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Handling Cash and Outsourcing Cannabis Employees

stephen sullivan ms mary staffing

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Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you looking for a fulfilling and lucrative career in the cannabis industry? Visit www(dot)cannainsider(dot)com/careers. That’s www(dot)cannainsider(dot)com/careers. Now here’s your program.

If you’re looking to break in to the cannabis industry or you’re an employer struggling with finding the right people to help your business grow, you’re really going to enjoy today’s interview with Stephen Sullivan of Ms. Mary Staffing. Welcome to CannaInsider Stephen.

Stephen: Thanks for having me Matt.

Matthew: Stephen before we jump in can you tell us what Ms. Mary Staffing is and how you serve clients?

Stephen: Sure. So we are a full service HR agency. We do payroll processing, recruitment, HR consulting and we’re serving the cannabis industry.

Matthew: And what were you doing before Ms. Mary Staffing? How did you get into this business?

Stephen: Well I was working staffing and engineering in IT. Then I wanted to bring the typical staffing model to the cannabis industry.

Matthew: Okay. Now many people listening may not understand that the cannabis businesses that touch the plant have a very difficult time paying employees and doing a lot of the things that normal businesses take for granted. Can you tell us about the cash issues dispensaries face and how you help your clients overcome those cash issues?

Stephen: Yeah it’s definitely difficult to run a business without a bank account, especially when you’re talking about payroll. So what we’ve done is we’ve implemented a PEO model that co-employment model where we step in and we hire dispensaries or cultivation facilities’ employees and we become liable for employment taxes, worker’s compensation and the client just pays us and we are able to accept cash. We work with a number of transportation companies like Blue Line Protection Group, NPS International. We’ve worked with both of those companies.

Matthew: Now Stephen, the PEO concept might be a little bit foreign to a lot of people listening, but it has a tremendous value for certain industries. First what does that acronym PEO mean?

Stephen: It’s Professional Employer Organization.

Matthew: Okay and so how does a Professional Employer Organization partner with an employer and how does that help them?

Stephen: So we step in and we go into what’s called a co-employment agreement with the dispensaries to where their employees now become our employees and we handle benefit administration, unemployment claims, we basically become the business owner’s HR department.

Matthew: This is really valuable for people listening. The problem is here is that most dispensaries don’t have a bank account. All they have is cash. So when they enter into an agreement with a PEO company like Stephen’s then Stephen can then accept that cash and pay the employees of the dispensary in direct deposit and he can also go to the state and federal level and pay those taxes on the dispensary’s behalf. And also this avoids the cash penalty. Now what is the cash penalty Stephen?

Stephen: Well the cash penalty is a 10% fee that the IRS charges if you pay your employment taxes in cash.

Matthew: So what other ways do PEOs help businesses besides just payroll?

Stephen: Well we become the full HR department for the business owner. So we do benefit administration, recruitment, making sure that the business owner is compliant with employment law, we also have employee handbooks. Basically anything HR related we can handle for the business owner.

Matthew: What are the type of things that you’re doing in compliance from an HR level because there’s weird little things I know in the HR world like if you don’t have a poster up or if you’re not doing things right, there’s like all these little pitfalls that you don’t know about that can kind of jump up and slap you. Can you tell us about one or two of those?

Stephen: Well you mentioned a couple ones. So when we first start working with a client we do what we call a free audit where we go in and we make sure that the business owner has those posters and has their employee handbooks and everything in order. Employment laws are constantly changing so that’s something that business owners have to stay on top of.

Matthew: What kind of staffing, what kind of positions do you help with staffing? Typical or what are your most popular?

Stephen: Our most popular, as you can imagine, are bud tenders, retail managers, trimmers, growers and everything in between kind of your harvest or your assistant growers.

Matthew: Now I’m really interested in attrition because there’s a lot of people trying to get into the cannabis industry, but from your point of view when you come on or what you hear back from employers when they let someone go, what are the typical reasons that someone leaves the cannabis industry or the positions that you see that kind of fall into the biggest bucket so we can understand why people leave.

Stephen: Well if you’re talking about employees quitting, usually it’s to move to a different… I see a lot of transitions between businesses within the cannabis industry. People come in and they get skills at a particular dispensary and then they move to another one.

Matthew: Okay. Is there anything where it’s involuntary where they’re leaving and you see…

Stephen: I have seen some cases where they were let go. Some employees were caught stealing product or stealing cash. I have seen cases of that.

Matthew: Yes. Pretty common I hear with trimming is kind of rampant with theft because you’re sitting around and you have huge amounts of cannabis and it’s something that happens when you have that valuable of commodity. Now I know this is a strange question, but do employers require drug tests and if so, what kind of drug tests?

Stephen: We’ve actually never had a request from any of our clients to do drug tests. We have the capability, just have never had anybody ask to do so.

Matthew: Yeah, that would be a funny kind of Candid Camera if we said we want to see if you test positive for cannabis and just watch their reaction. Now can you give us some examples of intermediate or executive positions that you’re starting to see more employers ask for?

Stephen: Intermediate I would say kind of your assistant retail manager, even some managers I would place in that category. Executive positions more of your facility managers, of course partners within the business. Maybe a consultant partner as well.

Matthew: Okay, now let’s say you just took on a new client and they’re a pretty average client in that they don’t have everything just perfect yet. What are the mistakes you see that most dispensaries have in common or maybe not mistakes but things they can do better?

Stephen: Employee handbooks are definitely something that we notice a lot with our clients, with new clients, that they don’t have proper handbooks. A lot of times, as you mentioned earlier, the posters that they’re supposed to have up aren’t up which is why we offer a free audit to any of our new PEO clients.

Matthew: Now from when you started this business to where we are now and where do you think we’re going in the next couple of years, how have the staffing and employer related needs evolved and how are they evolving?

Stephen: Well it’s constantly, rapidly evolving especially with regulations that business owners have to stay on top of as well as employment laws that are constantly changing and then now the new healthcare, Affordable Healthcare Act which requires employers to stay on top of benefits for their employees which can be a challenge for small business owners.

Matthew: Yeah and there’s some kind of magic number where if you’re over a certain employee count, the Affordable Healthcare Act behaves one way and if you’re under it, it behaves another way. What’s that number? Do you know?

Stephen: Fifty, fifty employees.

Matthew: Okay so after 50 what happens?

Stephen: You are required to offer health benefits to your employees, full time and part time.

Matthew: So I imagine that there’s going to be a lot of employers that magically start changing behaviors at the 49 number, somewhere around there, unintended consequences. Okay. Now what about employees from non-cannabis industries transition to the cannabis industry? How is that done successfully because there’s a lot of people listening that are not in the cannabis industry but they want to be in it. So how can they make that transition?

Stephen: I would say look at your past experience and your skills and really figure out what you want to do in this industry. If you have good customer service or retail experience, you’re most likely going to be better going the retail, bud tender route. If you kind of have a green thumb, maybe cultivation. It really depends on what you enjoy doing.

Matthew: So I want to circle back to this PEO concept for people, and again it stands for Professional Employent Organization. Is that right?

Stephen: Yes, Professional Employer Organization.

Matthew: Because it’s kind of a new concept still but it’s very very powerful in that if you’re an employer, you just write one check to Ms. Mary Staffing or whoever your PEO is and they take care of everything and it’s a great way of outsourcing the stuff you’re not great at. And in terms of cost is there any kind of ballpark figure of what this costs a dispensary owner for your services?

Stephen: It depends on how many employees and how frequently payroll is. We base it off of that and then it’s a percentage of gross payroll.

Matthew: Okay got it. So if you do a monthly payroll, it’s cheaper than if you do it every couple weeks?

Stephen: Right yeah, if you do it compared to a weekly.

Matthew: Now is there any other tips or information that you think would be valuable for people trying to get into the cannabis industry to make sure they stand out in one way or another?

Stephen: Well there’s several resources out there now. If you don’t have knowledge of strains, definitely tap into those resources to learn about the actual product before you try to get into this industry. That’s something that I see a lot. People don’t know much about marijuana but they want to jump into this industry.

Matthew: Okay. Very cool. Now Stephen if people want to learn more about Ms. Mary Staffing, how can they do that and tell us what state you’re in as well.

Stephen: Well we’re in Colorado, Washington State and Oregon at the moment and we’re rolling things out in Nevada here within the next month or two.

Matthew: Stephen is there anything strange in Washington’s law where it would prevent an employer from working with a PEO?

Stephen: Yeah the way Washington State has their marijuana laws set up it makes it very difficult for PEOs to operate, even staffing agencies to operate. So we just work under what’s called a direct placement staffing model.

Matthew: What does that mean exactly, direct placement?

Stephen: We still help with the recruitment, but instead of paying payroll through us we just charge a percentage of the annual salary as say a one time direct placement fee. Kind of like paying a consultant.

Matthew: Got it, that makes sense. Now Stephen can you give out your website for listeners?

Stephen: Sure it is

Matthew: Okay great. Well Stephen thanks so much for being on CannaInsider today. We really appreciate it.

Stephen: Yeah thanks for having me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guest to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Stephen Sullivan of Ms Mary Staffing (a cannabis staffing company) explains why it is often a way better deal to outsource your staff to his company. He also talks about how your cannabis company can legally handle cash.

Key Takeaways:
[0:57] – What is Ms. Mary Staffing
[1:42] – Stephen talks about the cash issues dispensaries face
[2:39] – Stephen explains how a Prof. Employer Organization helps employers
[4:51] – Stephen talks about the staffing aspect of Ms. Mary Staffing
[5:28] – Why do people leave the cannabis industry
[6:55] – Stephen talks about intermediate and executive positions
[7:29] – What can dispensaries do better from an employer perspective
[9:15] – How can someone make the transition into the cannabis industry
[11:11] – Contact details for Ms. Mary Staffing

Learn More:

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at:

Innovations in Hemp Science with New West Genetics

Wendy Mosher & John McKay

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

There’s so much news coverage of recreational and medicinal consumption of cannabis that we often forget about the massive impact the legalization of hemp will have on society as prohibition ends. I’ve invited Wendy Mosher and John McKay of New West Genetics to help us understand the promise and technology of hemp right now. Wendy, John welcome to CannaInsider.

Wendy: Thank you Matt.

John: Thank you Matt.

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

Wendy: Sure we are in beautiful Fort Collins, Colorado.

Matthew: Great. Home of Colorado State University.

Wendy: That’s right.

Matthew: Okay. Wendy can you tell us a little bit about your and John’s background and how you came to get into the hemp genetics business?

Wendy: Sure. So John McKay is a professor at Colorado State University in Plant Genetics. John and I are married. We’ve been together for almost 20 years now. My background is a lot more varied than his. I have degrees in both art and in education. So in our early years together, like the first eight years, I would try to plug my ears and black out all of the science and the genetic speak. I found it a bit too boring. That was against my will. I somehow absorbed it, at least the big ideas. So I’m decent at interpreting between scientists and non scientists which leads me to New West Genetics.

So when Amendment 64 passed we got excited. We thought oh this could be a really cool opportunity to use the skills that both John and our partner Rich, Dr. Richard Fletcher, who was John’s former grad students. So he’s our third partner. We thought this is a great opportunity to use those skills that both of them had been developing over the 15 to 20 years of their study and hence New West was born.

Matthew: Great and what specifically does New West do for a layperson to help them understand?

Wendy: Sure, so New West Genetics combines modern genomics with traditional breeding to create industrial hemp varieties that are adapted to the U.S. So we kind of intersect three large industries; agriculture, bio tech and cannabis. So we’re not only breeding into the seed desirable market traits like specific cannabinoid profiles, but we’re also breeding in desirable ag traits. So formity, good germination, high yield, etc. so that we can make this a scalable crop that can compete with the likes of corn and soy.

Matthew: John in your mind do you see a distinction between hemp and cannabis? I know a lot of people get very emotional when it’s the same plant and then other people say they’re the same and you shouldn’t have these distinctions. As a scientist, where do you weigh in on this?

John: Yes, I think there’s a distinction. It’s a manmade distinction but I think it makes sense. So the 2014 U.S. Farm Bill for the first time defines hemp in the U.S. as cannabis sativa having less than 0.3% THC. As you know, THC is the abbreviation for tetrahydrocannabidiol and that’s the psychoactive substance in cannabis. So 0.3% is a very low number. If you go into some of the dispensaries in Colorado, some of the marijuana they’re selling is labeled as being near 30% THC, so 100 times more potent than hemp. So cannabis plants have a large number of current and potential uses, and I think having this legal category of hemp that has no drug value and no recreational value allows us to take advantage of hemp and develop hemp without concerns that people might have about Reefer Madness or whatever you want to call it.

Matthew: Yeah good point, and that still exists. I travel around the country, I see the Reefer Madness. What a successful propaganda campaign that was. It still to this day lingers.

John: Yeah it’s pretty impressive, and yeah when you leave… after being in Colorado just a little while, when you go somewhere else you kind of notice that the stigma still exists in other places. So back in the 1950s or earlier, I don’t think there really was much of a distinction between hemp and higher THC varieties. Cannabis was used for robes, paper, fabric and some of it was also high in cannabinoids and had been used sort of recreationally for thousands of years. And then in the 1960s the Israeli scientists isolated tetrahydrocannabidiol and demonstrated that it is the psychoactive component. It wasn’t until then that we could actually use science or chemistry to sort the two types.

Matthew: Wendy, what kind of license do you need to grow hemp?

Wendy: In Colorado hemp is governed by the Department of AG. It’s very simple. You must apply to them for a permit to grow. You provide them with the GPS locations of all your crops. You agree to submit to random testing of the THC levels by them and you provide them planting and harvest reports. It’s a fairly straightforward system that has been working very well.

Matthew: Would you say it’s a functional market? How would you describe the market to somebody that’s not familiar with it?

Wendy: This is the $100 million question. Hemp Industries Association, their most recent data is from 2014 and they estimated that about $620 million were sold of retail sales of hemp products. So what is unclear is whether they’re tracking imported CBD and there’s not a lot of data to track that market because it’s so emerging. So there’s three main markets. There’s hemp for cannabinoid extraction. There’s the grain market for consumption and fiber use and of those three I would say that fiber is in its greatest infancy in the U.S. There’s people were having some really innovative applications but they still need to be maybe commercializing and if they are commercializing, they need to be made a little more competitive. There is a market for CBD from hemp and other cannabinoids and it’s sort of growing in fits and starts.

One of our major pains in the U.S. is that we have to compete with foreign imports. I can tell you over 2015 I saw prices between $1,000 a pound and $25 a pound. So I would classify that market as slightly volatile. The grain market is a little more stable and better studied of course. Canada has been growing hemp for grain for a while. And the majority of the hemp grain products that we consume come from Canada. We import 90% of what they grow there. They’ve been steadily increasing their acreage to meet the demand and the majority of that is for human consumption. What’s interesting is that we’ve had here in Colorado surprising success in the grain for animal feed market. So there are new markets opening as we speak and as people become more and more aware of the benefits of hemp and as regulation looses up. So I just like to plug the Hemp Business Journal out of Canopy and Boulder. They’re actively working on tightening up the data for this market so keep an ongoing eye out for their reports.

Matthew: John looking at the imports from Canada, why is the seed sterilized? I’ve heard that it is but is that true and why is it?

John: That is true or that’s at least what the law requires. So we’ll go back again now to the 1960s. So as I mentioned in 1964 THC was discovered. Just before that there was something called the Single Convention on Narcotic Drugs that was implemented through the United Nations. It listed cannabis sativa as being an illegal narcotic but allowed in Article 28 for the production of hemp for industrial purposes and this is where you start seeing this industrial hemp term come. So you could still grow cannabis for fiber and seed, but then the U.S. rolled out Controlled Substances Act which lists as a Schedule I drug the species name Cannabis Sativa which is rather unusual. There’s not other species listed there, usually just extracted compounds such as opium and heroin.

So this caused basically hemp, THC free hemp plants to be in the same controlled category as heroin. Over time there rules were relaxed to allow imports of hemp fiber and grain for animal feed. And then up in 2001 the DEA published a news release saying that they had changed the rules, effective immediately, and that hemp seeds were not back as a Schedule I drug. This hemp industry’s association, which was spearheaded by the companies Nutiva and Dr. Brawner’s Soap sued the DEA and won and since that was settled in 2004 and since then they’ve been importing sterilized grain or extracted protein and oil and selling them largely as human foods in places like Whole Foods. So it’s kind of a complicated story but that’s why the hemp has to be sterilized to enter this country still.

Matthew: Interesting. John what’s it like on the university setting there at Colorado State University? Is the university helpful in your research and study? What’s the relationship like?

John: So I’m a professor in the College of Agriculture at Colorado State University. I have a 75% or 9 month appointment there. I’ll say the university is helpful. I work there so I’m not going to complain about them on the air. But part of the reason that we started New West Genetics is that the university is risk adverse and was slow to come into research on hemp even after the farm bill was passed. In addition universities mostly do the research part of R&D and not much on the development side. For example, my colleagues at the university here do very detailed studies of diesel engines and can actually visualize the combustion inside the engine, but they don’t make new engines and sell them.

So it’s a similar thing on the plant genetics side. Eventually, with regard to CSU, the lawyers did investigate all of the details, consult with various agencies and decided it was not a major risk for us to pursue research in industrial hemp. And all along it was clear that there were interesting research opportunities in hemp for many different types of researches at the university from the College of Ag all the way to Engineering and Textiles.

Matthew: John when you’re looking at the study of hemp at a high level what gets you most excited? Where do you see the biggest opportunities?

John: Well I’m a geneticist so genetics gets me most excite. This species has a lot of unique traits such as cannabinoids, but it also shares a lot of core processes with other plants. And so we can then investigate what’s similar and different about the genome and the genetics of this species. A few years ago our Canadian colleagues published a draft genome. This was largely of the Purple Kush strain of marijuana. That’s a great start and gives us a glimpse of what’s in there. That genome is highly fragmented and we still don’t know what genes are in that DNA sequence. So there’s a lot of work to be done in just characterizing the genome and how much that varies within the species. But then as we do with other crop species, once we have all of that we can take this genomic approach to predict what particular genes and/or which particular varieties or genotypes of the species might have traits that would make it most suited for a particular market segment be that grain or fiber, etc.

Matthew: Okay that makes sense. Wendy, what customers is New West serving now and what customers do you hope to serve in the future?

Wendy: So we’ve had great success, as I said before, in the animal feed market and the food market in general actually. There are some novel uses coming out over the next couple of years that I think are going to be surprising and exciting for consumers. I can’t talk about them yet as we’re under NDAs with our collaborators, but that’s going to be some fun development. And of course we’re also active in the cannabinoid extraction market. We have both raw flower and extracted cannabinoids. Remember those are sort of short term goals for us. Our main goal is to create seed cultivars for sale to the Ag community who would then sell their crop to those end use markets that I just referred to because it’s a nascent market, we need to set up and foster that value chain and have those end use processors ready for our farmers so they see the reason to grow.

So we’re initially greasing those wheels, but our ultimate product will be seed genetics and other intellectual property. We see our customers for that as either larger Ag companies or even more recently we’re seeing some larger cannabis companies that are interested in looking at intellectual property acquisitions. And by the way we are entering Colorado Department of Ag’s hemp certified seed trials this year, and if that goes well our first variety will be available for our foundation seed growers for the 2017 season.

Matthew: And what’s their primary motivation, Wendy? Are the cannabis growers looking or hemp growers looking for better yields, less pests? When they’re coming to you they’re saying I need to solve a problem or I just want to have a better yield or is it both?

Wendy: So you mean farmers? Is that what you’re asking?

Matthew: Yes.

Wendy: So farmers are looking for an additional crop option actually in Colorado. So we’re working with more conventional farmers in both conventional crops and organic crops, but they’re looking for another Ag option. The prices and the commodities market is out of their control and a lot of times those prices are not enough to sustain unless you’re a gigantic farm. So it would be very helpful for them to have another option to turn to when wheat prices are down or corn is down.

Matthew: Yeah a little more speculative though in that there’s no futures market to hedge hemp currently.

Wendy: Sure.

Matthew: But maybe that’s an opportunity at the same then.

Wendy: Yeah someone not so risk adverse, yeah.

Matthew: John do you see any way that plants respond differently from the inside, being grown inside versus outside and what are some of those differences?

John: In terms of the plants themselves, there would be some differences. There’s a lot less light inside no matter how hard you try. If you buy the most expensive, high intensity lights, you might approach about 40% of the radiation of sunlight. So the plants will be overall probably branchier and less dense in the form that they grow in. But really there’s not going to be giant differences depending on at least between those two categories of inside and outside because there will be variation depending on how you grow them outside and how you grow them inside.

I think the biggest difference in terms of production is just the sustainability of it. So hemp can be grown outside. It can be bred to be locally adapted to the local conditions so you eliminate the need to have greenhouses, heating, cooling, lights and all of these other imports that make the carbon footprint and economics of indoor growing very costly. In addition, because people invest so much in indoor production, the one big advantage of indoor production is that you can do year-round production. And so once you make that investment, people do back to back production resulting in a resident population of insects and diseases that are only a problem in the greenhouse setting. So these are organisms that can’t survive outside in Colorado. For indoor production you end up, you have this venin environment year-round where you start building up some of these pests and diseases that you hear about in marijuana production and then people end up trying to save their crops by using dangerous pesticides in some cases. I think that’s not a sustainable approach and I think that almost all goes away when you move to an outdoor production system.

Matthew: John can cover what crop uniformity is and why it’s important in your mind and why perhaps maybe farmers or others should be considering it?

John: Sure, yeah so for a given plot of a given crop species, say you’re growing corn or wheat or soy beans on your farm, uniformity is almost all advantageous. So if all of the plants in a plot are at the same height and at the same level of maturity, then you can go in and mechanically harvest that. You’ve set your cutting bar, are the plants are the same height and you can efficiently harvest all of that grain or whatever you’re trying and in the end that’s an economic efficiency that translates into economic efficiency for the consumer.

So at the scale of the farmer, say with multiple plots, then uniformity and the ability or the availability of seed that produces a uniform crop allows a farmer to predict how much yield they’re going to get from a given acre. So they have so many acres to produce on every given year. They’re small businesses with a single shot at production a year. So farmers spend a great deal of time considering what to plant. So hemp if they know there’s a variety that produces X pounds per acre and they know the cost of the inputs and the value of that crop, then they can make the best economic decisions for their given farm for that year. If you have a non-uniform crop, you can’t make those predictions.

Matthew: Okay.

John: Just to be thorough, you want uniformity at the local scale in a given year but you also want to maintain crop diversity. So over year after year you need to be rotating different crops in there and similarly it’s necessary to have a diversity of genotypes of a given crop species. So for corn for example, each growing region has different locally adapted cultivars. In addition, as acreage increases, the insects and pathogens will adapt to whatever resistance mechanisms the plants have. And so it’s necessary to have a diversity of genotypes out there that slows down the evolution of resistance.

Matthew: John I know that some of the combines get kind of gunked up with the hemp resin oil. Is that a problem you hear about often and what do farmers do with that?

John: I think at the combine level the resin isn’t a problem. The fiber can be more of a problem for these European fiber types that are three or four meters tall in some cases. Hemp is famous for its long, strong fibers. Those are not particularly friendly to pieces of harvesting equipment. As far as the resin if you cut up some floral tissue off of hemp, you’ll get resin on the scissors for example, but if you think about the whole plant; leaves, stem, seeds and the floral tissue, it’s only a few percent cannabinoids when you take it as a whole. And so in Canada and Europe they are using combines and other mechanical harvesting approaches for hemp. Some of those are engineering designs around the morphatype or the shape of the plants, the genotypes that they have. And then the solution we’re working on is to actually breed the plant so that it’s in a form that is most optimal for existing harvesting equipment.

Matthew: John you mentioned the difference between hemp and cannabis is a manmade distinctions. However, there’s people that still say well I want CBD oil from hemp or I want CBD oil from a cannabis flower. Why do you think there’s some of that persistent conflict? Is it because there’s more refinement needed when it comes from hemp or to get like a clear oil? What is that exactly? Why is there some tension between those two communities at times?

John: That’s an excellent questions maybe for a philosopher. Some people don’t believe in evolution or that manmade greenhouse gas emissions accelerate global warming. I was looking at… I saw a recent article in the Washington Post that about 30% of Americans think Barak Obama is Muslim. So it’s hard to know why people say things that usually doesn’t necessarily have anything to do with facts. There might be some motivation to distinguish the two markets because of competition, but the fact is cannabidiol is a molecule with a defined structure. So if it has that molecular structure, it’s cannabidiol. So all the same cannabinoids exist in hemp and marijuana and it’s just the amount of THC that distinguishes them. The forms of the molecules are identical in both forms of the species.

Matthew: Okay. And John what are some of the most innovative uses you see with hemp right now? I know I’ve heard about I think it’s Mercedes or some German auto maker using hemp resin to make fibers or some sort of composite for a door panel or something like that. Do you hear about things like that and what’s exciting you the most right now?

John: Yeah so I think there are a lot of innovative uses. Hemp has been used for a long time traditionally for rope, textiles, paper. It’s unique in that it has these very long, strong fibers that are resistant to rotting and organisms digesting it. So it was used for rope and sails because it lasted longer than any of the other natural fibers that people were using. There’s also been, and I think things will continue in the more high tech end of textiles. Colorado has a sort of high tech outdoor clothing industry that I think would be very amenable to incorporating the benefits of hemp textiles. There’s also cosmetics. Hemp oils have been used in cosmetics. I mentioned Dr. Brawner’s earlier. They’ve been sort of activists and advocates for hemp production but they use it in their soap products.

There’s a large existing market of food and feed of the grain for animals and humans. If you go into Costco you can find Nutiva Organic hemp heart type products, the crushed grain or the oil or protein and then as you mentioned moving forward there’s been more high tech stuff like composite materials where the fibers are molded with polymers. There’s interests for airplane wings and other types of uses to replace carbon fibers with hemp. There’s some industry in Europe in building materials. It’s added to concrete to make a light concrete or to use in insulation. So I think there’s a lot of emerging markets. Some of these are going to require a lot of research and development before the market develops. Some are really just about developing the consumer market with existing technology.

Wendy mentioned the cannabinoids. So obviously THC is the psychoactive one. There’s a lot of interest in non THC cannabinoids and it’s really wide open at this point. My first question is how many cannabinoids are there. We don’t actually really know that. Some of them are quite rare and haven’t been characterized at the molecular level. The next question is how do they effect humans. How do they interact with human physiology? We know some of the binding sites for THC and a little bit about binding sites for CBD, but we don’t really know how any of the rest of them interact with human physiology.

Matthew: Wendy, how do you see the intellectual property aspect of your hemp research evolving over the next few years? I should say the intellectual property around hemp in general. Do you see it changing or morphing or evolving in any ways?

Wendy: I see it becoming intellectual property will play the same role that I plays in any other crop. It’s going to bring clarity to who created what, who owns what. There won’t be any more arguments about who created Girl Scout Cookies, the likes of that, which in turn brings some stability to markets. There’s numerous opportunities, not only on the breeding side which we’re on, but in engineering in general. We just talked about all those applications and products and just plant discovery in general. I think Hemp Industry says that there’s a potential 25,000 uses for hemp.

So I think the cool thing is that we have so much technology to improve at right now. It’s not like those other big crops in the latter half of the last century where they had to improve slowly as technology advanced along with them. We have incredible technology available to us now and because of prohibition we couldn’t use it on cannabis. So over the next few years I predict we’re going to see an explosion of discovery in intellectual property activity. I think that’s exciting.

Matthew: I hear that hemp is being used quite effectively for insulation in housing and building too. That’s really a promising development I think.

Wendy: Yeah, construction in general. Places like Hawaii are very vested in creating their own construction materials on site because it’s so expensive to get them there. So they have a very active hemp program and they’re looking at those applications. Things like Hempcrete and also replacing drywall with some kind of hemp composites. So yeah.

Matthew: Now Wendy you recently pitched at ArcView. Can you tell us about that experience, what it was like?

Wendy: Sure. In general ArcView was fun. It was a very fun conference. There was a lot of energy. It was a little bit younger of a crowd than other pitch events we had participated in. So throughout 2015, we fundraise in a variety of ways, not just with ArcView. We worked with Rockies’ Ventures Club with our advisors at the Innosphere and we worked a deal through Rocky Mountain Hemp Association which is now National Hemp Association. Fund raising in general takes time. You have to kiss a lot of frogs as people say, and nobody was awful. Just in some cases, in many cases it wasn’t the right match. So we chose carefully. People are kind of aligned with our culture. Every single one of those avenues was unique and interesting and certainly a tremendous learning experience. If anybody out there is thinking about fundraising, I would highly recommend utilizing your local accelerator whether it’s the Innosphere. If you’re in Denver, Rockies’ Venture Club. They were just invaluable in getting us pitch ready and I give them a lot of credit for our fundraising success.

Matthew: Are you open to new investors Wendy?

Wendy: We are not actively fundraising right now.

Matthew: Okay, and in closing, how can listeners learn more about New West Wendy and follow what you’re doing?

Wendy: Please go to our website That’s and hopefully if this airs before we’ll see some listeners at the Northern Colorado Hemp Expo in Loveland, Colorado on April 1st and 2nd.

Matthew: Great, well Wendy and John thanks so much for being on CannaInsider. We really appreciate it.

Wendy: Thank you for having us Matt. That was fun.

John: Yeah, nice to talk to you.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Wendy Mosher and John McKay PhD are the founders of New West Genetics.
New West is leading some interesting innovation in the hemp arena.

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?
Find out with your free guide at:

Key Takeaways:
[1:51] – Wendy and John’s background
[3:01] – What is New West Genetics
[3:50] – John talks about his opinion on cannabis and hemp plant distinction
[6:13] – Wendy talks about the licensing to grow hemp
[8:47] – John talks about the seed sterilization
[11:24] – John discusses the support he gets from the University of Colorado
[13:05] – Biggest hemp opportunities
[14:37] – Who is New West’s customer base
[17:09] – John talks about the differences between inside and outside grown hemp
[19:48] – John discusses crop uniformity
[24:25] – Differences in CBD oil from hemp and from cannabis flower
[25:55] – Innovative uses for hemp
[29:15] – Wendy talks about intellectual property’s future evolvement
[32:19] – Contact details for New West Genetics

Dissolvable Cannabis Strips from Oakor

Josh Kirby of Oakor

Click Here to Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

As the cannabis grows it’s getting harder for entrepreneurs to make their products stick out in the crowd. Some are going out of their way to offer a unique experience that is not a “me too” product. One such company is Oakor. I’ve invited Josh Kirby, founder of Oakor on to CannaInsider today to tell us about his unique product and how to stick out in a crowd. Josh, welcome to CannaInsider.

Josh: Thanks Matt. Thanks for having me.

Matthew: Josh, I like to give listeners a sense of geography. Can you tell us where you are today?

Josh: Yeah I’m in Seattle, Washington right now.

Matthew: A lot of cool things coming out of Seattle. I keep on hearing innovative things. Do you agree with that? Do you think there’s an innovative surge in the cannabis industry in Seattle?

Josh: Yeah it’s definitely an interesting market with a lot of really, really unique things happening.

Matthew: What is Oakor? Can you explain it for the listeners?

Josh: Yeah. So Oakor is a cannabis brand that’s focused on bringing smokeless cannabis products to consumers with a main focus on trying to destigmatize cannabis as a plant, as a form of medicine and as an industry in general.

Matthew: Okay and how did you get into the cannabis industry?

Josh: I actually got into it kind of by accident. I was working with a couple friends on trying to start some business. We didn’t really have any sense of direction other than we wanted something with either changing laws or changing technologies. We ended up falling into the medical cannabis industry. I moved out from New York to Seattle to start Oakor. As soon as I sold my first product and started getting patient feedback , I just immediately fell in love with the industry and fell in love with everybody who’s playing the game out here.

Matthew: Now can you describe your dissolvable strip and what that is for someone that’s never seen something like that before?

Josh: Sure. So the easiest comparison is it’s essentially a breath strip. The only difference between it and say a Listerine strip, aside from the fact that it has THC in it, is that it goes underneath your tongue. So it’s designed to be sublingually absorbed which mean all of the active ingredient in it gets pulled through the membranes and the capillaries inside your mouth directly into your bloodstream which makes it fast acting and it makes it super efficient.

Matthew: The thing that really stuck out to me about what you’re doing here is (A) it’s so different. I mean if someone’s coming into the cannabis space and they’re listening right now and they’re like hey I’m going to make a brownie, it’s like good luck. I mean the person at a dispensary has probably got so many different options for chocolate and brownies, I mean, it’s not to say it’s impossible but something like a dissolvable strip really catches your interest because it’s discreet and there’s a lot of different ways you can consume that easily without making a big stink. I mean it just seems like it solves a lot of problems. On top of it if you have bad breath, does that help too Josh?

Josh: Not as much as you think. It’s not as much of a breath strip as it is just an efficient way to absorb cannabis. So if you have bad breath, this probably isn’t your solution.

Matthew: Right, right. Now what are purchasing managers in dispensaries what are they saying when you show them this for the first time?

Josh: You know it’s a total mixed bag. Some people get it right away. We have a lot of people who are just like wow, this is exactly what I’m looking for. My friends and I had this idea forever ago, I’m so glad somebody did this, and then we get people who are just totally confused by the concept and it takes a while to walk them through. So it’s kind of all over the place and that’s what we expected with launching a unique product. There’s no real story you have to tell when you hand someone a pot brownie, but handing them an oral dissolving film infused with cannabis is a little different.

Matthew: Circling back to the Washington market, would you describe Washington or Seattle’s market as functional?

Josh: Yeah so I would say it’s functional and getting more functional every day. There’s been some challenges in Washington that other legal states haven’t had to face. Colorado for example had a very well-regulated license to medical cannabis market so when they wanted to take the switch over to rec it was very easy for them to just say you guys get to start selling to anybody 21 and up now. But in Washington we didn’t have the luxury of having a well regulated medical market. It was kind of gray area for years and years and years. Taking those unregulated businesses and just allowing them to sell cannabis to anybody 21 and up wasn’t really an option. So because of that we’ve been dealing some interesting fallout from the medical market transitioning into this recreational adult use market. But overall I think everyone has been doing a great job in keeping their head down and pushing things forwards. It’s just been a rocky road getting there.

Matthew: Washington’s a very popular flower state. Is that, being a non-flower, more discreet company, do you see that kind of pivoting in edibles and infused products kind of taking more a foothold now?

Josh: We thought that that was going to be the case, and you’re totally right. Washington is definitely a flower market. Our assumption was that as the market matured and as it moved further into the recreational space we would see that change happen and we would get closer to that 50% edible saturation like you see in Colorado and California. But what we’ve been noticing actually is flower has stayed about three-quarters of the entire market over the last year and edible sales have actually gone down a little bit. It’s a really interesting space.

Matthew: You’re mentioning that there’s kind of a mixed bag in response to the strips, the dissolvable strips. I mean people that understand it they get it right away, but for the people that don’t get it, what’s their objection? What are they not seeing?

Josh: That’s a good question.

Matthew: They just don’t see why someone would want to have it that way versus something else?

Josh: Yeah I mean one of the main push backs we get is why would I have this over a brownie or why would I carry this around if it’s so small or if the dosage is so low or if the price point is too high. We get things from all over the board.

Matthew: So it’s like a circular tin correct? The Oakor dissolvable strips, it’s a circular tin. Is it circular little strips that you put in your mouth?

Josh: Now they’re actually squares. We tried to make them circular at one point. We were able to do it. There was just a lot of waste created from that. So we decided to stick with the square shape.

Matthew: Okay so you have the squares and what kind of dosages? Do you have sativas, indicas, hybrids since they’re CBD focused? What can you tell us about the strips with that?

Josh: Yeah so we have eight different varieties of the strip right now. We have an indica, hybrid, sativa, a one-to-one which has 10mg of CBD and 10mg of THC, a two-to-one which has 10 CBD and 5 THC. A low dose strip which is 5mg of THC and then an extra strength strip which has 20mg of THC. All of our baseline of strips have 10mg of THC per strip and each tin comes with 10 strips in a pack.

Matthew: Now most people are familiar with THC and also most people are becoming familiar with CBD, but when you hear the one-to-one ratio can you just explain why someone would want that?

Josh: Yeah so there’s some interesting effects when you combine THC and CBD and there’s a lot of speculative research out there about why this effect happens. A lot of people call it the entourage effect. What I notice specifically when I consume CBD in tandem with THC is that a lot of the undesirable effects of THC are mitigated. So I never tend to have any sort of paranoia, any sort of uncomfortable feeling or badly racing thoughts whenever I take CBD in tandem with THC. And I don’t come from… I personally don’t have any glaring health issues so I can’t really speak to the efficacy of CBD and THC for my personal wellness, but we get a lot of reports from people saying that the one-to-one and the two-to-one rations, that combination of CBD and THC really, really help them with the different ailments they have.

Matthew: What about onsets with a strip versus some sort of other edible? Can you give us any anecdotal information about how quickly you feel the medicinal effects of a strip?

Josh: Yeah. So in general because it’s a sublingual dose, meaning it’s absorbed underneath your tongue, it goes directly into your bloodstream. So the onset can be four to six times faster than a traditional edible. If I were to take a brownie, I have to eat that brownie. All the cannabis is bound to the fat molecules in the brownie. So it goes down into your stomach, your stomach acids have to break that down, then those cannabinoids get absorbed through either the lining of your stomach or the lining of your intestines. They pass through your liver and then they hit your bloodstream. And then from your bloodstream they have to travel all around your body and find your cannabinoid receptors. And they have to go all the way up to your brain and cross the blood/brain barrier before they can hit the ones that make you feel the high effect. But with the strip you’re getting those cannabinoids directly into your bloodstream which means they’re hitting your cannabinoid receptors much, much faster.

So depending on what you’re doing, like if you’re being pretty active, you can feel the effects within ten to fifteen minutes because your blood is moving around your body and that’s the carrier for the cannabinoids. But if you’re kind of just sitting or maybe you just ate a big fatty meal or you’re watching TV, then you’re not going to feel the effects for probably 30 or so minutes. But in both cases it’s still faster than eating an edible.

Matthew: This is a very unique product. Is it difficult to find a manufacturing partner or the equipment to make something like this?

Josh: Yeah it was actually totally impossible to find a manufacturing partner. When I first came up with the idea for the product I spent about two months in my kitchen at home trying to figure out how to make it because I couldn’t find anybody that would help me out, and I ended up creating a handmade breath strip process that we still use today.

Matthew: Great. This is a barrier to entry. Someone can’t just decide to do this overnight and be in competition with you. So that’s a great situation.

Josh: Yeah exactly.

Matthew: How did you come up with the name Oakor? What does that mean?

Josh: So it’s named after the street I grew up in in New York. I come from a very small, conservative town in upstate New York that’s not too keen on pot. And when I moved out here I wanted to pay homage to where I came from and I also wanted it to serve as little reminder that even though I’m in a very pot friendly state, the war is not over yet so to speak.

Matthew: What other states besides Washington? Are you focused just on Washington right now, solidifying your exposure there before going elsewhere?

Josh: No, we actually have manufacturers in two other states right now. So we launched in Washington about two years ago, and since then we’ve opened up in Connecticut, which we’re in every dispensary in Connecticut in their medical market, and just recently we opened up in California as well.

Matthew: As a cannabis startup, is it difficult to get financing? Can you tell us a little bit about that journey?

Josh: Yeah so as anybody who probably listens to your podcast knows, you can’t find financing through the traditional methods with a cannabis company. A bank is not going to give you a loan. It’s pretty hard to IPO to get money that way. So you’re really resting on either angel investors or friends and family, and that’s the route we took. It took us about a year just hitting the pavement trying to find someone who was willing to even talk to us and eventually we found an old friend from an old company that we were working on that was willing to give us a loan to fund the R&D and the initial build-out of the product.

Matthew: What do the strips retail for?

Josh: So that depends on where you are, which market you’re in. In California, which is our biggest market currently, the strips retail anywhere between $15 for a tin to $25 for a tin.

Matthew: Okay. Any other products in the works?

Josh: Yeah, yeah. We’re working on a whole bunch of new products. We should have two new products out on the shelves in 2016, and they all sort of follow the same similar model that the slips do where they’re sort of a traditional product that people are used to with a nice tweak on them to make them more efficient ways to absorb cannabis.

Matthew: Which of the strips sell the best? You kind of gave us an outline of all the strips you offer, but which ones are the most popular?

Josh: Our two most popular varieties right now are definitely the CBD only variety, which is just 10mg of CBD in a slip, no THC and the extra strength variety, so the 20mg of THC.

Matthew: Okay. You’ve really done something unique here. Again congratulations to you Josh. For any aspiring entrepreneurs out there, do you have any words of wisdom as they develop their products, apart from don’t compete with you?

Josh: Yeah don’t make a breath strip. Just you know be yourself. That’s really all you can do. It’s a tough journey to get from an idea stage of something to actually getting it on the shelves and assembling a team behind you. And if you’re not true to yourself through that journey and you’re not constantly questioning why you’re doing it and who you’re doing it for, you’re never going to make it, or if you do make it, you’re not going to be happy with yourself.

Matthew: Great point. Be your authentic you, and if you don’t know who your authentic you can you take a 20mg strip? Does that help you discover that?

Josh: It’s definitely helped me find it before.

Matthew: Alright well Josh please give out your website and let people know how they can find you.

Josh: Sure, so our website is That’s

Matthew: Great. Josh thanks so much for being on CannaInsider today. We really appreciate it.

Josh: Yeah thanks so much for having me.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Josh Kirby is on the cutting edge of cannabis innovation. He is creating a dissolvable strip you put on your tongue and it dissolves. Learn why cannabis companies are having to innovate to survive.

Learn More:

Important Update:

What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at:

Key Takeaways:
[1:59] – What is Oakor?
[2:21] – Josh talks about how he got in the cannabis industry
[3:09] – Josh discusses his dissolvable cannabis mouth strips
[4:30] – The reaction to his product
[5:12] – Is Washington state’s cannabis market functional
[7:17] – Reasons some purchasing managers push back on getting the strips
[8:16] – Josh talks about the different varieties of strips
[11:35] – Finding a manufacturer for the strips
[12:11] – The meaning behind the name Oakor
[13:09] – Getting financing as a cannabis startup
[14:09] – Josh talks about future Oakor products
[15:07] – Words of wisdom for entrepreneurs
[15:48] – Contact details for Oakor

Using Data to Make Business Insights with Cy Scott from Headset

cy scott CEO of headset

Click Here to Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

As the cannabis industry continues its growth curve, accelerating passed the $3 billion mark, the industry starts to get more grown up needs. One of those needs is using data to make intelligent decisions at the cultivation and retail level. To help us understand how to use data to help improve customer experience and your bottom line I’ve invited by Cy Scott, cofounder and CEO of Headset to CannaInsider today. Welcome back to CannaInsider Cy.

Cy: Hey Matt it’s great to be back.

Matthew: Cy to give listeners a sense of geography can you tell us where you are in the world today?

Cy: Sure I’m up here in the Pacific Northwest in Seattle, Washington where it’s nice and rainy these last few weeks.

Matthew: Yeah you’re originally a California native, if I remember correctly. How is that going transitioning to being now a Seattle resident?

Cy: Yeah it’s great. We love the area. It’s a great mix of technology and we love the adult use, recreational space that’s happening in cannabis up here. So that’s been great, but I do miss the sun from time to time.

Matthew: Yes, yes it’s almost like a myth in Seattle, the sun. People talk about the sun, but I don’t see it.

Cy: That’s true except when everybody visits for some reason the sun comes out. So everyone kind of gets a little fooled, but it’s not bad and it’s pretty beautiful up here so I really shouldn’t be complaining.

Matthew: Cy I want to jump into what you’re doing at Headset. A lot of interesting things there, but first let’s remind listeners about Leafly, how you got started in the cannabis industry and what Headset is now. And I just want to remind listeners that Cy has been on the show before and that is Episode 20. So if you go to www(dot)cannainsider(dot)com/20 you can hear all the in-depth details of what Cy was doing previously at Leafly, but with that Cy, can you give us a little background on how you got into the cannabis industry, what Leafly was, why you started that and then now what you’re doing with Headset?

Cy: Sure thing. So for that tale we have to go all the way back to the year 2010. So five, I guess six years ago now myself and two others, Scott Vickers and Brian Wansolich started Leafly. And five years ago really does feel like a lifetime in the cannabis industry with the all the change.

Matthew: Yeah it does.

Cy: Yeah it does. I mean so much has changed and there’s just been so much progress, and you know I’m really excited to see what the next five years holds. But we started Leafly. Basically we saw the cannabis industry as a real opportunity in a real growth market and we’re founders, we’re entrepreneurs and startup guys and then that’s what we’re always looking at, but we also enjoy cannabis. When we first got access to a dispensary in California way back it really opened our eyes to the variety of strains that were out there. Doing some research we found out there wasn’t a lot of good resources that had good strain information available, and we thought there’s something here that we can pull together, some sort of website and app to help people share their knowledge of strains and where to find them. That was the beginning of Leafly.

We decided to take it to kind of a more mainstream approach that I think cannabis hadn’t been treated as at that point. You could kind of see it starting, but it’s very different than it is today where you see a lot more mainstreaming, a lot more people opening talking about it. So that was kind of the beginning of Leafly and you know we started that and it’s doing great and it did great and we ended up selling it to a company called Privateer Holdings which has been doing a number of investments in this space. Once we did that we were really able to scale up and like you mentioned moved up here to the Pacific Northwest to be closer to them and also to the recreational market as it unfolded. Yeah, we recently left Leafly. Now it’s been about six months. Went out and raised some money and started Headset.

Matthew: Great. Now having sold a business myself, there’s almost like a grieving process or a funky transition whenever you sell a business. I mean it’s something you started. It’s part of your identity and then you’re kind of tearing it out of yourself and your cofounders and giving it to someone else. And everybody that sells a business no matter what there is a little bit or a lot of change in the course of the business because different people have different ideas. Sometimes it’s better, sometimes it’s worse, sometimes you can’t tell if it’s better or worse until years later. But is there anything you can tell about that process that maybe people don’t think about because there’s this idea like I sell my business and then I’ve got this golden trophy. There’s an exit and an exit is very important, but how do you feel about the whole transition from starting Leafly and then having Privateer, which has a great reputation. You have a good partner acquiring you, but you’re no longer the captain of the ship in a certain way. So what’s that whole transition like?

Cy: Yeah it’s a great question. I think you kind of hit it on the head there with a lot things you’re saying. Just like startups, a lot of people equate the startups to have an emotional rollercoaster. There’s a lot of highs, there’s a lot of lows, and I think that kind of the same thing when you sell a company. It’s very, very exciting to have an exit. And having an exit is really important when you’re doing startups, and when you want to do more than one. So that’s great. It’s also you’ve built something of value that someone wanted to purchase and that’s huge.

With Privateer it was a pretty unique exit because they brought us back on. They bought the company from us and then we stayed on basically to help operationally and keep it going, and we did that for about three years with them. During that time we were really able to access resources that we couldn’t get on our own early on with Leafly. So in the beginnings of Leafly we had great traction. We had a lot of users. We had customers, everything that that a typical startup really looks for when you go out and try to raise money, but we really struggled to get any sort of investment capital back in 2010. There wasn’t a lot of money flowing into this space. It was strictly medical at the time. While everyone recognized that an opportunity was there I think that most investors were just a little anxious about it. And it really wasn’t until I502 and Amendment 64 in Washington and Colorado respectively passed and we saw adult use markets coming in that investment really started pouring into the industry.

So with the Privateer sale it was really a good deal because they were able to essentially fund us which helped take Leafly from a bootstrapped nights and weekends project to a full time, and with those resources we’re able to build a great team and you know it’s in very good hands now. It continues to grow month over month by all measures, and we still have a great relationship with those guys and wish them the best and wish them a great success. It’s hard to put into words I guess what it’s like to sell a company, but it’s overall very positive and I look forward to doing it again at some point with Headset in the far future here.

Matthew: So you transitioned from Leafly to Headset. So you went from a business that focuses on consumers now to a business that focuses on other businesses and they have a lot of different wants and needs. So let’s dig in to what Headset is. If I was a business owner in the cannabis space and you and I were having coffee, what would be some of the first; how would you frame the problem that Headset solves?

Cy: Sure. So if we were sitting down talking about Headset, I would like to describe it as a platform that enables your cannabis company to really optimize your operations by giving you insights into your everyday decisions. We call it Cannabis Intelligence. Headset is a product of years of conversations with people in this space from large scale retail chains to small growers and really kind of understanding their wants and needs and the biggest issues that they’re having. One of the most common thing that we heard was really just having a lack of access to good data and good insights. What’s happening at their locations, but also what’s happening in the overall marketplace.

So we really wanted to create a platform that helps solve that, and the best way to sum it up is really all about optimizations. So we’re really giving you a new lens, a new way to view your business so that you can really optimize and maximize your revenue potential. And with Headset we’re able to do that by analyzing data from a wide variety of sources and presenting that in an actionable way so that you can use that information to make more informed business decisions. So that would be decisions like how to best optimize your inventory if you’re a retailer or maybe you’re a product manufacturer. You know what kind of products should you be offering. Understanding what’s going on in the competitive landscape around you and being able to identify opportunities and again just really maximize those revenue streams for yourself.

Matthew: If you were put into the position of being a dispensary owner or perhaps owning a cultivation facility, if you were to sit down and look at the metrics that they have in place, most of the folks that are running these businesses aren’t really focused on the data piece. That’s where you fit in. So if you were to sit in their shoes, how would you orient yourself? Okay you look at sales, yeah that’s super important. Then you look at well which strains are selling the most, and then perhaps what else would you look at? How would you determine the health of this business and start to make insights?

Cy: Sure. Yeah it varies depending on the type of business that you have. We like to think of Headset as that super smart analyst or data scientist that you have on your staff that’s giving you insights to save you money and help you earn those additional revenues. And for a retailer, those things like sales are obviously very important, and what we try and do because you can get sales numbers out of your point of sale, but what we try to do is really create some more sophisticated reporting and some deeper analysis on numbers like that. Some of the stuff we really want to help retailers with is understanding their inventory and their assortment, how it’s priced, what kind of promotions they’re running, what kind of brands they’re carrying, what kind of brands should they be carrying, which brands are performing and which brands or product segments have the best margin and the best turn for them.

So for retailers it’s really kind of looking at stuff like that. It’s also looking at how you’re doing now compared to previous. So kind of always understanding the trajectory of your business in the context of how long you’ve been open. So a lot of these companies are new so they don’t have a lot of historical data, but you can start to see trends. And for the companies that have been open for more than a year we’re able to compare your operation compared to that time last. So a lot of those things are really helpful just to kind of understand what’s going internally. So right not it’s really hard for these companies to get that kind of inside out. The more sophisticated retailers out there are kind of building these reports on their own and trying to do a lot of Excel and pivot tables and really spending a lot of money on internal staffing to kind of get those insights and we wanted to make that really easy for them through a nice app that they access on their mobile phone or on their desktop that’s well designed.

It’s simple, intuitive. Everyone is really busy and they don’t have a lot of time to struggle with some of this stuff so we really wanted to make it real simple. So providing those types of insights and a real easy to use kind of well designed package. And design is really important to us as you can see with what we did with Leafly, taking a very design forward approach. We’re doing the same thing with Headset and we think it’s really reflected in the app now. And there’s other problems for product manufacturers, for growers that we solve. It just definitely varies for a product manufacturer. It’s really understanding their product line and where do they invest. Where do opportunities lie? Should they create a cookie or should they create a brownie? What’s selling out there? What are their competitors doing? How’s the pricing look like? What kind of opportunities for sales do they have? What kind of market coverage do they have compared to competitors?

For growers it’s what strain should they be investing in? Are people more interested in hybrids, indica, sativa? Is there regionality? Is there seasonality? So presenting that kind of information from the market data we collect but also from their own internal data as far as what’s selling for their brand because maybe their brand specializes in something that’s a little different from the market. So kind of marrying those things together and really giving it to them in a nice package is what we try to do.

Matthew: Okay so Headset can help a dispensary owner look and see okay here’s the velocity of the strains and how they’re selling. Blue Dream number one, this is number one and maybe Star Dog is number two and they can kind of see what’s selling at their own dispensary but then Headset can offer insights more to market level too like hey, in the Seattle market maybe you can say Blue Dream is number three overall and there’s two other strains ahead. So maybe you’d consider adding two other strains or different edibles and so forth so there’s both dispensary insights and then market insights that are married.

Cy: Absolutely. Yeah we feel that both are really important. So we do, we do share that. So we’re able to share market data at the aggregate level so they can understand what distribution looks like for some of their products that they carry across the market in general and even with their competitors. We’re also able to help them understand aggregate sell thru data so if they’re underperforming and over performing for certain segments or certain brands or even certain product lines we can help them with that. We also try to help them with this turnover problem where we’re seeing a lot of strains come and go as they run out of stock. So really helping them make sure that they never hit those costly out of stock events or if they happen to, giving them insights into other vendors that might carry a similar or if not same strain so they can backfill. That kind of stuff is really important.

Again, it all just comes down to optimizing the business because once you get; you have your store. You’re getting people coming to your store by using services like Leafly, but what we really want to maximize that revenue per square footage. So bringing in those insights from what’s happening internally as well as the market is very important for that.

Matthew: Now how does Headset integrate into the point of sale or how does it get the actual data to then analyze? How does that work?

Cy: Yeah so we do have integrations with point of sale software. So we’ve worked closely with some, others have APIs available and we just have methods to kind of get into that data, and there’s a number of point of sales that play in this space. We’re even seeing some from outside of cannabis that are now coming in, particularly in the recreational markets. And so we support all those guys and then we also support accounting software. So for some of the product manufacturers we will connect to services like QuickBooks and things like that. It’s very critical to kind of get that data. I mean obviously to be able to give you those insights we need access to the data and we don’t want it to be any sort of manual process, but we also take privacy very seriously. We never share that data out in an attributive form or anything like that. So while we work with the data and we integrate with these point of sales it’s just to give you your business intelligence as a store owner.

Matthew: Are you focusing on Washington out of the gate as your core market?

Cy: Yeah a lot of that is because it’s our backyard. Also it’s a pretty interesting market. I don’t know, Matt, you’re based in Colorado I believe right?

Matthew: Yes.

Cy: And so I don’t know if you’ve had a chance to come out to Seattle or Washington recently but the market is really coming together. It’s a really interesting space, and we think it’s a good model. We anticipate Oregon looking a lot like this and potentially California. So it’s really great to kind of start here. Also geographically it’s easy for us to work closely with our beta partners and get that kind of feedback we need, but we understand we’re not strictly Washington and just like with Leafly we want to cover all markets. So we will be rapidly expanding this year into other spaces, recreational and medical.

Matthew: One of the problems not just for a business owner but for everybody is the amount of data. People are drowning in data. So to have information curated for us is very helpful. However not every variable or key performance indicator deserves the same weighting. So that being said, when a business owner is looking at their dashboard, they’re looking at sales, they’re looking at the turnover, but after that how do they get to the next level? Because all dispensary owners are looking at those things. It’s great to have it beautifully presented, but then when you dig in and you try to differentiate yourself and make decisions based on data, what would you advise there? Are you starting to dig into what each individual bud tender is doing or what are some other things to look at?

Cy: Yeah that’s a great point, and that’s something that we set out with Headset to really try and change. Data is great, but insights are really where it’s at. Insights are only as good as you use them, and if you don’t use them they expire. If you don’t know how to use them, it’s even worse. So we really wanted to create a platform that’s very intuitive, very easy to use to kind of pull those insights out for you. So if you were looking at a graph or a chart and you’re trying to make heads or tails of like what is this really telling me. What are the key pieces of information? What we like to do with Headset is we actually pull that out and just present it to you. So you get the key pieces of information and then you can go and look at the chart to really understand okay how are they coming to this conclusion and really analyze that chart and maybe come to additional conclusions from it.

So that’s one thing that we really try to do, and it’s not an easy problem. It’s much easier just to present all the data and figure it out, but we understand there’s varying levels of sophistication in this industry. A lot of these companies are small to medium sized businesses with small staff. So we really needed to create a platform that is very easy to use that they can access from anywhere, on their phone on the go and just get that kind of insight and that kind of intelligence at a glance. So that was one thing. Yeah a variety of reports. Also you mentioned bud tenders.

So with the retailers we’re really trying to help them understand what’s happening in their store. So not just inventory sell thru but what their employees are doing. As I’m sure you’re well aware, bud tenders, particularly in recreational but also medical, they have a lot of purchasing power so they can really drive the purchase because people come in and there’s not a lot of brand awareness quite yet. There’s a huge variety of strains, not to mention types of products. So a lot of consumers come in and shoppers, they’re looking and are just kind of overwhelmed and the bud tender is really source for sales for these stores. So really helping them understand what the bud tenders are selling as far as brand affinity. So is this bud tender selling more of Brand X or Brand Y? And that’s really useful in a lot of ways. If you want to run a promotion for Brand X, you can look to which bud tender on my staff is selling the most of Brand X and you use that as a training exercise for the rest of your team or maybe learn some insights of what they’re saying that’s doing so well and selling so much of this.

Also their category, how they stack up. So you may find that some bud tenders do really well at selling topicals and other might do really well at selling edibles. So really understanding that, and you can use that as a store owner or a store manager to really pull some levers to try and really optimize your employees, and if you want just kind of a broad range of what they’re selling versus category versus brand, you can look at some of this Headset data to really help make those decisions and really change the way your business is run.

Matthew: It is amazing to your point about the ability of a bud tender to sway the purchasing decisions. It seems like the ones that when I’m purchasing more they do a really good job of making a connection with the person. It’s not just a transaction. It’s a connection and there’s an understanding and an empathy and it can make a huge difference in not only the revenue for a dispensary, but how happy the customer is walking away and feel like they got what they wanted and what they needed. Strangely some dispensary owners just think well hey I can just have this person train the others, and that bud tender may not know why they’re great. There just might be something innate to them. So it’s maybe something where they shadow them or something like that. So it is worth a lot of study there. Now you’re saying you can break out how much a bud tender is selling in flower and edibles and so forth which leads me to my next question. Initially Seattle seem much heavier a flower market. Is that starting to turn a little bit where we’re seeing where edibles are becoming more popular or is flower still the thing that people are really interested in?

Cy: Yeah, no it’s definitely in Washington we’re seeing a lot more of the package goods. So edibles, beverages, even topicals. I think it started with a lot of flower just because every kind of had to start from zero here for the recreational side. Colorado, all the dispensaries, a large number of them were able to turn over and become recreational. So they had things like edibles already. Where while Washington had edibles for the medical market. That was a whole new license and a whole new kitchen and everything was so different. So it was basically everyone started from zero. So flower is obviously the easiest thing to produce because it grows and you process it, you dry it and you package it which is interesting here, all packaged based on weights. But yeah it’s definitely over the year plus, it’s been a little while now that we’re starting to see more and more brands. We’re starting to see more consumers kind of heading that way and more concentrates. Obviously flower is still dominates and I think flower still dominates the majority of sales, but we are definitely seeing it increase in edibles.

I think a lot of it for the recreational consumer that’s just now getting back into cannabis or is going to these retail stores for their first time here, you know, a flower can be a little overwhelming too. It’s like do you want to go start drinking coffee, it’s buying coffee beans and grinding it up and doing a pour over coffee versus just buying something ready to go or pod for your coffee machine, really easy. I think there’s consumer demand we’re starting to see more of and also brands starting to address that. We’ve got some really interesting brands here that are popping up in the edible scene and some really interesting products. It’s very exciting and it’s just the beginning. Like I said early on five years ago a lot of the edibles we would see in California were packaged brownies in a Ziploc and a Avery label. And that Bang chocolate bar I think popped up around then and you could kind of see well this is the kind of the direction it’s going, but now it’s getting very sophisticated, and it’s really pretty impressive.

Matthew: You’re right and to your point it’s interesting to see kind of regional differences. I have a theory that places that have bad weather the people tend to be inside focusing on things a lot more and people in nice weather are outdoors not as focused perhaps and it’s definitely so in Seattle. We’re having an entrepreneur on the show soon that’s making dissolvable breath strip and out of; it’s not a breath strip, it’s like a dissolvable strip you put on your tongue and it has either CBD or THC in it. So there is some really interesting things coming out of the Seattle market and I look forward to highlighting those more. Now next steps, rest of the year. Here we are early 2016, what do the next 12 months look like for Headset? What are you going to be focusing on? Where are you going to be going strategically?

Cy: Sure so we’re just now coming out of beta for our retailer product. So probably by the time this podcast is up we’ll be live in Washington for retailers. So really pushing into that space. Meanwhile we’re in the middle of developing our product manufacturer processor edition. So like we talked about earlier, different types of companies have different problems, there are some overlaps for sure, but we really have dedicated kind of experiences for the different types of companies. So really focusing on the process or a product manufacturer coming up, and then expanding into other markets. So 2016 is going to be a huge year for us.

We just started Headset probably about July last year is when we started fund raising. We left Leafly in June and spent some time just kind of thinking about what’s next. We wanted to stay in cannabis. We love this industry. We think it’s going to be a huge, obviously so does probably everybody listening, it’s going to be a big market and we really want to see it succeed. So we kind of set out to figure out what that was and landed on the idea for Headset. So we’ve spent the last four or five months fund raising and then we were able to do that relatively quickly and then dove right into building. We’re just now kind of coming out of that. So I’m really excited to get it in the hands of customers. We’ve had it in beta for a bit now and have gotten a lot of great feedback so that’s a positive reinforcer. It keeps the team motivated, but I’m really excited to start getting it into customer’s hands and expanding into other regions this year.

Matthew: Cy are you still looking for investors for Headset?

Cy: We’re not. We did the seed round last year. A relatively small seed round, we wanted to keep it small. We raised money on an idea and a team. We love our investors and we love the group that we pulled together and we’re really privileged to have the investors we do and they all come from, you know, some point in cannabis. They have some connects. So along with the finances we also get a lot of support, a lot of insight into the market as well as a lot of connections. So that’s been really helpful. But this year we’re planning on doing a Series A, so probably sometime in the middle of the year while we’ll be doing that. And we wanted to have a product, get some customers, get some traction before we go out and raise a bigger amount. So this year we’ll be out there again looking for investors. So yeah that’s coming later, definitely probably middle of the year I would say, but right now we’re good on the financial front.

Matthew: How can listeners learn more about Headset?

Cy: So I encourage listeners to head over to, that’s While we’re pushing into new markets, definitely sign if you’re interested in getting early access. We do betas usually before we roll out the platform for each market. So if you have a cannabis business, retail, if you’re a product manufacturer or grower and you’re interested in these types of insights before anybody else, sign up and we’ll reach out and we’ll get you connected and we’ll get you on the platform.

Matthew: Awesome. Cy, thanks so much for coming on CannaInsider today. We really appreciate it.

Cy: Yeah thanks Matt, great talking with you.

Matthew: : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

Cy Scott was a co-founder of Leafly, the wildly popular cannabis strain exploration app. Cy and his co-founders left Leafly in 2015 and founded Headset. Headset has its sights set on helping cannabis cultivators and retailers use data to make educated decisions to help their business.

Learn More:

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year? Find out with your free guide at:

Key Takeaways:
[3:15] – Cy talks about his background and how he got into the cannabis industry
[6:35] – Cy discusses the transition from selling a business to starting another
[9:32] – What is Headset
[11:53] – Cy talks about how business owners use Headset
[17:21] – Integrating with point of sale systems
[18:33] – Cy talks about Headset’s core market
[20:25] – Cy discusses different areas of data for business owners
[24:58] – Flower versus edibles as it pertains to the Seattle market
[28:12] – The future of Headset
[30:57] – Contact details for Headset

Master Cannabis Cultivator on How to Create The Optimal Cannabis Grow

James Lowe of Mjardin Cannabis

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

With so much change in the cannabis cultivation space it is important to stay abreast of advances in cultivation operations and technology. That is why I’ve asked James Lowe, President of Cultivation and Co-Founder of MJardin to come on the show today. James has a sterling reputation in the cannabis community for his wealth of knowledge and best practices in cultivation. Welcome to CannaInsider James.

James: Yeah thanks for having me.

Matthew: James to give us a sense of geography can you tell us where you are in the world today?

James: Located in Denver, Colorado at the moment.

Matthew: And what’s your background James? How did you get started in this industry?

James: My background is actually in design management and project management. We got or I specifically got into the industry through starting off with just handholding with ownership and guiding them through the design and permitting process when the state of Colorado forced the commercial world to kind of come from below ground and go out into commercial facilities and be permitted and have their certificate of occupancy. So we put a team of designers together and helped around thirty or forty Colorado based groups navigate that process over the course of a year or two and then from there we morphed from a design group into a full blown cultivation management company.

Matthew: Right so the management company you’re talking about is MJardin. So tell us what is MJardin? What do you specialize in and how do you help clients today?

James: MJardin’s focus is on the turnkey management of commercial cultivation facilities. So we provide all the typical assistance that the consultants out in the marijuana world provide, design, licensing, support but only in the context that it also is part of a long-term management contract. So we come in and the vast majority of the time 100% staff the cultivation facilities and run the day to day operations as opposed to providing quarterly support or a single person that might assist a owner with their day to day operations. We actually perform 100% of those activities by MJardin employees.

Matthew: Yes and that’s something to really; is a key differentiator because a lot of the cultivation and consultants out there are kind of there if you need them but you’re actually in there doing it and that’s a big, big difference.

James: Yeah absolutely. We’re essentially kind of a non equity partner that is with the licensee for the long haul.

Matthew: Yeah so can you explain what that means by non equity partner and how that’s different maybe perhaps from the way some other cultivation consultants do it and how MJardin’s compensated?

James: Yeah I mean we’re typically a cost per pound. So we work with the licensee to develop a staffing protocols and how the facility is going to be run and then we in terms of that labor cost we don’t mark any of that labor cost up and we simply; our management fee is collected on a per pound basis. So outside of the raw cost which the licensee pays for whether it’s the labor, the cocoa, the fertilizers, whatever those may be they pay for those. We don’t mark any of that up and then we simply collect a management fee based off of production so that our interests are lined with the licensee’s interest as well. If we can’t successfully cultivate we’re not billing any fees and therefore since we are just a professional fee based setup we’re not asking for any equity in anyone’s deal. So the licensee keeps their equity for their own purpose whether that’s to raise capital or obviously keep it for themselves.

Matthew: I’ve had the pleasure of walking through a couple of your grows and it immediately becomes apparent that when you’re walking through with someone like James he’s looking at things in a very different way than someone who’s coming in as a novice looking at it seeing these plants and lights and tables and everything. James when you’re setting up a grow for the first time what are the big elements in your mind that you think hey I have to execute well here or we won’t have healthy plants?

James: Ultimately what we’re doing is; our job is to have whatever genetic that we’re growing we’re there to express it as best we can and in order to do that we have to have environmental control. The best growers in the world can’t do anything if the plant isn’t thriving and the only way that it can thrive is to be being grown in a perfect or close to perfect environment and obviously that’s the number one step or the number one thing to do when getting these places setup is to make sure that we’re staying within a budget. A lot of people’s downfall happens when they; I want a 1,000 lights but I only have money for 700 and all of a sudden corners start getting cut. So we have to make sure that we stay within the confines of the licensee’s financial situation. So those extra 100 lights don’t do you any good if you have mold issues or temperature issues or whatever the cause may be. So first and foremost is having a grip on what the final cost will be with our initial designs and not discovering that too late but then ultimately we want to maximize the space that we’re using.

We’re not proponents of compartmentalized grows. We look to the general horticulture industry to see that vast acres of cut flowers and hydroponic vegetables are grown in wide open greenhouses. They’re not cutting these facilities down into small basement size rooms. So by looking at that we make sure that we can maximize production in the square footage available and not get caught up in figures of I can grow three pounds a light or I can grow two pounds a light or four pounds a light or whatever the number is. The real question is how much marijuana can I successfully pull per square foot per year because three pounds a light is not a measurement. It doesn’t give me any context as to how much space that light is taking up. It doesn’t give me any context to how many successful yields were accomplished over a certain amount of time. So that’s how we; those are the main factors on how we approach a new facility and maximizing the value of the clients license.

Matthew: Looking at soil what kind of growing medium do you use or consider and why?

James: I think all; there’s no best soil. There’s no best hydro system. It’s all about what the clients objectives are, what their marketing objectives are. I mean if we’re looking at organic production we’re probably going to look at some soil based system. The vast majority of our facilities are not looking for organic production. They’re certainly looking for clean production but from an organic standpoint most people are onboard with the increased production they can get from some hydroponic or at least traditional fertilizer blends. So for the most part we use cocoa fiber. It provides faster growth than soil or peat moss blends but it also provides a little bit of a buffer for some of these larger facilities.

We can look at aeroponics or we can look at other systems rock oil, Hydroton but the cocoa fiber we feel provides kind of the best of both worlds. We do get accelerated growth with it but we still have a buffer with a large mass of roots so that we’re not looking at; we’re not running into situations in a large facility where we might only have minutes or hours to fix a problem. The cocoa fiber gives us that margin of safety that ultimately is extremely important and when choosing a soil or a growing medium you have to ask yourself and there’s a lot of variables in play but you have to ask yourself at what point is the risk profile not worth the reward and we do recognize that there are grow mediums that I might be able to get higher production out of but we just like the risk profile and the production associated with cocoa as opposed to; certainly as opposed to aeroponics or even potentially hydroponic mediums such as rock oil.

Matthew: Yes that’s kind of borrowing an ideology from the financial community which is risk associated return meaning you could probably get something a little bit better but then you’re introducing a lot of variables that could ultimately hurt the whole grow in some way.

James: Yeah absolutely maybe I could get 5% better yields with maybe a rock oil or an aeroponics system or something else. Maybe even 20% better yields whatever the number may be but it only takes that one failure to totally wipe out what could amount to; it could take you years to build back up with that one crop loss cost you.

Matthew: Turning to water and keeping your plants hydrated. In touring in one of your grows I saw that you had a special wicking pad or something similar to that. Can you describe what that is and why you use that?

James: Yeah. It’s called a capillary mat. We don’t use them everywhere and it’s a company called “WaterPulse” that we acquire ours from but it’s essentially a ebb and flood bench without the flood and so the benefit of that capillary mat is that instead of force feeding we’re relying on the natural capillary action of the growing media. So what happens with a drip system or a flood bench system or really just about any other system is that when a irrigation zone turns on you are watering at the frequency of the thirstiest plant for lack of a better term. So what that can lead to is situations where if I have a lot of strains in one zone and yet I am watering at the frequency of the thirstiest plant it’s at the detriment of the plant that might be the hardiest and doesn’t necessarily need as much watering and you can get into situations where you have ammonia toxicity from slight overwatering and it has nothing; it appears as a nutritional issue but it really has no bearing that we know. The fertilizer composition is correct it’s just a result of over watering.

So the benefit of the capillary mat is that when I have multiple strains in one zone instead of a drip system turning on and gravity pulling that water down or a flood bench system flooding and everything being fully saturated now we are relying on the dryness of a pot to absorb water. So just like a sponge you put a wet sponge and a dry sponge on one of these capillary mats the wet sponge is just going to stay at its current water holding capacity whereas the dry sponge is going to sit there and start to absorb water and the same is true with the cocoa fiber. So in addition to automatically watering the plants like any hydroponic system it also regulates the amount of water being delivered to various plants in the same irrigation zone so the plant that’s already a little wet is not going to be watered as hard as the plant that is very dry and needs more water. So we end up without ammonia toxicity issues in a irrigation zone with multiple different strains.

Now some of the benefits of the or excuse me that specific benefit starts to not be an issue when facilities get larger and larger and now maybe I only have one strain per irrigation zone or two strains per irrigation zone and those strains are matched and require watering frequency; a similar water frequency. We might start to look at a more traditional drip system or flood bench system or some other hydro system when we don’t need that benefit.

Matthew: So this is fascinating to me. So the flood table is indiscriminant. It sends water down the table to everybody in kind of equal measure but the capillary mat says okay it’s more surgical. It says this plant needs a little more and this one needs a little more. Have you noticed when you switched from like I’d say you were doing a flood table then you switched the capillary mat and do you see like wow the results were pretty clear that it’s a more uniform grow? What were the biggest changes you notice when you switch over to a capillary in some instances?

James: I mean it’s maybe that down turn of leaves and the vegetative state where we might have a couple different sizes of plants mixed together as everything’s filling out their pots. There’s some irregularity in growth at that point and that’s when the ammonia toxicity shows up most commonly and so we’ve seen the increase just a healthier vegetative plant which leads to a faster growing vegetative plant. Green from an entire tray being 100% green; nice, soft leaves as opposed to a leaf that is starting to discolor, turn down, and curl and get that slight yellowish tint to it. So in general we just don’t see ammonia toxicity anymore which is an important thing to achieve.

Matthew: Yeah so when the leaves turn down and they’re droopy like that are they typically yellow or they’re just drooping?

James: Yeah there starts to be some yellowness, maybe some necrotic areas. It’s subtle. It depends obviously on the degree of ammonia toxicity that’s being experienced. There’s obviously other issues that can cause the same kind of appearance so you don’t want to go down the wrong rabbit hole.

Matthew: James in terms of climate, temperature, humidity what is optimal there to help your plants thrive?

James: We’re generally; with carbon dioxide we’re generally in the mid to high 70’s with our flower areas. We run a little bit warmer than that in vegetative areas to increase growth and then 45 to 50% humidity in flower. 50 to 55% humidity in veg and we like to have our cloning separated from our veg because we do do root zone heating and so we like to run that climate a little bit cooler so that ultimately with the root zone heating the microclimate around the plant itself is still the same as what it would be in the normal veg area.

Obviously if we do that in the vegetative area and we’re still adding that root zone heat we can get situations where that microclimate might actually be a little bit out of spec and a little bit warm. Not the end of the world but we generally run a little bit higher humidity and a little bit higher temperature in our veg rooms because there’s less risk of bud rot or any other issues and we do. There are some benefits there. Once we get to flower we want to mitigate any risk of bud rot or powdery mildew that we can so we go ahead and drop the humidity slightly lower.

Matthew: So let’s say we’re looking at a 5,000 or 10,000 square foot grow. Is there any ideas around making sure the humidity and temperature is uniform within that whole space so there’s not little pockets of cold or something similar?

James: I mean the key is airflow. I mean there’s depending on your facility there should be a spec that you are designing around to get a certain velocity of air movement and for that air movement to be continuous from one side of the facility to the other that’s going to not only keep the environment consistent but it’s also going to help reduce risk of condensation where leaves could be touching and water forms and now is a breeding ground for any number of molds and so that air movement keeps that condensation from occurring. If it does it helps to dry it out fast and then obviously like your question asked it obviously keeps the temperature and humidity consistent throughout the facility. Dead spots are your enemy.

Matthew: Yeah. In terms of lighting what do you like these days? I mean is it the double ended lights or what are you using typically there?

James: Yeah we’re using the double ended HPS fixtures. We are running numerous LED tests and they’re there. I mean they’re pretty much on par with the double ended HPS and they’re definitely ahead of the Chinese knockoffs. The name brand and not all the name brand units but there’s a few of them that definitely perform better than others and when looking at those units with their ability to put light on target at the price point they’re at to us they are still a better option than LED. There are some double ended HPS fixtures out there that are on the cheaper side that you probably; the LEDs beat out. Our issue is just that with some of the warranties that are out there on the LEDs they’re not the best in the world. I mean it’s one thing for a Diode to last ten years and we don’t need to change our bulbs and all that good stuff that LED promises but when I’m spending thousands of dollars on a fixture and my warranty is only a year or two or maybe three then that’s a little bit of a concern for me to build; to invest in something assuming that it’s actually going to last ten years. So for us I am sure within the next year or two there will be continuous LED improvements that will make it the go-to choice or price will come down but in our opinion it’s just not there quite yet.

Matthew: In terms of height of your indicas and sativas how tall are each in general at harvest would you say?

James: It varies based off of the state regulations. Where we deal with the plant count we have to maximize the production per plant. If there’s no plant counts to deal with our plants get smaller and smaller and smaller. So Hawaii being an upcoming new market I think their limitation is 3,000 plants per facility. In Colorado it’s based off of patients. Even on the rec side there’s plant count limitations. States like Maryland and Nevada where you have no plant restriction or plant count restriction at all we’ll see the smallest plants. Here in Colorado we’re typically in the for our systems we’re typically in the three to four foot range but it’s not such an important on an indoor facility. The important thing is making sure that we are capturing 100% of our canopy. That we’re not wasting light, that we’re not wasting space, and regardless of how tall our plants are when they achieve that as long as those primary goals are being met our yields will stay the same regardless of how big the plant is.

Matthew: When an investor or business owner is putting together a proform or they’re trying to come up with numbers and estimate their ROI and their expenses and things like this is there an industry standard range on yield per square foot or something you see typically?

James: It’s all over the place. If you always want to be conservative I mean when you’re trying to woo a client or certainly what we see competition doing is making the claims of; they’ll typically speaking in pounds per light which we hate to talk about but everyone wants to dream of massive numbers and that’s great on particular strains but you really have to look at the fact that whether you’re a wholesaler or a dispensary you need 10, 15, 20 strains or in some cases many more than that and the yield profiles are going to vary widely between all of those strains.

So our standpoint is certainly on a financial side of the equation is to be conservative and we typically model and depending on what the scenario is in play that 30 to 40 grams per square foot per harvest but the number ranges up into the 60 grams and the 70 grams with some strains per square foot so; but you just can’t build a financial model around your best performance strains.

Matthew: And you’ve mentioned getting an extra harvest each year because of the way you grow. How does that work exactly?

James: Well it’s just an efficiency. It’s not wasting days, not wasting time. I mean it’s filling on a schedule, harvesting on a schedule. Making sure that there’s no tasks that could only take a day that could instead take a week. I mean it’s just a matter of all protocols being followed and all schedules being kept at all costs and for us not looking at extremely long flowering strains. There’s so many strains out there. We don’t think that it necessarily makes sense to be unless there is a purpose. I mean there could be strains that just need to be grown but for your general purpose strains there’s hundreds and hundreds of strains out there that don’t take 75 and 80 and 90 days to flower and in the commercial world unfortunately for better or worse it doesn’t necessarily make sense to go after those sort of strains.

Matthew: If you could kind of turn back the clock and go back a few years to when you were just starting out in this industry or just starting to help clients what would you change about; you probably focusing on a lot of things now that you would say hey this wasn’t as important. I probably should have focused on these things and not on these things. What would you go back and tell yourself five years ago or three years ago about what’s more important and what’s less important?

James: I think compliance is everything and we always make sure that we’re operating 100% compliantly but the rules are always changing and luckily we have a really great group of guys and contacts that are always assisting us and working with us to stay ahead of that but that legal side of things and that compliance side of things can really start to bog a company down if they’re not prepared financially to deal with it. Luckily we were but we could have probably been more prepared ahead of time to understand how important that compliance team is and how detailed they need to be and how many individuals there needs to be to kind of stay on top of that thing because no matter how good of a grower you are, no matter how beautiful your dispensary is, no matter how good the product is if you can’t stay on top of the rules 100% of the time; not 99% of the time, not 99.5% of the time.

It only takes; depending on your state it only takes one violation by an employee that could be at the bottom of the food chain but can put you in jeopardy. So really kind of appreciating that dynamic which we certainly do now and like I said we’ve always been able to maintain compliance but we’ve made that part of our company so much more robust now than what it was years ago.

Matthew: Looking at Colorado since recreational cannabis became legal how have you seen the consumer taste change from flower to edible to vape pens and did anything surprise you in those changes?

James: I mean I think it’s no secret that edible demand and vape pen demand keeps going up month over month and we’ve seen the increase just like everyone else has. I don’t think; it certainly hasn’t surprised us. I think the question will be is how far it goes but it’s my suspicion that it will at some point overtake flower sales and the amount of product being grown for vaporizers and edibles here in the next few years. There’s probably a lot of people that disagree with that but I’m certainly not surprised by it and the good part about that is it’s a different growing style and a little bit easier growing style when you’re growing for what’s essentially resin production instead of bag appeal. So it should lead to lower costs and lower prices for the consumer in the end.

Matthew: You have a up-close view of the different types of cannabis dispensaries and different types of consumers. Some are just looking for hey I want the cheapest price per gram or per ounce and others are looking for more like of an artisanal quality cannabis flower and experience. I mean tell us a little bit about that range that you see here in Denver. What’s it like? Is it really that big of a spectrum and when you go in what’s the consumer taste like?

James: I mean the vast majority of consumers I feel are looking for a quality product at a bargain price and then you’ve got; you do have your connoisseurs and that’s true of just about; alcohol industry is the same way. I mean you’ve got millions upon millions of gallons of Budweiser and Coors being sold throughout the world and you’ve got; there’s still a lot of connoisseur beer out there. There’s a lot of the same on the spirit side of the equation but I don’t think cannabis is any different there. The vast majority of people are looking for not necessarily a low end product but they want value with an acceptable quality and no matter what we’re talking about here when it comes to the regulated cannabis market everything is for the most part there’s very few people that are able to stay in business that aren’t growing fairly decent product.

So we’re not talking swag bud here by any means but they do want a value product at a good price but there are a number of dispensaries in town that have low volume sales, connoisseur only buds at a higher price and they’ve found their niche and they are successful at it but as the industry develops and maybe one day starts to cross state lines I believe that you’ll see very large players that are providing a 95th percentile product instead of a 100th percentile product that at very low prices.

Matthew: Turning back to cultivation best practices. In terms of pests and diseases how do you mitigate those risks without going crazy?

James: Design is paramount. You can’t escape bad design so it kind of all happens on day one and assuming that we do have our environmental protocols in place or standards in place and they’re met and the environment is being kept that’s the number one combatant. If our humidity is low whether or not mold spores are present they’re not going to be an issue. The same is even true with a lot of bugs. Spider Mites being probably the number one issue that people face. It’s a whole different battle dealing with Spider Mites if your environment is hot. Every seven degrees of rise in temperature can see 100% increase in how fast a Spider Mites lifecycle is. So it’s really not difficult to combat these pests when the environment is as it should be but when your environment is compromised safe practices, safe pesticides, safe insecticides are not able to keep up with the increased growth rate when the environments out of whack.

But regardless of that it’s really all about; for us it’s having our IPM staff at the ready. These guys are entomologists on hand. They are able to predict problems before we even know that there is a possibility of something depending on seasonal changes, temperature changes, environmental changes, and then coming up with a plan of attack to deal with anything in a safe; with safe pesticides whether they be and inorganic doesn’t necessarily mean safe but whether they be some sort of organic pesticide, a biological pesticide, some mineral based suffocant the key is to always change it up and not rely on one or two products so that there’s never any resistance being found in your facility and it’s paramount to do it in a safe way because there’s still as you see in Colorado there’s still so many hot tests coming back for pesticides that people are still falling back to some of these products and I guess crossing their fingers that they’re not going to get caught and that’s just completely irresponsible and above all else you’ve got to make sure you’re using safe products.

Matthew: Are there any other mistakes you see new growers make in high frequency?

James: Maybe. Probably not knowing their limitations. I mean everyone is an expert. Everyone has the best way to grow marijuana and you talk to 100 different growers you get a 100 different methods and the reality is it’s just like corn, just like soybeans, just like tomatoes. In the end there’s really only going to be a handful of accepted methodologies that make sense in the commercial world and that just hasn’t come to pass yet because the industry is so young and there hasn’t been the billions of dollars spent on research that have been spent on all of these other crops and so over time we’ll see tried and true methodologies start to kind of rise to the top and some of these 95 other ways to do it people will stop doing it and the problem is there’s so much ego in this industry that no one wants to think that there’s maybe a way to do things that’s better than their method and so what will happen is because there is no economic filter right now that gets rid of the ideas that may not be so good because everyone’s profitable even if there not that productive and so what happens is people have ([40:06] unclear) or they’re blind on and they start designing facilities that are double the size of their last facility and they’re still maybe based off of methodologies that may not be so great and then one day and probably in Colorado it’s going to be in the sooner than later.

But at some point that economic filter kicks in and prices drop and things become competitive and all of a sudden that method that people were so such about all of a sudden is causing them a lot of problems and they can’t keep up in the price war. So I guess the advice would be and we have to remind ourselves as well but the advice is to be everyone’s still learning and you’ve got to stay nimble and you’ve got to just know your limitations.

Matthew: That’s an excellent point and one I think is not talked about enough. I mean the ego can really hurt you and everybody’s probably seen someone that’s committed to an ideology crash and burn but having that humility and ability to say I don’t know everything and I’m constantly looking for a better way. The Japanese have a term called “kaizen” that they use in manufacturing and that is continuous improvement. The cake is never fully baked. We’re always looking for a way that we can improve and we don’t get dialed into a dog mud that can come back and bite us in the butt later. Germane to that are there any stubborn myths you see around still James about growing cannabis that persists and you just can’t believe that people persist in certain ideologies?

James: Not so much. We’re kind of in our own bubble and so I don’t get out to kind of see what people are stuck doing. I think that the one thing I can say is that a lot of people and a lot of big companies even took a lot of their knowledge when things were being done on a small scale and systems that worked on a small scale and made sense in someone’s basement and have now blown those up on a massive scale and so you see facilities setup very similar to how a basement grow may have been setup except that now that basement grow isn’t 200 square feet it’s 10,000 square feet or 20,000 square feet or however big it may be and so I believe there’s a lot of things that do work and do make sense in the basement that still find themselves out in big commercial operations.

Matthew: In terms of big commercial operations there’s a growing interest in greenhouses and you mentioned tomatoes and some other typically considered produce for growing in greenhouses and outside perhaps. What do you see happening with greenhouses and cannabis cultivation in the years ahead?

James: Well I think there will be a large shift to greenhouses obviously. I mean there’s lower costs involved. We’ve got a more complete lighting spectrum. We’ve got in most cases depending on your glazing we’ve got access to UV light. There is for us; there’s people that probably think you can’t grow as good a cannabis in greenhouses and that may or may not be true but the California market has probably given a bad name to greenhouses and that’s only because there were a lot of hoop houses that people utilized to get an extra crop out of or may have used; tried to use all year round but they weren’t necessarily state of the art high tech facilities and so sometimes the product that came out of them; obviously it was better than not getting a second harvest that year but there may have been a negative connotation with greenhouses because that second harvest it wasn’t the quality that it needed to be but it was also coming out of a very basic facility up in the mountains somewhere.

A state of the art greenhouse which can cost a substantial amount of money; it’s not done to save money. There should be different motives for going to a greenhouse. Obviously your operational costs will save money but your initial installation can be quite expensive to get it to the state of the art that it needs to be to be competitive with indoor facilities. But we think; we certainly think that’s absolutely possible.

Matthew: When you look out on the horizon are there any technologies or developments apart from greenhouses that gets you really excited?

James: I spoke a little bit negatively of LED’s earlier. We’re a big proponent of what’s coming in lighting and we think that that will be the next big thing for indoor facilities and other than that I believe actual research going into the processes around the cultivation of cannabis. I mentioned there’s vast amounts of money that gets spent on all these other crops right now. Most of the R&D being done for cannabis is really just trial and error in the growing environment. Now we certainly are and we’ll see and I expect other people probably will as well to do true research in controlled laboratory settings on the cannabis plant specifically not just; right now people are looking at the gnome, they’re looking at other things which are all exciting but for us being a cultivation company what excites us is true laboratory university grade research being done in controlled chambers.

Repetitive tests that truly mean something as opposed to I put an LED in this room over here and I saw better production so it must mean the LED’s are good. I mean it might mean that they’re good. It might mean that whatever you were testing in that room it might be good but we look forward to the day where we truly can provide scientific backed 100% verifiable data that says this product makes sense or this light makes sense or this hydroponic system makes sense. So we look forward to being able to provide that to our clients in the very near future.

Matthew: As I toured a couple of your grows James I noticed you have a lot of people working there. You have electricians, you have trimmers, you have people on the retail and the dispensary side, and every day I get emails from people saying hey I want to get into the cannabis industry so bad. I have no idea how to do it. Do you have any stories or can you tell us about a time where you may be promoted somebody that just showed promise who really wanted to get into the industry?

James: Yeah I mean we always try to promote from within. I mean there’s a certain amount of trust that’s required in these facilities and we can always hire someone with a great degree and experience in related industries but we’ve got guys who started at the bottom and now manage big facilities and they’ve learned every task in the company and they’ve developed trust with us and a degree of confidence that we were able to put these guys in multi-million dollar facilities. Likewise we’re always interested in hiring individuals with degrees in horticulture or some plant related field.
We like people that are excited about the cannabis plant but we’re always a little concerned about old habits die hard and we’re always a little concerned about a person who has the five years of underground experience and knows how to do things which sometimes that they work well with certain systems. Our system is very much science based so we’re always eager to talk to that person who doesn’t know how to get into the industry but has that science background or horticulture background and wants to figure out how to break into that industry. We are more than happy to talk to them.

Matthew: James in closing can you tell listeners how they can learn more about MJardin?

James: Yeah our website It’s not the best representation of us at the moment but its being rebuilt here very soon but it will give them all the information and we do post job openings there. There’s a link that people can go to and submit resumes and then they’re always welcome to call us up as well if they don’t see a position open at the time. We’re always collecting people’s information because we’re always expanding into new spaces so there’s always a new opportunity on the horizon.

Matthew: James thanks so much for coming on CannaInsider today and educating us. We really appreciate it. I was very impressed with your grows, your skill, and your team and thank you.

James: Absolutely. Thank you.

Matthew : If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Some quick disclosures and disclaimers, me your host works with the ArcView Group and promotional consideration may or may not be given to CannaInsider for the ads placed in the show. Also please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions.

James Lowe, President of Cultivation at Mjardin gets real and reveals how top shelf cannabis is grown and all the best practices it takes to ensure a healthy harvest. We talk lights, irrigation, soil mediums CO2 and more.

Key Takeaways:
[1:42] – James talks about his background
[2:41] – What is MJardin?
[5:56] – How to set up a cannabis grow
[9:05] – James talks about his preferred growing medium
[12:30] – James discusses the “capillary mat” and what it does
[18:00] – Climate, temperature, humidity
[21:13] – James talks about the lighting aspect of the grow
[23:15] – Indica and Sativa heights at harvest
[26:42] – Getting an “extra harvest” each year you grow
[28:27] – Lessons learned in the grow room
[30:49] – Changing consumer tastes
[34:59] – Mitigating the risks of pests and disease in your grow
[38:31] – Biggest mistakes made by new growers
[41:52] – James talks about people’s ideologies in growing
[43:38] – The future of greenhouses in cannabis cultivation
[48:33] – James talks about promoting his people from within
[50:16] – Contact details for Mjardin

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year? Find out with your free guide at: