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Have a Cannabis Business? Here’s How to Get More Visitors to your Website.

Paris Holley

In this interview with the co-founder of Mantis Ad Network, Paris Holley, we’ll learn exactly how cannabis-based business can advertise online and increase their sales. Paris gives specific expert suggestions anybody can use to get started.

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

Click Here to Read Full Transcript

atthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.canninsider.com/trends. That’s www.canninsider.com/trends. Now here’s your program. Cannabis businesses can’t do many of the things that traditional businesses take for granted. We have had guests on the show talking about how to get a bank account for your cannabis based business, and today we have a special guest that will tell us how you can advertise your cannabis business online even if you’re ad has been turned down by media sources in the past. I’m pleased to welcome Paris Holly from Mantis Ad Network to CannaInsider. Welcome Paris.

Paris: Thank you for having me. I’m excited to be here, and talk a little bit about what we do.

Matthew: Yes tell us what Mantis Ad Network is and how it helps cannabis based businesses.

Paris: So Mantis is a digital marketing platform built specifically to support the industry that’s been neglected by Google, Facebook, Twitter and other traditional media companies. We allow businesses to advertise direct to a cannabis audience without worrying about being shut down or violating any strict terms of service. So to put simply, you know, if you’ve gone to one of our publishing partners, whether that’s been the Denver Post or Medical Jane, Leafly and read an article on those websites, often you will see on the side an image or a banner encouraging you to purchase a product or service as well as if you’ve any widgets that would recommend content for additional reading, and we’ve also powered a lot of that as well. And so what we’ve done is we built our own network within this space to provide an outlet for businesses to market their products and services.

Matthew: Yeah this is really needed because Google won’t touch anything in the cannabis related market, and Facebook primarily as well. So this is really solving a big problem. What is your background, and how did you come to start Mantis?

Paris: Yeah, so I come from an enterprise consulting background. I led teams as a system architect for Fortune 500 companies across the country. My introduction to this space was actually through my partner Matthew Price who became a patient here in California and founded Medical Jane to focus on educating consumers about the medicinal benefits of cannabis. It was through our work together on that project that we began to identify gaps within this space, and marketing was a common theme we heard both as a publisher and as advertisers. Traditionally businesses in this space only have events and print to go to for a lot of their marketing efforts. So the pain points that we went through, the anecdotes that we heard from businesses in this space, we felt that Mantis was definitely needed. And if no one was going to support the industry, you know, it’s something that we kind of needed to do and build on our own.

Matthew: So let’s dig down a little bit into what Mantis does. Let’s say I have a business that’s in the cannabis space and I have an ad that’s been turned down by Google or Facebook, but I think it’s a really good ad, how can Mantis get my ad out there? What’s going to happen once I submit a banner ad to Mantis?

Paris: Sure so our network is composed of over 50 websites that are either focused primarily on delivering cannabis content or are just supportive of our space in general and willing to promote cannabis businesses on their websites. So within each of those websites we provide the ability to target based on demographics such as age, income and gender. Maybe based on the location of where that visitor is coming from whether that be by state, by country or by metro, as well as through keyword targeting. So if you’re reading an article about a particular target or a topic, excuse me, you would be able to then market your campaign and your banners to specific types of content. And as I mentioned before, the way we do that is we either put the banners on those websites or we recommend content from your website within those publications. So we’ve built our own network by collaborating with all of these different websites in this space who are friendly to cannabis businesses.

Matthew: There may be a lot of listeners that are not familiar with the terminology used in online marketing, and it can seem a little bit intimidating. But really the concepts are very easy once they’re explained. Can you help us understand some of the important metrics that are thrown around with online advertising?

Paris: Sure. I think that the one that’s probably most known would be the one metric that everyone tends to focus a lot on is conversion rates, right. So I launch a campaign. I know that if I spend X amount of dollars, drive people to the website, my visitors are going to convert into a purchase at a certain percentage of my overall traffic. Generally when you look across e-commerce and other websites, you know, companies tend to sell anywhere between half a percent to two percent of their overall traffic and converting that into sales. And so conversion rate is a good metric to use as an overall indication of performance in general of a campaign. But there’s also other metrics that you have to be aware of, and regardless of whether or not you’re spending to drive traffic or you’re building organic traffic. So there’s tools out there like Google Analytics which can give you a plethora of metrics whether that be bounce rates or flow within the websites. So you’ll actually be able to track, okay what page does the user enter on? How many pages does he view? What page does he drop off? If he views a product, does he add it to the cart? After he adds it to the cart, does he continue to check out or does he usually stop once he sees the price and the shipping cost in the cart?

So there’s a lot of data available through these tools that you can use to optimize not only your page spend, but even just taking advantage of the traffic that you get through other channels to your website. It’s understandable that many businesses tend to focus on that conversion rate specifically because it’s an important number, right. If you know if I drive so much traffic, it’s going to only convert at best case at a certain percentage, I can correlate how much I spend to how much I’m going to earn in profit. What a lot of businesses don’t do is really build a model around what the true cost of an acquisition is or a lead is and figuring out the lifetime cost of having that lead as a potential customer. A lot of businesses will spend or put a lot of effort into building their organic traffic without taking advantage of contact information that you can grab from a visitor. So if you’re paying for a campaign or you are launching an SEO effort and driving traffic to your website, but you’re not getting that user’s email in a marketing list, you’re not asking them for their phone number, you’re essentially throwing away traffic. Even if that user does not buy the first time he comes to your website, you can always remarket and retarget them in the future.

Matthew: Great point, and you just mentioned remarketing. So let’s go ahead and talk about that. That’s something that a lot of people won’t be familiar with. Can you tell us what remarketing is and how you can leverage remarketing to bring down the total cost of your marketing efforts?

Paris: Sure so retargeting is a powerful tool that’s really kind of grown in the digital and the ad tech space in the recent years. And what it allows you to do is track when a user or a visitor comes to your website. And even if they don’t purchase a product, you know that they’ve been to your website before. So if they go to, for instance, www.cnn.com or another online website and you then have the opportunity to present them with advertising based on the fact that they’ve been to your site and done some action, right. So it can be as simple as hey you’ve gone to my website, you haven’t purchased a product, if you come back 30 days later I will target you and offer you a 10 percent off coupon. I’ve seen something a little bit more powerful where you might even know what product they purchased specifically and then launch a campaign that targets them to upsell accessories or maybe upselling the latest version of the product whether it’s carrying bags or attachments or add-ons. So there’s a lot of powerful things you can do with retargeting. And in general what the industry has been finding, when I say industry I mean the advertising industry, has been finding is that users who visit your website as the result of being retargeted tend to convert over 50 percent better than users who come to your website for the first time.

Matthew: Yeah that makes a lot of sense. I mean they came to your website for some reason to begin with, there was some interest there. So they’re more motivated and interested in your subject matter.

Paris: Exactly.

Matthew: Now you mentioned the total revenue over the lifetime of a relationship, and that is an important figure. However some businesses are so new that they have no idea, but it’s something that if you’re a dispensary owner, for example, you know hey there’s a good likelihood if somebody comes in and has a good experience there’s, you know a subset of them will come back. So the marketing, the remarketing and capturing the email, all of these things working together really create a great way to complement your internet marketing efforts.

Paris: Exactly.

Matthew: Now is there any particular products or services that you think will do well on the Mantis Ad Network? I mean everybody has had the experience where they go to like Yahoo or some news portal and at the bottom they see these ads that are pretty consistent like weight loss, insurance and a couple of other things. These are things that are kind of parentally do well with banner ads on certain types of platforms. What do you think will do well on Mantis?

Paris: I would say the success of a campaign really comes down to the goals you have as a business for marketing. From an outsider’s, not an outsider’s prospective, from my synopsis of the cannabis industry right now is that we really haven’t got into an age where branding has been at the forefront of marketing efforts and companies in our space. You can take edible companies as an example of how constrained they are with the fact that they have to only sell and manufacture and distribute within the state they launched out of. You know you see them kind of working around that through licensing, but you really haven’t seen across state lines large branding efforts of getting products in front of consumers. And for a lot of businesses just being able to get your product inside of a dispensary whether that’s a flower or a smoking device or an edible, that’s a large part of the problem right. Once you get into distribution you probably have a good starting point, but eventually things are going to change a little bit where you’re going to have to be in front of the consumer prior to them walking into a retail store and purchasing the product.

Even with some of the advertisers that we work with today, the results vary quite a bit even though they might be selling very similar products. The variability can be driven based on the product’s pricing, the website experience, whether it has good design or there’s enough information about the product once you go and visit it. In general our view of the industry and the consumers within it is that they’re very educated. You know a lot of times what we’re finding is people will… even if they click on a banner and go to your website, they might look at the product to see if it’s something that they’re even interested in, but they are immediately going to the search engines and going to other websites to look up reviews, go on the locator tools, the Yelps of the world and saying okay what do other people say about this product before I purchase it. So not only does your campaign have to be creative, but just like with any industry, any market, your product has to stand out. If you aren’t properly marketing the differences between your, for instance, vape pen between the guy next door, customers are going to see that and not be as interested in the product unless you’re really putting a large effort in making yourself different.

Matthew: In your opinion what does a good banner ad need to get a prospect’s attention. You’ve seen, I’m sure, just thousands of banner ads. What are some that kind of stick out that we can take away as a best practice?

Paris: I would say that in general they just need to be straight to the point, identify what the product and service is, and most importantly be visually appealing. I would say if you haven’t hired a designer to put together your creatives you should be. Because the difference between a quality design and something that you’ve done in house is night and day. And obviously with any type of marketing whether it’s digital or print, if you can incentivize the consumer, whether that be offering free shipping or a discount or a promotion, those typically engage much higher than a normal product or service ad would, but obviously at the cost of offering an incentive. But that’s just one part of the equation.

The other part is not just the banner itself, but strategically placing it in an area that makes sense. So one thing that we like to offer to our advertisers is keyword targeting. We’ve found that for instance a company that sells CBD based products not only will their banners perform better on our network, but they’ll see better conversion rates if their campaigns are being shown next to articles talking about the benefits of CBD or going into more detail. So users who are looking and seeking out this content can also see relevant, targeted advertising based on what they’re reading or who they are. Those strategies are going to be much more beneficial. So it’s not just what the banner looks like, but also the context in which it appears that really will drive traffic and ultimately sales.

Matthew: Now how large a footprint is available in your network? I know you’re still young and that’s something you’re building, but where does it stand right now?

Paris: Yes so currently we, our network, we’re about 50 websites. Collectively across all those websites we reach about 4 million people every month. We project that by the end of 2015 we’ll probably even be closer to over 20 million people a month. We use a third party traffic analytics provider called Quantcast. They measure a lot of the top sites across the internet, and then based on some of our previous metrics and our projections we expect to be one of the top 100 US networks by the end of next year. And more specifically probably one of the only ones, if not the only one, that would support cannabis completely.

Matthew: Is there a lot different website properties that at first had some resistance and now they’re thinking about it over time and coming around?

Paris: As far as becoming a member of our network?

Matthew: Yeah.

Paris: Yeah I mean I think it’s one of those things where for us it’s a challenge because not only are we educating advertisers in an industry that traditionally haven’t gone digital. They’ve done print, they’ve done the events, but digital is a new realm. And even a lot of businesses and especially if you look at the dispensary market, a lot don’t even have their own website or their own tools. So we’re trying to solve that problem and making it as simple as possible. But for publishers it’s kind of also an education process because say for instance you are going back to the example of a dispensary. If a dispensary wants the market to… if they’re based out of LA and they want to reach everyone in the LA metro, you as an individual publisher can only reach so many people as one website in LA. Mantis, however, as a network of 50 websites can then take everyone’s LA traffic and present it into one bundle. Outside of reach and audience there’s also the, you know, a lot of publishers in our space aren’t traditionally technical companies, right. They are publications that happen to have an online website and usually their products and services that are around their digital strategy aren’t really tailored or custom fit for cannabis, nor are they a core competency for that organization.

So for us it’s we want to come in and build a platform that offers at the end of the day a better value to our advertisers. If you as a client want to be able to say here are my creatives, I want to push them out, I don’t want to go to every single publisher and negotiate rates, figure out what ad sizes they support, putting the images out, having to negotiate when the ad is going to launch. With a platform like Mantis we can bring everyone together. We can add more value to everyone’s website. So for us it’s not a matter of can we do it better or are we trying to take anything over. It’s like at the end of the day everyone in this industry is trying to grow, and I think that the more publishers, the more websites that can get together and work together and offer a better value to businesses in our space, the better off you are going to be as an industry. It’s kind of been our approach so far and why we’ve been able to acquire as many publishers as we have is that they all see that vision. They all see the need to build this network and provide a service that goes beyond what any one individual publisher can do on their own.

Matthew: Now let’s just review. Let’s pretend that there’s somebody that is creating their first ad on Mantis and you’re looking over their shoulder, what’s the one or two or three things that they make sure that they get right in order to have a successful campaign?

Paris: So I would say the first is make sure that you have the tools in place on your website to analyze not only the traffic that Mantis could give you, but whether the traffic comes from search engines or other websites. Make sure if you are an e-commerce or you have a store that you have online that it’s integrated into your Google Analytics, that you can track where your sales are, who they come from, what converts, what doesn’t. If you don’t have that visibility into your traffic, any money you spend you’re throwing out the window. So I would say before you even start a campaign, please be sure that you can track and quantify your investment from a marketing prospective.

The second piece would be then to also, given that half a percent to two percent is what’s typical for a website to convert sales into or to convert traffic into sales, take that into account not only when you’re budgeting, but then also trying to find ways to account for the 98 percent that don’t purchase, right. So whether that’s finding ways to collect email addresses or other ways to turn traffic that aren’t leading to sales but could be leads for the future. And then the third piece is having, if you can, try to think about or if you have existing data, try to optimize your campaign as much as you can upfront. But do understand that it’s going to be a learning process for you as well as for us. You know you’re not going to be able to launch a campaign and get 100 percent optimization off the gate. You’re going to have to learn what users from what types of devices, from what locations, from what websites work the best and then tweak and optimize as you go along.

Matthew: That’s an excellent point. Even the most successful internet marketers that I’ve met they never talk about putting up an ad and striking gold. It’s always put it up, test, refine and optimize over and over, just iterating that process. I’m glad you brought that up. You recently presented to cannabis investors at the ArcView event in Las Vegas. Can you tell us a little bit about that experience and what it was like?

Paris: Yeah so Mantis launched earlier in May of this year. We’ve been steadily growing about 25 percent month to month from a traffic prospective. And you know we got to a point where we established both a need for the network as well as significant traction going into 2015. So ArcView presented a great opportunity for us to not only look at raising funds to grow our team, but to also establish strategic partnerships with key players in this space. It was actually our second time going to ArcView. And so it’s just a great opportunity to get to know other like minded individuals in a space, other technical companies that are also looking to get started. And for us we left that week with a lot of great leads and potential to take Mantis to the next level and hope to continue to build on some of the relationships that we got during that process.

Matthew: Is it still possible to invest in Mantis?

Paris: Yeah, so we’re still actively looking for investment whether that be pure capital or more strategic relationships. Particularly as we grow, as we add more publishers, as we reach even more millions of people online, we’re going to be looking to ramp up our sales efforts as well as continuing to grow our offering and our platform from a development prospective. So anyone that would be interested in getting involved in helping us grow we would be very interested in talking with you.

Matthew: Paris as we close can tell listeners where they can learn more about Mantis?

Paris: Sure. Our website is www.mantisadnetwork.com, and we just relaunched with some additional information and pricing is also available on the website if you’re interested in launching a campaign. I am generally available online via our chat room window from the website, or I can be reached on my cell at 515-974-9848.

Matthew: Well thanks so much to Paris Holly of Mantis Ad Network for being on CannaInsider today. Thanks Paris.

Paris: Thank you for having me.

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

The Amazing Business Case for Cannabis Extraction with Patrick Taylor of Eden Labs

Cannabis Extraction Eden Labs

Edibles and vape pens are changing the cannabis market right now. People are shifting away from cannabis products that involve lighters and smoking. As such the demand for cannabis extraction technology is growing month-by-month. Patrick Taylor of Eden Labs walks us through the technology and opportunity of cannabis extraction

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

Key Takeaways:
[1:17] – Background on concentrates and extractions
[1:49] – Patrick explains how he started in the industry
[2:38] – Why the market is demanding cannabis concentrates
[4:14] – The difference between CO2 and butane has oil
[6:31] – Patrick explains Coldfinger and distillation
[7:43] – What part of the plant is turned to oil
[9:43] – Fast ROIs on purchasing extraction machines
[11:51] – Patrick explains extraction machine sizes and process times
[15:02] – Is it difficult to learn how to use an extracting machine
[16:02] – Perfecting the extraction process takes practice
[17:51] – Patrick explains polarity
[19:16] – Contact details for Eden Labs

Click Here to Read Full Transcript

Matthew: Today’s show is a deep dive into cannabis extraction technology and all the opportunity that exists in this space. If you’re interested in learning more about how you can get involved in cannabis extraction either as an investor or if you have a cultivation facility, and you would like to have extraction services on site, please email us at feedback at cannainsider.com. That’s feedback at cannainsider.com. Now here’s your program.

Perhaps one of the newest and most popular ways to consume cannabis is in concentrates, but before a concentrate can be made the cannabis plant needs to be broken down or extracted. Today we have an extraction expert, Patrick Taylor, on the show. Patrick works for Eden Labs. Eden Labs makes arguably the most sought after extraction machines. Welcome to CannaInsider Patrick.

Patrick: Hey thanks for having me.

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

Patrick: Seattle.

Matthew: All right and what’s it like there a little rainy, sunny, what do you got?

Patrick: It’s a surprisingly bright day, but we’ve been getting the typical winter rain lately.

Matthew: Okay. And Patrick for people who are a little fuzzy still on what extractions and concentrates are, can you give us a high level background on that.

Patrick: Sure. The extraction of cannabis, you take all the oils out of the plant and you concentrate it. A lot of people do extractions everyday in their house when they make coffee, kind of the same idea. What’s left behind is just generic plant material. So a lot of cellulose, chlorophyll and we take all the essential oils out of the plant.

Matthew: And how did you get started in the industry with your background?

Patrick: Well I think like a lot of people in the industry I just got into through sheer force of will. I started out very basic and bugged Eden Labs for a job for a long time. And eventually, you know, after a couple of years of trying and educating myself they took me on. I’ve been with them for a little over two years now. Yeah my first extraction was in 2002, but doing it full time now for 3 years.

Matthew: There’s a huge value proposition for both a business owner to be in extracting, but also for consumers. Can you tell us a little bit why business owners are gravitating to extraction machines so much?

Patrick: Well the marketplace is demanding it. Dabs, edibles, vape pens, they’re very in vogue right now. So growers and dispensaries as well are getting these systems. We’re also seeing that there’s a health conscious movement where people don’t want the pyrolytics, meaning just kind of carbon and nasty junk that you get when you smoke flower. So that’s a way to ingest medicine a lot cleaning. Because, you know, the potencies can get pretty high. If what you’re after is let’s say CBD, and you can get an extract that’s 80% CBD, well that’s only 20% of stuff that you don’t really want. Whereas with a flower, maybe that flower is only 10% CBD and 90% that isn’t medical or recreational for that matter.

Matthew: And how would you describe the difference in effect from consuming concentrate versus flower?

Patrick: It’s certainly more potent. Everything is concentrated so all the flavors are more intense. The high is much more intense as well. So I guess the easiest way to describe it would be a glass of wine versus a shot of whiskey, something along those lines.

Matthew: Got it, okay. And there’s still in the news a lot of stories about butane hash oil. Can you tell us the difference between CO2 and butane has oil and why they’re different and better?

Patrick: Sure so from a chemistry point of view of course they’re different solvents. CO2 is an inert gas. It’s all around us right now. It’s inside of you. A lot of people view it as healthier, non-explosive, non-flammable. I feel a lot safer in a lab working with it. I am pretty experienced with butane extractions as well and I always have this nagging fear, you know, kind of like a paranoia when I work with it.

Matthew: I don’t blame you.

Patrick: Yeah, if done right, you know, in a lab environment, butane is an alright solvent. But CO2, you know, I’ll be texting while I’m operating the system and not worrying about it. Butane is a light hydrocarbon, very similar to propane which is what people bbq with. Lots of news stories recently about do-it-yourselfers hurting themselves. So as far as the actual concentrates go, you know, the difference in their properties, CO2 tends to be a little bit less potent. Butane tends to be a little bit more potent. But that ultimately depends on the parameters of how you do your CO2 extraction. So you can tune the polarity of CO2, meaning that you can isolate certain cannabinoids. That’s how we’re extracting all this stuff is through polarities. So you can get into those super potent concentrates with CO2, but it’s a matter of technique.

Matthew: What does polarity mean? Can you tell us what that means?

Patrick: It’s the electrical, the way that the electrical charge is set up on individual molecules. So concentrates tend to have the same polarity as super critical CO2 and butane, propane, ethanol would be another one. And that’s how all these extractions are being done is polar, except for dry ice. That’s like a mechanical extraction.

Matthew: And what about Coldfinger and distillation? Can you summarize what each of those are?

Patrick: Sure. So it’s a modified soxhlet extractor, and it’s Coldfinger, and it’s basically you got a cooled condenser that’s shaped like a finger. User ethanol extractions. It’s a reflux distiller so you have a basin of ethanol in the bottom of the extractor and you heat that ethanol up, boil it and then it condenses on the Coldfinger and drips through the plant material, and you get a little tincture in the bottom. A lot of people are calling it RSO, even though that’s probably a misnomer. But it’s mixed tinctures. It’s really good for edibles as well. It’s definitely an entry level system, but that’s where I started as well. I bought a little Coldfinger extractor.

Matthew: I’m glad you corrected me and said Coldfinger, I think I said Goldfinger. I don’t know if I’m having a James Bond them today or what but thank you. Now will the machine consume the whole plant or just parts of the plant, the flower, trim, stem. I mean what can be turned into oil here? What’s desirable and how does that work?

Patrick: Well I mean just about any part of the plant that has psychoactives in it, everything basically. Now you will see big yield differences and flavor differences in what you put in. Flower, you know, you can get yields up into the high 20s. So 28% is a number that we see often.

Matthew: THC, 20% THC?

Patrick: Correct yeah, and you know another 7, 10, 11% in terpenes. Most people though are doing the sugar leaf trim. So there we see numbers something like 12% to 15%. There’s some people that are growing really well and they’re getting up to 19% yields by weight. And then you can also do stems and fan leaves, but you know that’s definitely kind of bottom of the barrel stuff. And I’ve even heard of people doing root balls. I don’t know what to think about that.

Matthew: So the extractions become so valuable that it’s almost not worth doing the root leaves if you can do anything else, if you could do sugar leaves or flower and things like that. It’s not worth running a machine because it’s so much more valuable to do it with a higher potency plant, parts of the plant.

Patrick: Yeah that’s correct. But you always want to have the machine running 24/7 right. So if you run out of those more desirable parts of the plant, I would say a 1% yield is better than a 0% yield.

Matthew: Right, right. So from a cannabis cultivator I spoke to some cannabis cultivators and I just started hearing some just incredible return on investment numbers with the extraction machines. You know, some people would say I bought the extraction machine and it paid for itself in a week or two weeks. And I was like how do these numbers make sense, and it’s because this is just so valuable this extracted oil, but can you tell us a little bit about that? I mean is it outrageous what I’m saying here? Do you hear these things as well?

Patrick: Yeah you’re exactly on point. Our most successful stories two days, someone paid their system off. And he was vertically integrated. So he had a grow and a system and a dispensary. So it’s definitely an outliner. Like the most common return on investment is probably a week and a half.

Matthew: God that’s insane. Okay and just to give people a sense, these machines are not inexpensive either. You have a range of machines, but can you tell us the price points on these in just high level?

Patrick: Yeah sure. I mostly work in the lab, but I believe our five liter system is somewhere around $74,000 and they go way up from there. So we have a 100-liter system as well which is quite a bit of money. I don’t know the number on that. There’s no other investment like it. You get that first $100,000 and then you’re in business. You’re a millionaire a couple weeks later, but it’s hard to get that first $100,000 of course. You know the 5-liter system that will make 7-900 grams a day easy. So depending on where people are that’s quite a bit of concentrate, quite a bit of money.

Matthew: Yes and there’s investors out there that have seen the dynamics. I’m sure you’ve heard of this Patrick even though you can’t comment, but there is investors out there, if anybody wants to know more about this, email me at feedback@cannainsider.com. But there’s investors out there that will put up the money to pay for these extraction machines because they know what the return on investment is and they want to help you get that return on investment and in return they charge a certain interest rate, you know, on that principle but that would be for accredited investors only. But if you have any questions around that you can email at feedback@cannainsider.com.

Now you talked a little bit about the size of the machines, but can you give us a sense of how big a grow would need a certain size machine?

Patrick: Well I was just at a grow the other day that was about the size of a McDonalds lobby or something like that and they’ve got a 5-liter, and probably their grow is not going to keep up with the system. People always underestimate how hungry the systems are. For instance a 20-liter machine you’re looking at easily 140 pounds a week in order to feed it, but you can always supplement your grow with doing contract work, and that’s kind of what I did a few years ago is I would take other people’s plant material, run it for a flat fee and then give them everything back. So you can make a little bit of money there. People are doing splits as well, your 50/50 split or 60/40 split. So almost no grow that I’ve been to or very few of the grows that I’ve been to have been able to keep up with their system. So they have friends and family or whoever that comes and supplements, but you always want to keep that machine running.

Matthew: Yeah. So let’s say just for simplicity sake I have 1 kilo or about 2.2 pounds of cannabis, how long would it take to turn that into oil, and how much, I mean I know it depends on the machine, and then how much oil would I have?

Patrick: Sure. So let’s say 1 kilo, that’s exactly how much a 5-liter system holds. A 12 to 15% yield so 120 to 150 grams, this is off sugar leaf trim. And that takes 3 hours, 4 hours, somewhere in there.

Matthew: Wow that’s pretty quick.

Patrick: Yeah and it’s easy. It’s not like you’re sitting there turning gizmos. You don’t have to pay attention to it. When I had my facility I had a Playstation in the lab so I just sit there and played video games while it was going.

Matthew: Okay.

Patrick: And it scales appropriately. So if you get a 20-liter, it’s 8, 10, 12 hours, somewhere in there. The larger systems tend to run a little bit quicker.

Matthew: And really what CO2 is doing is greatly accelerating what mother nature would do on her own essentially is that right. Is this the decomposition and breaking down?

Patrick: The cannabinoids actually dissolved into the CO2 just like salt in salt water. So kind of an analogy that I have is if you filled the extractor up with beef jerky and then you moved water across it, and then you boiled the water away, the salt would be left behind, kind of the same idea. Yeah so it’s actually a chemical extraction, and if you could look inside where the concentrate and CO2 is moving through, you wouldn’t be able to see the concentrate just like you can’t see salt in salt water.

Matthew: Okay and you mentioned you play Playstation or you used to when you ran the machine but does it take much training to get up to speed on how to use it?

Patrick: No. So the standard training is two days and that will give you a fundamental framework to operate the system. But it’s kind of like cooking, you know, anybody can make Top Ramen in their house, but then there’s also chefs, right, in Vegas or whatever and they’ve really perfected their art. So we can get you to the Top Ramen stage, but there’s a lot to learn right. There’s a big breadth of knowledge and fortunately for us the Top Ramen sells for $50 a gram or more. So it’s a good way to get started yeah.

Matthew: Yeah I like the way you put that. What is the top of the pyramid as learning? I mean is there other guys doing some kind of interesting things out there as far as how they run the machine or how they go about, their art? Can you tell us a little bit more about that, the creative side?

Patrick: Sure. Most of what we’re going to do is in post processing. So once it comes out of the system are we going to turn it into shatter, are we going to make vape pens, are we gonna just leave it as a wax or an edible. So it’s the post processing is where the real chef side of it comes in. The system, the main difference that you’re going to see is different pressures and those are really easy to experiment with. You know you just do a run and say, oh okay I’m going to do 1600 psi or this time I’m going to try 2100 psi, and you will see a small difference in the consistency of the concentrate because we’re changing that polarity again when you change the pressure. It’s not hard to do, it’s just a little bit of experience that’s all. Typically we see an RND phase of something like two months before someone decides okay this is what I want to take to market.

Matthew: Okay. Do you see a lot of people operating the machines that don’t actually grow their own plant? Like you were saying, they just come in and they do this for cultivators, say like I’ll do this all for you or the cultivators kind of overwhelming majority where they say we’re going to do this ourselves in house.

Patrick: Maybe like 15 or 20% of our customers are contract workers where they don’t have a grow.

Matthew: Okay, okay.

Patrick: And then the rest are gonna be dispensary owners and definitely grows. You know that’s our biggest customer or people with grows that are looking to get into the concentrate industry.

Matthew: Now you mentioned polarity a little bit and this concept is kind of fascinating to me. Could you again circle back and just kind of talk about what exactly that is and how it is going to effect the concentrate because I want to make sure we don’t gloss over that too much.

Patrick: Sure. So molecules have poles on them. So they have, on the left side it will be negative and on the right side it will have a positive charge. And generally things are either polar or non-polar. They’re either positive and negative or the molecule will even out so it doesn’t have any kind of positive or negative charge. And with extractions like attracts like. So polar solvents will attract polar compounds and non-polar will attract non-polar compounds. Most of what we’re after in the plant is non-polar. CO2 is kind of in the middle, as a supercritical, barely into the supercritical range. It’s somewhat polar, somewhat non-polar, but as pressures and temperatures increase you can push it more towards the non-polar side. Butane is a non-polar solvent. Water is a polar solvent. So that’s why if you try to do a water extraction, if you were just going to soak cannabis in water nothing would really get extracted out of it, but if you were to soak it in butane, it does grab things.

Matthew: That is very interesting. I could talk about this all day. It seems like there’s so much information here, but as we close can you tell listeners how they can learn more about Eden Labs?

Patrick: Sure so the best way is the website. It’s www.edenlabs.com. Again that’s www.edenlabs.com.

Matthew: Awesome. Well Patrick thanks so much for being on CannaInsider today. We really appreciate it.

Patrick: Sure, thanks.

Matthew: And just a reminder for anybody out there who is interested in cannabis extraction. You can email us at feedback at cannainsider.com. That’s feedback@cannainsider.com, and we’ll answer your questions. Whether you’re interested in deploying extraction technology at your dispensary or cultivation facility or if you’re an investor looking to learn more about extraction opportunities.

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

Successful Dispensary Owner Shares Secrets, Discussion with Ean Seeb

Ean Seeb

In this episode Ean Seeb co-founder of renowned dispensary Denver Relief discusses how he started the dispensary with friends and how he helps new dispensary owners with his business Denver Relief Consulting. Ean is also the Chairman of the National Cannabis Industry Association and he talks about why it is important for cannabis businesses to work together to create the positive change the industry needs to move forward.

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

Key Takeaways:
[1:08] – Ean explains how he got started in the cannabis industry
[3:28] – Background story to Denver Relief’s unique phone number
[7:58] – What it’s like to run a dispensary
[10:19] – Best selling cannabis products right now
[14:47] – Ean explains the formula for a thriving dispensary
[17:39] – What makes Denver Relief stand out as a dispensary
[20:18] – Ean talks about Denver Relief’s award winning strand, Bio Diesel
[22:48] – Ean explains the tax code for dispensaries
[27:10] – How and why Denver Relief Consulting got started
[31:10] – How Denver Relief Consulting helps clients
[32:50] – Ean explains the role of the National Cannabis Industry Association
[35:26] – Contact info for Denver Relief and Denver Relief Consulting

Click Here to Read Full Transcript

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

Our next guest Ean Seeb is one of the busiest people in the cannabis industry. He’s a founding partner at the renowned dispensary Denver Relief of also founding partner of Denver Relief Consulting. He’s the Chairman of the National Cannabis Industry Association and is also involved in many philanthropic causes. Welcome to CannaInsider Ean.

Ean: Thanks so much for having me Matt.

Matthew: Ean I want to dive into everything you have going on, but can you give us some background on how you got started in the Cannabis industry? What pulled you into this?

Ean: Absolutely. I was a recreational cannabis user. In the late 90s I suffered a terrible ski accident where I ended up having some partial paralysis in one of my arms. And that was, it was made much worse about ten years later when I had a terrible exercising equipment accident and I cut off the tip of one of my fingers.

Matthew: Ouch.

Ean: Yeah it was pretty bad. So I stay away from weights these days. But traditional pain killers were not working. They were making me woozy and just putting me under, and I couldn’t have that. So I had used cannabis, as I said, recreationally and I realized on day while I was recovering that when I smoked a joint, the pain went away almost fully. And so in early 2008, I learned of a doctor here locally that was assisting people with obtaining the medical marijuana license. It wasn’t very easy to do at the time. There were not a lot of doctors. There were no clinics that you could go to that were exclusively, who exclusively existed for the sake of writing cannabis recommendations.

I ended up working with this doctor. He gave me a recommendation. I realized that I had some knowledge that not a lot of other people did. So I started a very small referral business, word of mouth, where I was helping people obtain their licenses. From that I was introduced to both of my partners, and during that time I had been asked by a number of people to get involved in the cannabis industry. And for one reason or another I chose not to work with any of those people. And when I met the two people that ended up becoming my partners one of them was a successful businessman already, Kayvan, who had just recently opened Sexy Pizza. The other gentleman had a strain of cannabis called Bio Diesel that I had never heard of that he told me was the strongest strain in the history of the planet, and I tried it. And to some degree believed him, and a week later we started Denver Relief.

Matthew: Wow. Now you have somewhat of an interesting phone number. You have a background to a story to the phone number of Denver Relief. Can you tell us a little bit about that?

Ean: I sure can. I sure can. And before I do that I’ll tell you just very quickly that Denver Relief started with very very meander means. When we first started the company, I contributed $2,000, Kayvan contributed $2,000 and our third partner contributed the equivalent of $2,000 worth of cannabis at the time when cannabis was $4,000 a pound on the wholesale market. So Denver Relief started with $4,000 and a half a pound of cannabis when it began.

But on to the phone number. So yes, we have what I think is the best phone number in the industry. Our phone number is 303-420-MEDS. And it really was an interesting story. Essentially I called the phone company. I selected this custom phone number, they gave it to me. And they called me back the next day or a couple of days later and said, sorry sir you can’t have that phone number. And I said what do you mean, you already gave me the phone number. How can I not have it. They said it belongs to somebody else. I said who does it belong to? And they wouldn’t tell me who it belonged to, only that they had to take it back from me.

And so I immediately, I told them I couldn’t do it at that moment. I immediately went out to a cell phone store. I ported it over to become a cell phone number so it was no longer on the network from the phone company. And that was it. They couldn’t do much about it.

Matthew: So instead of saying okay here’s your phone number back, you went full MacGyver and decided I’m going to have it.

Ean: It was a damn good phone number.

Matthew: Yeah I agree.

Ean: We wanted to use that phone number. It was a big piece of what we had been doing with marketing or what we had planned to do with marketing. And we had already started to create some of our creative, and frankly I wanted to do what I could to keep it.

Matthew: Yeah I agree.

Ean: So, you know, we kept the phone number. We transferred it over to a cell phone and it remained that way. And fast forward a couple of months, at the time you could procure… once we acquired cannabis it automatically became legal and medical. And so back in the early preregulation days you could procure cannabis from a private caregiver here in Colorado and make it available for a shop or for a delivery service which is what we were at the time. We didn’t even have a storefront. We were only a delivery service.

So essentially I was at a vendor’s home. I came outside from his home and saw my business partner and a very, very easily distinguished vehicle behind him and asked him if he knew who the car was behind him, and he said no. And it turned out he had been followed, and there was some very, as I said, very distinguishing marks on this vehicle. And in this case there was an indicator that this vehicle was liked to a crime syndicate that had recently been busted here in Colorado from some federal raids. And it was a part of an international crime syndicate. And I said do you want to go talk to them, and he said no. So I went up an talked to this guy and I asked him why he was following us and who he was and why he was following us, and then told him I knew who he was and asked him why he was following us. And went on to explain that we were a very small company and it was just a phone number and there was no reason to be upset about a phone number, that it was ours and we’d planned on keeping it. The gentleman made some excuses about why he was in this neighborhood, and said that he was looking for a park. And I respectfully told him that the park was around the corner and he drove off and that was the last I heard of him.

Matthew: Wow, the power of a phone number.

Ean: Who would have thought that a phone number would lead to people following us in cars and potentially violence. We’re very lucky it didn’t lead to that, but you know it was a scary moment for us in the early stages of our business.

Matthew: Well I’m glad you kept that phone number. It is perfect.

Ean: Yeah we think so, and it segwayed well into our consulting phone number which is 303-420-PLAN.

Matthew: Now what’s it like running a dispensary day-to-day? A lot of people out there are just interested in getting into the business and they just want to know is it akin to any other business that you can talk about? I mean, what’s it like?

Ean: Well, I haven’t ever started or established any other businesses so I don’t know that I can necessarily say that it’s related to another business. I suppose it could be related to some degree to a number of businesses. It could be related to a jewelry store in that we have high value assets that are kept under lock and key. I suppose you could relate it to a liquor store or a pharmacy in that people are coming for either recreational purposes of inviting in something that can create a different effect for them or because they’re purchasing something medically that’s going to help them just as they would in a pharmacy.

And so I suppose that all three of those would be a similar type of business. But then you take everything that you know about traditional business and throw it out the window when you get into medical and recreational cannabis because the number one thing to remember is that it’s not federally legal. So we are constantly working under the threat of federal prosecution. We’re pretty safe here given recent statements that have come out from the Department of Justice, at least in Colorado. But there’s still a lot that needs to be taken into account when running a dispensary that one doesn’t normally think of with businesses. And that all relates to compliance and the fact that every single thing you do must be done in an astringent manner or you could risk losing your license.

And there’s a lot to remember when you’re running a dispensary. Simply letting somebody into a room where medicine is dispensed requires an entire process. If we need to throw some cannabis away, we can’t simply throw it in the trash. There is a process for outlining and measuring waste and accounting for that in our seed to sale tracking. So while a dispensary is very similar to some traditional businesses like I mentioned, there’s this whole other aspect that I don’t believe that there’s any other industry that is like the cannabis industry today.

Matthew: What seems to be selling the best right now, and what have you seen change over the last year as preferences seem to change? Is it more concentrates, less flower? If it’s concentrates, what kind?

Ean: Sure, sure Matt. That’s a great question. There has been a noted change in what consumers are requesting in shops. Several years ago when we first got started flowers made up 90+ percent of our sales. There were very few edibles vendors at the time selling concentrates aside from Bubble Hash or Water Hash was essentially unheard of in the early stages of this industry. But as it’s evolved there has been no lack of ideas, creative ideas in terms of methods of ingestion and the variety of edibles that have come out. Not to mention concentrates and the whole notion of dabbing in general. I didn’t know what dabbing was until after we started Denver Relief.

So I feel strongly that you’ll continue to see an uptick in the sale of concentrates. They now account for up to about 30% of our total sales. Edibles also now account for up to about 30% of our total sales. And simply doing the math you’ll see that our flower sales now only make up about 2/3 of our total revenue.

Matthew: And apart from just looking at the numbers, what are patients and adult users saying to you? Are they just saying they like the fact that it’s discreet? They don’t want to stink up a city block to experience cannabis. What is it you’re hearing?

Ean: In terms of concentrate use?

Matthew: Yeah why the move to concentrate and edibles? I mean what’s the preference?

Ean: Sure well I think that obviously methods of ingestion there’s a significant difference in whether or not somebody’s smoking something, whether somebody’s vaping something, whether they’re applying it topically or they’re ingesting it. As cannabis users become more informed and start to understand the different effects of cannabis, I think as with any intoxicant different people like different things. And on the medical side there is certainly a reason why somebody would use something, for example, an edible is going to be a better choice for somebody with lung cancer than smoking or vaporizing. At the same time somebody who has no appetite and who doesn’t have the ability, not doesn’t have the ability, but somebody who has no appetite and is nauseous and can’t eat, smoking is going to be a better option for them so that they can get that appetite and maybe get to the point where they could consume an edible.

In regards to concentrate consumption I think there’s several reasons why we’ve seen a proliferation of concentrates. One, as with anything people always want to get stronger, stronger. You know, you’ve see it with alcohol. Some people prefer beer, some people prefer wine, some people prefer shots. And then you have the crazy college kids who prefers Everclear. And you can take that same thought process and apply it to cannabis use. Some people prefer something very light, a couple of puffs off of a vaporizer. Some people want to smoke a joint, and some people want a very powerful hit. And so by taking cannabis, concentrating it down through a solvent process, most often butane, and creating a shatter or a wax, somebody has the ability to consume a lot of cannabis in a short period of time or a lot of THC in a short period of time.

Matthew: So I’ve heard it described from many people say that when they dab for the first time it’s like they’re getting high for the first time. Like it takes them all the way back to the first time, and it’s like it’s a fresh experience. Do you hear that?

Ean: Certainly. One can certainly feel the effects like the first time, if you will. I absolutely recall the first time that I ever took a dab and it got me. It was very powerful.

Matthew: Now you have some interesting partners, Kayvan and Nick, can you tell us a little bit about them and how you divide the duties to create a thriving dispensary.

Ean: Yeah sure. I have two wonderful partners Kayvan Khalatbari and Nick Hice. Kayvan is from Lincoln, Nebraska. Nick Hice is from just outside of Dayton, Ohio. And we have been together in business, as I was saying, we’re going on six years here. Each of them has a unique background. Kayvan moved out of his family’s house when he was 16 years old, graduated high school early, came out here to Colorado on his own. When he first started, when he first moved out here he had a house and he ended up renting it out and living in a tent in the backyard for a while because he was trying to get on his feet and trying to get things moving. He runs a successful pizzeria. He’s got some other ventures outside of the cannabis sector, both inside and outside. He has Sexy Pizza. He has Sex Pot Comedy which is quickly becoming Colorado’s largest comedy production company. He runs a magazine call Birdie which is an arts and culture magazine here in Colorado. He’s really involved in philanthropic causes like Colorado Symphony Youth Orchestra, Denver Kids, a very well-rounded individual.

Nick is a family man from Dayton, Ohio. Married, two kids. His family owns a nursery out in Ohio. So Nick and his parents have had this nursery for 30+ years. So Nick has always been around plants his whole life. And so moving from flowers, trees over to cannabis was a natural evolution for Nick. Nick runs our cultivation facility and he’s out there on a daily basis. Kayvan deals with a lot of the day-to-day activities of our business, but his main focus right now is dealing with our consulting clients and working on the consulting side.

It’s been, an important aspect of our business is the fact that all three of us are really dynamic and nothing’s ever the same. I feel that you need to be a dynamic individual to work in this industry because things are so different and because things change on a daily basis. You really need to be able to be able to roll with the punches and deal with any challenges that comes up. And so by having the three of us at the top of our organization chart it allows us to be really dynamic and assign a certain resource to a certain activity as it comes up and needs to be dealt with.

Matthew: Now how do you make Denver Relief stand out? I mean there’s a lot of dispensaries in Denver. What do you do to keep customers coming back?

Ean: Another good question. Being the oldest dispensary in Denver I think gave us a little bit of an advantage when people were getting into the industry in early and late 2010, even into 2011 as the regulations were coming about . We were very successful with the strain Bio Diesel that I told you about that we introduced to Colorado here in 2009, and winning some awards really allowed us to get out there and be on the map. So being an original player in the industry I think cemented us or allowed us to create a name for ourselves really early on. But then a name can only go so far.

And so over the past several years we have been very active and will continue to be very active in the community. We are very outspoken. We’re activists, we’re advocates, activists at heart. And it’s been interesting to keep Denver Relief on the forefront. We’re constantly in the press. We provide I think some of the highest quality flowers at the lowest possible price which is obviously, you know, a big part about an open market when it relates to cannabis. But we really try to put ourselves out there and want to be that model or that role model or that example for other cannabis businesses about how one could operate. There’s a number of ways in which one can do business, but we’ve chosen to be very open. We’ve chosen to constantly speak up for what’s right in the industry. We’re very active in the community and so we work with a lot of other community businesses and charities and local organizations here. And it has really naturally propelled us as leaders in the industry to the point where when you think of cannabis in Colorado, one tends to think of Denver Relief.

Matthew: Now you talked briefly about Bio Diesel there. You’re being humble, but it’s won some awards and it’s really well known. Can you tell us a couple of the awards that it won and also how having a strain that you develop in house, you know, do people come and ask for that? I mean how much business does that create on its own, and how much conversation does that create on it’s own?

Ean: Sure. We I think it created more conversation several years ago than it does now. We’ve never given Bio Diesel out as a clone saying hey, here take a cut of Bio Diesel and grow it yourself, but you’ll see now that it’s in 150-200 shops. And a lot of people back even in the delivery days, there were dispensaries that were reaching out to us to get an order two or three times a week when we had seeds in our cannabis in the very beginning. And so we know that some other businesses went and started to grow the Bio Diesel because of that name brand recognition that it has.

It won the 2009 Medical Marijuana Harvest Cup which is a now defunked competition that took place in Fort Collins, Colorado for several, but it’s gone now. That, as I said, was the first award that we won and put us on the map. But since then we’ve won several other awards for several strains that we carry. Our OG18 won first place in the High Times Cannabis Cup in 2013. Our Durbin Poison won 2nd place in the Sativa category in the 2014 High Times Cannabis Cup. Our Ultimate 91 Chem Dog has won several awards at the Hemp Connoisseur Championship. Outer Space has won several awards at the Hemp Connoisseur Championship.

So we definitely have a strong strain selection. We have a group of six strains that we like to call our proprietary strains, our Dobium [ph], Ultimate 91 Chem Dog, Bio Diesel, Bio Jesus, Outer Space and Gumbo. And there’s some Sativa in there, there’s some hybrid and there’s some strong indicas. And I think any business who wants to create some differentiation from other businesses and by doing so with these strains that we’ve created and created brands around, I think it has certainly allowed for some additional success with Denver Relief.

Matthew: Now many listeners may not realize that dispensaries get treated very unfairly from a tax point of view. Can you kind of summarize how they’re treated unfairly, what the tax code is so people can get an understanding?

Ean: Sure, I sure can. We are taxed under a tax law called 280E and 280E was created in the 1080s as a result of some cocaine traffickers who were making large scale taxable deductions to their taxes. And so the Federal Government stepped in and said oh no, no, no, no. If you are a drug trafficker, you cannot make the same standard deductions that a dentist or a handyman or a school principal can make. You are dealing with something that is federally illegal and therefore you’re not going to be able to make traditional tax deductions.

And so as a cannabis business we are only allowed to deduct the cost of goods sold, the cost to produce the cannabis that we cultivate. And when I say that we are, on a medical side, we’re still vertically integrated. So we produce at least 70% of the cannabis that we sell in our facility on the medical side. And as I was just saying, we can only deduct the actual cost of goods sold. So we can’t deduct our staff. We can’t deduct marketing. We can’t deduct, you know, purchases to the company. We can’t deduct meals and entertainment. We can’t make standard deductions that all other businesses in the United States get to take as a business.

Matthew: Wow, that is just massively punitive and unfair. I really hope that changes. Is there any talk of that changing soon?

Ean: Yeah, you know, there’s some talk of things changing. It is talk at this point, but we have some pretty wonderful legislators in the United States and there’s been several of them who have gone out of their way to make cannabis their issue. Here in Colorado we have Congressman Jared Polis, Congresswoman Diana DeGette. When I think of a national leader, I think of Jared, I think of Diana, but I also think of Congressman Earl Blumenauer. And Congressman Earl Blumenauer has written a lot, proposed a lot of legislation.

One of the bills that he has pushed into Congress is House Bill 2240. House Bill 2240 is the Marijuana Business Access to Banking Act that will give us access to traditional banks which is another big problem in the business. One of the other bills that he proposed, I think it’s… I need to look it up. I think it’s 2262, but this is to essentially do away with 280E in states where there is a legal, regulated model for cannabis. And so states like Colorado, states like Washington, states like Oregon, really the 23 states that have medical marijuana laws in place, this bill is an attempt to remove the 280E tax penalty for cannabis businesses in states where there is a regulated model. We will continue to see progress made in this area. Last year we had somebody that, your listeners may be surprised to hear would get behind the cannabis industry, but Grover Norquist, who is the head of Americans for Tax Reform.

Most people I think here hear Grover Norquist they think right wing republican lobbyist, evil and powerful. Grover actually wrote a white paper on behalf of Americans for Tax Reform and gave it to the feds and it was reasons why Americans for Tax Reform feels that 280E needs to go away. And when you start to recognize that this is a nonpartisan issue, that it really fits the model of what both republicans and democrats fight for, it really is something that we’re looking to get fixed here in the next couple of years.

Matthew: Now switching gears to your consulting practice, Denver Relief Consulting, can you tell us why you started that?

Ean: Why did we start it? Well we started Denver Relief Consulting because somebody contacted us. It’s kind of funny. I spoke at a Torah session several years ago in late 2010, maybe January of 2011. I was asked to speak at a session about medical marijuana, is it kosher or not. And it was myself and the dean of a Yeshiva which is a Jewish university here, or Jewish high school here in Denver. And there was no debate as to whether or not medical marijuana was kosher, but there was a debate as to whether or not the recreational use of cannabis was kosher or not.

So this took place at East Side Kosher Deli. One of the, a patron of the East Side Kosher Deli, saw the sign for it, contacted the owner. They weren’t able to attend, and that they missed it, but they had an interest in getting involved in the industry.

So this guy calls me up and they have a 95+ year old packaging company here in Colorado, and they were interested in providing packaging for the cannabis industry. And so they wanted a list of all the players and who they needed to talk to and really wanted to figure out how they could go about getting involved in the industry. And so we went up to their offices and spent a few days with them and realized that they were the first of many that were going to be looking to get into the industry. So we very quickly realized that we were on to something that nobody else was doing and we quickly formed Denver Relief consulting.

And fast forward four years now, it’s been almost exactly four years. We’ve had over 50+ clients. We’re working in over 13 states, 3 countries. We’ve had a lot of successes in several states and really paving the way for others to not make the mistakes that we made along the way.

Matthew: Now you’ve helped clients with licenses in different parts of the country. Can you talk about where and how many clients you’ve helped win?

Ean: I couldn’t tell you a specific number of clients that we have helped win, but I can tell you that we have worked with clients in Nevada. Nevada we were very successful actually. In Nevada we won, I can tell you the number there. We applied for 11 licenses and received approval for all 11 licenses. We had 100% success rate in Nevada, and those businesses are going to be opening up here this year. We worked with a couple of Washington state clients. We worked in Massachusetts. We worked in Connecticut. There were six dispensaries that were awarded licenses in Connecticut. One of our clients is operating Thames Valley Apothecary today. We have some clients in Maine, and we’re all over the country. We’re working with some people up in Canada even. One of the largest producers up in Canada. Tweed is one of our clients, helped them get through the process.

So it’s really all over the place Matt. We’re not slowing down. We have Maryland on board now, New York is starting. We’re getting a lot of traffic from people who want to work with us in New York. Unfortunately Florida’s ballot initiative didn’t pass, but we worked with a number of clients in Florida this past year. And the list grows every day.

Matthew: So you get approached by clients that want to create their own dispensary or cultivation operation in their state. If they don’t have a background in that, how do you orient them what it’s like to step into those shoes and take over a business like that? I mean what are they typically unprepared for that you really have to help them with?

Ean: You know it really depends on the specific client. Like I was saying earlier, Kayvan, Nick and I are forced to be dynamic in this industry. The same thing needs to be taken into consideration when you’re dealing with consulting clients because no group, no two groups are ever going to be the same. And some groups have cultivation expertise, some groups have business expertise, some groups have policy and compliance and have worked on the regulatory side of things. But each and every client presents their own specific business problems and we have to deal with each on as it comes about.

There are certainly some things that are for them and that the creation of a cultivation facility, for example, a large scale commercial cultivation facility. Even people who have cultivated cannabis have generally not done so on a large commercial scale. So there’s some uniform information that we give to cultivators. There’s some uniform information that we give to operators. But even when you think about operation, there’s a wide variety of ways that somebody can operate their business. They may be vertically integrated. They may not be vertically integrated. They may be wanting to focus on a certain niche in their retail facility such as edibles. So again it really depends on the client and what it is that they’re trying to do and what their mission statement is really.

Matthew: Now you’re the Chairman of the National Cannabis Industry Association. For listeners that may not be familiar with what the NCIA does, can you give some background there?

Ean: Yeah, I sure can. NCIA is, as you said, the National Cannabis Industry Association. It is the only national trade association that I’m aware of that deals with cannabis operators themselves. You know we have organizations like the Marijuana Policy Project that creates policy and tries to get ballot initiatives passed in certain states. We have Americans for Safe Access which deals with the patients. We have SSDP which deals with educating students about drug policy reform. We have the Drug Policy Alliance which deals with drug policy reform in all aspects all over the globe.

But the National Cannabis Industry Association is the only national trade association advancing the interests of the legitimate and responsible cannabis industry. We have tens of thousands of people that we employ in the industry. There’s hundreds of millions of dollars in tax revenues that are coming in as a result of this industry. And really creating billions of dollars in economic activity here in the United States. And so NCIA is that organization that unifies and coordinates campaigns on behalf of all cannabis businesses around the country. We’ve been very effective in lobbying bringing 40-50 people at a time to D.C. to meet with legislators. The 280E tax bill and the banking bill that I had mentioned have come about as a result of NCIA’s lobbying efforts these past several years.

You may be aware that just in these past couple of weeks this (34.38 unclear) spending bill that went through had some legislation put in that we played a large role in and that was defunding the justice department in states where there is a regulated model. And so NCIA is really the voice for cannabis operators around the country.

Matthew: So glad you mentioned that because, you know, in my mind I hear the word lobbying and it’s typically associated with some sort of nefarious back room deals, but there’s a legitimate purpose for it. I’m so glad that there is someone bringing voice to these issues. As we draw to a close what is the best way for prospective customers to reach out to you for Denver Relief Consulting? How can they find Denver Relief and how can they follow your work personally?

Ean: There’s all kinds of ways that they can get in touch with us. Denver Relief has its own website www.denverrelief.com. It also has a Facebook page www.facebook.com/denverrelief. It has its own Twitter handle @denverrelief. It’s own Instagram page. We’re also working with a new technology company called Mass Roots which is an app that’s in the app store and IOS which is another neat social media piece that Denver Relief is involved in. Denver Relief Consulting, the same information, www.denverreliefconsulting.com www.facebook.com/denverreliefconsulting. We have a number of other businesses that we work with as well Cannabuild, Waxy, Mass Roots, Cork Distribution, all strong industry players so you can find us through them.

The NCIA website, www.thecannabisindustry.org, again that’s www.thecannabisindustry.org. It has a list of all of its members so you can contact us and the other 800+ members that are part of the association around the country. As we discussed briefly, our phone number at Denver Relief is 303-420-MEDS and Denver Relief Consulting 303-420-PLAN. And if you can’t find me from one of those ways, we’re located in the very heart of Denver at 1 Broadway.

Matthew: And can they find you on Twitter individually as well?

Ean: It’s a good question. I current Tweet under Denver Relief.

Matthew: Okay. So everybody listening that enjoyed this interview please feel free to send a Tweet to Denver Relief and maybe even, can we nominate your next strain maybe, call it Grover Norquist?

Ean: The strongest, meanest strain out there.

Matthew: Well thanks so much for coming on CannaInsider today Ean, we really appreciate it.

Ean: Matt thank you so much for having me. It was a pleasure to speak with you and I appreciate your time today.

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

Update on Cannabis Legalization in Michigan with Mark Passerini

Michigan Cannabis Legalization

Listen in as Michigan medical marijuana dispensary owner Mark Passerini describes how Michigan is different than other states in terms of legalization, and how two pending laws promise to change the landscape significantly.

Key Takeaways:
[2:04] – Mark’s background
[5:24] – The reaction of officials and city officers when they visit Om of Medicine
[6:03] – When did medical marijuana become legal in Michigan?
[8:11] – Two cannabis bills that were reintroduced for a vote in Michigan
[9:56] –  How Michigan medical marijuana laws differ from other states
[11:43] – The trouble behind the medical marijuana access cards
[14:52] – Is there proposed legislation for hemp in Michigan?
[15:25] – Will adult use legalization occur in 2016?
[16:32] – Strategies cannabis advocates use to get their point heard
[18:02] – Mark discusses lab testing policy in Michigan
[19:16] – Contact details

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

Click Here to Read Full Transcript

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

The landscape of cannabis legalization is very different from one state to the next. That is why I’ve brought Mark Passerini in from the front lines of Michigan to give us a brief on what is happening there. Even if you don’t live or operate a business in Michigan it’s very important to understand what is happening in different states like Michigan as regulators and politician often steal both good and bad ideas from each other’s playbook. Mark owns a medical marijuana dispensary in Ann Arbor, Michigan called Om of Medicine. Mark, welcome to CannaInsider.

Mark: Thanks for having me Matt. I’ve been listening to your show now for a few months and definitely honored to be a part of it. You’re doing the important work of getting that conversation out there for all to hear, and I for one appreciate what you do.

Matthew: Aw thank you. Now to give us a sense of geography where are you today?

Mark: I am currently in my hometown of Chicago where it’s a frigid four degrees currently. These are the kind of days that really make you question your sanity. I split my time between here and Ann Arbor, Michigan where my dispensary the Om of Medicine is.

Matthew: Okay so you spend, you split your time between one place that’s super cold and another place that’s super cold.

Mark: Yes again, I’m not sure that my sanity is in tact.

Matthew: Okay. Now can you give us a little background on yourself and how you came to own a dispensary?

Mark: Sure. So a little background on myself. I was born and raised in the city of Chicago, and since graduating from the University of Michigan I’ve enjoyed a 20 year career in sales and sales management. Before opening the Om of Medicine I was in another green sector, the renewable energy field. I worked for a company that manufactured high efficiency lighting, as well as a company based in Boulder, Colorado called Renewable Choice Energy which was recently named the EPA’s Green Partner of the Year.

Matthew: Nice.

Mark: Yeah. Back in 2010 I got a call from a good friend of mine in Michigan who had a business plan for a medical cannabis dispensary in Lansing, the state capital. And he needed some startup funds to open. So my best friend Keith and I were eager to help out, having been cannabis advocates all of our adult lives as well as having both witnessed firsthand the medical efficacy of the plant. I had personally had slipped discs in my back back in early O’s and shortly after that Keith was diagnosed with spinal stenosis. On top of that my mother is a cancer survivor, but she also suffers from horrible neuropathy caused by her diabetes, and she’s on a ridiculous cocktail of pharmaceuticals. Some prescribed just to offset the side effects of others. So really it just made perfect sense to embark on this journey for a whole plethora of reasons.

Shortly after we opened in Lansing, we decided that being silent investors and really having no operational responsibilities wasn’t very fulfilling, and we decided to open up our own collective in Ann Arbor, Michigan. So I’m not sure how much you or your listeners know about Ann Arbor, but it’s always had very sensible cannabis policies. They were one of the very first cities in the country to decriminalize possession back in the early 70s when it became a $5 fine.

Matthew: Wow.

Mark: Yeah that was, I think it was ’71, ’72 and then they adjusted it for inflation. Today it’s a $25 fine. Keith and I actually learned that fact back in the late 1900s when we were stopped by an Ann Arbor police officer after just having partaken and really our whole lives could have drastically changed if that particular law wasn’t in place. So Ann Arbor was also, they were actually four years ahead of the state in passing its own medical cannabis laws in 2004 with a whopping 74% of the vote in the city.

Matthew: Wow.

Mark: Yeah. So Ann Arbor’s really been ahead of its time when it comes to cannabis and it just kind of made sense to open in the city that embraced cannabis, and of course the fact that I spent four and a half of the most formative years of my life there. We opened back in July of 2010, and when we opened we set out to be the most transparent and compliant facility in the state. So we opened our doors to pretty much everybody that was willing to have the discussion. Since we’ve been open, we’ve had dozens of state reps and senators come through. We’ve had our past two mayors, our city attorney, the entire city council, even the chief of police actually met with us for an hour when we first opened.

Matthew: Do you see the kind of light bulb go off when people come through, officials and regulators and they say oh my god, this isn’t some crazy place. This is a sensible business.

Mark: Absolutely. I mean I think that’s the most effective way to go about it really. People fear what they don’t know, and you know, a lot of times if they’re ignorant on cannabis, cannabis culture or its medical efficacy, you know, if they don’t have the conversation with somebody and if they aren’t educated, you know, worst possible scenarios pop up in their heads. And what’s scary is that, you know, a lot of these people are making laws without all of the information.

Matthew: Yeah. Now we’ve heard a little bit about Ann Arbor. How about the state of Michigan? When did medical marijuana become legal in the whole state?

Mark: So it was actually four years after Ann Arbor did it, and it passed by a ballot initiative in 2008 and it got 63% of the vote. It actually won by a majority in every single county and district in the state, even the most conservative areas were at least 50 percent. So we’ve had the law in place for seven years now almost.

Matthew: And how have things evolved since then?

Mark: Well you know, unfortunately there hasn’t been too many positive changes. Michigan was the 13th to pass medical cannabis laws, and as you know there are now 23 states that have cannabis laws, medical cannabis of course for adult use. The country’s capital, Washington D.C. of course have passed such laws, but it’s been a struggle in Michigan. You know every state after Michigan has implemented a distribution system so that patients can safely access their medicine. Unfortunately our Attorney General has been a staunch opponent of the law and really had a detrimental affect on the implementation of it since day one.

The patients in Michigan have taken a few blows over the years from bad circuit court of appeal’s decisions to new laws that just make it easier for law enforcement to arrest patients. For example one of the laws that passed a few years ago involved transportation of medical cannabis where patients have to carry the cannabis in the trunk of their vehicle as if it’s a gun. Meanwhile of course you can walk into a Walgreens, pick up your Vicodin, throw it in your pocket, drive with an unopened fifth of Jack Daniels in your lap and that’s okay. So it’s just kind of another way for law enforcement to target patients. And most recently the community has lobbied extensively for two pro medical marijuana bills to pass through the legislature that was blocked by the Sheriff’s Association when they called their state senators the night before the vote and asked that they vote no. And this kind of swayed a few votes and ultimately the bills never went up for a vote.

Matthew: What were those bills about?

Mark: Well I mean they just got reintroduced, but the bills are about re-legalizing the use of topicals, extract, concentrates and edibles because right now it’s the flower and leaves of the plant are protected which really makes no sense. We see a lot of patients that have never smoked anything in their lives and to assume that that’s the delivery method that they’re going to want to use is pretty ludicrous. The other bill is a bill which basically regulates dispensaries or (8.44 unclear) centers and (8.45 unclear).

Matthew: Okay so the Sheriff’s Association kind of got those put on the backburner before, and now they’ve been reintroduced and will they be voted on soon?

Mark: Hopefully. They were just introduced about a week and a half ago, and you know it looks like that we’re getting some momentum. The governor’s office seems to be behind it. Pretty much in terms of the sponsors it’s a bipartisan bill. We got half republicans, half democrats. So it looks like it has a pretty good shot. We’ve been working on this thing for, the dispensary bill in particular, we’ve been working on this bill for 3 ½ years. It started out House Bill 5580 which really went nowhere. Went to House Bill 4271 which got, like I said, blocked by the sheriffs and police chiefs last session in December. So now we have House Bill 4209 and 4210 which hopefully we can pass this year.

Matthew: Mark for listeners that may not be familiar with Michigan’s cannabis laws, can you tell us how they’re unique and different from other states where medical marijuana is legal?

Mark: Sure. So in Michigan the supply is generated from thousands of small gardens throughout the state. Patients and their caregivers creating really an incredible diversity of choices of strains and products instead of a few massive corporate cultivation facilities with limited strain choices. In Michigan a patient is allowed to grow their own medicine, up to 12 plants and caregivers can grow 12 plants for each of their patients which their allowed to have up to five. So if they’re also a patient (10.27 unclear) to a maximum of 72 plants per caregiver.

So for comparison sake the state of Illinois for example is in the process of implementing its medical marijuana program where there are a total of only 60 cultivation facilities in the state Where in Michigan all of the approximately 100,000 patients are able to grow their own 12 plants. Then of course 25,000 caregivers can grow up to 72 plants. Another kind of unique thing is that Michigan also has a state registry system that includes the issuance of a license that’s supposed to make those participants operating within the parameters describe the law (11.07 unclear). The Michigan medical marijuana law also contains an affirmative defense for patients and caregivers registered or unregistered with the state. So those are some unique things about Michigan laws as opposed to most other states.

Matthew: Okay Now Michigan requires a state issued medical marijuana access card, but many residents complain the card isn’t properly respected by certain regulators of officials or law enforcement. Can you tell us a little bit why that is?

Mark: Well the licenses aren’t necessarily require. If one chooses to participate in the registry program that meets the requirements and is issued a card then that person is supposed to be immune from (11.53 unclear) and there is supposed to be a presumption of innocence when the card is presented in a law enforcement encounter . The problem is in many areas, Oakland County for example, Oakland County is considered to be the egregious. The card is pretty much disregarded and the protections are totally ignored. And really to make it worse specific strategies used by the prosecutors are often defined to circumvent the ability for patients and caregivers to use the affirmative defense that’s supposed to be available for any marijuana prosecution.

Matthew: Wow. How does that work? I mean how do they get around that?

Mark: You know again it’s really interesting. Michigan is, it’s a real patchwork policy right now. So it depends on where you are. I mean some municipalities will really kind of embrace and tolerate so to speak, while others are completely intolerant. And it’s frustrating. It’s frustrating for patients, especially right now where there’s so few… there’s about 150 dispensaries operating in the state, and some folks have to drive 3 or 4 hours to access their medicine and oftentimes they have to drive through certain counties which are completely intolerant. So it’s terrifying to, you know. We’ve seen so many people get enrolled in the legal system. It’s not an ideal world just yet.

Matthew: Okay so in 2013 the Michigan Supreme Court ruled that dispensaries aren’t legal is that correct?

Mark: Well no. They actually didn’t rule that dispensaries are illegal. They ruled in part on what kind of transfers are protected from arrest and which aren’t.

Matthew: Oh okay.

Mark: Since some transfers typically occurring in dispensaries which are often in commercially zoned buildings to be consider illegal then the local government can consider it to be an illegal business or a public nuisance and find it in violation of zoning codes. But if the activity in the building is allowed under state law or if the local government doesn’t care to make an issue out of it, despensaries continue operating. Like I said there’s about 150 dispensaries operating in the state. So Matt when it comes down to it the only rule of law that it’s open to interpretation. Hopefully we can get these two bills passed so that it kind of clarifies things for local governments.

Matthew: Yeah, sometimes a gray area is good in laws, but other times it’s frustrating because, you know, you have to, individuals and businesses that have limited funds have to go up against state or municipal regulators that really have tax payer funds to prosecute your case. So it’s really an unbalanced playing field in my opinion.

Mark: Absolutely.

Matthew: How about hemp? Is there any proposed legislation for hemp in Michigan?

Mark: Actually there are two bills, two hemp bills recently passed and were signed by the governor. Yeah House Bill 5439 and 5440. One reschedules hemp in the state, and the other allows for research. And I believe they were passed and signed by the governor in December of last year.

Matthew: How great. Great.

Mark: Yep, it’s about time.

Matthew: How likely is full adult use legalization to occur in say 2016?

Mark: Well Michigan was actually the very first state to ratify the 21st Amendment which repealed prohibition. So hopefully that’s a good sign, but I would say it’s about 50/50 shot. Currently it seems that there may be two competing ballot initiative much like what’s going on in Ohio right now. But based on a few recent polls in Michigan and national polling on the issue. If the legislature is interested in expressing and respecting the will of the people or if the question were to make it to the voters by way of a statewide ballot initiative, it could very well be the law in 2016. It’s going to be interesting because we will have a bill which about to be introduced here in the next month or two which would start the conversation at the legislative level.

Matthew: Now what do lawmakers seem to respond to in terms of cannabis advocates being heard? Is there any specific tactics or strategies you’ve seen be successful?

Mark: Yeah I mean I would say that you know the law makers are concerned with a lot of things that cannabis represents. And even the most skeptical are willing to actually research the issue. They can’t deny the economic health benefits that changing current cannabis policy could bring to the people and the state. And we’re seeing both republicans, democrats, libertarians, tea partiers, they’re all starting to come on board. And I think the most effective way is to get the lawmakers to really evaluate and change their minds on the issue is really a deeply, heartfelt testimonial of their constituents. At Om of Medicine we’ve been really active in getting the stories that we hear from our patients into the ears of policy makers. Over the past five years we’ve seen over 7,000 patients and caregivers, and success stories are really plentiful, and it’s just a matter of getting those stories into the right ears. Then of course fundraisers, you know, money is always going to be a part of it. Unfortunately politics and money are so intertwined these days that it doesn’t seem like things can get done without affective fund raising.

Matthew: Now in terms of lab testing in Michigan, is there any required? Here in Colorado we kind of have the strange situation where recreational adult use cannabis testing is required but not the medical which you would think would be the opposite. But what’s going on in terms of lab testing in Michigan?

Mark: So really nothing currently. I mean there is no requirement by the state although many places like ours have been voluntary. We’ve been voluntarily testing our medicine. Right now the lab testing market in Michigan is just based on the desire of consumers and producer to know more about the medicine that’s being produced. Some like to know that it’s been screened for pesticides and molds and what the cannabinoid profile is, but there is no state law concerning cannabis testing. The language has recently reintroduced provisioning center at the dispensary bill would mandate that safety compliance centers test for things such as pesticides, molds and other contaminants. But at this it’s really just a desire of consumers to find out what the cannabinoid profile is and the potency to make sure that it’s clean. We do test all of our medicine. I think the same goes for almost, probably half of the dispensaries in the state.

Matthew: Now Mark in closing what is the best way for listeners to stay abreast of what’s going on in Michigan in terms of cannabis legalization?

Mark: There’s a really good weekly, internet radio show hosted by some of the state’s top activists called Planet Green Trees, and that’s a weekly show. I think it’s on Thursday nights, and that’s definitely a good way to stay abreast of what’s going on. There’s also an online source called the Compassion Chronicles. I think it’s just www.compassionchronicles.com, and they have a pretty thorough rundown of what’s going on in the state.

Matthew: And what’s the best way for listeners to find out more about your dispensary in Ann Arbor?

Mark: Well we have a website it’s www.omofmedicine.org. Or you can like us on Facebook. On Facebook we always have updates and events and news stories.

Matthew: Well Mark thanks for coming on CannaInsider. We really appreciate it.

Mark: Absolutely. Thanks for having me Matt.

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

The Uber of Cannabis Home Delivery? Keith McCarty, Founder of Eaze

Keith McCarty CEO of Eaze

Picture this, you want some high-quality cannabis delivered to your door, you use Eaze to explore strains on your phone and 10 minutes later there is a knock at your door with your cannabis. In this interview with Keith McCarty CEO of Eaze will detail the promise and obstacles facing rapid home delivery of cannabis. Learn more at Eazeup.com

Eaze has raised $10 million from investors including DCM Ventures, 500 Startups, Fresh VC, and Snoop Dogg’s Casa Verde Capital

Key Takeaways:
[1:05] – Keith’s background
[1:54] – Keith explains how Eaze works
[2:49] – The accuracy of Eaze’s algorithm
[3:21] – The plan to expand Eaze beyond San Francisco
[4:02] – The number of people using Eaze
[5:27] – Platforms that support Eaze
[5:55] – Pushback from iTunes
[7:44] – How payments are handled with the use of Eazes
[10:30] – Keith explains the next step in this technology
[12:21] – Keith discusses the regulators in Southern California
[14:46] – Contact details for Eaze

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

Click Here to Read Full Transcript

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

More and more entrepreneurs are creating innovative apps that will help medical marijuana patients and adult users get their cannabis in an Uber-like, frictionless way. One such application is called Eaze, and I’m pleased to have Keith McCarty, CEO of Eaze here today. Welcome Keith.

Keith: Thanks for having me.

Matthew: Keith I want to get into what Eaze does exactly, but before we get started can you give us a little background on yourself?

Keith: Yeah my background’s in technology. So, you know, most recently I helped start a company called Yammer. It’s a Facebook for the enterprise we started in 2008 and sold to Microsoft in 2012 for a little over a billion. And my passion and everything that I do now is all geared around how to be innovative in the technology space.

Matthew: So I hear the Rice O’Roni bell ringing. Are you in San Francisco?

Keith: I am, yeah, that’s the cable car.

Matthew: How perfect for a San Francisco setting. That’s great. Okay. Yes, I’ve definitely heard of Yammer. That’s a great acquisition. Kudos to you. Good job.

Keith: Thank you.

Matthew: Now digging into Eaze, can you tell us how it works at a high level?

Keith: Absolutely. So it’s really easy. I mean one of the things we want to do is enable patients an easy, quick and professional way for them to get their medicine, and so that starts with the sign-up. So you go to www.eazeup.com, and we’ll ask for information for us to be able to verify your eligibility that you’re actually a medical marijuana patient. And then once you’re into the solution it’s just a matter of three clicks to really request that delivery. So you choose your strain. You choose your quantity, and then we’ll automatically detect your current location. We’ll provide a real-time ETA in terms of deliverability time to where you are at that moment. And when you click “request delivery” we’ll automatically dispatch the nearest driver that has that strain or that medicine that you’re requesting.

Matthew: So is there some sort of algorithm that looks at the available drivers and then comes up with a estimation, and how accurate is that?

Keith: Extremely accurate. Yeah, I mean you’re absolutely right. So we know what the drivers have with them. We know what the patient is requesting. We know where the driver is, and we know where the patient is. So between, you know, those dynamics we can certainly provide a real-time ETA, and it’s as accurate as, you know, an Uber-like solution or any other one would be.

Matthew: Okay. Now right now is Eaze confined just to the San Francisco peninsula, is that correct?

Keith: That’s correct.

Matthew: Okay. And what’s the plan to expand to other geographies?

Keith: Yeah so the way that we developed the technology we can scale extremely fast, right. We partner with dispensaries that already have, are set up within each of the territories that we look to expand into. And for us it’s really just a matter of flipping on a switch. And so, you know, in terms of our expansion strategy, you know, we’re looking at the broader market and where the demand is, where the regulatory framework really makes sense for us today, and then also where that’s moving to. So yeah, like I said, from a technology prospective, you know, we’re there. We can expand tomorrow. It’s more strategic for us though.

Matthew: And how many people are using Eaze right now?

Keith: So Eaze launched a few months ago, and there’s tens of thousands of patients that are already using the solution.

Matthew: Is there a charge for using Eaze, or is it totally free to the end user?

Keith: So the business model is that Eaze is free to patients, and we actually work with partnering dispensaries to charge them for the lead generation services that we provide. As well as, you know, once the delivery is requested by the patient, we provide a lot of technology and route optimization for the actual drivers to increase that KPI of deliveries per hour per driver. And in turn that actually reduces cost per delivery for the dispensaries. So to answer your question it’s free to patients, and we actually work with dispensaries and the charges are on them.

Matthew: So you mentioned just a lead generation service. So there is no Eaze drivers per se. It’s all kind of, it’s just the technology that you’re facilitating for both parties.

Keith: That’s correct. Yeah we work really closely with the dispensaries so obviously we model our service off of the other on demand consumer services that are out there like Uber, Lyft, Postmates, you know, etc. And so, you know, we’ve learned a lot in just being in that tech hub, that tech community. And we instill a lot of those best practices from a driver operational prospective with our partnering dispensaries, but ultimately the drivers do work for the dispensary.

Matthew: Okay and what platforms is Eaze on currently?

Keith: So Eaze is mobile web, and our driver side applications are on both Android and IOS, and we’ll be offering an Android patient side application soon.

Matthew: And I know that sometimes iTunes is giving a little bit of a pushback on the cannabis applications. Did you experience that at all or was it frictionless for you?

Keith: Yeah we absolutely did. So, you know, we’ve been working with Apple since the beginning of the year, and Apple has certain guidelines around what they allow on their platform and what they don’t allow. And we could certainly build an application for what we’re doing to fit into those guidelines. We can figure that out, but there becomes a certain point where the patient experience starts to really diminish the more that you go down that path, and so strategically we made a decision to not offer, you know, an IOS app at this time.

Matthew: That’s pretty interesting. So you sidestepped them to give all the features and benefits to both the dispensary and the customer, missing out potentially on all of the eyeballs that you would get in iTunes, but you feel that it’s worth it.

Keith: We feel like the solution is naturally social, and I think that the numbers speak for themselves that although we would love to be on the iTunes store and have all those additional eyeballs, we really feel that the growth through the solution is going to come through virality, not through organic search on the iTunes store.

Matthew: Okay. So let’s say it’s a Friday night. It’s 7 o’clock. I live in the marina district of San Francisco, and I order 4 grams of cannabis. How long would that take? What would you say? I mean I know there’s a lot of variables in there, but what would you say at a high level?

Keith: So I can tell you that in San Francisco because of the algorithmic model that we’ve created around driver route optimizing, our average delivery time in San Francisco is ten minutes.

Matthew: Wow. Wow, that is fast. Okay. Now how is payment handled between driver and customer or does it go from driver back to dispensary? How does that work?

Keith: So the patient pays the driver. The driver works for the dispensary, and we then charge the dispensary. So the payment is actually processed between the driver and the patient. And then we obviously bill the dispensary who we partner with.

Matthew: Okay. So let’s say the driver does a poor job or does an excellent job, is there a way to review them or give feedback back to the dispensary in some way or back to the community at large?

Keith: Right. Yeah, that’s actually really important, and that’s actually a differentiator for Eaze in this whole on demand consumer service space within the cannabis category specifically is when you click “request delivery” your experience with Eaze does not stop there. Actually that’s where it just begins. So we keep the patient updated as the delivery is in progress with real-time delivery ETA updates. Meaning that as the driver’s getting closer you’ll actually see the counter decrease from, you know, 10 minutes to 8 minutes to 6 minutes etc. When they get to certain points in that delivery, you’ll receive text message updates, and then even after you’ve received the delivery then we want to understand how that delivery experience was.

So you will rate your delivery immediately. You know, did the driver have good ediquette, was he polite, did he understand the strain that he was delivering to you, and if you had any additional questions, was he able to answer those. So we’ll rate those, we’ll ask for a rating immediately after the delivery. And then some period after that, after we feel like you’ve had a chance to consume the medicine, we’ll actually ask you to review the strains themselves, and once again that’s a one through five star rating. And what Eaze is really trying to build is this strain graph. So similarly to what Facebook has in terms of the social graph or the friend graph. When you go to Facebook, you know, it’s wow how did they know who all my friends are. We want to build something similar for cannabis patients so that, you know, if you were to rate a certain strain five stars, we could actually recommend, based on our graph of ratings what you’re most likely to enjoy during your next order.

Matthew: That’s incredible. Uber has only been around for I think a few years now, but it has changed the game, and now we talk about what you’re doing here with Eaze as if it’s been part of our culture for, you know, a decade or two decades or something, but it’s really just changing the landscape of utilizing resources in an urban space. How do you see this type of technology evolving? What’s the next step? How do we go beyond Uber? Is it going to be drones delivering goods or what do you see?

Keith: Well obviously I’m bullish on this whole on demand consumer service category as a whole. You know when Yammer got acquired by Microsoft I was at Microsoft. I had a one year commitment. I was really looking at the next wave of technology, what is that going to be. And, you know, Uber and Lyft did a great job of paving the way within transportation. Then we started seeing other companies pop up in other categories such as food and drink or home. And, you know, I think that there’s this whole other category called healthcare that Eaze is really paving the way with. You know, I think the possibilities are kind of endless. Once you have those algorithmic models built into a solution to provide a really relevant experience to where people can with a click of a button get what they want and need, yeah, it’s going to be fascinating to be part of that. And I absolutely think that robotics delivery will be the future of this entire space. But, you know, I think Google made a strategic investment in Uber because of the self-driving cars that they’re building, and I absolutely see drones in the future of cannabis delivery with Eaze.

Matthew: It sounds like science fiction, but I’m sure it’s going to be here faster than we can even realize. There’s an app on my phone called Relay Rides and I can use other peoples’ cars and there’s like three people within a mile of my house that participate in Relay Rides. You just approach the car, it lets you in. It’s just unbelievable. I can’t believe how fast this is changing the game. But there is a couple of threats on the horizon for Eaze type technology. I know in Southern California right now, at this moment, as we’re speaking the regulators down there are kind of making a stink about the Eaze type technology. Can you tell us a little bit about that and how you feel about that?

Keith: Yeah I mean I think the regulatory landscape is ever changing for one, right. So I can give an anecdotal evidence of that, right. So when we started this project last October, I would ask the lawyers, you know, when is A, B and C going to happen. You know to their best judgment they would say well it’s tough to predict but maybe you know that’s a couple of years out. And you know fast forward six months I would ask them the same questions, and they would say well we’ve really made a lot of progress there, that’s more likely going to happen in six months. So not only are the laws kind of changing in the right direction, but they’re also moving exponentially. And I think that, you know, to your earlier question around expansion where is Eaze expanding next, the regulatory landscape today is certainly part of it, and we are in cities or territories where we’re absolutely following all the local laws and have a great relationship with, you know, the health department and authorities here. There may be other territories where we’re really gearing up to launch there, but we haven’t launched there because of the current regulatory landscape, but we view that changing very quickly, and L.A. may be one of them.

Matthew: Okay. Now is there any parallel markets where you would like to take this existing technology and say just to apply it to another market vertical at all?

Keith: Yeah so Eaze is, you know, we kind of brand ourselves as a on demand healthcare delivery service starting in medical marijuana. To be honest I view the medical cannabis space as a big enough category that we may not need to or want to kind of enter into these other, you know, ways to deliver other types of medicine. But I can tell you that from a technology prospective we hedged our bets in that we’ve developed a technology in a way where you can very easily start to introduce other types of prescription type medicine and with a click of a button also, you know, receive those. Really at the root the technology is all about verifying eligibility, being able to receive the medicine, an easy to display menu based on where you are, and provide real time ETAs and with a click of a button have that dispatched to the closest driver that can fulfill that need. And that’s applicable across, you know, any other type of medicine.

Matthew: Keith in closing how can listeners learn more about Eaze?

Keith: Yeah the best way to learn more about Eaze is to go to the website. It’s www.eazeup.com. And everything you need to know is there.

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

Keith: Thank you for having me.

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