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Armando Suarez from Grodan shares growing wisdom garnered from years of working with indoor produce farmers who have to grow their crops at 50 cents a pound or less. Listen in as Armando shares this wisdom to help you grow more efficiently.
See footage of rolling tables we talked about in the show
Learn more at
[1:07] – What is Grodan
[1:26] – Armando talks about how he got in the cannabis industry
[2:12] – Grodan’s flagship product
[4:28] – How does fertilizer interact with rock wool
[8:06] – Armando talks about bringing costs down
[12:02] – Why cannabis growers pay more than vegetable growers
[13:23] – Armando talks about ideal drip irrigation system
[16:23] – Bad habits of growers
[23:29] – Mixing air into the grows
[26:49] – Balance between natural light and supplement lighting
[28:40] – Armando talks about growing in vertical spaces
[33:37] – What are rolling tables
[36:36] – Clipping tomatoes to wires
[40:10] – Armando talks about cultivation in the next 3-5 years
[42:49] – Armando answers personal development questions
Implementing best practices in the grow room is getting more important as competition increases in the marketplace. Here to give us some cultivation guidance to both new and seasoned grows is Armando Suarez of Grodan. Armando, welcome to CannaInsider.
Armando: Howdy everybody.
Matthew: Armando, give us a sense of geography. Where are you in the world today?
Armando: Well, I live in upstate New York in beautiful Ithaca, New York. It’s very close to Cornell University, which is supposedly one of the best agricultural universities in the country.
Matthew: Yes, it’s supposed to be very nice up there. Home to Ithaca College and Cornell both.
Matthew: What is Grodan at a high level?
Armando: At a high level Grodan is a company that makes cotton candy with lava.
Matthew: Okay, we’ll get into what that means and why it’s good for plants, but I want to ask you a couple of other questions first. How did you get into this industry? How did you get into helping cultivators?
Armando: Well, my first job ever was in a nursery. I was just 15 year old, and it was to grow pansies for decorating cities. And from then I took a bachelor in Agricultural Engineering and Farm Management. That’s how you start and then you stay in the farm, and here we are.
Matthew: Now what do you mean exactly when you say “Cotton Candy with Lava in It,” because people are going to be what does that mean, and how does that help plants. Let’s talk a little bit about the flagship product of Grodan, what it is and why it’s important.
Armando: Basically the health of a plant is very determined by how healthy the roots are. Back in the 50s a company in Denmark was doing experiments on how to make rockwool, which is actually lava that was poured into a spinner to create fibers. Normally those are used as insulation, as you can probably guess. And they were for glues to make it hold its shape to go in between the rafters. One of the glues they tried was a mitigated disaster. It attracted water. It retained water. Can I mention that if you put insulation that gets wet, well your house is going pile - and melt into a pile of mold within six months.
So they threw it on the back of a factory and never to be looked again. Except that across the street there was a crazy greenhouse grower. He realized that grass was growing on it the next year, and that’s how Grodan started. They had their eureka moment, you know what, plants seems to actually like growing in this stuff.
Matthew: And it likes to grow in there because (A) it attracts and retains water, but is there any other characteristic besides the moisture attraction?
Armando: The more important factor there, it’s not that it attracts water, it’s that it actually rewets once it dries. So, one of the biggest challenges when you talk about growing media is not to wet it initially. It’s to actually rewet it once the plant is actually taking the water out. And rockwool seems to be one of the ones that rewets easiest, and because it rewets easiest, you actually have fairly good control of the amount of water that is going to be in that root zone.
Matthew: What about fertilizer? How does fertilizer interact with rockwool?
Armando: That is the other advantage that they found out is that it does not react with fertilizers. Most other medias, in fact, the lowly soil that covers most of the Earth actually retains fertilizers, and it will eventually compete with the plant for the molecules. In the case of rockwool, all those molecules and fertilizers are actually are available.
Matthew: That’s interesting. So, in your mind it’s the ideal starter growing media would you say.
Armando: Well, it’s very good because it’s clean out of the factory. Nothing could have survived the process of being melting into lava. Is it the best one? I believe so, but I’m a little biased.
Matthew: Okay, right. Now let’s look at the way - you talk with and work with a lot of growers that are outside of the cannabis industry and a lot that are inside. Let’s look at, for example, vegetable growers. They can produce their product at anywhere from $50 a pound or more or less, but that’s much lower cost per pound than a cannabis grow.
Armando: $50 a pound, I wish.
Hi CannaInsiders, sorry to interrupt the interview here, but just wanted to let you know that I meant 50 cents a pound here, not $50 a pound. Now back to your program.
Matthew: How can cannabis growers get there? What are they doing differently than the produce growers?
Armando: Well first the produce growers are not getting $50 a pound. They’re getting like 50 cents a pound, which illustrate why it is important to choose a system that allows you to remove all the little inefficiencies that are going to occur in any operation. Operational efficiency is really important for these guys, and they have eliminated pretty much every little thing that makes them waste one second here and two seconds there and three seconds over here and one second over there. All those little inefficiencies when you start calculating them over 1,000; 5,000; 5 million plants becomes really really big dollars really really quick. By removing them, you achieve survivability of your business when you have profit margins that are razor thin like the veggie guys.
Matthew: Right, so 50 cents a pound, the guys who grow and girls that grow cannabis right now their forehead’s sweating a little bit just thinking about how cheap that is compared to what they get. Let’s just say roughly a $1,000 a pound. There’s some that make $1,200. There’s some that make $800, but let’s just say $1,000 a pound, but they want to bring their costs down a lot. Do you have any specific examples around drip irrigation or something similar where listeners can try to visualize ways they can bring down their cost structure so they can be more competitive, and also actualize more profit.
Armando: Yes. For example, cost efficiency is the use of rockwool in a lot of the largest vegetable greenhouses, are switching to rockwool because they don’t want to be dealing with any bulk material. Bulk material require machinery, requires containment, requires washing the pots, cleaning the pot, moving the pots, getting in and out. So the lighter you can do the substraight and the more self-contained it is, which is the case of rockwool, because that’s that whole point of having tried the glues in the first place, was to actually be able to get in and out as quick as possible in the greenhouse. For example, the cost of setup with their plant is reduced to just a couple of dollars, while you look at pots that are used with any bulk material in it. In fact, that includes also rockwool as bulk material. Once you include labor in it, you’re approaching dangerously already $10 per plant.
Matthew: Yeah so, this is case in point. You’re saying look at your process holistically and every variable that goes into each one. It’s not just about hey I’m growing in pots. It’s like, hey you have to get the pot there. You have to make sure it’s clean, and then you have to clean it again and all these different things. Every input into that step and then every output. What are some other variables and steps you think that cannabis growers should be looking at in order to bring down their cost structure?
Armando: Substruct is a very very small one. One of the big ones, the big ones I see are really aimed in the cannabis market in the U.S. It’s really fertilizers and light. For most growers in the greenhouse, light is essentially free, depending on what geographical area we’re considering. For example, I see a lot of operations going up in the deserts, and they’re going inside, which makes absolutely zero sense. With all that light free, it makes no sense because that would be your biggest electricity cost, by far. You really look at as lighting in dark places where electricity is cheap. For example, in the Northwest there it’s an (10.56 unclear). So you see it really depends on the geographical area. Now on the fertilizers, yes. Pre mixes are something that really comes from the dark side in the retail mentality. You cannot be paying what these guys are paying for fertilizer.
Matthew: What would be a better way? How do you make sure you get great fertilizers at reasonable prices?
Armando: Well you buy from your Ag supply, and you make the potions. I call making them, preparing potions, yourself. To give you an example, an average vegetable grower is paying about 4 cents per gallon of irrigation water. The cannabis growers are paying about a dollar for that same gallon.
Matthew: Why are the cannabis growers paying so much more? Are they subject to marketing hype or what is it?
Armando: In part yes, I think there’s a lot of marketing hype. There’s a lot of legacy. It’s like that’s how the market grew, and most of these guys are actually new entrants in the market that have little agricultural knowledge. They think that yes, they’re putting magical potion in the water and that makes the plant grow. Guess what? That potion is nothing magical, and you can actually make it yourself.
Matthew: How would someone go about making it themselves if they’re used to buying the expensive stuff?
Armando: That is actually quite a steep learning curve. In fact, I attribute the fact that very few of them have taken that step in that direction because of that. Essentially any guy that is graduating from an agricultural university should be able to prepare potions.
Matthew: Okay, so this is like the NPK, the nitrogen, phosphorous and so forth?
Armando: That’s correct.
Matthew: Just getting that right and then what about creating an ideal drip irrigation system? How would you design that?
Armando: Actually that’s a very nice segue into irrigation system. Most of the time what I see with cannabis growers is that they have not step into really getting a hard look at their fertilizers, because every time they tried a different type of fertilizer, and they were trying more efficient irrigation system, boom, immediately they were clogging. It’s two components of the system that actually married together, they have to work together. If you’re putting anything in your irrigation system that is going to even have the hint of flocculating and making any type of gunk inside the line, yes you will forbid yourself the usage of real dripper irrigation, and foregoing all the efficiencies that come with automated irrigation and cheap fertilizer.
So, the first one is yes. You will have to choose the fertilizer that will not precipated, that will not create any deficit, because otherwise you cannot do an irrigation system with it. Plants are going to grow beautifully, but again it’s the mentality. Okay, now you’re a business, now you need to control costs. Your biggest bang for the buck is right there.
Matthew: Okay, so when you say it clogs the irrigation system, do you mean the nutrient part particulates build up.
Armando: Yes. So basically drip irrigation is created with the mentality that you have to put the water right on the roots of the plant in the slowest manner possible, while you’re still providing for the needs of the plants. Because you need to go very slowly, the passages that you’re using, which are the drippers, are very small holes. Anything that can go wrong and clog that tiny hole is going to clog it. So, the way to design it is always keeping in mind that you need to move water slowly, because moving water fast or moving a lot of water or pushing water very hard through a pipe is actually expensive. If you move it too slow, you get the nutrients clogging the lines. So, it’s a balancing act between those two.
Matthew: Is there any kind of bad habits you see amongst growers that they would be wise to change?
Armando: Many of them. The most egregious one that I see, and it’s very related to irrigation and fertilizer use, is these guys are chasing ghosts that in the big picture matter very little. For example you see a lot of growers literally manipulated. They’re focusing so hard on maintaining their ph stable, or literally holding a very precise number in ph. No, no, no, it needs to stay at 5.5, and you see them wasting mental resources and fertilizer resources, money resources, time resources in to trying to keep in line that number, which in the big picture is really not that important.
Matthew: There’s going to be some people listening that are going to say, what does he mean ph is not important.
Armando: Ph is important, but basically in nature plants work within a wide ranges of ph. I would say pretty much anything between 5.2 and 6.8, you are right about where the plant works perfectly. You will see very differences in performance within that range. Let me put it bluntly to you. You prepare a bucket of fertilizers. You let it sit right there. Just the bucket sitting right there, and you go and measure ph probably every half an hour for 24 hours and the ph is going to fluctuate. It’s going to go up and down, because you’re talking about systems that are not static. You are talking of systems that are very dynamic. Particularly when they get large they move very slowly in every direction. So you’re going to have ph fluctuations, whatever you do. No matter what you do. If the ph goes from 5.3 to 5.6, I wouldn’t even worry about it.
Matthew: Okay, that’s good that you bring that up because there’s probably a lot of people that will be relieved that might be doing that and why bother. Is there any other ghosts that they’re chasing where they’re obsessing about details that have a much wider range of success than maybe they think?
Armando: No, what I see a lot of them pursuing also snake oil. It’s a very snake oil prone market. Where, I don’t know, any company comes out with a new thing and it’s like, oh we need to try the new thing. Hold on guys, are you really sure. When you’re in retail, when you were doing (19.36 unclear) in your closet there were six plants. Yeah I can see the attraction of likely doing that. I would actually do that too. Now that you have a business with 6,000, your decision need to be a little bit more machilvalian. They need to be more money oriented instead of just is this product, even if the product works by the way. Some of the products out there absolutely work. They’re fantastic, but is the product—If I’m spending a dollar applying these products, am I going to get a dollar back or am I going to get less than a dollar back, or am I going to get more than a dollar back for applying that product into my crop. And see them not having that mentality yet.
Matthew: Where do you think that—is there a specific geographies in the U.S. or Canada that you see people fall prey to chasing ghosts or maybe thinking their circumstance are unique?
Armando: Yes. Colorado.
Matthew: Colorado, okay. One thing I see, and since I’m not a cultivator I can be a little more objective about it is that I talk with people and they say, well we’ve got unique practices that are different than in the industry and that allows us for bigger yields and a special artisanal growing, best practices, and they all seem to say that. They don’t realize that everybody thinks that. It’s kind of like a home brewer that’s like here’s some additional steps I take to make my brew stand out. There is something to that, but I think it’s perhaps less than they might think. There’s less impact from it. What do you think?
Armando: Absolutely Colorado.
Matthew: Colorado. So, the mistakes they’re making there is they’re not adhering to best practices in Colorado.
Armando: Well what happened is that Colorado was the first one to legalize rec, as well as medical. And a lot of new entrants in the market were pulled out from many other states. For example, I remember being in Florida just the week where they actually legalized rec in Colorado. I literally saw the growers in Florida packing and leaving for Colorado. So Colorado got an immense amount of new people that did not know what the hell they were doing. It’s just a consequence of being first, I think, more than anything else. For example, by contrast when you look at the growers 15-20 years ago, the few growers that you could actually get into their grow 15-20 years ago in California, those were hardcore.
Matthew: Hardcore in what way?
Armando: In every way they were hardcore scientists. They were hardcore. It was very criminal activity 20 years ago. So they were very secretive. They were very focused. They were very good growers. The new entrant is really not that great of a grower.
Matthew: How about mixing air thoroughly into the grows? What are some best practices you can give us there about getting the air mixture right?
Armando: The air mixture in the air, or the air mixture in the water?
Matthew: Let’s go with both.
Armando: Let’s start with the air. That’s kind of the obvious one. Absolutely. The air needs to be clean. CO2 which a lot of people see it as a thing you do on the side. Let me remind to all of your listeners that CO2 is actually the (24.03 unclear). All the little stuff that you put in the water are the vitamins. The real nutrient, the only nutrient that plants use is CO2. So, such in the mix, having CO2 in the mix. I at least have an idea of what’s happening is very important. Of course the king of all limiters in every growing system is the humidity in the air. Plants grow better when they’re warm, but you cannot get too warm, if you’re too humid, otherwise you suffocate your workers and you suffocate your plants eventually. So the air makes the environment of the canopy is absolutely critical in the success of it.
Now a point that is less, a road that is less traveled by many growers is actually paying attention of what is happening in the gases that are actually in the solution. So, in irrigation, the water temperature, and I’ve seen a few instances where that has become a problem. Either the water was too warm or that the water was too cold. In the case of the water being too warm, it was always an oxygen problem, which that’s why I asked the question, is this the air, in the solution the air in the air. So yeah, oxygenation of the water is one of those next step things where we don’t know yet much about it, but we have strong hints that it’s one of those what you don’t know can come bit you in the butt when you least suspect it.
Matthew: What about electricity in terms of you stated your preference and obviously it’s ideal to be having some sort of outdoor greenhouse in a sunny place. How much electric light should be used ideally versus sunlight, and what is the ideal versus practical here, just so people can get a sense of how much electrical light versus sunlight they should be using in different circumstances. Because sometimes it’s a possibility and sometimes it’s not. Sometimes you might live in a place where a greenhouse could be outside, but they’re not getting enough light. How do you arrive at the right balance between natural light and then some supplement?
Armando: It really has to do with the need of the plants. So it’s the idea situation and the ideal building is really the one that provides the best for the maximum performance of the plants. Site choosing is actually of primary importance here. Because depending on where you build a grow, it’s where you’re going to be able to put a greenhouse or to put a warehouse or put a combination, which is a greenhouse with supplemental lighting. So, in a place that doesn’t get too cold, a greenhouse with supplemental lighting is probably the one that is going to bring the biggest bang for the buck.
Matthew: Do you see that happening a lot where people have greenhouses with the supplemental LEDs or traditional lights?
Armando: Well, I’m kind of just one of those finicky crops that are (27.54 unclear). So it’s very reactive to the amount of light that you put on it. So most of the people building real greenhouses. Hold the thought on real greenhouse. If they are building a real greenhouse, they are generally putting supplemental lighting to it, because you’re never away from a cloudy day, even in sunny places.
Matthew: How do you see the produce growers using vertical space different than the cannabis growers or what tips could cannabis growers use from the produce growers on vertical space?
Armando: To be fairly frank with you, I think it’s boondoggling both markets.
Matthew: Okay, why is that?
Armando: Again, it’s when you start running the dollars that matters. Even on the veggie side, most of the vertical farmers—when you start scratching the surface you actually find that they’re very good at raising money from venture capital, but the system is actually highly impractical and not very productive. I would seriously caution many of the cannabis growers of the perversion that is being created by vertical farming on the veggie side, which I think funnily enough it’s a provision that actually comes from the cannabis side.
The only ones that were using lights inside a building for many years were of course the cannabis growers. Now a handful of lettuce growers have caught on to the fact that you can do that in a warehouse, and yes you can grow profitable lettuce, but when you start running the numbers, yes, you can grow profitable lettuce inside a warehouse, but you can grow it even more profitably inside a greenhouse. So, yes you may be in a situation where you’re very good at raising capital. You can get $20 million to build a grow, and then suddenly you’re going to have a greenhouse grower that is going to build a greenhouse five miles down the road and is going to hand your ass to you. That’s what these guys need to start looking at is from the point of view of business. This is not a static market. This is changing really quick.
Matthew: Yes, and that’s a concern I have. I mean, particularly in California I had to see so much supply coming on in the next year or maybe 18 months, and I think cultivators aren’t thinking about that as much. I mean, yes there’s a large population. Yes, it’s legal. More people will be consuming it, but there are really some cultivators that are coming on at scale, big scale, that are going to be flooding the market with cannabis. I want to make sure that people that are going into this space have some sort of unique cultivation ideas, or at least aren’t going into it with what the reality is in mind.
Armando: Well, the argument is that a lot of these guys coming out in scale from greenhouse or from field are not going to match the quality of the indoor growers, which I believe it’s true for now. Notice the for now is the big caveat here. So many greenhouse growers, high tech greenhouse and low tech greenhouse, are not yet getting the quality that allows them to compete with the indoor growers, because the indoor growers just been doing it for 15-20 years. So of course they’re (32.24 unclear). Let me tell you, they will figure it out.
Matthew: Also you think about northern California, let’s say Mendocino County, the weather up there is good enough where people can grow outside and without a greenhouse even. I’m not saying that’s legal, but I just think that is something to be considered. They probably have to supplemental water and fertilizer, but still it’s outside and they don’t have to condition the air at all.
Armando: That’s way cheaper.
Matthew: Yeah, way cheaper. I don’t know, I’m concerned about it for all the people that are rushing into it with certain assumptions about how much profit they’re going to make, and there’s just going to be a huge deluge of supply. So, I’m hoping that people can think, hey what if this only half as profitable as I think it is. Can I still make money. That’s what I’m trying to get people to think about. The operational efficiencies like rolling tables, which maybe you can introduce this topic of rolling tables. What are rolling tables? What’s a good way to think about using them to make a grow operation more efficient?
Armando: Well the rolling table is really a consequence of growing indoors. Either in a greenhouse, which is where they come from, or in a warehouse where their benefits are incredible. The role of a rolling table is that you basically only have one aisle that moves between table to between table. That way you occupy the maximum amount of space inside that square footage that you actually paid for it. So, when you build a greenhouse or when you build a warehouse the square footage that you build is a sunken cost. The lamps that you put or the greenhouse that you have are already also sunken cost. So you want to maximize the use of them as much as possible. By that is you minimize the aisle space. However, if you build a place that has no aisle, well you cannot enter and work into your crop. So, that’s why you build tables that can move, and then you only have one aisle that moves to table to table.
Matthew: How could you paint a picture of what that looks like for someone that’s never seen it before?
Armando: That’s an interesting question. Well, most of these growers are very used to those 4X8 tables that they put on rollers. It’s basically the same type of tray or table, but instead of being 4X8, it’s 4X100. You have six or seven of those literally slammed together in a greenhouse. When you need to start working between two tables you just move the one table to create the aisle. You enter that aisle where you do your work on both sides of the aisle, and then you close the aisle and you open the aisle between the next two tables. I have videos by the way of that.
Matthew: Actually that might be a good thing. If you have videos of that, maybe I can put that in the show notes for people to take a look at some examples of rolling tables where if they want to get a look.
Armando: Basically those are actually standard equipment in ornamental greenhouses, which are the vast majority of the greenhouses in the U.S.
Matthew: You gave me an example earlier when we were talking offline about tomatoes and how to save time clipping them to wires. Can you introduce what you meant by that and what cannabis growers can take away from that idea?
Armando: Again, it’s bringing back the idea of the operational efficiency. In tomatoes, the tomato vine is a very long vine that is 40-45 feet at the end of its life. So they hang that vine with a string from a cable that is at the top of the greenhouse. Every week they’re going to lower that cable to basically lower the vine to where you don’t have to get onto a 40 foot ladder to harvest the tomatoes, and then you always have tomatoes at the height of the worker. It used to be that the way to tie the tomato to the twine was to tie it literally to wind the twine around the tomato vine, but you can see that when you unhook it, and you run the twine around the tomato stem, well it takes what? Two, three, four seconds in the operation. Nowadays most of the growers are not twisting the twine around the stem because it takes about four or five seconds per plant. Instead they’re doing a clip.
Now when you look at the cost of the clip, let’s say the cost of the clip is one cent, but now instead of spending five seconds doing that operation, that operation takes one second. So you gain four cents in that operation. You gain four seconds in that operation. Now imagine you have tomato greenhouse that is one million plants, which is right about most of them are, one million times four seconds. That’s 4,000 seconds. That’s 4 million seconds sorry. Four million seconds, that’s a lot of man hours.
Matthew: Right, that’s a lot of plants. That’s a lot of plants for sure.
Armando: Yes but that’s the thing is when you start calculating by large scale things. Every little operation where you can get a second here and a second there, and that’s a really large amount at the end.
Matthew: Yeah, and that’s the point I think, even if you don’t have a million plants, if you have 1,000 or 100, you could pretend hypothetically. What if this hundred or thousand plants I have, what if it was a million? What would I have to do differently to increase my efficiency. It’s a good mental exercise to get you where you need to go and where to be thinking.
Armando: Yes, and that’s a mental exercise that every grower should actually do themselves in their own operation. There is always room for improvement, and that is part of the job of a grower is to actually improve that.
Matthew: As you look out the next three to five years, where do you think cultivation for cannabis will be? How will it have evolved to increase operational efficiency in your mind?
Armando: I think that’s the million dollar question. I may make a lot of enemies with what I’m about to say. I see a lot of the market going into extracts. If you’re really going to extracts, the difference between outdoor and indoor is academic. Most of those extracts are going to come from outdoor crops, as soon as they are legal. Depending on how the legal map looks like, most of that production, which is probably going to be the bulk of the cannabis market, is going to be outdoors. Now the market for flower, for smokable flower, there will always be that market. The indoor grows are going to become completely and absolutely niche where only very small guys that do very specific niche products are going to survive. All the rest is going to be greenhouse.
Matthew: That’s interesting. It definitely is congruent with a cannabis investor we had on the show a few months back, Anthony Wile, who is moving his production facilities for PharmaCielo. Him and the CEO have everything down in Colombia, because they think it’s the lowest—it’s the ideal place to grow and also the lowest cost. So they’re starting with the end in mind. They agree with you. That’s where the market is moving so they’re putting all their cultivation facilities down there. It’s really interesting to see other people are starting to see this and think this. I guess what you’re saying is you can be a low cost producer and grow outside, or you’re going to really need to have some compelling reason why consumers should pay more for your high cost grow. That could be a terpene profile or who knows what, but there’s got to be some reason. Is that what you’re getting at?
Matthew: Okay. Armando, I like to ask a couple personal development questions to give listeners to know who you are a little bit more. With that, is there a book that’s had a big impact on your thinking or way of life that you would like to share with listeners?
Armando: Not on my way of life, but it would be certainly a book that every grower out there should have on his shelf.
Matthew: Okay, let’s hear it. We got to know.
Armando: Hydroponic Crops from Howard Resh. That book, which is probably an 800 page (43.15 unclear) that you can bludgeon some people to death with, is probably all you need to know about hydroponic crops.
Matthew: Okay, very good. I haven’t hear that suggestion before. It’s great. Is there a tool, it could be a web based tool or a physical tool that you use daily or weekly that you consider valuable to your productivity that you would like to share?
Armando: Yes. It might come completely out of the left field for most people. I would suggest to most people that one of the greatest tool ever invented is a pen. Take notes. If I would suggest, actually buy a nice pen, not just any pen.
Matthew: What’s a nice pen to you, like a (44.15 unclear) or what.
Armando: No that’s too nice. That’s too nice. Yes I actually use fountain pen to take notes, because the connection that your soul is directly connected to the point of that pen. And the notes that you take from a computer and the notes that you take on paper with a pen actually have a great difference in quality.
Matthew: That’s interesting. I noticed there’s a lot of different kinds of learners out there. There’s some people that process information much better when they’re hearing it. Then they write it out in notes. There’s some people that what to hear and they don’t want to do the notes so they’ll record whatever is going on, like a lecture, so they can later come back to it. There’s all these different kinds of learning styles to match different brain types.
Armando: The thing here is because it’s a nice pen. It’s a sensory experience. So when you’re actually putting the words on paper you actually feel it. It’s not just I’m taking notes. I’m actually taking notes with a nice pen.
Matthew: Are you talking you use one of those old school fountain pens where you’re dipping it in an ink well?
Armando: Well that’s too old school but if you want to yes, except that’s kind of impractical when you’re in the field.
Matthew: Yeah, okay. So use a nice pen, but not too nice. Does yours have a leather veneer on yours? I’m just trying to visualize what nice is.
Armando: Something like that yes.
Matthew: Ostrich skin.
Matthew: Armando thanks for coming on the show and educating us about the latest in growing technology. How can listeners learn more about Grodan and get closer to you and follow more of your work?
Armando: We have a lot of information on the website. We’re actually coming out with a new website. The original website is www.grodan101.com. Don’t go to grodan.com because grodan.com is the veggie guys. We also have www.grodan-mmj.com.
Matthew: More strictly focused on cannabis market. We appreciate that. We’ll definitely put in the show notes a video of rolling tables so people can visualize. Really I’m glad you’re expanding our thinking Armando. I really think it’s important to be ahead of the curve. There’s only going to be two types of people. They’re going to be ahead of the curve, anticipating these things, and then people that are behind the curve that said what happened. I definitely want CannaInsider listeners to be in the first group ahead of the curve. So, thanks for helping us get there.
Gregg Weiss is EVP Software Development at Getleaf.co and Founder of CannaHoldings.com
Listen in as Gregg gives a boots-on-the-ground update of the legalization movement in Florida.
[1:28] – Gregg’s background
[2:21] – What is Leaf
[5:01] – What is CannaHoldings
[8:04] – Cannabis life in Florida before and after
[14:36] – Fixing Florida’s cannabis laws
[16:03] – Gregg talks about John Morgan investing
[18:21] – Gregg talks about his decision to leave Florida
[20:24] – Wrong perceptions of creating an app
[22:37] – Gregg talks about the most successful in terms of monetization
[25:00] – Gregg discusses most common questions from doctors
[27:28] – Gregg answers some personal development questions
[38:22] – Gregg’s contact details
What are the 5 Trends That Will Disrupt the Cannabis Industry in The Next Five Years? Find out with this FREE Cheat Sheet at https://www.cannainsider.com/trends
While the West Coast of the United States and Canada seem to be stealing the headlines with sweeping stories of the Green Rush into cannabis, Florida, America’s third most populous state with 20 million people is moving forward with its legalization plan. The question that remains to be answered is will Florida have a functional market or is it mired in governmental incompetence and bureaucracy. Here to help us sort us sort through Florida’s red tape is Gregg Weiss, EVP of Software Development at Leaf, and Founder of Canna Holdings. Gregg, welcome to CannaInsider.
Gregg: Good to be here. Thanks Matt.
Matthew: Give us a sense of geography. Where are you in the world today?
Gregg: I am in South Florida, Palm Beach County in the town of Willington.
Matthew: Are you in Del Boca Visa Phase 2?
Gregg: Del Boca Vista.
Matthew: That’s a Seinfeld reference for anybody listening.
Gregg: Definitely a Seinfeld fan, but it’s been a while. No, I’m not.
Matthew: I guess I could probably stop using 20 year old references. That might help a little bit. What’s your background? How did you get into the cannabis world?
Gregg: My background is in technology. I started an app development company about eight years ago or so when the app store first started. Actually, previously was a web development company. I sold that company about a year and a half ago with in interest in getting into this cannabis industry, as it was starting to develop in 2014-15 here in Florida. Like a lot of the entrepreneurs who got into this huge market and decided that this is where I wanted to be. Also I’m an advocate for specifically medical marijuana and all the uses and the conditions that it can help.
Matthew: Okay. We’ve had Yoni Ofir, Founder of Leaf on the show before, but give us a reminder of what Leaf, and what role you play there?
Gregg: Leaf is a plug and plant cannabis grow system, also grows vegetables. We just completed a $2.5 million Series A raise on Seed Invest, which we’re really excited about. It’s the only one of its kind with a climate controlled system, LED lights, hydroponic grow system and yields anywhere between three to four ounces per grow.
Matthew: That’s amazing. It really is. There’s few products in the cannabis space, I can probably only think about two or three others that kind of create a craving for it when you see it. The only thing I can say it’s similar to is maybe an Apple product or even some cars where you’re just like you look at it and it’s like, “I want that.” I don’t know where it comes from, but I do really want to get one of those. It looks so cool. There’s so much excitement around it. I know since you’re involved with the app, it’s going to be very clean and work well. I’m really excited about that. That’s a massive raise on Seed Invest too. How much bigger is that than the average seed invest raise, because I’ve seen other Seed Invest raises and they don’t seem nearly as big. Is that one much bigger, or am I crazy?
Gregg: No it is. I don’t know officially, compared to what the rest of the companies on Seed Invest have done. I know there’s one or two that have raised north of $2 million. I think very few. Seed Invest is a relatively new platform for equity crowd funding. It’s only been legally around with the FCC, being able to do that in the last year, year and a half. Yeah, we’ve had a lot of great success with it. We had over 600 people who have invested, with the majority of them being non-accredited investors. That’s really the big opportunity. If you want to invest in a company, a non-accredited investors previously didn’t have a chance to get in to a startup. They can invest anywhere from $1,000 to $20,000. The majority have been $1,000, $2,000, smaller investors, which has been great because then you have brand ambassadors for your product. It’s been a really good experience. We weren’t really sure how it was going to work out, but we’re very happy that we got involved.
Matthew: What is CannaHoldings?
Gregg: CannaHoldings is a company that I created last year before I actually started with Leaf last summer here in Florida, as things started to progress. Amendment 2 last summer was on the ballot, but it didn’t pass, but it did pass in November, as we know. I started CannaHoldings as a way to start educating our local physicians. Every state is different, but in Florida a physician needs to take an eight hour course in order to become a recommending physician. As we know, physicians in the United States are not taught anything in medical school about the endocannabinoid system, or how cannabis works as medicine. They’re very skeptical.
In order for Florida to become the medical market that everyone is predicting, you need to have a top down approach and the physicians need to be onboard. They need to take this eight hour course, otherwise you’re going to have a very small amount of doctors writing the recommendations, and then it’s going to turn into a sort of “Pot Doc” than a speech type of atmosphere, which no one really wants.
Matthew: That’s exactly what I thought of too. I thought of (6.27 unclear) beach and $40 and you’re like, “Oh, I’m having trouble sleeping?” Yep that’s it. On your way, young man.
Gregg: Yeah, girls on roller skates with pot leaf tank tops handing out little promo cards for $30, exactly. In fact, that’s some of the imagery that the No one 2 Campaign, No one Amendment 2 used heavily with their ads, and they literally said, we don’t want this to turn into California. The top down approach is really just getting physicians onboard and really starting with education. Again, this was before I joined Leaf last summer. I did a first symposium, invited a few physicians, presenters, Al, Dr. Sue Sicily [ph] was one of them, Dr. Greg (7.20 unclear). I did a free event in Palm Beach County. We had over 100 physicians attend. This was in September. Had a couple of sponsors. I thought you know what, if Amendment 2 passes in November, I think there’s going to be even a greater need. It did pass. I did a second one in March in South Florida that was a full, and then this past weekend was the third symposium in Orlando, where we had over 200 physicians attend. It was very well received.
Matthew: Let’s just rewind a little bit because you’re so immersed in this day-to-day. Let’s just go over that one more time. What happened? What was cannabis life in Florida before the November election and then after?
Gregg: In 2014, the Florida legislature passed what’s known as Senate Bill 1030, also known as the Compassionate Medical Cannabis Act of 2014, which allowed qualified patients to use the low THC, also known as Charlotte’s Web, mainly for seizures and epilepsy. It was a very limited program. Then in March of 2016, last year, the state legislature then passed House Bill 307, which is known as the Medical Use of Cannabis, which allowed for THC and expanded the use for patients that were terminal. Prior to November, with the Amendment 2, November of 2016, if you qualified, the only qualifying conditions were you’re terminal or you have seizures or epilepsy.
Amendment 2, which 71 percent of Floridians voted yes for, it added around 10 debilitating additions such as, HIV, PTSD, Parkinson’s, MS, ALS, etc., a couple of others. Floridians voted overwhelmingly 71 percent yes for that. Now in 2017, it’s funny because I’ve learned so much about how government works from being in the cannabis industry. Way more than I learned in my history class in high school or college. Now, the session, the legislative session just finished, and unfortunately they did not pass a bill. It got to the last day, and they did not pass the bill to implement the rules for Amendment 2. This is actually pretty timely because this past Friday, Governor Scott here in Florida, called for a special session, which is going to start this week. I believe Wednesday, Thursday and Friday. Called everybody back to discuss the budget because there were a couple of things out of the session that did not get passed. The budget was one of them. Medical marijuana was another one.
Unfortunately, medical marijuana is not on the agenda for the special session, which is really confusing and people in this industry here are like, why are they not addressing this. Apparently they’re not going to address it, which means it’s up to the Department of Health to write the rules. The Department of Health to write the rules. The Department of Health is consisted of appointees by Governor Scott. They’re not legislators. They don’t represent the people of Florida. It’s really frustrating and sort of backwards the way that Florida government works with regards to implementing that goal, marijuana.
Matthew: Yeah, it almost sounds like you’re saying these government bureaucrats have not done an optimal job in representing their constituencies Gregg. Is that the allegation at hand?
Gregg: In my opinion, yes, you’re absolutely correct.
Matthew: Shocking, I’m shocked.
Gregg: There’s just so much lobbying happening. You have seven existing license holders. Florida is a vertically integrated market, which in other states that have come before Florida have tried vertical integration, have proven that it really doesn’t work and they’ve gone horizontal. I want to say in Florida, it’s really expensive to get your medicine, and it’s almost half the price in other states , like Colorado, to get the same oil. When you have very few outlets to get this it drives up the price, and that doesn’t help patients who are paying cash and really can’t afford it in the first place. We know that their health insurance doesn’t cover it.
Matthew: This is why I really hope we don’t have universal healthcare coverage at the national level. If we’re going to have it, have it at the state level. Then if all these laboratories kind of trying out things, some work, and the ones that work make the other ones just look ridiculous because you could just point to Colorado and say look they’re doing it and then look this state over here is doing it, and even conservative states are doing it ten times better. This argument that it’s complex and the peons don’t understand all the esoteric knowledge and debates going on at the legislature. That kind of is a point. I kind of went off on a tangent there, but I think eventually Florida is going to have to come around because the citizens see functional markets all around them. They’re saying, can you just do what they’re doing in this state over here? Don’t reinvent the wheel.
Gregg: Yeah, I mean, people that really need it is just going to move out of Florida.
Matthew: Although it seems like the trend is the exact opposite. It seems like there’s a flood of people from the Northeast moving to Florida right now. It’s amazing. It’s like the wildebeest migration in the Serengeti Plains. There’s this flood, and huge dust storms of people pouring out of high tax, cold states, down to Florida.
Gregg: Yeah, it is a great quality of life. It’s a great place to live. There is no state tax so that’s a plus as well.
Matthew: Florida is making a lot of mistakes. The jury is still out when they’re going to fix them, but it sounds like this regulatory body is going to start making decisions in the absence of clear laws from the state legislature.
Gregg: That’s right. The amendment that did pass, Amendment 2, it states that if the state legislator can’t get it done, which they can’t, they didn’t, that it’s up to the Department of Health to promulgate the rules of how this program is going to roll out. I believe by July 3rd, if I’m getting this correctly. Then issue cards by October. I think they’ve already started issuing cards. There are some key dates that they have to have this implemented by. I think July 3rd is the next one. They basically have about a month, and there’s only a handful of people in the Office of Compassionate Use to get this done. They haven’t allocated a budget for it. The state has not given them the money that they actually need to roll this out. Hopefully, a special session this week, they are going to discuss and hopefully pass the budget, and hopefully they will allocate some dollars to the Office of Compassionate Use to roll this out.
Matthew: We’ve had John Morgan on the show, a lawyer that’s really prominent in Florida, that’s been a big advocate for responsible adult use cannabis, particularly for medical use. I think I’ve read a couple of things that he’s made some investments or he’s going to deploy capital. Have you heard anything about that?
Gregg: Yes, which is contrary to his whole agenda prior to Amendment 2, saying I don’t have any interest in the industry. I don’t own a grow. I’m really just doing this for my brother and it’s the right thing to do, and I’ve invested millions of dollars. You were there in Orlando at MJ Biz when he gave the keynote. I think he hasn’t even spoke after that. That was the first time I saw him speak. I was blown away. I was like, wow, he’s really doing the right thing. I believe him. Then the state legislature didn’t get it done, and Ben (16.45 unclear) who is his campaign manager. He publically shamed and blamed it on him, which is unfortunate. I can’t say that it’s his fault.
Then I read that he is going to invest some money. I also heard that he has 100 acres somewhere in Florida that he wants to build a grow. It’s just contrary to everything that he’s “ran on” even though he wasn’t running, over the last year and a half to kind of get this done. So, it kind of makes you wonder.
Matthew: It does make you wonder. At the same time, I’ll play the devil’s advocate and just say, he possibly changed his mind. That could happen too.
Gregg: Yeah, I mean, at the end of the day, he’s an entrepreneur as well. He’s a businessperson. He not only has his big, national firm, personal injury law firm, but he owns restaurants. He owns entertainment things. With my entrepreneurial hat I would say, why wouldn’t you invest in the industry. If you spent all this money trying to get Amendment 2 passed and medical marijuana passed, and now it’s passed, why wouldn’t you invest and capitalize on this billion dollar industry in Florida. It would almost be stupid for him not to.
Matthew: Yeah, you could definitely make that argument. You’re leaving Florida. Why is that?
Gregg: It’s looking like I’m going to be relocating to Boulder and really head up the Leaf office there, in the next probably 60 days, now that we’ve closed on this round of funding through Seed Invest. That is really the primary reason. If I were to stay in Florida, there’s a lot of testing that needs to happen with these Leaf units. We have two engineers in Colorado that have a lab and have about a dozen Leaf units that are currently growing. We have units in Israel that are growing. I was brought on last year to really head up the software side of Leaf, and I hired two guys to work on the app in the backend, and that’s my experience from running Blue L Apps, the company that I sold a year and a half ago. Building software teams and building apps.
Being able to test with the app and a Leaf unit legally in Colorado is another big deal. Otherwise I would just be here in Florida growing tomatoes. Not that there’s anything wrong with that, but this unit is really optimized to grow cannabis. That’s what we’re trying to do. So, that’s a big part of it.
Matthew: I don’t often talk with people that have the depth of skill you do in developing apps. What do you think the public’s idea is of developing an app, and then what the reality is, for someone that knows. We kind of look into the fish bowl and say oh, they just write some code and it’s done. I know it’s more difficult than that, but what does the public perceive about creating an app that’s wrong.
Gregg: There are many things. Number one, that it’s cheap and it’s easy and you could go offshore and hire someone from India for example and get it done really quick. You can even get an estimate offshore, and it will be cheap, but the quality of the product and what you’re going to get is not going to be good. It is a process. Every app, just like I always use the housing analogy. Someone wants to build a house and say build me a house. Okay well, how many stories is it? Is there a pool? Do you have granite in the kitchen? There’s all these details of it that you really need to figure out before you can give someone an estimate on what it’s going to cost to build a house.
An app is sort of a generic name. There’s social media apps. There’s simple calculator apps. It’s a very wide range of complexity in what you’re building. The app store is now, I want to say, almost 10 years old. I think the iPhone just had its 10 year anniversary this, and then the app store came a couple years later. It’s very difficult to not only build an app, but then get it in the hands of people who are actually going to use it. Marketing and promotion of your app. The days of build it and the user will come, but I don’t have a business model or my business model is I’m going to make money on advertising once I have millions of people and hope that I can sustain that business model is very difficult. You really have to have a business model with an app, if you’re an entrepreneur. You have that sort of app idea.
Matthew: Right. What have you seen be the most successful in terms of monetization? Is it something that’s an upgrade, like a freemium model? Is that the best way to go because ad support sounds hard?
Gregg: The freemium model is definitely good because that removes the barrier of the 99 cents or whatever you’re going to charge, and it gets people to try it and use it and have your app become sticky in a sense. Then you have some premium, paid for, whether it’s contented or features in it. That has worked very well. Advertising works well, if you have more of a utility type of app that people are using. Maybe it’s a weather app or that sort of thing. Again it’s very difficult to monetize an app. What a lot of people are doing now is apps for businesses.
These are the apps that you and I don’t see as consumers. When I ran my app development company we did build a lot of these internal company process driven apps, whether it’s an iPad for a guy who is out in the field, and he needs to take some notes and send it back to the back office. Previously he was doing that on a piece of paper and then going back to the office at 5 o’clock and then reentering everything in a desktop tool. Well now he can go out in the field, enter everything in, do what he needs to do and it’s done, and it really provides for a lot of corporate efficiencies. I think a lot of business and companies are really moving to mobile apps to help them run their businesses, and that’s really where a lot of this value is taking place.
Matthew: That’s a great point. You don’t hear about that as much because usually we’re all focused on consumer apps, but that is amazing efficiency you can gain from that. I would love to have you back on when Leaf’s up and running and we can talk more about the app later. That’s a future conversation. Circling back to some of the education events you’ve done with doctors and so forth in Florida. Is there a question they have that you see comes up or a concern? What’s their pushback or general thoughts about, I know you said they weren’t familiar with the endocannabinoid system. What are their other thoughts in general or obstacles or resistance would you say?
Gregg: I’d say the number one is that they don’t find that there’s enough research and the triple blinded studies that they’re used to that are done with millions of dollars in the pharmaceutical companies and the package insert that says dose this or take this three times a day for seven days. We know that medical cannabis is not like that. It’s unique to every person’s condition and every person’s different situation. It’s a different paradigm. It’s an herb. It’s not a synthetic pharmaceutical that has gone through all these controlled trials, at least not yet in this country. In several other countries they are doing those studies.
The last symposium we had last weekend we had Dr. Sue Sicily and she was talking about her study that she just started for PTSD on whole plant with the veterans. Her study is the first triple blinded control study for whole plant marijuana for PTSD for veterans. That’s going to be going on for another year and a half. It was great for her to present some of these findings and what she’s doing to this audience of somewhat skeptical physicians. We had an audience of 200, and for them to go, oh there is actually a study here. It took her seven years to get to a point where she could actually study that.
Matthew: I’ve had her on the show, and I know she’s been very persistent and come up with some corporate interest that do not want to see her succeed in what she’s doing. So I give her all the credit in the world. She’s also a very nice person. I wish her the best. Gregg, I know you have to get going so I want to ask you a couple more questions before we close. I like to ask some personal development related questions. Is there a book that has had a big impact on your life or way of thinking that you would like to share with listeners?
Gregg: I mean just with regards to agile software development and apps and hardware/software. I think the Lean Startup. I’m sure everybody would probably mention that in this field, by Eric Rice. That’s a really great one which hammers home the idea of proving your assumptions. Every startup, every entrepreneur has a great idea and then they have assumptions that are, everyone’s going to like this or pay for this because of XY and Z. You have to find a way to prove those without spending a lot of money or raising a lot of money, only to find out that maybe you were wrong. Gone I think are the days of let’s raise a ton of money. Let’s build this thing and then test it and see if people want it, and we’ll pay for it. If they don’t, we just lost a lot of money.
That has had a profound impact I think not just for myself, but a lot of people. Pivoting, based on your customer feedback. There’s been a lot of great examples of companies who have pivoted. Then also just the Law of Attraction books, just that whole thing. I was first introduced to that about 10 years ago. I saw the film, someone introduced me. That kind of changed my life in terms of business and personal and just the way you think and your mindset and all that. I think that’s important.
Matthew: I’m glad you mentioned that because you’ve got two very different examples there. One’s kind of a very—We got the yin and yang, The yang being the technical, objective things with the Lean Startup and more yin energy there with the Secret. I think we don’t talk about those type of intangibles that much because we can’t measure it. We can’t measure it, we can’t touch it. So it must not be important, but it is.
Gregg: It’s so important. I can’t tell you, we don’t have time now, but I can tell you how by employing the mindset of the Secret and the Law of Attraction and all of that, and some people, Ah I’ve heard of that. It’s this or that. They have their own opinion of it. I can’t tell you how many examples that for me I’ve worked both personally and career-wise that I can attribute to learning from that, and having a really big impact on my personal life and my career life. There’s just so many. I’m a big fan of that.
Matthew: There’s a related topic to that called, Lorenzo’s Butterfly, which if you do a Google Image search, you can see a diagram of what this looks like. Essentially it puts in math how whatever you’re putting out there, whatever you’re putting into the universe, it comes back to you in greater mass. So if you’re putting out positive energy, you’ll get this back. If you’re having thought about a startup you want to create, all these new thoughts will come and surround that. There you have a very intangible theoretical idea backed with something objective for the two type of listeners that are out there that are some saying, I want proof, and some saying, I like the softer side. Really glad you mentioned both of those things. Is there a tool web based or otherwise that you consider indispensible to your day to day life, I’ll say besides Leaf.
Gregg: It funny, one may think coming from the app world, that I’m the most techy guy and I use all these different apps. I really don’t. I use, and this is something I thought of, I was like man, I got to have some great answer for Matt that I use all these crazy apps. I use iCal the most. I use my calendar as many people do. They kind of plan their day. If it’s 11 o’clock at night and there’s something that I think about that I need to do, I’ll just add it in my calendar, little notes, because I live by my calendar. I think that’s really important. On personal development I learned TM, Transcendental Meditation a couple of years ago. When you do that in the morning, you’re supposed to do it for 20 minutes twice a day. Admittedly I very rarely get to do it at the end of the day. I try to do it in the morning when I first wake when everything is quiet, and it really sets the tone for your day. And just learning that has been a really great, personal benefit, and I would definitely recommend it.
Matthew: Don’t they give you your own mantra when you go through that process?
Gregg: They do yeah.
Matthew: What is your mantra? Do you mind sharing that?
Gregg: I cannot share my mantra, no. You’re not supposed to tell anybody.
Matthew: Oh really. (whispers) Gregg, it’s just me and you. No one is listening.
Gregg: They tell you that when you do the training. The training is four days. The first day is two hours and they have to be consecutive days. The guy that taught me was actually trained by Maharishi in Spain in the seventies. Back then he did this retreat there. I never asked him, but he’s probably in his seventies, but he looks like he’s my age. He looks like he’s in his forties. It’s definitely beneficial. We got our 14 year old son to do it. He does it because he’s 14, but we hope that as he grows up he’ll be able to use this tool like he’s been taught when he feels like he needs it. I wish I was taught it when I was in high school or college and be able to draw from that. I would definitely recommend it anybody.
Matthew: Was there a lot of anticipation when they revealed what your mantra was, because I can just only think okay they’re going to do the grand reveal now. It is, duh-ta-duh, and the whisper in your ear, Gregg, your mantra is Pop Tart. You’re like wait a second, I can’t be thinking about a Pop Tart the whole time when I’m meditating. I’m going to be craving Pop Tarts. It’s nothing like that is it?
Gregg: No, I think they’re all Sanskrit words. The mantra is not supposed to have meaning. It’s not a word. I found myself trying to analyze what it is. If you told me what it was and I was like well how do you spell it. What does it mean? He’s like, I’m not going to tell you how to spell it. I’m just going to say it again. I was like, well should I say it fast. Should I say it, you know, you don’t say it. You internalize it in your head, and have all these questions. There’s no right or wrong. You just repeat it as your mantra.
Matthew: That is hilarious. It seems like the people that are into Transcendental Meditation stick with it much more than other kinds of meditation, and I think it’s because they put this money into it upfront, and they’re like, hey I’ve invested in this. I’m going to make sure I get return on my investment. Do you think that’s why?
Gregg: I don’t think that’s why. I think it’s just very different than mindfulness, all those other types of meditation. There are some people that would be like, you don’t have to spend the money to do it, but there’s a lot of science and research behind TM. When you go to the initial consult there’s all these pamphlets and stuff that they give you. It’s backed by science. It helps with blood pressure. It helps with stress. It helps with a lot of medical conditions. It’s real. I’m not exactly sure why. That is the number one thing of why people don’t do it, because it is expensive to do. If you really want to do it, there are grants that you can get and you can get it paid for if you really want to.
Matthew: I had an amazing experience at a Korean Buddhist Temple, and I went in there for a meditation session and they said, okay you mind, like most people’s is kind of polluted with this river of thought, and there’s really no way to turn it off, but we have some things that can help. We want you to do this 100 times before we start meditating. You have to sit down, then get on your knees and then stand up, then bow. It was something like that and I did it 100 times, and they said, okay by the end of that your mind has gotten rid of most of it. I was like okay, well this seems a little strange. After that they led me through a meditation, and I had this experience where I didn’t fall asleep or feel tired at all, but just time kind of stood still for an hour and without any thoughts. It’s just such a rare thing to be awake and not have thoughts going through your head, that the first time it happens, it’s so restful. You feel like you’re recharged somehow. I can’t explain it any other way than that.
Gregg: You’re absolutely right. That’s what it is. You can experience it for five seconds or a minute or five minutes. The goal is that every time that you meditate you get into that state. Some days you have a lot of thoughts. Some days you don’t. Some days you don’t even get into that state. Yeah we’re really going off on a tangent here.
Matthew: We’re going off on a tangent. People love it. Everybody, let Gregg know that you love it. Gregg, how can they reach out to you and learn more about Leaf and learn more about CannnaHoldings and all the things you’re up to? Is there any way?
Gregg: Sure. The website for Leaf is www.getleaf.co and we’re still taking pre-orders. The website for CannaHoldings is www.cannaholdings.com, which I’m actually going to have a website up in the next couple of months. Right now that just redirects to Event Bright, which is the last symposium that we did.
Matthew: We went all over the place today, but it was a fun conversation. I appreciate you coming on. Good luck with your move to Boulder and everything you’re working on.
Gregg: Thank you Matt. I appreciate it.
Jim McAlpine is the Executive Director of The New West Summit. Jim and Matthew discuss how Jim’s Bay Area conference is attracting the best and brightest in cannabis tech and media.
[1:03] – What’s the New West Summit
[1:20] – Jim’s background
[2:45] – Jim talks about the first New West Summit
[5:18] – The experience of a New West Summit
[6:57] – Unique things at the New West Summit
[9:30] – What are the 420 Games
[14:08] – Jim gives a shout out to businesses that attended New West Summit
[17:26] – Jim talks about big opportunities for entrepreneurs in the market
[19:03] – What’s Powerhouse Gym
[21:59] – Jim talks about the California government affairs
[25:33] – How to be a successful exhibitor at a New West Summit
[27:12] – Jim answers some personal development questions
[30:08] – Contact details for New West Summit
As the cannabis market continues its upward surge into the billions of dollars in revenue, many businesses and entrepreneurs are trying to understand how technology can enable and accelerate business success. Jim McAlpine created the New West Summit to highlight and bring together those that are creating the technological change in the cannabis space. Jim, welcome to CannaInsider.
Jim: Thanks for having me. I’m a big fan of your podcast.
Matthew: Thank you. Give us a sense of geography. Where are you in the world today?
Jim: Currently I’m in lovely Northern California, in particular, Marin County. I also work in the ski industry and spend a lot of time in Lake Tahoe, but I’m in Marin today.
Matthew: Okay. What’s the New West Summit, at a high level?
Jim: It’s a B2B conference that focuses on technology, media and investment in the cannabis space.
Matthew: Okay. You mentioned you’re involved in the ski industry, but tell us more about your background and why you created the New West Summit.
Jim: Well, so, I’ve been an entrepreneur my whole life. For about 20 years I’ve owned and run a company called, Snowbound.com, which is an internet based company that offers ticketing services and marketing services for the ski industry. That’s kind of what made me jump into the cannabis space because the snow stopped falling out here in Northern California for several years, four straight years and really impacted our business in the snow industry. I kind of call it the one positive thing for me that came out of the drought, which it inspired me to get into this amazing industry of cannabis.
Matthew: Yeah. I skied heavenly in Squaw Valley and I really enjoyed that, some years back, but is the snow finally returned now this year?
Jim: Yeah, this year’s been an amazing year. Actually more snow than we’ve seen in decades up in Lake Tahoe. Yeah, we had a great year finally again, so that will be good for Snowbound. Cannabis and skiing go together pretty well. I like to merge both of those worlds together.
Matthew: Yeah. You can really smell it in Colorado when you’re behind someone on the ski lift. There’s this draft as you go up the mountain.
Jim: That’s not just in Colorado. I’m sure it’s more in Colorado.
Matthew: You had your first New West Summit a short time back. Where was that and what was it like?
Jim: The first New West Summit was two years ago. It was in 2015. It was at the Park 55 Hotel in San Francisco. It was great. Our first event was really well received, because there wasn’t anything like what we did in the industry, focusing on the tech aspects. It really went well. Last year we did it at the Hyatt Regency at San Francisco, and then this year we’ve moved it over to the Marriot and the Oakland Convention Center in Oakland because we’ve grown out of the space of the others.
Matthew: Wow. Oakland’s really transformed quite a bit too over the years. I remember the first time I went there. It was sketchy. This was years ago, but it’s really kind of transformed. How have you seen it change?
Jim: First of all San Francisco is I think the most expensive city in the country. It’s surpassed New York. It’s incredibly expensive to live in San Francisco. I think a lot of people began to look at Oakland as an option to not have to pay as much. Truthfully Oakland, more so than San Francisco, is the center in Northern California or California of the cannabis industry. It’s just over the water, but Oakland is really—Harbor Side is there, and it’s kind of been the real center in the Bay Area of the cannabis movement.
Matthew: If you’re a nerd like me, you look at a seismology map and it’s bright red in Oakland. If there’s an earthquake, Oakland is going down. Would you agree with that?
Jim: When you live in earthquake country you’re not scared of earthquakes, but you’re terrified of hurricanes and tornados and all that. I’ve been through many. I was at the World Series when the big one hit here. We don’t really think about it too much, to be honest with you.
Matthew: I lived in Chile for a time and experienced many earthquakes, and I’m still nervous about them. So, you got one on me. That’s good. You must be properly medicated. Is that what it is?
Jim: No, no. I have not medicated this morning yet, but it’s just one of those things. We grew up our whole lives here doing earthquake drills and all that. You just get kind of used to it. I’m sure that the people that live in hurricane, like I said, are way more scared of earthquakes, and they know they just go into their basement and wait it out. You just get used to it, used to what you’re living around I guess.
Matthew: Yeah, I grew up with tornadoes, and they didn’t bother me, but they freak people out that aren’t used to them.
Jim: The thought of a tornado scares the hell out of me. So, you got me beat on that one.
Matthew: Describe a little bit what people experience. If I was a fly on the wall at a New West Summit, what’s it like? What am I hearing? What am I seeing?
Jim: It’s really been the first conference to focus with a laser on technology, and how that technology will be the driver of the future of this industry in every aspect. It looks like a typical conference. It’s got panel tracks. It’s got exhibiters and keynotes and all that kind of stuff. The real differentiator to me is that we focus graduate level curriculum versus the one-on-one curriculum you see at a lot of other shows. Instead of how to open a dispensary, we’re going to have drilled down speakers and topics on agri tech, hydro tech, lighting tech, distribution technologies, point of sale systems. It’s just definitively a little bit more complex than some of the other conferences. The brighter minds of the industry have picked up, and I think that’s what’s kind of made people like us and separated us from the other shows.
Matthew: So you’re kind of skipping the base of the pyramid. You assume when people come to New West that they know what the introductory topics are and kind of assimilated that and digested it already.
Jim: Yeah exactly. I was just going to say, it’s not that beginners aren’t welcome, but yeah this whole curriculum has been fashioned for people what have at least a decent baseline, if not a strong baseline, of cannabis understanding in most aspects.
Matthew: What experiences do you try to weave in the Summit in order to have people walking away talking about or having something they want to talk about? What do they see that they can’t see anywhere else?
Jim: What I’ve tried to do is weave in non-endemic cannabis companies, and more so non-endemic speakers to the cannabis industry. An example is last year we had Susan Bennett who is the voice of Siri on the iPhone come and speak about her experience in the tech field of recording all that stuff, and there was some fun cannabis integration of that talk. We had Richard Branson last year, who kind of gave more of an all encompassing talk about the global legalization potential of cannabis. Really having people come from outside of cannabis and that are successful technology disrupters. Having speakers come from Salesforce, from Uber, from Go Pro helmet cam, and really talk about those fundamental philosophies of how to move the needle using technology. I think that really separates us too because usually at other shows it’s just the same names that you see and it’s all cannabis people. So, bringing big business and successful companies and speakers in from outside, I think really excites people, and they hear new information that’s going to help them. That’s another reason I think people separate us as kind of a graduate level curriculum, if you will.
Matthew: Well, well done getting Richard Branson to come to your event. That’s really got to be a big draw. Is that hard to get someone of that caliber to come? How does that work?
Jim: Yeah. Richard actually Skyped a live Skype from Necker Island, and did a speech and a Q&A session. He did it as a favor for us. His feed to speak is very, very expensive. He was a cool enough guy that he saw what we were doing and we didn’t have the money to pay his usual speaking fee, so he worked with us for less because he cares about this whole industry.
Matthew: That’s cool.
Jim: He’s a great guy. He’s an idol of mine for sure.
Matthew: Yeah, me too. He’s kind of like a business leader, Gandhi and Yoda all wrapped up into one. He seems to have achieved success not just in business, but in other areas.
Jim: Yes, spiritually. I’m the 420 Games Guy and Richard’s a great outdoor adventurer and athlete. So that’s another thing that I like about him is he gets out kite surfing and does some cool stuff.
Matthew: Any chance you’re going to make it to Necker Island?
Jim: That is definitely on my bucket list. I plan to someday make it there, yes.
Matthew: Gosh. That sounds like a great experience there. Well you mentioned the 420 Games. What are the 420 Games?
Jim: The 420 Games were actually my first foray into this industry, when I decided to jump in. In simple format, they’re athletic events formulated to destigmatize both the plant cannabis and the people that use it via athletic achievement. We tour around the country. This year we have eight events in six different states, seven different states. They’re 4.20 mile runs. So they kind of look like your typical 5k advocacy runs, whether it was for breast cancer or a woman’s right for abortion or whatever it may be. These are just advocacy runs, and we don’t smoke at the events. They’re family friendly. There’s kids out there. It’s really to change that perception of if you use marijuana, that you’re a stoner.
Matthew: Yeah. We had Seibo Shen, CEO of VapeXhale, on the show and he talked about how he sees a lot of NFL athletes, MMA athletes who are cannabis enthusiasts. What’s your experience around athletes at that level consuming cannabis?
Jim: (A) Seibo is one of my best friends. He’s actually an amazing athlete and a jujitsu guy and is pretty high level himself. There’s so many athletes that’ I’ve met through the 420 Games and that are advocating for acceptance of cannabis. In particular, I was just out at Harvard medical school and I moderated a panel with Ricky Williams. Eban Britton, Nate Jackson and Lance Johnstone who are all ex-NFL players, as well as a couple of doctors. We had about 400 doctors in the room listening to us speak on cannabis as an alternative for opiates, because many NFL players are forced to take opiates because of their injuries and they’re not allowed to use cannabis and become addicted.
It was a really forward moving thing to have these doctors at Harvard really intently listening to us and asking questions, and you can tell they were engaged. I think having these athletes that have come onboard really helps move the needle because people really want to listen, and they respect someone who is a professional athlete in a different way than if it was you or me talking about it.
Matthew: Yeah, the NFL athletes really seem to be trying to get the message out there lately. Does it sound like that message is being well received, apart from the doctors in the room?
Jim: Yeah. Unfortunately the one guy that needs to get it is Rodger Goodell. We also did the same similar panel at the Super Bowl literally to address the NFL and Roger Goodell to get them to hear our message. So, I think across the board the football players are putting out a really articulate message, which is also important. They’re all really smart guys that I’ve worked with that share the message about what cannabis can be as medicine in a way that people hear and take in that changes their opinions if they’re doubters. Yeah I think having these professional athletes, even outside of football, it’s been focused on the CT and concussion stuff in the NFL. As Seibo was talking about, these fighters are out there taking big head hits, and a lot of the UFC guys have become big advocates for cannabis as well. Joe Rogan talks about it all the time. I think almost in all sports it’s becoming looked at as an alternative for pain relief versus taking pharmaceuticals, which at the root of it makes me really happy to see people understand that this is medicine and not just something we use to get high.
Matthew: So, you’re seeing it more as pain management than performance enhancements, just in anecdotal experience?
Jim: Yeah, absolutely. I think athletes use cannabis. When I speak about this I always talk about the two genres of use. It’s focus and recovery. Myself, I like to use cannabis before I go skiing or surfing or on a bike ride. It really just helps me in the gym too to stay focused and enjoy what I’m doing more, instead of feeling the pain and being like oh this sucks, I want to quit. It makes me more engaged. The other side of it is what you mentioned and I think more people use it for, which is recovery. Instead of putting a pill in your mouth, you can use a cannabis topical, you can use pills. You don’t have to smoke, or you can smoke, and all of those ways bring relief to athletes after they’ve hurt their muscles or they’ve got sore joints.
Matthew: Is there a couple businesses or entrepreneurs you want to highlight that were at the last New West Summit that you think are noteworthy that you can tell us a little bit about?
Jim: Yeah, absolutely. To start off I’ll say, when we first started this two years ago, the delivery company Ease really stood out with their deliver app. That was something that seemed to really blow people’s mind that you could order your cannabis on your iPhone and someone would knock on your door to deliver it within 10 or 15 minutes. I think at the first one the delivery apps and that kind of stuff really stood out, and it’s been fun to watch the progression. This last year it was more on the growth side.
There’s three companies that would stick out in my head. There’s a company called Flourish Farms. They have these really interesting lighting pods. In essence you can grow outdoor with indoor controls, and there are these pods that allow you to basically put the pods over the plants and they refract light through these kind of solar like panels and bring all of the outdoor true sunlight into your plant while protecting it from the elements. It can almost amplify the sunlight. It’s an amazing way to increase the efficiencies of outdoor grows, and there’s a huge amount of interest in that.
There was a company called Grownetics that’s really an automated grow tech system that helps people with adjusting their lighting or their CO2 or whatever it is in their grow. That seemed to work really well. It had a lot of people interested in it. The last one was Flow Hub. It’s a seed to sale company and point of sale company out of Colorado, that really seems to be challenging and bringing perhaps a better product to the market than the MJ Freeways and other point of sale systems out there right now. It’s been cool to see the shift of focus. At first it was the apps and the integrative stuff to order your marijuana, and now it’s been focusing more on, or more interest on the actual grow tech in the last year.
Matthew: That’s cool. I actually went to the offices of the Flow Hub guys, and they said we want to show you how to use the software, but instead of explaining it to you, they just put this device in my hand and said, use this to move a plant from this room to this room. They had me doing it like that (snaps), out of the box without any training or anything. I thought that was pretty revolutionary what they were doing there. That’s interesting.
Jim: Yeah absolutely. The guys that created Firefly, the vaporizer, came from Apple and I recently read that Apple has a couple of patents on vaporizers. I’m excited for the day where we can have Apple with their vaporizer at the New West Summit, and truly integrate the worlds of tech and cannabis by having a company like Apple making products for us.
Matthew: Gosh, that would be cool if they did something like that, but at the same time it seems like they’re a little conservative. It might be a few years before they do something like that, but they do have a patent, so they’re obviously working on it.
Jim: Yeah, who knows. The future is bright, they say. So, I’m waiting and excited to see what comes out.
Matthew: If you were going to clone yourself and create a business in the tech space, some product or service apart from New West Summit, do you have any ideas that you want to throw out there for entrepreneurs that you see big opportunities if they can address some aspect of the market?
Jim: I think looking for—my philosophy in business has always been what is a solution that’s not as good as it needs to be. Instead of being the guy that invents something from the ground up, I’ve always like to say, here’s something that’s pretty cool, but it could be a lot cooler, and take that kind of head start. I think in the cannabis industry there are many companies, I’m not going to name anybody, but across the board from each sect of the cannabis industry, whether it’s the grow side, it’s the dispensary side, it’s the distribution side or any of the other tech stuff, there’s a lot of opportunity where people aren’t doing things quite to the A plus level yet. If someone’s out there with a good idea but they’re not doing it right, that’s really to me an amazing opportunity to step in and quickly make a difference. My philosophy has always been look around, see who’s doing something, but not doing it well that you could do better. Again, I don’t want to say any names, but there’s a lot of things out there that are not yet to the level they need to be, which means there’s a lot of opportunity for people that understand tech.
Matthew: Yeah that’s a good point. Alleviate a pain point, rather than create a new market. There is some incumbance in different areas of the tech scene in cannabis that just happened to be first on the scene, but are not necessarily the best or optimal that could be displaced pretty readily, if they understand the pain point. Tell us a little bit about Powerhouse Gym. What’s that?
Jim: Power Plant Fitness, that’s another one of our ventures in the cannabis athletic space.
Matthew: Power Plant Fitness, sorry about that.
Jim: That’s okay. No problem. I think there is a Powerhouse Gym from back in the day, kind of like a Gold’s or something. Power Plant obviously a double (19.22 unclear) there. We’re still raising money. It’s been an arduous process. When Donald Trump and Jeff Sessions came into power here a lot of the traditional money that we were expecting to come in for that venture got pulled back, because they were scared of the administration. So, I’m still currently raising funds for Power Plant Fitness. We’ve got a location in San Francisco that we would like to get opened here by the end of the year. It’s been one of those slow going raises that hasn’t happened as quickly as we would like. So, we’re still in that raising money phase.
Matthew: Yeah I’ve heard that feedback across the board that Jeff Session’s appointment was like a huge wet blanket. Things are still going on, but it just slowed everything down because no one wants to invest until they see. I think they’re seeing that perhaps he’s not as bad as they thought, but it’s still not clear.
Jim: I think he’s as bad as we all thought, but I don’t think he’s going to be as powerful as he hopes he could be. So that’s the way I look at it. To me what Jeff Sessions has done, for me, he made the big, real money investors back off, but in the big picture it’s not going to kill California, Oregon, Washington or the legal states, but what it’s going to sadly do is slow down the legalization in the states that need it and that aren’t there yet. I feel badly for those states that were getting close to legalization. With Sessions in office, I think it’s going to slow that down and probably have to come later. Later in the next administration for the states that don’t have any form of medical or recreational cannabis legal yet.
Matthew: I mean, I know you’re not a government expert or anything like that, but I was just reading yesterday that 250,000 tax payers left California last year, and it’s kind of a state of dichotomies in that you’ve got really wealthy tech investors and smart people that know how to make a lot of money. Then there’s the other side of that where there’s a lot of people not making much money there. The middle class seems to be leaving the state, from what I’m reading, largely because the high income tax rate. I think the top wants 13 percent. Just really high real estate prices, and a state government that’s not very business friendly. Do you see California, in the next ten years, having a positive outcome as these pension benefits spiral out of control and the state budget deficits get larger, or do you think it’s a non-issue that will resolve itself somehow?
Jim: It’s hard to say. I think California definitely has a bit of a mess on its hands, especially in the class system and the financial disparities that we have. I’m living right in the middle of it, and I’ve personally thought about leaving the state just because it’s so expensive here. I love living in California, and they say you get what you pay for, but it’s starting to hit that point where it almost doesn’t make sense trying to keep up with the Jones’ down here. I really don’t know. The one thing I do know is I’m a huge fan of Gavin Newsom, I’ve supported his campaign and been to his fundraisers. So, I would love to get Gavin, as he’s cannabis friendly and a forward moving, really strong thinker. Gavin is going to have his hands full. I think he’ll be the one to fix California, if we can do that. I wish I had the answers to those things, but I don’t really.
Matthew: I don’t know. If the Bay Area could somehow secede from the state of California, I think it would be a marvel. Something crazy would happen there between the technology and the capital and the innovative thinking. It would just go, it would become its own universe.
Jim: Yeah, no. It is crazy living here to see how much progression and things that are going on. It’s a really exciting place to be. To kind of turn the corner here, talking just outside of states and now talking countries, I’ve been really interested in Justin Trudeau and Canada and the opportunities up there in the cannabis industry, as we move forward. I think a lot of the investment money in the US that was going to go into US companies has began to go north into Canada.
Matthew: Yeah, it really is much easier there in Canada with the banking being legal. I think the only missing piece and the raising capital, those two things, but the only missing piece is dispensaries. Now I know they have dispensaries in Vancouver, but they’re essentially illegal. If they went away from this male-only thing, I think that would be huge. That would be the final missing puzzle piece that would just move the whole pole of the cannabis universe to Canada. So, with you on that. The population seems to have accepted it more. We have two poles in the US where we have people who totally accept it, and then it seems like people are against it. I mean I guess we’re winning some over into the acceptance side, but Canada seems more moderate about it. That could just be my perception.
Jim: I agree with you. There’s some disparities and weirdness in the laws with the dispensaries. I know there’s a lot of ones that were opening and getting shut down and just a bad, gray area. I think they’re addressing that now and moving into next year, that’s not going be a big issue in Canada. I’ve been excited to have a lot of the bigger Canadian companies start to come down to New West because they know that a lot of investors come to our events and they’re looking for American money now. So, the Canadian companies know that the American investors are interested in them, and because of that we’ve seen an influx of Canadian companies this year signing up for New West Summit. Honestly I don’t think we’ll get him, but I put in a request to see if Justin Trudeau would be able to come speak at New West Summit. I’m not holding any high hopes on that, but he would be an amazing guy to come talk as well.
Matthew: Oh yeah, that would be great. Now what do exhibitors achieve, what kind of exposure do they get? How do you become a successful exhibitor at a New West Summit and get the most out of it?
Jim: I think the first question is what are you looking for out of being an exhibitor. When I sell a booth that’s what I ask people. What do you want out of this show? Many bigger companies are just looking for branding and for people to know their name and see their name everywhere. Smaller companies many times are looking for an ROI. If they’re going to spend X, they need to make X back in new business from the event. Across the board I think the biggest things would be potentially meeting investors, as there’s a lot of investors at tech conferences. You see a lot of those kind of bigger money, traditional VC guys at our events sniffing around to try and figure out the landscape. So I think investment is a big one.
A lot of the growers and dispensary owners and people that are the executives of the industry are there. Those guys are looking for opportunities, whether it’s a new point of sale system like Flow Hub or it’s a new lighting system. So, a lot of the companies coming there are there poised to do business, and they do a lot of business. Our first year of New West Summit blew me away. One of the extractor companies, Genius Extractions, did over a quarter million dollars of business at our show in two days.
Matthew: Wow. That’s great.
Jim: Yeah, I mean, that’s what we want to do is put both sides in the room. The people providing the technology but also the people that want to purchase and use that technology.
Matthew: Jim, I like to ask some personal development questions to let listeners get a better sense of who you are personally. With that, is there a book that has had a big impact on your life or way of thinking that you would like to share with listeners?
Jim: I shouldn’t admit this, but I’m not a huge reader. I love reading magazines and short stuff, but I’m not a big, long book reader, but the ones that have kind of kept my attention and that I remember, I think the most impactful book for me that I’ve read has been called The 7 Habits of Highly Effective People, by Dr. Stephen Covey. It’s been really good for me as an entrepreneur to just have some baselines of how to operate. That book goes outside of business and is philosophically on how to live your life and be successful. I’ve always tended to, I don’t want to use the word self-help, but I like reading books that teach me something.
Matthew: Yeah, I still think about that book all the time because he has these four quadrants where the things—Two of the quadrants I remember. There’s important and urgent and another one was urgent, but not important. I’m thinking to myself, yes, this thing has come up on my schedule or has popped into my life for some reason. It seems urgent, but it’s not important. You can just choose to ignore those things. You don’t have to do them. Instead focus on the things that are important and just take care of them. Because if it’s not important, what does it matter if it’s urgent?
Jim: Absolutely. That makes me think about my email inbox that’s way too flooded and not trying to get back to every email. I’m starting to realize you need to pick and choose your battles. You can’t get back to everybody. That book, and I live by lists. My biggest tool personally for success is just having a pad of paper and every day I write a list of what I want to accomplish. It’s funny, if I do something that wasn’t on the list, I’ll write it on the list and cross it out just so I can see that I did that and feel more accomplished. I think just the very simple task of list making is really important and most successful people do that.
Matthew: Yeah, I like the list too. I have one that kind of syncs with my phone and my laptop. I wonder sometimes if I put too much on the list. Do you have a lot of things on there, or do you try to keep it down to two or three things, but somehow it seems to grow?
Jim: Yeah, I’ve got a little note pad. I try to make it never be more than one page, I guess is the best way to put it. Like you said, I try and pick the stuff that’s important and prioritize it, so I’ve got the less important stuff below and the most important stuff at the top, and if I don’t get to the bottom, that’s okay.
Matthew: Okay. As we close, can you tell listeners how they learn more about New West Summit, both when the next one is and how to register, how to become and how to connect with you in general?
Jim: Yeah absolutely. Before I do that, I would love to share one other thing. You had asked me an earlier question just about different ideas and New West Summit. What I’m starting to see at New West Summit and really excited to see more of, and as we talk about technology on a podcast like yours, hemp is such an amazing piece of the cannabis industry that not a lot of people are looking at right now because it’s more about the cannabis as a plant, using it recreationally or medicinally. That piece of cannabis and the hemp industry in and of itself is going to be, in my opinion, the next big rush in this industry that a lot of people aren’t looking at or thinking about.
Everyone knows that you can make paper, but you can make hemp fuel and replace petroleum. You can use hempcrete. You can build houses and fuel your car with hemp. I just wanted to iterate to everybody out there that it’s great to smoke marijuana or eat it or use it however you want to use it for that benefit, but the plant itself has so many more things that it’s going to go for us in society and humanity over the next few decades that I think a lot of people are going to be surprised and have their eyes opened at the possibility of hemp, and I wanted to make sure to share that today.
Matthew: Yeah, hemp is kind of the behind the scenes celebrity. I’ve read how Mercedes is making door panels and bumpers out of hemp resins now. As supply chains for different products try to become more transparent and sustainable, they’re using hemp and resins and things like that for industrial uses. You mentioned hempcrete. Hemp insulation, that’s a big one too. So many uses, so you’re right. It’s kind of the hidden star, hidden game changer. Hemp.
Jim: Yeah, so thank you for letting me share that at the end here because I think that’s important for people to begin to think about and look into. On the New West Summit it’s pretty straight forward. It’s just www.newwestsummit.com.
Matthew: Well Jim, thanks so much for coming on today and educating us about your events. They sound like a lot of fun and good luck with Power Plant and the 420 Games.
Jim: Thank you so much. I’ve enjoyed being on your podcast.
Kristi Knoblich Palmer is co-founder and COO of Kiva Confections. Kiva is one of the top brands of infused products in California. Kiva’s quality, ingredients, and reputation is allowing Kristi and her husband to expand beyond the state lines of California. Listen in as Kristi describes the challenges and opportunities associated with infused products.
Learn more at:
[1:13] – What is Kiva Confections
[1:46] – Kristi’s background
[3:02] – What changed for cannabis businesses on election day
[3:52] – Market progression for Kiva Confections
[5:13] – The birth of Kiva Confections
[6:38] – Different categories of the California cannabis market
[10:21] – Cannabis prices in California
[13:22] – Kiva Confections’ product line
[16:13] – Kristi talks about a CBD only line
[18:21] – Concerns around CBD extracted from hemp
[21:22] – Kristi talks about two frustrations she would eliminate from operating a business
[23:38] – Kristi predicts the future of the edibles market in California
[25:00] – Kristi talks about expansion plans
[26:29] – Kristi answers some personal development questions
[31:37] – Contact details for Kiva Confections
What are the 5 trends that will disrupt the cannabis industry in the next five years?Find out with your free cheat sheet at https://www.cannainsider.com/trends
The citizens of California have cast their ballots and voted for recreational cannabis. As the market turns from medical to recreation, edibles companies that already have a footprint in brand recognition in California have an early adopter advantage. Here to give us the lay of the land in the California edibles market is Kristi Knoblich Palmer of Kiva Confections. Kristi, welcome to CannaInsider.
Kristi: Thanks for having me Matt.
Matthew: Kristi, give us a sense of geography. Where are you in the world today?
Kristi: Sure, so Kiva Confections is located in Northern California. So we’re in the Bay Area, and we serve the entire California marketplace. We also have our products available in Arizona and Nevada and just recently in Illinois.
Matthew: Yes, I read about that yesterday. Congratulations.
Kristi: Thank you.
Matthew: What is Kiva Confections? What do you make?
Kristi: Kiva Confections is a chocolate manufacturing company. So, we infuse medical cannabis with chocolate. We just stepped out of chocolate for the first time with a mint. And really our goal has been to kind of redefine what a cannabis confection is and make products that are safe and tested and delicious and also professionally packaged.
Matthew: Okay. And what’s your background? How did you get into this business and come to start Kiva?
Kristi: So, we don’t really necessarily have backgrounds in food or really even in business. My partner and I got started in 2010, the end of the year. And we graduated from photography school, needed another source of income so we started a cultivation in our garden shed, and we needed another way to stand out in the cannabis world. So, back then people were cultivating and providing their plants and their flowers to the dispensaries, but we really noticed that there wasn’t a safe, trusted, reliable, edible product that we ourselves would buy or that I might share with my friends or with my mother-in-law for example. So, we really identified edibles had a lot of potential and a lot of opportunity for improvement.
Matthew: Okay. So that explains the photography. So do you do your own photography for your website and everything like that?
Kristi: You know what, not so much anymore, but we used to.
Matthew: Okay. And can you give us an overview of what changed for cannabis businesses and consumers on election day back in November?
Kristi: So what changed in November is now we have, now in California we have recreational cannabis. So, at this point, and that was six months ago, so six months later we have the system for sales of recreational cannabis is not yet implemented. That is expected to come in January of 2018. So, what you can do right now, what has changed so far is adults over 21 can have cannabis in their possession and they can gift it to each other. So, we don’t have a sales system just yet, but it is legal to possess.
Matthew: Can you take us back to what the California market was like for Kiva when you started and then compare it to what it’s like now?
Kristi: In 2010, cannabis was very underground. People, businesses and patients alike were afraid for their safety. You didn’t want to be the company with a billboard next to the freeway or even a magazine ad in one of the cannabis publications. So, it was very underground. The foundation for businesses and for patients was a bit shaky to say the least. And so people didn’t really feel comfortable in the marketplace. And so I think now, fast forward six years, people are really starting to understand how cannabis is going to fit into our culture. It’s becoming more and more normalized, and we’ve got laws coming very soon, which those regulations and laws for cannabis businesses are going to give that sturdy foundation that we’ve been lacking for so long.
Matthew: You probably had one idea what the infused product business would be like when you started Kiva. It was just an idea and then a totally different idea once you’re in it day and day, in the trenches. How did it differ from what you thought it would be and what it’s actually like?
Kristi: Well when we started it certainly wasn’t easy. We started in our home kitchen and we worked as many hours as we had to to make deliveries and to make the product and to bring it to our dispensary customers. So, early on I knew it was going to be really hard and a lot of work. That part of it certainly hasn’t changed, but what has changed is I think the opportunity in the marketplace is incredible, and I don’t think I really ever could look that far into the future back then to really try and understand how big the marketplace was going to be.
Matthew: Now are you vertically integrated in grow your own plants? How does that work.
Kristi: So, we’re not vertically integrated. We do our own distribution, but we do not do our own cultivation. So, we work with cultivators to grow up to our standards and provide us with materials that meet the specs that we are happy to put into our products.
Matthew: Now the California legislators have created a lot of different categories of cannabis businesses. Can you tell us about a few of those and what you think about the different categories?
Kristi: Sure. The few main categories that stand out are cultivation, manufacturing, distribution, testing and dispensary, which includes delivery service as well. I think one that stands out, which I think is a great category, is the small manufacturer. And a lot of cities, for example, have a cottage license for small companies that are looking to get into the industry on a very small level. So, I think that is great for entrepreneurialism. I always think back to how when we got started, we were tiny, and that opportunity should be accessible by people of all levels.
The other one that’s unique is the distributor. The distributor is very controversial right now because in the medical laws it says that manufacturers but not also be able to distribute. One of Kiva’s ways of getting into the marketplace was both manufacturing its products and doing distribution. So, we’re fighting really hard to protect our ability to also distribute our own products and the products of other companies.
Matthew: Yeah, you say it’s controversial. I’ve heard other people use not so neutral words, like they swear when they talk about it and they’re frustrated because it’s like, hey this is not plutonium here. We don’t need a separate category of distribution. Do you think that’s just going to add cost to the market?
Kristi: Yeah. Cost is a big concern, also stifling innovation. So, Kiva for example, we may try out a new flavor and we want to take that flavor to maybe ten of our dispensary customers in the market and see what think. Do they like the flavor? Collect their feedback. But if you’re going through a large manufacturer, sorry a large distributor, there isn’t a lot of incentive for them to perform those types of tests for you. Also they’re working on a much larger scale. So, if you’re a small company and all you can serve are ten dispensaries to start off with, what distributor is going to be able to bring you into their fold if you’re on such a small scale and they’re on such a large scale.
So, I see that allowing manufacturers, I think they can hold the distribution license. I don’t think the license category needs to go away. They should just also be able to do both functions, and I really feel very passionate that that’s the right way for the industry to grow and to flourish, and I think it’s the best way for us to move forward.
Matthew: Are legislators getting that feedback or is this pretty much set in stone that there’s going to be this distributor level or category?
Kristi: They are getting the feedback. I think the opposition was a little bit louder and came before us. So, a lot of the legislators that you speak with they haven’t necessarily heard our side of the argument yet. So, we’re still kind of fighting that uphill battle, but I think, I really feel we’re on the winning side of the argument, and we have the interest of the greater industry and that’s starting to catch on with the legislators.
Matthew: How do you feel about the price of cannabis, particularly in California where it’s such a big market? Do you feel anecdotally that it’s going down at the wholesale level or what’s happening to prices, under pressure?
Kristi: Pricing is going to be a really interesting thing to follow over the next few years while regulations are unveiled. So, I think if California continued on a path that it’s on without regulations we would see cannabis continue to fall in price, but I think the industry is in for a really big shock come January 2018 when regulations do roll out. There are a lot of regulations that are very strict and will require some additional talent to manage those. Some of the elements in track and trace, for example, or in inventory reconciliation. So, I think the price of cannabis is going to potentially go up for a short time, while regulations are being put into place, and people and businesses are figuring out how to handle those new costs.
Matthew: Okay, so at least initially it will rise, then maybe the dust will settle and the dynamic might change, but that’s interesting. We saw some of that in Colorado too when there was growers that met the testing requirements and they were able to charge a premium for a period of time, and then for six months thereafter maybe then the price started to plunge. So, I will be interested to see what happens. Particularly California has so much capital, so much technology and such a strong agriculture background, the confluence of those three things, in the long term, who knows about the short term or immediate term, I’m concerned it’s just going to really go down. Thoughts around that.
Kristi: Yeah. I think if the prices went down, that I would hope that quality would stay steady or continue to increase. So I think if prices fell, but quality stayed or got better, then that would be okay. Also if cost goes down, that means it’s more accessible to more people, and I think that’s a great thing for cannabis in general because it really has the ability to help so many people. So, if more people had access to it, I think that would be okay too.
Matthew: I want to hear more about your products, but before we do that I have one confession. Twice I did this at your booth at the Marijuana Business Conference in Las Vegas. I would go to your booth. I would get a sample of chocolate, then as to not look like I’m eating too much of your samples, I would boomerang around the whole Expo Center and then come back and take another one like I was coming for the first time.
Kristi: No problem.
Matthew: I just had to get that off my chest. So, tell us a little bit more about your products; your bars and mints and bites and so forth.
Kristi: Sure. So, we started the company with our Kiva Bars. We started with a 60 mg milk and dark chocolate bars. About six or so months after that we didn’t double, but we tripled the strength for 180 mg bar, and we added some really nice and interesting flavors to those to enhance the taste and kind of cover up the negative effects that you can get from adding so much THC into your products. Shortly after that we came out with our Terra Bites, which are the chocolate covered espresso beans, also the milk chocolate covered blueberries. Those two products are our best sellers currently. Then just recently we launched the mints. So, it’s our Petra Mint product, and it’s a 2.5 mg of THC, so it’s really part of our strategy to encourage micro dosing and the ability for the consumer to control their dose all the way down to that really small amount of 2.5 mg.
Matthew: Tell us more about the mints. That seems like a great discreet option. How did you arrive at creating a mint?
Kristi: So, the mint came because well when we launched the Terra Blueberries we wanted to take micro dosing to the next step. We also wanted to have a product available for consumers that wouldn’t melt and that was even more portable, and actually the equipment that we used for the mints, they’re molded on both sides in a dye. So it really allows for the most amount of accuracy in the dosing. So, the mints are awesome because you can take that tin, put it in your book bag or your purse without worrying about it heating up too much and melting. And then really the ability to dose yourself, just again, to that right amount. Not too much, not too little. It’s really part of a new way for cannabis consumers to use cannabis, especially those ones who are brand new to the industry and have never tried cannabis before.
Matthew: Yeah. You mentioned carrying them in your backpack or purse. I also use a sequence fanny pack, which also is a third option that you didn’t mention. Would it work for that as well?
Kristi: Yes, it will look great in that.
Matthew: Okay good. So, a lot of people are really interested in CBD and for good reason. Any thoughts about a CBD only line or something like that?
Kristi: Yeah, we get a lot of requests for different CBD ratio products. So, yes we’re always considering the feedback that we get and how we can next incorporate that into another new product line. So, we’ve got something that, I can’t promise that it’s going to launch by the end of the year, although I sure hope it does, but we’re looking more and more into CBD and ratios.
Matthew: Okay. Yeah, I mean I hear a lot about the one-to-one. It’s hard to know what the ratio is exactly what people want. How do you think about that? Do you just look in the marketplace? Do you talk to customers, talk to dispensaries and say what are people asking for, or do you just kind of go with your gut there?
Kristi: Yeah so, we definitely ask our dispensaries and our team internally, as well as patients for their feedback and try to really test the waters and see what the right product would be. For Espresso and our Ginger Bars, we landed on a one-to-one ratio because feedback was telling us that we needed to add CBD, but one fear was that if we added more CBD than THC, that there’s still a learning curve with what CBD does in the marketplace. So, it’s a little bit of a buzz word right now. But we didn’t want consumers that didn’t understand CBD to buy the products and be disappointed because it had a lot of CBD in it and they didn’t feel anything. That’s still something that happens as people try CBD, and they go, oh it doesn’t work. I didn’t feel anything. And you’re like, well that actually means it’s working, but if you don’t have any kind of pain or inflammation, then you may not notice anything at all. So, that was part of the reasoning behind that one-to-one was to get people introduced to CBD, but still feel the effects.
Matthew: Now I know there’s people that are concerned about CBD being extracted from hemp and we’re not sure where that hemp comes from or what circumstances it was grown in. Do you have any concerns about that, maybe from competitors or just in the marketplace in general?
Kristi: Yeah, definitely. CBD extracted from hemp, there isn’t anything wrong with CBD coming from hemp, but what the real problem is is where the hemp plants are grown. Hemp plants are put in the ground in places where the soil quality has deteriorated. They do a great job of leeching out of the elements from the soil, both good and bad. So, what we’ve done with our CBD products is we sourced our CBD from California grown cannabis plants. That way we can go up to the farms. We can dig our hands in the soil. We can meet the farmers and make sure that our CBD doesn’t include some of those chemicals that you are afraid that they might can contain when they’re from another country.
Matthew: What is the farming community, I assume this is Northern California, is it Mendocino, where is it in Northern California? Is it Emerald Triangle, something like that?
Kristi: Yeah. So our plants are from the Emerald Triangle from Mendocino, more specifically.
Matthew: Okay. So, what’s the scene like up there? I hear a lot about it. Is it a pretty active community? Is there a lot of great things going on?
Kristi: Extremely active community. Cannabis is the number one source of revenue for those communities up there. So, it’s a very cannabis-centric community. It’s stunningly beautiful up there. It’s incredible. When you go and visit you wonder why you live where you do, where there’s traffic and noise and you don’t have those beautiful sleeping views and the mountains. It’s incredible up there.
Matthew: Gosh, I hear you because sometimes, I’m in a big city right now, and sometimes I’m like this does not seem like an environment for a primate. It seems like we want to be out running around, barefoot, looking at the ocean and being around trees instead of this artificial construction. So, you can kind of feel your blood pressure drop when you get out into the country a little bit.
Kristi: You really do. You really do. I mean, just thinking about it now gives me chills. I mean, it’s so beautiful up there.
Matthew: And you’ve got such good weather. It’s so nice in Northern California. Anyway, got off on a tangent here. I’m just curious about some of the frustrations because there’s a lot of compliance and a lot of, I’ll just call them hassles. I mean you can’t just focus on creating a great product. There’s a lot of hassles you have to put up with in the cannabis industry, and I like to highlight the hassles because if there’s entrepreneurs out there listening that can solve people’s pain points or a problem, everybody wins. If you could wave a magic want and eliminate one frustration you have about operating your business right now, what would that be?
Kristi: I can only choose one, are you sure?
Matthew: Yeah, for now.
Kristi: Well I’m going to pick two. The first frustration is the one that everybody, it’s the low hanging fruit frustration, which is banking. So, banking is like top headache for absolutely everybody, but that’s what everybody is going to say. So, put that one aside. The second one, if I could wave my magic wand and fast forward us a year, where we had regulations that are rolled out, that would be incredible. Because we keep seeing proposed regulations. We have the governor’s trailer bill, budget trailer bill. So, there’s all these potential regulations being thrown up. And as soon as you see one set of rules, everybody just focuses on that and attacks that and you put all of your energy into giving your opinion and writing whitepapers and trying to give feedback, and it’s a lot. Just to see that those regulations may not even be the ones that end up winning in the end. So, if I could wave my magic wand and fast forward us by a year so that we finally have our regulations, which is basically like our playbook. If we know what we can and can’t do, then we’ll do that. We’re the cannabis industry, we’re really good at adapting, in my opinion. So, we’ll adapt, we’ll carve our businesses out around these new regulations and we’ll be compliant, but that would save me a lot of headaches and a lot of sleepless nights.
Matthew: Gosh, I hear you. One thing I don’t feel like the regulators and legislators have in mind when they do these things is that it prevents business owners from investing. You’re holding off until the dust settles a little bit and you say, well when it’s a little clearer I can then invest with confidence. So, you kind of invest as much as you need to, but not everything you would if there was clarity. So, I think that’s something they could think about a little bit.
Kristi: Yeah, certainly. Exactly.
Matthew: So I’m going to ask you a question. What do you think the edibles market will look like in California in five years because it’s a lot the last five years, what is it going to look like five years from now?
Kristi: In five years from now, I think that, as you mentioned before, the dust will have settled and there will be better products on the market in terms of quality and labeling and the testing procedures that companies are using. So, I think that in five years we’ll have a more professional edibles industry, which will, I think, cater to the patients and the consumers that are purchasing them, and it will also really open up the category. And edibles still have that stigma, people still picture that brownie, Saran wrapped with an Avery label that says, “10X”. So, edibles still have that stigma being unreliable and unsafe. So, so I think in five years we will have made some major headway in educating our consumer base on what the new edible is and how to use them so that you can have a controlled and enjoyable experience.
Matthew: And what are your expansion plans to other markets? We talked a little bit about Illinois. What does that look like?
Kristi: Yeah, so we’re continuing to expand the brand to other states. It’s frustrating, but that’s the way it has to be done. Because if you were a regular chocolate manufacturing company, you would have one hub and one manufacturing hub say in California, maybe one more somewhere else in the country on the East Coast or the Midwest, so that you could serve your markets appropriately. So, it’s very expensive and resource intensive and time consuming right now for companies to expand outside of the state that they’re currently in because you have to manufacture the product in that state. Not only do you have to manufacture it there, you also have to comply with the regulations in each state. So, it really feels like you’re starting a new company in every state that you move in to, even if you find a partner there to work with. It’s no simple, easy task. So, I see out of state expansion as being one of those things that maintains top of the challenges list, until we have federal regulations that allow us to ship across state lines.
Matthew: Kristi, I like to ask some personal development questions to help listeners get to know you better on a personal level. With that, is there a book that has had a big impact in your life or way of thinking that you would like to share with listeners?
Kristi: You know what, I’m just over halfway through with a book on Elon Musk. So I just picked it up, but it’s a great book. Elon Musk is very inspiring in his way of doing things. He doesn’t have the best reputation as a, let’s call it, a nice boss, but he certainly knows how to get things done. And he’s really on a mission. And so I’m looking at the way that he runs his business, not necessarily modeling myself after all of it, but I find that book very inspiring because he just has a straightforward way of getting done what he thinks is the most important thing, which when you’re running a business you’ll get lots of opinions from a lot of people. But if you don’t maintain that clear vision as a leader, it’s really easy to get off track.
Matthew: Yeah, and almost lost everything a couple times, and now he’s got, in addition to Space X and Tesla, he’s got the boring company that’s boring huge holes underneath Los Angeles to alleviate traffic and a neuro lace which is going to connect the human brain to software and hardware to expand our capabilities. I mean the guy is… we got to clone him somehow. That last one is a little scary though. I hope it turns out okay. I don’t know it sounds cyborgish.
Kristi: Pretty incredible.
Matthew: Is there a tool, web-based or otherwise, that you consider vital to your day-to-day productivity?
Kristi: Oh man, I would be nothing without my iCal calendar. I would get nothing done if I did not have my calendar. We have a series of shared calendars, one that my business partner and husband use. So I can throw anything on the calendar that we both need to attend. We have shared calendars throughout our facility and throughout our company, specifically for tours and for project management and for marketing. So, yeah, if it’s not on my calendar, it doesn’t exist. So, yes, my calendar is super important.
Matthew: And reminders are just as important for me. It’s like I need to be peppered with reminders that something is going to happen. I feel like I’ve outsourced my brain to Google somehow.
Kristi: Yes, totally, exactly. It’s like my phone dies and it’s out of commission, I don’t know what I would do.
Matthew: Now are you raising capital from investors at all right now?
Kristi: At this current moment, we are not. Our company has been bootstrapped up to this point, but with regulations coming in 2018, we’re going to have to rethink our approach and be able to grow and not miss out on opportunities. So, potentially by the end of the year, we’ll be looking to bring in some investment.
Matthew: That’s really cool because when I go to pitch forums or different places or see companies raising money it’s usually for brand new startups. It’s not for companies that are already successful. This would give an investor a lot more confidence, like oh here’s a business model that works. They just want to grow it, whereas when you’re starting from zero there’s a much bigger question mark like will this company make even one sale or a profitable sale. So this is nice. I’m sure you’re going to get a different level of investor interested when that time comes.
Kristi: Yeah, I think so. It’s really an amazing time for investors to get into the industry. I’ve got a lot of questions around that lately. People asking is it too soon, is it too late, and I’m surprised when people even suggest that it’s too late because the opportunity. We’re barely at the starting line.
Matthew: It’s like the first day, yeah.
Kristi: Yeah exactly. So, I think once regulations hit, that will really be the beginning for investors to get into the industry. There’s a lot of people, colleagues and competitors in the industry that are actively looking for capital and can’t get enough capital to accomplish what they want and get ready for 2018 and all the growth that we’re about to encounter. So, now is the time. The opportunity is really just beginning.
Matthew: Now, if there’s any accredited investors out there listening, should they just go to the contact area of your website, if they want to reach out to you about investing? What’s the best way?
Kristi: Yeah the best way to reach us is on our website, www.kivaconfections.com. Yeah, they can fill out the… send us an email at email@example.com or we have a contact page on there as well. Yeah, that’s also where listeners can find us online and find all of our dispensary contacts that we work with, where they can find our stores or our products in stores.
Matthew: Great, well Kristi, thanks so much for coming on the show today. We really appreciate it. Good luck to you and your husband, and I can’t wait to see you again at the next Marijuana Business Conference and Expo. I might just put out a chair or a chaise lounge and just nibble bits instead of pretending I’m not coming back and eating over and over.
Kristi: Come on by. I love giving people samples, and no one is eating more chocolate at the booth than I am. That is guaranteed.
Matthew: Well thanks, and best of luck to you.
Kristi: Thanks so much Matt. I really appreciate the opportunity.