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How to Use Packaging to Delight Cannabis Customers

Garett Fortune

Garett Fortune, CEO of Funksac, walks us through where packaging is in the cannabis industry. He delves into how Funksac not only protects your cannabis but also how it can be used to effectively build a cannabis brand that customers love. Visit http://www.funksac.com

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FunkSac is helping to fill in a very critical hole in the cannabis industry. FunkSac provides safe secure bags that keep cannabis fragrance in while keeping children out. FunkSac also helps dispensaries customize their packaging to ensure they get the most visibility to their brand. I'm pleased to welcome Garett Fortune, CEO of FunkSac to the show today. Welcome Garett.

Garett: Hi. Thanks for having me.

Matthew: Garett, so let's get a sense of your geography. Where are you located in the world?

Garett: Right now I'm in Ohio. So we have offices here in Cleveland, Ohio as well as in Denver, Colorado. So I split my time between those two mainly, but with the growing industry, I'm finding myself in Washington, Portland, and every other airline around the country.

Matthew: And why did you decide to get into the cannabis packaging industry?

Garett: Well, unfortunately, my brother passed away last year of cancer. And then by the time they found it, it was stage 4, and I started looking into different remedies. And it was the only thing that really helped him with his pain and getting him through those last couple of months.

And then on top of that, I served in the military with some folks that were suffering from PTSD. So I was aware of the studies that they were doing. And when I started researching on both fronts, I found there was no real packaging leader with this emerging market that was coming out in the cannabis industry. And I had a background in odorless packaging and in plastic. So we decided to go into that opportunity and expand, and start a business, and go after child resistant and odorless packaging to fill a void in the market.

Matthew: Great. And what exactly does the FunkSac do? How would you introduce to someone that has never heard of it before? It's childproof, it's puncture proof, what are all the things that it does?

Garett: So we've got about 50 different skews right now, and FunkSac has become the brand. The original FunkSac is an odorless technology, and we have a patent pending on that. It doesn't allow oxygen to transmit through the bag as well as smell. But it also has a UV protectant to protect the contents, and the original version was for storing cannabis and keeping the odor in whether it be at the cultivation side or the dispensary or the home-use side. And then that expanded into child resistant packaging that was required by compliance issues for the state of Colorado as well as other states that are adopting.

So we developed our own proprietary locks called the FunkLoc, which expanded into child-resistant packaging. So we have lines of odorless packaging for storage, security, and compliance, as well as tamper evidence, and then we also have child-resistant packaging.

And we're launching a bunch of new lines just based on what our customers need out there with the expanding market and the different forms that are out there whether it be vaporizers, or edibles, or just expanding lines based on what their requirements are.

Matthew: I love the name FunkSac. How did you come up with that?

Garett: Well, it was actually very quickly. I've got a few companies, one called Commodigy, and one called OdorNo. And I've always been good at coming up with names. We were brainstorming around a bunch of people at the office and saying I'm going to go to this market, and what are we going to do. And we just sat around the room on the bean bags and going over different options. FunkSac came pretty quickly. It was to the point. It was fun. Part of our brand is be relaxed but also be professional. So we want to have a fun name and everyone knew exactly what it would be just by saying that name, but also be relaxed and reflect the culture of our company.

Matthew: Troy Dayton, CEO of the ArcView group mentioned FunkSac, and how you're serving a critical role because he said packaging just doesn't exist in the industry. So you're coming on the scene providing the packaging. Where do you feel like there might still be holes and opportunities to fill?

Garett: Well, we have. We're finding stuff everyday. With the regulations changing on a regular basis, and it's state by state. We have to keep on every individual state what those issues are as well as it's expanding. People are coming up with new forms. There's edible. There's flower. There's oils. And there's lots of different forms that are out there. There was no real package that was out there to keep them secure from children as well as keep them odorless. So that's why we went into that pair. In the future, I see those coming down to single use bags. We're offering a couple of more lines that are coming. There's a huge opportunity in packaging not only on the security side, and the odorless side, but also the branding.

Branding is a big thing that people are starting to realize that on top of that compliance issue that really differentiates your product and brand from the others that are on the shelf. So the edibles that are there are in a very competitive space want to have good packaging to draw attention to those packages just like any consumer products that are out there. So there's a two-fold approach on the marketing and branding side as well as a the security.

Matthew: Great point. I mean, if you're a dispensary owner, you can have one contact where a patient or a customer comes in and gets some cannabis, or why not have them think of your dispensary every time they open the bag. So you're getting this touch over and over and over instead of just one time. So I see that as a big benefit. I agree with you there.

Garett: And I think if people see you with an exit bag for instance with your brand on it, they know where that came from, and that's a little more appealing than just a plain white bag. And also, everyone is looking for differentiators in the market, and there are certain brands that stand for certain things. And having a quality package that's your first impression to those end users and always leaves a good impression. On top of that you're going to get repeat business. People are going to want to come back and utilize your bags over and over again in your space.

Matthew: Great point. And that's actually a theme of the show is that at some point in the future, dispensaries are going to be more of a commodity and they need a way to set themselves apart. Is there any examples that you've seen of dispensaries or brands that they've done a really good job of presenting themselves in a unique way in customer's minds?

Garett: I think there's a few out there. Take Dixie Elixirs for example. We work closely with Dixie, and I think that is an excellent brand. The team there has done an incredible job on their packaging. Everybody knows what their brand is based on the packaging as well as their content. And you're looking at something that they've done it the right way. There's other packages out there that just sit on the shelves, but theirs always jumps off of the shelf. And they've realized that it's more than just having a great product, it's also having a great brand and making aware the market for those people out there.

Matthew: Great point. How are FunkSacs different than a traditional plastic bags. I'm just playing devil's advocate here. So I have a Zip Lock bag that's potentially odor proof but it's not puncture proof, and there's no lock. Is there any other differences?

Garett: Well, first off on your regular Zip Lock bag, it's a lower quality product. It's just going to be a resealable bag. It doesn't meet compliance. So you can't utilize that bag and be compliant in the state of Colorado, and the other states are adopting that. So you have to have a child resistant lock that's gone through the government testing and passed to meet ASTM guidelines, which are set in the laws. That plain plastic bag is not going to have any of that. Also the material that we make our bags out for the odorless side also stores materials better. It's puncture resistant. It's got that proprietary odorless lock on there. And if you put some cannabis for example, in a regular Zip Lock, you're going to see it. It can puncture the bag. You're going to smell through it right away.

Whereas an odorless bag - we also have tamper evidence that hit on the cultivation side. So we've talked about the dispensaries, and we've talked about some of the edibles out there. There's also the requirement for cultivators. For example, in Washington everything comes to the dispensary already packaged, and they need to have tamper evidence requirements. So they just use our bags with heat seal, and then it stores it. It doesn't allow that smell, and it also meets compliance.

Matthew: Right. So great point. So if a wholesale cultivator is getting the cannabis to a dispensary or some other venue, it's a good idea to - 1) that odor free as you mentioned, because if you have enough cannabis being transported, that's a huge smell risk, I imagine.

Garett: It is. It has actually opened up a new market for us - the security company. We've been in line with a couple of the top security companies because first off, they're transporting cannabis that has to be tamper evident. Also, they're transporting money, and the banks won't take that money if it smells like cannabis. And a lot of the dispensaries out there store their cannabis as well as their money in the same safe, and it allows for that transfer of smell. Our bags allow it so you can keep it separate, keep it tamper evident. It doesn't smell. It allows for that transport and security aspect.

Matthew: And for someone that's considering FunkSac, can you give them an idea of how much it costs to get into some of your most popular products?

Garett: So our child-resistant packaging now depending on the volume is anywhere from $1.75 to $2.15 I've seen on the market. And that's a printed exit bag with the lock. And they usually sell those to the consumers for $3.00. So the dispensary usually makes about a buck. Then on the odorless bags we sell the two gallon, which are equivalent to a turkey-bag size, and those sell for $.50 a unit or a bag. And that's cheaper than what's out there on the cultivation side and the turkey-bag size business.

Matthew: Now you presented at the ArcView Conference; is that correct?

Garett: I did last year in Las Vegas.

Matthew: For people who aren't familiar with what that is and how it works, and maybe they're a hobbyist of some kind that has some product or service in the cannabis industry, and if they could hear your story about how you presented and were successful, it might inspire them.

Garett: Yeah. I love ArcView Group. I think it's been great for our business. I'm a big fan of Troy and Dayton as well as the organization and what they've set up. What it is a shark tank specific for cannabis.

We went and presented on stage, and we had evaluators just like the shark tank you see on TV with the exception of there were 120 investors in the crowd as well. So you give your five minute elevator pitch. They ask some questions, and then everyone has the opportunity to follow up with you. We had a huge success on follow up not only on potential investors and people that we allowed to invest, but also people in the business and the industry. The networking there is invaluable. All the industry leaders are there. All the big investors that want to get into it just putting their toes in. So it brings that network together of entrepreneurs, financial people, and industry experts all in one location.

Matthew: Where do you see the future of packaging? I mean, it seems like innovators are coming up with endless ways to provide cannabis to customers. It just amazes me. Where do you think this industry is going to be in five years?

Garett: It amazes me as well. Everyday we're seeing new things. And now with our brand growing, we're getting approached by other products that want to work with our brand to take to market. I see a lot more secure smaller sizes packaging. Like our locks are very secure, and they're big and bulky. And you can tell that no kid is going to get in there. And I think that is a big thing to show that there is secure. There are some products on the market that haven't gone through proper testing, or they just look really flimsy, or if we test them we can see that they are not really compliant.

We have some smaller zippers that are coming out that are going to make it a little more sexy and sleek. We see the brand increasing hugely as well as future advertising. Advertisers are coming in and they are going to be packaging and branding on their packaging, so that they can send it out to the market place. But I think everything is going to be getting smaller, sexier, sleeker, more efficient, and cost-reduced.

Matthew: Now you mentioned sexy. Most people don't think about sexy and packaging, but I guess there could be a sexy aspect. Can you tell us a little bit about the tactile response that you consider when creating packaging because it's not just a visual. It's also a touch. What you think about when you touch something. What's the first thing that comes to mind? Does this feel like quality? Does this feel like security? Can you tell us a little bit about that?

Garett: Yeah. We've gone out of our way where we've produced, for example, our exit bag and our child resistant has a more space in it. It's gusseted. There was one competitor that had a tight package that met compliance, but was squishing the contents. And it does no good if you damage the contents. So you've got to look at what you're putting into it.

For the outside, the textile feel, we like to have a smooth feel that if someone's holding it, they don't want it feel as though it's not pleasant. So it's a matter of having a good material. We make all of ours here in the U.S. as well, which is a good advantage because we can turn around quickly.

Not only having the brand name but also having that safe secure feel, and people want it smaller. They also want to make sure that the contents of that package are not damaged in any way. And that's what we've gone out of our way and that's why we keep developing new packages in different forms as well because there's so many different forms going into it whether it be flower, edibles, or anything. So we want to make sure that we have the right package that fits it well, as well as presents it well for the public and keeps it secure.

Matthew: Now everybody's had the experience where they take a potato chip or a sandwich out of a Zip Lock bag, and you can smell kind of like an off-gassing of the bag or it's like a scent of the plastic. Does that exist with FunkSac?

Garett: I've never heard of that and I've never experienced anything like that. I think that the plastic that we use isn't that strong polyethylene that is normally out there. And ours doesn't submit an odor or anything. And I can actually continue everything with that. Even if you smell the outside of the bag, it doesn't smell like a real plastic bag.

Matthew: Garett, as we close can you tell listeners how they can learn more about FunkSac?

Garett: Sure. Our website is FunkSac.com funksac.co. And we're also available at 844 GOT FUNK. And we're always in the market and at the trade shows, and it's pretty easy to find us.

Matthew: I love that telephone number. Well, that's so much to Garett Fortune for being on the show today. We really appreciate it Garett.

Garett: Thanks for having me.


MassRoots – The Cannabis Social Network with Isaac Dietrich

Isaac Dietrich CEO of MassRoots

What is it like to come up with an idea for an app with a couple of friends only to watch the app grow from zero users to 215,00 users in a year?

We explore this question with the CEO of MassRoots, Isaac Dietrich. Isaac was a finalist in Peter Thiel’s 20 under 20 fellowship program. Isaac shares the difficult but rewarding journey it has been to get MassRoots to this point, and how he feels MassRoots is now poised for greatness.

MassRoots trades under the stock trading symbol: MSRT

Guess What? You could be listening to this interview on your commute. Get the free podcast for your iPhone or Android Device.

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Matthew: What is it like to create a social network for the cannabis community, and watch it go from one user to over 215,000 users in a year? We're going to find out the answer to that question today in our interview with Isaac Dietrich, CEO of MassRoots. Welcome, Isaac!

Isaac: Good to be here. Thank you for having me.

Matthew: Can you give us a little background on yourself, and how you came to start a cannabis social network?

Isaac: Sure. A couple of friends and I were working on republican campaigns in Virginia last spring, and we were kind of just smoking together. And we thought of all of our friends that smoke weed, almost none of them post about it on Facebook, Instagram, or Twitter because their families, bosses, and co-workers are connected to them on those networks. So we wanted to create a semi-anonymous environment where they would feel comfortable posting about marijuana, pictures of them smoking with friends, things of that nature.

So we launched a minimum viable product at the app store last July. And in our first eight weeks, we got about 6,500 users. We took that initial traction to the ArcView Group last September, where we met Doug Layton, our lead investor of Duchess Capital. He gave us our first investment. We were able to raise a seed round from ArcView, and we invested those funds into scaling the network to 100,000 users by March of this year.

When we back to the ArcView Group and were able to close a series A round, again from ArcView investors, again led by our lead investor doubling down on his initial investment. So that was an incredibly exciting sign, and we're just blessed to be where we are.

Matthew: That's amazing. Many people don't think of young republicans getting high, but I'm glad to hear they are.

Isaac: Yeah. Well, we're more libertarians. But we just happen to work on republican elected officials campaigns. And one of the main things that we were thinking about was, yes, we can work on these legalization campaigns in various states, but there's not really that much money involved. Like, yes, you can make a monthly salary. Yes, you can get a victory bonus, but you're opening up a multi-billion dollar market in states like Florida, if you get a legalization initiative successfully passed. So that's not where the real money is. The real money is in creating a service that can be used in every state where medical marijuana is currently legal, and in every state where it's going to be legal. So that's really what we're doing with MassRoots.

Matthew: Now you were involved with billionaire Peter Thiel's 20 Under 20 fellowship program. For people who don't know who Peter Thiel is and what that program is, can you give us a little background?

Isaac: Sure. So Peter Thiel was the co-founder of PayPal. He was the first outside investor in Facebook, and he started a program called 20 Under 20, which invests $100,000 into kids that are willing to drop out of school and work on the next big thing. So I was actually a finalist for that competition.

I don't think they are backing any marijuana plays right now, but I had the opportunity to meet Peter, and he recently wrote an incredible book called Zero to One: Notes on Start Ups, or How to Build the Future. And basically, that book is his instruction guide on how to build a multi-billion dollar company. It's what we love to read here at MassRoots. I require all of our employees to read it because it really outlines what makes businesses successful and how to go about doing that.

Matthew: Right. He is a fascinating character, and obviously - arguably maybe, one of the most successful venture capitalists ever. And correct me if I'm wrong, I haven't read the book, but I've heard him talk about it. But he's saying if you're going into a market where you have to compete with somebody else, that's a disadvantage. You want to be the first mover and just have like a silo with a barrier to entry so people really can't compete with you. Is that somewhat of the story there?

Isaac: That's exactly correct. You want to be working on something that no one else is working on. You want to be able to really monopolize that market and really own it. So if you look at Facebook, their main that they cracked was they were the first social network where people had a real identity. Your Facebook profile is your identify online. And they were really able to own that niche. And with the capital that was invested, they were able to dominate that market to the point where even when Google +, was introduced as kind of the Facebook killer, that's what it was billed up to be, they completely flopped because Facebook already owned the market.

Similarly when Facebook launched Facebook Poke as a competitor to SnapChat, that completely flopped because SnapChat had already owned that ephemeral market. So the key to building a successful company is to do something that no one else is doing, and then to quickly own that market.

Matthew: Now you kind of have a unique perspective on high school, college, its value versus the value of being an entrepreneur. What would you say to somebody that's in high school that is considering becoming an entrepreneur, but maybe has a little fear holding them back?

Isaac: If you truly believe in the idea, if you truly believe that what you're going to start is going to be a success, then go out and do it. No one is stopping you. No one is telling you that it can't be done. If you work hard, if you believe in it, then you can do it.

College isn't for everyone. At the same time, dropping out of college isn't for everyone. I'm not advocating that. What's really important is that you love what you're doing and that you're learning something while doing it. And here at MassRoots, I really feel that I'm learning more on a day-to-day basis than I ever would in college, than I ever would in an MBA program just because I'm on the ground floor actually doing it, actually executing. And I think that's far more valuable and I'll learn far more than I ever would in college.

Matthew: Really, what's a better skill than creating a product or service that people want? I mean, that's what it boils down to. So I really agree with that statement. I've had some business ventures in the past, and I'm not a fearless entrepreneur, but I joke that I'm 51 percent courage, 49 percent fear. It just - you don't have to be an overwhelming over-the-top, fearless leader, but if you just have a little bit more, that's enough to get started.

Isaac: Definitely. When I started MassRoots, we went to silcone Valley, and pitched all the Silicone Valley VCS on MassRoots, and they all said it's a great idea, great concept, but we can't touch anything marijuana related. So I ended up maxing out about $15,000 to $20,000 worth of credit cards to start MassRoots. So sometimes it does take that courage and that believe in yourself and the belief in that what you're doing is valuable despite what other people think.

And actually, when we pitched at ArcView last September, we had one of the lowest rated pitches of that ArcView meeting. I remember afterwards people came up to us and said you'll never be able to compete with Facebook, Instagram, and Twitter. You'll never be able to make money. You'll never be able to reach it to the scale that it needs to be to be successful. And having faith in yourself and really knowing what you're doing is absolutely critical. Typically that's a good sign. It's a very contrarian indicator, but if everyone tells you that you're on the wrong path, typically, you're on to something. Maybe that's not always true, but you get what I'm saying.

Matthew: Yeah. That's a great point, and I'm glad you mentioned that because I think there's a perception out there that you throw some code on a website and you have some unique gift. But it's really a lot of persistence and believing in what you're doing, and I'm glad you mentioned that because a lot of people - I think will give them the courage a little bit maybe to get them over the 50 percent mark to start their endeavor.

So switching gears to MassRoots in detail about what it is. How are people using it right now.

Isaac: Sure. What we are is a community of marijuana consumers. If you smoke marijuana once a month or once a year, you're probably not interested in MassRoots. We have the people that smoke on a daily or weekly basis, where this is a major competent of their lives. The people that are spending hundreds or thousands of dollars every year at dispensaries, people who really view marijuana as a core component of who they are. So we have those people in an app and website like environment where they're sharing this important experience of their lives. So MassRoots at it core is a community of marijuana consumers.

Matthew: I noticed that some of the users on MassRoots just have unbelievable following. What are they doing? How do they amass that following? I mean what unique sharing abilities do they have to cultivate that following?

Isaac: They're the first marijuana celebrities. So they're the people who can take gram dabs or the people who can smoke huge blunts without coughing and function just the same as soon as they're finished. And a lot of these people are also - yeah, that's kind of how I would answer that.

But they are posting just incredible content. The thing about MassRoots is if you post low quality content, typically you're not going to get that many likes or that many followers. But if you're taking hi-def shots of the best marijuana in the world with the latest equipment, those photos are just incredible. And people respond to high quality content, and that's what we want to encourage to be posted on MassRoots.

And then another thing is people kind of use their MassRoots profile as their marijuana identity. So just as Tender is becoming someone's dating identity, LinkedIn is becoming a person's professional identity, we want MassRoots to be a persons marijuana identity. Where that really comes into play is we're kind of expanding into a "find a smoking buddy near you" feature. So if I'm new to Denver and I want to find someone to blaze with, I can go on MassRoots and see profiles hundreds of different people within a 20-mile radius of my location and go through their MassRoots profile and really determine if they are real or not, if I want to blaze with this person. It's kind of like their social proof that who they are as a person is the same as who they are purporting to be online. So we find that incredibly powerful.

Matthew: It's funny that you mentioned that because I was just about to ask that question. So there's going to be a way where I can say, okay, there's Isaac, or whatever your name is, and he's within a mile from here. And I'll be able to see some things about you that give me a sense of if we're compatible is what you're saying? What will you give to show that these two people might be compatible?

Isaac: Sure. So it's called the assess feature and people will be able to toke or not toke very similar to Tender. So basically, they'll be able to see all their MassRoots posts. So if I want to blaze with you, I can go on your MassRoots profile, look at your past 20 posts and be like, hey, this guys pretty cool. I want to blaze with him.

So it's really - you can take your MassRoots profile in any direction that you want to take it. You can post selfies of yourself getting high with friends. You can just post pictures of the best content, the best strains that you can find. You can just use it to talk about legalization issues. It's really completely up to you. We now have 215,000 people where marijuana is a core component of their lives posting on there. So chances are, there's someone on our network who feels a similar way that you do and is interested in the same exact things within the marijuana space. So it's really that common interest. We now have to users in Iran. So they can literally get sentenced to death for using MassRoots.

Matthew: Oh, my God. I don't mean to laugh about that, but that's crazy.

Isaac: We're expanding quickly in Canada and Spain. And actually, Brazil is the international country where we're currently growing the fastest. And I have absolutely nothing in common with someone from Spain besides marijuana. So marijuana is the common interest that is bringing people together across all sorts of different cultures, across all sorts of different income levels. It really brings people together and is a common bond, and that's what MassRoots is all about.

Matthew: So you create this social network, and you give users this platform and in a sense ingredients to interact with each other. Has anything surprised you about the way people are interacting with each other that you didn't anticipate.

Isaac: Well, first of all, when we were first starting this thing, I was just excited to see two or three people actually using my app on a daily basis. So the most incredible thing was that people actually responded to it. People actually download it. People actually use it and use it a lot. I mean our core users are accessing MassRoots multiple times a day and making multiple posts a day.

And it's grown despite our technical expertise. For instance, Facebook, Twitter, Instagram have invested tens of millions, hundreds of millions of dollars into their platforms to make it as best as possible. Our initial platform was hacked together in two weeks by a self-taught developer. So we don't have all the cool bells and whistles as these other platforms, at least not yet. But we've grown despite that. We've grown despite our platform sometimes not working. We've grown despite us not even having direct messaging right now. We've grown despite features directly for marijuana consumers.

So what we're incredibly excited about is as we're able to invest the money into making the best possible platform for our users, we're seeing engagement increase. We're seeing our user growth rate increase. And that, I think, just is going to open up a whole other - hopefully, it will take MassRoots to a whole other level.

Matthew: It sounds like, I mean, if dispensaries listening, this is really they should pay attention to because it sounds like if you were to look at the sales of dispensaries as 80/20, these users of MassRoots might be the 20 percent that account for 80 percent of the dispensaries revenue just because they are just so fanatical. So that's pretty interesting.

Isaac: Exactly. And we're getting ready to launch our MassRoots for business portal here within the next few weeks, which will allow a dispensary in Denver to promote a post just about edibles to edible consumers within a 20-mile radius of their dispensary. It's data that no one else has. It's an avenue that is previously unavailable to these dispensaries because Facebook, Instagram, and Google banned marijuana-related advertising on their networks. And we really feel that the users on our network are those hardcore consumers, where the value per consumer is hundreds or thousands of dollars to these dispensaries over the course of the year. And we're just incredibly excited to start building out products and services for our dispensaries and get them just as enthused and just as engaged as our users.

Matthew: So for the dispensaries or the business services you're mentioning will they be able to go, okay, if a post is really popular pictures are really popular I would like to sponsor it if it's within a certain geographical area; is that how it will work.

Isaac: Sure. It will work just like Facebook ads or Twitter AdWords. So basically, you post a very high quality picture with content just about your business. Maybe it's a daily deal 20 percent off today, wax Wednesdays, shatter days, whatever it is. And then you can target it just to people on MassRoots within a 20-mile radius of your dispensary. So just by the nature of someone being on MassRoots, they're an active cannabis consumer.

And the ads really aren't that big. We're talking about sponsor posts. We're not talking about banner ads or pop-ups or anything intrusive. We're talking about an ad that looks and feels like a normal post. And the users, we really feel, won't mind because it's content directly related to marijuana. I mean, I would be stoked to see a picture from Denver Relief right down the street every time I log into MassRoots. And that's what we're already seeing. We already have, I think, 150 dispensaries onboard on MassRoots right now already actively posting on our network. And once we develop products and features director toward them, I think that will be incredibly powerful.

Matthew: How do you measure users engagement on a cell?

Isaac: We have our internal metrics. So we're constantly evaluating our daily, weekly, monthly active users, how engaged they are, what exactly they're doing on the app, what they're searching for. What pictures have the greatest response. So we're actively evaluating all those different metrics and using that data to develop products and features directly for our users.

Matthew: And what percentage of users are in a mobile versus a tablet or a desktop? How do you decide that?

Isaac: We actually just enabled web sign-ups about two weeks ago. So of the 215,000 users that we currently have, I'd say probably 213,000 or so are mobile, have downloaded our mobile app and are accessing through that mobile space. That's the most valuable way to reach consumers these days is on their mobile phone. That's where they're spending the vast majority of their time. That's what is with them all day everyday. So we feel that's another important factor at MassRoots.

Matthew: Where do you see MassRoots evolving in the next three to five years? I know it's so far out for a young company, but what's your best estimate?

Isaac: Yeah. We've only had a product for about 15 months now. We launched it in July of last year. So it's kind of hard to project a week in advance let alone years in advance. But I can tell you what we're focused on right now is growing the app to a million users. We really feel that once we're at a million users we will kind of define the space and kind of own our market.

We're obviously working on a MassRoots for business platform, which we feel will have valuable products and services for businesses. So I'd say within three to five years, we'd like to be one of the premier, nationwide, cannabis brands with a product that is synonymous with marijuana networking. And if we do that, I think we'll have an incredibly valuable business.

Matthew: You see a lot of technology, I'm sure. What technology in the cannabis field outside of MassRoots do you see and say, man, that's exciting what this company is doing?

Isaac: Obviously, Canaregs was one of Marijuana Tech's startup competition, and I think what they're doing is extremely valuable in terms of creating a centralized database of all marijuana laws in the country that people can easily reference and have memos sent out to the dispensaries about how new rules and regulations impact them. I think that's incredibly valuable.

I think these marijuana delivery apps, obviously, within the next five years, I think the vast majority of people will have marijuana delivered to their house rather than making the trip to a dispensary. Whether the rules and regulations will allow that to happen is yet to be seen because that is kind of a legal gray area. In Colorado marijuana delivery is completely banned. So it will be very interesting. I think there's probably six or seven delivery apps now. It will be very interesting to see who the eventual winner will be in that market.

Yee has just raise $1.5 million dollars from traditional
Silicone valley VCS, and I think that bodes extremely well for them, and those are investors that we had upped just last summer. So just a little over a year ago and they slammed the door in our face. Yee has just raised from them. And that just goes to show how fast public opinion and opinion among even the most traditional VCS are changing. And so, yeah, those are really the two areas where I'm most excited about.

Matthew: Speaking of investing, is it still possible to invest in MassRoots, and who is eligible?

Isaac: Sure. So we will be opening on the OTC QB on the second week in January. We're still waiting for an official date and an official ticker symbol. We'll have that probably within the next two or three weeks. And then people will be able to buy MassRoots through their Scott Trade Etrade account just like any other stock, and we're incredibly excited.

Matthew: And as we close, how can listeners learn more about MASSROOTS?

Isaac: We just launched an investor site, investors.massroots.com. And we'll be continuously adding to that just as we would a product. That's going to be kind of our investor portal. Just as we're building our apps for users and MassRoots for Business for businesses, we're also going to be doing something very similar for investors and really keeping them informed on a regular basis of what we're up to, what our accomplishments are. And I think communication is absolutely critical to being a successful company. So we're incredibly excited.

Matthew: And if I have my iPhone or android device in my hand right now, do I just go to Google Play or the iTunes app store to find MassRoots?

Isaac: Yeah. You can go to Google Play and download it. We're having a little bit of issues with app store at the moment. We have issues all the time just like every other marijuana related app. So you can go to MassRoots.com and access our mobile web version. We'll be back in the app store probably within the next week or so.

Matthew: Well, Isaac, thanks so much for spending time with out today at CannaInsider.

Isaac: Thanks you very much for having me.

Interview with Bruce Linton, CEO of Canopy Growth

Bruce Linton Canopy Growth

Bruce Linton is the CEO of Canopy Growth. Constellation Brands announced a $3.8 billion investment into Canadian cannabis firm Canopy Growth. Listen in as Bruce compares the differences between the U.S. and Canada’s cannabis market.

Note on this interview:
At the time of this interview, Canopy Growth went by the name Tweed.
Canopy Growth Corp Ticker TSE: CGC

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Tweed is an Ontario, Canada-based cannabis cultivation company. After applying for and securing a license from Health Canada, Tweed constructed a 315,000 square foot cultivation facility. Tweed recently went public and now has a whopping $100 million market cap. I'm pleased to welcome Bruce Linton to CannaInsider. Welcome, Bruce.

Bruce: Thank you, Matt.

Matthew: Can you tell us a little bit about yourself and how you came to start Tweed?

Bruce: Sure. Canada's had a history of having medical access for more than a decade, but it really pivoted sharply April 1st. And I could see the federal government equivalent of republicans, our conservatives, were going to make this a much controlled system, but also the increase the ease at which patient's could gain access. So in anticipation of that legislation, we began about six or eight months prior to the legislation coming out and sort of had a running start then when that hit the street June 19, 2013.

Matthew: Now you had to take a bit of a risk, I understand, because there was no assurance that they would even review your facility. Can you tell us a little bit about that?

Bruce: Sure. So the regulator came out and defined marijuana and how it would be treated similar to a narcotic. Which meant you had to have a very standard operating procedure-rich application and a very clear security plan. But one of the things that they put into the legislation was that in addition to having a written application that maybe 600 or 700 hundred pages in size, in order to get your license, you should also then build one, so they could come and inspect it and tell you if you did it right. And it was literally that much. Yes, this looks right, but we can't give you a license until you build it. So you can imagine capital markets in the early stages of medical marijuana, new build-out, new sector, and we have to build out the start of a 170,000 platform. That did make for some interesting capital raising.

Matthew: I can imagine. Well, kudos to you for taking that risk. So the cultivation facility is that really 315,000 square feet; did I read that correctly?

Bruce: It's actually bigger than that. So we bought what was the former Hershey plant and began that transformation as our indoor growing area. And so, for the growing area at that facility, while the overall facility is about 460,000 square feet on 40 acres, we're only using for the marijuana portion 180,000 square feet in total, and 168,000 of that is the growing platform.

And then June 19th of this year, we bought - part of it was in the licensing procedure and quickly moved them through to having a license, and that made us the only publicly traded company with two licenses, and to our knowledge, the only company with two licenses in Canada. And that platform we purchased was a 360,000 square foot greenhouse.

Matthew: Okay. And how big a harvest do you feel Tweed can produce annually?

Bruce: Well, it's sort of staged. So each year the government comes in and takes a snapshot of what we've built out, and you keep adding to it. And so, we'll probably produce about 7,000 - maybe 7,500 pounds this year. And I think that probably will go up, but that's the current we've built out and currently have the capacity for.

Matthew: How did you arrive at the size of the cultivation facility you wanted to build? Was it just a matter of having a Hershey facility to move into, or did you have your eye on a particular number?

Bruce: It was more of a function of in Canada we like rules a lot. And that means that we have fairly high compliance costs of any regulated industry. And so, I figured it was going to be $500,000 just to turn the lights on for compliance. And so, if you have a very small grow, fiscally, you're not going to cover that kind of overhead. And so the assumption was we had to have a large platform. And that led us to this building.

Matthew: And what are you seeing is the cost per gram right now that you're able to sell for or at the marketplace in Canada, how much is it for cost per gram in general.

Bruce: Remarkably, the government doesn't prescribe the price, and the price ranges from about $4.50 a gram Canadian, so $4 U.S. up to $12 Canadian. And we can pick any range in there. It's really a function then of quantity and cost of production, but that's the selling price.

Matthew: Do you have any concerns? I mean this is a massive grow operation coming on line here. Do you have any concerns about the market being flooded or do you feel like the dynamics of demand are going to equally match supply?

Bruce: Well, the key is the mandate. It was very difficult in Canada to gain access to medical marijuana. Until April 1st, it was 20 or 30 pages and involved government bureaucrats. On April 1st, it just became your doctor, yourself, and two pieces of paper. And so, the demand in access is increasing quite rapidly. And bringing it on stream, we all started at the same time. Right now there appears way, way, it appears, under supply for the demand. And so, probably a year from now you'll have a different dynamic, but I don't think it's in the next six to twelve months.

Matthew: How many strains of cannabis is the right amount? I'm sure you started with a certain amount; you have a different amount now. Are there any lessons learned about how many strains you want to have?

Bruce: Probably, you would be better off to start with five or eight. We started with 27. And so, the complexity of supply management is increased when you increase the number of variables. We've swapped a couple out, but I think we'll find ourselves hanging around 30. And you know there's a handful that everybody is familiar with as the main one. So CBD strains or CBD-rich or balanced strains are really quite active in our store.

Matthew: You have a really good handle on U.S. regulation and Canadian regulation of cannabis. Can you just kind of compare and contrast the two for the listeners?

Bruce: Yeah. So this is one of those cases where effectively everything in Canada is completely the opposite of America. And what I mean by that, for example, if I go to my bank account, I can use a drop down to pay for electrical bill or for Tweed. And I'm disallowed from using cash as a transaction here, but use every other form of credit.

We can't have retail, and everything must be delivered by courier. It's federally legal here, and it means our license is for the whole country. We pay taxes at normal tax rate as you would as a normal business deducting all normal business expenses, when you're actually not allowed. So really like on almost every aspect of the business, it is different.

Matthew: Great points. That is very unusual. And being federally legal is a big help. I mean having the banking for one is just an amazing advantage. That's great. Bruce, how many companies do you think Health Canada will give a license to?

Bruce: So there's maybe 13 or 14 currently licensed in Canada. I suspect one of the things that they're contemplating at Health Canada - the regulator is, how many do we need in order to have market price. It appears that we're kind of there now. And if we had too many, how would an event of financial failure be handled. And it appears that the regulations never contemplated that. So I suspect that they're cautious they can have too many. And would rather see the ones that are currently licensed begin to be financially solid. I don't think there's a big pressure now for more.

Matthew: Okay. Canada is in a bit of a transition where people that were allowed to grow their own plants, preserve that right with injunction. However, new people that would like to apply for a license to grow their own plants are not able to. Can you tell us where you think that - what's going to happen there?

Bruce: The driver was that there's a potential that choosing this medicine through this delivery mechanism makes it more costly for the individual than having a different medicine, say opiates or whatever. And in Canada, typically most medicines are free for access to the individual. And so, the crux of the case is why should it cost more to what's probably an equivalently good or better medicine.

So there's a couple of ways that could go. One of which would be to make this a standard schedule product, which makes it free or minimum cost to the patient. I guess that might be - have a feeling that the government is having people growing it all over the place. And we have 36,000 people with the right to have medical marijuana who either have chosen to grow it, have other grow it for them, or occasionally buy from the government. And that wasn't working for a lot of reasons. So I suspect that we're going to find a way this turns into just another medicine product that is on the same schedule as everything else.

Matthew: I understand Tweed is reaching out to doctors and healthcare professions trying to educate them about cannabis. Can you tell us a little bit about that?

Bruce: Yeah. So it's a couple of things. We have what might be deemed like a farmer rep kind of program, where there's a corridor of focus. And there is about 12 million patients or potential patients in that corridor. And it starts off as we're educating or interacting with physicians on the method of prescribing, the method of ingestion because initially most are saying I can't tell people to take something that requires them to smoke. And we have to walk them through why this doesn't require people to smoke. And so, there is a really quickly evolving - but it started at many different points, kind of education process. And now what we're starting to see are initially very reluctant or uncomfortable or uninformed physicians who are being part of the process of patients becoming patients.

Matthew: Now it's illegal to sell cannabis out of a retail store front in Canada. However, I hear it's being done in British Columbia. Can you tell us what's going on there, if you know?

Bruce: I'm no expert. I generally think having been to British Columbia many times that it is quite a surprise to most people who reside there that it's not in fact legal. It is just an ingrained portion of the culture. But as you move eastward, I think you'll find that the country has far fewer of those sorts of operations, and in many areas, zero. And so really, I'm not aiming our opportunity at attacking people in British Columbia nearly as carefully as we're trying to attract people in other parts of the country.

Matthew: Tweed refers to the quality of it's cannabis as premium and unmatched. Can you describe how Tweed strains and cultivation techniques might be different or a premium?

Bruce: I think in reality any company that is starting in this has to have aspirational statements. Everybody started off with seeds from multiple locations, and the best then practices. The real question is how quickly is everybody evolving the phenotypes? How quickly are they advancing their internal controls? Because in Canada you're disallowed from using any form of pesticide, fungicide, or herbicide, and everything that goes onto these plants is natural. And so, what you're really looking at is how do you do the best evolutionary process in a very, very - I'll call it moderate controlled environment. And so, I think what we have is good product that is getting better each cycle. But you do need to recognize we all start in that sort of similar place, and it's game to constantly advance.

Matthew: Bruce, as we close, how can listeners learn more about Tweed?

Bruce: So Tweed.com, which we thought was a nice name and natural, has a lot of information. We trade on a website, which is the Toronto stock exchange venture division listed as TMX.com, and our ticker symbol is TWD. Those two sources kind of correlate who we are and how we present ourselves in a fully exposed basis.

Matthew: Great. Thanks so much for being on CannaInsider, Bruce. We really appreciate it.

Bruce: Thank you.


Brian Vicente – The Marijuana Lawyer Helping Businesses

Attorney Brian Vicente

Brian Vicente is an attorney and founding partner of the firm Vicente Sederberg in Denver, Colorado.

Brian works in the dead center of the cannabis industry and its fast moving and constantly changing cannabis laws and regulations.  Brian not only advises clients how to profitably work with the existing framework of cannabis laws, but is working to help shape the laws that will effect the cannabis industry for years to come.

In 2010 Brian was elected the first-ever chair of the National Cannabis Industry Association. Learn more at: http://www.themarijuanalawfirm.com

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Brian Vicente is an attorney and founding partner of the firm Vicente Sederberg in Denver, Colorado. Brian works in the dead center of the cannabis industry in its fast moving and constantly changing cannabis laws and regulations. Brian not only advises clients how to profitably work within the existing framework of cannabis laws, but is working to help shape the laws that will effect cannabis industry for years to come.

In 2010, Brian was elected the first ever chair of the national cannabis industry association. I'm please to welcome Brian to the show today. Welcome, Brian.

Brian: Thanks so much.

Matthew: Brian, can you tell us a little bit about yourself and how you came to specialize in the practice of cannabis law?

Brian: Sure. I'm a little bit of a unique animal on that I've practiced primarily in cannabis law for my entire legal career. So for the last 10 years or so. When I was a law student, I founded the non-profit Sensible Colorado, which is sort of a lead advocacy group that works on behalf of medical marijuana patients. I've been running that ever since. And at the law firm Vicente Sederberg, we represent a lot of marijuana businesses. So I've been heavily involved in this area full time for about a decade.

Matthew: What questions do you get asked the most by new and prospective clients who are trying to orient themselves within the context of the cannabis industry?

Brian: Sure. Well, you know everyone is sort of curious about the risk associated with entering this industry, marijuana still being illegal federally. What is their sort of risk tolerance, right? I tend to think the risks are a lot lower than they were previously based on the firm federal guidance we have about what law enforcement priorities whether they're going to shut these guys down or not. So that's always an area.

But then people are really interested in how do they invest. A lot of folks see this as the next big thing. It could be this billion dollar industry in no time, and how do they sort of invest in this now. So we help people kind of structure those investments or start those businesses.

Matthew: Okay. So what are the big practice areas that - the big categories that you provide services in?

Brian: Well, we do a lot of - our law firm is kind of broken into two pieces. One is policy work. We do a lot of lobbying, writing initiatives. I was one of the two authors of Amendment 64, which made marijuana legal in Colorado. We helped with the campaigns to legalize marijuana or medical marijuana. So that's a good chunk of what we do. But then we also provide just general business legal services to marijuana business, and as such represent hundreds of marijuana businesses. And we help guide them with anything from compliance with current laws to your more traditional business legal services, such as your mergers and acquisitions, and real estate assistance, things like that.

Matthew: There's a lot of investors or potential investors out there that say maybe I want to create a grow facility and lease that out to a cultivator, but they're worried about the risks, and they try to balance those risks because we're still in a federally illegal market place for cannabis, but it's legal in Colorado, Oregon, Washington, Washington D.C. How do you reconcile these things? And even in the states where the medical marijuana is legal, how do you reconcile these things in even the states where medical marijuana is legal. How do you reconcile these things for potential investors to help them come to terms with this risk and balancing that risk?

Brian: The most important kind of threshold question is what state are you looking at going into. We have 23 medical marijuana states, and we have four legal marijuana states, and we also have D.C. now. But each one of those laws is different. So in terms of the law enforcement priorities in that area, in terms of the investment opportunities, in terms of the level of complexity of the state and local laws, they're all different. So we have to sort of do an examination of are you looking at Oregon? Are you looking at Colorado, what have you. A lot of folks get in touch with us because they want to go into Colorado, although we have offices across the country to help people in a lot of different states. But Colorado is still viewed as the main market right now or perhaps the state that is doing a very comprehensive job.

So in terms of your various opportunities to invest, I believe it was a real estate play that you were discussing renting out or purchasing a warehouse and then renting to someone who's growing marijuana, who has a license to do so under state law, is actually pretty safe investment at least in Colorado. There's other sort of investments that folks can look at such as loaning money to businesses or loaning money to the principles starting their own marijuana businesses in states that don't have residency requirements. Any sort of direct handling of marijuana is always more dangerous in some ways that the federal government could become interested in those activities, but real estate play itself, I think, is fairly safe.

Matthew: You touched on residency requirements. Can you talk about that a little bit maybe in Colorado and Washington, what that means, and who is included and excluded?

Brian: This is interesting because, again, because every state sort of used this differently. In Colorado there's a degree of protectionism essentially of the current medical marijuana licensed businesses. We've got a state law that says that in order to have any equity in a marijuana business - this is not an ancillary business like grow lights or something, this is direct marijuana business. In order to have any equity in a marijuana business, you have to have two years residency in the state of Colorado. So that's a major hurdle that prevents people from just starting a business if they're from New York or what have you in Colorado. So that's one that will probably change in the legislature in the next year or two, but currently it does prevent that sort of direct traditional equity investment that we see in other areas.

Washington State has a three-months residency requirement. So it's not quite as onerous as Colorado's two-year. But then you have places like Oregon, Illinois, Nevada really have no residency requirement for ownership in marijuana businesses as all. Now often it does help to have a local component to what you're doing, and that certainly can help you get ahead in a competitive licensing process by demonstrating you have these local ties. In Oregon, you have to have a sort of manager that's a local resident, but again, each state kind of takes it differently. And really, I think in terms of investors sitting back and analyzing where to put money, if they're interested in direct investment, they have to look at these places that don't have residency or else move somewhere and establish residency where you want to set up shop.

Matthew: Great point. Gosh, I didn't realize Colorado's was - two years is quite long.

Brian: Yeah. It's pretty wild. I mean a lot of people try to look for ways to get around that. And our view point on this is we have a very close relationship with the state regulators, and we don't believe in pulling the wool over their eyes, and I think they respect that. So if you own equity in Colorado, you have to be a two-year resident.

Matthew: So let's say I'm a dispensary owner, a cultivator, or even perhaps an infused product company, is there some ways that I may be exposed to laws, either state or federal generally speaking that I might now be aware of that I want to do something to mitigate my risk that you see occasionally over and over again, where this is something that should be top-of-mind for you if you were in one of these cannabis businesses?

Brian: Yeah. Certainly, again, everyone needs to have an understanding that what they are doing is illegal federally, and sort of come to terms with that and decide whether they want to be for it or not. But then a lot of folks don't understand the tax implications. We have a provision of the IRS Code called 280E that prevents particularly dispensers from making a lot of the traditional tax deductions other retail businesses may get. And some folks don't know about that and are conducting business, and are probably going to get audited and probably get a pretty nasty tax bill. So that's certainly one to keep in mind.

Generally, we also have pretty strict advertising restrictions in this area in Colorado, and also in other states. Often those advertising restrictions are at the state level and the local levels. So there's kind of different hoops you need to jump through. We don't have a ton of enforcement in this area, but I could see this being something that government officials crack down on eventually. So I really encourage any prospective businesses to really pay close attention to how they can and can't advertise.

Matthew: Now banking for cannabis businesses, particularly those that touch the plant, is just a quagmire. Can you explain a little bit why it's so difficult for cannabis businesses to get a banking account, banking relationship, and to keep that, and then where you see it going?

Brian: Sure. And this is absolutely one of the biggest issues that we have in terms of a hurdle for this industry is the lack of access to banking solutions. This has been going on for years. As we know, the marijuana was illegal for 80 years or so in our country, and then became legal for medical purposes starting in ë96 in California. And then it's been legal for recreational purposes in some states in 2012, and sort of slowly unfolding industry.

And banks just sort of being conservative by nature, and they have a lot on the line in terms of not wanting to irk the federal regulators that oversee the banking industry have been very hesitant to openly bank marijuana businesses. At the same time we've seen direct guidance from FinCEN, and federal regulators saying we don't really care if you bank marijuana businesses. We just want there to be a degree of transparency, and auditing of these businesses to be make sure that they are operating in a compliant fashion. But it's almost like that memo hasn't reached the banks yet. They're looking for an actual change in law to protect them from liability.

So this is a major problem. And I probably have a client a week that gets kicked out of their bank. It's humiliating for them. They're being discriminated against because of their business type, and also obviously it creates all sorts of problems for the business. They have to find a new bank or deal with cash or what have you. So we probably get a call a week from banks that are interested in working in this field. And I think we're going to see some banking solutions come on board fairly soon. My prediction is we'll have one or two banks that say, hey, we're going to do this. The industry will flock to them, and they'll make a bunch of money. And then once they don't get in trouble after six months or a year, then most other banks will start working in the industry as well.

Matthew: It's a shame that the state or even counties or community banks can't be created that can then reinvest the profits locally. That seems like a huge opportunity.

Brian: Yeah. That's a great point, and believe me we've examined many options for banking. It's such a public safety issue to have our clients and their customers exposed to these cash intensive places. They don't have banking. And it often leads to a lack of transparency. So we've looked at coops and various different sort of forms to push for banking solutions. But a lot of it comes down to the fact that any bank needs to be insured by the federal government, so you need to have a degree of federal involvement in the bank. And the feds are kind of dragging their feet in terms of providing guidance. And again, the banks themselves fear the federal government and don't necessarily want to jump into this realm.

Matthew: You talked a little bit about taxes and that, for example, a dispensary owner might not understand that there's certain deductions they cannot take that a traditional business can. Is there anything else in the tax arena that are kind of gotchas or things to watch? I've heard that dispensary owners are taxed in a different way as well as far as the profit they make. Is there anything else you could touch on there?

Brian: Well, get a good accountant and get a good tax lawyer. I mean, it is a complicated field for a typical business. For a marijuana business it's even more complicated. It comes down to a series of court cases mostly out of California, and sort of explain how the IRS deals with marijuana. And in a nutshell, they allow write offs related to the cost of goods sold. So largely the production side you can write off expenses there, but not the actual retail side. And so, it's confusing because that's not how typically businesses work. The other piece is just to keep an eye on - it's difficult without having comprehensive access to banking, but making sure state and local taxes, the excise tax, and in Colorado there's several levels of taxes these businesses have to pay are really being followed in a transparent fashion. So you can document that to both the state and federal regulators.

Matthew: Now let's talk a little bit about licensing because there may be a brand, for example, here in Colorado or perhaps in Washington or in some other states where medical marijuana is legal, and they have a brand, and they want to extend the brand beyond the state they operate in, but they may not necessarily want to get a license in those other states or a license from the state. How could they create a licensing arrangement that works for them in other states? Are you seeing this type of thing going on?

Brian: We are. I think this is an issue that we will continue to deal with in the future. I think it's a growth area. What you're basically talking about is intellectual property. I've developed a brand in Colorado. I have this wonderfully successful dispensary or what have you. How can I then carry that brand to other states? And we've actually structured quite a few of these. It comes down to basically creating a separate company that's really an intellectual property holding company. So I can sell that intellectual property to this new company that I've created. That new company can then set up in another state. We're really just using the brand and the intellectual property or sell the intellectual property to a manufacturer in another state.

So it's a way to carry a brand across state lines without actually carrying the product itself. In marijuana, again, you can't cross state lines with it. We see quite a bit of this, and in Colorado, for instance, I could produce 99 percent of my marijuana soda, including the label, and then I ship it to California, and then we infuse the marijuana in a factory in California. So the product and everything can cross states lines. It's just the marijuana that can't.

Matthew: It sounds very similar to how Coca-Cola does it. They have their trade secrets centralized. Then they push it out to the outer areas to actually have the water put in it and so forth. That's an interesting subject area.

In terms of shaping future legislation and being a thought leader in the industry, what is your firm doing right now at a boots-on-the-ground level trying to change or influence?

Brian: Sure. Well, our number one goal is to make sure that Colorado continues to be the gold standard for marijuana regulations. So as such, we're very active on a number of government panels. We have an active presence at the capital and lobbyists that we hire to make sure that Colorado continues to do a thoughtful and sort of comprehensive job of regulating marijuana. We really think that the eyes of the world are still on us.

Having said that, when we legalized marijuana in 2012, really ever since then, we've been approached weekly from folks from other states and other countries that are interested in potentially adopting a Colorado-style model. So in this past election we were involved to some extent in having Florida, Oregon, and Alaska to help the efforts there to legal marijuana, or legalize medical marijuana. Two of those were successful in 2016. We really hope to be involved in six states that are pushing to legalize marijuana then. And I think a lot of them will be successful. We're looking at California, which obviously is a giant market. We're looking at Nevada, Arizona, Massachusetts, and then perhaps some other states as well.

Matthew: You mentioned California. Do you really see that as when the dam breaks, because it is such a large state. The population in general is pretty receptive to it. There's a lot of growers, technology, infrastructure, and capital there. Is that where it's going to really just break away?

Brian: Yeah. I think that will be a bit of a tipping point game changer for the reasons you laid out, but also because there's simply so many Congress people from California. When those Congress people go back to D.C., it's different than the six Congress people from Colorado. You have 20 some from California. I think it makes a pretty big difference to have them there, being in Washington D.C. and saying, listen, I don't want to criminalize people in my state, and now we have eight or ten states that legalized marijuana, and the other 16 - let's do something about this. And I'm hoping that will the main thing that pushes towards change at the federal level.

Matthew: There's just been a lot of good news, legalization happening, the conversation moving forward, people changing their mind, the stigma going away to some extent where there's less of a stigma around cannabis. Are there any threats on the horizon where this could derail the whole movement, or is the genie so far out of the bottle that you don't see any big threats?

Brian: No, I think we need to stay vigilante, absolutely. We certainly have seen some major changes in how the American public feels about legalizing marijuana and growing support for medical marijuana, which is phenomenal. I mean we've had massive social change on this in the last 10 or 15 years. But I think there's the opportunity for the pendulum to swing back.

And so, again, we need to be very vigilant about how we are regulating marijuana. When problems come along such as people perhaps making hash at that house and blowing it up, or folks maybe having an unfortunate experiences with edibles, we really need to be thoughtful about then coming up with pro- active solutions and not sort of hide and say, oh, legalization is perfect. It's the answer to everything. Well, I think we need to have a very robust discussion about how to address issues and inform them, and if we do that, I think we're pretty safe.

Matthew: Do you see cannabis being removed from the Schedule I list of drugs; and if so, when? I mean, it's a bold prediction, but I'm going to ask you.

Brian: I'm not afraid of bold predictions yet. I see it happening in 2017, and here's why. We've seen massive, again, cultural shifts on the public views marijuana. We also will probably see four to six more states legalize marijuana in 2016. I think that's going to create the wave that forces Congress to address this issue.

You're also going to have a bunch of freshman Congress people come in in 2017. That are voted in in 2016, the same time marijuana gets legalized in their states or what have you. And I think that's going to be the appropriate time that I think we could see some Congressional push.

And it's also becoming increasingly clear and you see this in editorials from the Denver Post, and other thought leaders about the fact that marijuana categorization as a Schedule I controlled substances is just flatly absurd. It's just absurd to put it in the same schedule as heroin and label it one of the most addictive dangerous drugs known to man that has no medical value. When you have those sort of laws on the books, that really just breeds mistrust in the government. And I think the government is starting to understand that they just got this one wrong. There's a rebellion happening in all these states, and they need to really need to save face by removing it from schedule I.

Matthew: Gosh. I'm really - that's great prediction. I'm so happy to hear that. As far as there are so many entrepreneurs doing cool things in the industry, and it seems like it's changing every day. Do you see any entrepreneurs doing stuff that's just really interesting that you'd like to share?

Brian: Wow. We have people in our office every day that just have marvelous ideas, some of which are going to make them a million dollars, some of which will never go anywhere. But I mean that's one of the neat things about working in the cannabis field is there's so many creative people, and they're really starting to apply their creativity to these various business or activism opportunities.

Yes, I guess a couple of things. I've been surprised sort of pleasantly by the growth in vaporizer market, particularly the vape pens that you see. I didn't really foresee those being as popular as they are. But having become familiar with them, I understand it now. It's sort of a smooth and classy way to consume marijuana. And you also now have new states that are just passing vaporizer only laws. New York and Minnesota are essentially hash oil only as opposed to flower. And I just think that's remarkable. Another group that we've started doing some work with is Women Grow, which is just sort of a women's organization that is attempting to sort of foster the role of professional women in the cannabis field. Jane West is in Colorado and does a lot events and runs that organization and a number of our attorneys belong to that group. I just think it's sort of important that we embrace the diversity that is present in the field.

Matthew: Great point. Jane is doing a lot of interesting things. And we're having her on the show later this week, so I'm glad that you said that.

Brian: That's great.

Matthew: Brian, in closing how can listeners learn more about you and your firm?

Brian: Sure. Well, I'd encourage listeners to check out web page, which is very simple. It's themarijuanalawfirm.com. And we really think that we're leading the country in terms of being a law firm that pushes for policy changes in marijuana as well as providing good guidance to businesses. So we have an office in Boston, a couple of offices in Colorado, and we're just eager to help people become sustainable businesses and good community members. So check us out at themarijuanalawfirm.com.

Matthew: And I would like to thank you for your service in helping to shape the laws into a sensible way that works for both government and recreational and medical users. That's really a great help, and I'm glad you're one of the leaders in the industry.

Brian: Thanks so much. I really appreciate the opportunity to talk with you.


Find the Perfect Strain of Cannabis Near you with Leafly

Cy Scott Co-Founder of Leafly

Interview with Cy Scott co-founder of Leafly.  Leafly is an application that allows you to learn and explore the universe of available cannabis strains to optimize your medicinal or recreational experience. Once you have dialed in on the strain of cannabis you want, Leafly helps you find the best local dispensary to fit your needs based on reviews from residents of your community. The Leafly App is very easy and fun to use to explore strains near you. Learn more at Leafly.com

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Leafly is an application that allows you to learn and explore the universe of available cannabis strains to optimize your medicinal recreational experience. Once you have dialed in on the strain of cannabis you want, Leafly helps you find the best local dispensary to fit your needs based on reviews from residents of your community. I'm pleased to have Cy Scott, co-founder of Leafly on CannaInsider today. Welcome, Cy.

Cy: Hi, Matt. Thanks for having me.

Matthew: So listeners can get a sense of your geography, can you tell us a little bit about where you're located?

Cy: Sure thing. Leafly is located in Seattle, Washington. We're actually pretty recent transplants here by way of California about a year ago now.

Matthew: How do you like Seattle compared to California apart from no state income tax.

Cy: Yeah. That's really nice. Miss the sun a little bit here and there, especially in the winter, but the rain is not as bad as they claim.

Matthew: Especially in the summertime it's not that bad.

Cy: It's beautiful.

Matthew: Can you tell us a little bit about yourself and why you co-founded Leafly?

Cy: Sure. So I'm basically a serial entrepreneur. I've got a real tech background doing app and web development. I co-founded Leafly with Scott Vicerks and Brian Wonslegdge. So the three of us put it together. We were actually working together at the time at Kelly Blue Book, and it so it was kind of a nights and weekends bootstrap project.

Scott was the one with the original idea. He thought it would be great to have some sort of location where people could track the different strains and their effects and what they like and didn't like. The market - this is about four and a half years ago now. So in California the market was growing. A lot of dispensaries were popping up in strictly medical. It made a lot of sense that there was a real need for a service like Leafly. And at the time, everybody really targeted pretty much the common stereotype for cannabis consumers, so we really wanted to go with something a little more mainstream, better design, something that medical patients could look to for information and feel safe and welcome there.

Matthew: Now you mentioned strains. Can you just give us an idea of how diverse the spectrum is of available strains for cannabis?

Cy: Yeah. There's quite a number of strains. Right now we track well over 1,000 strains. Of those strains, we have over 100,000 different individual reviews. So Leafly is all user contributed content, so people use it to journal what they like and don't like and tag strains on the different effects or what conditions or symptoms they might be using it for. Then we take that data, we aggregate it, give people kind of a general idea. The number is pretty large though with 1,000 strains. And that's across three primary categories: the Sativa, Indica, and hybrid.

Matthew: And what's your favorite strain?

Cy: Yeah. That's a tough one. There's just too many to choose from. I enjoy cannabis in the evenings to help with sleep, so I like the Indicas a lot. Some good Indicas, L.A. Confidential and Northern Lights, are my go to. For the daytime, when I get a chance, a good Sativa like Sour Diesel, I enjoy as well.

Matthew: What are some emerging strains that are popular on Leafly?

Cy: Yeah. We're noticing a lot with the recreational up here in Washington, a lot of the producer/processors coming up with some strains that are interesting crosses and gaining a lot of popularity, and that's due a lot to the retail stores opening up. And we're getting more and more here in Washington. So we see a lot of that like strains like Copper Cush that kind of came out of nowhere. Historically, a real good one was Girl Scout Cookies, whcih everyone is probably very aware of now, but we really saw that on Leafy kind of go from nothing to in our top ten most popular strains in the matter of six months.

Matthew: In fact that is the strain that I - I went into Leafly. I put in what I wanted. I didn't want to be paranoid and then all the other things I did want, and that's what came up for me. Thin Mint Girl Scout Cookies, I think it's called.

Cy: Yeah. There's a couple of variations, but it's absolutely a popular strain.

Matthew: Can you explain a little bit of what body high and mind high mean for people that aren't familiar?

Cy: Sure.

Matthew: How those interact - those two ideas.

Cy: Right. So at Leafly when you review a strain, you can tag it with different effects. We have the kind of head high effects like euphoric and uplifted. So that's more of a mental effect. And then the body would be things like relaxed, tingly, just what you would actually feel in your body. And then kind of both mixed together, that's what you're really getting. So you'll see a lot of strains tagged with things like euphoria and relaxed. So that's kind of the head high/body high, and they definitely play off of each other.

Matthew: So let's get into a practical example here. Let's say I just got off of work on a Friday afternoon, and I pull out Leafly and kind of want to dial in how I feel and get a strain for that. How would I do that?

Cy: Yeah. A particular strain - we have an explorer. A strain infused product explorer where you can go in and actually filter the exact type of effect that you're looking for. So in your scenario, if you're looking for something that would leave you feeling upbeat, you just would dial that in. Include effects, uplifted, and then you can actually exclude things like making you hungry. So you can look for strains that include certain attributes and exclude others to really dial in that perfect strain. And then once you find it, Girl Scout Cookies you mentioned earlier, we also have an availability section so you can find out right where to get that. So it uses your geo-location, knows right the best area, or you can enter a city so if you're in Seattle, you can type in Seattle and find the top locations that would carry that particular strain.

We also have a dispensary finder, so if you're just looking to find locations right around your area, you can go directly there, and then start browing the different dispensary menus. And on the menus, when they're linked to strains in our inventory, you can actually get a good idea of the strains different effects and really find the one that's perfect for you.

Matthew: So how many people are currently using the app? I'm sure it fluctuates, but could you give us a rough idea?

Cy: We do about four million sessions a day - a month. We do about four million sessions a month. Four million a day would be nice, but it's still a pretty sizeable number. And that's between the web and the app. So it's pretty good. We've really seen the site and the app grow in adoption as different states come online. So new states adopting medical laws or your recreational states like Oregon, Alaska, and even D.C. We're seeing a lot of interest in Leafly when those laws passed. So as the United States continues to adopt cannabis - and the world, for that matter, we see increased interest. So that's really great for us.

Also, some of the trends, one of the most interesting things starting four years ago and where we are now, a lot of the branding is starting to happen. You're actually able to see different products and consistent brands across the industry where previously it was just dried flour in a jar at a dispensary. So that's a pretty interesting trend, and with that comes a lot of the rise of the concentrates in popularity there, whether it's the waxes or the little clearomizer cartridges for vape pens. We're seeing a lot of growth in that sector as well.

Matthew: Yes, the liquid in the vap pens. That's very interesting. Is that what kind of jumped out at you and surprized you the most about about the data, because I imagine you have just a ton of data if you have four sessions a month. Is there any data that is jumping out at you and saying wow, we did not expect to see this like - one thing that I thought of when I was using the mobile app for Leafly was why would anybody want dry mouuth? But then there are some reasons why someone would want dry mouth; isn't there?

Cy: Sure. I mean, we actually add that as negative so you could tag negatives from strain. Things like dry mouth or dry eyes, and you can actually exclude that, but you never know. There could be a reason why someone would want to include that. So we have that option as well.

Matthew: Well, I did find out why some people want the cotton mouth effect, and I had heard that ALS patients have a drooling problem, and the dry mouth can help them quite a bit. So I thought that was interesting.

Cy: That makes a lot of sense, definitely.

Matthew: Did you scratch your own itch with creating Leafly or saying okay, I want to see what the community is saying, and I'm going to let them steer maybe to my next decision on a strain for myself?

Cy: Definitely. When we first started, I really didn't have a good sense of the scope of the variety of strains and the different effects, and lot of that has to do with your access to cannabis. But after we started Leafly and getting more involved in it, learning more about the different strains, I definitely started scratching my own itch. If you go into any dispensary, and they could have any where between 20 and 30 different strains at a given time. And it's really tough to choose, and you rely on the bud tender at the counter. But if you're looking for a particular condition or what have you, it's great to have Leafly as a resource. Just having the app in your phone and you can check it real quick and compare to the menu that the dispensary lists and look at all of these rating. It's really been helpful for myself, and that helps drive new feathers that we put together because we all use the app as well.

Matthew: So you have all this data from your users. If you could only make one strain, I mean, I know people are picking out all these diverse strains, but you see that most people want something similar, the 80/20 rule. If you were aggrageate all that Leafly data - if you had to make one strain, what would be the characteristics of that strain?

Cy: Yeah. That's a great question. We see people searching for top conditions anxiety and migraines or ADD. Some of the top sypmtoms are depression, fatigue, and insomnia. So if somehow you could kind of bring those together in the perfect genetic cross. Also, you'd want to include some effects. You see a lot of people searching for creative, euphoric, or uplifted in the filters. So somehow if you could find the perfect combination, that would be the strain that I would try and put together definitely.

Matthew: How do Leafly users interact with each other? Is there social element?

Cy: We have a really light social layer within Leafly. Currently, you can tag different reviews. You mark them as helpful, not helpful, so both our strain reviews as well as our location reviews, that's about the best way right now. You can also dig into a user's profile for the non-anonymous users and see their review history. But it's actually something that we're working on right now and will have with our next release is more of a platform for peoople to connect and follow different individuals. We see a lot great reviews coming out of some of our visitors and, of course, and we want the ability to be able to follow those individuals and stay up todate with what they are viewing. So we're building that feature as we speak.

Matthew: So you mentioned you can be anonymous if you want to share information, but you just don't want people to know who you are?

Cy: Yeah, that's right. So there's a few ways right now within Leafly. You can actually journal your own usage and keep it completely private so no one would ever see. There's no anonymous listings. It's just a personalized journal. You can also share your review publicly, but you can choose whether or not to share your user name right now. So you can publish those anonymous or with a user name.

Matthew: Now switching gears a little bit and looking a Leafly from a merchant or dispensary's point of view, why do they want to be involved with Leafly?

Cy: Yeah. So dispensaries or recreational shops are primary customer and it's a great platform for them to be part of because it really does drive a lot of new patients to their location. Leafly's pretty special in the sense if you're in a new market - say you're in New York or a state where medical is just coming online or the dispensary system is just getting established, Leafly has been there for quiet a while. We have coverage and visitors coming from all over the world, and a lot of that has to do with strains being pretty widely available. So people are just looking for the information no matter where they are. So as soon as there's room for dispensaries or recreational shops, it's great for the dispensaries to sign up with us because we already have that user base using it search strains, and then you're location gets right in front of a potential new customer or patient.

Matthew: Can you give us an example of a merchant that is really leveraging Leafly properly to get new business?

Cy: Definitely. So with I502, which is the Washington recreational law up here, the recreational shops are continuing to open up. We still have a small amount, but we're seeing a lot of those new guys coming on, and they are really doing it right. The best way to get exposure on Leafly is to keep an updated menu. Our visits love to see the latest menu. If the menu gets too outdated, they might look at someone that has something more updated. Also having a menu and updated menu, it really helps with visibility because you're linked to those strains and edible products reviews. So if I'm buying Girl Scout Cookies, I can find the exact spot and you would show up if you're menu is linked. Also, we have ways for dispensaries to connect with their patients and recreational shops with their customers through a following system. So you can actually follow a dispensary and just stay tuned to their updates and dispensary and shop updates are basically like Twitter updates where they can post 140 characters at a time. And that's a grerat way to connect with your patients and stay up to date. Also, responding to reviews is really important. So provide that ability as well so whether it's a positive review or less than positive review, it's really good for the shops to get in front of that and start a conversation with their customers. So we're finding some of the new recreational shops here are really doing it right and getting a lot of traffic coming from Leafly.

Matthew: Now if there's a dispensary owner that says, you know, I just don't have a budget for this. I'm just getting startted. I've got a million other things to do, can you give them a sense of how easy or difficult it and how much money it takes to get started with Leafly?

Cy: Sure. It's quite easy. We have a services section in the footer so if you do have a story you could go there and sign up, and we'll - someone on our team will get in touch with and get your account created. We do have different service levels. The pricing ranging from a few hundred dollars to a few thousand dollars depending on how many ad placements you'd like or what kind of exposure you're looking at. So it's pretty flexible, so from the small shop that doesn't really have much of a budget, they can get some advantage out of Leafly to the bigger places that want to spend more, get more exposur. We have solutions for everybody.

Matthew: Other than legalization, are there any big trends you see growing in the cannabis technology sector that you're excited about?

Cy: Sure. Probably one of the best trends lately has been the increased professionalism and mainstream accessibility we're seeing in cannabis products. So the branding that doesn't just cater to the common stereotype of cannabis. We're seeing a lot of that happening now in Washington. Across the the U.S., we're seeing some really good branding happening, and that's exciting to see. It's a little more welcoming to a larger audience than what I think a lot of people associate cannabis with. And it's good for the whole movement as well. It kind of puts a nice face on cannabis when the branding looks nice and the packaging looks great, looks professional, and that's something we wanted to do with Leafly and we feel like we've really helped push this conversation forward by giving people something that looks nice, and is well designed, and feels comfortable when you use it. So we're seeing a lot of of that happening more and more through out the U.S., and I think that's just the nature of the industry kind of maturing. So that's a pretty exciting trend definitely.

Matthew: Now, Cy, how can people try Leafly for the first time? What's the easiest way?

Cy: Sure. We have a lot of ways to access Leafly. So you can find us on the web at Leafly.com. We also have an app for both ios and android, so just search Leafly in the app store or Google Play, and you can find us there.

Matthew: Great. Thanks so much, Cy. We really appreciate your time for the interview today.

Cy: Absolutely, Matt.