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How do you take lessons learned from Silicon Valley and apply them to cannabis POS software to help retailers save time and money? Here to help us answer that question is Barry Saik, CEO of Greenbits.
Learn more at https://www.greenbits.com
[00:53] An inside look at Greenbits, a cannabis retail POS software solution that provides compliance and marijuana inventory management
[1:07] Barry’s background working for Intuit and how he got into the cannabis space
[2:19] Greenbits versus other POS systems for cannabis retailers
[5:54] How Greenbits automates different workflows within a cannabis dispensary
[8:26] The types of platforms Greenbits integrates with, from online menu companies to delivery services
[9:31] Intuit’s “follow me home” strategy and how Barry is using it to optimize user experience at Greenbits
[15:18] Scaling challenges POS systems often face on 420 and how Greenbits has overcome those challenges
[19:42] How Covid-19 has changed how cannabis retailers use tech
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now here's your program. How do you take lessons learned from Silicon Valley and apply them to cannabis POS software to help cannabis retailers save time and money? Here to help us answer that question is Barry Saik, CEO of Greenbits. Barry, welcome to CannaInsider.
Barry Saik: Thanks. Glad to be here.
Matthew: Give us a sense of geography. Where are you in the world today?
Barry: I am in Silicon Valley. Our company has a few people in Silicon Valley. Then we have some people in the Pacific Northwest and spread out all over the world actually.
Matthew: What's Greenbits on a high level?
Barry: Greenbits is a point of sale and inventory track and trace system for cannabis dispensaries to use to run their operations.
Matthew: Barry, can you share a little bit about your background and journey, and how you got into the cannabis space and started Greenbits?
Barry: Sure. I spent a long time working at a company called Intuit that makes TurboTax and QuickBooks, and spent a good amount of time in TurboTax in the product management organization there and once had a product at TurboTax for a time. Then I became a general manager running businesses at Intuit, but all those businesses were focused on either personal finance or small business accounting and finance.
Then later in my career as I was moving on from Intuit and some other businesses, I've maintained that theme of focusing on businesses that really were trying to solve problems for small business owners. When I came across the Greenbits opportunity, it really was a great fit for me given my background in small business accounting, and also coupled with my background in compliance and with filing tax returns with the government.
There's a similar problem in the cannabis space in terms of filing all of your cannabis reporting with the various state entities. It was a really good fit for me when I learned more about Greenbits in this space.
Matthew: Barry, there's a few POS systems or point of sale systems for cannabis retailers. Where do you think Greenbits strength is relative to the competition out there?
Barry: Yes, you're right. There are quite a few of them although we're starting to see it consolidate into a few of the bigger players, but where Greenbits really stands out is we early on focused on compliance. We really work hard to ensure that our customers are 100% compliant with their state rules regulations in terms of all their filings and we make it really seamless and easy to stay compliant.
As you're using the product, selling products, and taking inventory, we've worked hard to make it so that you just have to use the system and we do all the filing in the background. That's one big string. The second one is we've really focused on ease of use of our point of sale registry system. We're the only one in the market that has an app-based system that ensures a high degree of usability, really speedy operation, and a user interface that's really designed for a tablet so that bartenders can really work effectively.
Overall, this translates into time savings for the dispensary. You don't want to spend time as a dispensary owner or manager training people or having to go back and do a bunch of catch-up filing or building your own Excel reports to send to the state filing agency. We make all that go away so that you can spend more time figuring out how to grow your business, get more customers, and sell more product.
Matthew: It's just super boring. Let's be honest, Barry.
Barry: It is. It's a little boring to be working in spreadsheets and doing accounting stuff. That's what software is for, that's why companies like Greenbits exist is to make all that easy so you can spend time doing things that are more enjoyable, more fun.
Matthew: How does it work then with these state regulators? Do you apply as a partner to get an API to their compliance system, or how does that work?
Barry: Our customers actually do get the keys. We are filing on behalf of them, but we work closely with the various providers and have an API that we use with them. We definitely have a lot of communication with the various filing agencies to work out how best to solve the problems for our customers together.
Matthew: Which of the states do you think are doing the best job in just creating a nimble, effective software for compliance? Like I said, it's not fun, but which state's doing a good job would you say, the top one or two?
Barry: One point of clarification too is that almost all the states outsource the filing to three companies. There's Metric, Leaf and BioTrack. Metric is the leading company, they have the most states under contract. Then a lot of it is affected by the rules the states put in place, then Metric implements those rules.
From a rule standpoint, I would really look at Oregon as being a leader. They've been out early and figuring out how to make everything work, but the legislature and the rules have really taken an approach of enabling the market and making it easy for both Metric and the dispensaries to understand what the rules are, and then stay compliant with the rules.
Matthew: When you think about the process that a worker in a dispensary has to go through, an employee there, how do you think about workflows and automating that? We talked about with the regulation piece and making sure you're compliant with reporting, but what other workflows are there?
Barry: There's many. Intaking inventory is a big deal. Making sure you've got the inventory set up properly, and then intaking the actual products, counting them, and then making them available for sale. Conducting sales is the most important one, making sure that you can actively process sales. We actually have an emergency mode so that if the network goes down, we allow our customers continue processing sales because that's such an important workflow.
Then there's stuff that starts to get much more complicated and nuanced. Customers that have more than one store will need to split inventory and transfer it between locations which requires some special work. Then another example would be managing deliveries and setting up deliveries in a good way.
Matthew: One frustration I know that's out there is sometimes, let's say you run out of flour of a particular strain or a vape cartridge or an edible, and then the third party live menu or review sites show that they're in stock even though they're not in stock, and the end-user gets frustrated. Do you think there's progress being made there? Can you talk about that at all?
Barry: There is, and that's a result of the menu and online menu companies being separate companies from the point of sale. There's definitely progress in partnership. We're working closely with the menu providers. I'll mention Dutchie as one that we've worked with quite a bit, and we're just working on how to figure out the right way to make sure they're up to date with current inventory and representing products in the right way.
There's a lot of detail there and a lot of rules. Again, you get back in the compliance aspect of what pricing and what products you show, but we're making a lot of progress. It really does require a partnership between the companies.
Matthew: A lot of retailers want to be able to integrate with other software packages that do different things so everything talks together. What's being asked for the most and what do you integrate with now?
Barry: Well, we integrate with, we call them online menu feeds. The online menu companies is a big one. The other one is loyalty points. Cannabis is a pretty competitive retail space, and just as you see in some of the other competitive retail segments where the retailers are trying to drive loyalty points and other programs, couponing and reaching out to customers with marketing programs to try to bring customers back to their store, you see that in the cannabis space as well and loyalty points is a key feature that allows that.
Those are I think the two big ones that we've seen. The third I'll mention is then delivery integration. That's something that the COVID pandemic has certainly raised in importance, there's a lot more emphasis on delivery these days.
Matthew: Now you mentioned that you worked at Intuit, which most people heard of TurboTax, and then most business owners have heard of QuickBooks. One of the things that really set Intuit apart especially in their early days was making it usable for their clients. I had read about this, I can't remember which book. One of the ways that Intuit make sure the software products were usable for the way that the users actually used them, not this pie in the sky idea of how they should use them was they would watch them use that. Can you talk about what that is and if you use that at all with Greenbits?
Barry: Sure, yes, at Intuit we call those follow me homes. It's a technique that the Intuit founder Scott Cook developed when he was building the very first versions of Quicken, which is a personal finance software. He brought over some techniques from the consumer packaged goods space, he was a Procter & Gamble alumni.
When you're selling consumer goods like cake mix or something, the way you test it is you would totally bring people in, because you can set up an environment and have them make cakes, but one of the things Procter & Gamble learned is that, it's better to go out and see what people are doing in their house. Scott applied the same techniques. In software, it's even more important, because you're doing so much and there's so many workflows that then affect real life that are outside of the product, if you will. The only way you can really see those unexpected things is if you're there actually watching.
If you try to do a lot of stuff remotely and in today's world, you have the internet doing like a FaceTime interview with a customer. The problem is they're filtering whatever they tell you. You can't break through that unless you're actually there and able to see something they do or pick up a piece of paper you go, "Why don't you pick that up?" That's the spirit of it is being able to observe the things that may get filtered by the respondent if you're actually asking them to tell you what's going on.
Now at Greenbits we did the same thing. We do a lot of store visits and spend time with our customers watching how the store operates, understanding why they're asking for certain features or functionality or extensions, and also looking at how we're doing on the key workflows. That's just a key piece of how we conduct business and how we get inputs from our customers about how to make software work for them.
Mathew: Was there any one specific thing that stood out to you in the Follow Me Homes to the dispensaries?
Barry: I don't know if there's one specific thing. I think the thing that stands out for me is the number of different workflows and the difficulty that then creates with managing the dispensary. There's because of the compliance aspect and the high number and variability of the products that are actually being sold, which was a surprise to me, I thought it would be much more like, there's like 15-20 different kinds of things you're buying. But most stores have hundreds of products available. Different strains and different cartridges and vapes and different mechanisms for dispensing. It creates quite a lot of variability.
Then you've got the other dynamic of a retail environment where you're hiring help that has a high degree of turnover. There's a need to keep them trained and up to speed with how the store operates. My main takeaway was, wow, there's a lot going on. This is a difficult business for a manager to really manage and run effectively.
Mathew: Yes, indeed. How do you think about the user interface? Because as you mentioned, there's a lot of different workflows, there's a lot of different types of inventory, you have to do complex things like split inventory between different retail shops. I mean, how do you make a user interface that is approachable, because I know when you're working on software, there's a tendency to get like so deep in the weeds, it's hard to have a beginner's mind as to what the end user is looking at.
Barry: Well, yes, that's a challenge. I mean, that's why we have designers that think a lot about user experience and how to design an experience that allows the user to have the right capabilities and easily understand the options, but also doesn't overwhelm them with a bunch of features and functions that just make it more complicated and difficult to know what to do. It's a tough balance. It's something that all software companies have to deal with, especially if you're tackling difficult user problems. I saw this in the tech space for years where you have this challenge of how do you would take this complex problem and digest it down so that a regular average person can operate software.
The other thing I think people don't always appreciate is that you have users that have very different skill levels and knowledge levels about the space you're working into. It can be really tricky to figure out how do I present the right interface to a user based on what type of user they are? How do I give them an option? How do I give a pro user a way to not have to go through a slow, more helpful interface and let them have an expert mode that they can kind of quickly go through. It's always a balance of trying to figure out exactly how much do your customers know, how experienced are they? How much help do they need? Then what's the right way design the software to allow them to accomplish the task as quickly as possible.
Mathew: On 4/20 and 7/10, maybe there's those are, or maybe and also right around Christmas time, I know, there's huge demands on kind of the network or server architecture. Can you talk about just some of the scaling issues around 4/20? I know, some of the POS software providers have had difficulties around maintaining services and software connections during that time, but can you just talk a little bit about that generally, and then your server architecture and your emergency mode?
Barry: Sure. Actually, emergency mode is a little unrelated, but I can talk about it a little bit. But on scaling of 4/20 has been historically a challenge in the industry, a lot of industries that I've been in have a cyclical nature, a season where there's more sales, and actually, the 4/20 spike is not particularly larger than I've seen in other industries, particularly the tax industry, tech software, and tax prep is very spiky, and more so even actually, when you get down to April 15, where you see more like, five, six X times traffic. In the cannabis space we see kind of 50% more so you know-
Barry: -maybe half an X to one X on time the size of normal processing. It's a challenge, Greenbits historically, before I joined did have some [unintelligible [00:16:54] But it's really, when you have an average like that it's really just a lack of focus and planning in today's world, like building out systems that can scale, all the companies have access to cloud based infrastructure. It's not an issue anymore, like you need to rack servers and make sure that servers are up and running, it's really just an issue of spending time focusing on it and figuring out how to do load testing that actually is a real load test, and not some sort of fake test that's not really representative of what your production environment is like.
Because the thing about scaling and handling a lot of load is that oftentimes you're surprised as you scale up with which piece of the system starts to fall down. It's not always immediately obvious which piece is going to be your bottleneck. The best way to tell is to exercise it and get comfortable with the traffic you can handle. At Greenbits since I've been there we've been focusing a lot on scalability and reliability for just that reason, because it's completely unacceptable to go down on peak selling days, I mean, we're running the sales, and you've got a bunch of stores and the customers in the store and the last thing would have happened is your point of sale system crashes or has a problem.
That's why we're super focused on that, we had an extremely clean 4/20 this year with no issues at all and we expect the same going forward because we've been spending a lot of time on our architecture and a lot of time testing. We run load tests against our production environment, and we can get comfortable with how much traffic we can handle. You mentioned emergency mode. emergency mode is really there for a lack of connectivity. We've seen a need for this, because people's Wi-Fi and internet connections depend upon the provider and depending upon their Wi-Fi setup. We've seen some of our customers have challenges with keeping that connectivity running. The emergency mode is great, because when you do lose connectivity to the backend service, you can keep selling product and operate your store.
Mathew: Okay, so it's like the local client has the client software has the ability to run things locally. Then once the cloud connects again, it syncs?
Barry: Yes, you can think about it like a sync architecture. The nuance there, though, it's not an easy thing to do is that all of our registers sync with each other too. Because we can't, we have to track everything. We can't allow the registers to both try to sell the same product. We do have sync between the registers on the LAN as well.
Mathew: Okay. There's a lot going on behind the scenes you have to think about.
Mathew: Okay. Just from your perspective, how has COVID-19 changed how cannabis retailers work and function in their care abouts?
Barry: Well, I mentioned the focus on delivery, which is one key one. There's other things though too that have come up. Like curbside pickup and ordering in advance and pickup. You do see just this emphasis on more COVID socially distant workflows, if you will. That makes sense and it's pretty obvious. I think the other thing we've seen is that they're all of our customers are selling a lot more. Their sales have been up pretty much 30% above what they were tracking before the COVID pandemic. That's just been an interesting thing for all of our customers to deal with and account for.
Mathew: Okay. No one has a crystal ball here, but how do you think the cannabis retail space is going to change and evolve over the next three to five years?
Barry: I think it's a classic example of an industry that is figuring out things and was early and there was a lot of disparate companies trying to attack problems in different ways. It's natural as the industry matures to see some of that stuff consolidate. It's like Darwinism natural selection. The things that work well people will gravitate to you and that means the things that aren't working well in the companies that aren't doing quite as well are going to struggle to keep up.
We're seeing some consolidation and in the industry across the various different tech providers. I think that's something that you'll see continue a little bit just through the natural choices that the company, the dispensers are making on who they want to use to provide their software and services.
Mathew: Well, I know a lot of cannabis retailers and delivery companies have come up with clever ways of being able to accept debit cards and different things. When we get a full legalization of banking opportunities for cannabis retailers, how do you think that's going to affect the retail environment?
Barry: The big one is that you'll be able to pay with your credit card, which is what every consumer wants. I've spent a lot of time with payments solutions over the years, working on accounting and personal finance. There's a lot of alternative payment vehicles out there and companies trying to do other alternatives. I've seen time and time again now that overall consumers want to pay with the thing that's already in their wallet. Credit card payments is a key enabler.
I think from a standpoint of a consumer experience, it's going to feel very natural. It'll be like paying for anything like paying for coffee. You tap your card or use your phone for a contactless payment. That part won't feel the different what's interesting for the retailers though is there's really good data that shows that using credit cards increases sales in two ways.
You can process more volume because it speeds up the transactions and everybody just knows how to pay and it's very comfortable and familiar. Then people tend to buy more when they're using credit cards than when they're using cash or other systems. I'm excited about those two factors of being able to increase the throughput and increase the basket size of sales.
Mathew: Do you think we'll see some sort of cannabis rewards credit card that's cross dispensary?
Barry: Possibly. I think when you think about those kinds of things, I think it's important to ask, why is that a good thing for what type of people? I think we'll see some of that, but I believe that it'll be more of a niche offering for probably for people on the heavier use side of things. Typically cards like that with credit cards, there's a set of complicated economics behind credit card offerings. The reason you see cards that are affiliated with a certain brand or entity is usually because there's some type of points kickback to the end consumer that's related to the backend economics.
That might make sense. I have a one from REI the more I spend I get points credits that I can spend at REI for future products. You could see something like that happening in the cannabis space, but those tend to be for the higher consumption heavy users. We'll definitely see them.
Mathew: The way the crypto space is evolving it reminds me of the early internet. I remember the first time I used Quicken, it was a CDROM. It wasn't even connected to the internet, I don't think. Now we have these edge use cases of digital assets and cryptocurrencies. Do you see a similar arc to the internet and ways that's going to be integrated into people's lives?
Barry: I think crypto will eventually transform how we do payments. I think the challenge with crypto is that the interesting thing from a payment standpoint is if you can clear payments very inexpensively and quickly, then it's valuable from a transactional payment standpoint, but we haven't seen any of the crypto platforms actually fulfill on that promise of providing really cheap and quick clearing of transactions. Coupled with that is most of the crypto platforms are pretty complicated and difficult to set up and people aren't familiar with them.
People have been treating them more as an investment vehicle, like buying gold or something. Then that's the other piece of crypto that's been difficult for people to really get their heads around is that cryptos and the whole digital coin thing it's a digital Fiat currency as well as a transaction mechanism combined into one. There's actually two different benefits out of those things. The Fiat currency alone is an interesting thing and it can, because you can invest in and where it can change value, but then the transactional capabilities are a different thing to think about.
I think both will have an effect on how we buy things in the future. It just isn't easy enough to use them right now and there's just too much uncertainty. People will I think largely gravitate in the near term back to credit cards and the US dollar until something that's a better alternative comes around.
Mathew: Okay. Where are you in the capital raising process?
Barry: We completed our latest capital raise back in the fall. We are building the company right now, so we're just a hundred percent focused on our customers on building out the software and investing that capital wisely for our investors.
Mathew: Okay. For accredited investors that are interested in investing, is there a way they can reach out or is that on hold for now?
Barry: Well with us, that's on hold we've closed our round and we are pretty set on capital.
Mathew: Okay, good. I want to ask a few personal development questions, Barry, to help listeners get a better sense of who you are. Is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Barry: Well, the one I always go back to and it's not actually a business book but there's a book called The Power of One by Bryce Courtenay and they actually made a movie out of it but the book is as usual way better than the movie. That's all about perseverance and about pushing through adversity. It's just a very inspiring book about a boy growing up in Africa and the gold mines and how he struggles to find himself and develop and grow up.
It's just a really great book and it's reinforced for me the importance of knowing that when things get tough, you can push through them. The book talks about you need help sometimes, and it's important to look for that help, but ultimately you got to also think deep and push through things and you'll find a path through the problems.
Mathew: Besides what you're doing at Greenbits, what do you think the most interesting thing going on in the cannabis industry is?
Barry: Well from a business standpoint, I think the continuing legalization across the country it's pretty obvious, but that's huge. Just the more and more States that legalized, I think it's just better for everybody. It makes the space safe. Both in terms of the quality of the products and in terms of the banking side of it and the purchasing experience. I think that one's really, really interesting and then we mentioned and talked a little bit about the financial aspect and the federal endorsement of banking is a big one. The lack of the banking infrastructure and real digital payments happening in the space creates all kinds of weird things and unsafe issues for people in industry. Those two I think are the most important enablers of the industry.
Mathew: Okay. What is the one thought that you have that most people would disagree with you on?
Barry: That's a tough one. Right now we're all embroiled in the COVID space, I guess right now I think we're going to get through the COVID thing in another month or two. I really have a lot of faith in science. I'm impressed with it. It's just amazing how fast these companies were able to make vaccines and get them out. We're all talking about the distribution issues and how fast can it get out and what are the rules around who gets it first but I'm in the mindset of like, just keep pushing on, guys. [chuckles] Get the shots in people's arms and you know what? We're going to be through this, I think.
People are going to be surprised and then all of a sudden you have to figure out like, you come out of the light on the other side of the tunnel, and it's bright light, you're like, "Okay, now what?" I think that's going to happen pretty soon that we're going to be on the other side and feel like, "Wow, I'm glad that is over with."
Mathew: Well, Barry, as we close, how can listeners find out more about Greenbits and for retailers that are interested in coming on and giving your software a try? How can they find you?
Barry: Sure. Well, just go to greenbits.com. We've got contact info up there, information about our products and offerings. That's the place to start.
Mathew: Great. Well, thanks so much for coming on the show. We really appreciate it.
Barry: Thank you. It's been a lot of fun.
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[00:32:32] [END OF AUDIO]
Covid-19 has not only accelerated advancements in technology but also the types of jobs needed to support the cannabis industry. Here to tell us more is Yoko Miyashita, CEO of Leafly.
Learn more at https://www.leafly.com
[48:11] An inside look at Leafly, the world’s largest cannabis information resource
[1:41] Yoko Miyashita’s background as a lawyer and how she got into the cannabis space
[4:20] How consumer behavior has shifted in cannabis over the last five years and where Yoko sees it heading
[5:37] How dispensaries leverage Leafly to increase foot traffic and drive sales
[9:41] Leafly’s partnership with Jane Technologies to create the most comprehensive and customizable product catalog in cannabis
[13:20] Leafly’s annual jobs report and how it’s making jobs in cannabis more accessible
[15:39] How cannabis jobs have exploded over the last few years to outstrip professions in dentistry, electrical engineering, and more
[23:04] The most hirable skills in cannabis right now and Yoko’s advice for those looking to enter the space
Matthew Kind: Hi, I'm Matthew Kind. Every Monday I look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's cannainsider.com. Now, here's your program.
COVID-19 has massively accelerated advancements in technology and the types of jobs needed to support the cannabis industry. Here to tell us more about it is Yoko Miyashita, CEO of Leafly. Yoko, welcome to CannaInsider.
Yoko Miyashita: Thanks for having me. Great to meet you, Matthew.
Matthew: Give us a sense of geography. Where are you in the world today?
Yoko: I am in my bedroom today in Seattle, Washington.
Matthew: Great. What is Leafly on a high level for people that aren't familiar?
Yoko: Leafly is the world-leading cannabis information resource and consumer marketplace. We've been around for about 11 years, and we started as a strains database. If you think about the cannabis world 11 years ago, no information, no information online, no data, no science. We started as essentially an Excel spreadsheet where consumers could share information about strains and the different effects it had on them.
Being able to bring that critical information to consumers, which we've then added over the years with news and additional lifestyle coverage on cannabis, and then connect to them with licensed retailers in North America, that's just proven to be a really critical tool to help consumers navigate their cannabis journeys.
Matthew: Can you share a little bit about your background and how you got into the cannabis space and joined Leafly?
Yoko: Yes. Like many others in the space, I'm actually a lawyer by training. I spent 14 years prior to joining Leafly in the digital media space. For me, I'm a policy junkie. I love meeting policy issues where the legal and policy issues are at the center of a business. For me, that was IP in my previous career. When I was looking to make a change coming to Leafly, that brings together both this highly regulated industry, cannabis plus media, where I have a deep experience, was just this amazing opportunity to pursue both of those interests. I started here at Leafly as the general counsel and took over the role of CEO in the summer of last year.
Matthew: Yoko, just so to give people a sense of what Leafly apps like, if they were looking over your shoulder the first time they open it up the app, what would they see?
Yoko: They'd find a search box. This idea here is to be able to answer consumer's questions about cannabis. I just found this strain in the store, and I want to learn more about it, or I'm looking for this product, or I'm looking for this dispensary or brand. We start your journey with the questions that you have and navigate you to the information you need.
Matthew: Why explore strains at all? Why is that important?
Yoko: I think that strains are fascinating, thousands of strains, and we've got about 5,000 in our system, but we look at this-- This is where I think cannabis gets super interesting because prohibition has prevented so much research from being done. As we've seen legalization come through, what we have now is so much lab data to inform our understanding of cannabis, and that's the root of our strains information. We take strains information that have different cannabinoids, different terpene profiles, that complexity within the plant itself, informs the cannabis consumers experience.
If you're talking about I'm trying to use cannabis for this reason, whether it's recreational or for a medical application, this idea that you can actually dial into the experience you're looking for, that's why strains are so important. It's not just indica, sativa, hybrid. You have to go the next layer deeper of understanding cannabinoid profile as well as terpenes to get to the effects you want.
Matthew: Great point. When we first had Cy Scott, co-founder of Leafly, I think six or seven years ago, back then, it was really a lot more about the THC level of a flower. There was some talk about the CBD-THC ratio, but it was still very early. How much is the influence of cannabinoids and terpenes really influencing purchasing decisions for people in the Leafly app?
Yoko: We think so much about how to bring consumers and the millions in the wings waiting to try this into the world of cannabis. We actually look at that experience and say, "The idea of bringing new people in is all about making sure we help them find the products and strains that are right for their intended uses." If you look at the Leafly app, we talk at a strange level. We have the world's largest database of consumer aggregated effects.
Consumers tell us, "Did this particular strain-- Did it have the intended effects? What were some of the negative effects?" This idea of being able to help consumers pick and choose and find the strains and products they want are all tied to breaking down the science of this plant.
Matthew: A lot of retailers in the cannabis space dispensaries, they rely on Leafly to get customers in the door, the foot traffic. The customer start on Leafly. They're exploring, they start to decide on a strain. If you were to stop and just visualize one dispensary in your mind that does a really good job of leveraging Leafly in the best way possible to create a holistic market plan, what are they doing? How are they using Leafly? How do they leverage it to get more revenue and happy customers?
Yoko: I love that question. It really goes to what can Leafly do for this community, this ecosystem of everyone playing in the cannabis space. I go back to the complexity of the plant, and that's a high barrier to entry. It's not you just go and pick a red or white and pick your flower, but because of this inherent complexity of the plant, if we can help break that down for consumers, get them in the door, give them a basic understanding of the plant, how the plant works on your own individual biology, and then take them through the selection process. That's key.
We consider this as the top of the funnel. We bring more consumers into cannabis. This idea then of being able to bring them into the doors of retailers ties directly to how retailers show up on the Leafly website. We've been able to break this down as to what makes a retailer successful on Leafly. It starts with having a robust profile, your address, your business hours, what services you have available, and that can all be managed on the back end on the weekly platform.
The second thing is making sure their menus are up to date. You can update your menu through Leafly menu solutions, leveraging our 30 POS systems integrations, or you can manually manage your menu.
But this idea of managing your menu, one of the issues we have in this space is that inventory. Inventory and supply chains are complicated, so products aren't always on the shelves when you go into your store. If you think about the consumer experience, this is a situation where we have some online, but a lot of these transactions have to be concluded in the store. If that's going to happen, and if that's going to happen in a way that's going to be beneficial to the consumer, you got to make sure when they place a reservation on our site, that product is on your shelves when that consumer comes in. Part of that is maintaining your menu and keeping that up to date to ensure that consumer knows what is or is not available into your store.
Reviews. Reviews on Leafly are huge. Again, I think a lot about what is this experience-- It's one thing for a seasoned cannabis consumer to come in and shop, but if you're really new to this, and you're one of these new people who are like, "This looks really interesting. I've heard a lot about cannabis. I think this can help me," Again, you need additional information to make you feel confident in your purchase. Reviews do that.
The other thing we see a lot of is our deals. Consumers like deals. Think about what we see in our regular experiences, e-com shoppers. We want to see if there's something on sale. We've been able to dial into all of these ways to manage your profile on Leafly to make sure you're the most welcoming and efficient place for consumers to come in and conclude their purchase.
Matthew: If you were upgrading a dispensary, what kind of promotions would you create and entice people, free dogwalker? What would you say?
Yoko: In markets where you can offer deals, people love percent off, BOGOs. BOGOs are huge. [laughs] The hard part about this is it's a market-by-market variation depending on what the regulations allow.
Matthew: Leafly recently partnered with Jane Technologies, we've also had on the show. They offer a lot of different tools for retailers. Can you talk about that partnership and the synergies either?
Yoko: Yes. For us, this was an opportunity to combine the education and know-how of Leafly with the best in class product catalog experience of Jane. Maybe we could go back with our previous question around how can retailers make sure their presence on Leafly is optimized. I talked about the Jane product catalog because that goes to the core of this experience, which is the menu. What Jane has been able to do-- I got to back up two steps to talk about some of the challenges with product catalog that you'll see in this space. Product catalog is each individual store uploads their products into their POS systems to essentially drive their menu.
The problem is because you don't have any standardized product descriptors, like a UPC that's widely adopted in this industry, you end up with the same product being uploaded by different retailers to their menus with different metadata. It might be called differently. You might have a variation in the name of the product. You'll have a variation in THC content, or CBD content, or you may have some fields empty. What happens if you don't cleanse that data is that, on a site like Leafly, where you show a ton of different menus, the same product can manifest in totally different ways.
If you're a consumer-- I have a favorite topical balm. If product catalog data is not cleansed, that same balm that I know I've bought looks a particular way shows up with different kind of information across different menus. Then as a consumer, you're left wondering, "I really liked this product. I have it here. I know what it looks like, but is this the exact same thing that's showing across from this store to that store to the third store?" That really undermines consumer trust in shopping.
What Jane has done is cleanse the product catalog, so that when they're seeing menus for multiple retailers with these products that look similar, they can match, cleanse, and align to a single description of the product with a great product image, so when the consumer sees that product manifested on menus and platforms like Leafly, they say, "That's it. That's what I wanted, looks exactly like the product I bought. I know this is the one I want to order."
That's a very long-winded description of what they've been able to do, but when that powers menus across retailers, what we've done is then taken that menu and integrated it into the Leafly platform. If you're a Jane customer, and you're a Leafly customer, you can basically update your menu in one spot that's on Jane and push that through Leafly.
Without that integration, they would have had to maintain two separate menus. You can imagine what kind of duplication and potential opportunity for mistakes that that situation poses.
Matthew: Do you think there's going to be some consortium in the future of big players that get together and say, "Hey, let's standardize some things here?" Just the naming of it.
Yoko: I think that would be a fantastic idea. Ultimately, if you think about this is an exercise in building consumer confidence in the cannabis shopping experience, that is absolutely where I think we should go as an industry.
Matthew: Now, you recently launched a jobs report. Can you talk a little bit about that?
Yoko: Oh, yes. Let me talk about the genesis of the jobs report. This is something that Leafly has been publishing since 2017. We published this because the federal government doesn't. Think about that for a second. Your job, my job and any other industry would be counted in Federal Labor Statistics, but because of federal prohibition, there's no separate next code. There's no separate categorization for jobs in cannabis. That's where the jobs report came out of.
What we've been tracking now is jobs created in the US from legalization, and those numbers are massive. This year's report covering 2020, we've got 321,000 jobs in cannabis across this country. That's 32% year-over-year growth from 2019. I want to go back to how you started this. COVID-19 has had a devastating impact on our economies and our jobs, but this sector, this is a shining light in our economy.
Matthew: Agreed. I wish we could talk about that more on a national level, but hopefully, that's going to start to happen here. I noticed that there's, I think, three senators pushing for some legislation that's hopefully going to move this ball down the field a little bit, but cautiously optimistic.
Yoko: It's interesting. We had with the green wave in November and New Jersey going wreck, we'd made some statements around that's the dominoes falling, and you just see the eastern seaboard lighting up.
This morning, I read about Connecticut. Virginia's legislature has moved legislation so quickly through their both chambers. I think when you see that kind of momentum, you see massive population areas basically saying, "We don't want to miss out on this," this is something that the federal government needs to listen to. We've got to make it easier for these businesses to grow, to grow state coffers and to essentially continue to create these jobs to drive our economy.
Matthew: Is there one or two bullet points from the jobs report that really stuck out to you as a cocktail party snippets that you could share?
Yoko: Oh, totally, tons. We've got more jobs in cannabis now than we have dentists in this country. We have more jobs in cannabis than we have electrical engineers and EMT and paramedics. I saw another state specific stat, which I thought was absolutely fascinating around more jobs in cannabis than police in Michigan.
Matthew: Wow. [laughs] That one's particularly nice.
Yoko: I think it's time to wake up to the opportunity here and act on it.
Matthew: Job seekers that are listening, and they're trying to figure out what category of jobs are there? Is the job's report have any detail about what kind of jobs there are that are interesting and making cultivator, extraction, lab scientists, trimming, all those things? Is there anything else that's on top of mind?
Yoko: We don't do a breakdown of job categories by job, we do do a breakdown of the states in the report, but just as a participant in this industry, I love the way you asked that question simply because it is the whole breadth of what it takes to support an industry and an opportunity to get involved, not just in plant touching, but looking at cannabis technology company like Leafly. You've got everything from marketers to finance people, to lawyers, to salespeople. I think that's what I love about this space, which is come one, come all. We need your expertise.
Matthew: How about Oklahoma? It seems like things are just going nuts in Oklahoma. Can you talk about that a little bit?
Yoko: Oklahoma is amazing, and it starts with the regulatory structure there, where they basically said it was an open market for getting licenses. That's so different than state by state. What you then have is adequate supply for all the consumers who are looking for products there. I think this is one of the biggest barriers right now that we've got to work there from a regulatory perspective in each of the states, where our store-to-consumer ratios are off in a lot of our biggest markets like California. This is just something where-- I think we can't get ourselves.
We're still fighting stigma, and we've got to get our local regulators on board and understanding the opportunities that cannabis presents. I call it the cannabis Boogeyman dispelling those myths around "the harms that cannabis legalization brings", some of which we've dispelled, for example, real estate properties actually increase when you've got a cannabis dispensary in your area. But that was a long-winded way of saying yes, Oklahoma is hot. I think it shows this great demand that consumers have for the plant.
Matthew: Any other jobs numbers that stick out at all?
Yoko: I think the jobs numbers, we also have to just look at sales numbers. We focus solely on the license market. The jobs exist because this industry drove $18.3 billion in sales in 2020. That's a 71% increase over sales in 2019. The other side, I should just mention about jobs. These are massive, massive sales growth, but this number, this growth in jobs
is-- We are the fastest growing employment segment in this country.
I'm going to just flip-flop back to that sales number. There's another interesting COVID stat. Again, you started here, and I think that's such an interesting space. This essential industry, what we saw with consumers in 2020 was that basket sizes are up 33% in 2020.
Matthew: I wonder if there's more shopping or deeper shopping, meaning I don't shop as much, but when I do, I get for a longer period, it's like a mini hoarding internal narrative because I might be in my house for a long period of time. I want to make sure I have a big stash. You know what I mean?
Yoko: We definitely saw some toilet paper hoarding behaviors, similar to toilet paper at the start of the pandemic in our own ordering info, but what we've seen is that as you track COVID and through the spikes we saw, things levelled down. People stopped hoarding, but what I do think it's driven is this shift in greater adoption of online ordering. Again, when we are talking about reducing in-person contact, this ability to actually leverage technologies like Leafly to order and then pick up, I think this is driving a massive consumer shift and really creating this more broader acceptance around shopping online for cannabis.
I was having this great conversation with someone about, a lot of the times you're shopping for cannabis, these are really personal and private issues you're trying to deal with. There's personal health issues that you may not necessarily be comfortable walking in and talking to a bud tender about. If we can help you with information and the news you need to do some of that exploration on your own, in the privacy of your own home, it just makes it somewhat easier when you walk into the store to pick up your product.
Matthew: In Seattle there, are they doing the trunk open delivery in the cars?
Yoko: No, we are a no-delivery state.
Matthew: No-delivery state.
Matthew: Is that changing?
Yoko: There's a movement but not in this session of the legislature.
Matthew: Interesting. Well, that leads me to the next question here. Where do you think the whole cannabis industry is going in the next three to five years in a national way?
Yoko: Oh, I call it the most bipartisan issue in our country. You've got 67% broad support for cannabis, COVID's devastated state budgets. We need tax revenue. Equity issues, criminal and social justice issues are at the forefront of all of our minds. Cannabis sits at the center of solving so many of those problems. All I see is opportunity, opportunity, opportunity, as well as an opportunity to do it right and to be inclusive, to be equitable, and give the people what they want.
Matthew: You're the CEO of Leafly. There's a lot of listeners that are new to the cannabis space they want to get in. What do you think are the most important skills that are hireable right now?
Yoko: Oh, like in working in the cannabis space to doing everything with one arm and a leg tied behind your back, tenacity, and curiosity. I think the opportunity in a space like this is that it hasn't been done, and it's yet to be defined. There's a level of intentionality that you can do that we should be doing. I think combining that you aren't reinventing the wheel, you're inventing the wheel. That's going to be difficult.
We actually have this conversation internally. If you want just a job, this probably isn't the place, but if you really want to be creative problem solvers, we have so many problems for yourself.
Matthew: Well, Yoko, I want to ask a few personal development questions. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Yoko: This one is a question that differs on the day you asked me. Today, I'm thinking about Catch-22 by Joseph Heller.
Matthew: Tell us why.
Yoko: I think it's one of those things I read it super early, like many listeners may have had too, and probably in high school. I think it just gave me a framework for thinking about life and back to some of the challenges you were talking about, where it actually gives you some levity and a sense of humor to address all of the things that come your way in life.
Matthew: What do you think the most interesting thing going on the cannabis field is besides what you're doing at Leafly?
Yoko: I'm so excited by that question, but then having to reduce it down to the most exciting, I am super passionate about this ability to tackle equity and business opportunity all in one. There's such a unique history to cannabis and prohibition and this intentionality that we are all trying to bring to say we can solve for all of this. It's not a zero-sum game. There can be winners across the board. That is hugely motivating and what makes me super excited to show up to work every day.
Matthew: Now, the last one, what is your favorite comfort food?
Matthew: Tell us what that is.
Yoko: I'm Japanese. Comfort food, Japanese noodles, soup base. You start with a very rich-- or actually a custom-made broth. It can be a bone broth. It can be a soy sauce-base broth. It can be a salt-base broth, and noodles. On top of that, you can add anything from vegetables to slices of meat. It's just savory, hot noodle soup.
Matthew: Nice. Well, Yoko, as we close, can you tell listeners how to find out more about Leafly?
Yoko: Absolutely. We encourage everyone to just come to leafly.com. Just start with the news and information. Start with this discovery. Start with learning more about the plant, the science, the news, the lifestyle commentary, and dive in. It's a journey that will take you to so many different places. If you're interested in advertising on Leafly, you can find the link at the top of our website that says advertise on Leafly and click through.
Matthew: Well, Yoko, domo arigato for coming on the show and educating us and give me a little Japanese lesson before we hit the record button. Thanks and good luck with everything you're doing in 2021.
Yoko: Thank you so much.
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[00:28:43] [END OF AUDIO]
At a time when most cannabis cultivators are competing on price, this company is commanding a premium on their sought-after flower. Here to tell us about it is Sam Ghods of Connected Cannabis.
Learn more at https://www.connectedcannabisco.com
[1:00] An inside look at Connected Cannabis, the largest branded flower company in California
[1:27] Sam’s background in tech and how he got into the cannabis space
[5:01] How Connected Cannabis commands a premium on their flower in a competitive market
[11:26] Differences between the cannabis market in California vs Arizona
[12:07] Connected Cannabis’ unique cultivation team
[15:37] Why most retailers don’t cultivate their own cannabis
[19:29] How California’s notorious black market is changing thanks to developments in the legal market
[21:37] The grow technology Sam finds most useful
[23:53] Where Sam sees cannabis cultivation heading in the next 3-5 years
Matthew Kind: Hi. I'm Matthew Kind. Every Monday, I look for a fresh 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.
At a time when most cannabis cultivators are competing on price, this grower's commanding a premium on his sought after flower. Here to us about it is Sam Ghods of Connected Cannabis. Sam, welcome to CannaInsider.
Sam Ghods: Thank you. Thanks for having me. Love the podcast, I'm excited to be on.
Matt: Give us a sense of geography. Where are you in the world today?
Sam: In San Francisco, personally. A lot of our operations are based out of Sacramento, California, but as I've been here for some time now. We have a pretty geographically distributed team, but I'm in San Francisco today.
Matt: Okay. What is Connected Cannabis on a high level?
Sam: We focus on growing and selling the world's best cannabis. We're vertically integrated in California and last year, we launched in Arizona as well. We are the largest branded flower company in California, as well as the highest priced as well.
Matt: I want to get into highest priced piece in a minute, but you've got a pretty interesting background here, Sam. Can you tell us about your background, your journey and how you got into the cannabis space?
Sam: Yes, totally. I started out in the tech world. I co-founded a company called Box, specializes in cloud sharing and storage over 14-15 years ago, with three other friends. We grew that from the four of us to 3,000 employees worldwide. We took it public in 2015, led that primarily as head of technology. Right around 2017, 2018, decided to take some time off, look for something new.
I knew I always had a real deep passion for craft and artisan consumer goods and wanted to explore doing that professionally, but I never knew cannabis could be like that, until I met Caleb.
Caleb Counts is the founder of Connected Cannabis. He started the company by opening the first dispensary back in 2009 in Sacramento. It was actually the first unanimously approved dispensary in Sacramento. From there, he started cultivating a year later in 2010, and with really out of a need for a consistent supply of really high-quality product. It was really hard to find great product consistently back then, so he just decided to start doing it himself.
From there, he and his partners have built this empire over the course of a decade. They added indoor grow, outdoor greenhouse, multiple moar dispensaries, distribution sales marketing, and that being fully vertically integrated in California. By the I found out about them in 2018, within the first few minutes of speaking with Caleb, I found out what I like to say is everything I needed to know about the business, which is for years they have been selling out of their product at two to two and a half times what Rio was selling theirs for. That immediately peaked my interest. I was like, "What's going on here with this company and this industry?" I just dove in head first. I really was blown away by what I saw and what they have built.
At the time, I joined on first as an adviser, helping them consolidate the company and get it prepared for fund-raising. They were also looking for a CEO, so in September of 2018, I joined full-time as CEO.
Matt: For listeners outside of California, can you describe how much a pound of cannabis is? What's the market price for a pound of cannabis?
Sam: Usually, we talk about it in terms of the wholesale price per pound is most common. It's been moving to price for eight, but in the price per pound range, for most cannabis for indoor, it's probably in the $2,000 to $3,000 a pound, then with this you double that to get to the retail price. We have been selling, for the past couple of years, an average of around $4,000. Recently, we've been selling for over $4,500 per pound.
Matt: That's the part where most people are like, "How in the hell?" That's what piqued your interest when you talked to the founder, and you were like, "What exactly is going on here?" Sam, how do you command a premium here? You've got something special going on here, but what do your clients say, what are your customers? When you talk to them and they say, "What are you buying this for?" Is it just like, "Hey, this is just next"? Or what's going on here?"
Sam: At the end of the day, it comes down to product. We spend a lot of time and energy developing the product and pushing it to it's absolute limits. There's two big components there. One is the genetics, and one is the cultivation. On the genetic side, a lot of people think that cannabis genetics are like wine bridals, where they're pretty common, pretty shared, there's no too much differentiation between different brands and products and it's really about obtaining different kinds, versus developing. Instead, we see them as something that we develop over the course of years and expresses our taste in world view about where the product is going.
One example is we've actually bread a total of, over the last decade of the company, bread over 10,000 different bridals and strains and we've only brought to commercial reality a small handful. That shows how much time and energy is going into our genetic development and expanding and breeding our line of strains and creating these strains like the biscotti, or gelonade, or baklava across our brands, that you just don't see anything comparable on the market. That's one of the biggest reasons that we end up with this premium is because we only make so much product because of the incredibly high-quality and high exact standards we have and that product because of the genetics in large part is of just a totally different kind of product than what else is on the market.
The way that shows up, it shows up in nerve structure, it shows up in the smell. Really, really unique terpene profiles. The flavors, the way that it smokes, the effect that it ends up having because of the unique combinations of terpenes and cannabinoids, all these things go into a really holistic end-to-end process of a product experience, that's really unlike anything else in the market.
The genetics power a lot, but then on the cultivation side, there's, let's say, 10-15 major steps or factors that goes into an average cannabis indoor harvest, and every single one has to be extremely well-executed every single time. What we found is one step in that process misfired one time, and you can instantly go from a $4,000 pound to a $2,000 pound. That product usually doesn't end up or will never end up in one of our branded packaged products that we sell. We only take the best of the best of what we cultivate and we put it on our brands, which then creates an incredibly powerful brand because customers know that when they come to Connect Cannabis, it's just not gonna be someone else's weed, thrown in a jar with our label on it. It's not just going to be whatever we just happen to grow, it's going to be what we believe is the best of what we represent. That's how we've created these brands that have such power and weight in the industry, it's through all these three things. It's the genetics, the cultivation quality, and the brand that results from that.
Matt: You mentioned when you first got involved, you were seeing the products sell-out. Is there an intentional strategy where you say, "We make just a little bit less than demand to keep the demand high," or are you pumping out as much as you can and then the demand just meets it at that price?
Sam: More of the latter. It's more that we only put out the best of what we can make and at this point, it so happens that demand is far exceeding the supply. We're going to keep trying to bring more and more products to more and more people, make it more accessible and available, but for the time being, we're not going to compromise any of our standards to just sell more volume, which is one of the kind of real key tenets of our company and strategy. At this point, demand is very much outstripping supply.
Matt: Okay. You have three retail stores in California, and how many other retailers do you sell to?
Sam: Right around 250 give or take, at this point.
Matt: You mentioned there's some in Arizona as well as California?
Sam: Yes. Last year, for the first time in the company's history, we opened up a new market. What was really critical for us in going to Arizona or to any other state for that matter, is we are doing our own cultivation with our own genetics. When you get a Connected or Alien Labs products, our two brands in Arizona, you can be confident that it is the same product you're getting in California, which is extremely rare in the cannabis industry because as your listeners likely know, you can't take product across state lines. You have to rebuild basically your entire company, like a mini version of your company in each state you want to go in.
If you see brands that are across many states overnight, the only way to really do that is to leverage other growers, other genetics, other brands and rebrand them as their own and that's a strategy we've very deliberately decided to not pursue.
Matt: Is there any differences in the California and Arizona marketplaces that you noticed right away?
Sam: I think in both markets, we found a really strong group of consumers, who really value a high-end experience. There are definitely nuances and differences. California is a more mature market of a larger size. For us, we found just as much appetite and demand for a higher-end product in Arizona as we do in California.
Matt: You have a really strong cultivation team. You talked about the founder. Can you just talk a little bit more about the cultivation team, how they spend their time and what they do?
Sam: Yes. We have two big components scope for each team. One is a genetics and research and development part of the house, where we're experimenting with new things and working with constantly introducing new external genetics into our pool and creating really cool and neat interesting stuff. We have some stuff coming down the pipeline in the next year too that's, I think, really going to blow people away. We have that whole side of the house. We're building that up now. We're working on hiring full-time genesis and plant breeders to work with the team that we have, that's been doing this for a long time.
On the other side of the house on the cultivation side, we have some of the most talented growers in the world when it comes to cannabis. People who've been doing it for years and years. Combined with newer hire that we've brought on, such as our head of cultivation, a gentleman named Ian Justice, actually came over from Driscolls, which is the largest berry grower in the world, measured in the billions of dollars of annual revenue, who is colloquially in the company known as our plant whisperer, who is really helping us push the limits and discover entirely new depths of where we can take this plant.
It's really hard not just for any cultivation team, but for any company to seed in cannabis without what I think of as both sides of the equation. The one side is the cannabis experience. There's not a lot of experience out in the world with this plant. Stemming all the way back to the prohibition, the complete and total prohibition in the early 1900s from federal level, there's been very little research, there's very little understanding. We understand this plant less than just about any other plant in the world, especially the ones that are developed commercially like, let's say, berries or corn or soybeans or anything like that.
Experience with the plant is extremely valuable. You have people like Caleb. We have a number of GMs in our company, who've been doing this a long time. You also want to combine it with the absolute latest cutting-edge plant science, from other plants that can be applied and unique and specialized as cannabis. If you don't have both sides and a lot of companies, in fact, I'd say just about every other cannabis company I see, ends up biasing heavily towards either just being purely a cannabis company without the business or growth or traditional parts, or you see a lot of business-oriented companies, where there's virtually no cannabis experience in the leadership level or cannabis product or anything like that.
What we've really created in the cultivation team and then beyond in the company more broadly, is a company that integrates both sides of that equation in a way that ends up being really really powerful, in terms of delivering scale along with a great product.
Matt: I'm just trying to understand why retailers don't do a better job with their own in-house brands. Do you have to have an absolute obsessive need to be creating the best possible plants and also a sense where the culture is going, then a vision and just a lot of retailers don't have that trifecta? Why do you think they just don't go where you've gone with Connected?
Sam: It's really, really hard. Creating great cannabis consistently is probably the most ironically underrated thing in this industry right now, especially when it comes to the mainstream conversations around MSOs or national cannabis markets or the development of those. The bigger companies that exist in cannabis right now, generally got there by being more portfolios of assets, than a focused company delivering on a specific mission.
Cannabis, it is one of the most complicated plants that's being grown today. It's one of the most counter-intuitive and the way it responds to different stimuli and environments. It's really easy, again, to go from an extremely well-crafted cultivated product with exotic and advanced genetics, to something that's just run-of-the-mill. That's what anybody can do. It's like a high-wire act effectively. I see it in every single harvest that we produce.
We're measuring things down to not just the nutrients or the frequency or how we water, even the temperature of the water of the way the nutrients are delivered, needs to be consistent. The amount of detail that exists is just really underappreciated, I think. You ask why a retailer or another cannabis brand or these MSOs can't get it right, well, it's really hard. We make sacrifices all the time, in terms of where our dollars go, where our focus goes. We're hiring a team just exclusively focused on post-harvest development, not even on the cultivation part, but just what happens after cultivation.
Matt: Talk about that a little bit, like curing and so forth.
Sam: Curing, trimming, packaging, storage, the way the product is stored after harvest, can dramatically affect the final product. That can eliminate or enhance all the hard work that came before it. Just the storage piece alone, for example, not to mention curing and trimming and those other pieces. There's whole dimensions to this. We don't even understand yet, but we believe we are on the cutting edge of and it's not your day job. It's like a full-time job to figure this out and push the boundaries, there's barely even hope to even create a premium product in the first place. It's really hard.
Even if you do crack the code and you can create a premium product, it's one thing to do it out of one facility or one team or with what certain limit to the amount of scale or even in one state, but to do it again and again in larger and larger facilities and more and more markets, that's a herculean task. From what we can tell, we're one of the only companies pulling it off right now.
Matt: California is notorious for having this huge black market. How is the legal market changing that dynamic, if at all?
Sam: It's definitely helping, overall. I think the state of cannabis is making it more accessible, safer. The testing standards California's put in place, some of them are a bit extreme, but at the end of the day, it's creating a much more regulated and safe environment for consumers, which is a really big win for consumers. One of the reasons the black market and gray markets continue to exist is because the barrier to entry is incredibly high. The amount of time and capital you need and the regulatory landscape that one has to navigate to be able to succeed in the
legal markets is a lot. It's really hard. It's really, really hard and it's a big struggle for us. The problem is if it's a big struggle for us, we can only imagine how hard it is for someone just getting started.
I think that's putting an artificial limit on the amount of growth and innovation that could exist in California and in many other states. In some ways, it really helps with a lot of the safety and quality and accessibility to bring cannabis and help it mature as an industry. Obviously, the tax revenue that we're providing is a huge boom to the state as well, but it's still too hard. It's largely from what we can tell because a lot of the programs are just under-resourced.
You have these agencies that are struggling to do a good job, but they're not given the resources of the frameworks that make sense to keep up with the scale of the industry.
Matt: Okay. Given your background with Box and technology companies, are you putting in some high-tech solutions in your gross to help sense and organize and do a bunch of different things and maintain them? Can you talk about that at all?
Sam: Yes. Ian, our head of cultivation likes to say, "This isn't just about putting processes and procedures in place that every time guarantee just manufacturing the same product. It's more of an ongoing relationship that we have with the plant, that we learn what the plant likes and how it reacts." A lot of technology we're focused on now, it's about monitoring, not just environmental monitoring of temperature, humidity or things like that, but monitoring what the plant is experiencing, the pH levels of the soil itself or the moisture levels or integrating how the airflow is going throughout the room, the CO2 levels in different parts of the room and what the plant's measuring. The light levels that the plant sees at different parts of the plant, all these things is data we're beginning to gather in a really high scale way, that enables us to really understand what the plant is experiencing through a typical cycle.
Every cycle has small differences and nuances that we have to react to in real-time. Every strain can react differently to different environments. We pay attention to that and try and optimize the environment for the different strain mixes that we have in the trip. I think we're at the very, very, very beginning. Unfortunately, the technology landscape for cannabis is not very flushed out yet. There's not a lot of options, but we are looking at more traditional [unintelligible [00:23:43] systems, the ones that are top of the line for monitoring indoor agriculture and applying many of those throughout the stack.
Matt: Okay. If you were to close your eyes, pull out your crystal ball and look three to five years out, what do you think cannabis cultivation is going to be like then? How will it have evolved?
Sam: As there are more companies who are able to focus their time and resources on cannabis cultivation, it's going to be pushed to heights that we can't even conceive of right now. You could say a theoretical ceiling on this plant, is incredibly high and none of us know where it is. You'll see $200, $300, $500 hits on the market. You'll see a tearing in a quality level that is based more on the intrinsic quality on the product, versus the brand, than any other consumer that we know of including wine, including spirits, including anything like that. We're going to see a higher ceiling and more potential of this plant to have differentiation in the product itself, than any other mass-produced consumer good we know of today.
That's what's most exciting for me about this company, this space, this industry is that I think we're on the very, very, very beginning of exploring and it's not going to go in the direction of [unintelligible [00:25:24]. It's going to go in the direction of the highest and most artisan and craft consumer goods we know of.
Matt: Now, obviously, you've got a big presence in California. California has had some challenges lately. Do you think they're going to turn it around or do you think it's going to hit bottom first, before, maybe, some of the government officials get a sense that they need to adapt or respond in a different way like some of these hungrier states like Nevada or Florida or Texas?
Sam: I'm not sure. I definitely hope it gets better before it gets worse. I don't know. I think that's a really good question and I really hope that some change comes to help push this industry along its growth trajectory because you still have a very small percentage of Californians that have easy access to legal cannabis. It just doesn't make sense. It's such a high-potential industry. It's such a great product that has so many benefits holistically. It's such a better alternative than other recreation methods. I really hope it does get better.
Matt: Sam, I want to ask a few personal development questions to give listeners a better sense of who you are. Is there a book that's had a big impact on your life or way of thinking you'd like to share?
Sam: Yes, for me, one of the things that I've spent a lot of time on is how to build culture inside of companies. Even though, at Box, my main role was to focus on technology and specifically, computer science or computer engineering and then coming over to a cannabis company has been a shift in a lot of ways, in terms of what's done day to day in terms of the actual product. The thing that has carried over the most, has been building a culture for a company that's experiencing a tremendous amount of growth developing and producing a great product. A lot of things that come with the culture is how people interact with each other when there's conflict, when there's disagreement, when there's really hard problems to solve.
For me, one of the most helpful guides along that path has been a book that I frequently say called Crucial Conversations. I really love that book. It's a step-by-step guide on how to have conversations where the stakes are high, whether it's a conversation between you and your boss or you and your partner, where there's a lot of either context or history or emotion involved and it's like a tricky spot to be in and how to navigate that. It's been a really helpful tool for me to develop on that front. Crucial Conversations, I'll recommend really frequently, especially for people struggling to have a bigger impact in the organization or to be more persuasive or influential in the work they do.
Matt: When you look out of the cannabis landscape, apart from what you're doing at Connected, what do you think is just super interesting in the cannabis space?
Sam: One of the things I'm really excited about is the research that's beginning to happen. As the federal laws around cannabis will, hopefully, continue to get more lax and permissive, there's some opportunities for research opening up, more traditional university back research. There was a paper published recently around light levels and cannabis, how cannabis reacts. I think one of the things they found was they weren't even able to find the limits. Even at their highest levels, they were finding there were still gains in the production of the plant as related to a light level.
There's so much more to learn about this plant. I think traditional research and science getting involved has a lot of potential benefits, not just the quality, but also the benefits, the health benefits and other benefits to the human body and the endocannabinoid system that we're yet to discover.
Matt: What's one thought that you have that most people would disagree with you on?
Sam: I think I would come back to just the importance of having both sides in a company. Most people get fed up really quickly when they're trying to integrate the cannabis world in the business world, and they would see it not as a valuable partnership, but one that drives a lot of conflict and it isn't worth it. I think the people who have been really experienced and historically are knowledgeable in the cannabis place look at the business people and say, "They don't know what they're doing. They're never going to understand it. They're never going to appreciate what we're doing or create something that's really high quality and amazing."
People in the business world look at the cannabis people and say, "They don't really understand business. They don't traditionally train. They don't have what it takes to scale companies and make it bigger." That attitude, it was also in a lot of the companies that you see. Whether either they're growing and scaling, but they don't have any products that nobody cares about or they're product-oriented companies that have a really hard time scaling. Neither of those make a recipe for pushing the boundaries and limits of what this plant can do.
At the end of the day, the only reason our products is priced how it is and our company is grown the way it is is because it allows us to invest more, and more, and more dollars back into the plant, back into the product. Like Apple or Tesla, driving profitability in their companies, allows drive all that profit and revenue back into their R&D to create even more incredible consumer products. I think that's something that's really not appreciated in this space is that blend and the hard work that takes to make a culture where both sides are really appreciating what the other side brings to the table. I think it's really underrated right now in the space.
Matt: Sam, as we come to a close, can you tell listeners how they can find Connected Cannabis if they're in California or Arizona and maybe, you even suggest a strain for someone that's trying it for the first time.
Sam: Yes, totally. We have our three retail stores in California, which are great spots to grab our product. San Francisco, Sacramento, and Stockton, those are three locations we have stores. Also, you can find our product at many, many partners, hundreds of partners and countries around the state. Weedmaps is a really good way, as well as [unintelligible [00:32:41], are both great ways to find the product and where we're carried.
In terms of strains, on the Connected side, Gelonade is one of our more newest strains that is a little bit more [unintelligible [00:32:58] leaning, a little more energy. If you just want the traditional, old school, a lot of the brand of was built off as biscotti. That's on the Connect side. The Alien side, we have a new strain that recently launched, biscotti, that's getting crazy, rave reviews. Keep an eye out for that one. It's pretty limited right now, but if you can get a hold of that, it's pretty magical.
Matt: Sam, thanks so much for coming on. You really educated us. Sounds like you have a great business. Well done. Congratulations and come back on once you have this curing and drying everything worked out with that team because that's really interesting stuff.
Sam: Absolutely. Thank you so much for having me. I'm really happy chat with you today and look forward to chatting with you again soon.
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[00:35:19] [END OF AUDIO]
Commercial cannabis growers are notoriously tight-lipped when it comes to their growing methods, but not Ryan Douglas. Today this master grower shares all the secrets you need to take your grow to the next level (including what not to do).
Learn more at https://douglascultivation.com/about
[00:54] An inside look at Ryan’s new book, From Seed To Success
[1:35] Ryan’s background as CanopyGrowth’s expert cultivator when the company was still named Tweed
[3:01] How Ryan helped CanopyGrowth get its start as one of Canada’s first and largest licensed growers
[6:05] How Ryan went about choosing the best genetics to grow at CanopyGrowth
[7:42] The efficiencies required for a large commercial grow
[11:37] The most common mistakes commercial growers make and how to avoid them
[14:33] Ryan’s advice on how to approach a commercial grow and determine what needs to be done on a high level
[17:22] How to determine a reasonable budget for your commercial grow
[19:02] Best hiring practices for commercial grows and what to look for in staff members
[20:34] How to mitigate pest issues
[26:34] The best type of lights for indoor grows
[27:57] Where Ryan sees commercial cannabis grows heading over the next 3-5 years
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com, that's cannainsider.com. Now, here's your program.
Often, commercial cannabis growers are tight-lipped about the best practices that used to grow world-class plants and customers want and to bring in profits. Today, commercial grower Ryan Douglas is going to pull back the kimono and share all the secrets you need to take your grow to the next level. Ryan, welcome to CannaInsider.
Ryan Douglas: Hi Matt. Thanks for having me on, it's a pleasure to be here.
Matthew: Give us a sense of geography. Where are you in the world today?
Ryan: I'm in Florida on Vero Beach, so it's about two hours north of Miami.
Matthew: Okay. Can you tell us a little bit about your new book, From Seed to Success?
Ryan: Sure. This is basically a guide book for anyone from any industry that's interested in launching a commercial cultivation operation. It's basically set up as a step-by-step guide for not only planning and designing but also executing and expanding a successful commercial cannabis grow operation.
Matthew: Okay, so it's not just for someone that's about to launch one, it's also for people that currently have a commercial grow too?
Ryan: Exactly, exactly because there's as many companies looking to expand as there are looking to start from scratch.
Matthew: Yes. This is important stuff. I want to dig into this, but before we do, can you just give us a little background about how you got into this business, what you were doing prior, and so forth?
Ryan: Sure. My background, my training is actually in traditional horticulture. Before even touching cannabis on a commercial scale, I was a greenhouse grower of ornamental and edible crops for about 15 years across the US. Then as cannabis slowly became decriminalized, I started looking to transition basically the crop I was growing, but keep the same line of work.
What I found is that 90% of the techniques and principles used for cultivating flowers or vegetables or herbs are directly applicable to cannabis. As cannabis became more and more at least decriminalized, then I became more interested in entering that that line of work. I was lucky enough to land a job as the head grower for a company called Tweed, which is today known as Canopy Growth Corporation in Canada.
Matthew: Yes, gosh, that's one of the biggest success stories in the cannabis space now publicly traded. It's one of the biggest, and we had CEO Bruce Linton on when it was called Tweed. There's a throwback for listeners that want to go back to those original-- That was a long time ago. That seems like it seemed like cannabis 1.0, so I'm glad we're going to hear some of the Genesis here. Most people have heard of Tweed that now became Canopy Growth, but what were you doing when you first started with them? How did you set up a-- That's an enormous grow I imagine. What was that like?
Ryan: That was exciting. Bruce hired me over a dinner one night in Ottawa back in 2013 and I just never looked back. That was a really exciting ride. At the time, I was a cultivation manager for a small dispensary in Maine. I was thrilled to be working with cannabis legally, but compared to the greenhouses I'd been operating, it was a relatively small grow area. Almost immediately, I started looking for something that would be much more challenging, but still in the cannabis world.
I read that Tweed was looking for a head grower and I just followed the typical paths of landing a job through reaching out with a resume and phone interview, and then I landed the in-person interview with Bruce in Ottawa and we took it from there. You're right, it was a massive undertaking because we were one of the first licensed producers in Canada. I think we were the seventh.
We not only had consumers that were waiting to purchase product, but we also had Health Canada, which was the entity responsible for regulating the program. They wanted to have some licensed producers actively growing and selling cannabis. There was never a dull moment for the first couple of years at work there.
Matthew: Okay. Bruce goes big. He likes to go big. How many plants were you growing?
Ryan: Yes, so at that time, we were restricted by the amount of grow rooms that we had licensed. The way that Health Canada set up the program is you received a cultivation license, which gave you permission to cultivate, but you had to have individual grow rooms okayed by Health Canada. At the time, at the beginning of that program, it was a relatively slow process.
Our goal initially was to set up six rooms of about 2,000 square feet each, and you would stick about 500 plants in each of those rooms. The short term immediate goal was to grow with 3,000 plus plants that we could load up half a dozen grow rooms and that was actually the foundation of the cultivation program at Canopy.
Matthew: Okay. Eventually, it moved into a Hershey factory in Ontario or something like that. Did I get that right?
Ryan: Yes, that's where we started. When they hired me in 2013, the company didn't have a license so part of my job was to help the group identify a facility that would be appropriate for building out into a commercial cultivation facility. What they found was a former Hershey chocolate factory in Smiths Falls, Ontario, which had been empty for seven years. It was huge, there was plenty of space. There was a lot of electrical power, a lot of water, and it was actually the idea of location. Because it had sat empty for seven years, the price was right on point, so that's how we ended up there.
Matthew: Okay. How did you pick the genetics to grow?
Ryan: Well, at the time the regulations prohibited us from acquiring genetics from any source that was not already licensed to grow them. At that point in Canada, for several years prior, they had a medicinal cannabis program for home growers. With the new program is basically licensed to large commercial growers, but we had to acquire genetics from those home cultivators.
It was so while I was busy, designing the facility and hiring the team, and planning production, we had people that were reaching out to these licensed home growers to see if they'd be interested in selling their genetics and then seeing what they had and in what quantities. Once these folks reported back with their findings, then I was able to select what I thought made sense to really launch the cultivation program with.
Matthew: Okay. Are you just getting cuttings from mother plants then? Is that what was happening?
Ryan: We had more luck finding seeds. The risk with starting from cuttings from other plants is that you bring in everything that's on that plant. There's a high likelihood of either a disease or an insect coming, hitching a ride with that plant. Since we had just built a brand new custom-designed facility for cannabis, really didn't want to start off with two strikes against us by inviting in potential problems. By starting from seed, we eliminate that risk to some extent.
Matthew: Okay. Yes. What kind of efficiencies are required for a grow that large?
Ryan: Those six grow rooms, relatively speaking, it wasn't that big, but my goal was to design a production facility that had the capacity to really expand relatively quickly and relatively seamlessly. From the get-go, there was a couple of systems I put in place that would really increase the efficiency, but also would support a much larger expansion. Just quickly, two of those were the environmental control system and a fertigation system.
An environmental control system, what that does is it allows either the owners or the head grower to view on one screen, monitor everything that's happening in the production facility, and make changes as well. With the click of a button, you could look at a grow room and see how the HVAC equipment, the dehumidification equipment is functioning. If the lights are on, how many lights are on, if the fans are moving, carbon dioxide levels, and it lets you adjust those so you can do that remotely or on-site.
The second piece of equipment was a fertigation system. Fertigation is simply the adding of fertilizer to irrigation water. Watering irrigating plants is a task that happens just about every single day in a production facility, and the amount of time it takes to fill a tank, measure, fertilizer apply the fertilizer empty of the tank. It seems like a pretty straightforward process, but it can consume 10% of a person's workday. You multiply that day after day, week after week for years and you're spending a lot of money on labor on that one task. By automating the irrigation we free up the labor and it ensures that we have a relatively lean production program in the future as they expand as well.
Matthew: Okay. What about harvest cycles then? Do you have a different harvest period for different rooms to make it easier on yourself or how does that work?
Ryan: Yes, so really the most efficient way to set up a production facility is to that have a perpetual harvest cycle. Whether we're talking about an indoor grow up or a greenhouse, if you were to load up that facility all at once and harvest it all at once, you need a really big space to dry it, a really big space to process it. You need a lot of people all at once to do the trimming. Then once it's done, you don't need that empty space, and you have to let all those people go. It's much more efficient to harvest smaller quantities but do so regularly. Really just about every two weeks is ideal.
Matthew: Okay. Did you use trimming machines or trim by hand or how does that work?
Ryan: Yes, so we did both. Initially, we started out by hand. Once you get into really big volumes, that really eats into your labor costs. Towards the end of my tenure there, we automated the trimming.
Matthew: Gosh. Can you tell us anything about the drying and curing process?
Ryan: Yes. It's a critical step because it's actually possible in a week or 10 days to ruin all of the previous couple of months of work if the drying process isn't done correctly. It's simply a balance of the correct temperature and the correct humidity and slowly allowing the moisture to leave the plant. If it's too hot and too dry, and it's done too quickly, it can negatively affect the quality of the flower and it can destroy some of the active ingredients, the cannabinoids or terpenes that the plant has.
On the flip side, if it's done too slow, or the temperature is too cold, and the humidity is too high, the crop can easily begin to rot in the drying room. It's a question of finding the balance between temperature, humidity, and airflow. Generally, a crop should be dried within about 7, maximum of 10 days from the day it's harvested.
Matthew: In your mind, what are the most common preventable problems commercial growers could avoid but don't?
Ryan: There's a couple, probably the biggest two, I think are especially for startups, selecting a really complicated grow method. There's lots of different ways to grow cannabis. What I find, oftentimes, are groups that are new to the process, they do a lot of reading and investigating and they find that certain ways of growing produce the most amount of product, grow the plant the fastest, and have the least likelihood of disease or insect infestation, which is great, but there's some really advanced methods of growing, which are inappropriate for startups.
If you think in a new facility, you've got a new cultivation team, you likely have new genetics, everything is brand new. If you start with the most advanced, most difficult method of growing, it has a very low margin for error. Because most startups in any industry are not pretty, you really want to eliminate potential risks or things that could go wrong.
There's methods of growing called Deep Water Culture, or Aeroponics. Basically, the plant is suspended in water or it's suspended in the air and the roots are misted by a nutrient solution. There's so many valves and tubes and pipes, and there's so many variables that have to come together just perfect for that crop to get pulled off that it's really risky for a startup to go that way. Probably one of the biggest mistakes I see is that companies from the get-go, elect a very advanced, inappropriate method of cultivation to start with.
Probably the second mistake I see right behind that is selecting too many genetics to start with from the get-go. I've had clients that have wanted to start between 50 and 100 different varieties from seed to launch their cultivation facility. That's extremely unlikely. Even a world-class skilled grower is going to have a very difficult time pulling that off. I tell people to start with maybe five or eight, maximum of 10 varieties because if you can't launch a cultivation facility successfully and quickly doing it with five varieties, you'll never do it with 50.
Matthew: It sounds like there's a lot of biting off more than you could chew because you don't know the level of difficulty when you're doing it for the first time?
Ryan: Yes, and there's a lot of excitement. Especially if you're new to the industry, there's so much technology and information and equipment, everything sounds good. There's a tendency to want that implemented all at once so you have just the best, most efficient production facility but, if you're not from the industry, you really need a consultant or a head grower that can really point you in the direction of what's necessary and what is inappropriate at the moment.
Matthew: Well, that's a good point. If you are the business owner or master grower, lead grower, what are the things you should be thinking about at a high level when you're creating a commercial grower for the first time? How do you organize your thoughts about what needs to be done?
Ryan: From the get-go, it's probably a good idea to start at the end with the end product. We really want to determine what is it that we're going to sell. If we're growing dried flower for sale at a dispensary, that's going to dictate how we grow that crop. In a dispensary, you walk in and you've got dozens of varieties behind a glass counter. The visual appeal is very important, it actually makes up a big part of the sale process. If we're growing dried flower for sale at a dispensary, we're likely going to be growing indoors because that gives us the most amount of control over the crop and it results in really the best-looking product.
If we're growing for an extracted product, if we're going to sell oils or vape pens or edibles, then the visual appeal of the flower doesn't really matter because the consumer never sees it. We're growing the flower as a source of biomass from which we extract the active ingredient. In that case, actually, outdoor growing or greenhouse growing might be appropriate.
We want to start by looking at the end result and then once we determine what our final product is, then we work backwards from there. We look at the regulations to see if the regulations dictate that we have to grow in a certain way. For example, in Canada, when we started in 2013, we were only allowed to grow indoors. Now, eight years later, we've got people growing indoors, outdoors, in greenhouse, so we were don't look at the regulations.
Then probably the last part of that is really look at the climate. Even if you decide that growing outdoors makes sense, if you're in New Hampshire, you've got a really small window of time to make that happen. Whereas, if you're in Southern California or Arizona, you could have two or three crops during the course of the year just because the weather is different.
Even before we look at growing the plants or the technical stuff, we really want to look at the bigger picture things like the end product, if there's any regulatory prohibitions, and then also. what makes sense in that certain geography or climate.
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Ryan, how do you orient people in terms of budget? I know different projects have different budgets but is there any general guidelines you can help listeners with?
Ryan: Yes, so that's a critical piece of the puzzle because what I have found is that if you don't have a budget, then everything is too expensive. The risk is that you have a lot of these companies that sell turnkey solutions, specifically for the cannabis industry. HVAC systems that have the capacity to remove lots of water, which is the case with any kind of cultivation site, there's a lot of evaporation and transpiration. You have companies that offer turnkey solutions in terms of fertigation systems like I was speaking about before. These may be a little bit more expensive upfront, but what you get as a result is really low risk and limited downtime, and you give yourself the greatest likelihood of launching your facility on time successfully.
In terms of budget, if you're doing 10,000 square feet, you really want to have a couple of million dollars at your disposal. Anything larger than that, then you're looking at raising upwards of close to $10 million. What I tell clients in the beginning phases, if you're going to build something from scratch, if you're building an indoor facility, plan on spending about $250 a square foot to build that site out. If you're doing a greenhouse, plan out about $75 a square foot. Anyone can do the math on that as you approach 10,000 square feet or more, then we're definitely in the several millions of dollars.
Matthew: Okay. How about hiring? How do you pick staff that can really make an impact?
Ryan: Well, that's another key element to really establishing a successful cultivation program. Two things, I would say one on the head grower. The head grower in my opinion is arguably the most influential person in determining whether that business is a success or failure. I tell people to look for someone that has at least 10 years of experience. Not necessarily with cannabis, but at least with commercial plant production experience because they already come to the table with years of experience with facility management, production planning, and people management.
Sometimes if you hire for cannabis knowledge, what you get is someone that knows a lot about cannabis but doesn't necessarily know how to plan production or manage a team or orchestrate all of the nuances of a facility. As far as the head grower, I say look for someone with experience. You want someone that at least has a decade of experience growing anything but on a commercial scale.
Then for the rest of the team, you really don't need someone that has experience in the cannabis industry. Whether they're plant technicians or trimmers, you really just want to look for the same kind of characteristics that you would want when you hire anyone for any kind of job. That's really someone that has a track record of showing up on time, someone that can learn new skills quickly, and probably more importantly is someone that's really passionate and interested to get into this industry.
Matthew: You talked a little bit about pest issues and how a pest can get hitch a ride on cuttings of a mother plant, but how do you mitigate pest issues when they do get in? Because invariably, it seems like they do get in and you want to minimize the opportunity, but how do you deal with it once pests are inside a grow?
Ryan: That's a good point because that's the best way to look at it, not to be too naive. We need to anticipate that we're going to have pest and disease problems because every single monoculture in the world is attacked by something and eventually, it's going to happen. Of course, prevention is always less expensive and more efficient than curative measures, so we can prevent introducing diseased material into our grow up by either starting from seed or if we do accept cuttings or genetics from another grower, we could put that through a process of micro-propagation or tissue culture.
In the process of duplicating plants through tissue culture, you actually eliminate any disease that's inherent in the plant. It gives you an opportunity to really start fresh or at least establish a stock plant or a production system that's really clean at the base. Then during the course of growing, it's all about really maintaining schedules in terms of scouting the crop for potential issues, but then also either applying organic-based pest control products or releasing beneficial insects to really keep any potential outbreaks under control and really mitigate the damage that they might cause in the event of a crop failure.
Matthew: Can you talk a little bit about what actually is happening in the tissue culture process that you mentioned?
Ryan: Unfortunately, I can't get too specific because even I don't understand how that works. It's much more common in traditional agriculture. There's dozens of crops that are duplicated that way. Basically, traditional asexual propagation involves the taking of cuttings or clones. You have a mother plant, you cut off a shoot that's about four or six inches long, you stick it into a substrate, and two weeks later you've got roots and now you've got a genetically identical clone to that mother plant.
With tissue culture, it's somewhat of the same process, but you need much less plant materials. Really just a fraction of a centimeter of material is sufficient in order to start the process of propagating a new cutting. If you look at a standard mother plant, it could probably generate one or 200 cuttings every couple of weeks. With tissue culture, you could literally generate 10,000 cuttings from one plant at the same time.
Matthew: Wow. You mentioned a little bit about the automation you set up at a Tweed or Canopy Growth, but I'm interested in what kind of technology you think has the most positive impact in terms of making sure the automation is working correctly and managed correctly. Is there any names of products or anything that you could throw out there in terms of the best practices in terms of software or automation systems?
Ryan: There's so many out there. Really the most important thing I would direct people to look for is any kind of technology that helps you create the optimal growing conditions for the plant. That means really guaranteeing just a few factors and that is light intensity, temperature, humidity levels, and airflow, carbon dioxide to some extent too. If we can provide those four or five basic growing needs for the plant and have it right inside of those optimal ranges every single day, whether it's the lights on or lights off-cycle, then that makes growing a lot easier. If the plant is healthy, there's much less risk of insect or disease infestation.
I would say any technology, any equipment, or any software that helps the grower to better control the grow environment is going to be well worth the investment.
Matthew: One that probably sends you text messages or something. If it happens in the middle of the night you get alerted, right?
Ryan: Exactly. When we set up Canopy Growth, I was the first call on that list of phone numbers. When something went out of range, it would immediately call my cell phone until I picked up and acknowledged that there was a problem. Then if I couldn't remedy the issue from my computer at home, I'd run over to the production site and really dig into what was going on.
Matthew: Does that happen often or is that a rare thing? Like carbon dioxide level, too high, that's gone outside of range or something like that?
Ryan: Or maybe an HVAC system that has shut off, but the lights are still on, so you can literally see the temperature rising as the minutes go by. That's why I lived three minutes away from the production site when I moved to Canada because I knew I would be dedicating a lot of time there. To answer your question, it is common especially with new facilities as you're commissioning the equipment and trying to get all this new stuff to work together, but it's less common once you get going.
Matthew: I imagine if you're doing an indoor grow, you have to have alternate energy source like a natural gas backup or something like that or generator?
Ryan: Exactly. Exactly. It would be unlikely that a production plant, the size of Hershey's, that you would have a generator that would allow every single piece of equipment to continue running. You really have to identify what are the most critical elements in a grow operation to keep running in the event of a power failure.
Matthew: A lot of people, it's like the Hatfields and McCoys with lights. People have their preferences and they get angry at people that have other preferences. What kind of lights do you like for indoor grows?
Ryan: For indoor grows with a relatively low ceiling height or those indoor grows that are multi-tier, LED lights work really well because they have a really thin profile and they can get really close to the plant. If you're growing in a grow room with a low ceiling height, you know that these plants are typically cultivated on benches that are about two feet tall, the plants grow another three feet so you have five feet already. Then if you've got a short ceiling height, you can't have a light that's going to generate a lot of heat because you're going to burn the tops of your plants and there's nothing that you could do, so low ceiling height or multi-tier growing, I think LEDs work really well.
If you've got a high ceiling or if you're in a greenhouse environment, then I still like a lot of the HIDs because they're just so powerful. They can really penetrate the crop and they have a carrying power. If you're in a really high ceiling indoor grow-up or a really high gutter on a greenhouse, then these HID lights they're going to reach the plant and do the work that they need to do.
Matthew: Where do you think commercial grows are going and how are they going to evolve in the next three to five years?
Ryan: Well, I think that we need to anticipate that growers will come under increasing pressure to really minimize their carbon footprint. On the one hand, it's great that we've got more and more states and countries that are legalizing cannabis cultivation, but we don't want our legacy as an industry to be that we've created this energy-consuming hog in a sense.
I think as we look to the next three to five years, we should anticipate as responsible growers that we'll need to do more with less, which means that we need to continue producing cannabis but doing so using less electricity and less water. I think we're going to see a lot of technology that's going to allow indoor growers to do that, but I also think new projects and expansion projects are going to be looking to greenhouse production because it's a much more environmentally friendly way of growing cannabis.
If we look at every other crop that's grown in the world, we're the only ones that do it indoors. If they can do it successfully outdoors with something like tomatoes that has such a small profit margin, then we can certainly learn how to do that successfully with cannabis, given that some of these markets are commanding $4,000 a pound wholesale.
Matthew: You're seeing a lot more adoption then of the greenhouses in Canada it sounds like?
Ryan: Well, those are my recommendations. It's hard to say on a whole if new businesses are going more indoors or outdoors, but my recommendation to clients more and more is to look at greenhouses because they're less expensive to build, they're less expensive to operate, and in three or four years in the event that there's some very strict regulations regarding electrical and water consumption, if you've built a really expensive indoor grow up, it's going to be even more expensive to retrofit that thing to comply with the new regulations. I honestly think greenhouse is the future of large-scale cannabis cultivation.
Matthew: For people that are interested in your book and they're on the fence like, "Hey, am I going to read this book or am I not." Tell us what's the biggest benefits from reading your book?
Ryan: The person that could benefit the most is someone that is not from the cannabis industry but recognizes the business opportunity. What my book is going to help these folks do is really avoid the typical starter mistakes so they end up spending less and they come to market much more quickly.
Matthew: Okay. Makes sense. Let me ask you a few personal development questions here, Ryan. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Ryan: Yes. For a long time, I always wanted to be an independent consultant. There's a book that I read that actually helps show me the way, showed me how to become a consultant and how to be the kind of consultant that I wanted when I was a Head Grower. It's a book called Getting Started in Consulting by Alan Weiss.
Matthew: Okay, and it worked.
Ryan: Yes. I can owe a lot of my success to that book.
Matthew: Okay. What do you think the most interesting thing is going on in your field?
Ryan: I think that kind of piggybacks a little bit on my previous answer in terms of really lessening our carbon footprint. Greenhouse and outdoor growers of cannabis, we can't rely on the pest control products that other growers can use, like pesticides or fungicides. We've got to get much more creative in growing these commercial crops by doing it in a very clean organic method.
What's exciting to me is seeing the way that growers are using, I would call biological agents, so beneficial bacteria, beneficial fungus, beneficial insects, in a way that prevents their crops from being exposed to potential disease, but also prevent or mitigates the potential damage from a crop failure. I'm excited to see in the next few years more and more companies implementing these products and really replacing pesticides with the use of organic methods and products to protect their crops.
Matthew: I feel geothermal's a big opportunity, especially in some of these environments with huge temperature swings, because you can be pulling the Earth's temperature into your grow and then the HVAC system just does the final last part instead of all the energy. It doesn't have to take everything to this extreme temperature that we can-- The Earth's temperature is at 50, I think once you go down 15 feet or 20 feet, and so if you could pull that temperature up into the grow and the HVAC has to consume a lot less electricity. Is there something I'm missing about that or is it just not widely thought of or is it difficult to implement?
Ryan: No, no, that makes a lot of sense. If you're in an area where you can take advantage of that principle, then I recommend it. I mentioned before that I'm from the traditional horticulture world and vegetable growers and ornamental flower growers, oftentimes, you'll have businesses that build these greenhouses right next to a power plant, or right next to an industry that generates heat as a waste product. When you look at places like the Northern states of the US, a large part of their operational expense is going to go into heating a greenhouse.
If you are connected to an industry or facility that generates heat as a waste product, then it dramatically drops your operating expenses in the same way that geothermal heat would. So if you're in an area where you can take advantage of that, I absolutely recommend it.
Matthew: What is one thought you have that most people would disagree with you on?
Ryan: I get a lot of pushback when I tell groups that their head grower should be the highest-paid person in the company. Like I said before, I think he or she has the greatest influence on determining whether that cultivation business is a success or a failure because the business makes money from growing plants. If your head grower is not a professional, skilled, experienced person, then you're raising $10 million or $20 million to bet on something that's very unlikely to pay off in the end. I always tell clients to find the best grower that they can afford and anticipate paying six figures and up for the right person.
Matthew: Okay. That makes sense. Ryan, as we close, tell us again the name of your book and how to purchase it.
Ryan: Sure. The book is called From Seed to Success: How to Launch a Great Cannabis Cultivation Business in Record Time, and both the paperback and the Kindle version are available on Amazon.
Matthew: Great stuff. Well, thanks so much, Ryan. This has been really helpful and informative and I know there's a lot of listeners out there that are looking for ways to improve their grows and also how to create an effective grow out of the gate. You mentioned you do consulting, are you still doing that?
Ryan: Absolutely. Anyone is welcome to reach out to me through my website at douglascultivation.com. I have a number of free resources for people that are thinking of getting into the business, but they're also welcome to contact me directly and I'd be more than happy to speak with anyone about their cannabis project.
Matthew: All right. Well, thanks again Ryan, and all the best to you in 2021.
Ryan: Thank you, Matt. It's been my pleasure.
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