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Ep 354 – California’s Finest Flower Is Rising From the Ashes in Wine Country

julia jacobson aster farms

Some of California’s most sought-after cannabis flower also happens to come from one of the most sustainable companies in the US. Here to tell us about it and share a few of her secrets is Julia Jacobson of Aster Farms.

Learn more at https://www.asterfarms.com

Key Takeaways:

[2:02] An inside look at Aster Farms, a sustainable cannabis brand based in northern California

[2:20] Julia’s background as an entrepreneur in the tech space and how she came to start Aster Farms

[3:40] Aster’s unique proprietary genetics and how they curate their popular line of flower

[7:49] The “5 phase approach” at Aster Farms and how this allows them to grow smaller, more high-quality batches

[11:29] The substantial damage Aster Farms suffered during the 2018 Mendocino Complex Fire and how the company successfully rebuilt themselves

[15:48] The pros and cons of being vertically integrated in the cannabis industry

[17:33] Why Aster Farms chooses more sustainable practices despite various challenges

[22:19] Why we’re seeing an upswing in craft cannabis brands across the US and where Julia sees this sector heading over the next few years

[25:08] The challenges in scaling a sustainable, small-batch cannabis company and how Aster Farms has gone about navigating this

[27:54] How Aster Farms differentiates themselves through unique branding and marketing

[29:58] Julia’s advice on how to build unbreakable brand loyalty

Click Here to Read Full Transcript

Matt: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now here's your program. Hi, CannaInsiders, just a quick note before today's interview gets started, that my colleague Sinead Green will be interviewing today's guest. Sinead is [crosstalk]--

Sinead: Hey, Matt.

Matt: Oh my god, you scared me. Sinead, I didn't realize you were in the sound booth.

Sinead: Sorry about that, Matt.

Matt: Well, Sinead, since you popped into the sound booth here, this is a great time to just say hello to all the listeners since I was talking about you.

Sinead: Sounds great. I'd love to. Hey, everybody. I'm Sinead Green and I've actually been working with Matt behind the scenes for a couple of years now,. I'm so excited to put on my hosting hat and really get a chance to engage with you and bring you some more great interviews. I just want to say if there's someone you'd like us to bring on the show, please feel free to email me your suggestions at sg@cannainsider.com. I'd love to hear from you, and I really hope you enjoy these upcoming shows.

Matt: Gosh, I want to get a host hat, now that you mention it, I'm thinking of a huge purple velvet hat. What do you think about that?

Sinead: I think that would look great on you, Matt.

Matt: Okay. Really important, Sinead, we want you to do a good job, but not better than me. Does that sound fair?

Sinead: We'll see about that.

[laughter]

Matt: All right. Well, everybody, enjoyed this episode with the host Sinead.

[music]

Sinead: California's most sought-after cannabis flower also happens to come from one of the most sustainable companies in the US. Here to tell us about it and maybe share a few of her secrets, is Julia Jacobson of Aster Farms. Julia, welcome to CannaInsider.

Julia: Hi, thank you for having me.

Sinead: Give us a sense of geography where are you in the world right now?

Julia: Currently, I am in Oakland, California, but on any given day, I can be found pretty much anywhere all over the state.

Sinead: Great. What is Aster Farms on a high level?

Julia: We are a sustainable cannabis brand. We are based in California, sold all throughout the state, and we grow our own. We have a farm up in Northern California where we grow beautiful organic sustainable flower.

Sinead: Awesome. I know cannabis farming is a family tradition of yours so I'm really excited to get into that in a second here. Before we do, I wanted to ask you a little bit about your background. Can you share a little bit about yourself and what you were doing before Aster Farms?

Julia: Before Aster Farms, I began my career as a buyer in the retail industry. I was a buyer for Bloomingdale's for about four years and left there to start my first startup, my first entrepreneurial venture, which was a technology company that bridged the gap between retail and some of the online social media and influencing that was happening.

Sinead: Very cool. Julia, what would you say differentiates Aster Farms from other cannabis brands out there?

Julia: A few things. I think it all comes down to substance and transparency. We are third-generation growers with really historic legacy in the cannabis space, which I think we're going to go into in a minute. We care about those ethos being stewards of the earth, caring about our consumers. We're conscious consumers. For us, it's not just about organically growing sustainably, it's about caring about our community connecting and being more than just bud.

Sinead: Absolutely. The demand for Aster Farms flower in California is just amazing right now. Can you tell us a little bit about the strains you grow. How did you land on these particular strains, and what all goes into your growing process at Aster Farms?

Julia: We have a few strains that are our proprietary genetics that we've been growing for years and will continue to grow. Those are our core strains. Those include Shishkaberry, Sour Maui, Maui OG and we double with a rainbow chip in there as well. Beyond that, we really focus on what we call fruit-forward strains. We're not doing dessert strains, we're not chasing the most popular strain that's on the market today. We really focus on beautiful fruity aromas. We focus on strains that are much closer to the original landrace strains, so connecting back to that Maui Wowie that people remember from the past.

That's how we try to curate our selection. We're also really focused on what grows well. We're not going to just try to grow something just to grow it, it all matters on the climate and your region. We are growing strains that do well in our very particular climate and region. That means sourcing from nurseries that are local, and that means paying attention to where these genetics have been bred over time.

Sinead: Great. Getting back to your tech experience, I have read that at the end of your experience in the tech space, you were ready for something just totally new. You wanted to do a 180. If I'm not mistaken, your father-in-law has a history in cannabis farming. Is that what inspired you to start Aster Farms? Can you speak a little to what just sparked that passion for cannabis in the first place?

Julia: It was a few things all pointing in the same direction. It was pretty unavoidable that I think my husband and I were going to end up in cannabis. For me, personally, I had developed chronic migraines. I had been a recreational user, but with my chronic migraines, I was using prescription medications that weren't working. I was ending up in and out of the hospital on a regular basis. One of the times I was in the ER, the doctor said to me, "If you feel comfortable with cannabis, you should try it for your migraines." I had never thought before to light up a joint in the middle of [inaudible [00:06:14]. I did, I listened to the doctor and I tried it and it completely changed my life.

For me, that was the moment where everything changed in my relationship with cannabis and it became something that was part of my health and wellness and part of my ability to actually live my normal life again. For me, it was really important to be involved in this industry because it literally saved my life. It was easy to get into the industry on that emotional psychological taboo career level because it was in my husband's family. His grandfather, on his father's side, moved the family to Mendocino in the '60s, and they started growing organic cannabis on an off-the-grid sustainable ranch. His grandfather was actually the first person to go to prison for cultivating cannabis in old Mendocino.

Sinead: Wow.

Julia: This piece we haven't confirmed, but legend has it, his family along with the neighbors who were all growing together up on Signal Ridge brought the first indica seeds to California. There's a lot of deep history in my husband's side of the family when it comes to cannabis. Also in the ethos that we wanted to bring to this business of caring for the land, growing and sustainable organic regenerative practices, and caring about consumers as well. We wanted to make sure we were bringing that to our business today.

Sinead: Wow. That's amazing. You guys, you're like the Johnny Appleseed's of cannabis in California. That’s so cool - I had no idea. That's amazing. Going on that, like you said, it's a multi-generational farm, so you guys have had a while to really establish your approach and your practices at Aster Farms. Can you explain your five-phase approach that you guys have at Aster Farms?

Julia: Absolutely. This approach that we have is actually a more contemporary approach and is based on the technology that we have today and also based on a type of cannabis that, to my knowledge, has only been commercialized in very recent times and that's ruderalis. With growing outdoors, you have a very finite season, and typically, with full-term plants, you can only get one harvest for one growing. In order to have a more diverse cadence, to have fresh flower at different times of the year, but still to be able to get those complex terpene and cannabinoid profiles that come from growing in live soil, we have started integrating ruderalis.

Ruderalis, there's sativa, indica and ruderalis. Ruderalis is the third type of cannabis. Correct me if I'm wrong on any of these details, but my understanding is it originated from Siberia, and it is bred in that climate to not be photosensitive. Ruderalis is a type of cannabis that starts vegging and flowering basically at the same time as after it germinates. You're getting really small plants, but you're able to get through an entire cycle in approximately 80 days. What we're doing at the farm, is putting in one crop of ruderalis while we're popping our seeds for our full terms.

We are then harvesting that ruderalis as the full terms go into the ground to make sure that we don't have any surprise males pollinating our precious flower. Then, as we're taking our full terms out, or as they're starting to flower, we're typically putting in one more run of ruderalis. In addition to that, we have some light deprivation greenhouse, which allows us to continue having fresh product in what we would consider truly the off-cycle, so in those winter months, in that early springtime. Between two auto harvests or full terms and the light dep, we're able to really consistently supply our demand.

We do clone as well. Typically, when we're cloning our full terms, we're looking for strains that we were a little bit light on so that we're able to beef up the yield in that particular strain. Those are the five various ways that we are currently growing at our farm, all using living soil, all using the same ethos and as sustainable practices as we possibly can. These are techniques, back in the day, the family was growing just full terms. Being able to use light deprivation technology, being able to utilize ruderalis genetics that have become stabilized is really fortunate for us in the commercial world today.

Sinead: That's really fascinating. You guys are located in wine country so you couldn't really be in a better place. That said, you guys had quite an ordeal with the Mendocino Complex Fire a few years back. Can you tell us a little bit about that and how you guys recovered from that incident?

Julia: The Mendocino Complex Fire in 2018 started, or one of the two fires that made up that fire, the ranch fire, started approximately 5 miles down the road from us. My husband and I were actually on the farm that day packaging, and he stepped out to take a break and saw a big plume coming over the ridge. We were really fortunate to have time. A lot of people in these wildfires, especially as they continue to grow in terms of their scale and their speed, don't have time. We had two days to pack up and to figure out what we were going to do to fire prep.

Ultimately, there's nothing you can do when there's a plant in the ground still growing. Out of 600 plants, only 13 survived the fire, which is incredible that even 13 survived. We were really supported by the community, not just the actual neighbors and the direct community that we have, but also the cannabis community. TerraVesco donated us nutrients, some really great warm casings, and compost and whatnot, and a top hat nursery down in Salinas donated us clones. With the help of our team and our neighbors and our community and our friends and family, we were able to plant the probably latest full-term harvest that anybody's ever pulled off in history. [chuckles]

We've got some teams in the ground the second week of August, I believe, and we made it through. It's really scary to see how wildfires are progressing. The drought that we're in this year, we're already seeing signs that it's going to be a very dangerous wildfire season. We're doing everything we can at the farm to continue to make it as fire defensible as possible.

Sinead: Absolutely. After that fire, you guys actually started a giveback program called Harry's Harvest. I know there's a bit of a heartbreaking story behind that program, but I hear you might be bringing it back. Can you tell us a little bit about that program and the story behind it?

Julia: Yes. Harry was one of the farm cats. He was half bobcat, which made him extra special, but he also just loved hanging around people and hanging around us while we were working. When we were evacuating the farm, the most difficult part of all of it was not being able to find all of the farm animals and Harry was one of the animals that we had to evacuate without. When we came back to the property, he was not there. It's not confirmed that he passed in the fire, but to this day, we have not seen him. We named our giveback program after Harry.

We donated $1 of all proceeds of each pre-roll pack to local firefighters. The volunteer firefighters in each local community, they are the first responders on scene. They are the people who are leaving their own house while it may burn down to come save yours and they rely on donations. We supported two of the local firehouses that responded to the fire that affected our farm. We are planning to bring this program back in the future and to expand it beyond just fire relief and focus on all different kinds of organizations and things that matter to us as a company.

Sinead: That's amazing. I love how you guys have turned a real heartbreaking situation into something positive there. That's really cool. I look forward to seeing if you guys bring that back down the line. My next question for you, Julia, what are the pros and cons of being vertically integrated with outdoor cultivation in the cannabis industry right now?

Julia: It is really important. It is a very interesting nascent industry. In other industries, typically, you have really established suppliers for all the different pieces of the supply chain. In this industry, all of these really commercial licensed operations are brand new, and everybody's still figuring it out, everybody's searching for capital to be able to keep going, everybody's navigating licensing and regulations. It's really difficult right now in this nascent industry to be able to rely on third parties. That is whether it comes to buying wholesale flour as a brand and just white labeling. There's been unbelievable fluctuation both in pricing and quality in the market for various dynamics.

In terms of packaging, there have been outages of certain packaging on and off throughout the last few years, then when it comes to co-packaging as well. Co-packaging and processing is a really tough piece of the supply chain because it's a low margin piece of the supply chain, and very intensive. The technology isn't necessarily there in cannabis today to automate certain parts of these functions. By being vertically integrated, we are able to rely on ourselves. If we've learned anything in this industry, that's one of the most important things you can do because just because somebody might be a great operator doesn't mean they're going to be around tomorrow.

Sinead: Very cool. Cannabis right now, especially with indoor cannabis production, we're seeing a huge carbon footprint, it seems to be rising year after year. Tell us a little bit about your efforts in sustainability at Aster Farms. What sparked that passion for the environment and why would you say these practices are so crucial to the cannabis industry?

Julia: For us, it really came from just the life that we live ourselves. We're conscious consumers, we care about the environment, we care about transparency and knowing who these companies are that we spend our money on. That's how we make decisions in our own life. It's also how the family's been growing cannabis for over 50 years, caring about the environment, caring about the consumer who was going to consume it at the end. In terms of our sustainability report and the way that we've gone about our practice, we believe that it's our responsibility to do right by this earth, particularly when it comes to cannabis.

A lot of people don't realize that the illicit cannabis market, when it was in prohibition, was incredibly environmentally harmful. A lot of the grow operations were literally just popping up wherever they could divert from a spring. There was a lot of water diversion, there was a lot of pesticide use, a lot of chemicals that were entering into the watershed, even animal abuse going on. When we have the opportunity to start a commercial industry from scratch, I think it's all of our responsibility and all of our duty to do it in the most environmentally sound way and to right the wrongs of the historic cannabis industry.

Sinead: Absolutely. Julie, you guys have some numbers to your name that are very impressive. I wanted to dive into your sustainability report from last year a little bit. Can you share a little bit about that and what numbers you guys recorded from last year?

Julia: Yes, absolutely. We put out our sustainability report really to take a look at how we were doing and assess ourselves so that we can benchmark and try to improve as we continue to grow as an organization. We also wanted to spark a conversation with people and see if other companies will put transparency. Open up and be transparent about this. I think one of the most interesting things is the actual waste use. There are regulatory reasons and there are also supply chain reasons that make cannabis a wasteful agricultural product in ways that others are not.

A lot of that goes back to the Track-and-Trace program. Aster Farms, for example, this last year, we used between 30,000 and 50,000, what's called a metric track-and-trace tag. Those metric track-and-trace tags are required to be affixed to the actual plants, which means using a zip tie. Our company used cuts and disposed of in solid waste in the trash, not recyclable, about 50,000 zip ties in a single year. If you start thinking about all of the licensed operations across California, you're talking about millions and millions of these plastic RFID tags and these zip ties that are used once and disposed of, and can't be recycled.

Those were some of the areas that we were the most horrified because it doesn't need to be that way. [laughs] Beyond that, we really have to be watching this industry and how regulations are being formed in regards to pushing operations indoors and into greenhouses. If you look at a study that was done in Colorado, greenhouse and indoor cannabis has produced more greenhouse gas emissions than the coal mining industry in Colorado. I don't have the data to know if that includes illicit market or if that's just commercial licensed cannabis operations, but regardless, that's not acceptable.

We need to be really having a conversation about this and trying to dig into, if cannabis is going to be forced indoors because of the taboo, because of the climate, because of local regulatory reasons, then how do we do that in a way that is not putting more stress on our climate?

Sinead: That's a great point. Cool. Going off that, we are starting to see an upswing in craft brands like Aster Farms across the US, which is great to see, not only in terms of just the quality of the product but also from an environment standpoint. Why do you think we're seeing that shift, and where do you see that going over the next few years?

Julia: I think we're seeing that shift for a few reasons. One, price sensitivity. On the consumer level, now the consumers are having to pay for taxes all throughout the supply chain that add up, it's a lot more expensive to buy cannabis on the commercial market than it was from the black market. I think that because outdoor and greenhouse cannabis can be produced literally because of the electricity costs and because of the water costs, we're pulling from a natural aquifer through a well, as opposed to pulling from city-developed water.

All of those things make a difference in costs, and that gets actually translated up to what the consumer pays. I think cost is truly a factor. I also think education is a factor. People thought that indoor cannabis was "better" or more potent than outdoor cannabis because of the shelf appeal, because it's not knocked around by the wind and the rain and the creatures and all of the elements outdoors, the trichomes look ridiculous. [chuckles] The bud structure is able to be much more controlled. That doesn't necessarily mean that it's a better high or even that it's more potent than outdoor cannabis.

I think there's price sensitivity going on. I think there's a lot more education about all of the benefits, including full-spectrum wellness and medicinal benefits of outdoor cannabis. I think people are starting to understand more, even if they don't know what a terpene is, that there's more than just THC going on in terms of giving you the effect of your high. I think there are a lot of dynamics. I also think that we're coming out of prohibition and for as many outdoor farmers is there have always been growing in cannabis.

The only reason that cannabis is grown indoors is because of prohibition. Now that we are legally allowed to grow, people can choose the way that they want to do. Hopefully, people will continue to choose to grow outdoors. It's harder, but we believe that it produces a better flower that's better for you.

Sinead: Absolutely. Like you said, it seems like there are lots of advantages to smaller batch harvests and craft cannabis as a whole, but you mentioned it is a little bit more difficult than indoor cultivation. What would you say have been some challenges with outdoor cultivation at Aster Farms and scaling a craft cannabis company? What would you say has been tricky there and give us a little bit about how you've gone about navigating that.

Julia: A really good example of this is the difference between the first run that we ever did in our light deprivation greenhouse and every run thereafter. When we first put our light deprivation greenhouse set up, we were racing against time and didn't have time to properly get the beds fully built out and the soil amended and turned into live soil and whatnot. We grew our first round in pots. The way that most people grow cannabis. Every single plant turned out, not identical, but pretty close to it. They were all very uniform. They were the same height, they were the same color, they were distinct bud structure.

There was uniformity. That was because it was the same exact potting soil in a very controlled environment, in a very small pot. The moment that we created really robust, deep, beautiful beds and planted straight into those beds, we began to see variability. At Aster Farms, we embrace that. We grow a significant amount of our flower from seed, which means it has bigger, but it also has variability. We see it the same way as going to the farmer's market and choosing heirloom tomatoes. All of them are going to look crazy different.

They are going to have some weird spots and colors and bumps on them, but they're going to taste significantly better than a tomato grown in a hothouse greenhouse. The variability, if you think about an entire field of soil, it's really difficult to get all of that soil to act exactly the same. Frankly, we wouldn't want it to because that would mean that there wasn't its own living ecosystem functioning down there. For us, it is a constant battle of assessing this patch versus this patch, versus these 10,000 square feet and really assessing how our soil is doing, how it's operating, what that living ecosystem is doing from one 10 by 10 patch to another.

Sinead: Great. Julia, I wanted to switch to the branding side of Aster Farms. You guys have, I think, one of the coolest brands in cannabis. I've watched a lot of your videos, and I think your marketing as a whole, but especially your video marketing really evokes this love for the outdoors. I get almost a sense of brands like REI and Salomon from some of your videos. I wondered, how did you decide your angle there, and who do you feel like you are targeting with most of your marketing?

Julia: That's a great question. We built Aster Farms for people like us. We are conscious consumers who care about what we put in our body. We care about the companies we spend our money on, but we're not necessarily composting every single thing in our backyard. I still have an Amazon Prime account. [laughs] Similarly, we're active people. We love to hike, we love to be outdoors, we love to explore, but we're not running marathons, we're not extreme spheres. I think Aster Farms is for people who are wanting to engage with their environment, whether that means getting deep in thought on an intellectual level or whether that means going out and exploring the world or exploring other people.

We want to produce cannabis for people who want to connect. We're not the kind of cannabis for getting stoned and playing video games on your couch. We really want to evoke that sense of adventure. I think California is inherently a place that has that from the mountains to the ocean to beautiful fields in Redwood Forest. We would just want to encourage people to get out and connect with the world. That's who we are and that's what we care about. We're trying to get that across, and everything from our packaging design to our brand films, to our messaging.

Sinead: Great. What would you say over the next three to five years, how do you see branding in cannabis evolving? What would be your advice to listeners who are either in the throes of starting their own startup or they are thinking about getting into this space? What advice do you have for their branding?

Julia: I would say that authenticity is everything. We are officially at the point in the cannabis market where it's a mature market when it comes to brands now. Consumers are starting to have brand loyalty and there are big operators. Even though federal legalization hasn't happened, the big money is here. There's a lot of money and a lot of flour being thrown around with nothing genuine attached to it. It's just a name that came up with on a whiteboard that was slapped on some packaging and some flour was sourced. There's big money behind those types of brands. They're going to be on the shelf.

In order to compete, if you don't have hundreds of millions of dollars, you need to be telling a genuine story and your brand has to be authentic. I think that's what we're going to start to see over the next couple of years. At first, it was just, get me on the shelf, make sure the warning label is proper so that I don't get-- The BCC doesn't pull my product. Then people started caring a little bit more about messaging. Now, I think we're officially at that point in a mature market where authenticity is going to be picked up on and consumers are going to start to really understand the personas behind these brands.

Sinead: Absolutely. It sounds like a lot of these big brands that you're talking about, you have been reached out to over the past few years from a lot of big brands and you typically like to partner with smaller, more local brands in Northern California. Can you tell us a little bit about some of your partnerships and why you like to keep things local usually?

Julia: Yes. For us, it's really about continuing to maintain our ethos. That means both from where the product is sourced, the way that the product is produced and manufactured, and the types of people who are running the companies behind the collaborations we do. We see Aster as a very farm-to-table brand when it comes to caring about the ingredients and caring about the types of form factors that you're consuming. For that reason, I'm not going to say we will never do a vape, but we've been approached multiple times about doing vape pens and we're just not interested in it because it's not who we are.

It doesn't embody what we believe our experience with cannabis is what we want it to be. We have collaborated with a few edibles brands. We have worked with Rose Los Angeles who are incredible makers of what they term a Turkish Delight. It's very similar to a Turkish delight and I would say more delicious. We've done collaborations with them. We love that they work with world-renowned chefs to create really beautiful recipes using farm-fresh ingredients. There's a lot of synergy between the things that we care about and the thought and effort that goes into the actual ingredients.

We've partnered with Potli which is an amazing and I always forget the tagline that they use because I always feel bad when I say this, but they are the infused condiment brand. [chuckles] I think they call themselves a kitchen pantry brand. Everything from Serratia to honey to olive oil, they make it infused and they make it delicious. We partnered with one of Sam's other uncles who has an award-winning or organic olive oil farm also in Lake county. With Potli, we made an Aster cannabidiol infused olive oil. We're making that into a forever collaboration. It won't always be with cannabidiol olive oil because it's a very small operation there.

We are going to be doing an infused olive oil with Potli as a forever collaboration. We have one more collaboration coming up this summer, which I can't talk about yet. It will be cannabis that you can sip. I will just leave it at that. We're really excited about the brands that we've been partnering with and hope to continue to do so with really only the best who are aligned with our ethos and what we care about in our brand.

Sinead: That's great. We're going to have to keep an eye out for that beverage this summer. Julia, speaking of your collaborations, you guys are celebrating Pride 2021, collaborating with an artist who has designed your packaging for these specific pre-rolls of yours. Can you tell us a little bit about that collaboration and what this means to you both personally and as a cannabis brand?

Julia: Absolutely. We really feel that it's important to not only support the LGBTQ+ community through regular donations and support and our messaging and our inclusive hiring, but to literally put it on our packaging and to turn Aster Farms into a celebration of pride, if not all year around, at least for this month. We wanted to partner with an LGBTQ+ artist who had-- Again, it's all about having a similar ethos and allowing them to express what Aster Farms means to them in a re-imagined design. We worked with Ludi.

She is a really brilliant, beautiful, amazing artist who has done work for fantastic organizations that we support. She designed a really beautiful reimagination of the Aster Farms' mountainscape. We are donating 100% of the proceeds to an organization of her choice.

Sinead: Great. Julia, how can listeners participate? Where can they maybe find those pre-rolls? Is it just in LA or could they find them elsewhere?

Julia: You can find them at the Sweet Flower shops in LA and they can be found at the Liberty shops in San Francisco.

Sinead: Great. Julia, before we turn to some personal development questions, I did want to ask what goals do you have for Aster Farms over the next few years? What can we expect to see from you guys?

Julia: We are currently getting the wheels moving in terms of some MSO expansion. That's multi-state operations. We believe that California is where cannabis is meant to be grown, but we also want to be able to take our brand and take our ethos and let people all over the country experience the Aster Farms lifestyle. We are going to be popping up in some other states over the next few years. It's a long road to do so, but we are getting the wheels in motion today.

Sinead: Very cool. We'll have to keep an eye on that and maybe have you back on the podcast to do a follow-up when that happens, but definitely wish you the best of luck there.

Julia: Thank you.

Sinead: Okay, Julia, I did want to turn to some personal development questions before we wrap up here. The first one, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Julia: I don't know if there's a single book. I was a comparative literature major in college, which meant I got really, really nerdy and way too analytical with all of my reading.

[laughter]

My specialty, I really love modernist literature. I think one of the most interesting things about modernist literature is being able to see people in their broken, disjointed, and convoluted inner minds and just realize that everything isn't as perfectly neat and tidy and tied up as sometimes people present themselves on the outside. I think there isn't necessarily an individual book but just understanding what modernist literature has taught me. I think as an entire body has been really helpful to my life and my sanity.

[laughter]

Sinead: That's awesome. Julia, next question. What is one thing going on in the industry that you think will have a big impact but might be a little bit underappreciated right now?

Julia: I think recently, another university was able to start moving forward with research. I think that people underestimate, in fact, I don't even think that most consumers know that there isn't federal funding for research to be done on cannabis. A lot of the conversations that we're having are grounded in research and scientific development that's happened outside of the normal realms of what we consider legitimate research. I think that that's one of the most important things that's happening today is we're creeping closer, one small step at a time, towards the proper research of cannabinoids, of cannabis, of THC, of how it interacts with other medications, how it helps with various ailments, diseases, how it interacts with our sleep.

There's so much to learn. I think it'll really help solidify cannabis's place in the medicinal world once we start having some of that research done in a way that is legitimized by the larger population.

Sinead: That's a great point. Cool. Julia, one last question before we close and it might be the toughest question in the interview. You're stranded on a desert island and can only bring three movies, which do you choose?

[laughter]

Julia: That's easy for me. L.A. Story is probably my favorite movie in the whole world. I'm a big Steve Martin fan, a child of '80s. Labyrinth was another childhood favorite of mine, which never gets old. It's just unbelievably fascinating to me. Last, I would go with the Big Lebowski.

Sinead: Oh man. [laughs]

Julia: I would say all three of those are really great stoner movies too.

Sinead: That's all great. Big Lebowski is a classic. [laughs] That's awesome. Okay, Julia. As we close, can you share with listeners how they can find you online and connect with you?

Julia: Absolutely. You can find us at asterfarms.com and you can also find us at @asterfarms on Instagram. If you go to our contact or DM us, we are always responding. Feel free to reach out and be in touch.

Sinead: Julia, thank you so much for coming on the show. We really appreciate it and we wish you the best of luck for the rest of 2021.

Julia: Thank you so much. I really appreciate being on here today. It was great speaking with you.

[music]

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

Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Emotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the company's entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.

[music]

[00:43:38] [END OF AUDIO]

Ep 353 – The Largest Cannabis Dispensary in the World Just Got Bigger

bob groesbeck planet 13

Planet 13 is the largest cannabis dispensary and retail experience in the world, and it just got bigger. Here to tell us about it is Co-CEO Bob Groesbeck.

Learn more at https://www.planet13lasvegas.com

Key Takeaways:

[00:56] An inside look at Planet 13’s 112,000-square-foot cannabis superstore in Las Vegas

[2:27] Bob’s background and how he got into the cannabis space

[4:53] How Planet 13 merges cannabis and entertainment for a unique retail experience

[9:30] The organizational tools Planet 13 uses to keep its dispensary running smoothly

[16:17] How Planet 13 decides which products to offer and the best ways to display them

[17:43] Surprising new consumer habits Bob has noticed over the last year

[21:19] Bob’s predictions for when we’ll see the first national brand in cannabis

Click Here to Read Full Transcript

Matthew Kind: Hi. I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program. Today's guest has created arguably the largest cannabis dispensary and retail experience in the world. I'm pleased to welcome Bob Groesbeck, CEO of Planet 13 Dispensary to the show today. Bob, welcome to CannaInsider.

Bob Groesbeck: Thanks, Matt. It's great to be with you.

Matthew: Give us a sense of geography. Where are you in the world today?

Bob: Well, today I'm actually in Vegas. I'll be down in California tomorrow, getting prepared for our VIP opening on the 24th, and then waiting for the opening to the public on July 1st.

Matthew: Well, you got to give us a sense of how big Planet 13 is and what it is for people that don't know. I think probably at least half the audience has heard of it, but another half hasn't. Just give us a snapshot. What is Planet 13 at a high level?

Bob: Sure. Planet 13 Superstore is, without a doubt, the largest dispensary complex of its type in the world soon to be the universe. We're about 112,000 square feet under roof, and we've built out about 75,000 feet, and we're actively under construction now of about another over 25,000 feet coming online here the latter part of next month, early August. Got about 16,000 square foot dispensary. We're adding roughly that's about another 7,500 feet of floor space and, of course, all the support that goes with that.

That'll take us to about 85 registers roughly. It's all designed to be an experience. It's more than just buying cannabis. It's mine cannabis with an experience. It's all about Vegas and it's all about doing things over the top. Of course, now we're carrying this footprint into Santa Ana, California with our first Superstore outside of Nevada. I'm really excited to build that scale and that type of operation with a Cali vibe. It's completely different than Vegas other than it's grand and it's designed to really create an experience.

Matthew: I want to get into more details there in a minute, but before we do, can you just give me a little bit of a background about you and how you got into this business? What were you doing before Planet 13?

Bob: Well, I spent many years as corporate counsel primarily in the solid waste industry, and a very strong regulatory background. I had my own firm for a while. I worked in a number of firms from small firms to national law firms and really spent a lot of time again in the regulatory environment for different clients. I really tripped onto this opportunity literally because I was at a county commission meeting and waiting on a land-use item of ours to be called and really wasn't paying much attention.

I thought I heard somebody mentioned the word marijuana and that peak my interest and then there was silence again. I went back and zoned out and started reading my material for my item. There again, they raised the items start talking about a regulatory framework that needed to be adopted. I was fascinated. I walked down close to the dice, I grabbed a hard copy of the agenda, look at the backup material. I was just stunned that here we were in Nevada looking to adopt a regulatory framework for sale of medical marijuana and super intriguing.

Of course, I didn't have enough sense at that time to really understand just how complicated it would be, but I came back and talked to Larry Scheffler, my co-CEO, and my longtime partner in real estate. We started talking about this, how many times in a lifetime does a business evolve from the underground to becoming illegal? We looked at that as an opportunity to something we really needed to explore and we jumped in with both feet. Again, we were pretty naive at the time.

We didn't really understand all the nuances and the implications of Schedule 1 and 280E and all those things but we made the decision nonetheless, and here we are, fast forward, nearly seven years later, and we've built a beautiful facility and now we're expanding that model other the jurisdictions, as I said.

Matthew: This is a super large facility. You said rooftop is over 100,000. Can you talk about inside, just paint a picture of what the experience is like because we're an audio medium here and people can't visualize?

Bob: Sure. For your audience, I encourage you to go on our website. There's quite a bit of B roll there, a lot of photos that they can look at, but really the experience is designed to start as soon as you pull into the parking lot. We've got a giant planet ball that greets you with water and steam. The whole idea is to really just get you excited about what lies inside. If you come in the evening, we call it the West Wall, you'll see a laser graffiti operation, the gigantic laser graffiti, where it's unlike anything really in the industry.

We used to allow our customers spray painless a laser graffiti, but the parking lots now are so congested and full that we've had to loop that through a computer system. Then, on the rooftop, you see gigantic flowers that are multi-colored LEDs and just really vibrant and special and then you transition into this gigantic lobby. They greet you at check-in and once you get your tickets, you're allowed to move forward into the grand hallway. On the left side of the building, we've actually got a large restaurant, Trece, we've got a full bar on-site.

We've got a massive production facility further down the hallway of which about 3,800 square feet are behind glass so customers can actually watch products being manufactured in front of them. Then, there are CUNY kiosks in the hallway that you can touch, that are touchpads, that you can look at the products as they're being manufactured and find out what the constituent products are that that given runner. It's really just designed to engage you, get you excited about the facility, and what it offers.

Then you go into the dispensary and then you go through the turnstiles and you're greeted with flying orbs which we found in Germany that fly on a GPS every hour to a choreographed light show. It's again designed to create that experience. This is Las Vegas after all. We've got 3D mapping on the ceiling and then our new phase of construction that's again, as I mentioned earlier, should open end of next month, it's going to have a gigantic video wall with waterfalls and planets coming at you in 3D.

To give you an idea of the scope, it's about 80 feet by 16 feet tall. We've got Maglev technology that are going to greet customers as they come in. They're going to actually see inventory floating in space in front of them and they'll have a full 360 views. It's really just, again, designed to be over the top. We're going to bring similar experiences to Santa Ana, of course.

Matthew: This is really something that could only exist in Las Vegas in many ways or at least start out that way. Cannabis and entertainment merging, how do you come up with ideas on what you want to do here to just wow people? Is their brainstorming sessions just come to you in the middle of the night? What's the process look like?

Bob: That's a great question. It's a combination of all of that, but most of the features you see in a store are things that Larry and I have come up with or we found, and we want to improve upon the wheel. We've got a very creative staff as well. They come up with ideas that makes sense. We'll integrate that into the process. We're always trying to change it up as things move on. Like I said, Santa Ana is a completely different field than Las Vegas. We learned a lot of lessons down there or here in Vegas that we've put into place down there as far as moving people, enhancing the experience.

Again, California is different than Nevada. You've got oceans, palm trees, and surfboards, and that whole Cali lifestyle and vibe. As we go into these larger markets like Santa Ana, Orange County, we're going to pay homage to the lifestyle, both communities we go into and really play up on what makes that community special.

Matthew: This is a massive operation just organizationally. Do you use a lot of technology and special processes to manage the whole thing or do you look at it like we're managing a theme park or how do you think about organizing and managing it all so it runs like clockwork?

Bob: Well, very much so. A lot of technology has been integrated in the facility. For instance, when you check-in at the front desk, you're giving a card. It's almost like you'd see a baseball field, it's QR coded, and then you go through optic scanners, you go into the facility, then you're directed to a keyless system that basically you put your phone number in, and then it puts you into a staging queue, and that lets you know where you are in the process.

Your way could be from zero minutes when the store is not busy, all the way to an hour or more when we hit peak times like Friday evening, Saturday evenings. We're looking to shorten that up considerably with the expansion. The whole idea is to let you know where you stand in the process. Give you an example, let's say you're here on a Friday evening, it's really crowded, there's going to be a significant wait time, go across the hall, have dinner, or sit in a bar and have a drink, watch sports, do whatever you want to do, just monitor your phone, and it'll tell you what your estimated wait time is.

Then it'll ping you and say, "Go to register 36 on the floor." It's really designed to make it as convenient as we can. Our philosophy is simple. We want you to stay here as long as you want to stay. If you're in a hurry, you want to get out, we want to accommodate you there as well. If you want to spend a couple of hours in the facility and enjoy it, we encourage that as well. That's why we're bringing on the expansion of the dispensary floor. We're also adding a standalone retail center. Now, soon, we'll start construction in the museum at the north end of the complex.

Then recently, you probably follow the national media on the Nevada Legislature approved lounges. We're really looking to now design a feature that will fit in well with that whole experience and really, again, keep you here as long as you want to stay.

Matthew: Tell us what's your vision for what the lounge will be like?

Bob: Well, we're looking at it probably a little differently than others. Again, the vast majority of our customers to the superstore here in Las Vegas are non-Nevadans. They want a club-like experience. What we're trying to do is basically build it out in two sections. One would be what we call an ultra lounge where it's quieter, very high-end, luxurious, but you can talk and engage with friends in a relaxed atmosphere. Whereas if you go into the club, it'll be a true Las Vegas-type club experience. There will be a cover charge, there will be entertainment, it'll be loud, and just over the top. We're looking to provide that experience to both groups.

Matthew: You said it's mostly non-Nevadans. What is the mixer? The breakdown?

Bob: Roughly, pre-COVID, and I've qualified that a bit, pre-COVID, about 85% of our customer base here at the superstore were not Nevadans. Obviously, during COVID, that changed dramatically. It basically went down to zero and the store was closed for a bit of time as we transition to delivery only. When we did open incrementally, the vast majority of our customers were locals. Now, we're seeing that as Las Vegas is reopening, we're seeing it now trend toward that 85% range again. We think that that'll be the cases things stabilize.

Matthew: What's the general vibe in Vegas right now? Are things pretty much wide open or is it half-open, just all the casinos and surface away and all these different things?

Bob: Pretty much all open. Some of the venues, they're not seven days, maybe they're five days or whatever, but they're all transitioning to their schedules pre-COVID. It's coming together. We're really excited. The traffic volumes now are ticking up. The exciting thing about that is we're seeing a huge retail customer base coming in. We haven't really started to touch on the convention customer, those events. We'll start to trail here in Q3, Q4. We're really excited about that. We just think there's a lot of upside.

Matthew: When people come in and have the Planet 13 experience, is there anything they say to you over and over again that you use at this point? You know what the typical responses?

Bob: Well, no. I love to just sit in the grand hallway and listen to people as they come in. I give you an example. Just last week, there was a group of five people from Houston that were in. They're walking down the hallway and they just finished watching chocolate being run on the automated rotten machines there. One of the girls turns for a friend and says, "I'm in heaven." I just thought that encapsulate everything that we're looking to do. Again, it's about the experience.

Matthew: That's going to be a lot of fun just coming up with these ways to wow people. It's like a Disney experience or Pixar like how are we just going to amaze people. The bar is always being raised, I'm sure.

Bob: Right. Well, as the industry has continued to evolve and legalize, there was a stigma and there still is. There's still a lot of Americans that have no idea what cannabis is or what it's about. The fact that some really positive things come out of that, and particularly, bring it out of the underground and legalizing it, creating jobs, paying taxes, doing all that. I think we have a lot of customers that come through that are cannabis curious or maybe they're coming with a friend really who had no exposure.

Or they've been to a store where they come from where it's out in an industrial area with steel bars, and a bunch of alleys, you got to go through to get to it. They come here and I see this. Wow, this is part of a real business in a very large scale business at that and we feel safe, we feel comfortable, everything's professionally displayed. I think it sets the tone and we think that's good for everyone.

Matthew: How do you decide which products to offer and then where to put them for optimal sales and visibility?

Bob: Well, that's an entire process. We've got a buying team together and we've got merchandise display people. They work very closely together. A lot of products before they ever get into the store, the vendor that's looking to place here in the facility provides samples and they're rigorously tested by our staff. Certain salespeople, for instance, will be provided with those products, they'll sample them, they'll score them, and then we'll sit down and talk about them, the positives, the negatives. If they can pass that hurdle, then they work with the buyers on pricing.

Then placement is a whole different game. If you're placed on what we call our Gucci Row, you pay for that placement like in any retail environment. It can be very significant depending on where you're placed. That's a very involved process and it's continually evolving. As I said, as we open the new retail store or the new retail area, there will be product placement opportunities there too. In fact, a number of those spots are already pre-sold before we even open the facility.

Matthew: Are there any consumer habits that you notice that are shifting or evolving lately?

Bob: Well, yes. During COVID or pre-COVID, rather, we would see huge percentage of our sales through non-flower vehicles, whether it be vapes or edibles. Then during COVID, that completely reversed. It was a huge gravitation back to flower products. We're seeing that now that the city reopens, more tourists are coming back. We're seeing at the superstore facility. We're seeing, again, a migration back toward the more discreet usage because you're not permitted in Las Vegas to smoke in casinos or smoke THC products, for sure.

We're seeing now, again, as the tourists come back, we're seeing that migration back to the more traditional levels that we were saying.

Matthew: During COVID, it sounds like you closed for a while, but also shifted a lot to delivery. Can we talk about that a little bit?

Bob: Yes. Let's say to put it timely a challenge. We were basically given about 24 hours' notice that everything was going to close. It didn't impact just us, it was everyone across every business sector. For us, it was acutely painful because again, all of our traffic was derived from tourists customers. Literally overnight, we went from several thousand customers a day to zero. We were fortunate though that the governor allowed our industry to engage in a delivery platform. Unfortunately, we had no meaningful delivery at that time. We were running several vehicles, maybe 20, 30 deliveries a day on average. That obviously wasn't consistent in operation of the size long term. We immediately made the decision. We weren't going to close our doors. That was not an option. We made a decision to try to compete in the delivery market and cater locals. We went out and found 30 vehicles in fairly short order and have them equip and converted to handle delivery. Within probably 60 days, we were knocking on 900 deliveries a day and built up a huge delivery platform.

Matthew: Wow. What did you use for that? A custom app?

Bob: Yes, we did. Well, we utilized a couple of apps and integrated those, a route smart technology, and really built that and started improving upon it. We continue, we have a very robust delivery service today, and we're going to continue. That's one of the positives out of this whole nightmare was it really allowed us to create a revenue stream and services segment that we weren't even focused on. Our delivery in curbside programs today represent standing alone about equivalent to whatever a retail store would in revenue monthly. Very excited about how that turned out.

It was a heck of a challenge but it paid big dividends in. Really, it's a testament to our staff, and our managers, they got focused. We all realized there was a huge challenge, but we're going to do everything in our power to see it succeed and it did, at levels we didn't even anticipate.

Matthew: Bob, is there any big trends you see in the cannabis industry that you feel that most people don't appreciate how big they're going to be?

Bob: Look, I do see on the horizon here, there will be national brands like you'd see in any other industry. We're not quite there yet. I think it's still a bit choppy. The fact that we still have schedule one looming over the industry. Unfortunately, in every state, it's how you advertise, how you market to customers is completely different. Until that changes, it's going to be a challenge. I think the industry has come a long, long way in the future in a few short years, but I still think we've got a lot of heavy lifting to do.

Matthew: Bob, I'd like to ask a few personal development questions. Is there a book that's had a big impact on your life or a way of thinking that you'd like to share?

Bob: Well, I don't know about a book, per se. I love to read, I'm constantly reading. When I'm not focused on this, dealing with the issues of this company, I'd like to just decompress and get a good book. For instance, right now, I'm reading a biography on President Grahams. I love history, I love everything about history and I recently finished a thousand-page Home on Egypt, the Evolution of Egypt. That's just what I do.

Matthew: I wonder what anthropologists are going to say thousand years from now about Vegas.

Bob: Wow, that's going to be an interesting read for sure. Vegas is unlike anything in the world, any place. One thing about Vegas though, we've had a lot of hard lumps, but we always seem to come back and reimagine ourselves in the community and what we do and we're no different year plan.

Matthew: Is there an old Vegas spot that you think that's really cool that people may not have heard of or you can get the essence of back, the Rat Pack, or maybe an old food hunt that you think's not well known, but it really deserves a visit?

Bob: Well, it's interesting. Unfortunately, in Vegas, one thing we've not done a good job at is protecting history. Every old hotel, we demolish it and build something new. There are pockets. For instance, there are a few old restaurants in town if your viewers, your audiences in town, they want to go to an old steakhouse. There's a place called the Golden Steer off of Sahara in Las Vegas Boulevard that is truly old Vegas. It's still old Vegas place and it has good food. It's been there probably for 60, 70 years, I'm guessing.

There's an old place off of, I believe, it's Flamingo, Battista's Hole in the Wall. That's been there forever. It's rumored to have been the place for all the old mobsters used to hang out have dinner and stuff. There still are little places like that, a few of them but not far, they're few and far between.

Matthew: Another food question here, Bob, what's your favorite unhealthy comfort food?

Bob: Everything. I'm an addict for sweets. I love candy. I love cakes and pies. I try to be healthy, but I got to be honest. I go the wrong way pretty frequently. I love ice cream.

Matthew: I love the honesty. Well, Bobby, you got a lot going on here. Please tell listeners how they can find your new store in Southern California, Orange County, Santa Ana, and then how they can learn more about Planet 13 when they visit Vegas?

Bob: Sure. Viewers, obviously, you can just go to our website, planet13holdings.com or planet13lasvegas.com. Same with Orange County. You can find us anywhere on the internet there. We're at 3400 West Warner Avenue in city of Santa Ana. We're just a couple of minutes away from the beach, just probably eight minutes south of Disneyland. Right there, near the 405 and the 55. It's going to be a destination down there as well, and we encourage everyone to come have a look. This is phase one that's opening.

As soon as we open that, on July 1st, we're starting design work on phases two and three. It's going to be an amazing complex and we're real excited. Of course, in Vegas, all you have to do is get off a plane and ask a cabbie where we are mostly. We got 200 wrapped cabs alone. You want to go to the Planet, they know where we are, or you can get us off any of the social media platforms. We're here and we're 24/7, and we're all about the customer and the experience, and I'd love to have all of your audience here.

Matthew: Bob, thanks so much. Good luck with everything you're doing and the grand opening in Santa Ana.

Bob: Great. Thanks, Matt. Great to be with you. Come out and see us.

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

Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention.

This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.

[00:28:08] [END OF AUDIO]

Ep 352 – A Wave of Capital Is Heading for Cannabis, Insider Gives Details

todd harrison cb1 capital

Is cannabis the largest investment trend of this generation? Here to tell us why we’re about to see a wave of capital move into the industry is Todd Harrison of CB1 Capital.

Learn more at https://www.cb1cap.com 

Key Takeaways:

[00:50] An inside look at CB1 Capital, a New York-based investment manager and advisor that specializes in the supply chain of cannabinoid-based wellness solutions, products, and therapies

[1:13] Todd’s background and how he came to start CB1 Capital

[3:46] How cannabis investing has progressed over the last few years and where Todd sees it heading

[6:30] What Todd is most excited about as an investor in the cannabis industry right now

[7:51] Characteristics that make for a successful MSO or multi-state operator

[10:02] Todd’s thoughts on the federal legislation timeline

[14:05] Why cannabis is the investment opportunity of this generation

[15:53] How the US compares to Canada in terms of cannabis investing opportunities

[17:41] Todd’s advice to investors looking to get into cannabis

[20:27] Who makes up CB1 Capital’s advisory board, from Governor Gary Johnson to Lorne Gertner

[22:03] Why Todd feels we’re about to enter the next stage of cannabis growth and signs to look out for

Click Here to Read Full Transcript

[music]

Matthew Kind: Hi. I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program

Is cannabis the largest investment trend of this generation? Today's guest is going to tell us how a wall of money is about to move into cannabis. I am pleased to welcome Todd Harrison of CB1 Capital to the show. Todd, welcome to CannaInsider.

Todd Harrison: Hey, Matt. Thank you for having me.

Matthew: Give us a sense of geography. Where are you in the world today?

Todd: We're in Port Washington, New York. About 40 minutes outside of Manhattan, on Long Island.

Matthew: What is CB1 Capital on a high level?

Todd: On a high-level CB1 Capital, we have our wellness fund where we invest in the global cannabis space. Then we have an advisory arm where we help companies, public and private, as well as some hedge funds and ETFs and such, navigate this exciting space.

Matthew: Todd, can you share a little bit about your background and journey and how you got into the cannabis space and started CB1 Capital?

Todd: Sure. My background is in finance. I started in Morgan Stanley. I created derivatives in '91 where I was a VP there. Moved over to the buy-side. I had various roles in Y2K. Went over to Jim Cramer shop. Ran their trillion operation. I became president in 2001 and was down there when the planes hit and the towers fell. That was really, I think the pivot unbeknownst at the time for me into cannabis because seeing the people holding hands and jumping and running from the smoke and all that, I had the wherewithal.

They put me to go talk to somebody and that somebody was Dr. Julie Holland, who as it turns out was, and is quite the expert on cannabis and really alternative therapies in general. This was back several years after 9/11. Still, I would confide in her that I was drawn to cannabis to help with the anxiety and would sleep and I was feeling guilty about that. She asked, "Why?" I told her, "Well, this is your brain on drugs, and I've learned it from watching your dad and all that." She turned me onto the science. She opened that door, that rabbit hole, if you will, for the intellectually curious.

Studied the history and the weaponization of this plant as an immigration tool, studied the science and really the endocannabinoid system and its role in regulating neurotransmissions and that retrograde pathway to wellness. Then really what a natural global free market looks like and the artificial impediments that were in the way of this moving into a taxable ground. That really began the journey that ultimately led to CB1 Capital taking shape. My partner, Loren DeFalco has experience in studying the endocannabinoid system for over a decade now.

We surrounded ourselves with who we think are really some of the best minds in cannabinoid wellness. As much as we're sitting here at the precipice of Cannabis 2.0, we really are weighing in ways for Cannabis 3.0 and certainly, the wellness attributes that are going to come out the other side of that biotech pathway.

Matthew: Todd, can you paint a picture of where you think the cannabis, where we are in this cannabis investing story now?

Todd: Yes. I think the short answer is that we're in the eye of the perfect storm. I say that after this space is rallied, had a pretty significant rally year-over-year before this latest call of four months consolidation. You take a step back with Cannabis 1.0, which is that community and cultivation story and how that was the bubble and bust of 2018. From January 2018 to March of last year, the global cannabis index that Bloomberg has, was down 92%. That was before the pandemic arrived, of course. It was a real existential moment for this space. It could have gone either way.

There was no access to capital. Persian, which is a large custodian, had pulled the plug on all things cannabis, and everybody could only sell, similar now to what we're seeing on a different level, which I'll get to, but at the time, there was really no visibility. As the virus took shape, cannabis was deemed essential. I think as the breadth and the depth of the pandemic began to self-actuate, cannabis, as a solution began to take hold, cannabis as a wellness supplement for anxiety and sleep began to take hold. Certainly, cannabis as a tax driver and employment engine in a post-pandemic world began to take hold.

That was really the, in our view, March of 2020, was that cyclical bottom within a secular bull market and certainly as Black Lives Matter in that social justice piece evolved over the course of the last year as we referred to as the slow-motion, perfect storm for cannabis, continuing into the elections with the five states sweep, both red and blue and ultimately with Schumer come January.

Although certainly I think a lot of people are frustrated right now, but through our lens, we are sitting right at the cusp of 2.0, and that'll be really triggered by that institutional adoption. It's going to require some changes to the current construct to allow investors to access these names. I think that's where we are right now, but as a statewide story, this will continue to manifest over the next couple of years.

Matthew: Are there any particular pieces of the cannabis ecosystem that you're most excited about as an investor?

Todd: I think right now the MSOs are, I think that's where you want to be. We try to poke holes in a lot of our own bullish thesis here as the plumbing for the marketplace right now is so convoluted. Obviously, I think as your audience knows or should know, you can't buy US cannabis on US exchanges. You have to go to the Pink Sheet, you have to go to the CSE, both garbage exchanges and by and large, institutions. Most retail investors, US retail investors can access these securities, if they even know the difference between US and Canadian cannabis companies.

We think that's an opportunity. We think that as these walls fall over time, and we do believe that's going to be an incremental process, these arbitragers will re-rate, these equities will re-rate. You'll see some more appropriate multiples on these securities versus right now, they're really being choked off from investors. We could debate why that is, but I think it's transitory.

Matthew: With the MSOs or multi-state operators, how do you evaluate which ones are better than others?

Todd: Well, it's a good question. I think generally, we look at it and say, there is the FANG, if you will, those four horsemen, five horsemen, five [unintelligible [00:08:14] FANG, if you will, that are emerging. Then you have the back of that totem pole or the second and third-tier guys that probably have more leverage to something like safe banking or some of these other incremental legislative initiatives that we think are going to come through the pipe. Certainly, I think the conventional wisdom would look at names like GreenThumb, and Curaleaf, and True Leaf, Cresco, TerrAscend.

Maybe throw Verano in there because they've got the scale, maybe not the operating history. Then as you start to move down, there are some really good companies. I think I said Cresco, but the forefronts of the world, the gauges of the world, these are good companies, largely operating in this inefficient market right now with a very limited investor pool. You have a lot of these arbitrage is if you will, valuation arbitrages and also regulatory arbitrages that are weighing in weight. None of which, to be honest, we're really depending on right now. We think that slow and steady wins the race. As my friend, Jason Wilde says, "You can pay us now or pay us more later."

The longer you have these artificial walls around cannabis, the more traction these companies are going to get in their home states, building these brands, building those footprints, building the scale of the company and the enterprise value of the company for when that buy-build eventually arrives, when CPG and the rest of them come to participate in the space. All of that's in front of us. It really is, it's a fascinating space right now, but it's not without its impediments.

Matthew: What if anything do you think it's going to happen from a federal legislation point of view?

Todd: Well, as we sit here, what is it, June 15th?

Matthew: Yes.

Todd: I think the market's told you now that there's going to be no sweeping federal change. I think the market trading, where it was in January I mean, literally to the tick as I'm sitting here talking with you, to where it closed the night before Schumer won the Senate majority leadership and the Democrats took the Senate. All of the expectations for federal movement through all lands have been removed.

Still, we expect incremental progress. Our way to sort of intel is that Schumer's going to attach safe plus to some must-pass legislation this fall, because as the Senate Majority Leader, he may wish to have sweeping reform. Aside from the fact that he doesn't have 50, much less 60 votes for that, he's also the senator from New York and New York is fully legal, New York has social justice programs that are coming out of the gate and the senator from New York knows that there can be no social justice without functional banking. I think that light bulb went off over the Senate in the last however many weeks that they're going to need to piecemeal this.

I think that is the best-case scenario for the MSOs and the existing operators, not the best case for all of the people who are sitting in jail for doing the things that we're getting paid to do which is a travesty. There's a lot of different moving parts here, of course, criminal justice. There's talk about moving us to a Schedule 2 versus taking it off to CSA but even moving it to a Schedule 2, it doesn't lend itself to any meaningful broad-based criminal reform.

You have to take this off of their controlled substance act and circle it like you have for cigarettes or like you have for alcohol. You leave it to the states and the other criminal justice component and then you have the social equity component at the state level. That's out ultimately with the state's rights being protected. Eventually, over time, I then will have visibility on it, interstate commerce which will shift the dynamics and certainly change some of the economics but I think by the time that all plays through, you're going to have a much larger investing universe involved with these stocks.

Matthew: How is the huge cannabis brand like the size of a CocaCola or as iconic as a CocaCola going to break through into this market when they're all essentially in state fiefdoms in a way? Is that possible? How do you see that evolving?

Todd: It's a great question. Ultimately, brands are going to be where it goes. I think everybody knows that although nobody really has a good sense on how we get there. Right now, we could argue Cookies is the best or only brand in cannabis. They do that in an interesting piecemeal way but one that certainly works but can help demonstrate what that model might look like.

I think for the first phase of adoption, honestly we more envisioned people experimenting, looking for the best quality at the lowest cost, and that helping to inform their decisions and drive those brands. Obviously, you see what Ben's doing at Green Thumb with Snoozeberry, with Dogwalkers. Things like that I think are models of what you look for in building brands.

Matthew: Do you think cannabis is the investing opportunity of this generation?

Todd: I'm pretty much betting my entire life, reputation, and all of my money on it so I sure should hope so, my friend.

Matthew: [laughs] Right. You might need a Dogwalker if it doesn't pan up.

Todd: I might need a dog because I'll have sold mine. The point is there's not many times in your life. I left after 9/11, I left Wall Street, I started a media company, it went down. I know all about the markets and helping people make better and more informed decision. During that time, I was studying and I was researching. I was fascinated by cannabis and the application agility that's going to come out of the back on the other side of these clinical trials.

We're still so early. There's still people out there that think that cannabis is more likely to cause cancer than to help solve for it. All of that is that comes through is going to illuminate the consumer curve. I think as we look back, there's only two sides of history and there's only one right side here. This plant has a 30,000 year or some odd relationship with the earth, with 10,000 years as a wellness supplement across societies, across cultures.

This prohibition, this man-made prohibition that ignored the efficacy, that ignored the wellness, that incarcerated so many people of color, it's a black stain on the soul of this country and I think it's over. It's just a matter of how it unwinds, how it plays out but cannabis is the earth's medicine. It is one of the earth's blessings and it's been villanized and weaponized and that's all coming to an end now. That's exciting.

Matthew: How do you feel Canada compares and contrasts to the US in terms of investment opportunities?

Todd: Listen, there's lots going on right now, discussions across I guess, the exchanges we can talk a little bit about another TSX's having conversations were told. Ultimately, it's going to come down to how that footprint matriculates. I think the current rate and pace all things being equal, the NSO, the big boys are more likely to turn around buy Canadian LP when they want exposure, if they even want to do that or go out and build it themselves as opposed to being able to, some of these guys that don't have the backing of a constellation or Altria are going to be able to afford the MSOs.

Every new state that comes on is like another Canada. I mean, you think about next year if Connecticut, if the special session goes through, you have the entire tristate area coming on board next year. That's a pretty big deal.

Then the year after, you're probably talking Maryland, Pennsylvania. The year after that, maybe Ohio and Florida. You can move around the states, you can move around the dates but they're all coming. They all need the money. As we research this plant and in itself avails what those of us who have been touched by the efficacy will so passionately tell you, that we're in the early stages of a multiyear circulable market. Painful for the last four months but you know what, Green Thumb went up 900%, take a third off the top over four months but chop around frustrate people. I can argue that's healthy even though it doesn't feel healthy as I'm sitting here talking to you.

Matthew: For people that are in other industries with skill sets and they want to bring them into the cannabis industry, who do you think is the best candidates to come in and add value?

Todd: Wow, it's a good question. I don't know if I have an easy answer. What I can tell you is I tell people who ask me about this and they say, well, I have no experience. I say, well, really nobody has experience. On a relative basis, if you go forth and study the science, keep in mind the endocannabinoid system was first discovered in the early '90s, it wasn't taught in medical school, still even not taught in many medical schools. The parallels between the people and the plant and endocannabinoid systems that cannabinoids found in cannabis still very much frontier science. Just now starting over the last couple of years to be taught at universities.

I have twin 17-year-olds, they don't listen to me, they don't get it, but I tell them and say if you want to never really worry about having a job, follow the science, learn about the ECS and cannabis, and there's that side. If 1.0 was about cultivation and 2.0 is about CPG and cannabis as ingredients. You think about the use cases, the end products, and the agility of the end products. Whether it's from nutraceuticals and beverages and the social lubricants side of the equation or the wellness supplements, the pet supplements, the cosmetics in vanity, the hemp use cases across biofuel and hemp cream, and plastic composites, it's going to be ubiquitous.

I tell you that and answer to your question because I do think that there's going to be a genuine need for an educated labor force across the entire spectrum. I do think this is going to be one of those things that we look back just like prohibition was repealed coming out of the Great Depression, I think the modern Great Depression or the COVID is going to see a modern-day sequel of that story, history lines. That's what we're seeing at the state level. I think the biggest possible risk is the FDA, Schumer knows that. I don't think that sees the light of day during this Congress, and I think by the next Congress, you already have the tri-state area onboard and billions and billions in tax revenues and upwards to a million jobs making it a different discussion versus the CBD story with the FDA.

Matthew: Tell us about your advisory board. You've got some heavy hitters on there.

Todd: I mean, if there's a Mount Rushmore for cannabis wellness, it's these guys and girls. Dr. Ethan Russo, Dr. Julie Holland, Dr. Jeffrey Chen, I mean, these are pioneers in the space and good at what they do, better at who they are. Governor Gary Johnson, Lorne Gertner, one of the founders of Cronos and the godfather of Canadian cannabis as he's called, we have a good team. I think beyond that, as we look around our ecosystem, we've found ourselves good partners, we know all the funds in the space, we all talk to each other, we know the analyst community, we know the management teams. I mean, the good news is that we have, right now, this is a pretty close-knit cottage community.

I think what a lot of people who miss this sit here and commiserate because I see retail on Twitter complaining about the price actioning and I listened to the smartest small-cap growth managers in the world complaining that they can't order these names. I think by the time we get to where we're going to go, this cottage industry will be industrial complex and it's just going to be different. I still think this is the easy trade. It doesn't feel like it when these things are moving 20%, 30% any given direction, but it's still the easy trade because once the institutions are on board, it's just going to get a lot harder and it's going to be a lot different.

Matthew: Will there be any signs that you feel like we're about to enter the next stage of huge growth? Is that something-- Go ahead tell us what those would be.

Todd: Just trading volumes, we'll see them.

Matthew: Trading volumes? Is the cash coming in?

Todd: Yes, I mean, I sit here and I stare at the screens, I stare at the volume because volume qualifies price, I've been trading over 30 years. The reason we are 90% in publicly traded securities is because there is zero doubt in our minds that once institutions adopt this space, they're all going to articulate those strategies through publicly traded securities just as they always have and they're going to want their monthly [unintelligible [00:22:46], they're going to want the reporting, the whole nine.

The problem with the space right now is not the business, business is great and getting better, the total addressable market is getting bigger, new states are coming on every year, even every month, a couple of months now. The issue is the queering and the custodian. I mentioned earlier, Parsian had pulled the plug at the end of 2019, really driving the knife into the back of this space, right into the pandemic, and more recently, Bank of America, Merrill Lynch, CS First Boston. There's a whole handful of them, UBS.

A lot of them were never very cannabis-friendly like BAML told us a year and a half ago, I guess they sent the memo around last week that freaked people out, but the reality is this is a plumbing issue, whatever the agenda is, whatever the, follow the money.

Listen, I've been doing this a long time. These are unnatural price movements for cannabis because they're not in a free market because they have no access, they're cutting access off to the participants. If this was happening already to Wall Street bets, there'd be a revolution, because it's happening on the CSC for a handful of investors, I don't think a lot of people are paying attention, but it's not going to last forever, put it that way. These companies are trading at really attractive multiples with really exciting growth trajectories in front of them. Again, we look at it as an opportunity.

Matthew: Yes, the kind of finance and cannabis are these emerging trends in FinTech. Wall Street's getting rewired in a way. When you look at it from a 10,000-foot view, you see FinTech and crypto and blockchain, how do you see that changing the old guard or the old way of doing things and bringing in a new?

Todd: I mean, listen, disruptive tech is [unintelligible [00:24:49]. I think blockchain is brilliant. I'm a no coiner, I say that without vice or virtue, because I don't know it. I can't tell you the difference between coins and, to be honest, I've been staring at cannabis for so long my eyes are green, but the truth is, this up and coming generation, they're all cannabis-friendly, all of the opposition for cannabis has been a demographic thing for the last decade has been aging out.

You have 92% of the country agreeing that there should be some sort of legal cannabis and 92% of the country doesn't rule out anything, it doesn't agree on anything, and then you have this whole younger generation that is looking to go green and stick it to the man and the industrial complex. I mean, cannabis just checks so many different boxes plus the fact it's good for you.

I think that's the part that most people are going to get a little bit whacked out on when they realize that this isn't about vice, it's not about getting high, it's about getting well. This is really about a therapeutic response to a lot of the unmet medical conditions that are out there because we haven't been able to regulate neurotransmissions as a matter of course, I think that's going to change as 3.0 takes shape, and that's exciting. It's going to take time and markets are very, as you know, ADD, immediate gratification, pay me now, and policy takes time. You have a duration mismatch when you have 99.9% retail universe trading these stocks, it tends to be a very emotional bunch.

Matthew: Todd, I'd like to ask you a few personal development questions to get a sense of who you are personally. Is there a book that's had a big impact on your way of life or thinking that you'd like to share or you recommend often?

Todd: I think Man's Search for Meaning by Viktor Frankl is the most powerful book I've ever read. I've read it a few times. I would say if I had to pick one, that would probably be the book, yes.

Matthew: I want to hear your thoughts on whether you think New York is going to rebound as the same city it was pre-COVID-19, or if it's going to change, how you think it might change.

Todd: New York always bounces back. It bounced back after 9/11, it bounced back after the great financial crisis, it will bounce back again, and will be different. I think generally, as a matter of course, there's going to be a demographic shift to the suburbs and the country, and I think that COVID helped to, obviously, crystallize that. We've seen the outsize real estate movement in the suburbs.

Certainly, a lot of unintended consequences of policy are certainly going to manifest in ways and I'm not smart enough to know, but I will tell you, if you could find companies that you believe are going to continue to demonstrate solid growth with good management teams and they're priced attractive, follow the fundamentals, right? In the short term, you have all these guys, all these traders voting on wherever this chart pattern is on, in the smallest and nearest time horizon. Over the long term, the market's going to weigh companies with good fundamentals and reward them with growth and that's where I think we are.

Matthew: Last question, Todd, what's your favorite unhealthy comfort food?

Todd: It's really just like asking me who my favorite child is, there's a lot. Anything chocolate, dark chocolate. Yes, that's my go-to.

Matthew: Well, Todd, thanks so much for coming on the show and educating us about the investment world, really appreciate it. As we close, how can listeners find out more about you and CB1 Capital?

Todd: See it at www.cb1cap.com, Charlie, Boy, the number one, Cap. You could sign up for our free daily recap. I have a Substack, Todd Harrison, and I'm on Twitter Todd_Harrison. It's not hard to find me, but if you find me, hopefully, we can make some money together.

Matthew: Great. Todd, thanks again.

Todd: Yes, sure. Thank you so much.

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Matthew: If you enjoyed the show today, please consider leaving us review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/iTunes.

What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.

Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests at CannaInsider may or may not invest in the companies, entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.

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Ep 351 – Maine Cannabis Company Thrives in a New Market

brandon pollock theory wellness

Maine cannabis sales are booming after dispensaries were finally given the green light to sell recreational cannabis last fall, but this new market isn’t without its challenges.

Here to tell us about it is Brandon Pollock of Theory Wellness.

Learn more at https://theorywellness.org

Key Takeaways:

[2:14] An inside look at Theory Wellness, a small batch cannabis company with recreational and medical dispensaries in Massachusetts and Maine

[2:57] Brandon’s background in cannabis and how he came to start Theory Wellness

[4:36] Lessons Brandon learned during his time working for Harborside and how they’ve influenced his approach at Theory Wellness

[7:11] The pros and cons of being vertically integrated in the cannabis industry right now

[8:53] Why Maine dispensaries are having a difficult time meeting their supply needs

[10:25] The best selling products in Maine right now

[11:25] Unique aspects of the east coast cannabis market and where Brandon sees it heading over the next few years

[13:53] What it means to be a “small batch” cannabis company and how that sets Theory Wellness apart from other dispensaries

[15:03] How Theory Wellness is expanding into new states despite difficulties scaling a small batch cannabis company

[17:38] The inspiration for Theory Wellness’ successful new product Hi5, a low-dose THC seltzer

[19:02] How Hi5 compares to similar alcoholic seltzers in onset and overall effect

[19:59] Why Brandon believes cannabis beverages like Hi5 will surpass alcohol over the next few years

[22:26] Challenges Theory Wellness has faced in distributing their cannabis drinks

[24:02] How Theory Wellness is helping more entrepreneurs get into the cannabis space through its social equity programs in Maine and Massachusetts

Click Here to Read Full Transcript

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Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com that's C-A-N-N-A insider dot com. Now here's your program. Hi, CannaInsiders just a quick note before today's interview gets started, that my colleague Sinead Green will be interviewing today's guest. Sinead is--

Sinead Green: Hey, Matt.

Matt: Oh, my God, you scared me. Sinead, I didn't realize you were in the sound booth.

Sinead: Sorry about that, Matt.

Matt: Sinead, since you popped into the sound booth here. This is a great time to just say hello to all the listeners since I was talking about you.

Sinead: Sounds great, I'd love to. Hey, everybody - I'm Sinead Green and I've actually been working with Matt behind the scenes for a couple of years now. I'm so excited to put on my hosting hat and really get a chance to engage with you and bring you some more great interviews. I just want to say if there's someone you'd like us to bring on the show, please feel free to email me your suggestions at sg@cannainsider.com. I'd love to hear from you and I really hope you enjoy these upcoming shows.

Matt: Gosh, I want to get a host again, now that you mentioned it, I'm thinking like huge purple velvet hat. What do you think about that?

Sinead: I think that would look great on you, Matt.

Matt: Really important, Sinead. We want you to do a good job but not better than me. Does that sound fair?

Sinead: We'll see about that.

[laughter]

Matt: All right. Everybody, enjoy this episode with the host, Sinead.

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Sinead: Nearly four years after voters approved legalization in Maine, retail stores were finally given the green light to sell recreational cannabis last year and the lines have been out the door. Here to tell us about it is Brandon Pollock of Theory Wellness, a vertically integrated cannabis retailer with some of the few licensed recreational stores in Maine and Massachusetts. Welcome to CannaInsider, Brandon.

Brandon Pollock: Thanks for having me. It's great to be here.

Sinead: Give us a sense of geography. Where are you in the world right now?

Brandon: Right now, I am in our office, which is super exciting. We have an office north of Boston where we spend some time when we're not on the road visiting our facilities or looking for new projects to work on.

Sinead: Oh, great. What is Theory Wellness on a high level?

Brandon: On the highest level, Theory Wellness is our cannabis project that we've been working on since 2015 on the east coast. We're a vertically integrated cannabis company where we cultivate different varieties of cannabis produce a wide variety of products and distribute that to our customers. Both adult-use customers and medical patients through our own dispensaries and we're currently located in Massachusetts and Maine.

Sinead: Great. Before I want to jump into everything about Theory Wellness, I wanted to talk a little bit about your background. How did you originally get into the cannabis space and what led you to start Theory Wellness?

Brandon: Sure, that's a great question. I've been entrepreneurial if you will, my entire life. Myself and the other founder of Theory Wellness, my business partner, Nick Friedman. We started our first company together in college, actually. In about 2014 or so, we both became aware of the medical cannabis movement that was happening primarily on the West Coast and it seemed really interesting. We saw that in Massachusetts, where we were working and living at the time, there were some discussions about medical cannabis. It had been officially legalized, but there were no dispensaries opened yet.

We decided to head out to California and do some consulting for some of the operators out there to sort of learn what this industry was all about. I began working for Harborside Health Center out of Oakland, California, which at the time was the largest and one the first dispensaries in the country. It was just a fascinating thing to see. There were so many patients coming through the door every day that we were helping. It was playing a huge role in their life. For us, it seemed clear that this would be something that would benefit people on the East Coast and was going to be part of the future there. That was the genesis for starting Theory.

Sinead: Great. I heard you mentioned you worked at Harborside, we've actually had a few people from Harborside on the show. How did that period of time influence your approach at Theory Wellness? Did you take any lessons from your time there?

Brandon: Yes, absolutely. They were one of the pioneers and we have a ton of respect for what they've done. They were truly on the forefront of bringing cannabis, as they like to say, out of the shadows and into the light. Really what that means is creating a welcoming environment for patients, testing their products for safety and potency, and just generally treating cannabis as a more open and accessible treatment option.

Certainly, it is different than other medications, of course, but just creating that environment where customers can come in, patients come in and become educated, and have a wide variety of safe products was really remarkable. Nowadays, it seems the norm because it is the norm, but back then, that was a much different approach than a lot of the other medical shops were taking.

Sinead: Definitely, and I've read that you have been a longtime advocate for the repeal of cannabis prohibition. What sparked that passion and what does it mean to you to be working at the forefront of that now?

Brandon: For us, for me, I've always been since high school, a cannabis consumer, never had any adverse effects other than eating a little too much food or maybe using a little too much and feeling uncomfortable for an hour or so. The whole discrepancy between alcohol and cannabis just from the highest level makes no sense. We went through alcohol prohibition, it was a tremendous failure.

We repealed that, of course, but then we did the same thing with cannabis. Then you couple that with how prohibition is truly been disproportionately affecting certain communities in our country and the genesis of prohibition, in many ways, had racial undertones. When you look at it with today's lens and historic lenses as well, it's just a failed policy that needs to be repealed. Cannabis should be accessible for any adult without any penalties. We're heading there, which is great, but there's still a lot of work to go.

Sinead: That's great. We'll get into your social equity initiatives that you guys do at Theory Wellness later on in the interview. You mentioned earlier, you guys are vertically integrated in both Maine and Massachusetts. What are the pros and cons of being vertically integrated in the cannabis industry right now?

Brandon: Sure, that's a great question. I would say the benefits of vertical integration, there are several, but essentially, when you're controlling your own supply chain, it allows your customers and your patients to experience exactly the products that you want to produce for yourself and for them. In other words, if you are simply a dispensary, and I say simply not in a [chuckles] simple way because even that is a tough business and I have a lot of respect for who are running dispensaries. If you only are a dispensary, you're at the whims of the wholesale market.

There might be certain strains of flowers you can purchase. There might be certain types of vapes, you can purchase or different dabs. You can't really control your own destiny as much. Being vertically integrated allows you to cultivate exactly the type of cannabis you want. It also allows you to produce new products, innovative products, which we can touch on later, we just introduced a new infuse seltzer water here in Massachusetts which has been super popular. You can really control your own destiny. All that being said, it's a lot more expensive and one of the most critical issues in cannabis right now is how expensive it is to get into the industry and how that creates a lot of barriers for entrepreneurs. It's good to be vertical. We started small and we're fortunate to be able to grow our cultivation into a larger facility, expand our manufacturing, but it certainly is a little harder to get going just trying to find the capital to do so.

Sinead: I've read it's been a bit aggravating for a lot of dispensaries up in Maine right now with their supply chain. Lots of dispensaries are experiencing some big shortages right now. Was that something you guys had anticipated going into the Maine market?

Brandon: Yes, it was an interesting launch where we received one of the first cultivation permits in the state and also opened the first retail store. There was only about a month in between those two things happening. [chuckles] As we know either, you can't cultivate cannabis in only a month. Initially, it was very slim, what we could have on the menus, and it was mainly just edible, and extract products and things like that as the supply chain caught up.

We are really happy to see that on a monthly basis there are more and more new cultivators and product manufacturers getting licensed in Maine. Maine is interesting where there's a very robust Medical program. There's a lot of infrastructures there that's starting to get ported from medical [unintelligible [00:10:02] use, but it's a lot of paperwork for folks. It's a process to learn metric and see the sale tracking systems. It's been a bit of a slow process, but the month of May was the record sales of the program up there and I expect it to keep growing through the summer.

Sinead I saw that. I saw $5 million in sales last month. That's pretty groundbreaking. What would you say in Maine, specifically, has been selling best right now?

Brandon Flower is the king as it is in Massachusetts. I think most markets still though. As we've added more concentrate options on the menu, more edible options on the menu, we've started to see the initial stages of that shift away from flower and more into the different manufactured products, which is typical to what we'd expect to be seeing as customers.

They might come into a recreational dispensary for the first time. They've only smoked flower in their life. That's their only experience with cannabis. That's what they're familiar with, but on their second or third visit, they might be eyeing that chocolate bar and say, "All right I'll try one of those." We're starting to see a little bit of a shift towards more edibles, concentrates at this point.

Sinead Great. I know I've mostly been asking you about Maine. You guys are also have dispensaries across Massachusetts as well. Have there been any surprising trends that seem unique to the East Coast or the New England area you've observed over the years?

Brandon I think it's just unique and fun about the East Coast is it is still very new out here. A lot of just culture and technology in general, it starts on the West Coast out in California and works its way east and cannabis is no different. What's really I find fun and different about the East Coast is on any given day, dozens of your customers will never have been in a dispensery in their entire life.

You get to be that first experience for them and show them what it can be like to purchase legal cannabis, what the different products are. That's something we're really fortunate to have out here where it's just so new still that we can still provide that first-time experience for so many of our guests.

Sinead Great. You guys are kind of also pioneering craft cannabis on the East Coast and that's really a new thing across the country. I've read that you take a lot of inspiration from Sam Adams and its parent company Boston Beer, which are pioneers in the craft beer industry. How would you say you're trying to emulate Sam Adams and bring those same craft standards to cannabis. Why is that important to you?

Brandon Sam Adams and now there are some other breweries in Massachusetts as well that are really impressive. Basically, created a new genre if you will, a whole new category. After alcohol prohibition was lifted, the marketplace really was a consolidated amount of your big beer companies, your Coors your Budweisers, but then Sam Adams came along and created a whole new trend about higher-end craft products that are sure they're more expensive, but they're also, they're higher quality. They taste better. They're packaged in a more aesthetic way.

When we look at cannabis right now, that's where we're trying to position our company to be both through the quality of the products and then the entire experience with educating customers, with packaging, with ensuring the flower inside the packaging is stored properly to preserve the terpenes. We're really trying to differentiate ourselves with that higher-end craft brand, which we believe is going to be a smaller portion of the market, but it's a more interesting part of the market to be in.

Sinead You guys, quality has been a pillar of yours from day one. You pride yourself in being a small batch craft cannabis company. What does that mean and how is that different from most other dispensaries?

Brandon What it means at the highest level is smaller cultivation. Our indoor cultivation facilities are, even though our stores are some of the busiest in the state, are actual indoor flower production, we have some of the smallest facilities in Massachusetts and Maine. What that allows us to do is really put a lot of attention to detail on each harvest cycle, on each plant even within a veggie or bloom run, just to really ensure that they're being cared for properly, they're receiving the right environmentals, the right nutrients. That allows us to cultivate a really nice product. We also are one of the few companies that only hand trim. We don't have any machines ever touching the buds before it gets to our customers. We try to just think of it from really from seed to sale. How can we take the most care possible with our products?

Sinead Great. With that, you guys have a lot of advantages and I'm sure if one harvest isn't may be up to your standards, you can tweak things and change things as you go. whereas other dispensaries can't. I imagine the small-batch model does make scaling a little bit tricky. What have you done in terms of navigating, scaling the company and how do you think you'll adjust that as you expand into new states?

Brandon That's a really good point. It is difficult because, since day one, we've struggled to keep up with the demand for our products and even today as we have done some modest expansions, we can't produce enough products to keep our customers satisfied. In order to help meet our customer demand at the store, is we've really developed a very good network of other vendors here in Massachusetts and in Maine where they have similar values to us. Where we're happy with the quality of the products that they're producing and are happy to also offer those to our customers. We're starting to look into new markets like New York, New Jersey. It becomes tempting to try to build a really big facility and have a lot more team members there and produce a lot more products. We need to temper ourselves and really just make sure that no matter what we're doing, we're continuing to focus on quality is as a unnecessary part of the business that can't be forgotten.

Sinead Great. You have also not only do you partner, like you said, with local farmers, but you also support farmer's markets in both Maine and Massachusetts to increase supplemental nutrition assistance programs. Tell us a little bit about that. Why is local farming so important to you at Theory Wellness?

Brandon As a wellness company, we truly do believe cannabis makes people's lives better. Whether it's a medical patient or adult-use customer, you're coming to a dispensary to feel better. It really segues well into the wellness aspects of local agriculture, eating healthy, eating local. It's not just good for the environment. It's not just good for the economy, but it's good for you. By supporting farmer's markets, we feel we're helping our mission along in general, which is just to create a happier, healthier community that we operate in.

Sinead Absolutely. That's awesome. I wanted to jump in, you mentioned your new product High Five earlier which is a low dose THC seltzer. Tell us about that and what inspired you to enter the cannabis beverage space?

Brandon This is something we're super excited about. We've been working on High Five for a couple of years now. The vision in essence is that cannabis can be used in a wide variety of ways and increasingly can and should be a substitute for alcohol. Almost every adult in the country is familiar with drinking an alcoholic beverage. It's very acceptable, it's very social, but for cannabis as consumers, we've been relegated to the sidelines a lot of times.

I get it. Not everybody likes smoke, eating a gummy is not social. It's not anti-social, it's just eating a gummy. We really wanted to get into beverages and through the brand High Five, we've created a fast-acting seltzer product that can give a customer a doseable experience that tastes delicious and is a very social way to consume cannabis. It's been very popular so far. We launched it a couple months ago and look forward to continuing to grow that market.

Sinead That's great. I read the story behind the name High Five is that the onset is five minutes, which is just insanely fast. What effect can consumers expect from High Five and how does that compare to alcohol?

Brandon That's a great point. I think that's one of the main advantages of inner integrating technology with cannabis where we are in 2021. We use a nano emulsification process with our cannabis concentrate, which essentially allows the cannabis to absorb in a person's body much quicker than a conventional edible.

Our customers will typically start to feel the effects within five minutes or so and they also dissipate quicker. Within an hour you'll have that effect circular off, which is very similar curve to an alcoholic beverage.

Sinead Very interesting. Where do you see THC seltzers, like High Five heading over the next few years? Do you think they'll really start to rival alcohol?

Brandon: I really do. I would be bold enough, I think, to predict that long-term, they will outpace alcohol because we're moving towards a healthier society, a more health-conscious society, and being able to have a social beverage where you don't have a hangover, you don't consume calories. You're consuming only all natural products is it's an obvious alternative to alcohol. Once it becomes more accessible to every adult. Right now, the main thing that's holding back cannabis beverages is just that beverages are really hard. You need big trucks, you need big facilities, you need to store millions of cans. It's a whole different business model than any other cannabis product. It's challenging to get that going but I think once Theory Wellness and other companies start to really understand the beverage space, I think the impacts are going to be tremendous.

Sinead How did you guys land on the concentration that you use for Hi Five and what is the potency for a Hi Five THC seltzer?

Brandon Hi Five right, now we have what we call a micro version, so Hi Five micro, which is similar maybe to your bud light if you're going to make that stretch of an analogy. That's targeting around a two or 2.5 milligram dose of THC, and then we have the more conventional Hi Five , the standard dose, which is five milligrams. We were looking to create two different options for folks with nano emulsification. The experience tends to be a little stronger, a little quicker, of course than a normal edibles, so five milligrams might feel more like a 10 milligrams, some people. We think it's a really good social dose and especially with the micros heading into the summer, we wanted to create a product that was sessionable that people could enjoy a couple of them out of barbecue and not potentially overdo it. That's where we are now. We're going to probably continue to innovate, introduce some new dosages, some blends with different other cannabinoids. There's really a lot of exciting things that we can do with the brand.

Sinead How have you guys gone about navigating distribution for Hi Five outside your own Theory Wellness dispensary's? Have there been any challenges there?

Brandon: There's been a lot of challenges. Beverages, as we were talking about earlier, the beverages are tough. They're heavy, they're big, they're bulky. We've had to purchase different types of vehicles, box trucks, delivery vans, things like that, just to help distribute these products. Then also we have to be on the road a lot because they take up so much more space when most of our wholesale vendors were building their storage vaults in their dispensary's, they weren't thinking about storing drinks, thinking about storing dummies or pre-rolls, which take up maybe a 10th of the space. Space and weight are really challenging right now for beverages, because unlike a liquor store, unlike a beer company, we can't just buy another truck. We can't just store things in the hallways. We're super regulated. All of our vehicles have to be registered, inspected by the state of Massachusetts storage has to be in very specific areas and people's stores. It's definitely some growing pains that we're navigating right now as we try to expand beverages.

Sinead I want to move onto your sustainability or your social equity initiatives. You touched on that earlier, but I know that's a huge part of what you guys do. I wanted to really dive into that here. Tell us about your program theory cares and why this is important to you. Why do you think this is going to really impact the industry for the better going forward?

Brandon: I do appreciate that. I think from our view, we've done from what we feel is the bare minim and we want to keep doing much more to give back and contribute in meaningful ways. We certainly acknowledged that the war on drugs has been not just a massive failure, but has been really negatively affecting certain communities of color for decades here in the US and Massachusetts is not immune to that pain. What we've done at theory is we've created an in-house social equity program, where we decided that instead of hosting different job fairs or educational seminars, we really wanted to help an entrepreneur get going in cannabis. We did a process where we interviewed dozens of aspiring entrepreneurs. All of them were certified by the state of Massachusetts as economic empowerment applicants, which essentially means their backgrounds are from communities that were disproportionately harmed by the war on drugs.

We're really fortunate to find and start working with the Legal Greens teams. This is a business run by Vanessa and Mark. They've been really awesome to work with. We've helped provide them financing and mentorship. Over the last couple of years, it's really provided them the help they need to open their dispensary, or they can do 99% on their own but that 1% that we can help provide just through already walking down that I think has been helpful for them. We're really proud that they recently opened their first dispensary in Brockton here in Massachusetts. It's been a great success our program. We're going to be opening up to a second round really soon.

Sinead Very cool. One last question, before we jump into some personal development questions. What is one thing going on in the cannabis industry right now that you think will have a big impact, but maybe is a little under appreciated right now?

Brandon: That's a great question. The easy one for us to say is beverages, because it's still such a small part of the market, but I think it's going to be huge. I think even though it's getting a lot of press, I think the real movement we're seeing at the federal level is starting to get or maybe it's not getting the attention that it deserves in the right way, but I think it's going to be really interesting to see how businesses in the next couple of years start to position themselves for federal prohibition. Right now we have a really interesting marketplace in the US where in every state that a company operates and they have their own production facilities, their own distribution, their own dispensary's. There's going to be some day in the near future where cannabis grown in California can be shipped to Massachusetts, then how is that going to start to change all these investments people are making right now or we're contemplating right now. I think continuing to really think about the future is going to be important for everybody in the space to make sure that things are being positioned in a thoughtful way.

Sinead That's a really good point. That wraps up the bulk of the interview. I did want to jump into just a couple of personal development questions though here for you, Brandon. The first one, is there a book that has had a big impact on your life or way of thinking you'd like to share?

Brandon: A book? I'm trying to think if there's been a meaningful. I wouldn't say a book that necessarily jumps to mind off the top of my head.

Sinead This can be anything really, if it's a documentary or anything?

Brandon: I think one of the things that's been really impactful is when I was in college I studied philosophy. Thinking about how great thinkers 100s, if not 1000s of years ago looked at what the problems, and then trying to reconcile their thought process with where we are as a country these days, I think is something we always try to think about. One of my favorite quotes is the more that you learn, the more you realize you don't know anything essentially. [chuckles] We try to weave that into our daily life because it's true. There's so much out there. It's really important especially in cannabis to keep this an open mind and try to keep learning every day because things are changing, there's new technology, there's new information. We're really just scratching the surface. I'd say having a philosophical outlook on life and business has been very helpful over the years.

Sinead Absolutely. Brandon, I've got a real hard hitting question here for you. What is your favorite unhealthy comfort food or guilty pleasure?

Brandon: I'm going to have to go with Chinese food is my classic go-to Montre when once every couple months I'll just get that craving and it can only be satisfied by some big greasy Chinese food. That's just how it goes sometimes.

Sinead I am right there with you. I love some good Chinese food. [chuckles] As we close, how can listeners find you online and connect with you?

Brandon: Our website is theorywellness.org, and we're all over the social media too is Theory Wellness and we'd love to connect with our current guests and new customers alike. Feel free to get in touch.

Sinead Great. All right. Brandon, thank you so much for coming on the show. We really appreciate it and wish you the best of luck with everything going on in the rest of 2021.

Brandon: Yes, thanks so much for having me. It's been great. Great talking to you today.

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