-friendly but they also have the eco-friendly aesthetic as well. So, it's one of those things you pick up and you're like, "Hey, I know this is doing something better than the traditional trash that I have."

Ron: Yeah. You know, there's always that balance between something, you know, having a natural look and going too far in the natural direction where people are like, "Oh, you know, it kind of stands out too much," and then something looking very non-organic or, you know, like a synthetic. And so that is very much, you know, that finding that balance with our materials so, you know, someone will notice, "Hey, this looks different but it also, you know, it looks and feels like a traditional plastic as well." So, yeah, it's very, very important to us to have that balance.

Matthew: Well, kind of walk through the problem with the traditional packaging and why that is such a problem and how much waste it creates and where you see the inefficiency.

Ron: Yeah. You know, from a very high level, we're using a non-renewable resource to make our single-use plastics. And so, I think that just from a starting point is something we need to figure out as a society, right? Like, we just cannot continue to just extract fossil fuels to make plastics. We must find other ways. And so, that's really where we come in with a single-use solution and then, a plant-based single-use solution. And then the, you know, the reclaimed ocean plastic, you know, the biggest thing that we feel we can do as a company is help drive the wastes industry. And so that may be the reclaimed materials, recycled materials, you know, showing that there's an end consumer willing to pay the price that it costs to collect, clean, and sort of this stuff.

Matthew: So, let's talk more about materials. How do you go about sourcing and finding manufacturers to help with this, because this is, kind of, it's not a mainstream product yet? So, how do you go about that?

Ron: Yeah. So, for the hemp-based stuff, I have built a relationship with a compounder and, basically, you know, for the past two and a half years, you know, when I was in school, just called them and said, "Hey, I want to make cannabis packaging." And, you know, from that point on, they were making a compound with, I think, it had about 10% hemp. And I was like, "Hey, I want to like do... Let's see how much hemp we can get in there." We are now up to about 30% hemp. And so, all of our hemp is domestically sourced, then compounded and then we manufacture it, two manufacturing locations in Minnesota and Arizona. And, you know, once again, with these folks, I just, you know, reached out to several different manufacturers and said, "Hey, this is what I want to do. I'm not sure if you have the ability to do that or you're even comfortable with it, but, you know, it's going to be a thing in the future and if you want to get ahead of the curve, you can work with me." And so that's really how we started those relationships.

Matthew: And how about the reclaimed ocean plastic? Who goes out and retrieves that? How does that work?

Ron: Yeah. So the reclaimed ocean plastic, it's kind of interesting how we have we got in contact with those folks. Oddly enough, the summer before going into grad school, I read a book called "Cradle to Cradle".

Matthew: Yes. Great book.

Ron: Yeah, amazing book, Bill McDonough. And that, kind of, like set the framework in my mind for, you know, sustainable packaging and where we need to go with that. And I, kind of, had that, you know, just rattling around in my head all, first year at school and, you know, it was like, "Okay, sustainable packaging." And so, it was kind of strange when someone, a colleague from, you know, a previous conference, we were talking and he's like, "Yeah, I know someone who he's worked with Bill McDonough, they're doing some ocean plastic stuff. You might be interested in talking with them." And I said, "Yes, please, you know, please connect me." We got connected and, you know, I started saying what we were doing, learn what they were doing with reclaiming ocean plastic and creating a certified marketplace for it. And so, the company that's doing this is Ocean Works and they, you know, we basically said, "Hey, we want to try to do this with cannabis packaging," and they seemed excited about it. And so, we started going down that path, you know, by first seeing if the material will work in our preexisting molds and then, you know, Child-Resistant Certification and all that fun stuff. And so now we're, yeah, we're really excited about what the future holds for reclaimed ocean plastics in the cannabis space.

Matthew: You know, it's so funny that you mentioned that book. I read that about 10 years ago. The book itself is made out of a recyclable plastic that actually has a good tactile feel to it. It doesn't feel like something you don't want to touch. It feels like you do want to touch it. And he says you could drop the book in like steaming water and then turn it into something else if you needed to.

Ron: Yep. Yep.

Matthew: And I gotta say, that dude, Bill McDonough, he has just changed the way I think about things in terms of when there's a problem now he's like, "Let's just redefine that there's a design problem. There's a design problem. This needs to be redesigned." And he's just got almost just a...he's just got such a different way of looking at things that's so inspiring, that is just contagious.

Ron: Yeah. I mean, you nailed it there with, you know, kind of, with design problems, right? Like, when I looked at the weight system, I was like, "Well, this system is currently broken, right?" Like, let's not keep designing things for a broken system. Let's, you know, design things for a new way. And I always kind of have that mindset when looking at problems is critical. And so, yeah, very, very influential in my world and I know he's influenced a ton of people in thinking about how to develop products. And, you know, I think it's something I really hope we see continued through product development because that's, you know, really one of the biggest problems out there is with materials. are they designed to be repurposed and reused and easily repurposed and reused, and is it communicating, you know, to the consumer that they need to be repurposed and reused, you know, kind of all those things. And so, yeah, just bringing out that messaging with our products and always thinking that way is integral to Sana.

Matthew: It would probably be cheaper if these were made abroad but you chose domestic manufacturers. Is that because it's more consistent with your value system or is there another reason?

Ron: Yeah, yeah, totally. You know, we look at sustainability from a pretty holistic approach. You know, it's not just the materials used, where the materials come from, where they're being manufactured, who's manufacturing, you know. All those things really come into play. And, you know, also how far things are traveling, big, big impact on sustainability there. And so, what we want to do is we want to make materials in places and then people be responsible for those materials in those places. And so, I think that kind of circles back to, you know, the "Cradle to Cradle" idea. People, they know where things are coming from, they know where they should go, and they know that it's not just being shipped off somewhere to be someone else's responsibility. You know, we all become more engaged with that product. And so, it's important to us at Sana to manufacture where our products are being sold, and then also from a, you know, sustainability standpoint with biomass, we really want to do that all domestically for just...that's going to be the big hurdle for biomass and there's no reason to be shipping that material across oceans.

Matthew: And how many clients do you have now, and where are they located geographically?

Ron: Yeah, so we just did a customer count I think last week. We're just right around 65, I think. And, you know, we have a pretty broad geographic spread. That's been one of the, you know, most interesting things for us, just kind of seeing where people are looking for sustainable packaging and it seems to be all over the country people are interested in it. And so, yeah, California, Colorado, Oregon, Maine, Massachusetts, North Carolina, Tennessee, Texas, all over. Really excited about that.

Matthew: Okay. Yeah. And where do you think this is going in the next three to five years with packaging? It seems like it's making leaps and evolving, but where do you see it going?

Ron: Yeah. I mean, we hope that it all moves towards sustainable packaging. You know, that's what our goal is as a company, we want to move the industry to normalize sustainable packaging and be that first industry that really grabs the bull by the, by its horns and says, "This is how we're going to do things." And so, you know, I hope that we keep seeing major shifts towards more sustainable packaging and I think we're also, you will see, you know, the way things are being done now, I think, are going to change as the industry matures and evolves. And so, that will be really interesting to watch, you know, as we move from just within state commerce to interstate commerce and start seeing what happens there as well when we start shipping products long distances and longer, you know, packaging kinds and all, and all that stuff. So, it'll be quite interesting.

Matthew: Yeah. I feel like Apple really changed the game with packaging because they, you know, created that religious experience when you get your iPhone and you open up for the first time, and now people are looking to packaging more than just as a simple container but something to create a response. And I know there's some company, I can't remember the name of it, that measures the emotional reaction of people with products, like the sound a FedEx delivery box makes when you put like an envelope in and close it. Like, is that a reassuring sound? How does it make you feel viscerally? Same as when you close the door of a BMW, like that thunk, like thunk, that feels like it feels very sure and it's like a confidence feeling compared to, say, some other brand of, you know, non-luxury car. And they like study that emotional response, and I feel like there's room for that in the packaging space. I mean, there's a visual response and then the tactile response. Does it reinforce it, and what is it saying as you touch it? You know, what's this product? Is this a premium product? You know, it's heavier or, you know, and what does that make me feel? Like, I should be paying more for this or that it's lighter and it's more eco-friendly then. Like, there's all these trade-offs mentally that go on without us really thinking about it.

Ron: Yeah. Yeah. I mean, this is the beauty of packaging, right? The way that consumers interact with it and then why it's designed that way. And I think that's, kind of, the big hurdle for sustainable packaging, right, is messaging in a way that says, "You know, "Hey, this product is still of really great quality, even though it might not have a shiny emboss on it," right? That then changes the recyclability of it or, you know, it has a plastic film layer. All the things that we do to packaging that make it so it's difficult to recycle and repurpose, you know, adding two different material types because it looks good, but then, you know, changing the ability to recycle it or adding colors that are not valuable to recycle. You know, there's just so many different things that we're doing, and that's really what we at Sana want to get across, is a narrative around sustainable packaging, really what that means, what we need to, what sacrifices we might need to make from a visual standpoint to get to the point of, you know, this is a single-use package. And what is single-use packaging, meaning, what value do we put on that from an environmental standpoint and from a consumer standpoint?

Matthew: Now you're an alumni of CanopyBoulder Cannabis Accelerator, where I'm a mentor. Can you talk a little bit about your experience there and what it was like?

Ron: Yeah, yeah. CanopyBoulder, integral part to Sana's story. You know, as James and I were in grad school, they were the first people...yeah, basically, the first people in the industry we were reaching out to to see, you know, "Hey, what do you guys think about sustainable packaging? And, you know, is that a viable thing?" And, you know, we had some great conversations with them. And then, you know, as we were looking at our options with Sana, we said, "You know, we're going to need some money to make this thing happen." And so, we applied to CanopyBoulder. We were accepted and, you know, much beyond the initial seed funding that we got, we got a place to work and commit our time and energy to Sana as we were finishing up school. And so, it's just a great space to really focus on this and have the community around us to really help get this thing going. And so, yeah, thanks. We always want to say thanks to Canopy for everything they've done for us.

Matthew: And where are you in terms of raising capital now?

Ron: Yeah. So, I think to date we've raised around 700...just over $700,000. We just completed a smaller bridge round. And, yeah, now we are gearing up for a larger round called a series A, next couple of months here. Ready to scale this business, increase our product line, and sell more packaging.

Matthew: Yeah. As you've gone through this whole process of being a startup and a co-founder or entrepreneur, has there been anything that's surprised you or any setbacks that you just, weren't expecting on a left field and you just feel like, "Man, I can see why not everybody does this," and how did you surmount that?

Ron: Yeah. Well, you know, first and foremost, this is a...it's a passion of mine, so that keeps it engaging, keeps it fun, you know, just the idea of trying to solve a major global problem and, at least, bring some solutions to it, what keeps me up in, you know, it keeps me up at night, gets me up in the morning, all that. You know, obviously, the entrepreneurial journey has its ups and downs, its uncertainties, but that's all part of the game that we sign up for. And I think, you know, if that's what you want in life and you're good with uncertainty and you like to try to solve big problems, then this is all just, you know, the path to take. Yeah.

Matthew: Yeah. I'm not that good with uncertainty, but I just say I have 51% courage. It's like all I need is that just a little bit more than the fear.

Ron: Yeah. Yeah. I, kind of, thrive on uncertainty and like, you know, if I know it's coming up, it kind of feels weird. So, that's, you know, in entrepreneurship if you don't know what the next day brings, you're just like, "All right, we're just going to keep going, see what happens."

Matthew: So, it's this point in the interview, I like to ask a few personal development questions. You already mentioned the book "Cradle to Cradle", but is there any other book besides a "Cradle to Cradle" and "Hello Kitty" that you find meaningful for your life?

Ron: Oh, yeah. Lots of good books out there always, and find reading is one of the best ways to get distracted from the trials and tribulations in entrepreneurship. One that I really like is "Thinking Fast and Slow" by Daniel Kahneman. Just really helps kind of figure out and look at why we make decisions the way we are making decisions. And I think that's kind of critically important to, kind of, understand how the inner workings of our brain works and why we do what we do and why we act the way we act.

Matthew: Yeah. So, much of it is some subconscious too.

Ron: Yeah. Yeah. I mean, it's all subconscious. It's built. Yeah, it's all there and you have to kind of work through why we're thinking certain ways and making certain decisions and going down the same paths or, you know, how do we find the right path and all that fun stuff. Yeah, it's a great book.

Matthew: Okay. What is the most interesting thing going on in the cannabis packaging industry?

Ron: Yeah. The industry right now, things that are fascinating me is, kind of, consumers' trends and understanding of the product and how quickly that's evolving. You know, as we went from an illegal industry, you know, so-called underground in many ways, just watching how people are talking about cannabis, the new products that are coming out, it's all very fascinating to me. You know, coming from, you know, someone who started consuming cannabis in high school and just, kind of, seeing, you know, how it was, you know, what our choices were and all of that, and now seeing where we are today and just, kind of, thinking about, you know, where we'll be in 5 years, 10 years is fascinating to me.

Matthew: You know, since you went through the CU Boulder MBA program, I have to ask, is there any class where you felt like, "Wow, I really use what I learned in this class a lot in my real life." Because, you know, most of college it's just, I don't feel like I use calculus ever and I took two calculus classes. So, I'm always really curious if there's something you feel like, "Hey, this was actually super valuable and I still use it."

Ron: Yeah. Yeah. Almost every single day in Sana, I am eternally grateful that I randomly took one class at CU Boulder that you are going to... If you plan on starting a business and doing entrepreneurship and you happen to be at CU Boulder, I would highly recommend taking VC law. And it is not a class that is in the business school, it is in the law school, but it's taught by Brad Bernthal and Jason Mendelson. And it is an incredibly important class to take if you are going to do any fundraising or, you know, just want to, you know. The VC world is a very...it's complicated. It's a world that you're just, you're not exposed to in your everyday life. And so, finding that information and understanding the terms and what's going on and why things are written a certain way and all the decisions that you have to make as an entrepreneur. Yeah. That class was integral to everything going on and, yeah, just grateful that that existed.

Matthew: Yeah. Talk about intensely practical. That's really practical for what you're doing.

Ron: Yeah. I mean, it was crazy too. It was coinciding as we were going through CanopyBoulder, and it was just like an eye-opening experience and, yeah, I don't know if we would have been as successful as we've been today without that class.

Matthew: That's great.

Ron: Yeah.

Matthew: Ron, as we close, what is the best way for cannabis retailers, brands, and even the accredited investors to reach out to you and to find out more about what you're doing?

Ron: Yeah. So, you know, reach directly out to me or James. My email is ron@sanapackaging.com and James' is james@sanapackaging.com. We would love to talk to you. You could also just give me a call on my cell phone. If you want, I can give you that number. It's (203) 520-9607. Yeah, we'd just love to talk and answer any questions. You know, we are, first and foremost, always trying to educate people on the world of sustainability and sustainable packaging, so any questions are, or please come my way. Yeah.

Matthew: Are you okay if people just text you emojis with no questions or words too? Is that cool?

Ron: Yeah, you know, emojis are cool. I might not respond with much other than an emoji, completely random, but we can try, see what we can get across.

Matthew: Well, Ron, thanks so much for coming on the show and educating us about packaging. It's a really interesting field, and I feel like cannabis customers are more open to alternative packaging, so it's going to evolve and iterate and move in fun new directions fast. So, thanks for the update.

Ron: Yeah. No, thank you. Really excited to be on here and, yeah, just thanks for having me.

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