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What are Delta-8 THC and 5-MeO-DMT and what’s all the hype about? Here to help us understand is the cannabis whisper himself, Max Montrose of Trichome Institute.
Learn more at https://trichomeinstitute.com
[00:43] An inside look at Trichome Institute, the leading cannabis education company
[2:06] Delta-8 THC and how it differs from its better-known cousin delta-9 THC
[3:45] Why delta-8 is surging in popularity
[13:36] Where Max sees delta-8 THC heading over the next 3-5 years
[16:44] Max’s partnership with Abstrax, an industry leader in the study and production of cannabis and botanically-derived terpenes
[23:39] 5-MeO-DMT, a psychedelic found in a variety of plant species and the glands of the Sonoran Desert toad
[27:39] Max’s work studying the Sonoran Desert toad and their unique venom glands
[41:12] How Max’s experiences with 5-MeO-DMT and ayahuasca have changed his philosophies and way of life
Mathew Kind: Hi. I'm Matthew Kind. Every Monday I look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly-evolving cannabis industry. Learn more at cannainsider.com, that's C-A-N-N-A-insider dot com. Now here's your program.
Max Montrose, the cannabis whisperer is going to help us understand what all the rage is with delta-8 THC and other important cannabis topics today. Max, welcome back to CannaInsider.
Max Montrose: Thanks so much, Matt. I love being on your show.
Matthew: Give us a sense of geography. Where are you in the world right now?
Max: I am in Erie, Colorado.
Matthew: Okay. Max, your company is Trichome Institute. For new listeners, can you just tell us what Trichome does?
Max: Yes. We are a cannabis education company that is different from the rest of them in the ways that we teach really interesting high-level, niche and fascinating cannabis topics, such as cooking with cannabis, the cannabis sommelier program, interpening. We also provide standard courses for the industry like cannabis consultant training, where we really just break down cannabis at a high level, how and why the plants are Indica, Sativa, and other really interesting things. For today's listeners, we actually have 10% off for anybody who's interested in our online courses or our physical goods, and that would be DELTA8.
Matthew: What's your URL?
Max: trichomeinstitute.com. Trichome Institute is on Instagram, in Facebook, trichome.institute. For people who are more into psychedelics you can also check me out max.montrose.
Matthew: The coupon code one more time, it's all letters or letters and number?
Max: It's Delta and then the number eight together, all capital.
Matthew: Okay, cool. Well, Max, we want to talk about delta-8 because we get so many questions about it, delta-8-THC. Three buckets of people listening they'll be like, "Oh, I've heard of it. I'm curious about it, but I don't really know what it is," others that say, "Hey, I've heard it and I know a little bit of what it is," and then others that have tried it, but they still don't know what to think about it. Let's just imagine we're on an elevator going up to the top of the Empire State Building, and you got a short pitch to deliver about what delta-8 is and why it's important, what would you say?
Max: Well, it's important to just know that what you're talking about is THC. Delta-8 is THC, but it's a form of THC. The form of THC that it is, it's not as sharp from an effect perspective, and so most people anecdotally claim that when they experience it, they feel high or they feel medicated, but without the eebily jeebilies, without the freak-out. There's no paranoia associated to it. They claim that it's a little softer or an easier type of high to experience.
Matthew: It's THC minus paranoia in your opinion. It's like nerfing THC to make it so you're not getting the harder edges that some people find uncomfortable?
Max: Yes. You could say that. There's a lot more to say about delta-8, but I'm on an elevator pitch. [laughs]
Matthew: You're on an elevator pitch. We'll go into a little bit more about it. Why do you think delta-8-THC is surging in popularity right now?
Max: I got to be honest, if I put all my money down on which cannabinoid was going to be the next hotshot in the marketplace, I would put all my money down on CBG and I would have lost because it was delta-8-THC.
I thought it was going to be CBG.
Matthew: I thought it was going to be CBN, so we're both--
Max: Interesting. There's reasons for this. What these reasons are, this is just really interesting stuff, we're talking about cannabinoids that are not only psychoactive like CBD, but unlike CBD, these other minor cannabinoids are also slightly intoxicating, whereas their big brother, THC, is most definitely intoxicating. I think there's a huge difference in the words people choose to use.
A whole lot of people in the hemp and CBD industry will tell you that their products are non-psychoactive. CBD is psychoactive, so is CBG, so is delta-8-THC, but CBG and delta-8-THC actually give you a noticeable effect that is calming and relaxing. When you take high levels of CBG it feels like you've done yoga for two hours and then meditated for an hour after that. Your amount of peace in physical calm and mental clarity is extraordinary, it's easy to take on and it feels great.
Matthew: That's interesting. It's a lot more approachable for the mass audience is what it is.
Max: Well, you've got two different audiences. You have the entire audience that is still restricted from a THC market that just found a backdoor called delta-8-THC out of hemp, which we can get into. The other market you have is all of the people who live in geographies where they have access to THC industries, but THC is too much for them. That would be my family. My sister and my dad, they can't handle the levels of THC in typical flower sold in most dispensaries. It's just too much. These are things that are really approachable for that whole other crowd, which is a massive amount of people.
Matthew: How many milligrams does it take you to really experience cannabis? What's a noticeable milligram amount where you're like, "I'm noticing this"?
Max: Well, when you're talking about milligrams, you're talking about edibles. You know that edibles metabolize in your liver because cannabinoids aren't water-soluble and you're made out of water. They have to transfer in your liver into something that is water-soluble, which does change the molecular structure. Why cannabis edibles are so intense or marijuana edibles with THC are so intense is because delta-8-THC turns into 11-hydroxy-delta-8-THC, which is more potent and a different form, again, of THC, a different version of THC.
What's really interesting is when you eat delta-8-THC, it actually transfers into 11-hydroxy-delta-8-THC. That's a really interesting experience because for many people, the edible experience is too much. It's too crazy. They think they're not breathing, that time has slowed down. Of course, we're talking about either people who have lower tolerances or people who take really high doses, but regardless, THC edibles can cook you in a different way than smoking flower, and everyone knows that. To try an edible but with that sharp edge taken off of it, is just really relaxing.
It's the kind of stone you get from that really heady, I'm going to use the word "Indica flower". Trichome uses the term "broadleaf". The couch-lock that you get where you're just so damn relaxed you literally cannot move is what I get from the delta-8 edible experience.
Matthew: Very interesting. Wow. It's starting to come into focus why it's becoming so popular. Are there any misconceptions about it that people aren't--?
Max: Well, we haven't even talked about really why it's becoming popular from a different angle.
Matthew: Let's talk about the other angle.
Max: Well, this angle is, this is a gray market surge that it's an enormous spike that is going to be shaved down really fast, for a lot of really good reasons. Delta-8 is not the rage or the surge in marijuana dispensaries. It is all the rage and all the surge in all the sub-operations that sell cannabis that wouldn't typically conform to the regulated industry. It's like, "Well, where are people getting this cannabis from?" "Well, the hemp industry."
That's the whole cannabis industry that's not policed by the Marijuana Enforcement Division. They don't use metrics. They don't have plant counts. They have unlicensed laboratories everywhere, God knows how many of them and where they're at, and what they're using to do extraction methods from. You're really talking about the Wild West of cannabis when you're talking about the hemp industry, which is a multi-billion dollar cannabis industry separate from Marijuana.
Now, that CBD has become a multi-billion dollar industry in and of itself, you have a ton of CBD. Now CBD is cheap. Now people have had enough time to learn about it, people have explored it, now people are ready for the next big thing. What would happen if we turned this CBD into delta-8-THC because the federal legislation from the hemp bill that separates hemp from marijuana from a THC's perspective, does specify that the difference is specifically delta-9-THC. That's the key, is all of these hemp people are saying, "Well, the law specifically says you can't have delta-9 but the law doesn't say you can't have delta-8."
Now, you have Texas, which doesn't have marijuana dispensaries but they have CBD dispensaries and hemp dispensaries, and now they're selling a THC product because they can because technically nowhere does it say that they can't. That is why you're seeing the surge, is you are seeing the world of people who wished that they could go to a store and buy THC doing it right now in places that don't technically legally, have THC.
Really, what's happening here is the federal government shot themselves in the foot by being hyper-specific because they do that. The problem is, you're trying to be hyper-specific about the number one drug on the planet that you cannot put in a box because it is the most-- Nothing in the world works like cannabis in as many different ways as it does. Had the federal government did what I think they intended to do, which was to say, any and all tetrahydrocannabinols, meaning THC (plural), any THC, delta-7, delta-8, delta-9, both versions of delta-10, 11 hydroxy, it doesn't matter if it's THC, if it is the intoxicating cannabinoid THC, there's a regulated market for that.
There's tens of thousands of people who have worked like you have no idea, to create a functioning and regulated cannabis marijuana THC market, where adults can go today, show their driver's license, buy something, go home and get high. That's where delta-8 can be sold legally and will be sold legally, and that's fine, but this is the hemp industry trying to skirt the law with this black box thing. You are starting to see governments, left and right, shutting this down and beginning to regulate it.
Matthew: Where do you think this all lands, let's say five years from now? It seems like the people want cannabis and hemp products so badly, they're always innovating and doing crazy things and looking for loopholes, just like this. It reminds me of how, when you lay a brick, there's this mortar that goes between the bricks. The bricks are all these regulations and then there's people that still had demand that wasn't being met. This mortar is being put between the bricks, delta-8 because there's a need not being filled. A strange metaphor there, Max, but let's roll with it.
Where do you think this lands, three, five years from now? Will we still be talking about delta-8 much? Or is it going to be eclipsed by some emerging cannabinoids?
Max: Yes, we will be still talking about delta-8. What's really interesting is, going back to those hemp dispensaries in Texas, they're selling cannabis flower in jars the way that you would walk into a dispenser in Colorado and purchase marijuana by the eighth or the ounce. That flower is really interesting stuff because it's rich in cannabinoids. Some of it is high in CBG, as high as 18% CBG. What an interesting product, and there's a market that's interested in smoking it.
The same goes for CBN like you said, Matt. Delta-8, even just terpenes on their own, what you have is you're going to have, potentially, an entire market of lesser cannabinoids in higher doses, and it's because they are more manageable, they don't mess people up as much, they're new, they're really interesting to learn about and to explore and experience, and they can be legally derived from hemp naturally, unlike delta-8-THC is right now.
Delta-8-THC is naturally produced by the cannabis plant but you have to remember these cannabis plants are not producing THC, to begin with or at least less than 0.3%. It's the difference of really manipulating chemically, one product to another. Yes, I think in five years you will definitely still see delta-8-THC but it will probably be only regulated in marijuana dispensaries, whereas you might see other lesser cannabinoids in higher values in hemp dispensaries.
Matthew: We probably have something in months or maybe single-digit months that this is going to survive like it is, in its current form before it mutates into more regulation, it sounds like?
Matthew: I know you're doing some work with a lab called Abstrax. Can you talk about that?
Max: Sure. Abstrax, they built a cannabis aroma supercomputer, so they're reading over 400 different aroma chemical characters simultaneously in three-dimensional visual space. [chuckles] You can actually see what this aroma looks like and it looks pretty beautiful. Their technology is so complex that they can calculate the spectrum difference of the groupings of the aromatic chemicals that would cause stimulation or sedation.
A lot of people who know cannabis still don't really fully understand that the terpenes that work in aromatherapy, and it's the same terpenes in aromatherapy, so when everyone smells lavender it becomes calm, it is the sedation chemical effect from the terpene, linalool that is causing that on your physiology. When you smoke linalool and THC combined, THC almost accelerates that sedative property causing the Indica effect.
If you map terpenes and understand how they work, and then they're in different groupings, you can actually calculate that this flower is going to be a sedative and this one's going to be a stimulant. To have a computer that can test if cannabis is an Indica or Sativa, would be a multi-billion dollar game-changer because we're going to solve a big problem in the industry because we're going to take the guessing out of the equation. [laughs]
Of course, because these guys have heard that I teach people how to see and smell the difference between cannabis and its effect in our interpening program, that they actually flew me out to LA, they tested me on this and I got seven out of eight jars right on the head, me, explaining that this one would affect you in this way and this one would affect you in that way, and, "These effects are also going beyond stimulating and sedative. We have analyzed five effect types." I was getting seven out of eight jars correct, right on the dot with five different options that the jar could be not one or the other.
Matthew: All right. It's a lot of permutations there?
Max: Exactly. Man, what we can do together combining how we analyze cannabis and its quality and its effect type, with our cannabis sommelier program, and understanding what's happening in the Emerald Triangle with appellations [unintelligible [00:19:32] and topicity, you can certify topicity with something like Abstrax technology. Topicity is the flavor that is recognizable and of typical to any and every OG that's ever experienced Durban Poison or Jack Herer.
If you claim that you have Jack Herer, says who? Have you literally verified the flavor of that Jack and put it on a computer program that can actually map it compared to the baseline assessment that we have from Jack Herer's son, our good buddy, Dan, who gives us access to the original genetic so we know that this is original Jack? Here it is. If you are a dispensary that's going to sell Jack, is that certified Jack? It's beyond terpene fingerprinting which is something people have talked about in the industry before. It's the same idea. It's just way more advanced.
Matthew: There would be some range that's allowable within it from that standard to say, if it deviates beyond, this would no longer be considered Jack?
Max: Of course, yes. Jack, grown indoors versus outdoor and in this state versus that state isn't going to read identically, but it's going to read really close. Jack bred with Skunk #1 isn't going to make the cut.
Matthew: Wow, that's really interesting. What a nose you have. Your nose is a prodigy of some kind.
Max: It's crazy. This is what we teach people. We teach people how to do this professionally and on their own. That's what that code is for, delta-8. That's an online course. Actually, Abstrax in Trichome Institute is coming out with a product that we've now finished. We just need to release it which is the world's very first cannabis aromatic training kit. It comes with 12 different terpenes to teach you how to feel different smells in different parts of your face to gauge where different groupings of terpenes would actually dictate stimulating or sedative effect types from cannabis.
Also, they have Abstrax terpenes in there that is the smell of Jack Herer. Because Abstrax can not just analyze it, they can recreate the smell identically. It's crazy, the terpenes that these guys can make. I've never seen another terpene company come anywhere close to the sharpness and specificity of the complex aroma types of these really unique plants produce of flavors that you cannot describe. Jack Herer and Durban Poison does not smell like a single fruit, a single type of food, a plant, an animal, a fungus, or a spice. There's nothing in the world that smells like those things.
It's crazy that they can recreate it. Because they can recreate it, we, the Trichome Institute, can teach people around the world about it because we can legally ship you the smell of Jack Herer in a jar where we might not be able to ship you the cannabis. Although now, we're selling hemp flower online to teach people how to get into their cannabis and grade it, the trichomes, look at it with a microscope, and all that fun stuff.
Matthew: You could create a men's cologne, just call it Dank.
Max: The amount of times, Matt, that I've said, "If a woman smelled like this cannabis plant, I would be done." There's some perfumes out there that would really be quite interesting. That's true.
Matthew: Wow, that is interesting stuff. Keep us posted. Keep us posted on that. I know you got developments coming, but let's pivot now to 5-MeO-DMT. I want to talk about your interaction with the Sonoran Desert toad in a minute, but first, let's just introduce what 5-MeO-DMT is.
Max: DMT is awesome. In fact, I don't know if you know this, Matt, but the back of the interpening book is reviewed by Rick Strassman, who's a dear friend of mine who wrote the book and did the movie of DMT: The Spirit Molecule.
Matthew: That was a great movie. I really enjoyed that.
Max: He's the world authority on what DMT is and how it works. He's a dear friend of mine. We produce DMT. Essentially, DMT is the chemical that you dream on, your very psychedelic dreams where you can fly and you can talk to your dead relatives, but it's also very clear in your consciousness. It's just incredibly psychedelic. The DMT that you produce in your mind is N, N-dimethyltryptamine. Typically when people harvest DMT from nature, it's an N, N-DMT that they're harvesting typically from DMT-producing plants. There's tons of different plants that produce what we would call a high level of DMT. A high level of DMT from a plant would be 3% by dry weight. That'd be a lot.
Most people who know DMT, they really know N, N-DMTs specifically. When you brew ayahuasca with Banisteriopsis caapi, the vine, and chacruna, which is P. viridis, the plant that contains DMT or Mimosa hostilis, the root bark, another plant that contains the DMT, you're producing N, N-DMT. All of this is N, N-DMT. 5-MeO is really derived from the toad. When people have seen The Simpsons and they lick toads and they start tripping, that's what they're actually talking about, is the Sonoran Desert toad which is also called the Colorado River toad. Its technical name is the Bufo alvarius.
Do plants produce 5-MeO-DMT? Yes. In fact, you can buy plants that have 5-MeO-DMT in them at your local garden store probably today. If you can't, I can guarantee you can buy them on Amazon right now. Do you know what a Mimosa pudica is, Matt?
Max: [chuckles] Have you ever heard of the plants called, what are they called? sensitive plants?
Max: Man. Come on. The little plants, you touch them, and then their leaves just fall and curl the second you touch them?
Matthew: Yes. I think I know what you're talking about.
Max: Yes, you know what I'm talking about. You sell them in garden stores for kids because they're really fun. They're cool because the plants move when you interact with them. Those have 5-MeO-DMT in them. Those plants are actually conscious. In fact, they actually remember specific people. They remember time. They actually remember certain events and they go to sleep because they're so conscious that they actually have to let their consciousness take a break. If they don't, they'll die from having a lack of sleep just like humans.
DMT is consciousness. It is a portal to many different worlds. This can get deep. Even though plants have very sliverous amounts of DMT in them, it is the Bufo alvarius toad that has a large amount of 5-MeO to offer.
Matthew: Tell us about your interaction with this toad.
Matthew: Don't be shy about the details.
Max: [laughs] There's a couple of important things to be said. First of all, these toads are being decimated from people who have learned that they contain "drugs". These are people who don't take the time to learn how to go about this properly. They take these toads out of the environment and they kill them to harvest their medicine. These are rare creatures to begin with. Their habitat is being decimated. The place that they live on planet Earth which is southern Arizona and northern Mexico, that's one of the most brutal places on earth. That's a harsh environment just to survive in. These animals can't live without water. I don't know if you've heard about Arizona recently, but they've already run out of water.
These are very, very special creatures. I don't want to be responsible for educating people that these are things that you can go out, and acquire and that you should. I don't really think people should. There is synthetic 5-MeO-DMT. Where you get that is probably the dark web. I think it should also be said that all of this is federally illegal. This is a schedule 1 drug. It's also federally illegal to harvest the toads. It's also illegal to possess them. It's illegal to go catch them. It should be, too.
How do I find myself interacting with these toads in the desert? Well, people who follow my social media, max.montrose, know that it's not just full of psychedelic plants. I literally run around the world in jungles and deserts catching venomous snakes barehanded and demonstrating a variety of different amphibians, arachnids, insects, bats. This is something I've just been doing since I was a young boy.
Arizona is one of my hotspots to go catch snakes and arachnids. On occasion, when you're in Arizona, hunting for tarantulas, scorpions, and rattlesnakes, and you come to bodies of water and you're at night, during the monsoon season, you can definitely see these toads. They're hard not to see because the adults are the size of small kittens. They are big toads. I have interacted with them. I've played with them. I've spent some time with them.
Matthew: Do they like to be held?
Max: No, not at all.
Matthew: You are spooning toads?
Max: I can tell you that trying to hold them is really difficult because they are unbelievably strong. Frog legs are quite muscular and these toads are the size of small kittens and they're slimier than fish and a wet bar soap combined. The mucus that comes off of them is just pure lubrication. These things can kick and they're trying to pull themselves and kick out of your hands. It is not easy to hold them, but I can describe to you how the medicine is harvested from them.
Matthew: Yes, please.
Max: They have really large venom glands that sit right behind their ear, which sits right behind their eyeballs on either side of their cheeks. They also have these venom glands on their forearms and forelegs. The idea of this psychedelic venom is if you were a fox or a javelina or some type of desert predatory creature that would come up and essentially bite the toad, the teeth would pop these glands. These glands are meant to be popped.
What would happen is you would have a hallucinogenic venom surge in your mouth. We suspect that that would send Mr. Fox to the other side of the multi-verse and have him converge with some government of alien beings. While he is lost in outer space, the toad would be hopping away.
Matthew: What a defense?
Max: [laughs] What a defense? That's the idea or the reason why we believe these toads have the defense mechanism, that is a poison, but it is a hallucinogenic experience that we feel that they actually give to other animals if they were to be bitten in a mouth.
What you do is if you can handle these toads, you put their venom glands in your fingers. This is very similar to popping a zit, but the zit that they have to pop is almost as hard as a rock. If you squeeze it hard enough, typically it will shoot and pop and squirt like a zit. This is disgusting, but you squirt it onto a glass dish or a pan. That hallucinogenic venom oxidizes in the air quite quickly.
The idea is you catch a handful of toads and put them in one bucket. As you're done going through popping all of their glands, place them in another bucket. This doesn't really hurt them. After you handle them with your bare hands because it's an amphibian, you definitely want to put cool and filtered water on their bodies to let them rehydrate and you let them go.
Once their medicine has oxidized, you basically can turn this Pyrex dish over and you can scrape it up and you have crystalline hallucinogenic frog or toad venom, which has a very high amount of 5-MeO-DMT in it, which is quite stable too. You can keep it for years.
Matthew: Wow, that's crazy. I wonder if anybody skipped ahead in this podcast and just came up to that point about the toad and the mucus and the popping of the glands, they're like, "What [unintelligible [00:34:57]?" That's crazy. The experience of this Sonoran Desert toad, 5-MeO-DMT, is it exactly the same as the synthetically made or N, N-DMT or anything you're talking about?
Max: Let me put it to you this way. I'm not sure about the synthetic stuff. I'll just say that because I haven't tried it. I have tried both N, N and 5-MeO. I've done a ton of ayahuasca. It's not a secret. People know I try the stuff and I have for a majority of my life. This is part of who I am. I actually have quite a bit of experience. I can tell you the differences.
I think the most important thing people should know about the experience is it does not have to be the way that you constantly see it done on shows like Vice because the way that the toad is typically done is in a macro dose. Typically people are doing upwards of 50 to 100 milligrams, maybe 200 milligrams, 0.2 of a gram, that you are basically sucking in through a bong. You can't hit it with a flame, it has to be vaporized. Which is typically why you see people smoking them out of funny pipes or "meth pipes". It's just because that delivery mechanism works really well for the type of product that it is.
Typically what you see in Vice or Hamilton's Pharmacopeia, or all these things is people doing these incredible macro doses to achieve an ego death. Just imagine that you're a refrigerator, and your refrigerator is plugged into the house. Your mainframe is on. Even if you go to sleep, you're still cold inside because your motor isn't running right now, because you're in sleep mode, but you're still plugged in because your motor is going to come back on. They're taking so much of a dose that they're actually ripping the cord out of the wall. They're unplugging the refrigerator. It can't turn itself back on.
This does cause an ego death because you literally go back to square one. You actually go to the place where you came from before you were here. You visit where death is although it's not death, it's just the other place that this isn't. You can learn a thousand years' worth of wisdom in history and come back from this experience literally never touching your cocaine habit ever again.
I've actually done ayahuasca with someone who knocked out 20-year-old alcohol and cocaine addiction with this toad experience.
Max: Yes. They actually combine it with the frog. The frog is different from the toad. I'm not necessarily going to get into that, but if you do, the frog is a prerequisite, it can make the toad way stronger. They are two very different things from very different parts of the world.
Matthew: Just tell us the name of the frog so we know what you're talking about.
Max: Oh, it's Kambo. Instead of Bufo, it's the Kambo, which is also a waxy monkey tree frog. [chuckles] This is where you burn holes in your muscles, in your body and you take that frog slime that you mix with your saliva and you stick it in your burn wounds and puke your brains out. It's a cleanse. We typically do this before we do ayahuasca or peyote or stuff like that. If you do the frog and really clean yourself out physically and psychologically and spiritually at a huge level, prior to doing some really deep psychedelic, like the toad, it's an entirely different launchpad kind of an experience.
This is all wisdom from the jungle. People have been doing this for thousands of years. This is not a new thing. It's just this is not common for Westerners.
Matthew: Ayahuasca trip, not everybody, but most people vomit before that. That's part of the process of cleansing out or just a reaction?
Max: When you drink ayahuasca, it's like a thick syrup. To me, it tastes like sour chocolate milk that's at least edible. It's not so sour that you cannot get it down, but your body does reject it. It's like, "Okay, what did you just put in me?" [laughs] Especially on your second, third, or fourth cup in the evening, drinking vines and jungle plants that have been brewed together in a cup of sour chocolate sludge, you can definitely throw that up. [chuckles]
Actually, it's one of my favorite parts of the experience because when you need to vomit, you're as physically pent up as you are emotionally and psychologically pent up. You and your being as a whole just needs to explode. The catalytic event of getting well, having the opportunity to physically really clean out and clean out deep and hard while having such a psychedelic experience simultaneously is riveting. It's really fantastic.
Matthew: What are your key takeaways from ayahuasca and 5-MeO-DMT about the nature of the reality we live in now? Seeing as you're an explorer, an adventurer in these other realms, how do you integrate these experiences into what your philosophy is about why we're here and what's going on?
Max: This stuff is hard to talk about because you have two different sides of the aisle. You have one side of the aisle that totally gets it. Those are people who will study ancient religions like Judaism and Buddhism and the structures of freemasonry and symbolism, sacred geometry, but who study it seriously in that really, really deep levels. The other side of people are people who have never experienced the stuff. They don't value how and why ancient religions are really pathways and keys to the whole of it all in life that have been structured and given to us from ancient ones that may or may not be a part of our species necessarily.
You have a scientific community that says, "Well, you're on a hallucinogenic substance, aren't you? Isn't everything that you're experiencing in your mind fake because you're hallucinating?" It can be a hard conversation to have because for the people who haven't tried these truly sacred medicines-- Actually, the last time I did ayahuasca, which wasn't that long ago, we had one of those guys in the group trying ayahuasca for his first time. When he came out of it the next morning when we were sharing our experiences, he said that he was one of those analytical scientific guys that poo-pooed on anyone and everyone who ever talked about magic being real. There's just no science for it.
When you hang out with divinity and a shaman god allows you to see the perspective of the matrix that you're truly in and all of your spirit guides who are rooting for you in the mission that you're on in this time period, it's really hard not to believe in magic. It's really hard not to know that there is a big purpose for being here and that time is so, so special and it is not to be wasted. You are a part of god because how could you not be? Creation is real. Something is being created and here you are, and you're a part of it, and you're co-creating it with the consciousness that you have and the free will that's a part of it in its equation.
We need you to be conscious in creating goodness because reality is constantly a battle between good and evil. Once you see this perspective and this war that's happening, you have a responsibility to participate as a warrior in fighting for what is good even if it doesn't make sense in society, like these things being against the law. It is my religion. I can go to synagogue and talk about the ancient ones who had these experiences and figured all this stuff out for themselves thousands of years ago or I can do it for myself, too.
Matthew: There's so much interesting stuff going on here. I hope listeners enjoy it as much as I have. I'm going to start going on your Instagram. You need a YouTube channel, call it To The Max or Maximus or something, where you're educating and also doing this interesting stuff, philosophy, integrating these things. It's just fascinating stuff. There are so many different ways we can get off the topics of cannabis here, but since this is the main theme of the show, we'll wrap it up now with some personal development questions for you, Max. You seem like such a Colorado guy to me.
Max: Oh, yes. My Subaru is so dirty, my pants are dirty, my [unintelligible [00:45:37] are dirty, my dogs are dirty. We go hiking, we search for mushrooms, we roll in the dirt, we grow weed. We're Colorado. [laughs]
Matthew: This is going to be a tough question for you then. If you couldn't live in Colorado, Utah, Arizona, where would you live?
Matthew: Sonoma. Wait. Oh, you're talking about Northern California?
Matthew: Got it. We were just talking about the Sonoran Desert toad, so I got confused. You like it up there?
Max: Yes, man. The Emerald Triangle is just too far out and the city is just too much. Right in between is a slice of heaven in wine and weed country in the Redwood Forest where there's farmers' markets and California hippies. Come on. [chuckles]
Matthew: What do you like up there? Sebastopol? Petaluma? [crosstalk]
Max: Yes, Sebastopol, Sonoma. I've got to tell you, I'll be honest, I've been trying to buy a house up there for a year or maybe plus at this point. It's hard with the fires. Really, it's the fire insurance, the flood insurance with the Russian River and California taxes. It makes it hard for a young guy like me to be able to actually make it work just because of all the extra little stuff. I'm also looking at Oregon. I think there's a lot of similar places and vibes and flavors, but I don't know how I could survive anywhere in the United States other than from Colorado to anywhere more west. Anywhere more east of Colorado, I don't think I could make it. [chuckles]
Matthew: Max, can you give us just a minute or two about-- you proposed to your fiancé and just the way you did that? Not to get personal. [laughs]
Max: [unintelligible [00:47:32] personal. I woke her up. We went to Sedona. She knew that we went to Sedona for me to propose to her. We made her ring together. We picked out all the stones and the rough. Our buddy cut it and put it together. It's literally the most beautiful ring you've ever seen. We went to Sedona to go get engaged, but she wasn't allowed to know what the ceremony was.
I woke her up at five o'clock in the morning with white linens and golden crowns that we both wore. We marched into the Sedona Desert and we made a sacred geometry little altar out of the earth in our crystals and our smudging and our music with not a single person in sight. We tried some psychedelic cacti and let's just say a magical something else.[chuckles]
Psychedelics are a big part of our life, not because we're on drugs, but because they open us up, our hearts to ourselves and each other and the universe in such a substantial and emotional, and deep way. It's not like we were blasted out of our minds or anything, but we definitely ate some sacred medicines and had a really beautiful ceremony in the desert together. I asked her to marry me.
Matthew: Oh, wow. That's so much different than the typical. That's why I wanted to ask you about it.
Max: [chuckles] Man, there's nothing I do in my life that is difficult.
Matthew: Max, bringing it back to cannabis, what's one big trend you see coming in cannabis right now that the general public just doesn't all fully appreciate how big or important it's going to be?
Max: Buying cannabis based on its aroma and not its THC profile.
Max: You have to have a platform. You have to have a system and then you have to teach people. This isn't going to be an overnight thing, but when people learn that if you stop shopping for strain names and THC percentages and you start shopping for specific aromas like Pachyderm Funk, then you're going to be shopping for what you're really looking for in ways that you can't even imagine. This is a whole other conversation, but shopping for smells instead of THC percentages is definitely the future of cannabis.
Matthew: Maybe a Leafly-style app that does gives you a visual of what the aroma is, that would be helpful.
Max: What do you think Abstrax and I are building?
Matthew: [unintelligible [00:50:23]
Max: You'll be able to see the exact batch of cannabis that you're buying on the app. You'll be able to see microscopic photos of their trichomes, but instead of it being confusing from a visual and aroma perspective, it's going to be very, very, very intuitive and way more detailed, way more accurate, and way more sophisticated.
Matthew: Okay. That would be really helpful. You'll have to come back on when that goes live.
Max: Right now you can't shop for like, "Hey, where's the ooey-gooey, sweaty, icky, OG stinky Pachyderm Funk at? Where is the freshest, sweatiest, stinkiest dank? Where in Colorado is that?" That's what I want to buy. If I was going to just drive somewhere and spend money and pay taxes on cannabis for god's sakes, I would at least want the opportunity to shop for cannabis in [unintelligible [00:51:29]
Matthew: Max, tell us one more time your website and also the coupon code for listeners that want to learn more about cannabis and take one of your online classes.
Max: Yes, trichominestitute.com and trichome.institute on Facebook. If you can't spell trichome, it's okay. It's T-R-I-C-H-O-M-E.institute. If you put it in the product code, DELTA8, you can get 10% off any of our courses and our books, our tools, jewelers loops. We've got light-up magnifying jars to hold your cannabis in, jars to cure your cannabis with, microscopes, all sorts of stuff. In a couple months the new interpening book comes out, the Third Edition Interpening.
Matthew: It's such a pleasure to have you on again, Max, really appreciate it. Thanks for educating us about delta-8, THC, and also your experiences with the desert toad. That is really interesting. I'm glad that you could be so honest and candid about your experiences with DMT and ayahuasca, that's really helpful for me and for our listeners.
Max: Absolutely. Thank you so much for the opportunity to share this really special information, and thanks to the listeners for listening to such a cool channel. Thank you so much, Matt. I really 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 guests to you. Learn more at cannainsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends.
Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at email@example.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 guest on CannaInsider may or may not invest in the company's entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you are 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.
[00:54:34] [END OF AUDIO]
The first cannabis event of its kind, MJ Unpacked places passionate retailers, THC CPG brands, and accredited investors at the center of it all with unique opportunities to connect, collaborate, and access capital.
Here to tell us more is revered cannabis executive and founder of MJ Unpacked, George Jage of Jage of Media.
[3:31] An inside look at Jage Media, a business to business company that produces distinctive events and focused content to help accelerate the growth and profitability of cannabis brands
[5:10] George’s background launching and leading some of the biggest media companies in the space
[7:12] Exciting parallels between the tea and cannabis industries
[10:57] Lessons George took away from his time at MJBizDaily and Dope Magazine
[17:16] George’s new content platform MJ Brand Insights and the valuable intel it offers cannabis brands and retailers
[20:55] How brands can use generational marketing to target the best audience
[24:18] The thought-process behind MJ Unpacked’s unique format and what sets the conference apart from other CPG events
[28:05] What attendees can expect at this year’s MJ Unpacked, from investor pitches to a Blues Brothers concert
[34:19] George’s predictions for when cannabis will see its first national brand
[35:14] Things that take a pitch from good to great and George’s advice on how to secure investors
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. Hi, CANNA insiders. Just a quick note before today's interview gets started that my colleague Sinead Green will be interviewing today's guest.
Sinead Green: Hey, Matt.
Matthew: Oh my God. You scared me. Sinead, I didn't realize you were in the sound booth.
Sinead: Sorry about that, Matt.
Matthew: Sinead, since you popped into the sound booth here, this is a great time to just say hello to all the listeners, since I was talking about you.
Sinead: Sounds great. I'd love to, Hey everybody. I'm Sinead Green and I've actually been working with Matt behind the scenes for a couple of years now. I'm so excited to put on my hosting hat and really get a chance to engage with you and bring you some more great interviews. I just want to say if there's someone you'd like us to bring on the show, please feel free to email me your suggestions at firstname.lastname@example.org. I'd love to hear from you, and I really hope you enjoy these upcoming shows.
Matthew: Got you. I want to get a host hat, now that you mentioned it. I’m thinking a huge, purple velvet hat. What do you think about that?
Sinead: I think that would look great on you, Matt.
Matthew: Really important, Sinead. We want you to do a good job, but not better than me. Does that sound fair?
Sinead: We'll see about that. [chuckles]
Matthew: Everybody, enjoy this episode with the host Sinead.
Sinead: Today's guest is one of the most revered Cannabis executives with over two decades, launching building and leading some of the largest media companies in the space from MJBizDaily to DOPE Magazine and more. I'm pleased to welcome George Jage in Jage Media. George, thanks so much for sitting down with us today.
George Jage: Sinead, thank you so much. That's quite a grandiose introduction being revered, but I'm just the guy and I love doing what I do.
Sinead: We're so excited to have you on. I know you were on the show a few years back, but you've done a lot since then. I'm excited to get into that, but before we jump in, George, can you give us a sense of geography? Where are you in the world right now?
George: I am out in the sunny Seattle area. We live on Bainbridge Island, which is just west of Seattle. You have to take a ferry to get here. It's really just such a beautiful part of the country. I'm so glad that we live here.
Sinead: Oh man, I've heard there are a lot of good wineries on Bainbridge as well. You guys go to some wineries here and there?
George: Yes. There's several on the island. We have some subscriptions to them so we can get [inaudible 00:02:43] when they get their wines ready. A couple of them actually, they'll let you volunteer to help bottle and process the wine during the season. Then you get a couple of free bottles for it. I haven't done that yet. I'm more of a IPA and a Bourbon drinker and my wife is the oenophile.
Sinead: That sounds like a fair trade-off volunteering for some free wine. I would be there in a heartbeat.
George: It's just starting to get to be blackberry season and every street and row and wild growth there has massive blackberry vines.
Sinead: Oh my gosh. That sounds like paradise, [chucklles] sounds so nice. Very cool. George, like I said, you've been on the show in the past, but that was quite a while ago. I think that was in 2014, if I'm not mistaken. You've done a lot since then and you have started Jage Media in the last few years here. Can you tell us what is Jage Media on a high level?
George: Sure. Jage Media, obviously just a placeholder corporate name. It was founded by myself and my wife, who's my business partner Kim, and she ran a previous business with me, World Tea Media, World Tea Expo. As a company, we saw an opportunity that cannabis, at the end of the day, is a consumer packaged goods industry.
When you look at the most important trade show in business media resources in a CPG industry, they're really brand or retail-focused. The only reason that we don't have anything on a national level for brands and retailers is because there isn't a national market because of the state bifurcation of all these individual markets, but we know that's going to change. We really started this company based on a conversation I've been having with Patrick Ray for close to three years after leaving MJBizDaily and MJBizCon that the market was going to shift.
We're at the precipice where we are going to see the advancement of interstate commerce or federal legalization. It is going to be a tsunami of change for our industry. We want to make sure that the companies that really carried our industry forward that are operating on a smaller state level, have the opportunity to really expand into the national market when it comes.
Sinead: Great. You dived into your background a little bit there, but what you just mentioned is really only the tip of the iceberg. Can you share a little bit about your background in B2B media and how you first got started in cannabis?
George: Sure. To answer the second part of that question, I first got started in cannabis after discovering the devil's lettuce and at a very young age and expanding that into a very small entrepreneurial herbal distribution business while I was in high school and college. I've had a relationship with the plant for some time. After leaving college, I had an opportunity to help my father's business. He was an apparel liquidator.
He was going through some changes in his business, he needed some help. We had an opportunity to create a trade show for the off-price apparel industry. These are people that would liquidate excess manufacturer's inventory at the end of the season, or buy distressed assets or stuff that got stuck in customs that just needed to get sold cheap and they would turn around and sell it to the TJ Maxx's and Marshall's, they were separate companies at the time and other regional discount apparel stores.
It was really interesting because they all independently set up these suites around town, around the big manufacturer show and the jobbers, as they're called, weren't really welcome there because they would be selling, say, Tommy Hilfiger's goods at 70% below what Tommy Hilfiger was selling them for. It was really fascinating because what they had in their inventory was what they had to sell. They weren't manufacturing, they couldn't make more. They lived and died by every deal. These people were hardcore merchants and purveyors of products, and a lot of our clients did 70% to 80% of their annual sales that are two and trade shows that we did a year.
Sinead: Wow. You mentioned World Tea Media and World Tea Expo. You've spent a lot of time in the tea and cannabis industries at this point. Have you seen any parallels between the two over the years?
George: It's incredibly fascinating how closely related they are. After we sold the OFFPRICE Show, I moved to Las Vegas and I had started a couple of other non-business media-related companies. I started the trade show for tea really because somebody had mentioned anyhow, is there a trade show for tea? I saw there wasn't. I was fascinated by it and launched that company.
One of the things from a commercial standpoint that I saw when starting that is there really wasn't a good understanding or model around what tea retail looked like. It was somewhat challenging for somebody to have a tea retail place where somebody would come in and maybe spend $10 or $12 on a pot of tea, and then sit at a table for two hours expecting free refills for water versus a coffee shop where you have that very high turn. Can have multiple instances that you can sell a customer that's sitting at a table.
I think that got parallel a lot of the cannabis industry when I got in in 2014 of really defining and understanding what the retail model look like, the strong need for education in a very early stage market. Tea has been around for a long time so is cannabis, but especially the tea market, which we really focused on was relatively new and certainly very exciting for people who were passionate about it. That was another similarity. The people that were in the tea industry were wickedly passionate about tea and then sharing this experience with people.
The same way that people in cannabis are like, "Oh my God, you've got to try this amazing plant medicine for people." On a scientific standpoint, tea has a lot of flavonoids and catechins that also cross your blood-brain barrier and actually have a psychotropic effect on your brain. Not nearly to the same extent that you would expect with cannabis, but there's things like L-theanine which is a non-essential amino acid that actually increases the alpha wave activity in your brain when you drink tea that creates calmness.
Alpha waves are when you're meditating, you have a lot of alpha waves going on. This is why Buddhists have used tea in their meditation practice because the L-theanine creates that calmness while the caffeine creates that alertness. It's a calm state of relaxation that tea creates for people. Then on the historical side, that was really fascinating. I didn't know this until I was just entering into the cannabis industry. Tea has been accredited to being discovered by Emperor Shen Nung who lived some 5,000 years ago in China and is deemed the father of modern herbal medicine.
Legend has it that he had a translucent stomach so when he would ingest herbs and plants, he could see what was happening inside his body. I don't think that was truly the case, but certainly, I think he was very tuned into it. I found out that he's actually also attributed for discovering cannabis and wrote quite a bit about using cannabis as a plant-based medicine, like I said, 5,000 years ago in China.
Sinead: Wow, I had no idea. I've never heard that before. That's really fascinating.
George: The biggest difference was that the tea industry, it's very commoditized. It's truly a global industry. It's the second most drank beverage next to water, but it's such thin margins, and there wasn't a lot of commercial opportunity there. It was a difficult business. Seeing all of the similarities and seeing the exuberance around investment capital and growth opportunities in cannabis was the biggest differentiator, I would say.
Sinead: Very interesting. George, getting back to your background, since you last came on the show, you have not only been president of MJBizDaily and MJBizCon, but also CEO of Dope Media where you led the startup to its acquisition by High Times. What was the switch from business to consumer media like? Were there any challenges or some lessons that you took away from both experiences?
George: Yes, absolutely. When I was running MJBizCon, I came in the industry as a president of the company. There was one full-time employee, Chris Walsh, who's now the CEO, great guy, and a good friend. Unfortunately, after growing the company to 20 tabletops to well over 1,000 booths at the convention center, I had some contract disputes with the owners of the company. They couldn't get resolved and ultimately led to an executive divorce with them.
There were some litigation that needed to be resolved. I wanted to stay in the cannabis industry. I just love the space. I think it's so exciting. There is so much opportunity for growth, and just meeting the people that are in this industry and the passion around it really fills me. I was presented with the opportunity to step into Dope Magazine. The founders of that company had built a tremendous brand. I always look at their consumer media space.
In business media, you have a very finite audience that's your turning target, people that are actively working in the industry versus the consumer media space, where you have this blank canvas that everybody could potentially be your customer and somebody could engage with your media platform. I was really intrigued by the opportunity and the challenges that that presented. Dave Tran, the CEO at the time of Dope Maganize, just hats off to him. He's such an authentic and kind and passionate human being.
People who know him know him as probably one of the funest guys in the industry. That's Dave. He wakes up and wants to help people. Just watching him was fascinating because he could walk up to somebody he's never met before and have a conversation with them, and they walk away feeling like they just got reunited with their long-lost brother. Also, going to a room of 200 people and start dancing by himself in the middle of the dance floor, and everybody going, "Who is that guy? He's having way too much fun. I want to hang out with him."
Listen, he's also a really smart guy, and as much as he's got a brand of being party-- the Tranimal, as we called him. He's really smart, and most importantly, an incredibly compassionate and authentic human being, and also a good friend. The opportunity with that company is that they really started out really early on, they caught fire, they raised a bunch of money and grew really fast. That can be really challenging for businesses, so there was a need to really reset things and find a path for them to reach profitability.
Unfortunately, what I've seen in the consumer media space, companies like Cultivate, Mary Jane, even High Times, Dope, and all of those consumer media assets out there. I don't know if anybody's really cracked the code of how to create a very profitable business. At some point, somebody will and create that success story for consumer media. One of the things that coming into Dope that early on in the industry, I think it's common to see all of these different opportunities you want to explore simultaneously. I call it squirrelitis.
One of the things, for example, that Dope did was they had these budtender appreciation days. They called them the bud events. The concept was brilliant. The execution was great, and the engagement was fantastic on those events. The idea behind trying to really corall the budtenders and being able to create a path for the brands to be able to educate them about their products and create some brand loyalty amongst the people who have the most influence with the consumer is really challenging.
To do that, because of the high transitions in those roles, you'd almost need to go into individual localized markets and do two or three events a year. If you start looking at that on a national scale even back in 2017 and '18 before all these other states have legalized, we are talking about really needing to do 300 plus events a year to make those effective.
What I saw as the opportunity is that as a publication in the space, the Dope Magazine should really be focused on educating the consumer upstream so that they're aware of what the products are, create that discovery, that intrigue, that understanding, and take away that stigma around those products so that the consumers became more empowered when they went in the store and weren't so reliant on the budtender to help them make the decisions.
I think any retail person should always be well versed in the products that they're selling to be able to explain them to consumers, but the reality of cannabis is that most of the people, and certainly the people, the new consumers in our market, go into a store, and have no idea what products are what and what the differences are. The brands and the products in our industry are so powerful. The concept of brand is how does somebody create an emotional response to seeing, touching, feeling, tasting, or trying that product?
In cannabis, it's a very powerful response. It's a psychotropic response. This product is going to have a very profound effect on how you feel. How do you differentiate your product from making people feel the way that they want when they try it that differentiates it from other brands in the cannabis space? Again, it's just the stuff that I love thinking about and talking about. I don't know if there's an answer to that.
Sinead: Absolutely. Tell us a little bit about MJ Brand Insights, and maybe what your goal is and who your target audience is with that media platform.
George: Sure. As a business media company, typically, our business model does rely a lot on our events to generate revenues and profits to continue to be able to build a community and create value to an audience, and really help lift up an industry. Having a content platform like MJ Brand Insights is really critical for us to create an opportunity to engage with people on a regular basis, on a day-to-day basis, not wait every year for an event, or every six months for an event. Offer them something of value for free as an olive branch to engage with them and ask for some of their time or their attention, and maybe their email address.
Before I talk about MJ Brand Insights, I want to give a shoutout to Felisa Rogers. She's our managing editor. She's written for The Guardian, Salon, and other major publications. She's absolutely a rockstar. If you have a chance, I think it was in The Guardian, they did a story about her on 4/20 that really talked about growing up with her dad growing pot in Oregon well before legalization. Growing up and experiencing having the SWAT team kick down her door, and take her father away in handcuffs.
There's a lot of harm and damage there, but there's also hope and aspiration there. She's really an amazing human being and we're incredibly fortunate to have her on our team. From a content standpoint, we also have a strategic partnership with BDSA, one of the leading market intelligence and consumer insights company in the space. Been around for a long time as most people in the industry know them. They contribute content on a regular basis, and we're really looking for the thought leadership.
I'm not trying to be a daily news bulletin. There's a lot of publications out there doing that well. I'm not trying to cover the regulatory aspects of the industry because Tom Angell of Marijuana Moments is doing a phenomenal job of that, but really providing something different. It's talking about insights and actionable intelligence to help people perform better in their roles in the business. We recently published an article by Chuck Underwood who's been a good friend for a long time.
He was one of the founders of Generational Marketing Strategy as a academic science of really understanding what defines Gen Xers and Baby Boomers. Looking at that their behavior and their worldview gets formed during their formative years before they reach adulthood at 18. It's really like 12 to 18 years old that events happen in the world that influence how they're going to behave towards marketing, how they're going to act in the workplace. We used to joke when Gen Y started entering the workplace, that they would just text you that they're quitting or post it on Twitter.
That's obviously a little bit of a misrepresentation. I don't want to slam any Gen Ys for that. There's certain things that happen in these generations that do impact their behaviors in the marketplace. Understanding the science behind generational marketing strategies can help marketers be more efficient in targeting certain segments of the population that they want to engage with.
Sinead: Absolutely. What would your advice maybe say to a young brand who's just getting going? What would your advice be in terms of generational marketing, how they could maybe implement that to really dial in at the demographics there and figure out who their niche is?
George: There's so many new brands coming into the market. It's really an exciting time for our industry. Some people would argue that the biggest brands in our industry haven't yet been introduced. I don't know if that's the case. There's some companies really making some big moves these days. What's great about this is this is really this post-prohibition of alcohol, again, over again for cannabis. Companies like Seagram's, and Bacardi, Southern Wine & Spirits.
You're talking about some of the wealthiest, privately held companies in the world that have been created in the alcohol space. We expect to see the same in cannabis. As far as generational marketing strategy, when you really listen-- and I was fortunate to listen to Chuck speak at a different conference before I had him come and speak at a couple of mine. You listen to him break down what those formative events are, and like for Gen X, which I'm a Gen Xer, there was rising divorce rates.
It was typically most of the children were raised by a female parent who's also going back to work and so they were latchkey children. The idea of having dinner around the family table like been abandoned, and so there was this despondency amongst Gen Xers that they were a lost generation and everything else. I'm like, wow, that all happened to me. I understand that and it made me distrustful and also resourceful. You look at the Baby Boomers and they didn't have just one revolution.
They had the sexual revolution; they had the women's rights, they had social equality, and all these different drug revolutions. They're this empowered baby boomer that they can do anything and they're going to live forever and forever young. You don't ever want to market to them in your golden years because that will offend the hell out of them. They don't want to be perceived as old, but they're also at a point in their life where their body aches a little bit, salves, low dose products are really popular amongst that group.
How do you communicate to them that this product is going to make them feel forever young and really resonate with that audience that you're going to feel like you did when you were in your 20s. You had long hair and were protesting at Haight-Ashbury. I think that there's some really powerful nuggets in there. Again, Chuck's going to be doing a series and drilling down on each generation and what those events were that define their worldview and how they're going to react to certain messaging in the marketing space.
Sinead: Wow. Okay, great. I'll definitely have to check out Chuck's series there. That sounds really fascinating just the psychology behind generational marketing. That's all new to me so I'm very fascinated by that.
George: I can give you a couple of books and he's actually-- they've aired a couple of PVS specials that he's hosted.
Sinead: Oh, okay, great. I'll have to definitely check that out. George, MJ Brand Insights, that's really just the media arm for MJ Unpacked, which is a big event that you have. You got your first in-person event this October in Vegas. I know you had a series of 3D virtual summits last year. Can you share a little bit about this year's upcoming event and what sparked the idea for MJ Unpacked?
George: When we started business back in 2019, built out the business plan and laid it out, raised some capital around it, the idea again was that this is a CPG industry. That technically in the future, the biggest show or the most important event in our industry didn't exist yet. We want to be in the best place to manifest that. We raised our capital in February of 2020, and the business plan at that time was to run a series of state-focused executive conferences that were exclusive for brand and retail executives.
Not a big pan-industry event, letting anybody in willing to pay a ticket price but really creating a high return on objectives by having the right people in the room and keeping it exclusive. Come March, obviously, everybody's plans got laid to waste in 2020. We did do a number of virtual events that I know you want to talk about that a little bit later. What happened at the end of 2020 was we saw that there was a good chance Biden will get elected and people believe that the senate and the house would both flip. Biden to get elected, the senate didn’t flip-- the house was already Democratically controlled.
The Senate didn't really flip until January with the Georgia runoffs. That was really exciting, but I saw that there was a couple of key factors that were going to happen in the marketplace. One is everybody was going to consolidate their events into late 2021 bringing it back to market. Instead of our industry going to an event in February and one in May and July and September, people are going to really probably go to one or two events in the fall of 2021. The other thing was that no events in our industry that on the national level actually qualify their audience.
They're more transactional in nature, buy a ticket, buy a booth, buy a ticket, buy a booth, and we want to create an event that was really differentiated. There's so many events in our industry. Some of them have waned away a little bit because of the pandemic, but I didn't want to come to market with more of the same. I don't think that that's adding value, and I also don't think that that's where the puck is going. We decided to launch the live event in October in Las Vegas. It is the same week as MJBizCon, the company I formerly ran.
That was also strategically a decision because I've talked to so many of the brand and retail executives and I've seen it happen. The investors, they go to Las Vegas during MJBizCon, but they don't really need to go to a show to look for light bulbs and label makers anymore. They're really going there to set up business meetings, and they're scattered all around town hosting meetups at a lobby bar or getting a suite at a hotel. It's really inefficient and people are wasting time in cab lines and hotel elevators.
We really want to create an event that created that exclusivity and that feel and productivity of an executive conference where four out of five people in the room are going to be relevant to you. There's somebody you want to talk to and create the space really for them to sit down and have a conversation to get to know each other. Not just hand them a business card or get their badge scan, but really create an engagement opportunity that we believe leads to a higher level of transactional value than the typical trade show experience.
Sinead: Okay, great. Going into that, I see you have a lot of various events planned for that weekend from investor pitches to even a Blues Brothers concert. Can you share a little bit about that agenda for that weekend and who is attending?
George: Sure. I don't want to call our show an onion, but it does have a lot of layers. We're doing our event on Thursday and Friday. On the Wednesday before, we're going to have a brand-only mixer and a retailer-only mixer. It's really just taking the time to have the conversations with our target audience and understanding what their need sets are. The brands are looking to engage with brands from other states and explore licensing and partnership opportunities.
The retailers are doing the same thing. They're looking to acquire additional licenses or existing businesses or also looking to create partnerships, to create a multi-state brand the same way that brands are doing that currently through licensing agreements. We want to really create some intimacy around that to kick off the conference. The event itself when it starts, BDSA again, as a strategic partner, not just of MJ Brand Insights, but also MG Unpacked will be in a leading off with incredible data session. Kelly Nielsen, who joined their team a few months back.
She comes from Nielsen Media. There's no relationship to her last name and the company's name. We've got some really fantastic sessions. The way we're designing our event gives us the ability to really elevate the conversation. No disrespect to the great sessions that NCAA or MJBiz, or Cannabis World Congress offers, but they're trying to do 50 different topics and they have 70 or 80 sessions. It's how deep can you get, right? You can. By keeping our event focused allows us to really focus on high-level retailer and brand pain points, real success stories, actionable intelligence.
We're bringing in gentleman Michael Spremulli. My wife and I talked to him and within like a minute and a half, he was able to tell us exactly what roles we play in the company and how we effectively communicate with each other and what our strengths are. He's really great at helping build teams. Having the right team and having talent on your team is such a critical thing of importance.
We're bringing in, as I mentioned, we have the Blues Brothers concert, Dan Akroyd, and, Jim Belushi are going to take the stage with Christie Hefner, Hugh Hefner's daughter, really talking about CPG brands. Dan's got his Crystal Skull Vodka line. Jim's such an iconic figure in our industry, and Christie Hefner obviously has had a very central role in building the Playboy brand. That's going to be a fantastic session. It's content around how do you localize your retail location in new markets, right? If you go and take a store-- Sinead, where are you located?
Sinead: I'm in Bend, Oregon.
George: You're in Bend, Oregon, you take that same-store concept that appeals to you in your market and try to drop it in Florida or in Massachusetts, you might not have the same response. It's really understanding those localized nuances that you can really create a successful retail footprint well beyond your localized market, partnering with your community, brands, how do you partner with the retailers to sell more products, really key topic for the brands in the space. Right now, the relationship with the consumer exists almost exclusively with the retailers.
There's certainly case studies for that existing in other markets like whole foods. For example, whole foods owns the relationship with the consumer in a lot of cases. Ultimately, if we continue to migrate towards the alcohol industry model, the brands are going to be the ones that own that relationship. Right now, because of the limitations on advertising and marketing, the brand's best bet is to really partner with the retail store and find ways that they can support their activities and the sale of their brand in-store. We also know there's a lot of M&A activity.
Andy Williams, who recently sold Medicine Man to Columbia Care for $43 million, will be moderating a panel that talks about integration, best practices for merging your company. We've got a great session talking about the future of cannabis consumption, which to me, is I think really the next generation topic for our industries. How do we build a successful on-premise consumption model? You look at the alcohol industry, again, $200 billion in sales in the US, 48% is on-premise consumption.
A lot of things are happening right now are precursors to us seeing a cannabis lounge bar orr going to a restaurant and being able to order a cannabis-infused iced tea at some point as that product development of companies like Canne or Vivid Oak, who's got a cannabis-infused wine in California. Well beyond, what we saw originally in the market from a beverage standpoint, which was 100 milligram, 16-ounce bottles of really having that fast-acting low dose so you can go to a social lounge and have multiple consumption instances and have a good time.
When you start seeing interstate commerce and the ability for these brands to not have four or five state operations but start creating some economies of scale and some production efficiencies, is going to be a huge valuation. I think the federal legalization and the development of on-premise consumption lounges is going to just send this industry to the moon.
Everybody talks about how big is the industry going to be? I see no reason that the cannabis industry can't exceed a $200 billion industry that alcohol is because it's safer, it's better for you, it's less harmful to society. We're going to get the cannabis industry or the world paying attention to cannabis instead of alcohol someday soon.
Sinead: Yes, I couldn't agree more. George, going on that if you had a crystal ball, when would you say we're going to see our first national cannabis brand?
George: Oh man, that's such a loaded question because there's some brands out there. You look at Select and Won On and Wild and Cann, for example. You could say that those, to some extent, are national brands. I think we'd find a national brand when we have a national market, right? Somebody can be producing a product that you can get in every single state I think is really the starting line of one when we'll see a national brand. There'll be some mix-ups and some stumbles at the starting line for some companies that you think might be in the pole position. We won't know who's going to win that race until the race truly starts.
Sinead: Absolutely. George, something you said a second ago, there really seems with MJ Unpacked, you guys are really lowering the entry to barrier for young brands that are looking to access capital and even just network. I know you guys have multiple investor pitch sessions at the MJ Unpacked this year. What are some good things that take a pitch from good to great, would you say?
George: Oh, well, listen, access to capital is key for the brands and the retailers in the space. Tied in with the fact that we've got all these venture capital firms already setting up in suites at our show, marketing our event has opened to accredited investors that are actively investing in the cannabis space. We'll have a lot of investment capital there and a number of the MSLs that are looking for acquisition opportunities.
We also brought on Debra Johnson who worked at Arcview for a number of years. She's really managing our investor engagement opportunities, and we're creating what we call the money stage. This is really like a micro-cap type of event for companies that have that corporate presentation. The only people allowed in that room will be people that have identified themselves as an accredited investor and verified that. I've seen a lot of pitches in this industry.
Anybody who's on that side of the world looking at decks know it takes a lot. Fortunately, I had Patrick Ray do a lot of coaching with me when I went through the Canopy Bowler program. You need to be concise. You need to be able to tell the story of why your product will be different in the marketplace, that you have the right management team, you have the right vision for the business because anybody's business plan today is going to be different tomorrow. As long as they have confidence in the team, that's executing on that plan, will make the difference.
Without going into a two-hour discussion about what makes a good pitch, I think, it's be authentic. Really sell on how you're different and your product will get traction in the marketplace, or define what traction you've already gotten, and don't be afraid to make the ask.
Sinead: Those are some great tips. I appreciate you offering that advice to our listeners who are just now getting into the game. That's really helpful. George, on the flip side of that, what advice do you have for our listeners who are looking to invest? Anything they should look for in a brand? Any red flags?
George: I think you got to make sure that the company through the due diligence process, you really want to make sure the company is buttoned up, has good legal representation and has the required licenses for them to operate, that they have the vision to scale the business. On the licensed operator side of the business, we've certainly seen companies that have fallen from grace.
I forget the name of the retailer that got busted for what they call looping where people were able to go into the store multiple times throughout the day and buy mass and mass of cannabis and then be able to bring it out of state. They completely destroyed that business and went glove-glove or got shut down by the Colorado marijuana enforcement department. I think making sure that you do some due diligence, not only on the business plan, and that they have the proper licensing, but also the operators.
There's some people that have unusual relationships with ethics in our industry from time to time. Make sure that they're committed, that they've got some skin in the game, that they're ready to go, that they're all in, and then support them. The operators in the space like the investors that we have in our company have been incredibly accretive to our success.
I talked to them frequently, I send them updates so they know what's going on and keep them bought into what we're doing. There's always an interesting relationship between the capital and the management of any organization. Use that to your advantage and make sure that the management is open to having you involved as an investor to help support them when you're asked.
Sinead: Okay. That's great. Thanks so much for that, George. I'd like to-- As we wrap up here, I'd like to move into some personal development questions. First question, is there a book that's had a big impact on your life you'd like to share with the listeners?
George: Yes, I know Matt loves asking that question. A book that I read probably most recently I thought was absolutely fantastic is a book called The Big Leap by Gay Hendricks. It really addresses what he refers to as an upper limit problem. Our ability to fully actualize ourselves is all self-inflicted. Being able to recognize when you run up against these upper-limit problems that we've created for ourselves, and realize that we're the only ones holding ourselves back from being able to break through that.
It's really a great book. I think it would fall on a self-help type of category. We're all human beings, we're all flawed. I've got plenty of my own misgivings and defects as a human. Being able to accept those, and recognize those, and then be able to resolve those I think is what allows us to grow as human beings. Love that book very much.
Sinead: Great. George, I would imagine in your last interview with Matt, this is where he probably would've asked you a Peter Thiel question. I've got an equally thought-provoking question for you here, I think. You can only watch three movies for the rest of your life, which do you choose?
George: Wow. First and foremost, it'd be The Blues Brothers. As a kid, I had my VCR. I taped it when I had SelectTV. This is like back where HBO's called QTV, so I'm dating myself a little bit there for some of your older listeners. I must've watched that movie 100 times when I was a kid. I just love that movie. Obviously, I've gone back and watched it a few times recently. Love that movie. Miracle, about the 1980 Olympic hockey team. Every time I watch that, there's just goosebumps and my hair and my back of my neck standing up. Such an awesome movie of the underdog where somebody took a bet on a team that nobody thought had a chance, and they surprised the world. The last movie, I don't know. One of the movies I love watching with family is Secretary. I think probably the other movie I'd also probably like to throw in there is what I would consider my top five sports movies of all time is called Let It Ride with Richard Dreyfuss. It's technically not a sports movie. It's basically a story about a degenerate horse gambler, a horse better. I just love the raw humanity of that movie. He'll go into a bathroom, there'll be an attendant there, and he'll have this internal dialogue with himself. He's like, "All right, if people need to go to the bathroom every two hours, you have this many people here. If they leave an average of 50 cents a person--" Calculating his mind the exact productivity of every job in the world. It's a hysterical movie. If you haven't watched it, I strongly encourage you.
Sinead: I haven't seen that. I'll have to check it out. That sounds so good. Very cool. All right. George, as we wrap up, how can listeners find you and maybe connect with you online?
George: They can find about our business by going to mjbrandinsights.com and about our event for mjunpacked.com. We have a site jagemedia.com if you want to look at who is on our advisory board, and a little bit more about our mission and our values. We are certainly are on social media @mjunpacked@mjbrandinsights. They can reach me at email@example.com.
Sinead: All right, great. George, thank you so much for coming on. We really appreciate it, and we wish you the best of luck with MJ Unpacked this year.
George: Awesome. Thank you so much, Sinead. I really appreciate that, and give Matt my best. I love his smooth, silky radio voice. He's really been a pioneer, and I'm glad to see you join his team. CannaInsider was a podcast before podcasts were cool, and you guys have how many episodes in your belt now?
Sinead: Oh man, I think we're closing in on 360, I think. Yes, so quite a lot.
George: Fantastic. Listen, it's been an honor, it's been a privilege. Really appreciate what you guys do for the industry really with the storytelling, and having people come on and talk about what makes them passionate. I'm a big fan and avid listener of your podcast, so please keep up the great work.
Speaker 3: 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.
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Final disclosure to see if you're still paying attention. This little whistle, jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episode soon. Take care. Bye-bye.
[00:46:03] [END OF AUDIO]
What happens when vertical farming meets cannabis? The highest quality, consistency, and yield at the lowest possible cost. Here to tell us more is Raymond Chang of Agrify, a developer of highly advanced grow solutions for the indoor agriculture marketplace.
Learn more at https://www.agrify.com
[1:01] An inside look at Agrify and its proprietary vertical farming solutions
[1:53] Raymond’s background as a serial entrepreneur and how he came to be CEO of Agrify
[4:17] The different components that make up Agrify’s automated cannabis grows, from vertical farmings units (VFUs) to advanced cultivation software
[9:25] The ROI per square foot for a facility with vertical farming units versus one without
[11:45] The price range for Agrify’s vertical farming units and how they pay for themselves in less than a few months
[16:08] Agrify’s fine-tuned SaaS component and the insights growers are loving most
[19:45] Agrify University, a 3,500 square foot vertical farming facility in MA that offers extensive hands-on training for new Agrify growers
[20:27] Opportunities for cultivators to license their grow recipes to other cultivators through Agrify’s platform
[24:49] Where Raymond sees the cannabis’ grow tech and automation space 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 at cannainsider.com. That's C-A-N-N-A insider dot com. Now here's your program. What happens when vertical farming meets cannabis? Raymond Chang, CEO of Agrify is here to tell us. Raymond, welcome to CannaInsider.
Raymond Chang: Thank you so much, Matt, for inviting me to your show. Very much appreciate it.
Matthew: Give us a sense of geography. Where are you in the world today?
Raymond: I'm actually in Illinois visiting a few customers. As you know. Illinois is one of the most exciting states, and I'm here to see some of our potential partners and customers.
Matthew: Revenue is up big time in Illinois, tax revenue, all kinds of cannabis revenue is up. I want to hear more about that. Give us an idea of what Agrify is on a high level.
Raymond: Matt, who we are, we are an indoor events cultivation partner. We offer vertical farming solutions that help our customers to achieve fundamentally four things, higher yield per square foot, higher consistency, higher quality, but doing so at the lowest cost of production. Our solution is uniquely designed. It's a very holistic approach that involves both the hardware and software. It's a fully integrated solutions to, again, help our customers to achieve the highest consistency, quality, yield, but doing so at the lowest possible cost.
Matthew: Raymond, can you share a bit about your background and journey and how you got into the cannabis space and came into Agrify?
Raymond: I've always been a serial entrepreneur. This is actually the fourth company that I got involved with. I started my career actually in the mid-'90s, essentially created the first broadband telecom service company in Asia that I took public on NASDAQ before dot com bubble. Afterwards I went out to China and created the first home shopping or TV shopping network in China. I had another listed company in Hong Kong in the automobile space. My career has always been using disruptive technology to really advance what I call a big opportunity.
How I got into Agrify, the cannabis industry, is that, first of all, I had firsthand witness of the medicinal benefits of cannabis through one of my family members. That's what really fascinated me to look more into the industry. Afterwards I went out to MJBizCon in 2018, and while there, what I saw was that there were a lot of solution providers, but everybody was what I call it looking at the solution from a silo perspective. For example, you got the lighting fixture companies, but they only care about the impact of lights on the plants, or you have people that only care about, for example, dehumidification.
When you actually talk to the growers and the cultivators, what I realize is that they're looking for a total integrated solution that just works. They don't want to worry about all these things. Thus providing them with an integrated solution is what I believe will be driving the future. That's what Agrify is all about.
Matthew: Paint a picture of what someone would see if they walked into a cannabis grow and there is Agrify VFUs or vertical farming units and a software installed, and the whole package is there. What would they see?
Raymond: They would see a fully automated solution that takes advantage of every inch of that square footage inside of any facility. If you actually walk into a typical cannabis grow facility today, you would immediately notice few things. One is that half of that vertical space is not being utilized. Most of the time the lights are hung from the ceiling. What that does is basically forces the plants to grow the stems because plants actually stretch towards the lights. Instead of actually using the energy to grow the nice flowers and buds, oftentimes he actually ends up growing the plants, in the stems and that's basically waste of energy resources.
What you also would notice is that typically you have multiple environmental pockets. Temperature, humidity are not going to be the same. There's also a huge [unintelligible [00:05:38] security risks. You're also going to see that people have to move the plants around a multiple number of times. Now with Agrify solution, first of all, every inch of that facility is stacked up with what we call, the vertical farming units. We take advantage of every single inch inside of our facility.
What's even more impressive is that each of these vertical farming unit, it's like a LEGO piece, but it's a customized LEGO piece so that, for example, temperature, humidity, light intensity, light spectrum, could be customized depending on the specific strain that you have inside of each of the VFUs, and also depending on the growth cycle. It's like allowing the growers to really dial it in so that they can produce the highest consistent crops, the highest quality crops at all time. That's really what you will see. It's an automated system that basically use less labor, but achieve higher yield, higher efficiency, and obviously better consistency and quality.
Matthew: What are the rough dimensions of a VFU or vertical farming unit?
Raymond: It's a four by eight by nine feet tall. It would take up, for example, a 32-square footprint. Given that there are actually two levels of grow space inside of each of VFUs, immediately it would turn 32-square footage to 64-square footage. However, these vertical farming units are actually stackable. A stall is actually three units. Literally, you could turn from a 32-square foot floor space to as much as six times the amount of grow spaces by stacking them up 3X. Three times two is six. That's essentially what excites most of the growers is that vertical extension going from as much as 6X, the amount of the grow space.
To be frank, we're not the first company to actually attempt to go vertical. Where I think most of the people make mistake are the followings. Number one is, when they go vertical, they forget that the environment changes. You're going to end up with stratification. Basically normally at the top, temperature is higher, airflow is probably better. What we basically do is we ensure that when we go vertical, we can still dial in the environment so that if you want it at, for example, 72 degree precisely, that's what we would deliver to you, 72 degrees.
The other big issue with going vertical is being able to provide a very productive, but safe working environment. Most of the people when they go vertical, they end up having to work with these [unintelligible [00:08:52] that frankly speaking are just not very safe and not very productive. We have a very unique solution so that when we go vertical, it's still a very safe and productive work environment. We introduce what we call a peripheral catwalk. These are all basically proprietary designed so that we solve the typical problems of environmental stratification productivity and also safety issues with going vertical.
Matthew: A lot of advantages there. Tell me, can you give an example of the return on an investment per square foot and how much more that would be than say a typical grow with just one tier that's just a big open space instead of a VFU?
Raymond: Basically, we have a customer here and this is a perfect case study. The customer had a 50,000 square feet facility. If they're doing one-tier grow obviously, you also need to have the back end, the dry room, the administrative offices and all that. Typically for a 50,000 square feet of facility, you probably only have about 16,000 or 18,000 square feet of cannabis grow space. You look at that, 50,000, but only 16 to 18 of the grow space is not very efficient use of that space.
Same with that customer, 50,000 square feet, by going vertical, we can actually increase the amount of cannabis square footage by as much as 3X to 4X. All of a sudden, you get 3X to 4X, the amount of grow space. What's even more impressive is even on a square foot basis, we can actually have as much as 1.6 to 1.7 times yield. All of a sudden, you go from 4X the amount of grow space, and then you multiply that by 1.6, 1.7, then you're looking at 6X to 7X return.
On top of that, because of the automation that we introduce into the system, actually, you get to have much lower OPEX. Overall, you get as much as 7X to 8X higher return on investment by using Agrify solutions. It's basically, just stack it up. It's first of all, 4X the amount of growth space, and then even on that square footage basis, you get 1.6X, 1.7X better yield, and then on top of that you get a much lower cost due to automation and, all of a sudden, your ROI is as much as 7X to 8X. It's a very, very impressive system.
Matthew: What's the range for a vertical farming unit? What do those go for if it's loaded with all your solutions in it?
Raymond: The hardware, we're selling it, it's about 20,000 per piece, but each of these vertical farming units could probably produce somewhere around 40 pounds of flowers on an annual basis. Let's call it $2,000 per pound, which is not on the high side, you would basically get $80,000 of production out of each of the VFUs. 20,000 investment and you get $80,000 back. That's a very, very good ROI.
Matthew: Are you seeing leaseback situations where companies are buying your units, and then they want to have someone buy the units from them and they can lease them back? Does that happen? Or not seeing that?
Raymond: No, we're actually financing some of our customers ourselves because we're a public-listed company, and we do have pretty decent balance sheets. Very recently, we launched what we call a total turnkey solution program, whereby essentially, we're leasing our units to our customers in return for-- we have a fixed software SAS component, but we also get a revenue share arrangement, so it's basically complete interest alignment. The more they produce, the better they are, and the better we are. That's the complete interest alignment there.
Matthew: That's a great business model, Raymond.
Raymond: Thank you.
Matthew: Good thing that you thought that out. Now, what is the SAS component there? We went over the cost for VFU, but what's the SAS component cost?
Raymond: We're only charging about $200 per VFU per month. Now, this is actually what we call the Agrify Insight, which is our complete suite of software and is really a ERP solution. What comes with it, first of all, basically, are these unique, proprietary, what we call the grow recipes so that it basically automatically sets the temperature, humidity, the entire environmental setting, throughout the entire growth cycle. It basically has AI to help you to continue to optimize that. That's basically is on the grow side.
It's also for example, for task management. Every day you show up at the facility, the manager would have, for example, 10 or 15 different plant-touching tasks already identified, and they will automatically assign these tasks to the workers. In fact, we have motion study that shows you that, "Hey, you know what? worker A is more productive in, for example, doing trimming, worker B may be better at doing, for example, task in the dry room, et cetera.
You would actually basically assign these tasks to the available worker of that day, and basically continue to do monitoring and also measure productivity. It's really a very, very advanced workflow management solutions, and it also has all kinds of business intelligence built in so that, for example, it helps you to meet all the compliance requirements on metrics, as well as getting third-party test results back from places like Confident Cannabis so that you know basically how good the production of the flowers are. It's a complete ERP solution that just basically makes the management of any cultivation facility that much easier.
Matthew: You think with the Agrify Insights-- All the variables are important because they work together in concert so you know the complete picture, but is there one or two variables that cultivators say, "Oh, now that I have this, this is so helpful to me"?
Raymond: Yes. In the past, a lot of these master growers, supposedly, they have these special grow recipes. It just happens by chance. Maybe one out of 10, or two out of 10, they get really this amazing harvest, but it's hard for them to really pinpoint exactly what happened during that growth cycle. We actually record everything going on inside of each vertical farming unit on a minute-by-minute basis.
You can actually go back and say, "Wow, this particular batch has basically 2% higher THC. Well, on day 57, I basically decided to increase the light intensity," or, "We actually increased the temperature and lowered the humidity between day 56 to day 59, and as a result of that little tweak, we got 2% higher THC." You could actually say, "Oh, wow, then, in that case, we should adopt this new growth plan for future production." Basically, it would produce the same exact result every single time because now you're putting the plans through a different grow plan.
It's basically a continuous optimization using AI, and to help the master growers to basically be better at what they're doing and also be able to go back and understand exactly what happened. That's really what makes the Agrify Insights so special.
Matthew: Were you surprised at all how your clients have adapted the units or your technology at all to their specific needs?
Raymond: Well, obviously, there's a learning curve, but for those that actually really embrace this technology, and appreciate the automation and the robustness of the data available. They continue to thrive, in fact, even more. We have a customer in Nevada, WhiteCloud Botanicals, and their flowers continue to be one of the best in the industry. They sell higher than basically average wholesale price in Nevada, and basically at a premium and getting into some of the highest-ranked dispensaries and have one of the highest sale force.
It's really beneficial for our customers to take advantage of everything that we offer to them and being able to repeat the same consistency and quality every single time. Ultimately, it's all about building brands. What you don't want to give customers is just volatility. You want them to basically enjoy your products and be able to basically come back for a repeat three peak purchases.
Matthew: Do you offer training? How do people get up to speed after they buy the VFUs?
Raymond: Yes, we have a training center in Massachusetts, we call it the Agrify University. Basically, every single customer of ours will go through basically a training, and that's a very intense three to four weeks training that we teach them everything about the hardware, everything about the software, basically, workflow, SOP, et cetera. It's a very comprehensive training to get people with a good jump-start.
Matthew: You can create a grow recipe that you can repeat over and over again, control the lighting, CO2 levels, all these different variables you can control so you get the same output over and over again, which is very helpful. Is there an opportunity to share recipes between clients? Or is everybody saying, "Hey, that's my special sauce, I'm not going to reveal that"?
Raymond: We column the data with our customers, but obviously, we respect the intellectual property behind it. What we encourage our customers to do is basically consider licensing opportunities. For example, if you are a single-estate operator in a state of let's take Massachusetts, and if you do really have a very special grow recipe, why not license it to a non-competing cultivation facility in let's call it New York, or Connecticut? Basically, we encourage our customers to consider these cross-licensing opportunities. We facilitate that, in fact, but we don't ever share the data with other customers because we have to respect the intellectual property and that's how we can grow.
Matthew: That's a great way for additional revenue streams especially if you don't plan on expanding to that stage or something like that. That's pretty cool.
Raymond: I think basically, our customers are taking advantage of that. Like this customer in Nevada, they could definitely license to, for example, another customer in Washington State or California. Actually, in fact, some of these MSOs, the advantage that we're giving them is they have a facility in Massachusetts that are really just doing excellently with, call it, purple punch, then basically, we'll replicate that recipe for basically their facility in Colorado, and it would have the exact same result because everything has gone through that same 75 or 80 days of grow cycle under the same grow environment.
Matthew: It's crazy. This is crazy how much this has changed over the years. You probably hire a lot of people. It sounds like you have a growing company. I get emails every day, people saying, "How do I get into this industry? I want to get in. I'm passionate about it." What are the skills you think are the most important to you when you're going out making hiring decisions now?
Raymond: I completely agree with you. In order for Agrify to continue to be successful, we need to really hire the best and train the best. We typically work with recruiters. We like to especially get people with industry knowledge, industry contacts, et cetera. Obviously, that comes with a huge advantage, but it's not a must. Obviously, if you already have industry contact, industry knowledge, that's a big plus. We also have seen basically, talents that had zero cannabis industry knowledge in the past but they're just still motivated to learn. It turned out to be [unintelligible [00:24:01] for example, top sales.
I think it's very important also internally to develop very, very good training programs. For example, we do training once a month on our latest VFUs. Basically, it's not just training the salespeople, the marketing people but even our finance, legal, et cetera because I want to build a culture where basically customers come first. Being able to relate to some of the challenges that our customers are facing is just so important. That's the mindset that I like to make sure that every single one of our employees has, which is customers are always right and they always come first.
Matthew: How do you think the growing tech in automation space in cannabis is going to change over the next three to five years?
Raymond: I think we're still, I would say, at the ground level. Obviously, what Agrify is doing it's on the cultivation site. There's still a lot more automation that we can bring to the table. As we collect more data, we're going to become even more intelligent and perhaps we're going to know that, "Hey, you know what? besides airflow, temperature, and humidity, light spectrum, light intensity, there's other things that we have not considered that are actually super important to the plants." We need to basically just continue to use data to get smarter.
Beyond just the cultivation site, if you look at any facility, right now, I think there's still a lot of inefficiency in the post-production. For example, a lot of space has been dedicated to drying. To me, it's a big, huge waste of space and it takes two weeks, 14 days. Can we use technology to shorten that? Can we improve the curing process? Can we improve the trimming, et cetera?
I think that we will still see more automation and more technology being developed to basically make this a more efficient process end-to-end. I also think that on the front end there may be some new breakthrough on the genetic side. For example, if you look at other crops like corn crossbreeding. Corn basically, there's been so much work that's been done on the genetic site that makes the corn grow cycle reduce as much as 60 days but tastes sweeter and more flavorful, and all that.
I think we're going to see something very similar with cannabis. I really believe that there's just been still very little research going into this beautiful plant species and I'd like to see more. We're going to see basically, new technology, new breakthrough, across the entire vertical chain.
Matthew: You mentioned there's a hardware component and a software component to your business. We just got an inflation print of 5.4%, I think, from the FEDS estimates today. We know there's a bifurcation between things that are getting cheaper and things that are getting more expensive. Do you see any kind of supply chain stresses or distortions causing price increases?
Raymond: Oh, yes. It's definitely also hitting the industry as well. I knew this was coming so we actually bought a lot of the key components ahead of time but some of the things that we did not expect, for example, right now, extrusion metals, because our vertical farming units are made of aluminum frame. Aluminum prices have gone out the roof. Even PVC pipings, everything, it is actually impacting everybody.
I think in the long run those things will eventually subside. What is actually most important is to help our cultivation partners to use automation to have lower production costs because right now, the industry is still looking at $450 to $500 per pound, obviously depending on what's included, but typically, it's around $450 to $500 per pound. I really believe that price needs to come down to maybe in the sub $250, $300 range because obviously, we're going to see price depression. Overall for this industry to thrive, I really think that the price per pound needs to get down to the 200, maybe even sub 200 range to have long-term sustainability.
Matthew: Raymond, I'd like to ask a few personal development questions to help the listeners get a better sense of who you are personally. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Raymond: Yes. Some of my favorite books include the Three Kingdoms, The Art of War, and also even, for example, Lean Startup. The Three Kindgoms was very interesting because it talks about human nature. [chuckles] It also talks about what happens when you get into a conflict situation, not only on a one-to-one basis but one-to-many. That was something that I really, really enjoyed.
The Art of War, obviously, again, dealing with human nature, talks about how to have these personal relations and also just in a conflict situation, how you get into a negotiation, most prepare, and et cetera. Obviously, Lean Startup because what I actually enjoy is basically building company from scratch. All of these things actually have made a huge impact in my life.
Matthew: Now, one of the big themes of The Lean Startup is this idea of a minimum viable product or MVP. Did you create an MVP for Agrify to test or see if customers would buy?
Raymond: Yes. Obviously, I would say the 3-6 is probably the reiteration of multiple rounds of MVP products. Every time we want to introduce a new feature, we go into MVP first, we test it out, we make sure that it delivers what it promises to deliver. Sometimes maybe it's an overkill, maybe sometimes it's not sufficient. The only thing you're going to know is basically put it out there, get customers' feedback.
The other thing is that you also have to be completely transparent with the customer, you got to build the right expectation from day one. You don't want to over-promise. You want to let them know that, "Hey, this is an early MVP. We'd like to get your feedback. Don't expect it to work perfectly from day one. This is continuous investment, continuous reiteration towards excellence."
Matthew: Build, measure, learn, that's the attitude with your MVP. That's how you make it better, better. Do I have that right? Build, measure, learn, I think that's the MVP-
Raymond: You're absolutely right. You're absolutely right.
Matthew: Second question. What is your favorite unhealthy comfort food, Raymond?
I love ice cream. My children always tease me about it as well. I have very sweet teeth. Sometimes I just can't help it, but I especially love ice cream.
Matthew: What flavor and brand? Let's get specific here.
Raymond: Oh, everything, trust me. Typically, sometimes when we go on these road trips, I would look it up and say, "Hey, what are some of the local best favorite restaurant, best shops are?" I would drive miles and just to have a taste.
Matthew: What is one aspect of the cannabis industry that you feel is really important but perhaps the public is not appreciating how big or important it's going to be?
Raymond: I really believe that this industry just like all the other consumer stable industry, it's going to-- Consistency and quality, it's going to really make a difference in the future. As I typically like to say, we're hoping to Pepsify this industry. What that means is every time when you open up a can of Pepsi, it tastes exactly the same, and that's what we're hoping to deliver. It's just that once you figured out the optimal grow recipe, let's repeat it so that consumers can expect to have the same results every single time.
Matthew: That is a huge expectation because once a consumer finds something that really scratches their itch, they'll bolt to a different brand if you can't deliver that over and over.
Raymond: You're absolutely right. For any brands to thrive, it's especially important to pay attention to just being able to deliver consistency and quality over and over and over. That's what we want to focus on.
Matthew: Awesome. Raymond, thanks so much for coming on the show today. We really appreciate it. You're a publicly listed company. How can people find your stock ticker, and how can they connect with you if they're interested in learning more about what you do?
Raymond: Our ticker is AGFY. We're listed on National Stock Exchange, again, under the symbol of AGFY. If any investor or customer has any questions, basically you can just reach us at email@example.com or firstname.lastname@example.org and we're always here to help. Matt, thank you so much for inviting me to your show. I enjoy it so much and I look forward to stay in touch.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends.
Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at email@example.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. Emotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider.
Lastly, the host or guest 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 we'll 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.
[00:36:44] [END OF AUDIO]
Does indoor cannabis cultivation have to come with environmental drawbacks? Not anymore. One company has found a way to minimize its emissions AND cut costs in half – all with the power of the sun. Here to tell us about it is Edward Dow of Solar Therapeutics, the first energy-independent dispensary in the world.
Learn more at https://solarthera.com
[2:17] An inside look at Solar Therapeutics, the world’s first energy-independent cannabis cultivation and retail facility based in Somerset, MA
[2:57] Ed’s background in engineering and what led him to become CEO of Solar Therapeutics
[5:55] Solar’s unique indoor cultivation facility, including its extensive solar arrays and centralized heating and cooling systems
[8:32] How Solar implemented its own microgrid to create a 100% self-sufficient, energy-independent facility
[10:40] How Ed was able to bootstrap what’s now a multi-million dollar operation entirely from private investors
[15:25] Solar’s collaboration with Fluence to earn over $1 million in energy efficiency rebates
[17:30] The advantages of broad-spectrum LEDs for energy costs and crop yields
[19:56] How Solar significantly offsets its costs through its heating and cooling systems
[22:36] Solar’s energy costs versus other similar vertically-integrated dispensaries
[25:15] The cannabis industry’s growing carbon footprint and what it will take for companies to implement more sustainable practices
[28:21] The best-selling products in Massachusetts and new trends to look out for
[30:12] Solar Therapeutics’ goals to become a multi-state operator, from Rhode Island to New York and beyond
Matthew: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com that's C-A-N-N-A-insider dot com. Now here's your program.
Hi CannaInsiders, just a quick note before today's interview gets started, that my colleague Sinead Green will be interviewing today's guest.
Sinead: Hey Matt.
Matthew: Sinead is-- Oh my God, you scared me. Sinead I didn't realize you were in the sound booth.
Sinead: Sorry about that Matt.
Matthew: Sinead, since you popped into the sound booth here, this is a great time to just say hello to all the listeners since I was talking about you.
Sinead: Sounds great, I'd love to. Hey everybody, I'm Sinead Green. I've actually been working with Matt behind the scenes for a couple of years now. I'm so excited to put on my hosting hat and really get a chance to engage with you and bring you some more great interviews.
I just want to say, if there's someone you'd like us to bring on the show, please feel free to email me your suggestions at firstname.lastname@example.org. I'd love to hear from you, and I really hope you enjoy these upcoming shows.
Matthew: Gosh, I want to get a hosting hat now that you've mentioned it. I'm picturing a huge purple velvet hat, what do you think about that?
Sinead: I think that would look great on you Matt.
Matthew: Okay, really important Sinead, we want you to do a good job but not better than me, does that sound fair?
Sinead: We'll see about that.
Matthew: All right. Well everybody enjoy this episode with the host Sinead.
Sinead: As indoor cannabis production grows, so does the industry's carbon footprint, and it's worse than you might think. To put it in perspective, studies show growing an ounce of cannabis indoors can emit as much carbon as burning a full tank of gas.
But it doesn't have to be that way. One company has found a way to minimize it's carbon footprint and significantly cut costs, all with the power of the sun. I'm pleased to welcome Ed Dow of Solar Therapeutics, the first and only energy-independent dispensary in the world. Welcome to CannaInsider Ed.
Ed: Thank you very much for having me.
Sinead: Give us a sense of geography, where are you in the world right now?
Ed: Sure, we are located in Somerset, Massachusetts. Which is the southeast coast of Mass.
Sinead: Okay, great. And what is Solar Therapeutics on a high level?
Ed: On a high level, we are a off-the-electrical-grid cannabis manufacturer and retailer. We get all of our power on-site from both an array of solar panels on the roof and the rear of the property. As well as our microgrid, which also consists of two co-gen, combined heat and power generators upfront.
Sinead: Great, I'm really looking forward to getting into Solar Therapeutics and your facility later on. Before we get into that, can you share a little bit about yourself and what you were doing before Solar Therapeutics?
Ed: Sure, immediately prior to Solar Therapeutics, I had started another company primarily focusing in the underwater exploration space. Primarily underwater autonomous vehicles, AUVs and ROVs. My company was a part of the manufacturing supply chain for these vehicles. Prior to that, I worked for a company, Woods Hole Oceanographic Institution, heavily in the mechanical engineering side, and mainly in the oceanographic exploration world, hence why I went into the other company thereafter.
A lot of the same systems that we have to deal with in that space, either indirectly or directly relate over in the cannabis space. Oceanographic exploration is a real hands-on problem-solving mentality. You're coming up with a question of what you're trying to search for, or how you're trying to search for it. Then you need to basically figure out the instrumentation or equipment needed to get there or to find something. That's a throw-you-in-the-deep-end approach, which was great, and I loved it. Awesome, awesome place to work.
Sinead: That's amazing. Your background in engineering was really fascinating to me because obviously it's come in handy for Solar Therapeutics here. What kind of edge do you feel that's given you in the cannabis industry?
Ed: Truthfully, when I first entered in, tremendous. There's a lot of people that came from the financial world that were jumping into the cannabis space. This space is so heavily involved with not just engineering, but also executing and designing and building-- or building actually, what you've designed. So I think early on it gave me a pretty solid edge. That coupled with I built a company prior that was heavily based around mechanical engineering and systems, I think it translated very well into the cannabis space.
Now there's a lot more like-minded individuals. There's a lot of folks that I deal with who are great, it's great to see coming into the space, both on the electrical and the mechanical side. It's fun to see and fun to work with them, and push boundaries, is what I'm hoping.
Sinead: Okay great. I read that you're not only the CEO at Solar but you also played a big hand in conceptualizing Solar Therapeutics. Could you give us a walk-through of the facility and give us a sense of the inner workings there? I know it's a very unique facility.
Ed: I think the most unique part of us is probably now the microgrid aspect of us. To commit to a large-scale grow off the electrical grid is daunting, but I think the bones of Solar came from a number of engineers. I would agree with you, the vision came from me, but I think I had to work with six or seven-- probably more than that by this point in time, engineers. It was really a collaborative effort, I would say.
Inside Solar we're a centralized heating and cooling plant which is substantial in that all of our cooling or heating ability is created in one plant, out in the front of our facility. That's then circulated throughout, through our various grow rooms, our various operations. That's unique to say, a mini-split, or a point-of-use heating and cooling system, which is really largely the norm.
Building in the fashion that we did is much more mechanically and financially intensive early on, but it's much more efficient in the order of magnitude once you scale up. It's a much more efficient way to produce your cooling and your heating, and then transferring it around to your points of use than it is to build these little HVAC systems that are used for each grow area.
Again, so I'd say that's the main differentiator from the way we're designed. That, and then we really try to take sustainability at our real core ethos. We try to maintain sustainability throughout, including we save all our water from our condensate stream. We're recycling at least 90% of our water. It's not necessarily a big dent on the bottom line. If anything it might cost us a little extra but we think there's no need to waste thousands and thousands of gallons per day when we can recapture that and re-use it. Which we chose to do.
Right down to the packaging, we really try to weave it in throughout our whole facility. It's part of our core ethos, I'd say.
Sinead: That's great, I want to get into your heating and cooling system later on, because I know you guys offset a lot of your costs using your system there. I want to talk a little bit about your microgrid first. I know you built that yourselves, it took you about a year to do it. Just wanting to really give the listeners a sense of how you use that to power your facility, and what the process was like getting that up and running.
Ed: It's arduous for sure, committing to a microgrid for 100% of you power was not-- Just so we're real clear, was not my intent set out at the gate. The intent was to subsidize ourselves with the solar, have a significant electrical connection to the grid and build upon our microgrid resources and assets as we moved.
Then we found out we couldn't get the power that we needed from the grid for about two years and millions of dollars, so we had to pivot quite substantially. I'll say this, designing and building from the ground-up or a build like this from the ground-up, and if you choose to go from the microgrid, is probably a much more clear-cut approach than the way that we ended up here. That said, it's still a huge undertaking. If you're committed to cutting the cord, so to speak, you're talking six months minimum design. You're talking a year of implementation. I love how you said it took us a year to finish the microgrid, I would have to say we're still not done with the microgrid. We're still optimizing, there's still points of times where our load, our energy demand profile will peak so heavily that it can cause issues with our own internal microgrid, whereas if we were part of the larger electrical grid, it could absorb that bump, no problem or that spike, no problem but I would say we're continually to this day, including right now improving our microgrid on site. It's not really done with its full commissioning.
Sinead: Wow, man, that's crazy. You guys had a lot of upfront costs but yet you were still able to bootstrap what's now a multi-million dollar operation entirely from private investors. How did you go about doing that? How did you secure those early investors?
Ed: Well, I'm super proud of that and to this day, we're still privately owned all, no institutional money. I was the starter of that. I think I poured all my own money into it. I'm the CEO and founder here, but I did not have anything substantial to do the build-out that we needed here is basically enough to cover legal costs initially if you really looked at it.
I think one, leading by example of putting my own money on the line probably instilled a bit of confidence into the folks that I was talking to initially. Two, getting involved with, it was initially a number of doctors for myself, there were six of us who started this whole thing, financially, anyways, bootstrapped the initial seed money.
We were fortunate in that they believed in the vision that I showed them and the building that I found, and it took a few of them to commit and then it really, it was very tough. You've probably talked to a number of these entrepreneurs, bootstrapping these companies, it's not all yeses in the beginning, but then you get a few yeses, and that really turned into a snowball effect.
The other real big part of it was taking the seed money we had and executing in a way that got people really excited. Now it's so much different, now we have people actively knocking down the doors to get involved, which I'm happy to say we're closed, we don't ever anticipate to do more equity funding, which is great.
It was tough. It's a process and it's really-- If I could say to anyone, it's networking, networking, networking, and really having, you might not have the full vision of the company. In fact, if you say you do, it's probably not really truthful but if you show a really good start and a solid foundation on what you can build, you're not going to know it all out of the gate, but you can certainly build the plane as you're flying it, which is what I've been doing here.
Sinead: Wow, and you said most of your early investors were doctors, was that a challenge finding doctors who were on board with the medicinal cannabis space or was it easier than you thought?
Ed: I think back then, this is-- remember, this is almost four years ago, actually, probably is four years ago, there was so few doctors in the space, but the ones that were in it, they were really passionate about it. They wanted to speak to the benefits of cannabis. They were vocal about it, doing conferences.
My first two doctors that I had are prominent rheumatologists and speak all over the world. Prior to meeting me, they spoke all over the world as to the potential future benefits of cannabis in their studies. These are really limited funding studies so they had to be passionate about it. They were the first two.
Now I'd say there's a number more involved in the space and it's piquing more and more interest in the way of studies and doctors that are interested in getting into the space now, which is great to see. No, they were on board with cannabis from the beginning, and then I was really fortunate that they introduced me into their network and that was the snowball effect that I was discussing earlier. It started with the doctors and then evolved into more--
Obviously, we needed to deal with High-Net-Worth Individuals. It was all privately funded, and they got me into those pools of capital. Again, then we started hitting the ball, we started building out and then gaining more traction but yes, to this day, I think it's now officially over a third of my investors are doctors.
Sinead: Okay, very cool. I'm always curious where things are in terms of medicinal cannabis and your more conventional medicine. That's really reassuring to hear.
Ed: Yes, thank you.
Sinead: Okay, that's cool. Can you share a little bit about your partnership with Fluence and you guys have outfitted your entire facility using their LED lights, and you've earned quite a rebate using their technology? Can you share a little bit about that with us?
Ed: We have yes. Fluence was, I guess we're not partners on paper but we really are partners in the sense that I vetted all the products early on, we didn't think we could afford LEDs early on, and really, we couldn't, I intended to upgrade to LEDs as the technology proved itself a little better and as we had more cash in the coffers, but I made the conscious decision to switch to LED early on, which actually affected the whole design of my facility in a positive way, which I could talk about later. Fluence was just a standout product then. It was really one of the only standout products that I had dealt with that I really liked.
I did not think I could afford them, they made an offer to me that I couldn't refuse, they basically helped me get my lights. Eventually, obviously, I had to pay it back, but at a cost that I couldn't turn down. I am so happy we did that.
Now we've brought on additional grow rooms, every time we bring on more grow rooms we're buying large orders of more Fluence lights. It did kind of form into a partnership. I am happy to promote them because I really, truly believe in their product and I think that that's paying dividends because now they promote us as well so it's fantastic.
We actually have an event coming up here, the Cultivator Cup coming up Labor Day weekend, where they're going to be a major part of it. A major sponsor for it. We're thrilled to have them and a few other key vendors that we work with. Yes, it's definitely formed into a relationship and more of a partnership in that sense.
Sinead: Oh, wow, that's great. You mentioned broad-spectrum LEDs, you discovered that they are the preferred lighting solution. How did you figure that out and what are the advantages there for energy costs and crop yields?
Ed: Yes, as a long-time grower myself, I actually tried to adopt LEDs early on and had terrible, terrible results. They weren't really engineered properly at all at the time. The broad spectrum LEDs that you speak to, Fluence and other folks now have, they've really studied what the cannabis plant absorbs, and the spectrums that it does not absorb and they've basically prioritized all of the spectrum that these lights generate into only what the plant does absorb.
Theoretically, you should then have the least energy input for that light with the maximum output to the plants and I'll say that's what we're seeing firsthand. The other huge benefit for us, for LEDs versus metal halide or high-pressure sodium or any of what they call, affectionately the gas and glass lights is just the heat.
The heat is well over 100 degrees, 140 easily on those old metal halide and HPS. In the LEDs, I actually don't know what the high side threshold is, but it's got to be under 110 degrees but where I measure it is on the heating load to the building that we're trying to then get remove all that heat. Obviously, it takes a lot of cooling.
Don't hold me to the number but it was well over a quarter, I think it was a third of the heat. It was half the heat, I'm comfortable saying from a comparable metal halide or HPS, which is huge. That means all your HGH systems are smaller, you're heating loads are much smaller, therefore you need less cooling. It was really a trickle-down effect that redesigned and re-engineered our whole entire early-on build. We were able to reduce at least 500 tons of [unintelligible [00:19:51] which is substantial.
Sinead: Wow. That's amazing. That's so cool. You guys not only save a ton just on energy costs, but you mentioned earlier, you are able to offset a lot of your costs through your heating and cooling systems. Can you tell us a little bit more about how you do that and ballpark how much you're able to save offsetting those costs?
Ed: Sure. As far as a dollars and cents, what we're saving, that's going to take a year of trend analysis to get to. I can say this, we're recapturing all of our heat. Rather than just venting our heat to the atmosphere, we're recapturing it in our, what we call our ERUs, our energy recovery units. We're doing the same with our cooling. Anywhere we can recapture our free cooling and free heating we are doing so in the HDAC system.
We also are integrating our co-gens, the combined heat and power generation units I spoke to, which are really the backbone of our energy production for the facility. We're currently calling that heat-- Right now the heat is going through a series of heat exchangers and it's not yet plumbed into our system. Once we reclaim that into the facility, that's a further way to reduce all the heating loads we need.
In addition to taking that what otherwise would be waste heat from the grows, we're reabsorbing that into our central heating system. I guess what I'm trying to say is on the microgrid, we're doing the same exact thing. Our ultimate goal is that we'll never have to run our boilers. Those are substantial boilers. You're talking 3.7 million BTUs times two. We were trying to never have to turn those on, again, unless we have a failure and there's some reason we need to have those on. That's on the heating side.
On the cooling side, we've also integrated free fluid coolers, so that anytime-- In the northeast, we have a very cold climate in the winter. A lot of times, obviously, we're heating through the whole winter, we need to keep the thermal load up, but you still need cooling. It sounds counterintuitive, but these lights, they put out a lot of heat. Also, you need to get rid of a lot of humidity that these plants give off. You need cooling.
In the winter, we have these two big free fluid coolers that actually take all the cooling from the atmosphere anytime it's below, I believe, it's 44 degrees outside. The atmosphere cools those cooling coils. That's fired right back to into our central cooling system. That's a huge win for us too in that we don't have to turn our chillers on in the winter. That's a little bit about our heating and cooling load.
Sinead: Wow. You mentioned it's going to take about a year to really look at the numbers and see how much you guys are saving. If you had to ballpark it, what would you say solar saves on energy costs in a year compared to similar vertically-integrated dispensaries?
Ed: I can say, specific to electricity costs what we'd be paying to the grid, we save about half. That's pretty substantial. Then what do we save on energy costs? That's the thing I'm referring to, that's going to take a year. That's where we really start seeing really big efficiencies.
We're now I might say, I'm comfortable saying we were maybe 60% of the carbon footprint that another facility would be. We're really targeting a lot higher than that. We're trying to offset 75+% of our emissions, 80%. There's a possibility if everything treads out properly, we integrate the free fluid coolers properly, we take all the waste heat properly, there's a scenario in which you can see 90%+ efficiencies. That's really where we'd like to get to.
That's not just efficient for the cannabis space, that's efficient for any big manufacturing space, be it pharmaceutical or what have you. That's a significant offset of both Co2 production, as well as efficient energy usage. That's where we're trying to get.
Sinead: Okay, great. You did have a lot of upfront costs and I'm sure just the maintenance of these systems requires some costs of their own. How long do you think it will take for those costs to pay for themselves? Do you think that'll happen in the next few years or what would you predict there?
Ed: Without the energy rebates, it's still a few year ROI. It's a little under a few year ROI, depending on how you fund it et cetera. It makes financial sense. It's just a very heavy lift and it's a lot of work that you don't have to do if you just plug into an outlet, so to speak. It's a lot easier to just plug your phone into an outlet than to make the generator that's running that outlet.
Sinead: That's a good point.
Ed: You did allude to the energy, the rebates and for the microgrid, we are targeting a rebate for that. To date, we've gotten just overall the facility 1.1 million in rebates to date. That's substantial. So that really helped. It speeds up the ROI that you were speaking to.
Sinead: That's huge. That really ties into my next question for you. As indoor cannabis grows, facilities are, in Massachusetts alone, they're currently responsible for about 10% of industrial electricity. As the sector grows, this could really skyrocket.
What does it feel like to be leading the charge there, in terms of more sustainable practices? What do you think it will take for companies to jump on board?
Ed: Well, one, it feels it's fantastic. I love it. We're not trying to let off the gas. I'm trying to let you know, we're trying to keep pushing forward. Battery storage is a big part of that. In short, I love that we had to own our own microgrid. In hindsight, it was tough, it was certainly a challenge, but really happy that we do own this in this space.
What's it going to take to push forward? The change is, I think it's all regulatory. I think, from a business standpoint, like I said, it's much easier just to plug your facility into the grid. It just is. It's a fixed cost that you work into doing business. There's not much of a motivation to go to a microgrid. In fact, in a lot of respects, there's probably a lot of detractors to going with owning and operating with microgrid.
I'm not sure it is for everyone, in truth. When you look at these large manufacturing plants like Kellogg's or these huge pharmaceutical companies, they do their own microgrids. That must mean it makes financial sense when you're at scale. A large-scale operation, they almost all incorporate them. I think it is the way of the future. I think microgrids are a real solution to our heavily-taxed and ageing electrical infrastructure, but there's not a heck of a lot of incentive to do them.
Going one step further, it seems like there might be some incentives drying up from microgrids. If they're more allocated to say, solar and wind turbines, then there's probably going to be less available rebates for natural gas co-generation units. That's just a theory, but it is something I'm dealing with with the current utilities. I guess my short answer is, I don't know how we get there. I think it's got to be regulatory. Otherwise, there's not much of an incentive short-term to go with something like this.
Sinead: That's a really great point. I'm hopeful that as you said, the regulatory side comes up with some solutions here. That's really interesting to hear what challenges you faced there.
I want to shift gears here Ed, and discuss just Massachusetts in general. I know guys have had pretty thriving cannabis market over the last few years. What products are selling best at Solar right now? Are there any surprising new trends in Massachusetts listeners should know about?
Ed: I don't know if it's surprising new trends but seltzers are-- Everyone's interested. Seltzers are big in general and then couple it with the THC space and it's no wonder why they're a big hit with consumers. Believe it or not, the biggest sales segment is still just cannabis flower. Everyone still really just loves the actual flower. That makes up 50% of the sales.
Then it's followed by vape cartridges, edibles. The tinctures are a much smaller section. Yes, seltzers. That's one to look out for. We're working on one right now that we're trying to drop for September. People are really loving the infused beverages.
Sinead: Definitely. Is the seltzer you're working on, is it a CBD seltzer or is it a THC?
Sinead: Oh, very cool. That's awesome. That seems to be a thriving sector there.
Ed: Consumers want it. Not everyone wants to smoke the flower, the raw flower. I have a feeling as the space progresses less and less people are gonna want to do it. Everyone's a little bit more conscientious of what goes into their bodies and their lungs. I think there's big future market for it.
Sinead: Definitely. Yes, for sure. It's very cool. Ed, I have read you have some multi-state operator aspirations. I wondered what are your goals for expansion? Are you looking to replicate what you've developed in Massachusetts in other states?
Ed: That would be ideal. Our first foray is Rhodes Island's obviously in our backyard so we did apply there. We have three pending applications down there. We're hoping. If any of them are pulled-- Let's say all three are pulled from the lotto, you're only allowed one. That's our first hopeful entry into another market.
The other markets, everyone knows New Jersey and New York are on the horizon. Ageing electrical infrastructures like there really ties in perfectly to our solar model and we have been dealing with utility providers down there. This would be an ideal model for climates like that.
Yes, we are actively trying to work on those markets. We're being selective about we don't have the funds some of these big MSOs have to apply into every state as they come on board so we really target the ones that our energy model would translate over to really well. That's where we keep our core focus on.
Sinead: Very cool. Okay. Ed, you've spoken a little bit about where you see sustainability and cannabis heading over the next few years. Where do you see the industry as a whole heading over the next three to five years and what would you say you're most excited about?
Ed: I'm excited about all of it. It's growing exponentially. I know that's a bit of a cop-out of an answer, but there's just-- The space is moving so fast that a month from now, we're going have another hot topic to discuss.
I'm most excited, I'd say, for something like the Safe Banking Act going forward and making it a little bit easier on all of us, for the retailers. Instead of giving away equity for cash, it would be nice to be able to do traditional debt raises, which we're starting to see. I think in the short term, I'm most excited to get just this banking stuff squared away so that we can get some federal tax relief like every other major business to be validated as real business, legitimate business. I think we're going in the right direction there.
One of the most conservative Supreme Court justices just spoke to that. Within the last couple of days, he spoke to this disjointed federal and state policy. That will be great to get that all cleaned up. As an engineering junkie myself, I love equipment, I love automation. I think there's going to be in two years from now we're going to see a whole different way of us growing.
That's something that I'm pushing and something that I'm actively working on that I can't wait to see the systems that we come up with and optimize. I'll let you know as I get a little bit more info on how I think that looks. The AI is there, the electrical side of it's there. It's just we need more mechanical automation.
Sinead: Absolutely, yes. There's so much upswing and I think there's a lot to be excited about. Before we close, Ed, I wanted to pivot into some personal development questions. The first one, is there a book that's had a big impact on your life or way of thinking that you would like to share?
Ed: And old school book in this space was the Marijuana Bible. I think everyone thought that. That was a great book that got me in the right direction some 20 years ago. That's probably the most impactful book I've read in this space and I think it probably still carries some weight to this day.
Sinead: Oh, yes. That's a classic. Very cool, okay. Ed, next Ed development question here. What is one thing going on in the industry right now that you think will have a big impact, but might be a little underappreciated?
Ed: That's a great question. Again, I think I'd go back to Safe Banking Act. I think that's going to be-- That will be extremely appreciated and welcomed. I don't have an answer on that yet. I think every evolution in this space, I think we all greatly appreciate it because it's all--
We're paving the way as we go, and it's getting a little easier here and there. I think any change, we all see the impact and we all really appreciate it. I don't have an answer right now on that at the moment, unfortunately.
Sinead: That's fine. I totally agree with you. I think the industry is so new, every development is just groundbreaking so definitely agree.
Ed: Very impactful, yes.
Sinead: Absolutely. Okay, Ed, this might be the toughest question in the interview. You're stranded on a desert island and can only bring three movies. Which do you choose?
Ed: Lock, Stock, and Two Smoking Barrels, Snatch, and I don't know the third one. That's a great question. Those are my top two by far. The third one-
Sinead: Those are great. [chuckles]
Ed: -Fight Club.
Sinead: Fight Club. Oh my gosh, that's great. I love that movie. I think that might be my top three as well.
Sinead: That's awesome. [chuckles]
Ed: That's it.
Sinead: That's a great answer. Awesome, okay. Ed, as we close, can you share with listeners how they can find you online and connect with you?
Ed: Sure. You can check out our website and then there's hello@solarthera is a great way to get hold of us. It goes to marketing. We all see it. That's probably the best way. If there's any people that are specific and they want to reach out to me directly, it's email@example.com.
Sinead: All right. Ed, thank you so much for coming on the show. We really appreciate it and we wish you the best of luck with the rest of 2021.
Ed: Thank you so much.
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