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The Michigan cannabis market isn’t on everyone’s radar, but it’s large and growing faster than you might think. Here to tell us about it is Fabian Monaco of Gage Cannabis.
Learn more at https://gageusa.com
[1:17] An inside look at Gage Cannabis, one of the largest vertically-integrated cannabis companies in Michigan
[1:45] Fabian’s background in investment banking and how he came to be president and CEO of Gage Cannabis
[3:01] Michigan’s history in medical marijuana and how the state’s cannabis market has evolved over recent years
[5:18] Why Fabian believes every cannabis brand needs to be vertically integrated right now
[7:05] The pros and cons of contract growing versus buying wholesale
[11:05] The most popular cannabis products in Michigan right now and surprising new trends to look out for
[17:49] How Gage Cannabis has successfully employed curbside pickup to gross almost 99 percent of their profit
[21:29] The importance of brand continuity and how this has helped Gage grow so quickly
[24:38] Cookies aka the “Coca-Cola of cannabis,” a popular California-based cannabis brand that has partnered with Gage to expand into Michigan
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A, insider dot com. Now here's your program.
Michigan is a market not on everybody's radar, but it is big and growing super-fast. Here to tell us about it is Fabian Monaco, CEO of Gage Growth, a vertically integrated cannabis retailer in Michigan. Fabian, welcome to CannaInsider.
Fabian Monaco: Thank you. Thank you for having me on. I appreciate it.
Matthew: Fabian Monaco sounds like a character from a spy novel. I feel like my name is vanilla in comparison. What do you think about that, Fabian? Should I change my name? Can I be Matt Monaco?
Fabian: Hey, look, [laughs] I'll admit, Fabian Monaco is a nice, interesting and unique name. I don't come across too many Fabians. That's for sure.
Matthew: Yes, that's great. Give us a sense of geography, where are you in the world today?
Fabian: Right now, I'm in Toronto. I go back and forth between Canada and Michigan. Right now, I'm in Toronto, Canada.
Matthew: You could almost jet pack from Toronto to Michigan. That's pretty easy, right?
Fabian: Yes, very, very quick flight. Very, very quick.
Matthew: What is Gage on a high level? Give us a picture.
Fabian: Gage is one of the largest vertically integrated cannabis companies in the state of Michigan. That's pretty much Gage at a high level. It is the premier brand in the space right now in Michigan. We continue to command some of the highest price points in the state of Michigan, put a lot of effort and time into the products that we bring to the consumer and the medical patient in Michigan, and something that we're very, very, very, very proud of what we built.
Matthew: Can you share a little bit about your background, journey, and how you got into the cannabis space?
Fabian: Yes, good question. My background started actually more in capital markets. I used to be a lawyer and went into investment banking at this place called GMP Securities. GMP Securities was at the forefront from a capital market standpoint in the cannabis game. They had brought Tweed public. I joined them shortly after that and frankly got to work on a lot of the first of the industry. The first acquisition when Tweed bought Bedrocan, the first $100 million financing, the first IPO.
I got to, again, work on a lot of the first in the industry and really transitioned to more on the operational side of things a couple years ago when I started Gage with a couple of my former colleagues and, frankly, two of the best operators I know in the space. I'd seen probably over 100 gross and cultivation assets and operators. These two founders of Gage really stood out. We're really one of a kind and, frankly, the rest is history. That was three and a half years ago and here I am today as the CEO of Gage.
Matthew: You're pretty young guy. How old are you if you don't mind me asking?
Matthew: Yes. Well done. Tell me, why Michigan?
Fabian: It's a great demographic in terms of just the people there and the consumption habits of the people in Michigan. They're a very proud state as well. They've been consuming cannabis from a medical standpoint for many, many years since 2008 when their caregiver program came into place. Michigan was actually the second largest medical card holder system only behind California. We had this great underlying base. We knew Michigan was going to be a massive, massive market. Now today, Michigan already is the third largest market based on run rate.
Matthew: Yes. I think people don't realize that. Also, when you talk to people in Michigan, there's no resistance, it's like, "Yes, cannabis should be legal." "How about you?" "Yes." "How about you?" "Yes." I haven't met anybody from Michigan who's like, "No, forget-- this is crazy. Potheads everywhere." You don't hear that?
Fabian: No, not at all.
Matthew: They have a huge background as cannabis medical market, and growing like crazy. Talk about the locations of your retail operations.
Fabian: Yes, we now have eight different retail locations across the state of Michigan. We have 13, we'll have all those 13 open by the end of this year. We're actually trying to get to 20 by the end of this year via acquisition. We have a whole bunch lined up for us in the next little short while here and look to have that full 20 portfolio of retail locations open by the end of this calendar year. We really, really took a lot of time and spent proper analysis to finding markets where we knew they were going to be big markets and properly situated from a geographic standpoint.
We can reach 90% of the population within a one-hour drive with the 13 locations that we have currently. Again, only eight of those are operational. By the time we get to 20, I'm hoping that we can reach close to 100% of the population within a short 20, 25-minute drive, and that's our goal. That's how we're really setting up our retail. Really trying to make sure we have the best access to all the consumers. Delivery is available in Michigan. Is dynamic delivery as well. It's something that's going to really explode that market. It's, again, already so big, can't wait to delve into the delivery aspect of the strategy as well.
Matthew: You're vertically integrated as I said during the intro. You grow your own plants, you're doing your own processing, selling your own goods at your own retail stores. What do you think are the biggest benefits of being vertically integrated? The tradeoff would be maybe you're not focused, but others would say, "No, we're very focused on everything from bottom of the funnel to the actual transaction." What do you say to that? What are the benefits?
Fabian: Yes, I think you need to be vertically integrated in the space right now. The way the market is going, you need to control every aspect of how your brand as a company is presented to the consumer. If you literally have no aspirations of being big cannabis brands, you can go set up a cultivation asset, sell wholesale, probably make good money. That can be your strategy. For us, we really want to make Gage the biggest and best brand out there. With that, you need to be vertically integrated, you need to control every aspect from seed all the way to smoke. You can't necessarily give that opportunity to another third party to potentially misstep and have a scenario where they represent your brand poorly.
Even for us, we actually sell the majority of our product through our retail channels. We don't actually sell much wholesale. That's again by design, it's by strategy. We wanted to ensure that we get every single grain of cannabis to the consumer. Every single process that goes into that, we control it. We control the narrative, we explain to the consumer what they're getting when they come to our retail stores. They only have access to Gage and Cookies-branded product when they come to our retail stores. Again, in Michigan being slightly competitive especially if you're trying to grow a brand, vertical integration is very, very key.
Matthew: What's the difference? Let's talk a little bit about contract manufacturing and wholesale. What's the difference for people who are like, "Wait, what's contract manufacturing and what's buying wholesale? Or contract growing and buying wholesale?" What's the difference between those two?
Fabian: Wholesale is a scenario where Matt is growing a couple pounds of cannabis, Gage will come and purchase that particular strain or flavor that Matt is growing. Contract manufacturing is a little different. These are licensed entities that came to us that wanted to grow Gage branded products. We give them those starting materials, those cuts to essentially grow for us. It's a very capital light model, and actually something that's not really been widely available to every cannabis company out there. We've been blessed again, with the fact that our brand is very, very well known in Michigan and very, very well recognized and respected.
We've had the opportunity where we now have 10 different exclusive contract growers within our network. This spans across 10 different facilities. For us, it gives us an opportunity to expand exponentially our cultivation footprint. Also, doing so in a capital light way. We don't pay for the CapEx, we don't pay for the OpEx of these facilities. In fact, most of the time they cover our packaging, our testing and secure transporting. I'm getting product on my shelf for $0. I'm making 50 plus percent gross margins.
More importantly, the difference between wholesale and contract manufacturing, you're controlling your supply chain. You know what product's being grown, you know when it's going to be harvested, you know when it's going to be packaged, you know when it's going to get on your shelf. With buying wholesale, you don't know how many pounds this person has, what flavors they have, when can they deliver it, et cetera, et cetera, what price it's going to be.
Here for us via our contract manufacturing agreements, we've kept it really, really simple step by step process throughout the growing process and then obviously selling that product to us, which just makes it very, very simple and very easy for us to control our supply chain.
Matthew: Yes, and this is helpful for the growers too because they get predictability. They're like, "I know who's going to be buying this at the end after I've cultivated this, cured this and everything. I have some comfort knowing that there's someone at the end here, and if I do a great job, they're going to keep working with me." You're both incentivized to work together.
Fabian: Totally. Totally. It's a win-win scenario for both. They benefit financially, and then more importantly, they get to intangibly benefits where they're dealing with one counterparty all the time, one purchaser, they don't get to go chase multiple parties for their money. It's just a great relationship. It's truly a win-win scenario for both parties.
Matthew: The first time I saw this was in Dairyland of Wisconsin, and there's all these dairy farms and you can see they have out front they say, "We're a craft farm," or-- I can remember the other big dairy companies.
I would think like, "Wow, do you want to do this?" Then you talk to some of the dairy farmers because who doesn't talk to dairy farmers in Wisconsin, Fabian, you're probably doing something a lot more interesting, but they would say, "Oh, yes, we do like this because of predictability. We have what keeps us up at night, what's the price going to be when it's time to go to market and stuff like that?" It takes away a lot of that stress for them. I think it is a win-win when both partners are properly aligned.
Thanks for explaining the difference between contract manufacturing and wholesale. I think it's an interesting model. I can certainly see if you're making a 50% profit margin with a contract manufacturing partner that you like, that's a no-brainer and something that scales probably pretty well, I would imagine.
Fabian: Exactly. No, exactly. Just the speed at which the company can grow the flavor offering when it comes to flower just expands exponentially as we get more and more of these contract growers online. Right now, five of them are operational. We'll have the full 10 by the end of the year and even looking to add potentially even more on top of that 10.
Matthew: What's selling the best right now in your retail stores? Is there anything that's surprising like, "Hey, this is unusual that we're seeing a purchase of this and it's a little bit out of pattern?"
Fabian: Yes, flower sales are super strong. Michigan, or Michiganders as they like to call themselves, they consume some of the highest amounts of flower on per capita basis. For us, we specialize in flower. That's where we built our brand. We didn't try to be the jack of all trades trying to get into a variety of product categories. Again, we focused on flower. On 4/20, as an example, we had over $500,000 in sales from just seven stores. Of that 500 plus, 73% of it was flower sales. For us, we continue-
Matthew: That's high.
Fabian: -to see strong demand for flower. Yes, I would say over 50% of our sales are flower and pre-rolls. With that being said, it's still a market and category that we focus on quite a bit and one that's selling well.
Matthew: 4/20 is the Amazon prime day of cannabis and a lot of times, there's through that whole supply chain through the-- A lot of technology goes down that's connected to the cloud intermittently, but I notice that some of the technology partners and integrators in the space have adapted to this and they know these big traffic spikes are coming, is there any way to smooth out the 4/20 experience? Or does it go totally smoothly?
Fabian: No. You know what to expect, right? Our operations team and the founders have deep experience in space right now, they know what to expect. You embrace it. It's a wonderful day. It's an exciting day. It's something that as chaotic as it can be, even for us, it was pretty wild especially fighting with the big long lines trying to get customers in and out as quick as we could. It's something that you embrace and something you appreciate. It's a blessing. It's a blessing to be in an industry that's in such high demand right now in terms of product that we can't complain whatsoever.
Matthew: Let's talk about the basket size of the store at Gage. Can you talk about basket size and what you think about that?
Fabian: Yes, that's a good point to bring up actually because that's where we really, really excel. We really, really show how deep the team is in terms of knowledge and how they run dispensaries, and more importantly just indicates how big of a brand we have. Michigan averages about $85 the last study that we saw. That's a very good basket size. If you compare that to most other states, it's exceptional. For us, we're nearly double that. We had 164 average basket size in 2020. So far in Q1 of this year, we've been averaging depending on the month between 150 and 170. On 4/20, it was 171. The week leading up to 4/20 it was about 165.
We've been in and around that zone pretty consistently now. Keep in mind that 2020 number I just gave you, that was across the whole year across all the retail. No cherry picking, no saying, "Hey, this is with our best store, this is what basket size we get." This was across our retail channel. There's some longevity and consistency in the numbers that we're seeing. Again, if you compare that to anybody in the industry, we're completely head and shoulders above everybody else.
Matthew: Yes, that's really big. Do you provide like debit card check out or ATM in stores? Or how can people pay?
Fabian: Yes, we predominantly accept cash. We've been trying a variety of options to get debit and credit cards in the stores. We do have some of those options, but again, it's not widely used just yet. It's a shame that the industry continues to be plagued by a variety of banking and insurance issues. To have the ability for someone to just come and put their Visa down or Amex down and buy a product. Not only I think is it going to make it easier for us and less risky for us as a business, but then even the consumer, you know what I mean, does have the propensity to potentially even spend more.
It can even increase the sales that we see once we get this potentially SAFE Banking Act passed which who knows if we're ever going to get that passed any time soon. Again, I think as the industry opens up more and more and we actually have that ability to-- as if you're walking into a liquor store and having that same payment capabilities. I think you're going to see the industry explode even more than it already is.
Matthew: Yes, I agree. You're making 3% less profit margin because of all the charge costs but people are much more comfortable. Also, when you're not handling bills, money seems a little less real. Like when you go to Disney World, they let you charge everything to a bracelet and man, you're just flying through stuff because it's like money's not real. I'm dealing with these pretend dollars, Disney dollars. It's that type of thing.
Matthew: It's like there's zero friction. I definitely see that coming. You probably really feel being in Canada and then working in Michigan, it's like you get to see like, "I live in a market where it's federally legal, cannabis is, and there's none of these banking shenanigans. Then I go down to the US where it's this crazy madness where they picked one thing to get upset about and ban and then they did that. Now we have to deal in cash." Probably is super frustrating because you live in a place where it's like, "We don't have these problems."
Fabian: No, very, very frustrated. If you go to a store here in Canada, again, similar to what you said. If you go there and you have $100 or $200 to spend, sometimes if I go to a store and say, "Hey, I want this or that," and then the budtender says, "Have you tried this new version? Or this new flavor?" At times, again, because you're paying with your card, you say, "Yes, sure, throw it in." If you came only with cash, there's also that ability to potentially not even be able to pay for it and you have to say, "No. I just got to come and get what I came here for." The ability to up sell consumers as well is reduced.
Again, that's not the name of the game always, just trying to get the consumer to spend more. The risk associated, again, with handling cash all the time and even during a pandemic, it is there. You'd expect and you'd hope that sometime soon we're going to get some changes there. Especially at a state level, it's a no-brainer. It's really a no-brainer. There's absolutely no reason why you can't get proper banking to this industry.
Matthew: Let's talk about curbside pickup. How big has that become in the last year or so for you?
Fabian: Our curbside pickup is pretty much 99% of our business right now.
Matthew: Oh, wow.
Fabian: Yes. All the numbers I gave you, especially on basket size, keep in mind, those are actually on the curbside pickup numbers. We only had the store open I think a little bit near the late summer in 2020. Since then, the stores have been closed. You cannot enter the store. It's a little bit of a frustrating scenario as well there. You'd love for people to come see the stores. We've opened up a bunch of new stores actually more recently and no one's really been able to come and see inside them.
We're really proud about our retail footprint and assets. It would be great to have people walk through the door, but for us, as well, you got to keep safety in mind. Safety of the employees and safety of the consumers and medical patients. Everyone follows strict protocols but again we haven't really had the comfort to go and open up the store. Curbside pickup's a big, big game changer for us.
Matthew: I get emails pretty much every day or several times a week from people asking how can they get in the industry? You said you're trying to expand to 20 stores in Michigan. When you're trying to fill positions, what are the key positions you're looking to hire for just so people can get an idea of the holes you're looking to fill?
Fabian: Pretty much across the country, you're always expanding your accounting and finance department. You're always expanding the employees at retail as well as you continue to open up more and more retail locations. Even for those that are looking to get in the industry, sometimes it's growing so fast that even the entry job that you initially get with a company, you could see yourself four or five levels above that so quickly like within a year's time. Where can you get that opportunity or that type of career expansion so quickly? You just can't get it anywhere else besides the cannabis industry.
We have people that came in as budtenders, moved up to the assistant manager of the store, then manager of the store, then manager of a regional part of the state and then moving up to director of retail as well. There's just so many opportunities to really grow fast, especially if you're performing well because every single company out there, especially the ones that are doing a good job, are growing so exponentially that they can't get enough people to come work for them.
Matthew: Great points. A lot of people don't have a background in retail or finance or accounting, but they have some complimentary skill you're looking for. How big a piece does attitude and ability just to solve problems come into your hiring decisions?
Fabian: You don't always get that opportunity to really figure that out with the individual that you're hiring. You look to references, you look to the things that they're saying about the industry and why they're interested in the industry and that's where you really got to base yourself on. It's funny, it's not as easy to hire people in this industry as people think. You think that, "Oh, someone who's working at Pepsi or Red Bull or some of these other great CPG type companies, they should be an amazing addition because cannabis is similar."
At the end of the day, it's a different base study. There's a lot of learning especially for those that don't have much knowledge of the cannabis industry and it's not always easy to attract people that fully get it. For us, it's about having, like you said, someone that has the right attitude, that's hungry to learn, that's hungry to dive basically headfirst into a brand-new industry. That's what attracts us to candidates and that's the people we usually hire.
Matthew: Looking at the video of your stores and your marketing and your message, it seems like a very clear, crisp marketing message. How do you create that? Because, well, even the fact that the name is short, I think is helpful to own one word in the prospect's mind, Gage. I think that's very helpful, but then your whole branding is very consistent. I was wondering if you could just open up the curtain at least. What are the marketing meetings like when you talk about like brand touchpoints, how we want the brand to be conveyed, and those types of things?
Fabian: That's some good analysis there. Not to give too much of our secret sauce away, but you hit on a lot of points that we focused on. Obviously, the name being quite short, obviously to the point. The fact that for us, if you compare us to a lot of the other cannabis names out there, which always baffles me, you can go into a store, a dispensary, and not even know that a specific company owns that store because they're so bifurcated in their branding strategy. They have branding for retail and then branding for the product.
For us, we try to keep it pretty simple. You have Gage as the legal publicly-traded name that trades on the CSE in Canada under the symbol Gage, G-A-G-E. You have the dispensaries that are Gage branded. You have the product that we sell that's Gage branded. You just have this continuity in the brand where it's all just Gage, Gage, Gage. I think that helps. Probably why we've been able to grow our brand so quickly, it's not a scenario where you go into a dispensary and say, "Who owns this dispensary? What's this about? What is this product? Is this grown by the company that owns this dispensary? Is it not?"
You have a little bit of that scenario where the branding is just not consistent. Some cannabis companies, don't get me wrong, do do a good job of this as well. Trulieve as an example in Florida, I think a lot of their success is, again, Trulieve as the legal entity name, Trulieve as the publicly traded entity, Trulieve dispensaries, and Trulieve product that they sell within their dispensaries. It's really, really a straightforward strategy.
I'm baffled as to why not a lot of other companies follow it in this industry, but again, we put a lot of time into our social media, a lot of time into interacting with our consumers. That's how you learn what the consumers are liking, what they actually want from you. We have close to 30,000 followers on our social media, on Instagram for our Gage Cannabis profile. We have close to 30,000 followers for our Cookies Michigan profile.
We're constantly interacting with our consumers, again, to find out what they're really looking for, what they're saying about our company. Are they happy about a new strain that drop? Are they happy with the bag of art that was associated with that new strain? Et cetera, et cetera. It just helps in a big way. To us, it seems pretty simple but not a lot of companies are following a similar strategy and we're frankly happy they're not right now.
Matthew: Tell us about Cookies there because I think you're talking about the California brand Cookies. I just want to make sure everybody knows what you're talking about and why you're excited about it.
Fabian: Yes, sure. I should have brought this up earlier. We have an exclusive arrangement with the Cookies brand out of California. Cookies is hands down the best in the space. They're the Nike of the space. The Red Bull, the Coca-Cola of the space right now. A couple of years ago, over two years ago, they weren't at that time but we knew they were really gaining in prominence. They'd been around for a good solid six, seven years and recognized, "Hey, this is a brand where the street culture, the subculture of cannabis is really, really appreciating."
We partnered on an exclusive basis with them and still have that exclusivity for the next step three years here where we essentially run the brand for them in Michigan. We run two different Cookies-branded dispensaries in Michigan, one on 8 Mile in Detroit, one in Kalamazoo. It's the first adult-use store, the latter, the Kalamazoo one, in the Midwest, and obviously in Michigan. Obviously, the Cookies medical one in Detroit was the first store in Michigan. We opened that up last year in January.
These are some of the best-performing dispensaries in the state. We just really learned so much from that company. Again, it's like starting a sneaker company with Nike in Michigan. It's been a scenario where we get to learn so much from the company and more importantly, continue to grow with them. We put a lot of effort into their branding as well within Michigan making sure that we're representing them the best that we possibly could.
That again helps elevate our brand to another level. I'd say when we first opened our dispensary in September 2009, our very first one, probably the majority of the people in the line were there for Cookies products. They didn't really know who Gage was. Now, these days, I'd say Gage and Cookies are pretty synonymous with each other in Michigan, and more importantly, Gage is on a similar level from a branding standpoint.
Matthew: Great explanation. Thanks. Well, Fabian, I'd like to transition to some personal development questions to let people know more about you personally. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Fabian: To be honest with you, not really. I used to be a big avid reader, but I'd say over the past decade, not a lot of time for reading. I'm reading so much for my work that at the end of the day like most of us out there, you're just looking to either go out with some friends or more importantly, just sit down and watch some TV, watch some Netflix. From a book standpoint, it's a little tough to say. Haven't really been swayed or moved by anyone.
I'm a big fan of Malcolm Gladwell, have read a lot of his books, a lot of the ideas that he puts forth in his books. The way he looks at things, his analysis that he's done, his research is always intriguing. Especially the one where it's like you got to put 10,000 hours into something to really become an expert, I think that's pretty key. Myself and all the people at Gage are putting in tons and tons of hours into this company on a consistent basis, always trying to learn, always trying to be better.
I think that's particularly important because when you become overconfident or arrogant about your branding or your company, that's when you start to slip up. We always try to view ourselves as a company that can always learn, can always be better, can always achieve higher. Even if we're achieving some great success, our motto within our company is not good enough. We should achieve 10% higher. Those are some of the ideas that generally I got from my previous reading, but generally, no, I can't say one particular book.
Matthew: When you're looking at the industry from a 10,000-foot level, do you think there's any trend or anything you see that's going to be big, but the market or the general public at large doesn't seem to see it quite the same way you do?
Fabian: I know it's funny. This is a 50/50 question, but I think the size of the market is being underestimated in a big way. I think a lot of the studies that are coming out are being done and people are not fully aware of just how big this market is. We are achieving outrageous growth generally as an industry with so many constraints, so many handcuffs on us when it comes to banking, when it comes to the ability as we were talking earlier to predominantly just operate in cash and not having the ability to use any credit cards or, frankly, any debit cards in most scenarios.
I think once the industry really starts to open up, once supply starts to open up in the various states across the US, I think it's going to surprise a lot of people. If you take a look at Colorado, Colorado six, seven years into their program, their adult-use program, and yet I think they grew 20% from December 31st, 2019 to December 31st 2020, which is just crazy. I think people are really underestimating the size and the power of this industry.
Matthew: How about this, Fabian, what's your favorite, key here, unhealthy comfort food?
Fabian: My background is Italian. I'd have to go with Italian food and more importantly, pizza. I can eat pizza every single day of my life. A close second to that it'd be a cheeseburger. I absolutely do love burgers. I got a couple of friends that I went to law school with that I probably get together with him every couple of weeks for us to go try a new burger spot where I live. I think I've tried probably close to 100 places here in the city of Toronto.
Matthew: Oh my God, you're serious about that. I like that level of commitment. Speaking of Malcolm Gladwell, you're an outlier for cheeseburgers.
Fabian: 100% a fan.
Matthew: You've put in 10,000 hours then.
Matthew: As long as we have you on here, there's a lot of people from Canada that listen to the show and Ontario specifically, what's the best cheeseburger in Ontario?
Fabian: The chain that really got me on burgers was The Burger's Priest. They have a small little location in the east end of the city that they started. Every time you go there, there will be lines and lines and lines. I have to give them credit. That was the thing that really got me on this artisanal burger craze and I haven't looked back since. The Burger's Priest, hands-down, one of the best burgers in the city.
Matthew: Fabian, tell listeners how they can find your stock ticker and how they can visit one of your stores.
Fabian: For sure. First off, you go to our website, www.gagecannabis.com. Really easy to remember. Again, that's gagecannabis.com. Just learn a whole variety about our company, the products we have. You can look at all the menus of all our stores online, both on the rec side of things and the med side of things. If you have any questions from an investor standpoint you can go-- you can email us, sorry, at firstname.lastname@example.org. Again, that's email@example.com.
As I previously mentioned, we are a publicly-traded entity. We trade on the Canadian Securities Exchange like pretty much the majority of the other MSOS like Trulieve, Curaleaf, et cetera. We trade under the symbol G-A-G-E, really easy to remember Gage. Again, that's G-A-G-E. We don't have our OTC ticker yet for those listeners in the US. Working hard to get that and we should hopefully have that in the coming weeks giving obviously the US investors the opportunity to buy our stock as well, because it's a little difficult to buy CSE traded stocks in the US right now, unfortunately.
Matthew: How about job seekers? If they're in Michigan and they want to apply for a job to help your team grow, is there a way they can find open job positions?
Fabian: Yes. Go to our website, gagecannabis.com. You'll see we're always hiring. I feel like we always have a long list of people that we're looking to add. Follow us on social media as well. We do have certain announcements about when we're having a big hiring push as well. Our social media and I would just say, you can find us on Instagram @gagecannabis, pretty easy to remember. Again, that's @gagecannabis. Follow us there. It gives you a little taste and flavor of the brand as well to make even see if you want to work with us to see how we look at the industry and how we run our company. We do have some announcements there as well when it comes to job postings and other initiatives that we're working on. I encourage everybody to follow us there as well.
Matthew: All right. Fabian, thanks so much for coming on the show. We really appreciate it and good luck with trying to get 20 stores open. That's a huge goal. It sounds like you're executing really well and we wish you all the best.
Fabian: Thanks so much, Matt. I really appreciate you having me on.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at cannainsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannaninsider.com/trends.
Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at firstname.lastname@example.org. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers or companies featured in CannaInsider.
Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episodes soon. Take care. Bye-bye.
[00:35:25] [END OF AUDIO]
Despite a global pandemic, cannabis is one of the few industries that has grown throughout 2020 and 2021 — and that’s nothing compared to the gangbuster growth expected through 2025.
Here to tell us more is Chris Walsh, President and CEO of Marijuana Business Daily.
Learn more at https://mjbizdaily.com
[1:05] An inside look at Marijuana Business Daily, the most trusted business news outlet for professionals in the cannabis industry
[1:41] Chris’ background in business journalism and how he came to be CEO of Marijuana Business Daily
[4:04] How cannabis regulations have changed over the last five years and what that could mean for the industry going forward
[7:36] Surprising reasons cannabis managed to survive and adapt during Covid-19
[10:51] Why cannabis retail sales could double to put the industry at a 38 to 45 billion valuation by 2025
[13:23] Aspects of the market Chris believes investors and business owners might be underestimating
[17:14] Surprising new trends that are quietly taking hold in cannabis right now
[23:43] How more legalization for recreational cannabis could diminish the medical cannabis market
[30:24] The last states standing between the US and full cannabis acceptance
[34:59] How job growth in cannabis doubled from 2019 to 2021 despite Covid-19’s economic recession and spiking unemployment rates
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com, that's C-A-N-N-A insider dot com. Now, here's your program.
Matthew: Despite a global pandemic, cannabis is one of the few industries that has grown over 2020 and 2021. Even with all that growth, we're looking at a gangbuster growth rate through 2025. Here to tell us more about it is Chris Walsh, President, and CEO of Marijuana Business Daily. Chris, welcome back to CannaInsider.
Chris Walsh: Thanks for having me on again. Excited to talk about this crazy business.
Matthew: It's been five years since you've been on if you can believe that.
Chris: [laughs] Feels like 20.
Matthew: Well, give a sense of geography. Where are you in the world today?
Chris: MJBiz is based in the Denver area and I live in a suburb of Denver. That's where I'm talking from today, from my house.
Matthew: Okay. What is Marijuana Business Daily for the person that doesn't know out there?
Chris: We provide news and analysis and market research on a daily basis for executives and investors and professionals in the cannabis industry. Then we also have another side Hemp Industry Daily for the same audience anyone who's in or looking to get into the hemp business. We run large B2B trade shows and conferences including a big one every fall in Las Vegas, MJBizCon.
Matthew: Yes, that's a lot of fun. I've been to that. Since it's been half a decade, could you just share a little bit about your background and journey and how you got into the cannabis space?
Chris: Yes, absolutely. I was a long-time business reporter and editor at mainstream metropolitan newspapers. I had moved to South Korea in my early 30s and figured I would live abroad for a while. I worked as an editor at an English language newspaper there on the business desk. Then I came back to Denver in 2011. When I left two years prior to that, there were no dispensaries to speak of, medical marijuana wasn't an industry. I worked at the newspaper in Denver and we weren't covering that on the business side because there was nothing to cover.
In just two short years while I was gone, when I came back there were more dispensaries than Starbucks in Denver and we realized there was this huge opportunity to serve the industry with news and market research and analysis, all the things we're doing now. It was about that time in the spring of 2011 that MJBiz Daily launched. I helped build the content and the strategy around that then we expanded into professional business events. I eventually turned more of my attention to the business side and helped grow the company from that perspective.
In January of 2020, I became CEO, and then two three months later we hit the pandemic [laughs] and went into that chaos for the last year. We've grown a lot along the way and really chronicling the industry and helping the industry professionalizing it, giving it good objective news and insights, and our MJBiz Daily and our conference, MJBizCon, and everything we're doing has grown along with the industry as well over these years. It's been a fun experience over the last decade.
Matthew: Is there any good Korean barbecue in Denver or did you just skip that since you can't get it?
Chris: There are actually a couple of good places here. It's a fun experience if you haven't tried it because you basically grill your own meat at the table in a little fire pit in front of you. There's a couple here that do that. It's an enjoyable experience.
Matthew: Good. Well, Chris, the last time you were on the show, as I mentioned was 2016 and the industry was so much smaller back then and the regulatory framework was very edgy. Things didn't look as certain as they do now. Where are we now? What do you think the biggest challenges and opportunities are in front of us?
Chris: Well, the regulatory situation is still challenging and it shifts very frequently. Every state is handling this industry very differently from the jargon and terminology used by legislators and in the regulations all the way up to how the industry operates. It's still a very piecemeal industry and it depends on the state and oftentimes the city that you're operating in that really define the business opportunities and define what you can do in cannabis.
What we've seen since then is a lot of states there's a newer model that's emerged particularly in the Midwest and the Eastcoast that is much more planned out from a regulatory standpoint. Then the initial states did it a decade ago like Colorado and Washington and Oregon. You do have a split in this industry. You've got the western side which is the old school players and the more mature markets. They've done things very differently from a regulatory standpoint than the eastern half of the country which are newer states to the game.
They've taken a different approach and they're different players involved. It's a lot more costly to get started. It has a lot more influence from the regulators and business people. That's what we've really seen crop up. There's still no really uniform way on the regulatory front that states are using. Even the newer ones, they pick and choose from what they see working elsewhere. They avoid the things that they think are mistakes that other states have made but there's been no cohesiveness around a regulatory scheme that works in multiple states.
Not much has changed from that perspective in that it's still this tapestry of differing regulations and different approaches. What we do have is this evolution over the years of states figuring out what works for them and what works for their patients and their consumers and they're still a long way to go, still a lot of trial and error and experimentation that's going on. This is a brand new area for everyone. It's likely going to be in this type of a situation for the foreseeable future. When we look at opportunities again, it's really on a state basis.
That's what's fascinating is the opportunities in California are completely different than those in a newer recreational marijuana state like New York. Whether it's allowing delivery or consumption lounges or capping licenses or having a free-for-all, you're just really seeing the opportunities vary by state. If you're in this business or you're getting in it, you have to be really aware of that. There's no one-size-fits-all approach. Much of that is dependent on the regulations but the consumer bases are also developing differently across the country and the wants and needs of the people buying cannabis are different in different areas.
You have to approach it with that framework and really get to know each market on its own.
Matthew: Is there anything that's surprised you in terms of how the cannabis industry has survived and adapted during COVID-19?
Chris: I'm floored at how the industry did. It's just an amazing success story. When you put it in historical perspective and think that it wasn't that long ago when marijuana was demonized by a fair percentage of the population. When we first started in 2011, the looks you would get, the questions when you said, "Hey, I'm involved in the marijuana industry," were very interesting. Even for someone like myself where we didn't touch the plant and still don't and we're just providing information and connections and networking opportunities, people were wondering back then what the heck you were doing getting involved in marijuana and think you went off the grid.
What's really surprised me is that in a very, very short period of time you have just the sea change in the approach. You have states that are now legalizing medical and recreational through their legislators not just the population. That's been a big change. Also just how quickly this caught on, how public opinion towards this has changed, with poll after poll showing strong overwhelming support for medical marijuana legalization and now strong overwhelming support for marijuana legalization in general. I did not think we would see this type of change happen.
When you look at the map of states that have legalized, we've been running maps of the US since 2011 and when we first started it was mostly blank in terms of states that had legalized at that time just medical. Now you look at the map and it's mostly filled in because the majority of states have legalized medical and an increasing number are obviously legalizing recreational. That rapid change in how this industry is viewed and perceived, the business opportunities, the immense growth that's come.
Then I have to say that the other two quick things are the mainstream interest in the industry has really been taking off for the last couple of years. I thought it might be a little while before you had the big alcohol and tobacco companies coming in because we've been chronicling this for a long time and they're hesitant because it's not federally legal but you're seeing an increasing number of mainstream companies coming to cannabis, making investments, buying up companies, developing products.
That has been surprising over the last couple of years that more and more big, big names, big household names, and brands are coming into the industry. The last thing I'll say which completely caught me off guard was that this is becoming an international industry and movement. We were really focused on the US for a long time and then we saw what was going on in Canada, we focused on Canada too, but you have more than two dozen countries that have legalized at the federal level medical cannabis.
Now you have discussions in Germany and other countries, obviously, Canada already legalized recreation and Uruguay but that kind of global development of this industry caught me off guard and those walls came down really quickly.
Matthew: How big is the cannabis market today and where do you see it going, what's your estimate by 2025?
Chris: Well, for this year we expect the retail sales in the legal market to be between $22 and $26 billion and that's a wide range I admit but tracking actual sales across the industry because every state handles this differently is very difficult. We put a range in, there's a lot of factors that go into it every year, every month, in fact, every week there's a different unexpected development in this industry, so it's really hard to project what's going to happen in two months, let alone in two years.
We use all of our experience doing this and we provide a range, on a low end we expect $22 billion and on the high end we expect $26 billion, it may fall somewhere between there. If everything goes right, we'll hit that higher number and that's very, very significant. We're approaching the point where marijuana sales are going to catch up to craft beer sales and the global opioids market, it's already past the NFL. That gives you least or some bigger perspectives of what these large numbers mean.
When we go forward, we look at what are going to see as more states legalize, as mature markets continue to grow and expand as there's the potential for this federal change at some point, hopefully in the near future, what is that going to mean for the industry? When we look forward, we think the industry could double in terms of retail sales by 2025 getting up to around $45, $46 billion if you're looking at this through an optimist lens.
Again, having done this for many years, a couple of years down the road is very hard to determine what's going to happen in this industry but we're comfortable with this range of $38 billion to $45 billion, anywhere from 70% growth all the way up to a doubling of the industry. We're not at the tip of the iceberg, we're below the water level and we can see how big this industry can be and the potential. There's still massive opportunities but a doubling from where we're at today is another $20, $25 billion in additional sales which translates to tons of business opportunities, investment opportunities, and more rapid growth in general in the next couple of years.
Matthew: What aspect of the market do you think investors and business owners are underestimating but you think are going to be big?
Chris: I think there's this hype right now about the potential for federal change and most people including myself are seeing the most likely scenario would be a shift in federal banking laws versus some kind of outright legalization bill which I do not think is in the courts any time soon. There's another potential for some type of move whether it's decriminalization, rescheduling or just allowing states under federal law to determine their way forward. There's those types of moves that could happen too which would change the industry tremendously but I think the most likely is a fix to our banking laws which accomplish a lot of what we want in this industry.
It would really open it up the types of banking services and investment money and funding that we don't have now and business certainty which is lacking when you have trouble finding banks. If that type of move happens which everyone is hoping and a lot of people are actually expecting and making bets that that's going to happen, I think what we're not really recognizing is that that's going to change things tremendously. It's not no like, "Hey, here's a panacea if this happens, we're all going to be millionaires overnight." It's not going to work like that.
Once the federal government is involved even on the banking side things will change. As we hope to see this easing of federal laws whatever that looks like, there's going to be a lot of new struggles and challenges ahead. Whether that's the banking authorities getting involved, whether that's the FDA, the way that the industry has evolved to date has been very haphazard and it hasn't had any of this federal guidance. We look to hemp right now to see what that looks like. Hemp was legalized through the 2017 Farm Bill and there're still many things that the federal government is working through and there's a lot of uncertainty.
If we use that as an example of what might happen when we see change on the marijuana side, it's going to be a long evolution and businesses are not all of a sudden going to have all the certainty they need and want. There's going to be new challenges on the horizon, new places we're going to have to spend money and then you're going to have this wave of I mentioned mainstream companies, that is going to explode even with banking. That changes the dynamics of the competitive situation.
That's not to say it's not on the radar of everyone, I just think that companies do realize this, they do realize the competitive landscape is changing, new skillsets are coming in, new experiences from the corporate world that's already disrupting parts of the industry. As that plays out, we all have to be prepared for another decade of fast growth combined with uncertainty, combined with a shifting landscape. How you compete is going to be a much bigger element of the industry than what it has traditionally been which is, "Hey, this is new, stores are opening up for the first time, there's these new products out there and this is rising tide for all the boats for lifting all the boats."
You're seeing this play out some of the more mature markets, you've got to be more competitive. I think some of that is things that we all need to prepare for, companies are at different stages and reading these tea leaves and getting their business in shape to meet these new challenges in the future.
Matthew: Chris, you talk to a lot of people in the industry, when you talk to executives, people operating businesses, what kinds of trends do you hear, and what keeps them up at night?
Chris: Well, I think you had the pandemic which kept everyone up at night for various reasons whether it was for your business or your personal situation. The industry faired pretty well during the pandemic. Overall, there were definitely pockets of pain in different niches of the industry and different geographic regions and different types of businesses. Some did experience pains, some went out of business, some are still struggling to get on their feet but in general, the last year has been pretty decent for the industry, companies are now coming out of this.
The industry deemed essential in many states and so we saw record sales across the country. Significant growth last year in retail sales of around 30% to 50% again depending on the ranges. That's good in any industry. I feel really comfortable and optimistic about how the industry moved forward in this time over the last year. Now, as we turn the page and we come out of this, what are companies focused on? They're focused on how they're going to survive going forward and how they're going to thrive.
I'm hearing more from some people who've been in the industry for a while, some entrepreneurs, the OGs of the industry, a lot of people are now looking at exit plans or at least getting the heads around what that might look like. That is something that is a relatively new trend. Not for maybe the newer entrants with more business savviness or investors who demand to have some outlines for an exit plan but for many, many years it wasn't even on the radar of people in the industry. They were just excited to be able to start a company in the cannabis industry.
A lot of them had a personal or previous connection with cannabis in whatever way they consumed it themselves. Maybe they were part of the illicit market but they had an affinity for the plant in many, many cases. They were just happy to be here, growing their businesses and absorbing all this excitement, and helping lead the industry forward without real thought on what the long term held for them. That's something that we experienced. You could not plan very far in this industry until recently.
Even now it's really hard but I mentioned earlier even doing estimates for sales there's a million factors that could come into play that no one can predict right now, what states are going to come online, how regulations might shift, how the federal government's approach might change, how new players will enter. All the things that I've mentioned made it very difficult to have a business plan that looked more than six months out. Now you're at a point where the industry, even though there's all these uncertainties, it's almost becoming a requirement to look further out than we ever have as an industry overall. You're seeing a lot of focus on midterm planning and even long-term planning, including exits.
Some people are tired. This is a grueling industry. It's exciting, but it takes a lot out of you. I think some people are considering new chapters for themselves or their companies. I'm hearing a lot more of that. They're also looking at the trends and you've got the mainstream companies, the mainstream investors coming in. If you've got a green rush going on and people are willing to and eager, and in some cases almost desperate to get involved, they'll pay a pretty penny. It's this exit strategy it's longer-term planning than in the past. It's where do I focus?
That's what a lot of companies are going through now is, what's changing the industry, what forces are at play? As I look at my spreadsheet of opportunities, which in many cases is huge because there are opportunities everywhere you look, everyone's trying to figure out, "How can I take a disciplined approach and a strategic approach for the future versus just winging it?" which many of us did. That's what I'm hearing from a lot of people, it's where do I fit in in the new dynamics of this industry and how do I focus my company around a core vision, a core strategy so that we're not getting distracted and going off here or there applying for licenses in any state that opens.
Whatever it is, and just randomly choosing how you're going to go forward, doing it with a much more focused lens.
Matthew: You have the factbook that just came out, when you had the very first draft of this factbook in front of you, was there anything that jumped out at you and surprised you?
Chris: Yes. Having done this for a while, it's hard to surprise me now [chuckles] because you just learn to be surprised all the time. As we were going through this, it's really the continued momentum and the shifts when it comes to product preferences. Flower is still, and as we've known it, it's the biggest part of the industry, and it's been eroding as you've got this array of new products and ways to consume. I think that that's a trend that we're really focused on and seeing what the true potential of edibles and beverages and vape pens are and all these other products out there, all the innovation going on versus flower.
As you look at just consumer behavior in general you look at smoking in general, people are trying to live healthier lifestyles. They don't want to inhale anything anymore, except for oxygen, of course. I'm interested to see how this plays out because now that you have these big beverage companies getting in and big CPG companies, they're seeing a big market here. I don't know what the true potential of it is and how much more share of the market they will take versus flower. Continuing to see this area of the industry grow, I think is fun to watch. It was fun to look at that this year too.
See, this is a huge area that I wouldn't say is untapped at all, but that represents a significant growth opportunity, and what the limit and what the ceiling is on that, we don't know but I think it's pretty huge.
Matthew: A lot of people don't talk about or hear about the medical cannabis market much, but it's still large and relevant. What do you think is most important to know about that?
Chris: I think the future of the medical market is very uncertain right now. As you've seen states legalize recreational, you over time start to see the medical program diminish and dwindle. There's still a base of patients absolutely who prefer going that route. It's usually cheaper in terms of taxes and there are some benefits for staying in the medical structure, but we're seeing a bigger migration away from the medical it's just easier on the recreational side. You don't have to get a card, you don't have to see a doctor. In some cases, there's a wider array of products available to you.
Where this goes in the long-term and whether states take the route of Washington, which basically merged its medical into its recreational, so it's just one marijuana industry or whether they try and keep them separate and what that means going forward, we don't know. There's still a big focus on the medical side in some areas. There's companies that are really focused on that patient base and doing things more from a health and wellness standpoint. It's hard when you've got the much, much, much larger recreational market and consumer base over there.
A lot of companies are tempted to just go in that direction. There's less of an emphasis in some cases on the medical side, from the companies that are out there. I don't know where this is all going to go on the medical side. It's definitely part of the discussion. It's great to see states continue to legalize medical, which is the 38 states have done that. It's the largest market in terms of number of states, but in terms of dollars and the opportunities, it's heavily on the recreational marijuana side.
In this grand experiment that we call state-level cannabis legalization and this experiment with this marijuana industry across the country, we have to see how it plays out. The early results in terms of medical, that it is becoming a smaller and smaller part of the market with less attention paid to it.
Matthew: One thing that's really hard to measure is the size of the unregulated or illegal market. Do you have any guesses or the best estimate of the size of that market in the US, or even any state?
Chris: I could throw out some numbers for sure, but hesitant to do that. We used to do estimates for the black market but what we learned over time is that there's really no good way to track it. Everything you're throwing out there, no matter what you justify it with, is really a big guess. You'll see now there's estimates from 30 billion to 100 billion, to 150 billion, it's all over the board. I say that because I'm hesitant to provide any type of numbers or range. What I can tell you though, is the black market or the illicit market varies by state as well.
In some states, it's been diminished for sure, as legalization has taken root and the legal market has grown. There's no doubt about it, that in every state, it has some type of impact on the black market. You just look to the sales numbers I provided earlier, we're talking $20, $25 billion in sales. Where would that be if it weren't for the legal market? Perhaps the biggest chunk would be in the underground market. Now, not all of it would be, there's people who are only using now who never used before and never would unless it was legal.
There's a big percentage that certainly fit that description but if you just take it on the base level and say, "If you've got $20 billion in retail sales, where was that money before, or had there not been a legalized market now?" I think there's a significant impact there. However, is what you do see is the illicit market is thriving in some areas because of poor enforcement, because of huge gaps between the cost with taxes, with regulations, the cost on the legal market versus the illicit market.
Then you are seeing this unfortunate situation where there's easy diversion because there isn't much oversight. People can buy mass quantities and go sell them on the illicit market or they can home grow and then sell even if they're not supposed to be selling it or even home growing. In some cases, it's opened the door for bigger aspects of the illicit market in pockets. That's worrisome. I don't think the black market's ever going away, but what we can say is that the legal market has not only generated all this money that's above board.
It's also gaining more traction with a lot of people because, let's face it, even if it's cheaper on the illicit market, there's a huge benefit for most people to be able to walk into a store, do it legally have the product selection that you only get in that regard have trusted brands have testing. All of the things that go along with that retail experience is a big benefit for many people. When you weigh that about saving some money and go into the guy down the street and going in his basement and having to share part of it with them or how that's done these days, I don't even know, that's only appealing to some people.
I think over time the legalize industry as more states come online and more people come into the fold and there are more options, more innovation, more trusted companies and brands out there, you'll see a bigger hit on the illicit market. It also will require better enforcement of the laws, which I don't know if we're going to get there because it's very difficult to do. States aren't investing a ton of money into that aspect. They're investing a lot into regulating the legal industry but not a ton of enforcement on the illicit side. There's still a thriving illicit market in California and some other states. That was just a long way of saying that the industry's absolutely had an impact on the illegal market. I expect it to continue to but it's never going away.
Matthew: We're at that cultural shift moment in cannabis acceptance, are there any US states that you look at and you say, hey, they're really symbolic of the last vestiges of resistance and when they fall, it's really just a whole different chapter?
Chris: It's really the south. When you look at the map, it's the south and it stands out like a sore thumb. The good news is that we have had some traction in the south over the last couple of years with Florida legalizing medical and having a thriving industry, even though it's limited from a business perspective because there's only basically a handful of licenses available. We made some good progress as a movement and a nation and an industry in that regard, but in general, that's where a lot of the holes are. Why that is important is the remaining markets right now, we basically have some of the biggest states that have already legalized medical and now recreational.
Whether it's California, now you've got New York, you've got New Jersey, you've got Ohio with medical, you have Michigan. Most of the big population centers where the big opportunities are have legalized in one form or another. There's an increasingly smaller pool of new attractive states, but why I mentioned the south is Florida, if they go recreational at any point-- and it doesn't look bright for that prospect this year based on some recent developments. If Florida can go recreational, that's a massive, massive market that is very attractive.
It will likely spread further into that region in terms of other states legalizing or feeling the pressure to do it. That's what we've seen elsewhere like with New Jersey going then New York, does that convince Pennsylvania? Does that convince Ohio, et cetera? We've seen it play out where once a state in a particular region goes in this direction, the ones around them end up following. Not in every case, but it does happen. Then you look at I'd say the really, really big prize left on that map and that's Texas.
That they have a very, very limited-- some people call it the medical marijuana program. We do not classify it as a legal medical marijuana state because it's basically a CBD and hemp program. Just essentially trace amounts of THC are allowed. We don't put it in into the same category as the states with what we call full medical marijuana programs. If Texas expands its program into one of these more traditional medical ones, which it looks like there's some opportunities it might do this year, that opens up a huge market.
If Texas goes the direction of recreational, that's even bigger, you've got a lot of power players there, a lot of money there in oil and gas, and that spreads out across the industry. It's not just the size of Texas or Florida, it's the influence and it's locking down that region. To your earlier question, that's where that last bastion has traditionally been. We've seen some cracks in it with states legalizing in recent years. There's still resistance though when you look down there.
I just want to highlight why this is all so important because when we look at federal laws, the biggest holdup in any real change has been people in Congress and particularly the Senate and particularly Republicans who are against these types of changes to federal law, with marijuana. A lot of them cling to these old stereotypes about marijuana in general. A lot of them are older in general and they represent more conservative states. Even though these states are starting to legalize medical, they have held up this movement at the federal level.
The more states that legalize that these congressmen and women represent, the better chance we have at federal change because they have to reflect their constituencies. It's hard for them to argue there shouldn't be federal change if their own state, particularly if it voted and the population voted to legalize medical recreational. If we can get some of these states, Tennessee, South Carolina, Texas on the medical side, if we can get Florida on recreational, you're talking about a potential shift in federal laws because you will now have that support in the halls of power.
Matthew: What can you tell us about job growth in the cannabis industry?
Chris: Job growth has been tremendous. You can look at our retail sales estimates and the history of retail sales and there's direct correlation, not completely apples to apples, in jobs in general. You have a couple hundred-thousand people employed in the industry, nowhere near America's most dominant industries, but you have job opportunities cropping up everywhere. I think it's important to circle back on something I said before is the job growth isn't just coming from a state legalize, and there's going to be a need for cultivation operations, and growers.
There's going to be a need for product manufacturers and all the people who make that happen. Then this retail side, and you're going to need bartenders and general managers, all of that happens when a state legalizes. Then you have this whole ecosystem out there of those support services, so that the ancillary companies like what we do, and we don't touch the plant but we support the industry in other ways. You have all of these types of companies that crop up or expand as new states legalize. The important thing here is it's the mature states or states that have already legalized and have industries up and running where we're seeing job growth as well.
It's not like you legalize and after two or three years you plateau. We have many case studies on this now across the country. Whether you're looking at medical or recreational, what you find is that the programs grow over time. It's as people, as legislators, as the population becomes more comfortable and understanding of what this industry is, and they see that those negative aspects that people say the sky is going to fall and you're going to have people walking around like zombies, eating Funyuns, that doesn't happen or it doesn't happen to a degree that sways a lot of people's opinions on the industry.
Yes, there are some downsides, there's people who complain about it but in general, states are accepting this and on the medical side, people are seeing the benefit. They're having family members, friends that are using it for various ailments. They're saying, "Hey, this isn't bad. This is actually good." These states start expanding their programs. They lift the license caps, they expand access, they add medical conditions. You're seeing job growth, even in these states as the regulatory barriers come down and access opens up. That growth in jobs is all over the board.
Colorado hit record sales last year. Colorado was the first state to launch recreational sales in 2014. It's still growing. I believe it grew by 25% last year, retail sales. It's not a direct correlation again to jobs, but there's still lots of job growth across the country. I encourage people to widen your mindset if you're thinking about getting in this industry, because it's not just again, growing, processing, or selling the plant. Basically anything you do in your professional life before cannabis can likely be applied in some way to this industry.
You're seeing people come in and start marketing agencies focused on cannabis and consulting and equipment and everything you can think of that services a normal industry has a need here and you're seeing a lot of job growth there as well.
Matthew: When is the MJBizConference coming back?
Chris: Oh, we are so excited. The pandemic did not treat us well. Even though the backbone of the industry was really strong and growing, and it was a fun story to cover in the sense that, "Wow, look at this, this is now an accepted part of our country and all these businesses have to close but are you kidding? Cannabis stores can stay open. Wow, have things changed? That was the thought over and over. For us, it was really difficult because we are fueled by live in-person events and getting people together for business deal flow and networking, and education and we couldn't host our events last year.
Our business took a hit. It was some tough sailing over the last year, but we have full confidence. We're rallying around MJBizCon. We are seeing tremendous interest. Our show floor is getting sold out. We're going to launch registration soon, massive interest from the industry to get back together. We've all missed out on that in all aspects of our lives. There's a novelty in just like, "Hey, let's get everyone in the industry together again." This is the largest show in the industry and it's the center gravitational point each year that people come to for various reasons even if it's just a party in Vegas with other people in the industry.
With that said, we are gearing up for a big return to MJBizCon and to live events and we're seeing a lot of interest in it right now. We are 100% confident we're going to be able to toast it in Las Vegas.
Matthew: That's great. What's the date that it's scheduled for it now?
Chris: MJBizCon is October 20th to 22nd in Vegas. We'll be back at the Convention Center with what we hope is a critical mass of people that are going to be networking and doing business deals and learning. As I mentioned before, partying I'm sure.
Matthew: Live come early and stay late, there's a lot of fun stuff going on. That's great. I want to ask you how people can find that and register. Before we do, just a few personal development questions. Chris, what is the best piece of advice that you've ever received from anybody?
Chris: Best piece of advice I've received is that you always have to rethink what you're doing. You have to be open to it and accept it, and you have to embrace it. I'm bringing this up because in a previous life when I was a reporter and an editor, you get used to doing something a certain way. That's all your training is based on, that's why you go to school. In your early job, you're figuring out the way to do something and do it well. It's easy to just think that that's the way you always have to do it because you were trained and educated that way because it's worked in the past.
The rate of change, not only in cannabis, but in the world in general, and particularly in cannabis dictates that you can not have that mentality. You have to be willing to rethink what you're doing and why all the time. It may vary significantly from what made you successful or what you learned in the past. To me, that's been the best piece of advice. I have to consistently remind myself of it and it's becoming more of a habit now, but it takes a while to get there. If you don't do that, you fall behind, you lose your competitive edge, you miss trends, you miss opportunities and you become irrelevant.
That's really served me well, especially in the last five years.
Matthew: What do you think the most interesting thing going on in the cannabis industry right now, I'm sure it changes for you a lot, but one thing you're just like, "Wow, that's cool"?
Chris: I just think the continued evolution of the products. I'll go back to that again and really trying to get at the heart of what consumers want and maybe what they don't even know they want. One of the interesting products it's starting to gain some traction is these soluble powders that are flavored and you can put them in anything you're drinking. It's not already an infused beverage, it's just something that if you want to have a beer with your friends at a party, or have some people over, or maybe you want a LaCroix or maybe it's just water, you can make whatever you're drinking into a cannabis beverage.
It's not rocket science, there's drink powders in every way imaginable outside of cannabis. I just think it's exciting to see and track what we're going to see on that infused product side going forward. How companies are really trying to up their game and say, "Hey, we have this wide-open area that we can explore and figure out new ways to consume." We're going to try out all these ideas.
Matthew: Lastly, what is your favorite unhealthy comfort food?
Chris: This is very embarrassing. There's a very short backstory. I'm not a big fast-food person, I didn't eat it for many years. I started traveling internationally a lot for work, always traveled internationally but started doing it for work as we looked at a global strategy. I was speaking in other countries about the cannabis industry and doing market research. I would come back from these long trips to Israel or Greece, or Columbia, and on the ride home, I had one craving and it was Taco Bell.
It was something I ate all through college and then really never had, or very infrequently had maybe once every five years. I got on this thing where I'd travel abroad and I come back and on the way home from the airport, I'd stop at Taco Bell. I occasionally still have it. It's now my eight-year-old daughter's favorite fast food. I'm not proud of it, but it is my guilty pleasure.
Matthew: I like that you had to do it on the way home from the airport, like it was that urgent.
Chris: Oh, I could not wait. No, I get in at midnight, hadn't seen my daughter or wife in a while and I had to carve out time, go to that drive-through.
Matthew: Well, Chris, again, tell us the dates for the MJBizCon, how to find the factbook, and for people that don't get your daily e-mails, how can they sign up for that?
Chris: MJBizCon this year is basically the week of October 18th. We have stuff going on all week, but the main conference is October 20th through the 22nd at the Las Vegas Convention Center. Our site, we're going to launch registration soon. We've been selling booth space on the show floor for a while now it's mjbizconference.com. You can also get to it through mjbizdaily.com our main portal. You can also see our Marijuana Business Factbook if anyone's interested in that, where we chat the trends in the industry and make projections and estimates.
Then also, maybe I can get some tips from you, but I've launched a podcast from MJBiz called Seed to CEO, where we're really helping people navigate this industry, these new entrants that are flooding in. Those are some of the main endeavors, and you can get to all of that through mjbizdaily.com.
Matthew: Well, Chris, thanks so much for coming on the show and educating us. I think I'm going to have to find a way to get some Taco Bell now, you've planted that seed in my mind.
Chris: I don't recommend it, I'll tell you that. You might be [crosstalk] for a couple of hours.
Matthew: I know, I did say unhealthy, so you've got that. All right, well, thanks so much, Chris.
Chris: All right. Thanks for having me on. I appreciate it.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at cannainsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an e-mail at email@example.com. We'd love to hear from you.
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Matthew: Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-Bye.
[00:47:34] [END OF AUDIO]
How do you stand out as a CBD company in a crowded and noisy market? Here to help us answer that question is Josh Haupt of Plant Love Naturals.
Learn more at https://plantlovenaturals.com
[1:17] An inside look at Plant Love, a USDA certified organic full spectrum hemp extract company based in Denver, Colorado
[1:31] Josh’s decorated background in cannabis, including his popular cannabis growing guide “Three A Light”
[4:36] The unique growing process behind Josh’s top-shelf cannabis flower that sets it apart from others on the market
[7:18] Why the price of CBD has dropped significantly over the last five years
[8:30] Common mistakes CBD companies make when trying to gain traction in today’s noisy industry
[9:35] Why Plant Love only sources its hemp from USDA certified organic farms
[11:04] How Plant Love’s subcritical extraction method preserves cannabinoids and terpenes better than the popular supercritical methods
[12:23] The growing interest in minor cannabinoids including THCV, CBG, and CBN
[13:36] How Josh uses CBD to successfully treat his epilepsy
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A, insider dot com. Now here's your program. How do you stand out as a CBD company in a crowded and noisy market? Here to help us answer that question is Josh Haupt of Plant Love. Josh, welcome back to CannaInsider.
Josh Haupt: Hey, thanks for having me, man. I appreciate it.
Matthew: Give us a sense of geography, where are you sitting today?
Josh: I'm in my office in Colorado, Denver. Right here in Lower Highlands, and I am watching the snow melt because it was beautiful yesterday, and then last night it snowed through Colorado fashion springtime, and now-- literally was snowing less than two hours ago and I'm watching it all melt. It's a beautiful day. Looks like the sun's going to be coming back out.
Matthew: You're in a fun neighborhood there. I like that it's a fun neighborhood there in Denver.
Josh: It is a fun one. We got a lot of restaurants, a lot of moving people around here. It's good.
Matthew: What is Plant Love on a high level?
Josh: Plant Love at a high level, it's going to be just top shelf CBD products derived from the cleanest inputs. Great products that really aren't on the market today.
Matthew: Okay. Josh, as I mentioned you were on the show once before people probably know you for the book, Three A Light, and a few other things. Why don't you just give us a quick background about your growing career and so forth.
Josh: Three A Light, gosh, it really turned into a dream come true and opened a lot of doors for me, but it was my platform to enter the space and really teach people how to do well for themselves in the garden. A simple somewhat of a picture book if you will, that shows you from start to finish how to cultivate cannabis for yourself. With Three A Light, also came Success Nutrients, Success Nutrients is the feed regimen that we feed the plants to achieve those results. That's been massive. In 2017, both those companies were acquired by Medicine Man Technologies, that was a publicly traded company. I stepped in as the chief cultivation officer there. I served as the chief cultivation officer, chief revenue officer and chief operations officer. I wore a few different hats for the three years that I was there.
Recently stepped away from Medicine Man Technologies, they're now known as Schwazze. Wish them the best. Stay in close contact with them. I know they're going to do well for themselves. They've got a real focus towards the retail footprint and really making a splash in the state of Colorado. My ventures are the Plant Love Naturals CBD line and that's been a huge focus of mine as well as the launch in a flower line of prepackaged flower in Colorado. Colorado is really known for its overdried mids, unfortunately. What I mean by that is just really not top shelf product is somewhat of a rumor in the space. Unfortunately, it does reign true depending on where you're shopping in the state. Our goal with this next flower brand is called Artsy, and our goal is to create essentially the Louis the 13th of cannabis. A cannabis, flower packaging line that really does have integrity, truly is the crème de la crème. The best products you can get and so I've been having a lot of fun starting these or launching these two brands. Been a lot of fun.
Matthew: What's the pricing like in Colorado right now for a gram or an eighth or whatever the most popular amount of fresh [unintelligible [00:03:55]
Josh: Colorado has a little over 1000 cultivators in the state and 600 dispensaries, so it's a highly, highly competitive market. You're going to be paying anywhere from, you can get an eighth I want to say for as little as you know 20, 25 bucks all the way up to $60 depending on the quality you're going for and what you're looking at. You've got all ranges of the spectrum there. Then you have wholesale pound selling for as low as $1,400 a pound at a dispensary, and then you have the top sell providers that are still moved in to 2K a pound. It's really across the board because you have such a wide array of suppliers.
Matthew: Gosh. The market's smaller but not for the top shelf cannabis flower, but not so small that you won't get any sales, you don't think. What is the growth process look like for how you're creating Artsy?
Josh: Grow process for creating Artsy is really going to be focusing on just the cleanest inputs. I realized this when I meet with other growers and they run these huge facilities, I'm talking 60,000 square feet and up, and they won't smoke the flower they put out. That's just a shame to me, and I say, “Why, guys? What's going on?” They say, “Well, we got to put it through this X ray machine when it's done to make sure that everything that we're growing is killed off of it,” because they're growing it with a lot of mildews. There's just really a lack of integrity throughout the growth process in a lot of these large commercial facilities. Call it what it is. Now, there are good ones, so I'm not calling everybody out. I'm just saying the majority of them really want the auto feeds, really want to remove the human component to it, and that just makes it really tough to grow top shelf.
At Artsy, we have a large focus on all the inputs. We want to start with very clean genetics, good products to start, as far as the strains are concerned. We want to make sure that we're only giving them strong beneficials. We don't want to use any pesticides throughout the entire process. We want to make sure that the plants are cared for very, very delicately. We also want to make sure that we're giving them a lot of heavy, pure water flushes to clean out the roots. The cleaner the roots are, of course, the cleaner the fruit and the flowers will be. Those are very important things for us. Focus on trichome development. Really focused on, as I said before, when it comes to no pesticides. We're also going to be releasing predatory insects and bugs. They actually act as your security guards for your rooms, making sure that no other bugs can be housed in there to really protect the flowers.
Then at the end of the process, we have a very large degree of focus towards our dry cure process. We want to make sure it dried and cured as perfectly as possible. We don't want it to be overdrive, we also don't want it to be too wet. Those that have that nice, perfect medium. Then before it goes in the bag, we want to make sure it has a nice, light hand trim to it. Not a machine firm, we're not going to pump it through a machine. We're going to dry it properly. Really just focusing on the entire process. As we've mentioned before, really not cutting corners, and you'll have a product that is something that you're very proud of. We over at Artsy, we're looking at an April 20th, a 4/20 launch here, and really getting the products out on the shelves, and we're excited about it.
Matthew: What's happened to the price of CBD over the last five years, in terms of how much it's fallen?
Josh: Oh, goodness, well, you've got a classic example of supply and demand. Five years ago, you'd get a kilo of isolate, if you could get a kilo of isolate, it would be about $70,000. Today, get you a kilo of isolate, depending on how many you need for probably 300 bucks.
Matthew: That's the market forces at work.
Josh: Yes, it really is. People start to catch on. This is exciting and fun, and let's grow all this CBD, but the problem is, in such an unregulated industry, who can compete with hundreds of acres coming out of the Midwest, there's just no chance. You've got to really get grown on a global perspective now, which is fantastic, because we need it, but it's definitely made it very difficult to essentially distinguish where's the good products versus where's the bad products? What's a good kilo of isolate versus not? The whole testing process is really just taking wait for how they're going to regulate that space, and they've got a lot of work to do there.
Matthew: There's a lot of noise in the CBD space, as I mentioned during the intro, what do you think a lot of the CBD companies that are not getting traction are doing wrong, in your opinion?
Josh: That is a tricky one for me to answer, but I would chalk it up to a couple key points. One is they want to make sure that they're getting the best inputs into their products, that's going to be very key. Making sure that they're sourcing top shelf inputs, making sure they're not getting this leaf from a bad spot, that there's some kind of regulation behind the kilos that they're purchasing for their products, their inputs. Secondly, they want to make sure that they have the ability to market their product to their customer. In the CBD space, that can be incredibly difficult to do because more often than not, you don't have your traditional routes of marketing. To promote your page on social or things like that, there's very tight policies and guidelines for it. It is doable, but it is difficult. I encourage people to not get too frustrated, just give up there. Make sure that you're pushing the limits and trying to market your product and get market visibility.
Matthew: How do you find quality sources of hemp then for Plant Love? What's the process like?
Josh: For us, it's really-- we just focus, I'm not paying $300 for our kilos. Our kilos are much more expensive because I only want to buy quality. For us, it's one of those things where I just go to USDA organic certified farms only, because right now there's too much noise in where it could be grown elsewhere so having a USDA-certified organic farm it's already been vetted to a significant degree that other farms are not having detour to go through.
Matthew: Okay. What is it about USDA-certified organic farms? What does that attest to what they do differently?
Josh: What they're going to do differently is they're just going to make sure that the fields are not packed full of heavy metals from prior agricultural use. Then also really makes sure that the inputs that they're giving them are truly organic. That certification is tough to achieve and harder to hang on to. I know that those fields are tightly regulated. The inputs that are going into the products are going to be incredibly clean and all organic-based. That's going to be incredibly essential when you're cultivating hemp and then extracting that hemp, especially to treat. I would argue CBD is that, it's going to be the new aspirin in the sense of aspirin and help you with a lot of different things. I think CBD is going to find very similar avenues as well.
Matthew: Talk about your extraction process and the different major and minor cannabinoids you're trying to preserve there.
Josh: Well, our extraction process is a little bit different. I shouldn't say everybody, but there's the majority of the space. By the majority, I mean, a lot 90% plus of the space we'll do a supercritical extraction when it comes to CO2, they'll also use butane and other parts. We use a subcritical extraction. That's going to be lower temperatures and that's actually going to preserve the terpenes much better. When we're doing our subcritical extraction, we're not killing and burning off all these terpenes, we're actually preserving them and moving them into the actual product itself.
Our process is very unique and different in that sense. You're just going to have a lot more of the what's beneficial that we're trying to get from the plant is preserved and makes it to the end product with Plant Love Naturals, where another brand next to it doing a supercritical extraction would have already removed those terpenes and would have rinsed it a little bit, much more aggressively than we do. We want to preserve all those extra components as they are very, very vital to making the CBD efficient and get the results you want.
Matthew: What are your thoughts on THCv, CBG, CBN, these cannabinoids, are people looking for them and asking about them now when they're buying CBD oil?
Josh: People are not. I think that's only a matter of time. I think people will realize your CBGs, your CDNs, your THCvs, these are the things that actually make your work. What I mean by that is like, let's take a vehicle. Well, CBD is-- those are the tires, and it's fantastic that you have like four tires right on, but without the THC components, well, there's a show of your body. You've got your CBN, your CBG. Well, those are some components in your engine, then you add your terpenes. That's your gas for your tank.
Now, the vehicle can do something. They work much more harmoniously for the result you're going for together as a team, as opposed to when they create an isolate, all they do is they just do CBD isolate. CBD by itself, now don't get me wrong. That's not going to be harmful in any capacity, but it's much, much, much more efficient and much more recognized by your endocannabinoid system when it's a group of them.
Matthew: Talk a little bit about your epilepsy and how does CBD help that?
Josh: My epilepsy is-- I say every epileptic is a little bit different, but every person is a little bit different. What I mean by that is the way my endocannabinoid system in my brain responds to CBD is-- Epilepsy is going to be a misfire of neurons and electrons. I'm just going to have a seizure. It's never any good, that's the result of it. The CBD for myself really helps to calm all the activity behind the neurons and electrons, it calms it and makes for not nearly as many misfires. Therefore, I'm not having any seizures. It's helped me incredibly with my life.
I think that anybody that is struggling with how to stop seizures and it is going on the Western medicine process, which I highly encourage. I don't think there's anything wrong with that. I just would argue that at some point, I encourage you to try and incorporate some CBD, because that might be the missing link. That was the missing link for myself almost, or not almost, to the point where I don't take Western medicine anymore. I don't need it. I've been seizure-free for years now and CBD has been one of the main components behind that. Of course, having a healthy lifestyle, your diet, your sleep routine and your schedule you for working out or not is going to play heavily into that equation as well for myself.
Matthew: I know there's more to it than just milligrams, but what's your milligram dose range for CBD.
Josh: In our everyday balance tincture, which is what I created for myself, is my tincture, it's 33 milligrams per drop, and I'll do two of those drops in the morning and two of them at nighttime. By two I mean, just a full tincture full and that'll be- I’ll switch it under my tongue for a few seconds and then go ahead and swallow it and go about my day. It sits next to my toothbrush and it's a very balanced routine for myself. I encourage anybody else that's dealing with challenges that are heavily focused on Western medicine.
I encourage you to incorporate, not to steer away from your Western medicine, but to incorporate some CBD usage with it, you might find that it really helps it be more effective with what you're going for.
Matthew: That sounds like the right dose for you, but how did you arrive at that? If you take three or four eyedropper tinctures, is that too much? How does that experience come off, then you do, does your body just feel lethargic? Then if you don't take enough, how do you know?
Josh: Yes. I would argue that it's not too much. I really-- I struggle with taking two much, because I've just been taking it for gosh, for decades now. For me, it's not too much. I don't really feel lethargic off of it at all. If anything, it gives me a little bit more of-- I haven't ever taken too much, but I've also never taken more than three or four dropper fulls. I've never pushed it to see where my threshold is. On the other side of that, if I don't have it, I have these things called fatigue mal. With an epilepsy, you have a grand mal seizure and you have fatigue mal seizure. The grand mal is just like it sounds, it's granted, it's a couple of minutes. It could be a few minutes long. It's very scary.
A fatigue mal seizure is exactly what it sounds like as well. It's very tiny. It can happen in an instant in your mind. If I have a fatigue mal, more often than not, no one will even notice around me, but I'll notice it because if I'm holding something, I'll drop it. If I had a thought and I'm trying to-- if I'm texting or something like that, it'll interrupt what I'm doing incredibly. That's really my bumper that says, "Hey, I got to go take some CBD" If I have another one, it's very important that I lay down and I take a break. I recognize the fact that my mind is telling me you got to slow down or we're going too fast, or we need to relax.
The fatigue mal is really what tells me as an epileptic. Once people have had epilepsy, you start to understand how your brain works in the way of it'll start tell you when you're going to have a seizure. It's very important that you listen to that for myself. For me, that's how I rounded up. I came to that conclusion of, I was able to not have fatigue mal if I take two drops in the morning, two drops at night and stay on top of my workout routine, get good rest and try and keep low stress.
Matthew: I don't know how you do all those things, especially as we're winding up COVID here, it seems like.
Josh: What a year, man? Gosh, that was brutal.
Josh: Coming from somebody who I really liked to stay as positive as possible, maybe you've heard me say it before, but one of the things I like to say to my team is I'd much rather be optimistic and wrong and pessimistic and right. For me with life, I try and always stick to that. Man, the last year was tough with COVID. I had to push extra hard to stay positive and we've all got a lot of-- everybody's family has somebody that needs support. [unintelligible [00:19:01] somebody that's the wild one, everybody has family, that's someone that's a conservative.
Everybody got to realize that every single-- no matter which category you fell into, as a family member, it was important that we at least checked on one another and that we were there for each other, and that you could be there as much as you could of one another. I think that a lot of good can come from something as obvious 2020 in the sense of hopefully abroad families closer together. I don't know about you, but made me realize that being there for other people, and more importantly, being there for my family filled my cup much more than finances ever could.
The real currency for me moving out of 2020 is love and the real currency for what defines success for the road ahead is going to be my impact on my loved ones. That's what defines success for me. Now there's a new definition for success after such a challenging year.
Matthew: That's why you started Plant Love.
Josh: There we go. Absolutely.
Matthew: Josh, I want to ask a few personal development questions to help listeners get a better sense of who you are, is there a book that's had a big impact on your life or a way of thinking that you'd like to share?
Josh: Yes, I do appreciate reading as frequently as possible. I do love wafting out, when I don't have time for books, I'll just jump on some inspirational quotes just to really get my mind moving in the right direction. One of the books that I read in the last couple of years that really stuck with me, and I actually read a couple times now is The Hard Thing About Hard Things, it's a book by Ben Horowitz.
It was very helpful for me and very beneficial for me to realize how to handle challenging times, as we talked about a lot of things going right in the space, there's a lot of wins going on, but behind closed doors is also a lot of challenges, you got a lot of turnover within teams, you've got a lot of cutthroat things going on in the space, if you will, with consolidation. Really people jumping from this team to that team made it really difficult to navigate the waters, as these companies have grown so fast because growth can kill a company.
I think that the one thing this book really helped me with is my ability to communicate with my team throughout these challenges and this book really talks about that, talks about how you want to make sure that you're leaning into one another, and it also really pushes on how to have empathy for others and understand their challenges, even if they're supporting you, how do you return that favor as a leader? It really helped me in those areas. Yes, The Hard Thing About Hard Things, check it out.
Matthew: Besides what you're doing with Plant Love and Artsy, what's the most interesting thing going on in the cannabis field to you?
Josh: The most interesting thing going on the cannabis field for me is got to be the yo-yo of federal legalization, they started this yo-yo, gosh, I want to say in 1970s or they're saying, "Hey, we're going to talk about this going federal," and then the administration put it away and it didn't happen. It's slowly over the decades have been coming more and more and more forefront and recently, it seemed like with getting a Democrat in office that cannabis was about to go run the distance. It was his fifth, it was Biden and Kamala Harris, his fifth agenda item, they were really going to move this forward.
Then you've got some confusing messages going on, mixed messaging when they fire people from the White House that claim they had cannabis usage in their past.
Matthew: Jesus Christ.
Josh: It really scares me to think that Biden has good intentions, but he's a true politician, without putting it differently he's a yes man. In a lot of ways, these guys going to do what he's told to do because we all know that this world is run by the golden rule. That is the guys with the gold make the rules. I would argue that one of those things that's been challenging for me as being such a lobbyist for federal legalization and moving this forward, it's been tough to see it, "Oh, yes, we're going to make this a priority, and then we're not and then we're going to move Safe Banking Act forward, and then we're not." I'm really interested to see over the coming months, because I do think that this administration is going to do something about it, it'll be really interesting to see how all this unfolds, I couldn't be more on the edge of my seat about the coming years with this space than I am now.
It's going to make a big turn because during COVID, we got deemed essential and with that comes significant revenues, and with significant revenues comes significant taxes. We have the ability to do turn the needle the other direction, instead of constantly, constantly losing money, some of these things can turn it to, surely, they can't be profitable but they can definitely slow the meter on burning capital. They can give back a lot to the things that really mean the most.
Matthew: Josh, you have such a deep growing background, I know there's a ton of ways people can make a successful garden or an unsuccessful garden, but if for someone that's really wanting to grow their own plant, can you just give them just a couple bits of advice to ensure they get off to a good start because you you're really good at this?
Josh: Yes, I think that if you want to grow some plants for yourself at your house, I would just recommend putting right next to tomato plants in the garden. If you have the ability to grow medically for yourself at your home, you really got to start somewhere, picking up some seeds off of an online source, if you Google cannabis seeds there's thousands of breeders out there that they can send you some. I would recommend just putting it in a nice wet paper towel, let the seed germinate.
Once it has a little tail coming out of it, a little white root has sprouted from it, then go ahead and bury it about a half-inch in the soil and put a little dirt over it, give it water on a daily basis and watch it grow, then water like the weed but it is because it'll grow fast and big. Recommend that. If you want to get a little bit further into cannabis cultivation and bring it indoors, I'd recommend you pick up the Three A Light book or you Google and YouTube as much information about as possible and really just get started. [inaudible [00:25:26] half the battle to becoming a master grower or a master anything in this world is just getting started.
Matthew: Josh, as we close Can you tell listeners the best place to find you and connect online?
Josh: The best place to find me and connect online is going to be off of plantlovenaturals.com and artsycannabis.com or my Instagram, those three spots are going to be great spots and just Joshua Haupt on Instagram.
Matthew: Okay, Josh, good luck with everything you got going on here, your plate is very full and I look forward to hearing a full report next year or sometime when you have all these more mature.
Josh: Absolutely, Matt, it's my pleasure. Thanks for having me on the show.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at CannaInsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out your free report at CannaInsider.com/trends.
Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback at CannaInsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers or companies featured in CannaInsider.
Lastly, the host or guests on CannaInsider may or may not invest in the companies entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle, jingle your listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care, bye-bye.
We hear a lot about what’s going on in the west coast cannabis market, but what about the midwest? Here to fill us in is Tim Schuler of Cannalicious and Detroit Edible Company.
Learn more at:
[1:09] An inside look at Cannalicious and Detroit Edible Company, two of Michigan’s most successful cannabis businesses
[2:00] Tim’s background working for Anheuser Busch and how he got into the cannabis space
[3:42] How the cannabis market in Michigan has evolved over the last ten years
[8:35] How Tim and his team decide the best cannabis extracts to produce at Cannalicious
[11:23] The types of products sold at Detroit Edible Company, from gummies to brownies
[17:44] Detroit Edible’s latest partnership with Eaze and why the California-based delivery app is expanding into Michigan
[21:31] How Tim manages his inventory using LeafLink, cannabis’ largest wholesale management platform
[25:51] Where Tim sees the cannabis market in Michigan heading over the next 3-5 years
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly-evolving cannabis industry. Learn more @cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program.
Matthew: We hear a lot about what is going on in the west coast cannabis market, but what about the midwest cannabis market. Here to tell us what business is like for a cannabis operator in Michigan is Tim Schuler of Detroit Edible Company and Cannalicious. Tim, welcome to CannaInsider.
Tim Schuler: Matt, thanks for having me today.
Matthew: Give us a sense of geography. Where are you sitting today?
Tim: Ann Arbor, Michigan. We call it the cannabis capital of Michigan. They've been doing that annual hash bash for more than 50 years. When adult use or recreational cannabis came to being a little over a year ago, the first provisioning centers were in Ann Arbor. Now, we have over 220 here in Michigan.
Matthew: What is Detroit Edible and Cannalicious on a high level?
Tim Schuler: Detroit Edible Company is a truly an Edible Company. We make everything from fudge to brownies, to chocolate bars, which we call Barracuda bars, and then we have honey peanut butter. Then we have variants of gummies as well. We just launched our Guppy gummies. That's a five to one THC to CBM line, and then Cannalicious it's in a different location.
It's actually in Pinconning, Michigan, which is up North here in Michigan and it's a pure extractor and concentrate company. We do everything from hydrocarbon to ethanol washing. Then we obviously make distillate after we do both of those processes.
Matthew: Tim, can you share a little bit about your background and journey and how you came to start these two companies and got in the cannabis space?
Tim: Well, do you have an hour? No, I'm kidding. [chuckles] It's an interesting story. I started my career through Anheuser-Busch and working for one of the largest brewers in the world. Learned sales, marketing, and distribution, and worked for them for more than 15 years. The last five of those years, I was a state sales director here in the state of Michigan.
It's a three tier system. A brewer, then a wholesaler and then a retailer. We moved about 48 million cases of beer in Michigan on an annual basis. That's where I got or cut my teeth, at least, in sales, marketing, and distribution. Then I launched into the supply chain here in Michigan about three years ago to start one of the first secure transport companies here. Along the way, I met my current partners and decided to get out of secure transport and jump into the processing game. We launched Cannalicious about two and a half years ago. Then Detroit Edible Company started about a year and a half ago. We're progressing well as a processors here in the State. Then we also have one retail location in Ann Arbor as well.
Matthew: You have two businesses then. You've got Cannalicious, the extraction concentrate company and Detroit Edibles Company.
Tim: That is correct.
Matthew: We hear a ton, as I mentioned in the intro, about California, Oregon, Colorado, but we just don't hear that much about Michigan. It's just not talked about that much in the bigger markets. Can you just orient us in terms of what the background or the Michigan markets like in the past and what it's like today?
Tim: Sure. A little over 10 years ago, there was what was created the caregiver network here in the State of Michigan, which made it legal for an individual to grow up to 12 plants for him, or herself and five other patients. That individual, the caregiver could supply those products, whether it be a flower, pre-rolls, tinctures, edibles whatever variant of cannabis that they could come up with.
Along the way, through some various loopholes, various dispensaries started popping up across the State, where caregivers could bring their overage to that dispensary, and then that dispensary would sell it to medical cardholders who didn't have a caregiver to go find. The medical cardholders grew to nearly 300,000 medical cardholders here in the State. It became a little unwieldy because caregivers were doing things a lot different across the State. The State enacted a new supply chain, which essentially meant growers, processors, a safety and compliance.
They added a different wrinkle that most states don't have, and that's a secure transporter, to move the product between the different entities. Then of course the provisioning centers. That was implemented in late 2018 when it was all medical. Then the state voted by a margin of 58 - 42 to go adult use, and that started last January. All of those various medical license had been applied for adult use. We completed our first year in Michigan at 2020 and did almost $1 billion of retail sales.
Matthew: Wow. Let's dig into your business a little bit. Cannalicious, the extraction and concentrates company, and then Detroit Edible Company where you have one retail store and you also have all the edibles. How does the revenue breakdown between these two companies?
Tim: It's about 53% on the Edible side and 47% on the concentrate side to various stores. It varies by month and it also varies by areas preference. We obviously distribute across the state and that includes the UP. There's over 325 different provisioning centers. We have to call on each of them and we deliver from each one of those two facilities on a daily basis.
Matthew: For people not familiar with the Midwest, the UP is the Upper Peninsula,
Tim: The Upper Peninsula it's connected to both Wisconsin and Minnesota. It's a vast amount of land. If you're in Detroit, you can get to Washington DC quicker than you can leave the state of Michigan, if you were to go all the way up to the UP across the Mackinac bridge and then all the way to a place called Ironwood, which is where coach Tom Izzo at Michigan State's from.
Matthew: What kind of extraction equipment do you use for your business? Just curious there.
Tim: We started with hydrocarbons. We extract with both a combination of propane and butane and we use XT70 made by ETS to do that. Then, just recently about eight, nine months ago, we purchased an ethanol skid. We do ethanol washing, and then we take that ethanol product or by-product, and then run it through an HPE thin film separator to create distillate. We're one of the largest producers of distillate in the state of Michigan and do it for ourselves as well as there's a few other growers that also have processing license, but don't have the ability to extract so we do some toll processing for them to get raw distillate for them.
Matthew: How do you arrive at what kind of extracts you want to make at Cannalicious.?
Tim: I tell you what, we take the Amazon model from 20 years ago with Jeff Bezos, and that is that you have to change and adapt to what the marketplace may want or need. We've always rooted ourselves with a product called Rick Simpson Oil. We make the most RSO in the State and make a few different varieties of RSO.
As we look at live resin or shatter darts, distillate carts, we try to round out a menu so that our customers are, if they need a concentrate, we're a one-stop shop for them. As our inventory, we try to keep anywhere from a four to six-week inventory amount on our shelves so that PCs know that they can come to us and rely on a consistent product that's always there for them. We just build our inventory based on those levels of different products that are on the concentrate side of the business.
Matthew: A lot of people are familiar with RSO or Rick Simpson Oil, particularly if they know someone that's a medical patient using cannabis oil, but can you just go into what Rick Simpson Oil is?
Tim: Sure. Rick Simpson Oil he's a Canadian, so he's right across the border from us here in Michigan. He discovered almost nearly 50 years ago that the cannabis plant has some ability to either stop or retard the growth of cancer cells in most peoples' bodies. He started an extraction process where you basically get to a crude, and then you eliminate the fats and lipids. The product itself is not a pretty-looking product, but we put it in a one gram syringe and recommend to people to put about a rice-sized droplet on a cracker or mix it with some peanut butter or whatever they want to do because it's an ingestible concentrate that helps relieve a lot of different ailments.
It's not just cancer. We have a lot of research that shows that it helps in the relief of pain. We've mixed it with some CBN, so you can take it and have a good effect to be able to sleep at night. We call it a Rest RSO. Then, we've also flavored it with some natural terpenes, both cherry, grape, and wine, like RSO. For those who haven't had it, it's not the most flavorable concentrate out there. We tried to make it a little more appeasing to the palate.
Matthew: That's great. I'm really happy to hear that you're making that for patients. Then, we've talked about how you've picked extracts and you're trying different things. Is it the same way then with the Edibles Company or are you just trying different things? How do you think about that?
Tim: We're Detroit Edible Company now, but we used to operate as Detroit Fudge Company and made the best fudge on the marketplace. Since we're going in a direction of having multiple different variants of edibles, we changed it to Detroit Edible Company. We've always rooted ourselves in having great fudge, great brownies that are nice and moist for the consumer.
A fudge only has a lifespan of about three months of shelf life after it leaves our facility. Brownies have six months. Then, chocolate bars, honey, peanut butter, guppies, they all have 12 months. We have to do a nice job of working with our retailers to not over order and make sure that they have plenty on hand, but not too many because the last thing we want is any product going out of date.
Matthew: Balancing act there.
Tim: It is a balancing act.
Matthew: What does the illegal market for cannabis look like in Michigan or unregulated, some say? How would you describe it?
Tim: Unfortunately, too big. The caregiver model lasted here for eight or nine years, and there's a lot of caregivers that grow a lot of great product out there. The way the rules are written, caregivers can still exist. They can grow up to 72 plants. Because we're in a COVID situation, nobody's really monitoring how many plants that these individuals are actually growing. Then, obviously, their distribution chain is such that they have the ability to penetrate quite heavily. Whether it's 30%, 40%, or even 50% of the actual market, there's really no way to tell, but we definitely know that it exists out there because many of our retailers share with us what their customers are coming in and saying that they can buy from various sources. At one point, there was 40,000 caregivers here in Michigan. It's now down to registered 30,000. The caregiver network has the ability to grow up to 2.1 million plants. The licensed market only has the ability to grow about 700,000.
Matthew: Wow. I'm interested in how you brand with the edibles. You seem to have chosen a fish theme. Talk about that a little bit.
Tim: Sure. Michigan is surrounded by four of the five Great Lakes and we pride ourselves on being a great state to be in enjoying water. Barracuda is our chocolate bar. It comes in two different levels, 100 milligrams for adult use and 200 milligrams for medical use. We want to pay attention to the microdosing market out there because we believe there's a lot of canna-curious, that if they take too much at one point, like any other consumer product good, if somebody has a bad experience with that product, you may never get them to try it again.
We brought out a 10-milligram Minnow bar, which Minnow, obviously is a lot smaller than a Barracuda and allows people to microdose 10 milligrams. It comes in four distinct rectangles that they can break off so they can get it down to 2.5 milligrams per dosing, which we think is a great thing for the consumers because we recommend, "Start slow." Everybody has a different tolerance. Everybody has a different metabolism. We want people to have a great experience with our products.
Then, we've just launched our gummy line. Staying with that fish theme, we launched our gummies to be called Guppies, close to a gummy-sounding name. We found some white space in terms of what we believe is a great seller in California, Oregon, Washington, and that is a THC to CBN combination. There's so many of those canna-curious or myself, I'm a 54-year-old male that has problems sleeping at night, I can take one of those 45 minutes to an hour, and I'll sleep all night and fall asleep very easily.
It's better than taking a melatonin or Diazepam or any other sleep aid, in my opinion.
Matthew: Just take one of your gummies?
Matthew: How many milligrams is your magic number?
Tim: I stay with 10. I don't need to go much further than that to fall asleep and have a very restful night of sleeping.
Matthew: Wow. With a 100-milligram gram bar-- I know around 420, sometimes you see a 420-milligram chocolate bar. How do you orient someone that might be new to cannabis and they're going to take this, and like, "Oh, I eat the whole thing." Is there something on there that says like, "Hey, you might only want to take a nibble of this to start out or you're going to blast off to another planet."?
Tim: [laughs] That's one of the things that the MRA, which is the Marijuana Regulatory Authority has recommended and made sure that everybody follows, and that is a dosing amount on each package. For the adult user, the most amount of milligrams we could put into a chocolate bar is 100. Then, each serving size can be no more than 10. We recommend to people that, if you need an entire chocolate bar, that's going to be the entire bar and it's 100 milligrams. All of our bars have lines, a mould that it comes out of, so there's 20 triangles of five milligrams each. If they took half the bar, they would know they'd be getting 50 milligrams.
Matthew: You're going to start partnering with Eaze, the delivery app for home delivery. Can you talk about that a little bit?
Tim: Sure. We're really excited about Eaze. Eaze is obviously the leading home delivery company in California, potentially the largest retailer now in all of California through their home delivery depots. They made a concerted effort to want to expand out of California and they saw what was happening in Michigan in terms of $1 billion of retail sales. They've entered the market with us and we're going to launch next week Thursday, I believe it is, April 1st to be the first depot delivering out of about a 45-mile radius of Ann Arbor.
We believe that home delivery is going to be here to stay. COVID's obviously accelerated that with DoorDash or Uber Eats or any other restaurant or any other delivery service that's out there. What better way to allow people to bring things straight to their house to try. Cannabis and pizza has always been two of those things that have been home delivered. We believe Eaze is going to knock it out of the park here.
Matthew: How many adults in Michigan are not cardholders? I'm trying to get a sense of what the opportunity or the blue sky is for you going forward.
Tim: The state of Michigan is about 10 million people, last census, which is a little over 10 million. There's 7 million of those are over 21, and there's 300,000 cardholders in the State of Michigan. Now, you can be a cardholder and still be under 21, but most are over 21. The blue sky of adult use, we believe is somewhere between 6.7 and 6.8 million people. Another thing that's great for Michigan is Michigan is a tourism state.
Like I said earlier, it's surrounded by four of the Great Lakes. It has a number of different lakes. Tourism is one of the major industries here in Michigan and we lost out on that all of last summer with COVID. We believe there's still another level of consumption that will go on once people are vaccinated, COVID comes back down and people are now more apt to travel. Our surroundings state Indiana has zero cannabis sales. Ohio has medical only and a very difficult one at that.
Illinois is adult-use and medical but again their supply chain is not built out. Then Wisconsin is not either cannabis-friendly. When you look at those five states surrounding us, that's about 46 million people that are within a five to six-hour drive of the State of Michigan. We think Blue Sky Michigan has a great opportunity yet.
Matthew: For international listeners or people who have just never been to the mid-West, it's hard to understand the vastness of how big the Great Lakes are. They're just absolutely enormous. I brought a friend over from Germany once and he thought it was the ocean. I said, "I thought you guys were supposed to be good at geography, better than us." He goes, "You're in the middle of the country here." It's so big. You can't see the other side. I think it's a wonder of the world actually, the Great Lakes. They're just so big.
Tim: It is. You can stand on pretty much any shoreline, whether it's up in Port Huron, up north on Lake Superior, or on the left side of the State of Michigan. On a rough day, you would think you're on the shores of both the Pacific or Atlantic Ocean.
Matthew: One thing in talking with you that I was really interested in is that you use the B2B platform called LeafLink that's in the cannabis space. You use it in some interesting ways. Can you talk about that?
Tim: Yes. LeafLink, when we started this journey, we had a lot of inventory. How do you manage inventory and make sure that sales were actually not stepping on one another in terms of the amount of products that they have or selling on a basis. We went looking for one. I had used Salesforce in the past and Salesforce is a great tool, cloud-based but extremely expensive. There's another one out there called Sugar, it's good but again pricey.
I was introduced to LeafLink as a CRM or a consumer relationship marketing tool. We found it to be outstanding from a control of inventory. PCs can go on at no charge. Shop your menu as you keep it updated. We put up great pictures, test results, case quantities, all of those important things that a customer would need, and they can click and order. As we learned and dealt with LeafLink, they're a great company. We have a great relationship with probably more than half of their 100 employees now.
They wanted to bring to us some various tools. They have myBI which is my My Business Insight so that we can have a nice deep dive into our own analytics of when people are ordering, what are they pairing with each order, things like that. Then they also have another platform called MarketScape. Everyone that's on the LeafLink platform here in Michigan, we can now run reports to say, "Okay. How much RSO are we selling compared to the market? Where are our price points at? Where are other competition basically?" That helped us from there.
The other area that we've always wanted some help in is cannabis is a cash business. They brought out LeafLink Financials. We're their launch partner here in Michigan for it. Essentially, what it does is it provides to the retailer not have to pay on delivery it's net 30 terms and we don't have to deal in cash. That's really important to us because Matt, I don't know if you've every tried to count $70,000 at one time. It's dirty, it takes long, and there's a lot of risk.
Matthew: I can barely count my fingers, Tim.
Tim: Exactly. If we can get out of that, we felt we'd have more time and more resources to put in other directions. We're a big believer in that. Now, we're in about 86% of all the provisioning centers in the State of Michigan and I want to say about 80% of those use LeafLink Financial, which makes it a whole lot easier on our comptroller to be able to monitor cash flow as well as understand he doesn't have to get his hands dirty or worry about safety.
The third platform that they've instituted is what's called LeafLink Logistics. Secure transport is one of the supply chain that we have to use here in the State of Michigan. What they've done is they've simplified it down to where we can click on a delivery, put in the date, and they arrange all of the logistics to get it from our facility to a PC. Why I say PC, it's not politically correct, it's provisioning center.
We've again, found them to be great partners. They're very knowledgeable about the industry itself. They helped people understand how to use the power of terms to be able to buy, sell, and then be able to buy some more products through that 30 days we've been running out. They've been a great help to our industry here in Michigan.
Matthew: Tim, how do you see the cannabis market changing in Michigan in the next three to five years?
Tim: Right now, there's 1,400 and fifty-something different cities and townships in Michigan. Only 400 of those have opted in to allow retail sales. There's big hot pockets of where retailers are centered whether it's Bay City, or Lansing, or Ann Arbor, or Kalamazoo, or Detroit, all the way up to Traverse City, things like that. We believe that as more cities understand the value of what cannabis can bring to the market and that it brings reputable people jobs and tax revenue, that we'll see as many liquor stores in the State of Michigan as we'll see cannabis stores. We as a manufacturer have to be ready for that and we have to work with companies as they grow. There's not going to be urban centers with a hundred stores, there's going to be a store in every different municipality. We believe there's a wide-open growth there.
Another level of adult use that's out there is called consumption lounges. We believe that that's another [unintelligible [00:27:11] for people to instead of going to a club and dancing and buying alcohol, they are going to be able to go and enjoy cannabis, which again would provide another opportunity whether that's through an edible line or a concentrate line for us.
Matthew: Tim, I'd like to ask you a few personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Tim: Sure. I do love to read. Thomas Edison's biography is incredible. The preamble talks about how the time he was 18 to the time he died, he averaged filing a patent every six days. [chuckles] It's just incredible. He just didn't invent the light bulb. He did so much with plants. He figured out how to make a synthetic rubber for the tire manufacturers. He was very influential. Steve Job's autobiography was also another all-encompassing how do you control where you're going in life.
Then my very first autobiography I ever read was Lee Iacocca. Never knew it at the time that I'd be living in Detroit but what he did with the Ford Mustang and then latter-day with running Chrysler, the ability to lead and to adapt and change every day is so important for personal, and obviously, a company's development. You need to have a vision of where you want to go and how to get there but also, the fortitude to change when something is not going the way you want it to.
Matthew: What do you think the most interesting thing going on in your field is besides what you're doing with Cannalicious in Detroit Edible Company?
Tim: I think it's the marketing of the cannabis itself. Obviously, every one of us believes we have some idea of what and how to market things. I believe, cannabis, when you walk into a store, you're now competing with Heinz, and Clorox, and every other food product out there that's a consumer product good. Our packaging has to be spot on, it has to be consistent, it has to represent and speak to the consumer.
If individuals are wanting to find different niches of where to go, it's not always how do I get in and run a grow facility? How do I process, but how do I market, handle, or do public relations around the industry itself? Much of it is currently ignored. We've talked to a couple of different agencies here that don't even want to deal with cannabis right now because they're afraid they're going to upset other clients. The individuals that jump on and take this from--
I equate it similar to prohibition, that people are hesitant to do it to where it's going to be mainstream is going to really help us grow as an industry. Then hopefully, as our company, rises along with the tide that comes with that.
Matthew: Here's the Peter Thiel question for you. What is one thought you have that most people would disagree with you on?
Tim: In this particular industry, people disagree with me on moving to what I consider the 95s or the 45s. Most people that sold cannabis in the past sold it as zeros, so $15 grams, or $40 eighths or candy bar for $20. If we're going to truly elevate us, we need to be more aligned with other consumer product goods and we need to price it at $14.95 $13.45 and be able to take price increases as we go because right now, the supply and demand makes pricing fluctuate so greatly, that the consumer gets a little confused at, one day I can buy a gram of live resin for $75, and the next day, it's $35. That doesn't make sense to the consumer.
Matthew: Tim, as we close, can you tell listeners how they can find your business and connect with you, the businesses?
Tim: Yes, businesses. Eaze obviously, if you're going to do a home delivery, and you're going to be anywhere in the lower half of Michigan, which is where they're going to launch first, go to the Eaze platform, which is www.eaze.com. Secondly, we're big believers in Leafly. A lot of retailers push people toward WeedMaps and it sounds WeedMaps. Oh, okay. How do I find my weed on a map?
Leafly does a much better job of educating the consumer, providing the exact same information, or geo-targeting to the location where they're at to find the store that has their products that they're interested in. We're listed on both Leafly and Eaze to be able to help people find where their location. Then, obviously, we have our own website, which you can obviously go on it and it'll show you where our retailers are as well as ask us where to find the closest retailer for them.
Matthew: Well, Tim, thanks so much for coming on the show. We really appreciate it and good luck surviving the winter here as we turn into spring, it shows you should be getting happier every day now.
Tim: Spring has sprung. It was 70 degrees here yesterday in Michigan.
Tim: When it gets over that number, people start to move around a lot more.
Matthew: [laughs] Great. Thanks, Tim.
Tim: Thanks a lot for the interview, Matt.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at firstname.lastname@example.org. We'd love to hear from you.
Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may, or may not invest in the companies, entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.
Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to, will get stuck in your head for the rest of the day. Thanks for listening. Look for another CannaInsider episode soon. Take care. Bye-bye.
[00:34:36] [END OF AUDIO]