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Creating The First Cannabis Wine That Actually Tastes Good

chip forsythe rebel coast

We knew it wouldn’t be long before the cannabis industry started taking market share from the wine and spirits industry, and here to showcase that trend is Chip Forsythe, CEO of Rebel Coast Winery.

Founded in 2013, this California winery is making a major splash with its alcohol-removed, THC-infused wine – a beverage that offers a very different kind of buzz (and skips the hangover).

In this episode, Chip shares a behind-the-scenes look at the meticulous process involved in creating cannabis wine, Rebel Coast’s plans for the future, and his insights on where the cannabis beverage market is headed in the next few years.

Learn more at https://rebelcoast.com

Key Takeaways:

  • Chip’s background in wine and what led him to start Rebel Coast Winery
  • How Rebel Coast’s cannabis wine compares to traditional wine in terms of taste, aroma, and calorie count
  • The difficult process behind infusing wine with cannabis and how long it took Chip and his team to get it right
  • Regulatory and logistical hoops Chip still has to jump through in order to keep Rebel Coast alive and kicking
  • Difficulties in scaling the production of cannabis-infused wine and the ways in which Rebel Coast has worked to overcome them
  • Chip’s work educating regulators and politicians so that the cannabis industry can continue to grow and become more diverse
  • What’s on tap next for Rebel Coast Winery and where Chip sees the cannabis beverage market going over the next 3-5 years

 

Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday I 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. We knew it wouldn't be long before the cannabis industry started to take market share from the traditional wine and spirits industry. Today we have a perfect example showing how that trend is accelerating.

I'm pleased to welcome Chip Forsythe from Rebel Coast to discuss his cannabis wine. Chip, Welcome to Canna Insider.

Chip: Thank you so much for having me, Matt.

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

Chip: I am in sunny Los Angeles right now.

Matthew: Great. And I'm in Orlando, Florida. Chip, what is Rebel Coast at a high level?

Chip: Yes. So Rebel Coast started out as a traditional winery, making wines with alcohol in it. And we transitioned about two years ago into making cannabis-infused alcohol removed wines.

Matthew: Okay. I wanna dig more into that. But first, tell us a little bit about your background and journey and how you got to this point with Rebel Coast.

Chip: Yes. So I started off, I moved out to California from Texas when I was in, I just graduated high school to go to college out here at Cal Poly. And the first day, first week of school I found out you could get a degree in winemaking.

So, I went that direction and got an internship apprenticing under a couple of different winemakers while I was studying there. Studied winemaking for the five years that I was going to school there. And then, while I was doing that, me and my buddies would make wine in trash cans in our backyard and sell it to kids in the dorms because we had no money. It was awesome.

Matthew: Did it taste okay or...?

Chip: Not really. I mean, we reinforced it with brandy and sugar. And we were just doing anything to get the effect of it, I think. And then, when I graduated I started a winery called "Sexual Chocolate." And what we would do is we'd buy wine on the bulk market, blend it, bottle it and then rent the equipment we need to get it into the bottle, and then go out and sell it.

I started that in 2009, we grew pretty quickly. In 2012, I always....I did not get along with my co-founders very well so I ended up selling the winery, traveling, kind of like what you're doing right now, traveled the world for a year, and then came back to United States in California and decided to start Rebel Coast Winery, same guts of it. It's called a virtual winery where you buy on the bulk market, blend, bottle and sell. We'd made one wine called "Reckless Love." That took off again.

And about two years ago, 2017, we decided to, we saw a prohibition for cannabis coming to an end. So we decided to see what would happen if we removed the alcohol from wine and infused it with cannabis.

Matthew: So, Chip, how does that work exactly with making cannabis wine? Is there alcohol in there, removed, what do you do exactly?

Chip: Yes. So alcohol is a federally granted license to make and sell alcohol. And cannabis is still federally illegal. So it's completely illegal to have alcohol and cannabis in the same building or even in the same product.

So, when we found out that that was where everything was going back in 2017, we decided to see what would happen if we removed the alcohol and if the wine would still retain its flavor compounds, and it would still taste like wine and then infuse it with fast acting THC. And it turned out it was really hard to do and took a lot of time but turned out great now.

Matthew: Just circling back to your "Sexual Chocolate," a great name. So you were essentially like buying, you were kind of like a brokering wine and then bottling it yourself with your own label. And really, you're kind of targeting people that are trying to make a statement for the evening that are buying that wine, is that it?

Chip: Exactly. Yes. The fancy word for it in the industry's a negotiant. It was too hard to get a loan or raise money right out of college for $5 million to build a brick and mortar winery with the equipment pumps, land and actual building. But I knew I wanted to make wine. So, the virtual winery was the direction I took.

Matthew: Okay, it's funny how in the wine world, everything just sounds just a little bit more sophisticated.

Chip: Yeah, absolutely is.

Matthew: Okay. Do you think sometimes that's unnecessarily so, like, we really don't need to call it that but...?

Chip: Every day. Absolutely every day.

Matthew: Okay. So, man, that's great. You're in college and you're like, "Hey, I could major in some boring, bland middle-market management major or winemaking sounds like the road less traveled," that sounds interesting. And you probably haven't been disappointed by choosing that as your major, I imagine.

Chip: No, I love it. But my parents at first, like, when I told my parents I was gonna be a winemaker, they're from Texas and my mom cried and my dad laughed. He's like, "That's not a real job." I was like, "All right. Well, let me try. Let me see what happens."

And I planted my first vineyard my sophomore year, and they came out and looked at it. And then they were like, "Wow, this is actually real," and they've been insanely, insanely supportive ever since. The cannabis, they're still a little apprehensive about that side of the direction of my life.

Matthew: Yeah, I'd imagine.

Chip: But they still support it.

Matthew: So they're apprehensive about the winemaking, so the cannabis wine is like, "What is he doing? He's combining every element into..."

Chip: Don't go to jail.

Matthew: Okay. So, take us back to when you really had the thought of like, "Wait, cannabis wine," and then it went from a thought to an actual business. Can you just describe what you were thinking back then?

Chip: Yeah. So, back in 2004, a lot of winemakers are, I guess, they're called enthusiasts now for cannabis. So, a lot of winemakers, they are a little bit rebellious or whatever. They'll make their own cannabis-infused wine. And it's pretty easy the old school way of doing it. You take a pound of shake, throw it into a halfway fermented barrel of usually white wine or red wine will do it. And then five days later, you strain out the shake like tea leaves, and you've got alcohol. The alcohol extracts the THC, it also extracts a lot of chlorophyll and polyphenols and terpenes and stuff.

But the end result is you have cannabis-infused alcohol wine, and it's totally illegal. But it's just a little ever...you make 20 cases of it a year, give it to friends and family and yourself. So that was when I really got interested used to it. That kind of fell off the radar when I graduated college.

And then, it was 2017 I think mid-2017 we kind of sat down and looked around like, "Hey, the wine space is highly competitive. And there's a lot of...it's a very price-conscious market." We're like, "Okay, I wanna start, I wanna do something with no competition, high-profit margins and try to be the first at it. So we saw cannabis prohibition coming to an end. And then we're like, "Okay, how do we make cannabis wine?" Let's take that...what does it tastes like if you take the alcohol out because most people have never had alcohol-removed wine because we tasted everything on the market, and it tasted like garbage, absolute...it just seems like grape juice, bad grape juice, whatever. And so, we really started down the road of trying...I'm a pretty good wine maker. So I was like, "Well, I can make this taste better."

So then we went down the road of what it would take to make alcohol-removed wine taste like actual wine. That was kind of the "aha" moment when we tried our first R&D project. And it was like, "Oh, wait. We may be onto something. This actually does taste like wine now."

Matthew: What are some of the mechanics of that? How do you make that work? I'm sure there's a lot of struggles and difficulties there.

Chip: Oh, yeah. Are you talking about infusing it with THC or just...

Matthew: I'm talking about just making it taste good.

Chip: It's really hard. You really have to have a good palate. And it takes a lot of blending of acid and sugar levels. And then, it's not technically terpenes, but terpenes are just like essential oils or whatever. But the grape has a lot of flavor compounds, polyphenols in the wine. So you have to be...you have to really start with good wine. And then you have to have a really good partner to remove the alcohol, is the overarching idea behind it.

Matthew: And how tricky is that removing the alcohol once you get to mass scale?

Chip: So hard. It is absolutely really...Bringing it down in the wine industry, there's a law where if your wine is over 14% alcohol, you're taxed as a liquor, so you don't ever wanna go over 14% alcohol. But if you pick your grapes too late, they have too much sugar in them, the yeast eats the sugar, turns it into alcohol. And if you have too much sugar, it'll make too much alcohol. So it's pretty traditional for wineries if they have too much alcohol to remove a couple of percent points so you get down to the 12 or 13% alcohol thing. So there's companies out there that do remove alcohol. But bringing a full wine down to zero, I mean, I pretty sure we were the first to try that as well.

Matthew: Do you go around to friends and family and be like, get to a point where you think it tastes good. And then you give it to them and say, "What do you think of this?" Is that what you do?

Chip: Every person I can find. Yeah. And at first too, when we first started, I went off the assumption that cannabis wine should taste or should smell like cannabis and taste like wine.

So we got really heavy into terpene extraction, doing steam extraction, and using hydrosol to reintroduce it into the wine. And it tasted, or it smelled great. It smelled like you just walked into a room that had just been cut down, smelled like really, really good bud. Spent months doing R&D on that, made samples, gave it to about 1,000 people. We did case studies and used surveys and stuff like that. And every single person we gave it to was really disgusted by it. They did not want it to smell or taste like cannabis at all. They made the manufacturing process easier. But we spent a couple, too many months going down that rabbit hole.

Matthew: Well, that's good to find it out before you go into mass production, though.

Chip: Oh my gosh, yeah. I would be really sad if nobody bought what we made yet.

Matthew: So how does the calories work then? If you're removing the alcohol from the wine, what does that do to the calorie count per glass?

Chip: Oh, yes. So it almost, it cuts it way down. So, a traditional glass of white wine is about 150 calories. And once you remove the alcohol and even with the THC in it, I guess the THC doesn't have too many calories, but ours comes out to about 40 calories a glass right now instead of 150. It's great.

Matthew: Wow, that's massive. So you can call it healthy cannabis wine or like, light.

Chip: Yeah, and it's gluten and vegan. But in all fairness, all wines are gluten free and vegan.

Matthew: Right. Why not highlight the benefits.

Chip: Yeah, go for it.

Matthew: Was there a time when you were going through this process of dialing it in, and you're getting negative feedback and you have a bit of a dark night of a soul and wondering, "Hey, is this gonna be a viable business? Am I a little bit crazy? Maybe there's a reason why there's no cannabis wine?" And did you struggle with that? And how did you overcome that?

Chip: Yes. So, I want to say that we've got a calendar reminder every two or three months where there's a company ending-decision that needs to be made or not made. So, there's been plenty of those rough nights.

From the very beginning, I knew that one of the things that I knew I needed when I was starting the traditional wine side of Rebel Coast was a good CFO. So that in 2017, met Josh, he's my co-founder, best friend. Having someone that's down for the cause with you every step of the way, not always encouraging. But we work together and we disagree on things and work, figure out the best way to move forward. That's been absolutely essential for this company. But yeah, every couple of months, the California government passes a company-ending law or potentially company-ending law. It's gnarly.

Matthew: Now, we've talked about some of the difficulties in making the wine and all the negative feedback you got initially and getting it just right. But then, just in terms of scale, like producing thousands of bottles, what are the kind of particular problems there?

Chip: So, our biggest problem was finding a facility large enough, a cannabis-licensed facility large enough to store our tanks. So, even though we were still pre-revenue right now. We've only been really selling for about three weeks in all of 2018, but we know that this is something special, and people are incredibly curious about it. And everyone wants to try it at least or is curious about it.

So the way we built the winery for the cannabis side of things is, you know those tanker trucks that go down the road that carry gas, like, the big stainless steel ones?

Matthew: Mm-hmm.

Chip: So those also carry wine, you know, they're food grade or whatever. But that's 6500 gallons, so we wanted to be able to buy wine, or buy from our buddies that make it, buy the wine in tanker truck loads, get it to our facility, or get the alcohol removed in tanker truck loads, get it to our facility and bottle tanker truck loads it.

So we bought these huge tanks, these 6500 gallon tanks, they're 15 feet tall, and they don't fit in most buildings. So that was the main, the first thing, is finding a facility, cannabis facility large enough to put them in. And then we had to get a bottling line which is kind of expensive. They're a couple hundred grand sometimes.

So we got a bottling line to do that. And just scaling up everything is...just the scale of what we're doing is...it's the largest operation for a cannabis drink in, I don't know everyone's, but definitely, the largest in California.

Matthew: And so the reception has been good. It's been...you're right. People hear about that, and they're curious I would imagine. That's the first reaction. Like, "What does that taste like?" Is that the first question?

Chip: Yeah. Usually, it's what we...what we found is mainly people are asking how strong is it? Because it turns out a lot of people have had at least one terrible experience with a too strong of an edible. And a lot of the cannabis drinks out on the market are 100 milligrams for a 12-ounce serving. So everybody asked like, "How strong is it? What does it taste like?"

And we kind of dosed it exactly like a glass of wine where you can always drink more, but you definitely feel it. You don't get drunk off of one glass of wine, but you may catch a buzz. But if you drink two or three glasses, you'll get drunk.

And that's the approach we took for our wine. We don't wanna...this is not a conveyor mechanism for T...not only a conveyor mechanism for THC, but it definitely works. It's definitely there. But it tastes and smells like wine. And it's dosed just about a little bit stronger than a glass of wine but right around there.

Matthew: Okay. And how do you educate bud tenders and people in the industry on what they should know about this? Because there's, you know, there's kind of a flood of products. This is obviously unique. So there's interest, but how do you approach them and talk with them?

Chip: Oh, yeah. So, customer-education, we're spending a ton of time, effort and money on because like you were saying, nobody's ever had weed wine before.

So, every time a dispensary orders a case or I think our minimum is three cases of wine. Every time a dispensary orders for their first time, we have a team of brand ambassadors all over California. And they're just waiting to get a date and a time and then they do a customer appreciation day for that dispensary.

And our real goal for the customer appreciation day, someone shows up, someone on our team comes into the dispensary, pours our non-infused, non-THC wine so people can taste it and see what it tastes and smells like.

But the real goal isn't to educate the 300 or 500 people that come in the door that day. The real goal for them to be there is educate the bud tenders. Because those guys, they're there every day. And we're gonna do about 500 or 600 customer appreciation days in 2019 just in California.

Matthew: Oh, wow. That's smart.

Chip: It's...

Matthew: Yeah.

Chip: Yeah. And it's the only way to, I mean, we try and say as much as we can about that the product on the wine label, but it's really the only way to get out there.

Matthew: And so the non-THC version, how close does that taste to the THC version?

Chip: I'm super proud of it, really, really close. We were astonished. It was kind of an afterthought when we were bottling. I mean, we planned to do it, but we didn't have any high hopes for it.

And then we bottled it and tasted it. And holy cow, it tastes good. People, I mean, apparently just drink it just because it tastes good, even though doesn't have any alcohol or THC in it.

Matthew: Yeah. This is a perfect example of creating a new market category. Because why compete in the insanely competitive wine industry where the margins are tough. It's huge, huge capital requirements when you can create this new segment and be top of mind. So that's a great way to do it.

Chip: Yeah, we're...the future is very bright, that's how we see it.

Matthew: So you're in a difficult regulatory environment in California. What's it like working with regulators and politicians? And, are they understanding of how their laws and regulations have a cascading effect? Or do they seem, like, totally oblivious to that? And what's that process like working with them bringing this product to market?

Chip: Yeah, so the laws come out in you...when the laws are published, and they seriously come out, and they were coming out every three to four months, something would be written in stone, and then it would be rewritten and completely contradictory all through 2018. I think, actually, there's gonna be a lot of...I predict there's gonna be a lot of companies that end up going under because they spent all their cash trying to follow these laws with legal fees and packaging, repackaging, repackaging, repackaging expenses. I've already had a couple of friends, cannabis companies go under because they just run out of cash. They didn't, they couldn't get to market, their product out there and it had to come back. And it's gonna be...it's a really hard thing to do.

But the regulatory bodies are not malicious in my opinion of them. They're not malicious. They just don't have any clue what the laws that they write, what they do to the companies trying to follow them. They wrote a law that said, "You can't use the word wine in your product." And this is targeted directly at us because there's no one else doing it. But the thing is, is we make alcohol-removed wine, and we say that on the label because that's what it is. And they were like, "Dude, you can't even use the word wine, even though you're saying, we say, like, five times that there's no alcohol in it, it's completely removed. This is what the product is. So we've had to re-label our products at least a half dozen, or not to half dozen. Yeah, maybe like...I think we're on number five right now, for relabeling. It's hard. It's really hard.

Matthew: Yeah. They're probably protective of that word up in Northern California I imagine.

Chip: It's not even that, they just don't want to mislead the consumer. And they just did a blanket statement, "Don't say wine, beer, spirits, or you can't use ale, you can't use margarita, you can't use..." And they just did a blanket statement, said, "Don't use those words no matter what."

And then we came to them and we're like, "Hey, we say it's alcohol-removed, non-alcoholic wine or whatever." And they were like, "No, still, that doesn't happen."

So then we had to hire a lobbyist, and help get this law changed because now we're just a cannabis beverage, is what it's called. But that's not what we are. We make wine and then remove the alcohol. It's been tough, man. It's really tough.

Matthew: Yeah. That is tough. And you can have a whole business set up and then, with a stroke of a pen, it's like, nope. That's frustrating. I've seen it.

Chip: Yeah, they got rid of ice cream. I didn't know it was a big thing. But they said no cannabis-infused ice cream. And that put a couple of companies under.

Matthew: Can you say cannabis-infused creamed ice?

Chip: Yes. I don't know. It's because you can't use dairy, it has to do with the shelf stability and refrigeration and stuff like that. Like, so no dairy products.

Matthew: This is such an interesting space. Where do you think the wine and spirits markets' going in the next three to five years? And where's it dovetail with the cannabis beverage market?

Chip: I mean, that question I've been asked a lot in front of large audiences. I don't think, and this is just my opinion. But I don't think the cannabis space is gonna truly cannibalize.

If we make this cannabis-infused wine and it takes off and we sell millions of cases of it, I don't necessarily think that that's gonna cannibalize the wine industry. Because my opinion is, people have their vices already.

If you're over 21, you've tried both, you picked one, you kind of go with it, you know, one or the other, usually. And the first joint wasn't smoked in California in January of 2018. The industry has been around for 20, 30 years, however long you wanna call it, and it hasn't...they've co-existed up until that point. That being said, now that there's more products and stuff available, and you don't have to go to a drug dealer to get anything, it's...the access is there. I don't know. I guess that's the billion-dollar question if you've got the crystal ball.

Matthew: I guess you just create it, is what the answer is. I don't know. I know as I create it.

Chip: Yeah, exactly. I can tell you people are insanely curious about cannabis-infused wine. Everyone's like, "Where can I buy it? Where can I buy it?" So it's awesome.

Matthew: Now let's talk a little bit about patents and intellectual property. What do you see happening there in the cannabis space and with drinks?

Chip: So when we were making this to make to...THC is an oil, and all drinks without alcohol are basically juice, like water. Oil and water don't mix. So to make the THC liquid soluble, so it does mix into the water, there's three ways that I know how to do it. Everyone's inventing new stuff all the time. So, I hope there's still three by the time this goes live. You can either nano-emulsify it, which you just shake up the T molecule with an ultrasonic rod and make the little oil globs really small. You can do a lipid-soluble THC, where you attach it to a lipid molecule, the oil to a lipid molecule or you can do a hydrophobic hydrophilic surfactant. And that's the way we went. Basically, the THC behaves like it's water soluble, even though it's not truly technically water soluble, but it goes into the product and stays in suspension indefinitely.

A lot of people are having problems with getting their THC to stay in suspension when they use nano-emulsification because it'll form a ring at the top. I don't know. It's a complicated thing. But Canopy acquired a company out of Colorado called Abu, and we've...we were using Abu's, we were licensing Abu's technology for the water-soluble surfactant.

When that, when they got acquired, Canopy at the time could not invest in U.S. plan touching companies. So they had to cancel all their THC contracts and licensing deals with all the companies that they were licensing it to except for us.

We took it as a signal that they liked what we're doing and want us to grow and keep blazing the trail creating this category. So, we've got the patent granted to us for liquid soluble technology for seven states for 10 years here in California in the United States.

Matthew: Oh great.

Chip: Yeah. I'm sorry. I kind of rambled off for a second.

Matthew: Good job, good job. Well done.

Chip: Yeah, I guess it...Yeah. And then back in 2000...in November of 2017, we did have this idea and we're like, "Wait, how has nobody ever done this?" So we hired a patent lawyer. They did a search and they were like, "Hey, honestly, nobody's ever done this. It's not in the office." We're like, "Okay, cool. Let's write the patent for this." So then we had talked about it because this is gonna be published publicly by now. But what we did is, we wrote a patent. And the invention isn't removing alcohol from wine and the invention isn't making THC liquid soluble, the invention is putting the two together.

So anybody who makes beer or wine, removes alcohol from it and infuses it with any cannabinoid, THC, CBD, CBG, whatever, is going to...and if we get the patent granted, will end up having to license that technology from us. And we don't know if it'll get granted. Patents are a very tricky thing in the cannabis space. But if it does, it could be a game changer for us.

Matthew: Wow. Very interesting. There's so many dimensions to this. You have to wear a lot of hats and really be convinced that you're doing the right thing to really move the ball down the field.

Chip: Relentless is the right word for it. And sometimes you go down the wrong rabbit hole, but having a good team helps you come out the other end.

Matthew: You were a college, or high school wrestler, was it?

Chip: Yeah. I was one of the best in Texas.

Matthew: Wow, that's saying something. So you're wrestling this pole, whole, all these problems to the ground?

Chip: Yeah, hopefully. I think we're very, very, very close to just really rocking and rolling with this thing. But there's no guarantees in the cannabis space. Every time I give a guarantee, like over the last year, I'm like, "I don't know." I mean, it's always like, I'm 99% sure that this is gonna happen because there's so many curve balls being thrown at this. I mean, a startup is hard enough on its own, but a startup in a regulatorily uncertain environment is even harder.

Matthew: Yes, I agree with that. And where are you in the capital-raising process?

Chip: Yes, so we raised a seed round. And we've pretty much exhausted that. We've got, we just started our Series A about two weeks ago. So we've met with...and because of the product in the first to market, people, every VC, large or small pick up the phone when we call or calls us back.

So we're headed up to Canada next week to be in Toronto for a week and then New York for a week to talk to all the large LPs up there in Canada in the publicly traded companies.

But VCs, just like consumers are incredibly excited. They all want in. "All right, cool, it's a good idea. Let's taste it. Does it taste like wine? Does it smell like wine?" And so far, we've gotten really, really good, really good feedback from everybody. So we're hoping to have a couple of term sheets here by the 19th of April.

Matthew: And for accredited investors that are interested in just learning more about that, can they go to your website and fill out a contact form or anything or is that...?

Chip: Yeah. We actually... it's just, it's, rebelcoast.com. And then there's a Contact Us page. And we've actually had three or four potential investors inquired, just cold-calling us through the website. We follow up with everybody.

Matthew: They're coming for you. They're coming for you, Chip. Finally.

Chip: We are in Los Angeles. But yeah, we get back to everybody, follow up. Because we're in this position, we definitely wanna...we're fortunate enough in this...This prettiest girl at the party thing won't last much longer. I mean, maybe in three or four more months before, I'm assuming, I can't believe nobody's tried to do this. We're a year into legalization in California, like the cannabis and wine capital of America and we're still the only ones doing it. So, I keep assuming someone else is gonna try it but it is incredibly hard to do it.

Matthew: That's what I was gonna say, you've...this whole podcast has been about huge Goliath-size problems. So you're like, "I can't believe no one's doing it." I can. I can totally believe it.

Chip: It sounds easy. Just get wine, remove the alcohol and infuse it with THC. That's the general thing. And I thought when we went, when we first launched, we'd have competition springing up left and right.

But no, but there's one company that said they made a rose, the world's first cannabis-infused rose, and it was just a bunch of liars doing a press release. They've never made it. They're not in market. They're not legal. They're not compliant. But that was our first potential competition. It was just a joke. So, I don't know, it's exciting.

Matthew: Well, Chip, I'd like to ask you a few personal development questions to help listeners get a better sense of who you are personally. But before I do that, is there anything you can tell us to help us, just make us a little bit smarter about wine in general? A lot of people think it's an esoteric subject. And you're so deep in this world. How can we sound a little bit more educated, and be a little bit more educated about wine so we can understand it better?

Chip: Oh, yeah. I guess, so everybody always asks like, when someone's smelling or tasting wine, they rattle off, like the flavors of whatever, that it reminds them of. And it's not that like, there's grapefruit or white peach or citrus used to make the wine, it's just the characteristics of the wine that reminds you of that. So, the best way to get better at tasting wine and being able to talk about it is find someone that loves wine and that does that, that's really good at talking about what they smell and taste in their wine, and then just have them talk to you about it. Like smell the glass of wine with them, have them rattle off what it sounds like, and then when they say what they're tasting and smelling, then for some reason, this always happens, but for some reason, you'll be able to pick up.

You'll be like, "Oh, no way. There is...I smell the grapefruit. Now, that's what that it." So, find a good tasting buddy. And wine's not that pretentious, it's just a delicious way to catch a buzz with someone.

Matthew: Have you ever...do you remember a time when someone used a word to describe the taste of wine that you thought was just so creative or off the wall that you couldn't believe it?

Chip: Yeah. It's usually to describe flaws in wine. There's a compound called VA and it smells like a wet Band-Aid or wet cardboard or wet dog. You don't want that characteristic.

But usually when someone's like, "Oh, I'm getting real, real nasty Band-Aid smell," we're like, "Oh no. Your winemaker's got his work cut out for him. Because to get rid of that, it takes some serious equipment."

Matthew: Oh, my gosh. Well, thanks for that. So back to the personal development questions. Is there a book that you've read that's had a big impact on your life for a way of thinking that you'd like to share?

Chip: Yeah. So, I thought about this one a lot because I've listened to almost every single one of your podcasts also. You're pretty incredible in helping me learn about the industry from years ago when information sharing wasn't really there. So thank you for that one.

Matthew: Sure.

Chip: I used to live in Australia. I used to study winemaking over there. And I spent a week fasting out in the bush and I read "The Alchemist" randomly.

And it was the perfect book at the perfect time. And that kind of just helped guide me throughout the next 10 years, 20 years of my life. Just like, if you put it out there, what you want into the universe, it usually provides it for you. Sounds a little hippie but whatever.

Matthew: No, that's...I found that to be totally true. I walked out of my corporate job 10 years ago, and it was really good job. And I was just like, "I'm doing this," and it's like the universe is, when you commit, the more you commit the universe just comes in and just provides for you right as each step seems like a cliff.

Chip: Yes, absolutely. And it's like, "Hey, this isn't gonna kill you, just it's gonna be really hard for the next couple of weeks. Yeah, it's good."

Matthew: If you could go back in time to when you were just starting this business again, what would you do differently?

Chip: Oh, that's one...that's a tough one. How far back in time, like five years?

Matthew: Sure.

Chip: I would have started back then. I wish I would have been able to see prohibition coming to an end when it did. I thought it was gonna take a couple of more years, so I thought I had more time to perfect a formula for the wine. But I would have started working on this day one in college. I was started studying this, figuring it out so that we could have already been in the market right now.

I'm always kicking myself like, "Oh, if I'd just done this a year ago or two years earlier, we would...all this would be out of our way and we would just be rocking and rolling, selling this stuff." So I would have started sooner.

Matthew: I realize, like, your marketing, you have clever marketing techniques in your illustrations and everything, and how you present yourself has done really well. And I realized that alcohol and the beverage, wine, and spirits industry, that's so important how the brand sits in the prospect's mind even more so than other types of businesses. Like I saw at, was it George Clooney that just sold that mezcal or the tequila.

Chip: Casamigos?

Matthew: Yeah. And I see how he positions that, with him driving, like, vintage motorcycles through the fields, like high deserts of Mexico and stuff like that. It's like, how do you want the prospect to think about this? So you have to really think deeply about that.

Chip: Yeah. Well, for the wine industry, I studied marketing, wine marketing in college. And the one thing I took away and implemented day one for "Sexual Chocolate" and on was, you've got to tell a story.

Because all wines, you know, if they are a California Wine, they're usually gonna be pretty good. The quality of the juice inside the bottle, and then you've got to tell a story on, about who you are, or whatever story you wanna tell on the label.

So for our "Reckless Love," I have a huge handlebar mustache. So I just put it on the bottle, and then wrote a story. And every year we write a story of where we are in our lives and why we're making this wine. And then we printed it with glow in the dark ink because it's one more thing you know, and we like glow in the dark ink. And then all of our cellphone numbers are on the corks just for fun, and it's just a way to engage with people on another level.

Like one of our wines, I make a white wine called "Sunday Fun Day" and we have a scratch and sniff pineapple on it.

Matthew: Someone just drank a bottle of wine and messaged you, Chip.

Chip: Yeah. I get text messages and calls 5 or 10 times a day now. I answer all of them if I can. I love talking to people about it.

Matthew: Yeah. Well, before we started recording, you had mentioned that you did a virtual reality simulation with HTC set. And every time I've heard about virtual reality or augmented reality in the past, it's like not quite ready yet, almost there. This is totally unrelated to cannabis wine. But what did you think about it?

Chip: I mean, I don't wanna use the word "life-changing" because I don't feel like I'm a different person. But I definitely have a different perspective on what reality is versus where it can go. Virtual reality is the...once it's indistinguishable from real reality, things are gonna get really wild, and it's getting close. It's getting really, really close. But it's awesome. It's cool.

Matthew: Oh my gosh. Oh my gosh. I got to give that a try. I tried...the last time I tried it, it was pretty good. And we were talking about this too, before the call, like, I'm worried that it's gonna be too good. So it's like, you don't wanna...you're just like, "I wanna stay in this world and do all these crazy stuff."

Chip: And Elon Musk, as crazy as it sounds, he's got a pretty good theory that we could be living in a virtual reality world created by some other super being, and with unlimited computing power and unlimited energy. It's hard to conceptualize. But once you try virtual reality, and you're like, "Wait, if this felt, if this, 10 years from now indistinguishable from reality, it's gonna be pretty crazy."

Matthew: Yeah. It's like, well, how do we know this is real? Just because it's persistent. And it seems real, like, okay. We don't, that doesn't necessarily mean it is.

Chip: Yeah, that's a whole other rabbit hole.

Matthew: Right. You need at least one bottle of Rebel wine down before you go down that hole.

Chip: Honestly, if you've had a couple of glasses of our cannabis wine and then you play virtual reality, I played for eight hours straight, it was awesome. And I do not play video games. So it was awesome.

Matthew: Well, Chip, thanks so much for coming on the show today and educating us. This has really been an interesting subject. And congratulations to you for all the work it takes to do this, and all the persistence. I think having a background as a wrestler is really probably helpful because this is a lot of discipline, a lot of pain, and just a lot of feedback you're getting as you try to go through the process. But as we close, tell listeners your URL and the best way to find the wine and connect with you.

Chip: Yeah. Absolutely. So I mean, the one that's easiest to remember is just probably Google "cannabis wine." There's no one else doing it. So we'll always pop up. But our website's rebelcoast.com. And what we're most active on and honestly, I kind of feel nerdy saying this but we're most active on is Instagram. So, our Instagram handle is rebelcoastwinery.

People listen to every word we write, everything we say out of curiosity. And we've got 15,000 people on Instagram that are actually genuinely enjoyed following what we're doing because we're very transparent with our ups and downs, and manufacturing, and our team, and our girlfriends, and having fun at the same time. So it's pretty exciting to watch what we're doing, apparently.

Matthew: Good. Well, I've got to check out your Instagram account now. All right, Chip, thanks so much for coming on the show. We appreciate it and good luck with everything in 2019.

Chip: Absolutely, thank you. And please, keep doing what you're doing. It's helped me out a lot. Just navigating the industry and seeing what everyone else is working on.

Matthew: Thank you for that. 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@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.

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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.

Hidden Fortunes in Cannabis B2B Businesses with Alex Coleman of TILT Holdings

tilt holdings alex coleman

Business models from other industries are quickly making their way into the cannabis industry, TILT Holdings is aiming to become the swiss army knife of business-to-business offerings in the cannabis space.

A vertically-integrated infrastructure and technology platform, TILT Holdings delivers contract manufacturing, distribution, hardware, and software for over 1,500 retailers and brands throughout the U.S., Canada, and Europe.

In this episode, TILT Holdings CEO Alex Coleman shares with us an in-depth look at the goings-on at TILT, shares his insights on the future of cannabis, and provides some invaluable advice on how to navigate the cannabis B2B market.

Tilt Holdings Stock Ticker: SVVTF

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

Key Takeaways:

  • Alex’s background in cannabis and what inspired him to start a B2B business in the cannabis space
  • A deep dive into Tilt Holdings and the various companies under its umbrella, including Baker Technologies and Sea Hunter Therapeutics
  • How Alex believes the recently passed Farm Bill of 2018 will impact the cannabis industry over the coming years
  • Up-and-coming technologies like AI, gene editing, and nanotechnology and their implications for cannabis
  • Why big alcohol and tobacco companies are investing in cannabis and the traditional businesses Alex predicts will follow suit
  • Alex’s outlook for the future of cannabis and what he believes the industry will look like in 2030

 

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.

Business models that exist in other industries are making their way into the cannabis industry. Today's guest is Alex Coleman and he is going to explain how his company, TILT Holdings, is aiming to become the Swiss Army knife of business to business offerings in the cannabis space. Alex, welcome to "CannaInsider."

Alex: Thank you. Thank you for having me.

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

Alex: So I'm actually in, we have a office in South Florida in part because the weather in the Northeast has been a little bit challenging right now. Our primary office is in Cambridge, Massachusetts. We have four or five offices around the United States, Toronto and London at the moment.

Matthew: Okay. And I'm in Seaside, Florida today.

Alex: Great.

Matthew: What is TILT Holdings on a high level?

Alex: So TILT has progressed into becoming the leading provider of products and services to other businesses operating in the cannabis industry. And if I could just, I'll do a little bit of background there. Essentially, we provide, on a contract manufacturing basis, marijuana in a variety of form factors of vaporizers, inhalation devices, business and consumer delivery, and a broad suite of software products to about 1,500 retailers and customers and brands throughout the U.S., Canada and Europe. And it's an important distinction, though, that most of the products that we manufacture on behalf of our clients are customized to their specifications and branding. And the mission for our company is really to enable them to operate their businesses more efficiently and connect with their consumers more effectively. And that's the goal of the company.

Matthew: Okay. Alex, can you share a little bit about your background and journey and how you got into the cannabis space and started TILT?

Alex: Yeah, my background is traditional middle market private equity. I ran funds for Citicorp and prior to that for Dresdner Bank, Allianz. Always U.S. middle market-focused, three primary categories of industries. One is food and beverage, which obviously comes into play a little bit in the industry. One is information and business services and the other is specialized manufacturing, defined as sort of a low volume, high margin type businesses. And I was introduced several years ago into cannabis, looked at a REIT and you notice some odd discrepancies around the way that those are structured. And then you go and do a little bit of work in the federal-state conflict and then you look at demand and you certainly define a clear path into how you wanna get into the industry.

Matthew: Okay. What do you think about... The number of publicly-available traded companies in the U.S. is shrinking and private equity seems to be growing. Do you think it's because of the regulatory hurdles and compliance hurdles of being a public company?

Alex: Are we talking generally or specifically for cannabis?

Matthew: Generally.

Alex: Yeah, no question about it. I think that the, you know, as soon as you introduce things like Reg FD and additional reporting requirements and limitations on the information you could provide to the market, it became very challenging to operate a public company. And the proliferation of private capital gives you real viable alternatives to never have to go public. So, you know, I think there's a variety of contributing factors that, really, people think there's far more balance now in staying private versus going public. Whereas 15, 20 years ago, there was no question you would go public as the capital markets opened for your sector and your business.

Matthew: Yeah. And sometimes I worry about the bifurcation of society as the people that have the ability to access private equity continue to do well and then people that have this shrinking pie of public equities they can participate in. I wonder how that's going to change things at all and make them different. I mean, I don't know if you saw the acquisition of SeedInvest by Circle, that app, to maybe start to socialize private companies more. But that's still to accredited investors. So I wonder what the future looks like there. Any thoughts about it?

Alex: Yeah, I mean, it's an interesting discussion because, by virtue of the fact that if you talked to most market participants today, they would argue retail investors should only buy ETFs anyway and that one-off stock-picking has gone the way of every other, you know, past business that is largely inefficient, lack of information, lack of timing. And I think that the, look, if you have a pension fund, if you're participating in, that's going to be in private equity. It's also going to be in the public markets. So, like, there's a lot of different ways that the average retail investor, through some tertiary means, become a participant in both the private and public markets. I also think that from an analytical standpoint, you know, there are ways for individual investors to participate in VC startups, high risk, potential high return, but it's extremely high risk. So I'm not as concerned as the private market provides an alternative for larger cap companies, higher growth companies, because a lot of people end up being inadvertently investors in those companies through other means anyway. So I'm not sure, I think the market's evolving so quickly, I'm not as convinced it's leaving people behind as it is probably decreasing the risk profile for most people that maybe shouldn't be investing in the markets anyway.

Matthew: Okay, fair point. Now let's dive into TILT a little bit more here. You gave a quick overview of the different companies involved there, just kind of in market category. But can you go into the companies that comprise TILT so we can understand at a more granular level?

Alex: Yeah, I can. Although it's funny, we're so integrated at this point. And so the history... So maybe I'll work backwards and maybe through the supply chain and it's easy to understand how we put this together. So if you start, what was Baker Technologies? It was a CRM SaaS platform, which is a very sophisticated way of saying that it simply connected retailers with their customers. And the reason is there's a nuance in the law that prohibits those retailers from keeping customer data on a recreational level when they walk in and walk out. If you opt into a Baker platform, then the store can actually stay in contact with you. And then we go and drive growth. We drive growth through promotional activity, through weather alerts, sporting events, trial on new product developments. We have a over 10% clickthrough rate, now that that's where it started. Then we added a company called Blackbird, which is a business-to-business and business-to-consumer delivery company also providing the software and services for supply chain management.

Well, now we can go and help those retailers manage their inventories better, connect them with original equipment manufacturer suppliers. And we can also do last mile delivery for them if they choose to use that service from us. So it's very, it becomes very integrated with what was Baker in terms of that customer connection tool. Jupiter pens, working all the way back then, fits in that ecosystem perfectly. We can take unfilled cartridges, bring them to the manufacturers, take up the filled cartridges, bring them to the stores. And if the stores so choose, we can actually drive foot traffic for consumers to buy the cartridges.

So now our entire, what was our infrastructure asset platform, which really is, again, describes our manufacturing capabilities in marijuana, well, we now put that into the same supply chain and offer the same contract services to our customers. It's important to note that just about 72% of Jupiter pens are actually customized for our clients. And we look at the same kind of ratio for our marijuana products. If they aren't customized and they're really sold wholesale, TILT is not currently in a branding category in the market.

Matthew: Okay. So we did have Joel, the CEO of Baker on, gosh, maybe a year or two ago. And it was really interesting to hear how all the different ways that dispensaries can touch and reach out to their customers. And I found that fascinating. You seem to have, like, an overarching strategy here. Is it happening kind of organically or do you kind of have a master plan where you're having, as a customer comes in, there's more opportunities to work with them than just one? Obviously, you know, they come in as a Baker customer, but then you're talking about vape cartridges and delivery and all these other things, too. Is there a larger vision on where you're going with TILT here?

Alex: There is. I think you need to pick, even though a lot of markets require to be vertically integrated, meaning you need to cultivate and process, package and sell, it doesn't fit our business model as much. And so as we think about our business model, it's supporting companies that want to develop a retail strategy and/or a branding strategy. And that really requires connecting with a customer. And so I think about our company as enabling all those companies to do their jobs better and connect with the customers more effectively. And so that opportunity for us continues to expand in terms of providing supply-side services to all these companies, whether it be software or physical delivery, or both, that really enables the industry to grow and then we grow along with it. And in part, it's an acknowledgment that the industry is in a very nascent stage of its lifecycle.

There's probably $10 billion of trailing revenue collectively. By our math, if you take some of the data coming out of the recreational states and simply extrapolate it across the country, it's most likely a $100 billion annual market. And that lines up nicely with maybe the beer market, that's $111 billion, and I would put a footnote that that does not include medical products. That's really just a recreational view of where the market could go. We simply wanna be in a position where we can help the industry grow and also benefit financially for our company and deliver returns to our shareholders. So it's just a slate, you know, I think that's our specialization. We're not in the retail business, as I said, we're not a branding company and largely we're really not a cultivation company. Where we do cultivate, it's out of necessity where there's just short supply in the market. But you don't have to be a vertical. We don't have to be a vertical. We can, in other states like Nevada, Colorado, California, Washington, Oregon, you know, we can buy the commodity product and then add the value for our customers and deliver it to the shelf.

Matthew: Okay. There's a lot of moving parts here and deep domain-specific knowledge that's required. You know, I'm thinking about Baker in particular, but also for delivery software, I mean, each state has essentially their own market and has its own regulations. How do you keep up with that and also kind of prioritize what the best opportunities are as you go along?

Alex: That's a very good question. I think that what we've done internally is kept businesses functioning independently where they need to adapt to evolving state laws. Someone described it to me as wearing ballet slippers to work every day. We have two primary silos. We have our software and services division and that contains the Blackbird and Baker and some other ancillary services. And then we have the consumer devices and packaged goods division. And that's as it sounds, it's selling the hardware as well as marijuana products. And really by bifurcating the company like that, it allows us to augment all those expertise both across each line. But within those silos, there is a lot of overlap in all of the previous businesses that now, in many parts, just share headcount. I mean, most of them are just fully integrated now.

And the nice thing is, too, we can leverage all the market data to help our customers. When we do acquisitions now, it's an easier fit. You know, we have a very robust discussion at the management level, how they would fit not just from a product standpoint but culturally. And that's really enabled us to take advantage of what is incredibly, as you point, it's just a very fast evolving market. And so you need to make sure to have a tremendous amount of flexibility in your business model to adapt as laws inevitably will change. And importantly, consumer preferences will change.

Matthew: So with the passage of the Farm Bill and hemp becoming legal, what kind of opportunities pop to top of mind for you? Or how did your thinking change as that got signed into law?

Alex: I would say two distinct parts to that. One is, so hemp extract oil, which I believe it's what it's gonna be called now, with less than 0.3% THC is, it's a commodity. You know, the prices will simply come down as supply comes on the market. And the question is, you know, where can TILT benefit from a product standpoint, delivering to clients or an end product. And, you know, we're working in-house right now to a more larger scale of manufacturing, which we can't do in marijuana products, to deliver product across the states. Drinks come to mind, topicals come to mind, and to some degree, nutraceuticals come to mind. So that's where we're focused. And the in-house knowledge we have around extraction techniques, delivery, and not just delivery. We don't have to use our own. We can obviously use third parties now because it's legal and it's just about our getting endorsed, right, for CBD products.

The other part that I think is very interesting is, you know, everybody talks about the legalization of marijuana, they're both cannabis sativa plants. But talking about the legalization of marijuana, you know, watching the FDA machinate over generally regarded as safe practices and reevaluating all their consumable directives, you know, is definitely cause for concern. And a lot of senators are pushing them to come out with regulations faster that clarifies how we can, and any market participant can deliver product to the shelf that kind of adheres to the guidelines provided by the FDA. We don't have those guidelines yet, you know, so we'll see what happens. I mean, it could be, it could be unknown. It's a consumable product and their job is to protect the welfare of the citizens. So we just don't have any visibility yet on what changes they might make to allow hemp extract oil in a drink product, for example.

Matthew: Okay. And is there any other legislation that you're excited about in terms of it being like a big opening and, like, as big as the Farm Bill where you'd say, "Wow, this is another big milestone we've reached in terms of legalization," apart from, you know, just the federal government stepping aside and letting states regulate as they will?

Alex: Well, I think some form of the SAFE Act looks like it's imminent. And the SAFE Act is basically just protecting us for the banking side. What it does beyond that, we'll see. I mean, it's such an interesting evolution of a market where, you know, you have $10 billion of historical revenue, largely, cash transactions. We are aligned with the federal government to make sure that that is visible and transparent and taxes are paid. You know, we obviously have a problem at the retail level around taxes. You know, we're stuck with a 1983 crystal meth ruling against a drug lord. You know, we pay taxes where we can't shelter any store expenses. How much they tackle with what's called the SAFE Act along with banking, we'll see. It's challenging for the industry right now, but that, I think that's the most likely. The STATES Act is the one that legalizes it, again, whatever definition you wanna use. And that seems to be less sure right now.

Matthew: How do you think exponentially changing technologies like AI, gene editing, nanotechnology could perhaps change or enhance the cannabis industry?

Alex: So, you know, you have to come into the industry and say we've had a 50-year medical blackout on research and broadly. You know, we have now partnered up with people that actually have DEA licenses and have been doing work in cannabinoids for 30 years, but they are not the mainstream. And there's an infinite number of white papers around the health outcomes of using cannabis independently or in conjunction with medical. But again, they're suggestive. So, you know, I think it's a high-level opportunity for us as a company. You know, we have a very robust science team, a lot of formal relationships with medical professionals and we're working diligently to make sure that we can discover ways to address basic conditions. You know, gene editing is interesting because you can obviously help plants grow faster. As importantly, to me, you can also reduce the negative influence of aphids or powdery mildew through that as well.

Now, do we produce plants that have, you know, you do a terpene profile that addresses a specific medical condition through that? We might be able to. It's just, you know, we're putting a lot of money and time behind it and there's some near-term advantages, but I think you have to have a long-term view on that. It is not something that's gonna happen overnight. And as I said, you know, we're just starting to pick up momentum now on new research around using CRISPR nine technology, for example, to help the plant evolve into something that's useful for the consumer or the medical patient.

Matthew: So big alcohol and tobacco companies are making investments in this space. Are there any other types of traditional businesses you see making big investments either now or in the near future?

Alex: You know, I would hope healthcare pays attention and invests and, you know, even a middle company, I would call middle because a lot of consumer products like a Johnson & Johnson seems ideally suited for it. You know, and Estee Lauder might be ideally suited for it in terms of, you know, they use tobacco in most of their products in terms of certain, you know, as a derivative ingredient. So, yeah, I mean, I, you know, tobacco feels a little bit defensive. When we open into a recreational state, we see low-end wine and beer sales plummet. And it could be share-of-wallet, it could be an enhanced experience where you just don't need to drink as much. And so those companies need to really understand it's the same consumer and they really need to figure out the shift in preferences and that's why it makes sense for them. On the other side of that coin, you have maybe an offensive investment by a J and J or some company like that that really wants to go and pioneer new CBD, THC products for specific medical conditions.

Matthew: Okay. Well, Alex, you're in a position where you're having to make projections, talk to investors, look at all these hard objective facts all the time, but it's equally important to dream big and have a big imagination. If you were to look out to 2030 and say, "Hey, you know," I know this is wildly subjective, but what will the cannabis industry look like then? I mean, what do you think we can dream about that will come to pass?

Alex: 2030 is about a century in cannabis time. I would hope that every state in the United States, Europe, Pan-Africa, that these countries have evolved to allow their citizens access to marijuana products in whatever form factors they want. You know, we see trends in consumer preference driving towards micro-dosing. I think if you think about basic, you know, anxiety, sleep, we have the product that can really free people from synthetics and allow them to incorporate it into their day to day lives in a very healthy way. I mean, for goodness sakes, for some reason, cannabis rebuilds your epithelial layer in your gut, protects your liver. There's all sorts of things that come from this.

So my hope is we get through the next 10 years and we shake this social stigma that came from, you know, Nixon in 1970 and that with a right amount of research and investment dollars, you know, the consumer now adopts this same way they have alcohol in their house or anything else. And the biggest difference between alcohol and us is it's actually very healthy and it can be very specific in terms of the outcome. Now where they buy it is gonna be interesting because I think in 10 years, you know, you'll see a lot more home delivery or mail order. You'll certainly see mail order, direct to consumer with CBD products. And I think that's gonna be another difference, that the whole supply chain is gonna be expanded a bit.

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

Alex: No, I couldn't say it would be a specific book. I think you'd have to go, anything from, you know, a Frederick Taylor book to, maybe from a good to great type book in management. I'm learning on the job every day. It's, I mean, I feel really fortunate because I learn something, more than one thing every day, and something about myself. And so I think you have to bring an amalgamation of experiences just from private equity, just from my own intellectual curiosity that really helps make decisions. I mean, you know, one of my favorite quotes is, you know, "The harder you work, the luckier you get." You were asking earlier about, you know, by design or by fortune, I mean, you know, we are, every single person in my management team and hopefully everybody in the company, this is a very consumptive industry and you have to love it. You have to love the frenetic pace. Now there's no way to help those decisions and structure them, you know, unless you've taken a broad approach in everything, including the background of materials that you like. And so, I mean, I would attribute it to, I mean, even, you know, from ''Zero to One,'' the Musk book was great and what are, you know, just some people just aren't asking the right questions. You can draw from all of these things.

Matthew: Yeah. I have a Peter Thiel question for you in just a moment, but first, is there a tool that you and your team use that you consider really valuable to your productivity that you'd like to share?

Alex: Well, I mean, you know, from my own background, personal interaction is key to idea sharing. We have a sort of a on-demand every Monday. The entire management team gets on the phone for as long as it takes and goes through sales reports, product development successes, failures, needs excesses. It's shared across most silos inside the company. And so for all of the great intranet tools and all the other technology we have available, I find that unequivocally, the most important part of the week is that call that helps everybody understand exactly where we are as a company and where we're trying to go.

Matthew: Okay. So you pull up sales reports, numbers, projections and things like that. And when you're on that call, is there anything that in particular you feel like is the most important thing or a hurdle to get over or target to be hit that you feel like, "Hey, if I only do one thing on this call, it's gotta be this"?

Alex: So it's not as specific as that. You know, it's more about, you know, big customers. What are they asking for? What do we need? How can we cross-sell products? So the most important thing coming into the call is making sure that we transition, continuously transition the company and evolve it in a way that's meeting customer needs. So, you know, usually, we get off that call with a dozen good ideas around how to improve our product offering for our customer base, which is the other businesses in the industry. And there's no call that we don't have where there's an overlap of customer or an overlap of product idea, sales initiatives or all of them. And so, yeah, they're very fruitful calls.

Matthew: Okay. Now here's that Peter...you mentioned the book ''Zero to One'' and here's a Peter Thiel question for you. He's the author of that book. What is one thought you have that most people would disagree with you on?

Alex: I would say I am not interested right now in seeing marijuana become legal federally.

Matthew: Okay. And why is that?

Alex: You know, as I said earlier, the Farm Bill really is a good test case for what happens when the federal government becomes involved. There's no current oversight or legislation on the federal level. At the state level, we have very specific requirements about lab testing, quality of product, delivery of product, a seed-to-sale tracking system that doesn't let anybody sell product at the point of sale unless it started in that state. Now is, like, the introduction of federal bodies like OSHA, the FDA, other groups, is that a good thing? You know, I mean it's like "Charlie Wilson's War." Maybe. Maybe, maybe not. We know what we have today and the number of shifts we have to take a week, the shifts in packaging or delivery or how we test product on a state by state basis right now is infinite. And so we have a lot of requirements that will only be increased with a federal government position that makes us legal and then the intervention by the federal government in the evolution of the industry.

Matthew: Okay. So kind of to go back to your point earlier in the interview where the regulatory and compliance and all those costs just go up a lot and you've got a lot of different referees on the field making different calls and it just gets confusing and expensive.

Alex: Yeah, well, that, so there's no question about that. And again, it's not that I don't... It's an eventuality. My concern is that the industry has the right amount of time to educate the people that will write the laws that eventually govern the industry. That's all. So it's not opposition, it's more acknowledging that it's not as simple as saying we're gonna make it legal tomorrow because that has a large number of unintended consequences. Now, the other side of this, my other big concern is, you know, as an industry, we might be spending $5 million or $10 million a year on lobbying efforts. You know, I think the drug industry, the last number I saw was $125 million. Now, what is cannabis doing? It's providing an alternative to the proliferation of synthetic drugs that have only become available because cannabis was illegal, right? Opiates, etc., or sleep aids, anything that had been synthetic. Now, we have the solution.

My other concern about the legalization is that the drug companies get involved and writing some type of the legislative initiative that then makes it more challenging for us to simply get a product to the customer that's safe and easy to use. You cannot overdose on THC. There's no long-term organ damage. You know, we have some very accelerated programs right now for post-op recovery, which hopefully will take the place of opiates. And my concern is if we don't accelerate that knowledge base fast enough and the federal government takes a position backstopped by, you know, a $125 million lobbying effort, well, the net loser's gonna be the consumer.

Matthew: Right. That's kind of, those... What you're describing there is invisible to most people. They don't think about that, how big interests sometimes come in, in this to craft things to block out other entrants is essentially just defense. They're paying for big defense and limit their competitors. So, well said. Alex, as we close, how can listeners find your stock ticker and also how do they connect with you and find your websites and so on and so forth?

Alex: Yeah, so the URL is tiltholdings.com. T-I-L-T, Holdings. We are traded on the Canadian Securities Exchange or more familiarly known as the CSE under the ticker TILT, T-I-L-T. And I believe within the next 24 hours for U.S. investors, we are gonna have our OTCQB listing, which is basically linked to our Canadian Securities Exchange stock under the ticker, T-I-L-T-F.

Matthew: Okay.

Alex: So, you know, it's readily available. It's a good retail stock in terms of accessibility.

Matthew: Okay. Alex, thanks so much for coming on the show today and educating us and good luck for the rest of 2019.

Alex: I appreciate your time. Thank you very much.

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@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.

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Cannabis Capital Raising is Maturing Here’s How…

Troy Dayton CEO of Arcview Group

With the cannabis market projected to hit $31 billion by 2021, it’s easy to feel like the industry has simply taken on its own momentum.

However, what most people don’t know is that there’s a group of investors called The Arcview Group that funds the very companies we’ll be reading about in the headlines 1-2 years from now.

In this episode, founder and CEO of Arcview Troy Dayton gives us an in-depth look at the goings-on at Arcview, shares his insights on the future of cannabis, and provides some invaluable advice for those looking to take the plunge.

Learn more at https://arcviewgroup.com

Key Takeaways:

  • The cannabis industry’s current landscape and where Troy sees it heading over the next few years
  • How The Arcview Group has evolved from angel investors to now also include venture capitalists and large companies looking to make acquisitions
  • Overlaps in the entertainment and cannabis industries and how this could positively influence cannabis’ growth
  • The amount of capital Arcview investors have invested to date and projections for the future
  • Troy’s advice on what to look for when investing in startups
  • A deep dive into Arcview Ventures and Arcview Market Research
  • What it will take for cannabis to become as established as other industries and start seeing more interstate commerce

 

Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday, I 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.

Many of us read the cannabis headlines and awe each day. We see an industry exploding, it just seems like things are happening of their own momentum. But there's a group of angel investors that meet several times a year and fund the companies that we'll be talking about one to two years from now as we read about them in the headlines. The name of that angel investing group is called the Arcview Group. And today, I'm excited to welcome back Arcview's founder and CEO, Troy Dayton. Troy, welcome back to CannaInsider.

Troy: Thanks for having me, Matt, it's great to be back.

Matthew: Give us a sense of geography, where are you at today, Oakland?

Troy: I'm in Oakland, California.

Matthew: Great. And Troy, you've been on the show twice before, and we talked about your background and cannabis advocacy and your pivot into creating Arcview, so today, let's focus on investing. So just so people can get their bearings, the first time you were on, we talked about Colorado and Washington as they were kind of the focal point, and now we have 33 states with medical or adult use, and so much has changed. What is your 10,000-foot view of where we're at right now, and the context of how you view the cannabis landscape?

Troy: Yeah, you know, really ever since 2012 when Colorado passed legalization, we've been at just an incredible inflection point, and at any time you check in, it's like, "Well, we're at an inflection point, right?" But it's always been true. And I think, you know, there's just an endless stream of superlatives for the last, you know, seven years, but this batch of superlatives is really seeing this massive increase in the amount of investment. You know, there was over a 3X increase in investment into the cannabis sector in 2018 over 2017. That's incredible, and in fact, there was more money invested into cannabis companies last year than there was legal cannabis purchased. So to give you a sense as to what's changed, it's...there's now...the investment community has caught on to the fact of what you and I have known for quite a while, which is that the compound annual growth rate for the cannabis industry is tremendous. In fact, from 2018 to 2019, we project a 36% increase, which will be the largest increase in a single year that we've ever seen.

And so the investment community is responding to that. And I think the investment community is really noticing that the barriers that have really kept them out for the last, you know, five, six years, they can taste the evaporation of those barriers. Things like banking, things like end to federal prohibition, things like the IRS tax code issues, and some of the stabilization that needs to happen in the state markets for it to be conducive to activity, and then of course, what's happening worldwide. And even though we're not there yet on any of those issues and those barriers evaporating, the fact that the capital is starting to pour in ahead of that is a good signal that the smartest people are...can really sense the end of these barriers coming in the not too distant future. And as we get closer, the level of investor and the amount of money that they're going to pour in is going to even eclipse what we're seeing today. Because, despite the fact that we are seeing a lot more investment, it's still surprisingly capital constrained when you consider the opportunity relative to other industries that have similar opportunities.

Matthew: Now let's rewind to your last events. Can you tell us where that was at and in terms of the tone of the entrepreneurs' pitching and the sentiment of the investors, can you tell us, give us a little color around that?

Troy: Yeah, so our last event was in Los Angeles in the beginning of February. And, you know, I think the biggest thing is, it's interesting listening to your intro about angel investors, that's kind of like, that's an old story. I mean, we were only angel investors because that's the type of investors that were involved in the cannabis sector for the first, you know, six or seven years of Arcview, but it's really changed. I would say angel investors are a minority of the attendees at our events.

Matthew: Oh really? How has that changed then? What's the makeup now?

Troy: Well, there's a lot of venture funds, you know, people who were originally angel investors with their private money but we're full-time investment professionals in their day jobs, but those people weren't involved...either those firms have gotten involved, or those people have started their own firms to deploy capital. And so, it's a little bit of a different thing. Then there's also larger companies that are looking to make acquisitions in this space and partnerships in this space that are there, as well as public companies, companies that were raising capital at one point, and maybe are still, but are simultaneously looking to make acquisitions. So we have a lot of the bigger public companies that now have pretty huge market capitalizations and can use that to buy other companies, so a lot of those companies are there as well, and then a few more ultra-high-net-worth people, or people representing ultra-high-net-worth people.

So I would say, you know, of the investors at the event, I would say, you know, less than 30% primarily identify as angel investors. Of course, across the board, you've got people placing some of their own personal money into these things. But that's really changed, and that was particularly evident at our last Los Angeles event.

And I'd say the sentiment is that, you know, the companies have to be really good. Like people are not supporting companies that are not amazing, right? That don't present really well. And I think, you know, in the past, in years previous, the competition just wasn't as stiff as it is today. And so what you're seeing is companies recruiting out of big alcohol, and big tobacco, and big natural-products world. They're recruiting out of these top companies, and bringing them into these companies. And that's one of the big shifts that we're seeing. And I think, you know, there's also a lot more attention to data and macro trends, and less gut-level business. It's all we used to have was our guts, right?

Matthew: Right.

Troy: And now, there is this world of data, and, you know, making larger, higher leveraged decisions, because as companies are growing and moving into their A, and, B, and C stages, it's a whole different ballgame. And then when you look at the startups, you either have people focusing on smaller and smaller niches of problems, or people bringing incredible backgrounds and whole new better mousetraps to solve the problems for which there are already a dozen or so companies trying to solve that problem for. So it's really a different ballgame.

Matthew: And since that event was in L.A., did you see any kind of more dovetailing of the entertainment industry with the cannabis industry?

Troy: Absolutely, I mean the entertainment industry sees the opportunity here. There's so much overlap between culture and cannabis, and particularly with a lot of celebrities getting involved as well, and some of the advertising restrictions paradoxically opened up more opportunity because you know that... How else are you going to get your products in people's minds other than through various entertainment means and things like that? So absolutely seeing more of that.

Matthew: And I know you typically have this information on the tip of your tongue, so what is...how much capital have Arcview Investors invested to date?

Troy: Well, of what we know of, which we are 90% sure is just this fraction of what's actually happening now, we used to be able to track this much closer, but during this explosion of capital, it has become much harder to track what's happening in our group, but we've counted over $240 million invested into a little over 200 companies in the cannabis sector just from our members to companies that have come through our ecosystem.

Matthew: Okay. And can you think of an entrepreneur that maybe didn't have their best showing initially, but took the feedback that was given from investors in the ecosystem and improved? Because there's some pressure up there, if you go on stage and you don't have a background in presentation or anything like that. It's not something that everybody feels totally comfortable with out of the gate. Some people are just naturals. But for someone that's not, have you seen someone evolve and then go back out and like really nail on the second or third time?

Troy: Well, nowadays you don't really get second and third times, right?

Matthew: Okay.

Troy: I mean, it's so competitive now that, you know, you really gotta be really good, or you've got to have a really good business. And that's the other thing I would say is, it's no longer so much about presentation as it is about fundamentals, and about having a good track record. And so certainly, you know, you see people who have a strong business and a strong background, they don't need to be that great of a presenter if they've got those other things because especially as we shift into more professional investors who, it's their job to look at this stuff, it's a little harder to just be a, "Wow" presenter, and really get through it. And so there's two examples I would give of companies that have had major struggles and have reinvigorated investors' interest and gotten them re-excited of companies that have been really involved with Arcview over the years. And I would say, both ebbu and MJ Freeway are, kind of, in that boat. For a background, ebbu recently sold for over $300 million to Canopy Growth.

Matthew: Right. I saw that. Yeah.

Troy: And ebbu, you know, raised a good portion of their early capital through Arcview members and then, you know, ran into some issues and some challenges and their sales weren't going well and there was leadership changes, and...really tough. And, you know, a lot of people thought, "Oh wow, we were counting this company out." And then, you know, they were able to turn it around. They pivoted their business model to an intellectual property model, and turned around and sold it a few years later for just an enormous multiple. And I think that's a story where it shows you that, you know...there's this term in poker where you say, "All you need is a chip and a chair." If you still are sitting at the table and you have a chip left, you've got a chance. And some people do their best when they're...necessity is the mother of invention and they are up against the wall, and they've got to figure out how to make one or two chips be their saving grace. And that's what makes being in business and being in an industry as volatile as the cannabis industry. It's just part of what makes it exciting, it's part of why we all play the game, right? And I think that's a great example of it.

Matthew: Yeah, and there're colorful people in this industry to begin with. And when then you put them up against the kind of those circumstances, things get...it's like an episode of VH1 "Behind the Music." Like incredible things happen that people will be talking about for a long time.

Now, what are the most common questions you get from investors that are kind of thinking about joining Arcview, and how have those questions changed from when you first started to today? I mean, it sounds like the industry is maturing quite a bit from your vantage point, so are the questions more, not so much seed-stage-investment-type questions, but more mature market questions?

Troy: Yeah, yeah. I think you know, initially, people were like, "What...like I'm excited about the cannabis industry, I read about it in the news, how do I get involved?" And they would call and they would know nothing, right? And they would have no access to deals in this space. Now it's pretty rare to run into somebody who has no exposure to understanding some of the metrics or... I mean, even now, it's pretty hard to run into somebody that hasn't looked at a few deals in this space and doesn't have a census to like the different aspects of the business, at least at a surface level. And so, I think what really makes the difference now is about building peer networks of trust with other investors and other companies. It's not just about deal flow, it's about how you wind up negotiating with those companies. It's about how you place that capital, it's the kind of a network that you build because I think people more and more understand that this is, you know, ultimately a relational game.

And it used to be that any company that was big enough to be in an A round or a B round would...you would already know them. But now, there's no single investor that could actually wrap their whole head around all of the opportunities for companies that are now in growth phase. There's just too many of them to keep your head around them. And so that's where having the kinds of relationships that bring you certain deals that... And the other thing is that deals are getting snapped up now, it's not like it used to be that every company had a tough time raising capital. Well now, you've got deals that only get passed around 10, 15 people before they're done. And so, that's why it's important to really know the other people in this space, and to build those trust networks, and to show them that you're somebody that you want them to show you a deal. And increasingly, more of the deals that are getting done, you know... I don't...I've never even... You know, they just...they kind of flow through the group in various ways.

Matthew: Okay. Now, how can an investor get very comfortable with a startup? Because one of the questions I get emailed most frequently is that, "I'm considering investing in a company, but I can't tell if they're legit or if the management team's any good." And I have no answer for that. How do you tell? I mean, that's a subjective thing, but maybe you could talk about how investors get to that comfort level. What is the most typical things people do to get to comfort?

Troy: Yeah. A couple of things and this is...and the answer to this is the reason why we created Arcview, right? Which is that this is the hardest question, and I don't purport to have the answer nor should anybody, right? There's a couple of ways that you do it, and they all involve other people. So which is, you know, the first is, you want to look at a couple other deals in the similar vein, right? If you're looking at a packaging company, and you're trying to evaluate this strategy, and you're trying to evaluate this particular team, and the valuation, how many other packaging company deals have you looked at? If it's not at least five or six, then you don't have enough information to look at this. Or if you've got to find somebody else who's looked at a bunch of different packaging deals and have them give you their feedback on how this one compares.

Secondly, it's about knowing what you don't know. You know, if you're in the packaging business, well then you probably will do a pretty decent job of evaluating this packaging company, but if you're not in the packaging business, then you've got to talk to some people who come out of that realm and learn about what they know.

And then the other is to be connected with customers, and not just customers that you pick up the phone and call, but, you know, people where you have the kind of exposure and relationship with where they'll give you the real deal, right, as opposed to just getting references from the company. And, you know, they're very few ways to do that very efficiently, which is why we've put together our group, which is so you get in one place, with a lot of these folks, as well as, you know, through an online platform, and then also through our team, which who can connect you to the people that you're most needing to connect to to evaluate a deal. Now there are certainly ways to do that without Arcview or a group like ours, but it's just more work.

Matthew: Yeah. And there's more arms to Arcview now, there's Arcview Ventures, there's Arcview Market Research, maybe you can tell us a little bit about Ventures to start.

Troy: Yeah. So three, four months ago, we launched Arcview Ventures, which is a venture fund, and we are in the, kind of, raising phase for that right now, and Brian Shang and Jeanne Sullivan are our general partners for that. And we're going to be really focused on A stage, growth A and B stage, sort of, growth stage companies in the hemp, and brands and, technology space...agricultural technology space as well as, you know, software and things like that, and really, really focused on that. And I feel like we've got a unique role to play there given all of the exposure that we have to potential deals.

Matthew: And you've also been producing reports here for a number of years, the Arcview Market Research State of Legal Marijuana Markets is probably the most well known, but can you talk a little bit about the research that you're generating and how that works and maybe the partnership with BDS?

Troy: Yeah, yeah. So, I'll start back a little further which one of our main partnerships and things that we've worked on is creating CanopyBoulder, which is a seed stage mentor-driven accelerator in Boulder. And one of the companies that came through CanopyBoulder was BDS Analytics. And right as that was happening, Arcview, who had been producing these market reports for years, realized that this industry was maturing, and as it needed more data and more data was starting to become available, and we had to decide, are we going to become, you know, a data company in order to do this or are we going to partner? And we thought, you know, "Hey, that's not what we really...we don't really, really know the deep data. We understand the market, and we can make sense of data, right, but we're not going to be the one that's generating it." And so we partnered with BDS to, you know, meet the needs of an evolving, maturing industry.

And so, we've been putting out reports with them for a few years now, and it's really raised the bar for the cannabis sector and has really become sort of the industry Bible, so to speak. And, you know, we released a semi-annual update to our sixth edition of "The State of Legal Marijuana Markets." We'll be coming out with the seventh edition very soon. And it's, you know, it's...you know, your listeners are big purchasers of our market reports and big downloaders of our executive summaries, but, you know, we really try and give a really big overview of what's happening, and then, we've also been putting out a lot of reports that go specifically into certain topics, so going into concentrates. We just put one out about how pharmacies and dispensaries are going. The pharmaceutical industry and then the state-regulated industry, how those two industries are going to compete with each other, and what the dynamics are there between pharmaceutical development with cannabinoids versus, you know, oftentimes having that very same product basically available for a fraction of the cost at a local dispensary, those sorts of dynamics. So we're putting out a new report every, you know, four to six weeks now, based on that, and so people can subscribe to the Cannabis Intelligence Briefing service, which gives you access to everything as it comes out.

Matthew: Okay. And what do you think is in store for the cannabis industry in the next three to five years that might surprise people that they don't see around the corner that you feel like not enough attention is being paid to but you see it pretty clearly?

Troy: Yeah. So, one of those is about this question of valuations and execution, right? So we were in this phase right now where the companies... Most of the value here has been created recently by moving assets around, essentially, M&A, mergers, and acquisitions, bringing companies on the public markets and seeing, you know, a big arbitrage between private company valuations and public company valuations. This is where most of the money's being created right now. But once you bring all these disparate elements together and you move it to the public markets, which gives it more access to capital, and, you know, there's all this financial engineering that happens, right? At the end of the day, the real measure of whether a company is going to succeed is whether or not they can get these disparate elements to work together, which means getting the right talented people to work well with other really talented people.

And at the end of the day, everything in a business revolves around getting people to work together to execute on a vision. It's not about selling that vision to investors, it's about actually executing on it. And that's going to be hard, that's going to be hard to do, especially for companies that are making an acquisition every month or two to get those systems actually working synergistically together, and get those people actually working synergistically in a way that creates efficiency, and then ultimately, it really rests on whether or not they can make regulators and customers happy at the same time, and to be able to use all of that, to make that happen. That's what's going to really, ultimately make these companies valuable, not all the financial engineering and stuff that's happening right now. So, I think that's really important, which is one of the reasons why, you know, recruiting is such a big deal, and I think we're going to see a lot more management consulting, and executive retreats, and these sorts of things because we're going to need to get everybody working together. So it starts to look a lot more like other industries very quickly.

Another aspect that I feel is under considered is....everybody thinks interstate commerce is just going to happen. That like, as soon as the STATES Act passes or anything happens at the federal level, all of a sudden states are going to be able to trade and countries are going to be able to trade, but I don't think that's how it's going to work. I think particularly in these Northeastern states, in Florida and these sorts of places that have very limited licensing, I think they're going to hold on for dear life to the regulatory models. They do not want to be competing with other states and other tax codes and these sorts of things. I think maybe in the West, there'll be a little bit more interest in this because they're a little bit more open-type markets instead of very constrained, but I think eventually court cases will bust it open and will cause there to be interstate commerce. But I think that we're looking at probably two to four years after the effective end of federal prohibition before we really start seeing interstate commerce. And so, I think people that are making their business models based on the idea that we're going to be able to trade back and forth very soon, I think they're mistaken.

Matthew: Interesting.

Troy: Yeah. And then the other thing, which is sort of the obvious elephant in the room, so it's not really unique for me to be saying it right now, but hemp and CBD are going bananas. I mean, this is wild and I... You know, I think we're all trying to wrap our heads around it, frankly.

Matthew: Okay. Troy, I'd like to ask a few personal development questions to help listeners understand who you are individually, and I've asked you some of my favorites in the past, so I've come up with some new ones here for you. Is there a best practice that you've implemented in your business that has been really helpful that you'd like to share?

Troy: Yeah, so one of the things we've been doing at Arcview for years now is, once a week the whole team gets together, and we do a couple of breathing exercises just to center ourselves just for 30 seconds or so to get present. And then each person goes around the room and they say somebody that they appreciate on the team and why, what they appreciate about them specifically, it can't be like a general thing. Then they say what it is that's on the top of their mind workwise, like what's the big thing that they want to accomplish this week or this day, and that gives everybody a sense of, you know, what everybody's working on. And sometimes in an organization, it's harder really to get a sense as to what other people are working on, and that helps to create more synergy with people. And then any bottlenecks, anything that's in the way, because oftentimes someone will say that something's in the way, and it turns out, somebody else has the solution to that, or there can be some more empathy for whatever they're going through. And then lastly is celebration, right? And oftentimes these are more in people's personal lives, right, really humanizes people in the workplace. And, you know, this has been, you know, kind of a thing we do once a week, and I think it's made a huge difference in morale, and a huge difference in people feeling appreciated, and to formalize it in that way.

Matthew: Great. Is there an opinion that you used to hold really firmly, have had for a long time that has changed in the last 18 months?

Troy: Yeah. This is related to the cannabis sector, hemp-derived CBD. You know, for a long time I kind of thought that hemp-derived CBD was not going to ultimately be a thing because it didn't have as strong of an impact on people as when there was THC involved. And then there was this on... You know, Sanjay Gupta had his whole special about, you know, what we talked about, "the entourage effect" and all of this. But consumers seem to be buying up hemp-derived CBD, and there are credible brands and credible people that are now supporting and coming out with products that are from hemp-derived CBD.

And so, I think I was likely mistaken there. I mean, you know, time will tell whether this is a flash in the pan, kind of, hot trend that's going to dissipate, or whether it's real, but I know lots of people who are using hemp-derived CBD and saying that it helps them with the issues that they're dealing with. So yeah, that's one area where I think I was probably wrong, but I don't think I was alone there. I think a lot of people in our industry and probably many people still share that opinion. But at the end of the day, the consumer is king.

Matthew: Now, Troy, if you were not in the cannabis industry and you had a career that was solely for fun, what, what would it be?

Troy: But Matt, this is so much fun.

Matthew: It is fun, it is fun. I mean, I mean just totally fun, not in the cannabis industry.

Troy: Yeah, what I love doing is bringing people together in interesting unique ways, which is some of what we do at Arcview, but it's less about the topic, whether it's cannabis or anything else, and it's more about this idea that humans are magic, and that when you put them together in the right type of context, with the right kind of prompts, and the right kind of intention, that magical things can happen for people, and they can feel, you know, transcendence, and they can feel connection in a way that they didn't think they could feel connection with, particularly when it's across difference. You know, people, they didn't think they would connect with that turns out that they can. And I love creating those kinds of contexts, whether business or personal.

You know, for example, a friend's wedding recently, I led a group exercise that got people connected and it's one of these multiple-day weddings, and it was really powerful to see how... You know, people at weddings, they fuss over the flowers, they fuss over the band, and the food and all of this kind of stuff, but usually what a couple really wants is for their family members who are from disparate areas and different subcultures and different ages, they wanted them to bond. They want those people to bond and to connect and feel good about each other, and this was an opportunity to put some real focus on that in a way that I think might have achieved the goal. So that's the kind of stuff I get excited about.

Matthew: Oh, cool. What did you have them do?

Troy: There are a number of... It's different ways of putting people in contact where they get to see how similar they are, and then also really appreciate the ways in which they're different in a way that is that is fun for them, makes them feel closer.

Matthew: Okay. Well, Troy, that's for coming on the show today. As we close, can you tell listeners how they can find out about your next event, about the research and anything else you'd like them to know?

Troy: Yes. You can go to arcviewgroup.com or arcviewmarketresearch.com and I think our website is very explanatory about all those things. And our next event will be in Vancouver, April 23rd through 25th. It's a beautiful venue, it's a beautiful time to be in Vancouver, and if you qualify, we would love to have you.

Matthew: And accredited investors are the ones who qualify, and just go to your website and fill out the form, or to speak with someone, or book a call or something like that?

Troy: Correct. Exactly.

Matthew: Okay. Troy, thanks so much for coming on today. We've got a really exciting future, and I'm glad to be part of it with you.

Troy: Yeah, congrats on all your success as well.

Matthew: Thanks, Troy.

Man: 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.com? Simply send us an email at feedback@cannainsider.com, we'd love to hear from you. Please do not take any information from cannainsider.com or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.

Matthew: Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider.

Man: 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.

Matthew: 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.

Can Craft Cannabis Survive The Big Money Takeover?

ryan stoa craft weed

Can small-scale craft cannabis survive against huge corporations and the big ad practices they’re introducing to North America?

Here to help us answer that is Ryan Stoa, Associate Professor at Concordia University School of Law and author of “Craft Weed: Family Farming and the Future of the Marijuana Industry.”

In this episode, Ryan argues the need to keep cannabis “more craft beer than Anheuser-Busch” and proposes a Marijuana Appellation system that would support a sustainable, local, and artisanal farming model within the U.S.

Learn more at http://ryanstoa.com

Key Takeaways:

  • Ryan’s background in law and cannabis and what sparked his desire to write “Craft Weed”
  • Why Ryan argues we need to support craft weed over big companies with large scale cultivation facilities
  • The extensive research that went into Ryan’s book and the information that shocked him the most
  • Smart farming and how it relates to indoor cannabis growing
  • How Ryan believes the newly passed Farm Bill of 2018 will affect the small American family farm
  • Why the desire for sustainable, artisanal cannabis fluctuates across the U.S.
  • Ryan’s positive outlook for the future of cannabis agriculture and how he believes legalization will benefit our culture
Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday I 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. Can small scale craft cannabis survive in the face of huge corporations bringing big Ag practices to North America? Here to help us answer that question is Ryan Stoa, Associate Professor at Concordia University School of Law in Boise, Idaho and author of the book "Craft Weed Family Farming and the Future of the Marijuana Industry." Ryan, welcome to CannaInsider.

Ryan: Thank you very much, Matt. It's a pleasure to be here.

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

Ryan: I am in my cabin in the mountains outside of Boise, Idaho.

Matthew: Oh, nice. And I'm in Charleston, South Carolina today.

Ryan: Awesome.

Matthew: Can you share a little bit about your background and journey and what drove you to write this book?

Ryan: Sure. So, I started my career in Miami, Florida, Florida International University, and was studying at the time, predominantly water rights and water conflicts around the world. And I turned my attention to water conflicts domestically here in the United States and one of the conflicts that originally jumped out to me was occurring in Northern California. And it was between, you know, cannabis farmers, small scale cannabis farmers, many of whom were doing their best to practice sustainable and legal cannabis agriculture. But were not doing so with water rights that have been granted by the state of California largely because the state had not figured out how to develop a water permining system for cannabis agriculture. And once I kind of delved into water conflicts in the cannabis industry I realized that there was a huge number of questions that regarded cannabis agriculture and its future. And once I started digging in I realized that there was just so much fruitful information out there to uncover and discuss and ultimately write about in my book.

Matthew: Okay. So, your book is called "Craft Weed," can we have craft weed as big companies move into the space and focus on huge large scale cultivation facilities?

Ryan:Yeah, I really believe we can. You know, I'm not pretending that there won't be this sort of big marijuana model that'll come to become a reality. You're already seeing some really good investments by big tobacco and build out big alcohol players, you know, the owner of Corona beer has made a billion dollar investment in a Canadian marijuana producer in late, I believe, in August of 2018. And then in December, a few months later the owner of Marlboro made an even bigger investment in a marijuana producer...Canadian marijuana producer. So, you're seeing a lot of money coming in and certainly like other industries, there's likely to be consolidation and scaling up and perhaps even a commodification or commoditization of the product. But I think craft weed or artisanal model of marijuana agriculture and production can survive and even thrive. I think that's really what a lot of consumers have shown an interest in and a preference for in terms of diversity of products and strains.

I think people look for higher quality and sort of the products that they're consuming, especially if you look at other industries such as the wine industry and the craft beer industry there's evidence out there that a craft model can coexist alongside the sort of cheaper generic products. And I think that's just as likely to be true in the cannabis industry.

Matthew: Okay. Was there anything that really surprised you when you were researching this book that really jumped out that you weren't expecting?

Ryan: Yeah, you know, I was roughly familiar with the history of cannabis, and of course I knew that cannabis cultivation and use stretched back centuries. But I think what surprised me a little bit about the history of cannabis cultivation, I think sometimes we sort of assume that you know this war on drugs that the US implemented in the 20th century was something really novel and new. And that previously everybody had been in love with cannabis plants and that's really not the case. Cannabis cultivation has been controversial for centuries and it's been...and many cultures around the world have sort of had this tension between those that recognize the opportunities and potential of cultivating cannabis on the one hand and authority figures that were uncomfortable with it and try to prohibit it on the other hand. And so it provided sort of a useful backdrop and really surprised me in the sense that, you know, a lot of cultures and societies have tried to deal with cannabis cultivation and square that with our societal norms.

Matthew: It does not surprise me at all because I feel like the first time you consume cannabis you say, "This is not anything that I was told it was. It was demonized." And then the second thing is that you start to ask other questions. So, I could see while it's why authority figures don't want people asking a lot of questions, it makes a lot of sense.

Ryan: Yeah, and, you know, the cannabis plant as many of your listeners would likely now, you know, as a diversity of uses. It can be recreational, it can be medical, it can be therapeutic, it can be spiritual. And historically it's been used for all of those reasons and I think what can be especially threatening, especially historically where, you know, groups that were using it for spiritual purposes that sort of threatened the, you know, the status quo or the world order of the dominant society. And I think that those were cases where it was perceived to be especially threatening.

Matthew: Let's talk about smart farming. And how does that dovetail with indoor cannabis growing?

Ryan: So, there's been a rise in the last few years of this concept of vertical farming or smart farming, in other words, growing crops indoors. And by doing so you can optimize growing conditions and increasingly monitor those growing conditions to a very scientific degree. And so, a lot of smart farming operations will have sensors for the quality of the soil, and moisture content, and the climate, and the temperature. And you're measuring all these things at once and those technologies can inform you when, you know, those plants need more inputs or need a change to their growing environment. And you know, it's interesting that that concept is now increasingly being applied to grow produce indoors. And really a lot of the foundations of that indoor farming movement or the vertical farming movement are, you know, indoor cannabis grows, which sort of developed out of necessity in the 60s and 70s when the federal government and state law enforcement were starting to go after cannabis outdoor grows. It drove cannabis growing inside and the benefits of that are still numerous.

You know, you don't have to be subject to the whims of mother nature. Now you can control your environment and really dial in your system. And of course, there are also downsides and as I talk in my book, I think, you know, indoors farmers really need to reckon with the fact that the, you know, the cost and energy consumption required to grow plants indoors instead of under, you know, the bright light and free light of the sun it can be an enormous challenge.

Matthew: So, most licensed cultivators operate indoors as we've talked about, but how will the greenhouse model, will that be a catalyst here, you know, to be more sustainable? And how do you think that will look because politicians are still really nervous about this. They treat cannabis like plutonium. What do you think is gonna happen?

Ryan: Yeah, you know, I think one of the interesting developments in the cannabis industry and the legal cannabis industry is that you've got these two different communities growing cannabis. There are the indoor growers on the one hand and the outdoor growers on the other hand and both are really passionate advocates for their model of farming and just can't see how the other approach would have a viable future. And, you know, that's interesting. I think eventually it may be that one comes to become more popular than the other. You know, at the moment, you still have a thriving outdoor cannabis agriculture community, especially in western states and especially in Northern California. But certainly authorities in some states aren't even allowing outdoor cultivation largely for the reasons that you mentioned. They want it to be out of sight and out of mind. And so that certainly gives a leg up to the indoor growing community.

Ultimately, you know, I think there's probably going to be a happy medium in the form of greenhouse agriculture. It makes sense that you would create a growing environment in which you're taking advantage of the sun's light energy while at the same time, you know, not subject to all the whims of mother nature including storms and droughts and the like. And so, I think greenhouse, you know, that sort of middle ground or what some state license issuers or regulators are calling is sort of mixed light approaches are gonna have a bright future, no pun intended.

Matthew: Now, how will the Farm Bill affect the small independent American family farm? Will it be a new era of like these beautiful systems being built with small family farms being able to support themselves and without having to just scrape by?

Ryan: Well, I think that we can certainly hope so. I'm not sure I'm that optimistic that I would project that that's a guaranteed future but I certainly hope that you know, the Farm Bill can help support the American family farm. And with respect to cannabis agriculture, of course, the significant development was the federal legalization of hemp cultivation. And one of the things that's interesting about that is that, you know we have...I think a lot of folks kind of mistakenly believe that, you know, hemp and psychoactive marijuana are these two very distinct plants. Whereas, you know, really we're talking about pretty similar plants, one might be a strain that is low in THC and the other is not. And so, I think it'll in some ways help make communities and especially agricultural communities a little bit more comfortable with with farming the cannabis plant and seeing the potential uses of that. And hopefully as that develops and American hemp farmers become competitive in the global trade for hemp products will sort of loosen up our conceptions and fears around psychoactive strains or psychoactive crops and enable those to legalize and then thrive.

Matthew: So, wine lovers tend to think wine from Napa or Sonoma, California are better than other places. Will something similar happened with cannabis? And if so, what would it look like?

Ryan" Well, I expect and in some ways you can probably already see that if you spent time in California or Washington. Colorado, I think folks there and can be very proud of their local products. You know, you often hear people brag about, you know, the quality of Cali weed or Colorado weed. And I definitely think something similar will happen in the cannabis industry. And one of the ideas that I propose that has been gaining traction is the...is using the wine appellation model for the cannabis industry. So, what I mean by that is that in the wine industry, if you're drinking a bottle of wine that says Napa County on it, you can be sure that the grapes that were used in that wine actually came from Napa County because a regulatory authority is verifying that that's the case. And that's called an appellation system. And there are many who are now believing and hopeful that such a system can be applied to cannabis agriculture as well.

In other words, farmers that are cultivating cannabis in Humboldt County can advertise and put Humboldt County grown on their cannabis and that will be verified and certified by an authority or governing body. That way, someone who's, you know, growing in, you know, their basement in Arkansas can't just put Humboldt County on that to take advantage of the solid reputation of Humboldt County and get away with them. And the same could be said of other growing regions Washington, Oregon, Colorado, Nevada, wherever. You could really use that system to diversify the amount of products that are available and help, you know, sophisticated in a way the cannabis marketplace.

Matthew: I think that works. It works but there in some ways there's still kind of these imposters. Like I went to Parma, Italy last year and I went through the Parmesan cheese tours and watch how they made that. And they have essentially like a cartel that is allowed to say, you know, Parmesan cheese but then you have these competitors that say like, Parmesan inspired cheese or Parmesan-style cheese and for a lot of people that aren't paying attention they're like, "Oh, just grab this one's a little bit cheaper or, you know, I like the packaging a little bit better." So it does work because the person that really wants, you know, the real Parmesan cheese will look for that seal, will say, "Okay, this is one the real deal." But for people that are not that into it, they still lose some market share. So, it'll be interesting to see how strict this becomes, you know, I know in California, they love making like laws and regulations so, maybe they will make it really strict there and it'll be difficult to do that.

Ryan: Yeah, I mean, it's a great point. And, you know, one of the major challenges of an appellation system is enforcement. Famously, it took, you know, over a decade and ultimately a US trade mission to China to get Chinese authorities to stop a Chinese wine manufacturer from labeling their wine as coming from Napa Valley and you could see the same thing happening with cannabis. The origin of the appellation system can be traced back to the Champagne region of France, you know, so champagne wine producers were developing this really high-quality product and wine growers from other regions were recognizing that and saying, "Hey, if we just say champagne people will pay more." And so that's, you know, really the origin they sort of, there were riots around this issue and ultimately, French authorities said, "All right, we're gonna have to verify this and allow these producers to develop their reputation." And also one of the questions about an appellation system, you know, there's sort of two different models in the US for wine.

All our appellation system says is where the wind came from, whereas in France, the appellations are also used as a mechanism to regulate what types of grapes you can grow, when you can grow them, how you can grow them, et cetera. So ultimately, there's some potential there for the appellation also to be a mechanism for farming communities to get together and talk about what type of strains they might wanna specialize in, or how to be sustainable on their agricultural practices.

Matthew: Yeah, that would be interesting. I mean, in one way, you could see why that would be a cool way to create like a heritage that passes down from generation to generation that consumers get to know but in another way, it might seem stifling. So, it'll be interesting to see what balance is chosen there.

Ryan: Yeah, and hopefully, you know, since legalization and regulation is taking place on a state by state basis, we might have a lot of different models to look at and investigate.

Matthew: Yeah. In your book, you talk about cannabis consumers desire to have their cannabis come from small, sustainable and wholesome places. But as I drive across the US as I have many times and I stop all over in the middle, a lot of times there's...I see people making choices about food that is there's not much thought put into the sustainability or perhaps the budget, so think about that as much. So, will this simply be a bi-coastal thing you think?

Ryan: You know, it's a great point and I think in the cannabis industry or cannabis consumers, they're still going to be a large subset or a significant portion that are, you know, their most important factor is price. They're gonna be price sensitive, and they're gonna be looking for that inexpensive, yet potent generic product that maybe the big marijuana purveyors can specialize in. But I still think there's going to be a robust market for the higher quality strains, the sort of boutique artisanal craft producers that are churning out and producing interesting varieties and strains that have interesting effects and taste and flavor profiles. And so, I think there's still gonna be a robust market for that. And what's interesting about the cannabis industry, you know, especially compared to the agriculture, the sort of broader agricultural industry we have in the United States today, I think a lot of people, you know, certainly some people aren't thinking about this issue or are more price conscious and, you know, the status quo is it works fine for them.

I think there's a growing community in the United States that sort of laments the state of American agriculture and the unsustainability of practices and the monoculture that we've developed. And yet, it's kind of hard to change because, you know, we have these entrenched interests. What's interesting about the cannabis industry is that it's brand new at least from a legal perspective. And so, there's a wonderful opportunity here for stakeholders, including growers and regulators and consumers to build from scratch the industry that we want.

Matthew: Yeah. How do you think the cannabis industry is going to change and evolve in the years ahead?

Ryan: I think we'll continue to see big moneyed interests entering into the marketplace. Ultimately, federal legalization could be a huge force and potentially a disruptive force but I think there's a bright future for the for the small scale farmer and for the artisanal producer. I think you're already seeing a sophistication of the industry as people, you know, walk into a legal dispensary and, you know, oftentimes the person behind the counter sounds an awful lot like a sommelier that you be speaking to at a fancy restaurant when talking about wines. You know, you can kind of go in there and say, "Hey, look, I'm having migraines. Is there a strain that can help?" And they can say, "Yeah, here's a few you might want to consider." And I think that that's likely to continue.

Matthew: Okay. One aspect, we don't talk about too much on this show but is culture in terms of how it affects culture, you know, different generations, the boomers, the millennials, Gen X, now also Gen Z, the homeland, or homeland generation. How is this affecting our culture and how we live?

Ryan: Well, I think, you know, America as a society is becoming more and more comfortable with cannabis and the cannabis industry. You know, we sort of moved from a model that, you know, really try to demonize the plant and especially demonize users and now sort of the war on drugs. So, I think that generations that lived through that might either, you know, still be buying that message or be scarred from that experience. But as we're moving away from that and more and more Americans are sort of aware, you know, in the 90s that California had legalized medical use and that throughout the 2000s you have more and more states that are legalizing. I think that we're becoming more comfortable with it and now starting to think about, "All right if this is going to be legal, what do we want it to look like?" And ultimately my book, you know, doesn't focus too much time on legalization or whether or not the plant should be legal. You know, really I think it's time to think about the future and the next steps. If this is gonna be legal, what do we want this industry to look like? We have an opportunity right now to really help shape that future.

Matthew: Okay. Just out of curiosity, what's the reaction been with your colleagues at Concordia University as you published this book?Because I know Idaho is typically pretty conservative, but also becoming less so now with so many California transplants and transplants from all over the country discovering what an awesome state it is.

Ryan: Yeah, you've got a good read on our state. Certainly, Idaho's rather conservative when it comes to cannabis legalization. I think we're one of three states that have not legalized medical use in any form or decriminalized small amounts of possession. So, certainly our legal infrastructure is still relatively unfriendly with respect to cannabis. But I think from a research perspective, my colleagues are supportive and I think there's still a lot of interest. You know, we're surrounded by states that are legalizing cannabis, Washington, Oregon, Nevada, Utah, Montana, and of course, Canada. And so, it's certainly even though it hasn't been legalized here, a terribly relevant issue, even for Idahoans.

Matthew: Oh, yeah. And also it's coming in over state lines one way or another. So there's gonna be, you know, a reckoning in how to deal with it.

Ryan: Absolutely.

Matthew: So, Ryan, at this point in interview, I'd like to ask a couple of personal development questions to help readers...listeners get a better sense of who you are personally.

Ryan: Sure.

Matthew: 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?

Ryan: Sure. I think, you know, one book or series of books that have really influenced me were written by Daniel Quinn, you know, when he came out with his sort of Ishmael trilogy, including "Ishmael" and "The Story of He and My Ishmael." I just thought that was such an innovative and novel way to approach sort of a lot of philosophical questions that we have between humans and our natural environment. And the way that Daniel Quinn talks about that in narrative form, encourages us to reevaluate our relationship with the earth. I thought was really, really influenced me and helped shape my thinking. And I think another book that, you know, was influential in the way that I wrote "Craft Weed" is the "Unsettling of America" by Wendell Berry. And if you read the book the last chapter I sort of quote from several passages from Wendell Berry in that book talking about sort of the development of big agriculture in the United States and the impact that that has had on our rural communities. And I think that book will still have...leave a lasting impression on readers into the 21st century.

Matthew: Do you know anybody close to you that had a positive impact from cannabis or hemp that caused you to start to broaden your opinion of the plants' abilities?

Ryan: One of an indispensable figure in my life with respect to understanding cannabis and the cannabis industry is Jack. The sort of figure that I opened the book with and talk about throughout the book. He was a close friend of mine and, you know, moved up to Northern California and sort of got his start in the cannabis industry and is now a flourishing, you know, artisanal craft farmer. And I think, you know, being able to hear from him and hear his stories and his experiences and learn how the industry is changing and changing rapidly on the ground, you know, was a really invaluable experience in writing this book. And you can hear a lot about the cannabis industry from, you know, online media or sort of your larger publications, but it's really an industry such as this one that is sort of quasi-legal and still evolving and moving in a lot of different directions. Having contacts on the ground is really an essential aspect of understanding the industry and where it's going.

Matthew: Well, Ryan, this has been a lot of fun. As we close can you share with listeners the best way to find your book and connect with you online if you're on social media or like connections there?

Ryan: Absolutely. I'm on social media, I'm on Instagram and Twitter. You can find me at Ryan Stoa, or on Twitter @ryandstoa. I have a website ryanstoa.com R-Y-A-N-S-T-O-A .com, and you can find my book "Craft Weed Family Farming and the Future of Marijuana Industry" essentially anywhere you buy books online, whether that's IndieBound or Amazon.

Matthew: Ryan, thanks so much and best of luck with your book.

Ryan: Excellent. Thanks very much, Matt. It's been a pleasure.

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 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 or companys featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show.

Please consult your licensed financial advisor before making any investment decisions. 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.