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The Marijuana Investor Summit with David Friedman

David Friedman

Find out why investors and cannabis companies are converging on The Marijuana Investor Summit in April in Denver. Avoid the mistakes that most rookie cannabis investors make and understand where the market is heading before the masses.

Get a Discount on the Marijuana Investor Summit
Use coupon code: cannainsider
http://www.marijuanainvestorsummit.com
for a discount between 10-20%

Key Takeaways:
[1:22] – David’s background
[3:55] – David talks about the rate of growth in the cannabis industry
[5:35] – Family offices getting into the cannabis space
[7:09] – David talks about the biggest mistakes cannabis investors make
[10:35] – David discusses different ways to invest in cannabis
[12:05] – Valuations of younger companies
[13:30] – David talks about how supply and demand affects the ecosystem
[16:25] – Startups doing interesting things in the cannabis space
[19:53] – David recommends funds for investors
[21:53] – David deals with investments that don’t touch the plant
[23:12] – David talks about the Marijuana Investor Summit coming up in April
[27:31] – Contact details

*Guess What? You could be listening to this interview on your commute. Get the FREE iPhone app or Android App*

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

Investing in the cannabis industry is a bit like throwing your money over a wall and hoping for the best. That is the say it is very opague, fragmented and there’s a lot of disinformation out there. That’s why I brought on David Friedman founder of Marijuana Investor News and the Marijuana Investor Summit to tell us how to navigate cannabis investing. Welcome to CannaInsider David.

David: Great, thanks Matt.

Matthew: To give listeners a sense of geography, can you tell us where you are today?

David: I am in the cold, windy city of Chicago.

Matthew: Okay. I want to dig into all the different ways people can invest in the cannabis industry, but can you give us a little background on yourself first? Your background professionally and how you came to start Marijuana Investor News.

David: Sure. Well I started, I was an entrepreneur, and have always been attracted to closely held small businesses, but I learned early on that I was much better starting businesses, buying businesses than really running them. I have a very Type A personality so when stuff starts operating smoothly it’s best for me to get out of the way or I start changing things that aren’t broken. So I moved more into the outsource nature of financial consulting and then eventually into private equity and venture capital. And we still have an outsource CFO firm that services a number of industries. And after doing distressed assets for a number of years we decided that we really wanted to focus on emerging markets, just a better place to play. So we did a lot of early stage Tech. And about a year and half ago we were all individually kind of thinking about the cannabis industry and made the decision to dive in, and we’ve done that here now in the last year.

Matthew: Yeah it is a huge opportunity. Maybe once in a couple generations I think.

David: Yeah I would say so. I mean, you know, it’s got some makings of the internet bubble and the real estate bubble, but it’s different. It’s more like prohibition. When a market goes from being illegal to legal, people forget about the fact that you’re not creating any market that already exists. The guesswork is taken out of what the size of the market opportunity is to a large extent. Even though nobody will agree on a number, we all agree it’s somewhere between $40-$70 billion direct product sales of the agricultural commodity. And yet on the ancillary and you’re into a couple hundred billion. So, you know, that’s always an interesting way to look at it.

Matthew: Valuations could be screwed up and there could be a bubble blowing up right now, but do you feel like the bubble can’t really expand the way the tech bubble could because it’s a state by state market still? So there’s not this national blowing into equities and there’s not NASDAQ or NYSE listed stock. So it really can’t blow up with the same velocity as Tech stocks. Would you agree with that.

David: Yeah, I think that’s a spot on analysis. You know, it kind of goes backwards. I’m not sure if that’s a problem or the symptom. I think what it really comes down to is real institutional money is not available yet. The reason it’s not available is because it’s illegal. So it’s all cyclical, and so you took a part of the circle, but it all comes back. Until it is legal, until you can ship it over state lines and build distribution platforms that are similar to other industries and create economies and scale, and create a national brand and do those things, it’s really going to be difficult to scale a business.

Secondarily while it’s illegal it’s impossible. So the institutional money is not coming in yet. The explosion will come when it becomes legal federally, or at the very least when the banking problem is figured out people will start to make a move. Peter Thiel made a move in the last couple of months, but he’s a bit of a renegade and I don’t expect everybody to come jumping in behind him, and he also made a very small move. And that’s the other thing,institutional markets can deploy money into this sector yet. They can’t do $50,000 or $100,000 deals that’s just not set up for when you have a billion dollars in capital. They can’t keep track of deals that small.

Matthew: I heard recently that the, I think it’s the Pritzker Family in Chicago invested in Dow Capital, and now Dow is making some investments in different companies in the cannabis industry. Have you heard anything about family offices starting to get into the cannabis space?

David: Yeah I mean I still talk to quite a bit of family office people. I used to run a family office. They’re like everybody else. Some will and some won’t. I had heard the Pritzker Family specifically though, I was told and these are unsubstantiated, but Joby Pritzker who works out on the West Coast was doing something. I don’t believe J.B. and his group here in Chicago have done anything officially. I’ve heard he’s asked questions but so has everybody else. So I don’t know beyond that, but I’ve heard from a number of people that Joby Pritzker’s got a group that’s involved. So that might be it.

But other family offices, yeah you bet, they’re looking at it. They don’t have as much of the reputational risk, you know, that funds do, but they still have the legislative risk, and that scares them. They’re smart people. So they’re taking it as it comes and making assessments, but some are jumping in. If you can imagine some families are more aggressive than others.

Matthew: Sure. And for listeners that aren’t familiar with the Pritzker name, that is the family either owns or used to own or currently owns Hyatt Hotel, and they’re usually considered very savvy, wealthy investors. But I want to jump into how we can help investors, either first time cannabis investors or current cannabis investors. So what is the number one mistake you see first time investors making in the cannabis space David?

David: Yeah, you know, making decisions too quickly, going it alone, moving too fast in general. There’s just not a lot of information out there, and you have to be really prudent about how you invest your money. It’s hard enough when you’ve got analyst coverage coming out of your ears for a publically traded company to determine if that company is going to make money, when you not only don’t have analyst coverage, but you don’t have industry data or even, you know, market segmentation breakouts. Understanding what you’re investing in is so hard. And then obviously because of the fact that it’s illegal and unregulated, it can’t help but attract some of the less savory characters. They’re in every industry. There’s no question about it, but as you can imagine, you know, I think it tends to be a little bit higher. There are some people that play around this industry because of their ability to do so who are, you know, a little savory. Regulation will hopefully send that to the sidelines, but we can’t regulate until we legalize so it’s again another vicious circle.

Matthew: So with your background in understanding financial statements and being a CFO would you look at profit/loss statements, bad balance sheets and all the different ways you can assess a business, I’m just curious of what your lens is. If someone gives you ten minutes and says, or twenty minutes or an hour, and says David, what’s the health of this company, what is the first lens you put on when you look at it?

David: I mean the first thing I’m going to do is look at the book value which is going to be zero on all of these companies. Most of them are startup businesses. They’re low, they don’t have a lot of capital invested in equipment and things like that. There are some. So I’m not saying that they don’t exist, but a lot of them are more service based businesses, internet companies, you know, data and research companies, and these are ancillary businesses that I’m speaking of, touching the plant. I’m looking at cash flow, and cash flow’s a very difficult thing to analyze because you’ve got specific sections of the internal revenue code that are some of the goofiest I’ve ever heard in my life that make it really unprofitable. You’re paying taxes essentially on a large portion of your gross revenue, income.

What’s funny about it is that in their infinite wisdom they decided that you can deduct the cost of the product, the cost of goods sold as it’s shown on a P&L, but you can’t deduct your ordinary business expenses. So what that translates to in the cannabis industry is you can deduct the cost of the illegal drug that makes this whole thing a train wreck, but you cannot deduct your payroll and your rent and all of the other things that you need to run a business because it’s an illegal enterprise. So you really got to kind of wonder who was smoking what when that law was written.

Matthew: Government knows best David, don’t question.

David: Yeah exactly.

Matthew: So most people know they can invest in some cannabis companies via Penny or OTC stocks, but what are some other ways they can invest in cannabis?

David: Yeah, so you know, there’s a big Angel Network community. Most notably ArcView, a lot of people keep threatening to do what they’re doing, but really nobody else has yet. And you know, that’s a phenomenal community, that was the first meeting I ever went to when I went into this business. I’ve really never gone anywhere else. I’ve met everybody through that network. Everybody you need to know is part of it at this point in time. You have to be an accredited investor so it is somewhat limiting. And accredited investors, a lot of categories, but generally speaking you either have to have $200,000 a year in income or $1 million in net worth. There’s some variations on that, and a lot of people don’t qualify.

So in those cases they are only left to either get into the public markets or start a business or go to work for a company and get stock options and things like that. Now there are some creative ways that you can get involved in the business. You can do consulting for them and get compensation, you know, as stock. You’re just not allowed to “invest”. And so that gets a little dicey. And education around how to do that without getting yourself in trouble is really important.

Matthew: Now you’ve seen a lot of entrepreneurs make pitches. What are their valuations looking like for young companies, and do you think they’re fair, overvalued in general? What can you tell us about that?

David: Yeah, I can tell you that they’re all over the board for the most part. They’re way overinflated. You know it’s not any different than the dot com days when people just pick a number of the air because it’s internet related and the internet is going to make money no matter what you do so we’re going to randomly pick this valuation. I’ve seen, I don’t know, if I see another pre-revenue, pre-money, $10 million valuation for an app that is the same as 20 other apps I’ve seen, I think I’m going to throw somebody out of the window. But the ones that are out there, I’ve started, I know it could be deal sourcing could be getting better, but in the last 3 to 6 months, I’ve started to see have a little bit more substance that still have some hefty valuations, but they’ve got the ability to get there. Those are certainly interesting. You’re going to make more money in those deals, but they’re few and further between. So you know it’s still the dawn of a new industry. Let’s put it that way.

Matthew: Now how do you feel about the supply and demand dynamic of cannabis, and how do you think that will shake out in the future as markets become efficient? How will that affect the ecosystem?

David: Yeah that’s a great question, and one I hadn’t contemplated until a few weeks ago when Tripp Keber and I were talking about the summit that we’re having in April, and he’s actually going to give a presentation on market saturation and the risk that it poses to investors who are, you know, running to Colorado to stake their claim and don’t realize that the price of cannabis is dropping rapidly. And nobody’s telling that story, you know, because it’s happening so fast. I know the same thing has occurred in Washington. We ran a story a while back about an auction that went off. You know the market is getting saturated in certain places. Eventually it will equalize itself out, but this is how it is in a new frontier, you know, especially one that’s unregulated. It’s quite interesting and no matter how smart you are, as I have said to several people, you know the more I learn the less I know.

Matthew: It’s true. Now do you think more companies should validate their idea? Can they get one customer before they start seeking money from investors, or in some cases that’s not possible, but do you think there’s more startups that should do that?

David: Well you know that’s a great question, and it depends on how you frame it, but I’ll tell you this, I think in general the longer you can wait to take money the better off you’re going to be. And that’s just simple, you know, theoretical physics here. You are going to be worth less money until you prove that you aren’t. And the earlier you take money, you’re going to be giving up a larger piece of equity because that’s just the way the numbers work. If you’re worth less and somebody gives you $100,000 today, you’re going to give up X, and if they give it to you three months from now, and you’re worth more, you’re going to give up Y, and I would rather have Y. Too many people jump in and just pick a number and say alright we’re going to go for a million and a half.

And you really don’t even have business plans, source and use of funds, all the basic blocking and tackling that you need to know about. But I always advise entrepreneurs who are raising money to take as little as you possibly can, push yourself to the point where you’re working 90 hours a week and everybody donating every spare second that they can and then go out and get your first round and get your valuation, and even then only pull yourself back a little bit. You know, you got to still continue. And if you do that, you know, by the time you get to an MVP, a minimum vital product, whatever that might be, you’re valuation could go up 10X, and that’s a really important thing because you can’t usually get the equity back that you’ve given away. And so once you dilute you’re playing with a smaller piece of the pie, it’s harder to get big.

Matthew: Now speaking of startups, are there any companies out there that you feel like are doing really interesting things in the cannabis space?

David: Yeah there’s a lot. You know I’m a data junkie, and that’s a big reason why we got into the industry. We just invested some money so full disclosure in a company called New Frontier which, you know, in short will be Big Data for cannabis. The exit is Bloomberg or Reuters or somebody like that, but the data doesn’t exist, and it’s only just coming online. Theirs is some historical data. So getting that data repository where people can go in and grab the data, pull it. Legislators can use it to justify bills that they’re bringing to the House floor. You know, governments can use it to justify changing the laws around cannabis, and then of course businesses can use it to figure out how to make money. It’s a game changing piece of technology in business we always knew we wanted to be in that space. We’ve looked at a lot of different people trying to get into the data, and there are a few other companies out there that we’re actually talking to to try and bring onboard. We think there’s really no such thing as competition in the industry in general, but state specifically, you know, there’s so much to be gotten. So that’s a really interesting thing.

I see a lot of the branding that’s very interesting to me. You know, it’s amazing what a good brand will do. Everybody in the market knows Dixie Elixers. Tripp’s got an amazing brand, and if the market blows open that guy can be the first pot billionaire because he would go national. And I mean, a legitimate one, not one that wrote his Penny stock up for three days and was a billionaire. No, that’s negative. So those brands and the people fighting for those brands, you know, there’s Incredibles, there’s Cheeba Chews, there’s Bhang Chocolate. Those are only one brand, but those people are all positioning themselves to go national with a brand when the market opens up. This about it, if you own Nike or Nestles or something today, you know, how will that be. That would be great.

Matthew: Yes and I think a company like Dixie or some of the larger successful brands have a real advantage over people that are just producing flower because the oil or concentrate is just one input into their whole operation. Whereas if you don’t have a brand or an edible or some value added good, then you’re just subject to the whims of the market price. So I think there’s some advantages there.

David: Yes, there’s a commodity aspect to this. It’s still a very volatile commodity, but it will level itself out. We’ve also been interested in the commodity side of it. One of the other publications that we own is Futures Magazine so we’re very interested in what marijuana futures might look like someday in the future, but that’s not an easy thing to accomplish. Tobacco is not traded on the futures exchange because there are too many strains. We think it might be the same way, but some derivative of this product will be traded and that will be interesting to see.

Matthew: Now are there any funds out there that you would recommend for investors?

David: There’s only a few that really exist, I mean legitimate ones. I should say this, there’s only a few that I know of, and because I think we’re the largest investor news publication in the marijuana industry, I would be surprised if there are others out there, but they could be out there and just be stealth, and they just might not be taking investors which is kind of the problem even with some of the ones that exist. Duchess Capital, they don’t have any outside capital, but they’ve got I think the second largest fund in the industry behind Privateer. Privateer just raised $5 million or $30 million I think or something like that from Peter Thiel, who’s very well-known. And their fund got a $475 million valuation. They also have the license on Bob Marley, but their minimums are pretty huge.

Another couple of funds out there, smaller funds, there’s MJIC in which, the marijuana index. There’s Poseidon Asset Management. Those are both funds that accredited investors can still get into. I’m trying to thing, I know probably 15 more that are kind of sort of almost there, and a lot of individual investors who are looking to connect with other investors to form funds. So I think more will be coming online. But those are the main ones at this point in time. Supposedly High Times has a fund. I did meet the guy they hired to to run it. It’s mostly soft circle money right now, but they do intend to do deals. They’re being pretty quiet about what they’re looking at. And then the guys from Lead Maps, Justin Hartfield, I think Emerald Ocean Capital or something, but I don’t know if they’ve got any velocity. I haven’t heard any of them talking about any deals that they’ve done or anything like that.

Matthew: Now in general are you more excited about investments that touch the plant or don’t touch the plant?

David: You know, I don’t really care. Honestly I am excited about investments that are going to make me money. You know from my perspective right now there’s still so much money to be made, that touching the plant is a risk that I don’t feel I really need to take. That’s not to say that we won’t take. I’m sure we will at some point in time. I just don’t know when and I don’t know what, but right now there are too many other opportunities for us to leverage that we want to go after first. I certainly think the quicker money and the more money is going to be made by the people who are touching the plant successfully. And I think by in large most of them will be successful. But you know I just don’t want to be the 1 in a 1,000 that the DEA raids. And even if you don’t go to jail, they take all your inventory and you’re out a couple million bucks and you’re bankrupt and you’re done. I just don’t want to do that. Even with the laws that they’ve passed and the safeguards that are in place, you know, the changing of an administration or an Attorney General, you know, a lot of different things can happen. So just prefer to limit my risk if it all possible right now, and I think that’s for me a smart move.

Matthew: So you have a cannabis investing conference coming up in April. Can you give us an overview of what will be going on there?

David: Sure so the Marijuana Investor Summit is being co-produced by our company, Marijuana Investor News, Panther Media and Crowd Fund Connect and specifically CannaFunder. And it’s really going to be two hard days of education around investment opportunities and risks in the legal marijuana industry. We’ve got a lot of different general sessions that will cover everything from key legislation, how to find the right investors, what are deal terms. We’ve got two boot camps that we’re running; one for investors, one for entrepreneurs that will dive deep into details, touch on things like evaluation, how to structure your deal, what type of investor is a strategic investor. Some of the questions that you asked on this interview will be things that we’ll address. We’ve got a live pitch session. We will be awarding money or people will be able to invest live. As far as we know this is the first of its kind in the cannabis industry. There’s been a number of competitions. ArcView does them quarterly, but people invest money offline. Nobody is required to invest money, but we will have Kevin Harrington who is one of the original Sharks from Shark Tank, and sitting on the pitch panel along with several other investors. And if they decide that they like an investment then they may make an investment. So we hope to see that happen.

And then we’ve just added actually and the details are still being finalized, but on Monday 4/20 when we’re running the boot camps the Medical Marijuana Conference has been added to the agenda, and that’s being done through another group, and it will be for healthcare professionals and I believe they’ll have continuing education credits available through that conference as well.

Matthew: And for people that aren’t familiar that specific week is going to be a big celebration in Denver. I mean 4/20 it will be a big party week, big learning week, there will be a lot of stuff going on. So it’s an exciting time to be in Denver when you have that conference going on. So just so I make sure we get the full information for anybody that’s on the fence about going, let’s say I may a somewhat sophisticated investor. I feel like I know a good bit about traditional investing. What will I’ve learned after the conference? You know I’ve come in kind of not knowing that much about cannabis investing, but I’m interested. How will my perspective have changed by the end of the conference do you anticipate?

David: Yeah so there will be stuff there for novices, and there will be stuff there for intermediate, you know, and there will be stuff there for people who are advanced. We’re going to have a couple of sessions that just kind of focus on the laws and, you know, what the risks around that. Several different attorneys will be presenting in those sessions. We’ll have sessions on where do you look for deals and how do you find deals. We’ll have sessions on due diligence in the cannabis industry. So a lot of those are a little bit more advanced sessions for somebody who understands what those things are to begin with which is not everybody.

A lot of people are coming in, this is the first business they’ve started or the first investment that they’ve made, and they don’t know what any of those things are, and so there will be some basics. And again the boot camps on the first day will address some of those in depth a little bit more. We also plan to have pitch coaching available I believe for a full day where people will just be able to sign up and go make their pitch and have some professional investors critique them and beat them up a little bit so that they can go home and also even have the opportunity through our partners at Cannabis FN to video their pitch and create one they can use on the crowdfunding sites, because those can cost money to do, and if you’re all assembled in one room you can get them for a much better price. We’re hoping to provide a lot of resources for everybody.

Matthew: David in closing how can listeners learn more about Marijuana Investor News and the Marijuana Investor Summit?

David: Yeah sure, so the Marijuana Investor Summit is www.marijuanainvestorsummit.com. And I think my team’s done a pretty great job of getting a lot of information up there. We’re adding more every day. We’re adding exhibitors every day. We’re adding speakers every day, but we’re pretty close to finalizing everything here 45 days out. Marijuana Investor News is www.mjinews.com. And you know we would love to have your listeners come and view us, and at the summit we have created a series of discount packages for your listeners. We have a lot of different things available and separate tickets. But if they enter the code CANNAINSIDER, I’ll spell it, but hopefully your listeners know how to spell it. Then they will get a mystery discount probably between 10% and 20% depends on what’s going on. Charity events probably much, you know, much less. We are running a couple of charity events. So come on in and check all your surprises.

Matthew: Well all right well I definitely appreciate that David, and of course I’ll be there and this is one of the three conferences that I will attend and I recommend. There’s a lot of conferences out there that are let’s say, not the most, don’t have the most integrity behind them. This one does. I definitely recommend the ArcView Group and the Marijuana Business Daily Conference. So I will be there, and I hope to, I’ll see you there David, and I’ll hope to see a lot of listeners there. So thank you for that coupon or discount, and thank you for being on CannaInsider.

David: Yeah my pleasure. Thanks for having me. I really enjoyed it, and I hope to see you and many of your listeners there as well.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback at cannainsider.com. We would love to hear from you.

Expert Cannabis Grower Reveals Secrets and Insights – Nick Hice of Denver Relief

Nick Hice of Denver Relief

If you are interested in what it takes to be a profitable, cutting-edge, commercial cannabis cultivator you’ll love this interview with expert grower Nick Hice of Denver Relief.

*Guess What? You could be listening to this interview on your commute. Get the FREE iPhone app or Android App*
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Subscribe to Cannainsider on iTunes: 
https://itunes.apple.com/us/podcast/cannainsider-interviews-from/id925127229

Key Takeaways:

[0:55] – Nick gives his background in Horticulture.
[2:43] – Nick explains what is meant by a flood table.
[6:49] – Size of Denver Relief’s facility.
[7:14] – The life of a cultivator.
[10:20] – Nick explains an ideal yield per square foot.
[12:56] – Are there different growing speeds between the different strains?
[14:10] – Nicks explains how to take care of cannabis plants.
[17:21] – Advantages on using fabric containers.
[21:17] – The ways the canopy and roots communicate to optimize a plant.
[23:15] – Nick explains NPK.
[23:52] – Nick explains common mistakes cultivators make.
[27:29] – The transition between indoor growing facilities and greenhouses.
[32:29] – Nick talks about optimal temperatures and humidity ranges.
[35:08] – Nick explains how CO2 is administered in a cultivation facility.
[36:28] – Nick talks about pests and diseases.
[44:29] – Nick talks about trends and technology in cultivation.
[49:35] – Contact info for Denver Relief and Denver Relief Consulting.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

Our next guest is Nick Hice, a renowned grower at the famous dispensary Denver Relief. Welcome to CannaInsider Nick.

Nick: Yeah thanks for having me Matt. It’s good to be here.

Matthew: Nick, can you tell us about your background in horticulture and how that evolved into cannabis cultivation?

Nick: Yeah absolutely. I’m originally from Southern Ohio, and my parents when I was in elementary school started a 100 acre nursery, garden center and landscape design build company. And you know, so I pretty much grew up on the nursery and had a green thumb since way back in the day. And after graduating from the University of Dayton, I ended up going back and working for the family business for about another decade. And then in 2009 I moved out to Colorado and fast forward and here we are.

Matthew: What skills from the nursery experience help you the most in your day-to-day cannabis cultivation?

Nick: A little bit of everything really. You know, I’ve taken a lot from those years and, you know, a big advantage has just really been able… being able to understand agricultural equipment, some of the automation that’s taking place in bigger agriculture. And being able to sort of transition some of those products into our growing style here at Denver Relief. For example all the way down to even our fabric pots. Fabric pots are recycled containers that are typically made out of different recycled plastics and things of that nature. And they can be made out of blue jeans or anything else as well. But that’s something that we, you know, we were healing 20 foot tall, 2 and 3 inch caliper trunk size trees into the ground 15 and 20 years ago at the nursery in those very similar fabric style pots. So being able to take some of that technology, some of the flood tables and some of those different things and bring them into indoor agriculture more quickly than some other places has helped us keep a cutting edge I think.

Matthew: Can you just describe what a flood table is for someone that’s not familiar?

Nick: Sure. It’s very similar to an ebb and flow table. A lot of the people in the industry are familiar with smaller ebb and flow tables. They can be set up in multiple different ways, but the main advantage is it’s very easy to automate watering of all of your plants. You know, some people grow in true hydroponic, what I call true hydroponic systems, meaning that their only media is water and roots essentially hang in water. We grow in cocoa in container, again the fabric pot containers, and there are several different reasons that we do that.

But one of the reasons is it is easier to grow in. It is more consistent. If we have power outages or failures and things like that, we don’t have to worry about the electric going down as much. Of course we need our artificial light in the grow rooms, but let’s say we got a brown out for a few hours or we even have a blackout for a few days, all of our plants in the cocoa containers are going to be able to, you know, withstand a few days without light, and you would probably bounce back without much crop loss. Whereas if you have a true hydroponic system, you have a lot more electricity involved whether it be pumps and timers and things of that nature. So if you have even a very short power outage, you could have a major crop loss and it’s very hard to keep a consistent product in that way too.

So one of the nice things about the flood tables is because we do grow in those containers. You know, we’re able to have basically one automated irrigation system dump into a flood table that can be anywhere from 50 feet long to 300 feet long, and it can literally, you know, flood that table and water hundreds or even thousands of plants all at the same time. So it saves us a ton of labor as you can imagine. You can imagine top watering each individual pot when you have thousands of plants in 5 gallon containers, it’s going to take multiple hours and multiple guys worth of labor to get that done. Whereas with automation we can flood these tables.

There are other different benefits for flooding the tables as well. It keeps our fungus, gnat populations next to zero because we don’t have the top of the containers not moist which you would have with top watering. It’s harder to burn the plants with the flood tables because it is a true sub irrigation where the plants’ root system is actually pulling the nutrients and the water off of the table, but at the point that the plant does not need any nutrients or water, it won’t pull it up. So even if we accidently had a nutrient mix that was slightly hotter than it should be, it’s less likely that we’re going to have burn and things in the plant. Partially because of the sub-irrigation and the roots are pulling water that they demand, but partially because the cocoa media is actually a buffer as well and it helps hold some of the excess nutrients as opposed to a true hydroponic system where you have the roots hanging in, you know, a nutrient water. There is no buffer and if you put something hot on that, that type of system then it’s gonna very quickly cause degradation to the crop and potentially cause crop loss as well.

Matthew: So on a typical flood table, let’s say, how many plants would you have and does the water, do you put it at one end and it just goes all the way down to the plants all the way to the end of the table and gets all the plants in between, and they suck it up from the bottom through the fabric and the root ball?

Nick: Exactly. The flood tables are essentially, our current flood tables are 35 feet long and six feet wide, and we have four of them in each of our flowering rooms. But yes correct, the water is basically flooded or dumped in via a 1 inch or a ¾ inch irrigation line. And because there are channels in the table, there are grooves or channels cut into the table, even though the table is perfectly level across 35 linear feet, it is still able to drain out. The drain is recessed a little bit on one end of the table, so it allows it to pull all of the water out of the table very efficiently when we do drain the table.

Matthew: And how big is Denver Relief’s current cultivation facility?

Nick: We have a 13,000 square foot facility right now, and we are actually, we’re just finishing building out the remainder of the facility. So we have about 3,000 square foot under construction as we speak.

Matthew: Okay. Now a lot of people are curious what is it like to be a cultivator day-to-day? How do you spend your time? What are your headaches? What do you enjoy? What’s it like?

Nick: Well I’m pretty fortunate that we have the consulting company and the medical marijuana center and also recreational marijuana sales. So we do wear a lot of hats. My days are very interesting. You know, it changes month to month, but we’ve just recently in the last couple of months we found out that most of the teams that we worked with in both Illinois and Nevada received licensure. So we’re very busy. My daily basis, you know, I’m headquartered here at our grow facility, but typically I come in in the morning, do anywhere from an hour to multiple hours of emails on the consulting side. It could be with, mostly right now it’s with architects and engineers hoping to design construction drawings for these facilities that we’re getting ready to start to build out here in the next three to six months.

So pretty exciting and fun emails. You know lots of times there’s a wrench thrown in the works where something about the existing building just doesn’t allow us to do what we want to do in the building. So it’s constantly sort of modifying our plan and the layout of these facilities and just trying to make sure that we’re maximizing the efficiency and the amount of production we can get out of the facilities. So at the same time that I’m doing more and more emails every day, I am here at the facility helping to operate our facility as well. So you can imagine right now with the construction process going on, with our grow rooms going full swing and also with our MIP company just really starting to get out of the gates and get up to full speed, we’re staying really busy. It’s an exciting time in the industry, and we’re fortunate to be, you know, where we’re at at this point in time.

Matthew: Yes, you guys all really are busy. I know your partner Kevan [ph] also has a pizza company and a standup comedy company, and Ian is I believe the Chairman of the National Cannabis Industry Association. You’ve got the Denver Relief Consulting, the Dispensary Cultivation Center. You guys really, you need to clone yourselves I think.

Nick: Right, yeah, yeah. That’s one of the interesting things about the industry right now is it really is, we’re starting to really get thin on people with skill sets. You know, there are a ton of fantastic people in the industry right now, and there are more people coming into the industry every day. But the states really have started to come on board I think a little bit quicker than anybody expected. And you know, there really is a fairly limited resource pool of commercial producers and business people that have really been in the trenches for more than a few years and had some Hard Knocks and had some of the true life experiences that it takes to really be able to help people out.

Matthew: Now digging into the mechanics of growing, is there a yield per square foot of growth space that you typically hit or try to hit just to give people kind of a rule of thumb like hey, I’ve got a cultivation center that’s this large, how much yield do you get per square foot just so people can try to visualize that?

Nick: Sure. It’s hard to say because there are so many variables that come into play. But typically what we will use is per thousand watts of lighting power that we’re putting on the plants. Square footage is tough because depending on where we’re at, you know, for example if we have 1,000 square foot flowering room, we’re not using 1,000 square foot of the flowering room. In a greenhouse space we might be able to use anywhere between 80 and 90% of the floor space. In some of these indoor facilities we’ve got to keep things like EGRESS in mind and the fire code.

So we can’t, usually we can’t maximize the square footage in some of these flower rooms quite as well as we would like to. So it’s a little bit harder to put a yield per square foot together. So typically we will very conservatively tell our clients that they need to expect between 1.25 to 1.5 pounds per 1,000 watts of light. Now that’s top shelf cannabis. That’s top shelf flowers that are sold as whole flowers. On top of that we typically get another third of product in what we call byproduct which is either, it’s trim leaves and what we call larf. Larf is what we consider really loose buds and flowers that just aren’t dense enough to sell as a full flower. We don’t think so at our shop anyway.

So typically we’ll tell our clients to expect between 1.25 and 1.5 pounds on average across the room per 1,000 watt light, and then add another 1/3 on top of that weight for byproduct. Now again a lot of people might hear this right now and say wow that’s not very much weight. There is some strains that we grow that could easily do, you know, 2, 3, some strains even push maybe 4 pounds per 1,000 watt lights in the perfect condition depending on the strain. But here we grow a lot of finicky strains or a lot of coveted strains that people really look for. For example, OG Kushes and some of the Diesels like Sour Diesel. These are very finicky strains that are typically not high yielders, but they are such good medicine and they are very sought after. So these are things that you have to keep in mind when we’re talking about these averages. Again, you know the average gets lowered quite a bit because we do grow a lot of strains that are finicky and take a little bit of work to really get heavy weight out of.

Matthew: Now you mentioned Sour Diesel and a few other strains there. To give people a visual, how does the growing speed differ between Indica, Sativa, hybrids, is there any kind of rules of thumb there?

Nick: Not a whole lot. The Sativas can definitely grow a little bit quicker. For example they could have a slightly shorter vegetative schedule because you don’t need to grow them out as long to get, you know, the height that we’re looking for because basically for an indoor environment we’re looking to maximize, you know, square footage on the floor space or of the floor space underneath the light. But we can’t have a lot of height like we could outside. For example these artificial lights only penetrate maybe 18 to 24 inches worth of really good photons or light to the plant and anything underneath that doesn’t get very good light. So under these artificial lights if we grow a plant six foot tall, it’s still really only the top two feet that we’re getting good flowers out of. And you know the bottom third of the plant we’re going to trim up and there’s going to be next to no branches on that anyway.

Matthew: So that’s a good point you make there. I mean there’s different schools of thought as far as topping a plant, trying to make it rounded where you want the flower to be the most abundant sea of green. Can you kind of walk us through how you feel plants should be taken care of in terms of, you know, do you want it to be rounded, do you want it more heavy on the top, that type of thing?

Nick: Yeah sure. So typically because we do, here at Denver Relief, we do keep our vegetative schedules pretty similar between our Sativas and Indicas. So typically when they move into the flowering stage our Sativas are a little bit taller than our Indicas, but that’s fine for a couple of reasons. One is that they’re typically a little bit more, the Sativas are a little bit… they have a wider node spacing. They’re almost more of a vine type of plant where they just have thinner branching and thinner foliage. So that makes it better for light penetration, right. Even though it might be a foot or two taller than one of our Indica plants, it’s a little bit sparser or thinner. So there is a little bit better light penetration from those artificial lights on those Sativas.

But the other thing that we do is in vegetation we do have about 50 or 60% of the strains in the building that we top 1 to 2 times in vegetation. And when I say top it’s really just that very, just right at the very tip of the apical meristemmer, the very top growth on the plant, right in the center of the plant. Just that very newest node that’s shooting out, typically we’ll take out less than a quarter inch or an eighth inch of foliage off the plant. But it’s just really that tip node off the plant. So on some of our taller varieties that we know take well to topping, we will top once or twice in the vegetative stage to try to push some of those Sativas out and get them a little bit wider base and a little bit wider branching pattern. But at the same time, when we move them into the flowering room, they are a little bit thinner typically so we can afford to have them a little bit taller.

And then we also have posts around the corner of our flood tables so that we do put up trellis netting. Trellis netting is really the key in flower. That’s how we maximize square footage. We have a trellis net that basically has four inch by four inch cubes on it, and our goal is to fill up every one of those four inch by four inch cubes on the table with at least one branch if not two branches. So that’s sort of the idea when we get the plants in the flower, we’ll start training the plants out, manipulating some of the horizontal branches, pushing them to the sides especially on some of the taller Sativas. We’ll be a little bit more aggressive with those and train them out across the trellis netting to keep them growing horizontally as opposed to vertically.

Matthew: Gosh that’s great information, and how tall do the plants typically get? I know that varies, but how tall are they would you say?

Nick: I would say some of our shortest Indicas like our Lemon Diesel looks very much like a traditional Afghani Indica, but it’s very short and slow growing. Some of those probably only get may two and a half feet at maximum height when they’re harvested. But then some of our Sativas like our Island Sweet Skunk or maybe Outer Space, they could be I would say in between four and five feet sometimes at their maximum height.

Matthew: Now you spoke a little bit about the containers that you keep the plants in, and there’s a lot of folks out there that are still using, you know, dense plastic containers. Can you tell us why you prefer the porous fabric containers in a little bit more detail and what that does for the roots?

Nick: yeah absolutely. So one of the reasons is because we are very fond of flood tables. We think that’s, you know, as far as scaling up and you know looking towards big agriculture to try to get some ideas, that’s where we’re going and that’s, you know, again there are a lot of other benefits to the flood tables that we haven’t talked about yet. But back to the fabric pots, you know, that helps them wick up the moisture, be allowed to pull in that moisture. If we had plastic pots, there’s a few drain holes on the plastic pots, but it would limit the amount of moisture that those plants could wick up on that table. So it would reduce the amount of water we get to the plants.

Not only that, but the fabric pots, a lot of our plants again are very finicky, and if they hit the side of a fabric pot with their root system, they’ll start to get root spin or they’ll start to J-root which means the roots are starting to spin around the side of the plastic container. And it stresses the plant out, it stresses the root out and it keeps the root system from producing more finer feeder roots. Which actually it’s just the very tip of each root hair that pulls up nutrients. So the rest of the root system gets pretty hearty and pretty woody and doesn’t really pull up nutrients. So rather than have that spin out, if we have fabric pots, the root system grows out to the edge of the pot and then the root tip or the root hair will actually penetrate the side of that container. When it does it sees daylights and it sees dry air, and it’s basically a natural reaction for the plant to air prune itself.

So essentially that root tip goes out, it gets dried up, it burns back and dies off. That’s essentially the same thing as topping the plant. As soon as that happens just behind where that burn back happened two new root hairs come out, one on each side of the root system. So by using the fabric pots it really does create just a way more fibrous root system that allows the plant to pull up way more nutrients in a much shorter period of time.

Matthew: So if we could visualize that sac that the root ball is in you’re essentially optimizing making sure that the volume of that space gets the most optimal root articulation or projection out from the center of the root ball instead of hitting a corner, coming back and circling around. It’s fully optimized within that root space.

Nick: Yeah. Exactly. If you just pictured turning the plant upside down and almost think of the branching and the foliage as the root system for a second, if you could just turn that plant upside down, now all of a sudden it’s like we have automatic toping of the root system. Every time a new feeder root hits that wall, it dies back and it shoots two more roots out behind it. So very quickly that plant becomes a very bushy, very dense and fibrous root system, very much like if you were to continue topping a plant and vegetation.

Whereas again, if you just have that plastic pot, that taproot is going to hit. And some of the cannabis strains have a little bit more of a taproot than others and usually those are typically the more finicky strains. If that taproot is allowed to just hit a plastic surface like that, it feels like it hit a rock or something else, but it’s still got moisture and it’s still got darkness so it starts to spin, and eventually it can even strangle the plant. The root will spin around the pot so much that it can strangle the trunk of the plant or strangle other root systems. So the roots will end up fighting themselves and they won’t be creating any of those new root hairs and those feeder roots to take up nutrients. So we’ll just continually slowly decline the plant until the plant is either harvested or dead.

Matthew: Now can you help us understand how the canopy of the plant and the roots of the plant communicate where the canopy might say okay roots we’re doing well up here, grow some more roots, and the roots might say okay now it’s your turn canopy, grow some more and kind of the language back and forth to optimize the plant?

Nick: Yeah exactly. So a good example of that is when we transplant a plant. Every time we transplant the plant that’s typically going to be one of the most stressful points in that plant’s life. So for example we go from three inch Rockwool cubes, you know, before they go into their final container they’re in three inch Rockwool cubes. So when we transplant from that three inch Rockwool cube into that cocoa container typically, you know, there is going to be a root here and there that gets snapped or broken back, and there’s going to be a little bit of transplant shock or stress to the plant.

So typically in that first week after transplanting we don’t get a whole lot of plant growth really anywhere. We don’t get any growth on the top of the plant because the root system is working to try to repair itself. So what we’ll do is after we give the plants a few days to get through that transplant shock, we’ll go ahead and hit them with a foliar spray that’s very high in NPK. And the reason we do that is to jumpstart the foliage growth. So if we hit that plant with that foliar spray of NPK it goes directly, you know, it soaks in directly through the stomata and through the pores on the surface of the plant into the plant which immediately makes, you know, photosynthesis start to pick up and the cells start to expand and growth starts to happen.

So when that growth has a chain reaction that’s sent down to the root system basically telling the root system hey we’ve got more foliage up here. We need more help supporting this foliage. And the root system, because it has that demand from the foliage will continue to increase its growth and put out more of a root system. And then it’s vice versa, once there’s more roots on the plant then it’s much easier to photosynthesize. So the plant will start photosynthesizing more and the foliage will start to continue to grow.

Matthew: Now you touched on NPK there. Most people that have been to a garden center will recognize those letters used together, but could you just give an overview of the three minerals you’re talking about when you say NPK?

Nick: Yeah nitrogen, phosphorus and potassium which are the main three macronutrients that we deal with.

Matthew: Okay. I touched on Denver Relief which, you know, is your dispensary and your cultivation facility, but obviously you have Denver Relief Consulting as well. We talked a little bit about that. Let’s say one of your Denver Relief Consulting clients calls you up and they’ve been attempting to grow on their own, but they have zero experience. When you walk into that cultivation center without knowing anything else, what are the typical mistakes you might see?

Nick: Lots of times we’ll see a lack of forethought in the design or a lack of design planning. And sometimes, you know, some of our clients are sort of stuck with a building or they had a building that they thought might suit them, and then they found out later that it wasn’t a perfectly ideal building for growing cannabis for whatever reason. So lots of times we’ll see folks that just have a lack of workflow thought out. They haven’t really thought too much about okay this needs to be the clean side of the facility where any finished product is, where any processing goes on, if there’s a kitchen in the facility, this is where the kitchen needs to be. And then there’s a dirty side of the facility, you know, where we’re mixing media, taking in pallets worth of material and things like that.

So just really thinking through the workflow and trying to make efficiencies in your facility with the processing and the workflow. Also stationary lights or just lack of design in this particular room which is stuff that is typically very easy to fix. Lots of times we’ll see people that have stationary lights where they’re mounted on a ceiling and you know, that works out in some cases but typically we want all of our lights to be adjustable because we’re losing grams, we’re losing ounces, we’re losing pounds if we’re not able to really cater to each strain and to each plant. So we want all of our lights to be adjustable and lots of times we go into facilities and see that they have stationary lights that are, you know, 3, 4, 5 feet away from the top of the canopy of the plant which is typically, you know, typically not putting enough photons on the plant. So, you know, even if it’s a $10,000 or $20,000 retro fit in each flower room to make an adjustment like that you’re typically talking about 1 or 2 harvests to get the return on investment.

Matthew: Now when you’re talking about the lights being adjustable, you’re talking about both horizontally and vertically, is that correct?

Nick: Mainly vertically. We have started to experiment with some different supplemental lighting. For example, a lot of the big greenhouse growers in the US that do vegetables are starting to use I believe Phillips is the main manufacturer that has what’s called inner module lighting. And basically it’s a light beam. It almost looks like a florescent fixture, but it’s about 6 feet long and it shoots out LED light at a 60 degree angle off of both sides of it. So more indoor growers under artificial light are playing around with using some of these different technologies like LED because it emits low heat, and we can afford to slide those in, you know, underneath our isles or next to our isles, next to the trunk of the plant, next to the main stem shooting up at the bottom of the plant on a 60 degree angle to try to minimize the amount of larf we talked about earlier. Some of our byproduct is actually just loose buds that we can’t sell at the shop on the shelf as top flower because they’re not dense enough. But if we can get some more supplemental lighting underneath the canopy where there artificial light typically is falling off then we can, you know, raise the quality of our product and raise our yields at the same time.

Matthew: Now when I hear you speak sometimes you make the distinction between artificial light or natural light. How do you feel like the transition between indoor cultivation facilities and greenhouses is going to happen? Do you see that starting to happen now and are you excited about it?

Nick: Absolutely. It is starting to happen all across Colorado. The neat thing about seeing it happen here in Colorado is it truly is typically high tech greenhouses going up. And you know greenhouses really these days are the best of both worlds. You know lots of times when we talk about greenhouses people already have a preconceived notion of maybe just a cold frame or a hoop house or some hobby greenhouse. But the greenhouses that the, you know, the big agricultural companies are using and the big manufactures of greenhouses in the US these days, it’s as high tech as it gets and it’s the best of both worlds. None of our artificial lights are ever going to be able to out power the sun in the sunny months of the year. And the sun moves across the sky which is good for the plants because it allows them to share that sunlight to a certain extent, and it allows us to grow bigger plants in a greenhouse too because there is better light penetration, more light penetration.

But the real key with the new greenhouses coming online is making sure that they are very high tech. We do need supplemental light in there so that when we get into the winter months and we’re not getting enough photons from the sun that we can help out and make sure that we’re keeping our yields up. Of course it’s a little bit more expensive to produce in the winter months especially in a climate like ours here in Denver. We’re going to have to use, you know, more natural gas and things like that for heat. But it’s well worth the investment, and it’s still a fraction of the cost that we’re spending on our indoor grows. The artificial light it will be much less expensive per square foot in artificial because we won’t need as many fixtures in a greenhouse setting.

And really just about, you know, any agricultural equipment whether it’s a true hydroponic, you know, NFT or water system or whether it’s container production, is going to have a ton of advantages in a greenhouse environment. It’s easier to keep the environment in a greenhouse. There’s fewer mechanical systems running the greenhouse as opposed to all of the little mechanical systems that we have to install in these indoor environments. And we actually just in the last year have purchased a two and a half acre property right behind our current cultivation facility where we plan on building just over 30,000 square feet of flowering space in very high tech greenhouses. So we’re very excited about that.

We’ve just recently started, we just recently received our H.E. Anderson fertigation system which is a system that we had custom made for us so that we can basically automatically pump raw elements through five different pumpers into any irrigation zone or valve at any point in time. So we can essentially, whether we have one flower room or fifty flower rooms, we can program our controller to tell the controller hey flower in room number one needs, you know, 1,000 parts per million, 1,000 in room number 2 is a week further behind it. It’s needs 1,200 parts per million and so on and so forth. So we can specify the electrical conductivity or basically the salt level of the nutrients, the ph level of the nutrients. We can do all that and have all of that automated to where we really don’t have to step in and do much. We’ll have 50 gallon stock tanks that are highly concentrated with things like potassium nitrate and another tank with monopotassium phosphate and so on and so forth throughout all of our macro and micro nutrients. And the computer is going to be sophisticated enough to be able to do on time watering for each room.

And again it will be able to specify, you know, whether it’s a vegetation room or whether it’s a room in the first week of flower or in the tenth week of flower. So we’re very excited about that and getting, you know, just getting a little bit more of the automation running here in our facility so that by the time we get the 30,000 square foot of greenhouse up we’re ready to go.

Matthew: Gosh this has come so from the ditch weed I smoked in college.

Nick: Yeah it sure has. It’s happened a lot quicker I think than most of us expect it to even those of us that were the most optimistic five and ten years ago. I don’t think most of us expected to be where we are right now. So it’s a whirlwind. You know, in some ways, you know, we’re definitely learning every day, every minute of the day and it’s exciting though. The technology and being able to, you know, step up into the shoes of some of these bigger agricultural producers like some of the bigger tomato producers and cucumber producers in the US. If we can just continue to follow their path and follow their footsteps, you know, think about the things that we should be able to do with the product that we’re growing.

Matthew: Now what are the optimal temperature and humidity levels for a plant because we talked a little bit about, you know, minerals, watering, how should we think about temperature both, you know, at the vegetative and flowering stage and what’s the humidity range that’s optimal during those periods?

Nick: Sure. In vegetative stage we’re typically keeping the temperature between about 75 and 80 degrees. And we’re trying to keep the humidity anywhere between about 40% and 60%. We don’t want it to go too far over 60% because then we’ll have to start worrying about different funguses and diseases entering the room. And in the flowering room it’s very similar. It’s typically 75 to 80 degrees, if we’re supplementing with CO2 which the majority of growers are supplementing with CO2 in an indoor environment. It would be pretty crazy not to.

So the flowering room 75 to 80 degrees. We’re typically a little bit tighter on our humidity and try to keep it between 40 and 50%. The reason we don’t like to go too much over 50% in flower is because cannabis is an annual plant or more specifically it’s a seasonal plant. So once the plant gets about a month into flower, the immune system of it completely shuts down which means any kind of failure in our environment is going to be exaggerated and it’s gonna, you know, be a potential for a problem like powdery mildew to show up. For example, you know, after we get through a month of flower we have a lot of green plant material in these flowering rooms in a very small footprint. As we know, the plants are, you know, 80 to 90% water weight. So they create a lot of humidity on their own. Plus we’re dumping hundreds of gallons of water into these flood tables.

So once we get passed that day 30, if the humidity goes over 50%, there’s a chance that powdery mildew could enter, a spore could enter into the room and start to attach itself to a plant. Typically lots of times we have trouble with that because we do have our room packed in so tight. So lots of times we will have fluctuations where it jumps up maybe to 55, 58 even 60% sometimes in our rooms. And that’s where it’s very important to have all your other mechanical systems in place. You know, every now and then it’s okay if it bumps up a little bit like that if we have really good air flow from our horizontal air flow fans in the room, if we have enough tonnage on our air condition system so that the air condition system can keep up with the lights. If we have enough CO2 supplementation in the room so that photosynthesis can continue at its maximum rate, but you know and there are a dozen other different variables I could go over with you. But if any of those variables are lacking in any way shape or form then it’s going to be more likely that a pest and/or disease enters your room.

Matthew: Now you mentioned CO2 there. For people, I mean obviously CO2 helps the plants a lot, but how is that administered in a cultivation facility?

Nick: We use natural gas burners which is our first recommendation. If you’re able to do it per city code, then that’s what we recommend. Natural gas is very cheap. It’s very safe. It’s very affective. Really the only downside to the CO2 burners in our room is the fact that we are creating a little bit of excess heat from the CO2 burners, but it’s not enough to really affect the room too much. We also do now have to, as the regulations have kicked in, and we have stricter rules and regulations, if you do have a CO2 burning in your room, you will also have to have an audible and a visual CO2 alarm. And we also have to have our CO2 tied into our exhaust fans in our flowering rooms now as well too. So that if the CO2 goes above I believe it’s 4,000 parts per million, the exhaust fan is on a relay and will kick on and exhaust that room. We have some signage on the doorways of the room too noting that it might be an oxygen deficient environment.

Matthew: Now pests and diseases could be its own show, but can you just give a high level overview of what you have to deal with and how prospective cultivators should think about pest and diseases?

Nick: Yeah absolutely. As far as pests go, I’ll start with those I guess because they might be, I don’t know, a little bit easier. I guess, we would consider them a little easier anyway. Thrips, aphids and spider mites are typically the three pests that we’re most likely to see. The thrips are more of a nuisance pest. There is a natural bacteria called Spinosad that is sold Monterey Products, and it does really well for the thrip. So we’ll usually do a foliar spray on those in vegetation. Typically pretty much once a month in our veg rooms, we’ll do a foliar spray with that bacteria, that spinosad bacteria because thrips are very common, and they seem like the most often pests that come back into our rooms. But again they’re very much a nuisance pest, and it takes very very high populations before they really do much damage to the plant.

Aphids and spider mites, typically the way that we deal with all pests is just healthy plants. Doing some of our organic foliar sprays in vegetation is very important because it helps to build up a waxy layer on the surface of the plant which makes it harder for the pests to chew on the foliage and to penetrate the plant. So some of our natural foliar sprays and organic foliar sprays really help just to build that waxy cuticle layer on the plant. And typically all of our treatment, any treatment that we do is typically going to be organic, and it’s going to be in the vegetation stage. We won’t put plants into flower if they have a pest or disease on them. We’re either going to call them out of the crop and destroy them or we’re going to keep them in vegetation a little bit longer so we can correct that problem.

So typically if we see pests once the plants get into the flowering stage, we usually let it ride. We will mechanically remove a few plants if we find it ground zero, and we find it early which we typically do because we have a lot of people in our grow rooms. So we will do some mechanical removal, but typically we won’t do any kind of foliar sprays in the flowering room because we don’t want to compromise the quality of the product. And if we’re not spotting a spider mite or an aphid or whatever else it might be until we get into the flowering stage, we basically have a two month crunch time where we really want to make it through that two months. But lots of times for us if and when we see it, it’s going to be, you know, late spring or in the summertime, and if we see it in flower, it’s typically a few weeks into flower before we notice a big enough population to even be visible to us. And at that point we’ll typically let it ride. If we have a little bit of product that we have to destroy, we will do so.

But typically the pests, you know, it’s a slower process. Lots of times growers will do more damage to their plants by putting something synthetic and toxic on the plant than the bug would do. You know, in a matter of an hour or two we can do way more damage with something synthetic and toxic than it takes most bugs, you know, two or three months to cause damage on your plants. So really the bigger concern for us is disease.

One of the biggest diseases that we see trouble with is powdery mildew and gray mold or botrytis as well. With the powdery mildew it’s sort of the same game plan as the pests. Really having sort of an integrated pest management or we even have an integrated crop management system in play where we know what organic foliar sprays we’re putting on the plants, and we know how we’re treating our plants to make them very healthy in the vegetative stage so that they can help fight that stuff off and flower. One of the things that we will use on powdery mildew in the flowering stage and pretty much the only thing that we’ll spray on the plants in the flowering stage is a 35% food grade hydrogen peroxide. And typically we’ll just do that to spot spray.

So again most of our plants go about 70 days in flower. And again they have a good immune system up through the first month in flower. So typically if we ever do see any in our flowering rooms, it’s usually that last week or two in flower, and it’s typically just a little pinhead or something the size of a Skittle where we notice a spot or two on a fan leaf. And if that’s the case then spot treating with that 35% food grade hydrogen peroxide, we do it at very low rates. I should note that. You really have to dilute that stuff, 35% is very caustic and it can be dangerous. So we dilute it down to very low dilution rate with a gallon of water, and then we’ll spray that. You know, hydrogen peroxide basically just has an extra oxygen molecule. So very shortly after it’s been sprayed on the plants, it’s essentially back to water. But again there isn’t a lot, you know, one of the things that we have to deal with as growers is knowing that there’s very few things that we can put on in the flowering stage because this plant does have such a short life cycle and it’s really a sprint to the finish, and any kind of synthetics that we put on it are more than likely going to compromise the product and/or leave some residual in it even after it’s been processed and harvested.

Matthew: So you talked a little bit earlier about extraction and concentrates. You touched on it. And it’s one of the themes of the show is that, you know, we’re kind of moving away from flower. Flower will always be there, but concentrates, edibles seem to really be accelerating in terms of market share. Can you talk a little bit about what you’re doing over there as far as creating concentrates and extracting yourself?

Nick: Yeah just a little bit. I’m not in the kitchen too much. We have a couple of other good people over there that run the kitchen process for us. But it has changed a few things for us. We are building out a big extraction booth now so that we can get back to doing BHO extraction which we haven’t done since the middle of last year when the new regulations kicked in. And we are putting a little bit, we are dedicating a little bit more product every couple months towards concentrate production. You know a few years ago, pretty much all of our byproduct went to concentrate production. It was all trim leaves or that larfy bud that’s not quite good enough to make it to top shelf. Whereas now the demand is shifting very quickly, and more people are willing to pay. There’s a price point. There’s a difference there, you know, people know the difference and understand the difference. And we’re now able to market the difference between a nug run shatter and a for example compared to, you know, a byproduct run.

So if we label, you know, Nug Run on any particular concentrate, than it’s typically going to be a little bit more sought after by the general public. Now these are concentrates. So lots of times we can get the trim or byproduct concentrate to be very close in cannabinoid concentrate to the Nug Run cannabis. But sometimes, you know, there can be a slight difference in the amount of plant material and fatty lipids and oils that are pulled through with it. But it’s interesting because, you know, it does change a few of our processing scenarios. For example if we do Nug Run concentrate product, we don’t have to worry about manicuring those flowers down as well. So it makes it a little bit easier for us on the harvesting end for some of the product that’s going into the kitchen because if we know it’s getting a process down and concentrated anyway then there’s no reason for us to spend that extra few minutes trimming up that flower to make it as perfect as we can. As far as aesthetically anyway.

Matthew: Now what trends or technology in cultivation are you most excited about that you see on the horizon?

Nick: You know, both as activists and as owners of the consulting company we’re very excited about legalization and the way it has continued to sweep across the country. It’s been at a pretty fascinating rate, and we’re very excited to continue to ride the wave and continue to be involved in as much as we can, be with this great new industry that we’re all building here. But on top of that the really exciting things for me as a grower and for consulting others that are growing is a lot of the automation.

The Anderson injection system I mentioned earlier that we just got into our facility, hopefully we’ll have it hooked up here in the next seven days. It’s pretty phenomenal. Up until about 12 months ago a similar system to the one we have would be close to a 6 figure system. And I can assure that we’ve got it for a much better price than that, and it’s a very good quality system. You know it’s really just getting into the greenhouse space. We’re really excited to get into a 30,000+ square feet of greenhouse space. We honest feel like we grow some of the best cannabis in the state right now, and we really truly believe that we’re going to be able to improve on what we’re doing inside once we get into the greenhouse space.

So a lot of the automation that goes into that and just stepping into more of a big agricultural outfit is what we’re really excited about. Moisture sensors I guess I should mention really quickly too. As far as technology goes we’ve got a lot of decagon sensors in our building. So we are constantly testing. We have infrared sensors in our room. We have thermocoupler sensors in our room. We have moisture sensors that test volumetric water content in the pore space of the pot, not only in the pore space but also in the actual media space of the post. So what the cocoa’s holding. So we’re constantly watching our salt levels in the media which is very cool and very exciting, and we’re learning a ton from it. It’s easy for us to see when we are giving the plant too much nutrients so that then we can back off.

One of the neat things that we’re working on is zero leach off of our plants. For example when we use the elemental compounds that we use we typically need to get between 15 and 25% runoff from our plants or else we’ll get too high of a salt level in the soil and we’ll start to burn the plant. With these sensors that we’re using, we’re able to see our salt level rise. So we can continue to do micro pulse irrigation where we’re just doing a five or ten second irrigation. It’s not enough of an irrigation to make any water leech out of the bottom of the pot, but it’s enough to continually keep that plant at a 30% moisture content. Now when we see the salt level gets up to a level that’s unacceptable for the plant, we can go ahead and water it for a day or two with just straight ph water, still do those micro pulse irrigations. The micro pulse irrigation with the ph water is just going to help dissolve more of those salts that are held into the soil and help bring that EC level back down. When that EC level goes back down we can start bumping it back up with fertilizer again.

So really just being able to feed these plants in real time and really be able to dial in exactly what their needs are. We’ve been using some of these decagon sensors for about seven months now, and the learning curve has just been unbelievable. In the last seven months we’ve learned things that we probably wouldn’t learn in five or ten year without the technology.

Matthew: Wow. You know, one final question before we close. There is a lot of people that… I’m sure you get this question all the time too. I get reached out to and they’re so hungry to get into cannabis cultivation. They just don’t know how to get their foot in the door. What can they do to stand out, show their eagerness and their aptitude and be helpful to cannabis cultivation facility?

Nick: I mean one of the things we look for is an education in agriculture, in horticulture. We look for people that are really passionate about plants in general, not necessarily just cannabis. So anybody that comes into us and has a resume with any kind of degree related to horticulture or agriculture, that’s going to be a huge plus or any kind of greenhouse growing experience, those types of things. Those are big plusses. We know a lot of people get started out here by becoming bud tenders or becoming contract trimmers. There are a couple of temporary trim companies around town that staff employees to different facilities. So a lot of people get in the door by applying for a bud tender which is more of an entry level position and/or a trim position. But really the industry, you know, it needs a lot of good people right now. It’s growing so quickly. So really anybody that is passionate about plants and that’s willing to roll up their sleeves and put in the effort, there are going to be lots of opportunities for those type of people.

Matthew: Nick in closing how can listeners learn more about Denver Relief and Denver Relief Consulting?

Nick: Yeah you can reach us over at Denver Relief if you’re looking for some product or medicine to speak about, you can reach us at 303-420-MEDS, and if you’re looking for any information on getting into the industry or any type of consulting information, you can contact us at 303-420-PLAN.

Matthew: Well Nick, thanks so much for being on CannaInsider. We really appreciate it.

Nick: Yeah, thanks for having me Matt. It was good to be here.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us feedback at cannainsider.com. We would love to hear from you.

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How to Prevent Theft at your Cannabis Business – Dan Williams, CEO of Canna Security

Dan williams CEO of Canna Security

In this interview with the CEO of Canna Security Dan Williams, we will learn about the gaping holes most cannabis operations have in their security plan, the top ways employees and criminals steal and the latest and greatest in cannabis security (Hint: Seal Team 6 is involved)

*Guess What? You could be listening to this interview on your commute. Get the FREE iPhone app or Android App*

Key Takeaways:
[1:23] – Geographies Canna Security serves
[1:51] – Dan explains his background
[3:02] – The different security strategies employed
[6:57] – What most security plans are lacking
[17:18] – How to make a business inviting but secure
[21:48] – Dan talks about ensuring you have employees with integrity
[23:30] – Dan discusses licensing
[29:20] – Dan talks about the exciting security technology coming online
[33:34] – Dan talks about meeting Seal Team 6
[35:57] – Contact information for CannaSecurity

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

An issue for cannabis dispensaries and cultivators alike is security. Security of plants, employees, cash and more. Today we’re going to talk with a cannabis security expert, Dan Williams, CEO and co-founder of CannaSecurity. Welcome to CannaInsider Dan.

Dan: Thank you Matt.

Matthew: Dan to give us a sense of geography, can you tell us where you are in the world, but also where CannaSecurity operates?

Dan: Sure so CannaSecurity America or CSA is currently located, our headquarters are in Denver at the heart of the cannabis world here. And we currently provide services to 12 states.

Matthew: Okay. And which is the biggest? I take it Colorado I’m guessing.

Dan: Colorado and Washington are out two biggest states, but we’re quickly expanding. It looks like Illinois and Nevada and Oregon are going to be next up. We are in New Jersey as well, and we’re going to be in New York. And then on the West Coast, obviously Washington and then California.

Matthew: Now what’s your background? Were you in the security business prior to founding CannaSecurity?

Dan: Sure. So prior to this myself and one of my business partners both worked for a company called Envision out of Louisville, Colorado. They were a startup about ten years ago with proprietary camera systems. And our first large client was Chipotle Mexican Grill. And we were put in charge of putting all their security systems into all their locations nationwide. And after that that company quickly expanded to do work for Einstein’s, Pizza Hut, Dunkin Donuts, Qdoba, Burger King, McDonalds. You name it in fast food, and we were managing the installation of systems around the country anywhere from up in Alaska as far as Hawaii.

Matthew: Now help us understand how we should be thinking about security at dispensaries and cultivation facilities and even processors. I mean people think oh security, I’ll get some cameras in there. The doors will have a big lock and a safe, done.

Dan: So our biggest task here is to make sure that any system that’s installed in a legal facility anywhere in the country is compliant to any regulations that are set by that state’s regulatory commission. Now that can either be the Health Department, The Department of Revenue, The Department of Consumer Protection. It really just matters, you know, how many resources that that institution has to commit to regulating cannabis. So it does differ by state. And in part we really have to keep upu on how those regulations change on a state by state basis because they’re changing daily as this industry is evolving, and really coming into the light here.

Each state wants to adopt its own set of regulations that usually are fairly severe and heavy. In Colorado for instance the rule making committee was formed five years ago. We were established in 2009, and it was at that point that the rule making committee said what do we need to do to make, you know, security up to par so essentially people aren’t going out and buying a camera system, you know, at Wal-Mart or Home Depot or something like that and throwing it up. That really wouldn’t do the job. And we were part of that rule making committee to write those for Colorado. It ended up being a 12-page document that really read like a technical document.

And what it usually entails is where cameras have to be located, what types of cameras, what types of DVRs you have to use. Certain postings for secure areas where only authorized personnel are allowed, off site video backup which means the cameras in real time over the internet, video stream, there are views to our offices here and we have camera servers here. The point of that is if a burglar were to come in and, you know, smash your DVR with a crowbar, we’d be able to see who that person was and at least have an idea of what happened there. On the other side is theft deterrence. You know, the real reason why these facilities need to have security is for theft.

You know, we’re dealing with a very valuable product that’s very small and can easily be stolen. Ninety percent of the burglaries that we see are internal. And so we have personnel in different facilities, or say our clients do, between growers, bud tenders as they call them, and any point within that chain it’s easy to steal a product, and we’ve seen it happen time and again. And it’s our job to try to minimize that through the use of different procedures. And offer now, you know, camera systems, alarm systems and then door access systems which are key cards. And then the physical security side which are the security guards, the armored transport, anything along those lines. And then we also come in and can review the facility for security protocols and then put those into place utilizing those systems.

Matthew: So you’re only as strong as your weakest link and if you’ve seen weak links in security plans, where are they typically? What do you see is the most often where an owner of a cannabis business thinks they have everything covered, but they have a big gaping hole in their plan?

Dan: Usually it’s during the trim process. When the product is harvested all the plants need to be trimmed to get all the leaves and stems off so that they’re ready for production, and then they go into a drying phase prior to being sold. And typically in order to be able to get through the entire harvest as quickly as you can in the trim process, that work is done through third parties or sub-contractors. Here in Colorado we have several companies that offer part time or temp work as trimmers. So you could bring in 10-15 different trimmers to get everything trimmed and start the drying cycle.

You know, that being said there’s all kinds of ways to try and limit the amount of theft there. We’ve seen everything from obviously products being pocketed to for instance having a handful of cannabis in your hand and wearing latex gloves and pulling that glove off and so now you have cannabis within the glove, throwing that in the garbage can. That garbage can then gets thrown in the dumpster and then around 2 a.m. the person pulls up and does some dumpster diving to get it. Even be put in wet/dry vacs that are within the room. So we try to set up those trim areas as best we can to deter that.

One way that we do that is we place chairs in a circle, usually have your plants in the center of the circle and your trimmers on the outside of the circle. And then four cameras on each corner of that room. So for instance we’re able to see in front and behind every single one of those trimmers and see the entire procedure as it happens. Usually we like that to be monitored if we can so that we can see things happen in real time before there is loss. But there are different ways that we’re able to limit that, and that’s just an example.

Matthew: So there is a ton of physical cash at dispensaries, and when robberies occur or theft occurs, you know, if we were to look at maybe a hundred instances of theft or robbery on video and then do a post mortem and say, well what could have prevented this would be a strong practice of X. What would you say that would be?

Dan: Well we usually don’t see the sophisticated criminal. You know, the Mission Impossible, Tom Cruise bling out of the ceiling type of thing and safe cracking. We usually see what’s called smash and grab. Smash and grab typically is when brute force is used. More grow facilities are broken into than dispensaries. That’s usually because they have a lot more product on hand. We would typically see that somebody is working on the inside to tell somebody else when they just harvested. Because any criminal would much rather have you do all the work for them, and wait until the end of that growth cycle where everything is sitting there drying or packaged the day before it’s going to be transported and then break in.

It’s mostly people breaking through doors, running inside, trying to grab it and run out. We’ve seen everything from a guy down in Boulder using a rechargeable sawzall which is a large rotor, hand held saw that can cut through metal. They cut through the top of a tin roof in a warehouse facility, and he actually did belay down on a rope into the facility with a duffle bag on his back. He filled the duffle bag with cannabis and then run to the exit doors thinking there was one of those emergency bars, exit only, so that you would be able to open it from the inside to exit. He didn’t anticipate that all of the doors were deadbolted, and he essentially dropped himself down into his own cage. So all the alarms were going off. He had no way of getting back up the rope. And they found him inside sitting Indian style in the middle of the room waiting to be picked up.

We seen a middle aged couple pull up on rice rocket motorcycles in the middle of the day dressed as ninjas. Run into the dispensary equipped with ninja swords, take a large jar of cannabis, put it in their backpack and take off on their motorcycles. They were later caught. And you know, you have to wonder how these people come up with this sometimes. You know, they’re sitting in a room and they’re watching TV, and they say hey I’ve got a good idea. Let’s give this a shot, it will be worth it. Especially since nowadays, you know, the price of cannabis since it’s so readily available in legalized states has gone down so much.

We are seeing a new target and that’s cash. As you know the banking system hasn’t allowed checking accounts for people in the industry because the FDIC mandates that cannabis and the sale of it isn’t federally legal. So they’re not allowing checking accounts. So what you have is an abundance of cash on hand. Many people are bringing that home and stuffing their mattresses which is never a good idea. There is actually an incident reported in the news a few weeks back about criminals waiting outside of his house because it just became known that he was taking home 10s of 1,000s of dollars every day and putting it in his house. So there’s all kinds of new ways to deal with that.

What we’ve done is we have new fully up armored Mercedes Benz sprinter trucks. Since we don’t have to have your typical, you know, bank trucks that are heavy steel and are made for lots of coin and heavy objects to be placed in them, we’ve chosen to go a different route there and have lightweight fast vehicles that we can use that aren’t adorned with, you know, the word cannabis all over them. It’s called the Inclandestine or kind of low profile. They pull up and we have cameras all over the vehicles. They’re uplinked to our dispatch room here. All of our guards are either ex-swat or ex-military. That can be anyone from Marines to U.S. snipers, Delta Force. And we’ve, actually Josh Rey who is in charge of our physical security division which is called the Cloverton Group. It’s loosely named after the Pinkertons who were the first private security company here in America in the 19th Century.

The Clovertons have their own procedures in place. And Josh was ex-swat, and his job was to train and create procedures for the swat teams around the country. We believe that since cannabis is kind of dictating its own needs at this point which is exciting, you know, we see all these new products and new services strictly dictated by the needs of the cannabis industry. And these were in over 80 pages on different procedures of picking up and dropping off either cash or cannabis based on the function of our different clients. For instance the need to pick up cannabis at a grow facility and be able to securely drop it off at the dispensary.

So our guys pull up to a grow facility. Let’s say that we have, you know, 50 pounds of cannabis to pick up. We go in with sealed containers that have GPS within each container should anything happen and they leave the vehicle, still tracking them. Part of our traceability, and traceability is a word that really comes up a lot in cannabis, you know, or seed to sale. You hear that a lot. Knowing exactly where your product is at any given time. We use police body cameras to record the transaction from the facility for the product to be placed in the container then back to the vehicle. We have cameras inside and out of the vehicle, then through GPS that vehicle is tracked from point A to point B where we then drop off the product.

If anything should happen in between point A and point B, we do have procedures in place there to be able to handle that. And somebody was asking us the other day, you know, are there other industries that have kind of that level of uplink camera systems and everything else so that, you know, we’re able to account for anything that we transport and I’m sure there are. I’m sure there’s plenty. But the answer is I don’t think there are any that are written just to move pot is what it comes down to. You know, it’s a fun industry and we are growing with it, and I’m sure we’re going to see a lot more of that.

Matthew: So there’s some dispensaries where you walk in and you’ll see a dispensary employee behind bulletproof glass, and there’s a Kevlar reinforced wall around that. I mean how do you strike a balance where it’s inviting but also secure and safe?

Dan: You know we were working in a facility on the East Coast, and they wanted razor wire around the facility. You know, pretty much everything they could have, you know, up to possibly having a gun turret on top of the…, you know, and we said we want to have the facility be secure, but you don’t want to scare people away. And we believe that really sends the wrong message here. So in terms of what we’ve seen on a crime level, I think we’ve seen actually four armed robberies where, you know, the guys come in with hoods on and have a gun and say, you know, give me the money and the product. And that’s been over five years, probably you know, a couple of hundred different burglaries. It’s very rare that that happens. We almost never see it. And in three out of those four times it was an inside job. So the people that were working there actually knew those people that were coming in with the guns.

Matthew: Oh my god, that’s crazy.

Dan: And in one case they even texted them a minute before they came in and said we’re outside, are you ready. You know, kind of just really blatant kind of behavior like that. We’ve never seen anybody get hurt during any of those burglaries. We’ve always instructed our clients, should that happen, give them everything. You know, life is too short to risk that and that of your employees. And nowadays there’s actually insurance. CannaSure is one of the companies that is doing it. That’s offered for incidents just like that. So it’s seldom that we see that.

And when we see, you know, the bulletproof glass, and the Kevlar reinforced rooms we don’t really see a need for that. A panic button or a panic pendant is a good thing to have. Training for your employees, and CSA does offer training for this, on what to do in a high risk situation. How to handle yourself, for instance, don’t try to be the hero. You know it doesn’t pay off. Usually they’ll come in and they’ll leave. Let them leave. We’ve talked to some clients who want to have, you know, a manned shop where you come in and one door locks behind them, and then they have to be released into the next room, and if they’re leaving you can lock them into that room. We don’t endorse any procedures like that. It doesn’t make a lot of sense. It’s best to get them out of there and get them on their way.

Some of the things that we do though for instances is if we have a license plate that we can get off of our cameras, we’re fully licensed now to be able to do license plate searches, comprehensive background searches, and that’s not through web services like Intellius, and there’s a few other ones out there, which are called spider searches. They essentially go out and they grab information everywhere. These are using national databases where we can do a search and find, you know, 15 degrees of separation. We have access to traffic cameras. Like I said reverse license plate lookups. So if we’re called into a burglary and we can get that license plate, chances are we can tell you where that vehicle is before you finish filling out your police report.

So that is neat. And there’s a lot of different technologies at our disposal these days, especially in the security side. You know people ask oh well, you guys are a cannabis company. We say well, you know, we’re a cannabis company and a security company. So you know we represent both sides of that spectrum.

Matthew: So it sounds like screening employees is a huge part of this given what you’ve said about inside jobs, and you know theft from employees. What are some best practices for making sure you have employees with integrity?

Dan: Well you know, we understand that everybody has a background. We’re more concerned with felonies. We’re more concerned if it was a misdemeanor, what type of misdemeanor it was whether it was theft oriented or threatening or assault for instance and things like that. We’re not looking for people who have you know, 15 outstanding traffic tickets. Those things can happen, or you know, the college stories.

Matthew: Sure. Especially in this industry.

Dan: Yeah sure, it’s going to happen on spring break. You know we always believe that, you know, you should hire the person not the resume. And that’s how you create the building blocks. We do encourage all of our clients to run at lease criminal background checks, and we do them here. I think they’re about $70 for a comprehensive, national background check. And we’re also able to give advice based on that background check of any concerns. And we do that prior to hiring any employee. So that would be part of the vetting process.

Matthew: So there’s people all the time that reach out and talk about they want a license for cultivation or they want a dispensary processor, but they don’t really understand it’s more than it’s more than just submitting an application for a license. Can you help us understand how you partner as part of the extended team to someone who is submitting an application for a license to be the security partner and what that means?

Dan: Absolutely. So different states during the licensing submission process, they ask for a full plan that usually includes a full business plan, financing involved, floor plan layouts, electrical production numbers, it’s comprehensive. And on the security side of what we do as consulting for new licensing clients is we’ll actually create that entire security plan that usually entails a floor plan that lays out where your cameras are, where your motion sensors, your door sensors, your panic buttons, everything else depending on either the needs and the budget of our client or what the state is asking for. Because many times the state will ask for the degree of security they want. For instance that can be IP cameras which can be a little bit more expensive, fully networked systems.

So we lay all that out. We outline the products that will be used as well as the procedures that would be put in place. And the point of that is, you know, during that submission process you really want to shine. You want your submission to be as strong as it can so that it looks much more professional than other people considering, they’re considering, so you know, it basically gets to the top of the deck. And that’s where we can help.

Matthew: That’s a great point. So your job when, you know, submitting an application for a license is not necessarily to check all the boxes which you must do, but it’s also how do you look relative to the other people submitting for a license in contrast.

Dan: Exactly. Yeah you know, there’s a lot of new business owners entering the space that don’t believe that you have to have that high level of representation, and they often don’t get very far in it. I know that when the new regulations were released here in Colorado the way that Colorado stated it is that they wanted to kind of weed out the riffraff. No pun intended. But you know they want to see the people that are serious about what they’re doing, and they can be trusted, and that they understand what goes into it. And there is a lot of paperwork, there’s a lot of effort. I mean I think everybody assumes that millionaires are just sprouting up overnight the second you get into this space. That’s not the case.

It takes a lot of work. You have to know how to run a business, and you have to have follow-through on that. And the second that you believe that it’s just about knowing how to grow cannabis, you know, I think there’s so many professionals out there right now who’s expertise is in the growth and production of cannabis. They’re pairing with other business minded people to really make these businesses a success, and we’re seeing a lot of that especially in Illinois. We’ve seen a lot of new investors coming in. I know that on an investment level, it’s really turning into, well people are aware of where this is going and that it’s not going anywhere. You know we’re essentially in 24 states right now. You know I would say that within the next two years, three would be pushing it I think, we will see that federal legalization. And there is a lot of money to be had there. It’s just a matter of how you do it.

So as we see new investors come in, five years ago, you know, the average grow facility we would see would be 5,000 square feet. Now we’re seeing between 20,000 and 60,000 square feet. We have facilities up to 200,000 square feet which is the size of a small college campus. They’re huge, and they’re not retrofitting warehouses anymore. They’re building them from the ground up with in wall irrigation, remote environmental control. So they’re just built to produce cannabis efficiently. And that’s really neat to see and be a part of especially when we come in and we work with new constructions and new builds so that they’re secure during that build process, and seeing that happen is really exciting.

We just, well I should say in about five months we’re going to be releasing a product that ties in every sensor within your facility and between environmental controls, your cameras, your door systems. And there’s been remote access for these different systems available for years. Usually you have to log into one system at a time to control it. And we’re working with a company out of Israel right now that basically will tie all of those systems into one cloud system that you’ll be able to log into through a portal, a web portal and watch your cameras, allow access to a door for an employee, change the temperature in a room, and be able to do it all in one place. So we’re really excited about that. We’ve been beta testing it now, and like I said, you know, the industry is dictating its needs.

Matthew: You know looking ahead the next three to five years anything with technology, especially electronics, just seems to get exponentially better. What do you see that you’re most excited about that maybe that’s just in beta right now?

Dan: I think that’s probably what we’re most excited about right now is integrating all those different systems into one place. Especially bringing in the environmental control. I mean you could essentially sit at your remote office and watch your grow and you know, hit a button and CO2 would be dispersed into a room. You could change your lighting, watch your growers trimming and do everything remotely.

What we’re seeing now are owners with multiple facilities. Chains are being created of different businesses, especially here in Colorado. And that’s really neat because at first it was the independent business owner either owning a grow facility or dispensary and those had different functions. You know the growers would grow the cannabis, and the dispensary owners would run the business side and sell it. And now it’s vertically integrated here which means that if you sell cannabis, you have to produce it as well. And it’s called the 70/30 rule, which means 70% of everything that you sell you have to produce yourself. So you have to know how to do both.

That was the next change, and then with that we’re just seeing rapid expansion. Companies owning multiple grow facilities, each facility getting better and better and multiple dispensaries around the state. We’re going to be seeing that I think, you know, I believe in every state that we go into going forward.

Matthew: So just kind of rewind to what you were saying about, you know, everything being in one network so you’re talking about like an Ethernet or something where environment security camera, telephone all goes over Ethernet network and into one centralized location instead of having the multiple systems where you might have this closed circuit, you might have telephone, you might have environmental and they don’t really talk to each other in a way that’s meaningful or kind of Duck Taped together, but as you kind of bring them all onto the network, there’s some efficiencies that are gained.

Dan: Absolutely. So in the past for instance, for environmental control you would have one piece of software that you would login and control your environmental control or one piece of software for your cameras if you just wanted to watch those. And with this new technology that’s been created, we’re able to integrate everyone of those sensor controls within your facility to send a signal to one cloud based system. So you would be able to view them all in one place with one login and use all of them at once. And that’s when it really gets exciting. I think, you know, the technology is out there for separate independent systems that run extremely well. And now what we’re getting excited about is tying those all together to be able to speak to one another.

So for instance if you have a camera outage, and all of a sudden a camera goes blank, you would receive a notice and then your alarm system would be notified about that and possibly go into armored mode. And environmental control would be notified to watch for any changes in temperature. We had one facility where a large overhead garage door in the back of the facility was blown open during a major blizzard here in Denver. And all of a sudden the temperature dropped to 10 degrees and it destroyed the entire crop. So in a situation like that we would be able to know about it and you know, act quickly. So yeah when we think about all these different technologies coming into play it does get exciting, and especially how they can be applied to cannabis.

Matthew: Switching gears a little bit you recently had a trip to New York City and you met with Seal Team 6 I believe. Can you tell us a little bit about that?

Dan: Sure. Yeah so we met with Seal Team 6 who is starting a side private company called Blade. And we were contacted by them over a month ago to offer some of their service through CannaSecurity to our clients, and we met with them in person last Thursday. And we’re very excited to say that we’re going to be able to offer those services to our clients. Some of the services include extraction. I’m not sure how much we’ll need that here in Colorado, but what they’ve been talking about doing, and that service will be available this summer, let’s say that there were a terrorist threat to a building in New York they would be able to dispatch guys on motorcycles to weave through the traffic and get to a high level client, you know, get him out of his office, throw him on the back of a motorcycle, get him to the harbor and get him out of there either on motorcycle or by air depending if there was any, if the air was shut down or not, traffic control.

Some of the other services they’re offering are social media threat warnings or online threat warnings where they assess a person to see if there’s anything or any threats out there or anything being derived. And that’s not social threats, that’s physical threats which may come into play. They will also be doing training. We’d like to get them out here to Colorado to train some of our clients who would like to take a class, and we’ll be offering that for free, but what to do in high risk situations. For instance if people were to come in armed into your facility, how to best handle that. And you know, it’s really neat to see these different lines being drawn between different parties like Seal Team on the cannabis side. It’s great to see that awareness being shared now.

Matthew: Gosh that’s crazy. It sounds like Bourne Identity type stuff.

Dan: It does.

Matthew: Well Dan as we close, how can listeners learn more about CannaSecurity?

Dan: You can either come to our website at www.cannasecurity.com. That website is about to be replaced in a couple weeks. So don’t mind the bulkiness of it. You can also reach us at 888-929-4CSA (4272), or by email info@cannasecurity.com.

Matthew: Dan thanks for being on CannaInsider today.

Dan: Thank you Matt we appreciate it.

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5 Cannabis Trends with Johnny Green from The Weed Blog

Interview with Johnny Green from The Weed Blog

I recently sat down with Johnny Green from The Weed Blog, we spoke about trends in the cannabis industry, here is an excerpt.

Q: Johnny, you are sitting in the crow’s nest of cannabis news and information, what do people seem most interested in and why?

A: I think the most popular trend I’m seeing is a huge interest in all things involving the business side of marijuana. It’s the gold rush of our generation for sure, and everyone and their grandma is clamoring to get in on the industry and make money. It’s not a coincidence that Forbes has recently launched a weekly segment dedicated to the marijuana industry. The marijuana business side of things is complicated, and people are searching out information about it more and more everyday, on my blog and just about everyone else’s that covers that sector of the marijuana world.

Q: How do you see activism changing since starting The Weed Blog?

A: For the longest time marijuana activism pretty much only involved volunteering to gather signatures, showing up randomly to talk to an elected official, or attending a rally/protest. The internet has changed all of that. We are more organized than ever before, spread awareness better than ever before, fund raise better than ever before, and wield influence like never before. We have a heavy focus on politics/activism, and we are consistently one of the top marijuana websites on the entire planet despite having hardly any resources and a head author (me) that is entirely volunteer at this point, and I don’t think that’s a coincidence. I like to think we are just that cool, but in reality, I think it’s more that people are hungrier than ever for activism based content, which makes me happier than I can ever express in words.

Q: Has anything surprised you about the changing tastes of cannabis enthusiasts?

A: There has been a growing trend of people looking for marijuana entertainment. Now that marijuana is going mainstream, people are coming out of the shadows to try to attend a marijuana event, or are looking to stay at a Bud ‘N Breakfast, etc. There are also countless ‘newbies’ out there that want to explore the marijuana world via a guided tour around Denver or somewhere like that, which is something I’m sure they thought they would never be doing just a few years ago.

Q: Are there any new demographics of cannabis consumers that are just coming online?

A: There’s a lot of people coming to the marijuana world for the first time these days, or coming back from a long hiatus. Whereas in the past they didn’t have access to a lot of information other than asking their dealer and/or a friend, now they can go to Google (or to a lesser extent social media), search for answers to marijuana questions like ‘what are dabs’, and gain knowledge easier and faster than ever before.

Q: How is technology helping the cannabis enthusiast?

A: One of the most popular questions since the beginning of marijuana is ‘where do I find good marijuana?’ The internet has helped fill that void quite a bit with sites like WeedMaps, Leafly, and countless others. The marijuana consumer is becoming more and more sophisticated everyday, and that is happening at the same time that more and more information about strains is being gathered and organized, and at the same time that marijuana is being sold legally at more and more stores and dispensaries. I expect that trend to continue for a long, long time. For so long people didn’t know what they were consuming, nor did they have a good way to find out. Now they can search for that info online very easily, and people are doing it a lot these days.