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Ep 270 – Synthetic Cannabinoids Are Opening Up A New World Of Possibilities

jason poulos librede

Just as we’re becoming comfortable with the massive changes in cannabis legalization there enters a disruptive new technology called “Cannabinoid Biosynthesis” that has prompted a lot of interest among industry insiders.

Here to tell us more about it is Jason Poulos of Librede, a synthetic biology company and leader in cannabinoid biosynthesis based in Southern California.

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

Key Takeaways:

  • Jason’s background in biology and how it led him into the cannabis space
  • A deep dive into cannabinoid biosynthesis and how it’s disrupting the industry
  • An inside look at Librede and how the company has taken the lead in cannabinoid biosynthesis
  • The intricate work involved in designing a molecular drug that efficiently binds with its target
  • Exciting new discoveries surrounding the potential of cannabinoids beyond CBD and THC
  • The importance of CB1 and CB2 receptors and how they interact
  • The relationship between synthetic cannabinoids and cannabinoids found in nature and how Jason believes that relationship will grow
  • Ways in which we could misuse synthetic cannabinoids that we need to avoid
  • Where Jason sees the cannabinoid biosynthesis business heading in the next 3-5 years and how it will affect the cannabis industry
Read Full Transcript

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

Just as we're getting comfortable with the massive change of cannabis legalization, there enters a disruptive new technology called cannabinoid biosynthesis that has many industry insiders very excited about the prospects, but also scratching their heads about how this industry can scale. Here to help us understand is Jason Poulos of Librede. Jason, welcome to CannaInsider.

Jason: Thank you, Matt.

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

Jason: So, Librede is located in Carlsbad, California, which is just a little bit north of sunny San Diego.

Matthew: Okay. And what is Librede on a high level?

Jason: So on a high level, Librede is a biotech company and our goal is to look at nature for therapeutic compounds and then produce those compounds at an industrial scale. And so at the highest level, we're a biotech company.

Matthew: Can you share a little bit about your background and journey and how you got into the cannabis space and came to start Librede?

Jason: Yeah. So, my background's in bio-engineering and biotechnology. I started Librede coming out of the University of California, Los Angeles with a different technology. And so we started this on an artificial cell membrane platform. So, what we were doing was we were creating artificial cell systems and then looking at human proteins embedded in those systems as a way to do high throughput drug discovery and drug screening for the pharmaceutical industry. So the basic idea was a cell on a chip, right? We have a cell, we put it on a chip. And then you have the ability to study human membrane proteins inside of there. And one of the proteins we were really interested in looking at was a protein called a TRP channel. The TRP in mate receptor is involved in cold sensing. It's kind of when you put methanol on your skin, that's the channel that gets activated. And it was interesting from a pain pathway system as a target.

And so, cannabinoids had also been recently shown to interact with these channels. And this is back in 2011, 2012. And so, when we were developing a new technology, we don't want to do what has already been done. We're always trying to look towards the future, like what's going on next? What are the next, you know, important drug targets? What are the next important therapeutics? Because your technology has to work with those. So, we, you know, we were looking at this protein and then we wanted to look at it in the presence of cannabinoids. And so the ability to get access to cannabinoids, it was not that difficult for THC and CBD. But the other compounds were. So the minor cannabinoids, we couldn't really get access to. And so we're like, "Well, how are we going to test our system with these new cannabinoids?"

And Dr. Farina, Anthony Farina, you know, our CSO, thought that he's like, "I bet we can make microorganisms produce these chemical compounds so we could use them at [inaudible 00:03:25]." Because we didn't need that much of them. And so, we kind of set out on nights and weekends to develop this technology. And kind of on our first pass, we actually were able to produce some cannabinoids at reasonably high enough levels that really started to turn my eyes towards it and became extremely interesting. And that was kind of my first window into the cannabis space and the cannabis industry. And I knew we had something of extreme value then, and that this is really a way to kind of get access to not just THC and CBD, but many other cannabinoids. And so we kind of decided to switch all into this. And it's been kind of a fun ride ever since.

Matthew: Yeah. So, when you say microorganisms, a lot of people will be like, "What does that mean exactly?" Can you just give a little bit more context on what that means?

Jason: Yeah. So, microorganism, there's kind of generally three classes: the fungus, algae and bacteria. So, you know, bacteria, small little bug, right? So that's like a microorganism. Algae would be another example, and yeast. So, like baker's yeast, you know, yeast that we make beer with or bread with? That's another example of a microorganism. So, our lives are involved with microorganisms every single day. Our guts rely on them. And so they're everywhere even though you can't see them all the time.

Matthew: Okay. Do you feel like when you meet people and you're trying to explain at a cocktail party or anything what you do, there's any kind of stumbling blocks? Or how do you help them understand it if they're struggling?

Jason: Yeah. So, sometimes there are people like, "I don't understand how a bug can make the same chemicals that a plant can do." And so, typically, what I talk about is that...it's the word biosynthesis that sometimes can trip some people up. And so the way I explain it is that, you know, plants, just like humans, we make chemicals, right? We make lots of different things. And so plants, you know, can make different smells and things like that. And so they're synthesizing chemicals. But it's a biological system. So, it's biology synthesizing chemicals. So it's biosynthesis. And so, if we understand that biology can be used as a chemical factory, then, you know, I can...other biological systems can also be used as chemical factories. And then if you have a chemical factory, you can start to transplant the machines inside that factory in between, you know, from a plant to an organism, from one chemical factory to another, and actually end up making the same products or the same chemicals. And so, it's really no different than any sort of kind of basic chemistry. It's just is biology is doing the chemistry versus, you know, mixing two chemicals in a jar.

Matthew: Okay. So chemical factory, that's kind of the way you talk about it. What aspect of these chemical factories do you think is most important for cannabis enthusiasts and business owners understand in terms of what's possible with these chemical factories?

Jason: So the most interesting thing and useful thing from the cannabis industry side is the ability to control what's going on. So when you start to engineer these new chemical factories and microorganisms, you're doing them from the ground up. And so that allows you total control. It's like designing your own house to be exactly what you want it to be. So, the cannabis plant is extremely complicated. Huge, large genomes making lots and lots of different chemicals. But if I decided that I wanted to make a chemical factory that only makes one chemical at a time, it looks a little bit different. And it's actually a little bit simpler so I can actually target to go in and target exactly what we want to make and then build that up in a much more simplistic system and taking away all the complexities of an agricultural production.

So, you know, soil, long growth times, water, light, fertilizers, pesticides, those don't come into play anymore. And so, because it's a much more simplistic system, we get much more consistency and control out of what's going on. And people like reliability in supply chains. And so that's where this is all going. It's kind of consistent purity, low cost and reliability. And so that's what you get out of this, is that ability to control basically at a molecular level.

Matthew: So when we talked in the past, you talked about how drugs, molecular drugs or remedies can be designed well so they perfectly bind with their target in terms of creating that control. Can you talk a little bit about maybe how to create a molecular drug that perfectly interacts with its target and what that means?

Jason: Yeah. So with respect to cannabinoids, we're mostly talking about binding to the cannabinoid receptors, right? And so the natural cannabinoids, the phytocannabinoids found inside the cannabis plant have been okay at doing that. They kind of bind well. They bind a little bit, but not too much. And that's...they're in the kind of Goldilocks area. It's just the right...because if you end up binding too tight, you have problems. And some drugs have been pulled from the market that have been designed to bind really tight to the cannabinoid receptors. And if you don't bind enough, then you don't get any sort of therapeutic benefit. And so, the ability to control the production of molecules at the molecular scale allows you then to modulate the binding to receptors, and that then allows you to develop new therapeutics and to kind of, even kind of dial in more on this Goldilocks area that the phytocannabinoids have happened to stumble upon. And so that's one way that we can use the platform for designing new therapeutics.

Matthew: Okay. And when helping people understand, for example, the CB1 and CB2 receptors, is it fair to say kind of like a receptor is like the female puzzle piece and then the male piece fits into the receptor? Or how do you...

Jason: Yeah. It's a lock in a key, right? That's exactly what it is. And so there's a huge number of receptors in our body. And they're all just about chemical signaling. And so when something binds the CB1 or CB2 receptor, it begins a chemical cascade or a signaling cascade down that can have many different physiological outcomes. And we see this with all the different effects that cannabis and cannabinoids, individual cannabinoids have been used for. I mean, THC again has been a pharmaceutical product for 30 years, I think, now. And CBD is just recently a pharmaceutical product. And they're used for totally different indications and, you know, the binding of different receptors in different ways. And so this becomes really interesting. Depending on what key you have, you can open up different doors. And even though these keys can look somewhat similar, behind each door can be a totally different area of exploration.

Matthew: Okay. Now, in terms of scale, you know, people are thinking, how does this work here? We have, let's say, yeast in bakers or some other microorganism and we're trying to create products fit... How does this work at scale in order to be a business?

Jason: Yeah. So, has anybody ever heard of Anheuser-Busch?

Matthew: No. I'm [crosstalk [00:11:35] idea.

Jason: So that's how this works.

Matthew: Huge vats is what we should picture. Huge vats.

Jason: Yeah, this is the way this looks at scale. And this has been done before. So, cannabinoids are natural products. They're just they're valuable natural products. There's a laundry list of natural products that people interact with on a daily basis. Aspirin comes from the bark of the willow tree. Taxols and anti-cancer drug, that comes from the yew tree. Capsaicin, you know, is put in cream, that comes from peppers. Vanilla comes from the vanilla bean. Grapefruit comes from the grapefruit. I can go on and on and on. And I think half the pharmaceutical products in the market today are derived from some sort of natural product. So this is, historically, natural products are good and cannabinoids are good, too. We're learning more and more about them, and the more we learn, the better they are.

But as you move to an industrial scale, plants aren't necessarily made to produce these compounds at an industrial scale. That's not their job to do this and to supply human populations with these. So you have to come up with alternative ways of doing this. And yeast, specifically yeast, have been used to produce high value natural products. For example, the grapefruit smell, that is produced in yeast. The rose smell is produced in yeast. And that's good if you're in the perfume or sort of flavor and fragrance industry. Now we don't have to have, you know, huge fields of roses to make one small bottle of perfume. So that's great from an environmental sustainability standpoint as well as a reliability standpoint, because you know exactly the smell that you're going to get every single time. This is also done for Omega-3 fatty acids, and a whole list of other compounds have been done like this at scale.

And so when I talk about scale, I mean the metric ton level. I'm not interested in kilograms. It's metric tons that we're going for. So this is what it looks like. So, imagine that you're...have you ever brewed beer before? That's basically what we do on a day to day basis. And if you've ever worked in an Anheuser-Busch facility, that's what it looks like at an industrial scale. So the yeast kind of produce these compounds and then you can extract them out and purify them. And they're white, tasteless, odorless powders.

Matthew: So as these worlds of synthetic and natural cannabinoids come together, how do you think about those two worlds coming together and what should we know? What's of interest there?

Jason: Yeah, so I think, just to back up a little bit, there's this...the idea of synthetic versus natural cannabinoids is something interesting and I think it kind of happens in the definition here of a few words. And I want to start back at the beginning before I kind of directly answer that question. So, cannabinoids are anything that basically interacts with the CB1 and CB2 receptor. That's gonna be the definition of a cannabinoid. And so there's phytocannabinoids. These are the cannabinoids that are found in plants. For example, you know, THC, CBD, CBC, those are phytocannabinoids found inside the cannabis plant. There's also endocannabinoids. Those are the cannabinoids inside of our body. The names of them are hard to say. I just say their abbreviations, AG2 for example. So these are just, you know, natural cannabinoids that are produced inside of our body.

And then there's synthetic cannabinoids. So, synthetic cannabinoids are cannabinoids that are made in laboratories that cannot be found in nature or a human body. So they're not a phytocannabinoid. I can't find them in a plant and they're not inside of a human body, and so they're synthetic cannabinoids, invented cannabinoids. What we're doing is we're actually matching [SP] the phytocannabinoids, we're just doing...we're doing it the exact same way that nature does it. We're just making it in a highly efficient system, okay? So, what's happening now is the world of biotechnology and the cannabis industry are interacting and they're doing this on the level of kind of the production side. So, it's about optimizing the production and creating an efficient system so that you get to scale and reduce costs and then environmental sustainability through the use of technology. So it's not really synthetic cannabinoids that are being produced. It's engineering a more efficient biological system to do definitely what nature does, but just doing it faster and more efficiently. And so that's really what's going on. It's not necessarily synthetic cannabinoids that are being produced. It's an application of technology to our production system.

Matthew: Okay. And is there any way that you think it's a misuse or things you want to be careful of when creating cannabinoids or combining them in any way, synthetic or organic?

Jason: Yeah, no, definitely. I mean, you have to be extremely careful. The CB1 and CB2 receptors, many, many things can bind to them. If you don't do this correctly, you can have extreme adverse side effects. And there's huge examples of it. So for example, the synthetic cannabinoid, people refer to this as typically Spice. These are the things that, you know, people go crazy on. What's the difference between them? Sometimes it's a single nitrogen, a nitrogen getting replaced inside the THC molecule. That allows it to cross the blood-brain barrier a lot faster and combined tighter then to the CB2 receptor, that's bad news, okay? So we have to be really careful about what we're producing here. And as well as stereochemistry matters a lot. So you talk about that, it's left-handed and right-handed molecules.

And this makes a big difference. So, when you're developing new production technologies, you have to make sure and have to be careful about exactly what you're producing, and so you know exactly what's going into products and what's going into inside of people. And so you do. You have to be careful with the system just like you're careful with any sort of neurological compound in general. And so as we move and create, you know, potentially new cannabinoids or new formulations, you have to go through the typical safety screening and testing that needs to be done. I mean, that's what we do with our compounds when we make them. It starts in nice models and then goes beyond that. So, it's something that everybody needs to be aware of.

Matthew: If you were...I mean, this is conjecture here, but in the next five years, if you were to look at cannabinoid biosynthesis and say like what market share, what areas of market share it's going to be, the products are going to be in, pharmaceutical supplements, foods, edibles, topicals, like where do you see biosynthesis having the most traction in the cannabis industry?

Jason: So, from a pharmaceutical standpoint, it's for sure going to go there. I mean, that's easy to say that it goes there and it captures a lot of that market share as the pharmaceutical market develops. Inside the consumer market, it's going to be, obviously not the flower component, okay? But I think you're going to start to see this dominating in the edible space, the topical space, even vape pens. And I consider that to be kind of on the nutraceutical type of the industry. There's going to be a transition period. So, you know, I think about hemp oil or kind of full spectrum oil as effectively a carrier solvent where you can start to begin to spike in kind of pure compounds to get to the ratios that you want and get the consistent ratios that you want, and also have the ability to create new ratios that are not found in nature.

So for example, having a high CBG content topical cream, it's really difficult to get that in nature. And you can do that now with biosynthesis. Or having a high CBDV, some of the V compounds in there. And that's where you can do and that's where they're going to come in. So, it's about creating new products, not just, you know, THC and CBD. And that's effectively a black and white world and what you can do now is begin to add color to this. So that's, I think, that's where it's going to go. There will be a transition period, as I mentioned, but eventually I do believe that there's going to be a cannabinoid product in every single household. And it's not going to be THC and CBD. It's going to be other compounds in there.

Most people have Ibuprofen or aspirin inside their house. But what you don't have is the bark of the willow tree in your house. And just as natural products, from a historical content, have moved from natural systems to efficient industrial systems, the same will happen with cannabinoid production. And so I see it happening. And concentrates, anything that uses extracted cannabis oil, this will make more sense to use pure cannabinoids to allow for reproduction of a chemical profile. And that enables then branding of your products and consistency. Anywhere I go in the world, Coke tastes the same. I know that's not totally true. There's Mexican Coke, which is slightly different. It tastes good, too. But that's what you're looking for here. How do you make a brand and how do you get consistency? And you're going to do that through controlled formulation, which is enabled by pure cannabinoids, which you can only get through synthetic or biosynthetic production.

Matthew: You know, some people say that THCV has an appetite suppression qualities to it. Do you see anything with that coming to market in terms of, you know, diet aides or things like that? Is that gonna...

Jason: Yeah. I mean, I hear a lot about that, too. So, THCV is high on people's lists, something that's interesting, something that we can produce, something that's been very difficult for plants to produce. I've heard people talk about, you know, getting some high THCV plants out through breeding programs. But it seems to have been taking a long time. But, yeah, I mean, that's what's interesting here. So, you know, maybe we're talking about having a diet pill here, you know, a naturally derived diet pill. That would be really exciting to have something like that in a medicine cabinet. And so, it's really, when you kind of remove the constraints of an agricultural system, you can begin to think about creating new products like THCV that you mentioned and doing kind of so much more.

So, we look at the plant for the examples of what compounds we should make and then we do them, then we create them in a highly efficient manner. And so it's not only doing what the plant can do, but kind of doing so much more and enabling that accessibility to these compounds. I mean, if they're valuable therapeutics, what I want to do is to get access to them so we can supply them to as many people as need them and to do it for as low as cost as possible. That's what we should be doing from a therapeutic standpoint, I believe.

Matthew: Okay. And if you had unlimited budget and time and could only perform like experiments on yourself, which ones would you kind of...which cannabinoids and combinations and things would you be doing to kind of optimize just yourself?

Jason: Yeah, I mean, so that's interesting. I've thought about this. I've actually talked with the NIH about this a little bit, too, the National Institute of Health. It really...it doesn't sound very exciting, but it's at the beginning. I mean, I'd really like to do kind of minute changes and formulations to see what effects those have. Taking the top 12 cannabinoids and kind of start to play with permutations of those and see what the effects are. I mean, we really don't know how any of these things work. And so some really basic, basic information about what does CBC do, I'd be really interested in seeing what happens with that because I think so little is known about these compounds. And so you really got to start at the beginning.

Matthew: Yeah. Well, Jason, I like to ask a few personal development questions to help listeners get a better sense of who you are. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Jason: Yeah, actually, recently there's a book of poems called "Consider the Humble Poet" by Joan Tenor. Not a very well-known author, kind of an older view, but I like that. It's a unique view on, you know, the life that people don't see a lot of about. And it's just as interesting to kind of get out of what people consider, I think, kind of famous authors and things like that. So, yeah, "Consider the Humble Poet" by Joan Tenor. That was something interesting I read.

Matthew: Okay. Is there a tool that you or your team use that you consider valuable to your productivity?

Jason: Yes. Okay. So, there definitely is. We use lots of different tools. Some tools are lacking, but the power of DNA synthesis has and will continue to change our lives, okay? The ability to effectively print DNA which then allows you to print genes, allows you to print enzymes, which are the chemical machines to create chemical factories, is an extremely valuable tool that we use inside the lab and has really enabled the growth of the synthetic biology industry in general.

Matthew: Yeah, that seems really promising. I don't have the knowledge to fully appreciate exactly what that means. I mean, apart from what we talked about today, how do you think it's going to show up in people's lives first here in the 21st century?

Jason: Yeah, so the thing about the DNA synthesis, it's all in the background. It's the stuff that you don't know. It's the complicated electronics inside your phone, okay? Like, I don't know how...I mean, I don't know how my phone works. I hit the call button and it goes. There's this complicated electronics that are doing things in chips and chips reading it. And so what the power, the ability to make DNA rapidly is gonna allow us to do is to allow us to make new compounds and new therapeutics and do this rapidly. And so although you don't always see what this is and how this was made, the kind of the core behind a lot of these technologies and therapeutics kind of begins at the DNA synthesis level. People have heard a lot about CRISPR technology these days and, you know, gene editing. You need to edit...in order to get that to work, you need to actually synthesize small fragments of DNA.

It's not what you talk about, but it's kind of the core and the base of this. For biosynthesis production of cannabinoids, it begins with us typing in a DNA sequence into a computer and then hitting the order button. And then, you know, the cannabis gene getting sent to us as a piece of DNA. We don't need to touch the plant. And so this means we can do lots of changes to these enzymes quickly to make them much more efficient, to make them work faster. And so, it's difficult to see these things in your life, but that has been a big, big game changer, that ability to kind of synthesize and manipulate DNA rapidly and cheaply. You've got to understand, when we did this in the first time back in 2013? Yeah, because we filed our patents in 2014. We ordered the genes to do this for less than $5,000.

So we built the entire cannabinoid pathway into yeast for genes that cost less than $5,000. I mean, that's insane. And you've got to understand like, we were a company of a few people that had zero money. And so, we put our own money basically into doing that. And, you know, when you're fresh out of graduate school you don't have a lot of money. In fact, a thousand dollars is a lot of money to me. And so it's still...but because that barrier was small, we could go ahead and do it. You can make those bets. And that's what started this company. It's the ability to kind of get after that DNA. And so that had such a huge, obviously, impact on my life and I think it will continue to have an impact on like the global population in general with respect to therapeutic development.

Matthew: You know, I think about the DNA editing quite a bit. I think, you know, how... It's already starting. Like in South America, I know some people that, they can like change their kid's eye color or hair color and just how, at first, we're going to like try to eliminate diseases or things that are undesirable. Like, maybe you're prone to MS. Like, "Do you want your kid to be prone to MS?" You say, "Oh no, I don't want that." "How about like they're prone to balding?" "Well, no, just take that out, too." And then all of a sudden it's like...it's all of a sudden like, "How about cognitive learning ability?" "Oh, I want that to be high," you know. And next thing you know, you're kind of creating this super race of people.

Jason: Yeah. It's basically eugenics again. I mean, this is super dangerous. Yeah, I totally agree with you. So this is the field of bioethicists and there's many out there that are much more well-versed in discussing these issues than me. But, yes, with any technologies that's created, those can be used for good and those can be used for bad. I mean, I look at nuclear power that way. I mean, the nuclear bomb is terrible. I think nuclear power is not so bad. So we have to be careful about this. You have to be careful about what you do, what the implications mean. And these are discussions that we need to have kind of at a societal level. Really at a governmental level. What do we want to be doing as a society?

Do we want to be getting rid of sickle cell? And so there's just recently a study, they just started human trials for CRISPR to help cure sickle cell. I mean, I think we could agree that, yeah, you know, we should edit that gene out if we can. That's good. MS. I think we can agree with that. And so, where do we stop as a society? I think probably, you know, baldness. I think it's like, yeah, it's getting there. I don't think we want to do that. You know, high cognitive ability, eye color. I mean, man, it's starting to get into some areas...

Matthew: Or you could just like, "Hey, I don't want to spend $14,000 for my kid to have braces. Can we just get some straight teeth here?" Like, "Sure. Done." And you're like, "Oh, what else can I do?"

Jason: Yeah, exactly. And these...yeah. So, I mean, these are important issues. I think that, you know, there's lots of people thinking about them. But this is starting to come up. And the pace of technology moves so quickly that we need to be doing these, having these discussions and making sure that we're doing it slowly. I think the FDA in the United States has a pretty good kind of governing control over this. And like, I use governing as in like a governor on like an engine. Like, they pretty like to do things slow. There's other countries that like to move...are moving faster, and this is, well, this is...man, you guys are editing embryos and do we want to be doing this and what are we doing? You know, and basically the ability to change human evolution through to biotechnology.

I mean, these become interesting questions that you could write science fiction novels back in the '50s about, and now it's your life. And so, it's definitely something we need to think about and we need to make sure that we're doing this in the right way. But given the cautions that are there, there's also so much that can be done for good. And so you don't want to limit the technology necessarily. But you do need to keep an eye on it and make sure that we're using them in a responsible ways.

Matthew: That makes sense. Now, here's a [inaudible [00:33:16] question for you. What is one thought that you have that most people would disagree with you on?

Jason: Yeah. So what's the... So I don't know if many people disagree with me on this... Yeah, I guess people...a lot of people do. I typically think that nothing is very new in the world. That everything that is done can always be looked back through with some sort of historical context and a model can be found and repeated. And a lot of sometimes people think, especially kind of with regard to the cannabis industry, this is something...this is brand new and, you know, cannabinoids, nothing like this has ever been seen before. And this is, you know, a brand new industry. And I think we've seen things like this before in the land of therapeutics and things in the land of the regulatory environment, too. And so, I like to kind of look to history to see examples of how things have always been done and then kind of morph them in there and morph them into...morph and map them on to what's going on in today's world.

And I think other people would disagree with that. It's like, "Hey, this is brand new and so you can't look to the past. You have to create your own future." And I understand that mentality, too, and that can be useful. But I think a lot of things have historical context that you can bring into play when planning for the future.

Matthew: Jason, before we close, can you let us know where you are in the capital raising process, if anywhere?

Jason: Yeah. I mean, you know, we're a biotech company. We almost always are raising money. So we do rounds periodically. And so, we did a round recently and we'll probably be gearing up to do another one in quarter four. I'm always really interested in partnerships and bringing together unique skill sets from a variety of different areas like the pharmaceutical industry, the production systems and platforms, and bringing those together to accelerate the commercialization of the technology as well as getting compounds to markets. So, anyways, that's kind of where we are. So we should be looking at quarter four maybe this year of coming out with doing some more things. And I hope to have some exciting news before that, too.

Matthew: Well, as we close, let listeners know how you spell Librede and how to reach out to you if they're accredited investors and want to learn more.

Jason: Yeah. So, Librede is spelled L-I-B-R-E-D-E. And this goes back to our days as an artificial cell company. It stands for Lipid Bi-layer Research and Development. So, not many people know that, but that's what it stands for. And so Librede there, you can go to our website. It's librede.com, L-I-B-R-E-D-E.com. And, you know, there's a Contact page there, there's an Info page there. They can reach there, that actually goes basically directly to me. I'm also on LinkedIn. It's Jason Poulos and you can reach out to me there. And so we're always looking for, you know, new people to kind of come in and join the team, whether they be investors with, you know, different skill sets as well as, you know, people that help want to build up the science, molecular biologists, protein engineers, you know. We're growing and we'd like to bring on the best people to help this company grow.

Matthew: Well, Jason, thanks so much for coming on the show today and educating us. We really appreciate it and good luck with Librede. It sounds like a really fast growing area. I'm sure there's great things to come.

Jason: Yeah. Hey, thank you so much, Matt.

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

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

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

Ep 269 – Designer Cannabis Is On The Horizon Thanks To Molecular Science

chris emerson level

It’s no secret that achieving a truly targeted effect is the holy grail of the cannabis industry, but how close are we to making this a reality? Are designer cannabis products on the horizon? 

Here to help answer this is Chris Emerson, co-founder and CEO of a unique company known as Level that’s working to disrupt the cannabis industry with products precisely tailored to every individual and every occasion.

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

Key Takeaways:

  • Chris’ background in chemistry and how it led him to the cannabis space
  • An inside look at Level and its mission to provide a tailored cannabis experience to every patient and consumer
  • How Chris’ extensive background in science allows him to think about cannabis products differently than most entrepreneurs in the industry
  • Why Level sources its oils from strains high in CBD, CBG, and THCV and how this enhances the overall effect for consumers
  • Chris’ efforts to find rare and unique cannabinoids for Level’s products and his discoveries to date
  • A deep dive into Level’s tablinguals and pax vaporizer pods
  • Chris’ work at Level determining new uses for cannabinoids, including everything from stimulants to hangover cures
  • New and exciting initiatives at Level and Chris’ insight on what the cannabis industry will look like in the next 5-10 years
Read Full Transcript

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

It's no secret that getting a targeted or desired effect from consuming cannabis-related products is the holy grail that consumers want, and businesses are trying to create. But how close are we to making this a reality? Here to help answer this question is Chris Emerson, CEO and founder of Level. Chris, welcome to CannaInsider.

Chris: Thanks, Matt. Appreciate you having me.

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

Chris: Currently sitting in San Francisco, California.

Matthew: Okay. For people that aren't familiar, what is Level at a 10,000-foot view?

Chris: Level is a cannabinoid company with a thesis that you can get to targeted or effects-based experiences through the application of unique or more rare cannabinoids formulated in ratios you can't access from the plant alone.

Matthew: Okay. And, Chris, can you share a little bit about your background, and journey, and how you got into the cannabis space and started Level?

Chris: Sure. So I've always been really fascinated with the interaction between chemicals and human physiology biology, and had a very significant interest in plant medicine. But I actually wasn't very good at school, and ended up going in the military, spending most of my 20s trying to figure out what I wanted to do. And in my 30s, I went and got a Bachelor's in chemistry and really fell in love with small molecules. And I [inaudible [00:01:51] small molecule chemistry. Most people get trained that way either go, they work for pharma discovering or making drugs, or they go into academics and train the next generation of chemists.

I always wanted to be an entrepreneur, but I didn't know how I'd reconcile these two kind of desperate physical life science and building a company because there's a lot of barriers to that. And so after my PhD, I had a postdoc at Stanford. And I was doing a postdoc at Stanford doing molecular biology and small molecule synthesis. And about six months into my postdoc, I was kind of disillusioned with anything that was available to me at that time and with academics. So I quit my postdoc, ended up on a cannabis farm in Mendocino. This was early 2012. And that whole experience just kind of reshaped my life from, yeah, being on the farm, and being able to synthesize my knowledge base as chemistry and biology in the plant, and really diving into what we knew about it and what we didn't know about it.

Matthew: Okay. So it sounds like you dropped out of the Stanford PhD program. Was it just you kinda lost interest or didn't like the career opportunities that looked like they layout on the horizon? Or what were you thinking back then?

Chris: Right. So it was actually my postdoc. So I already had my PhD. So I was a postdoctoral fellow doing research. Yeah, I wasn't cut out to be a professor. And that wasn't a path that I could do. And pharma wasn't interesting to me. I just really didn't want to go into pharma for various reasons. It's hyper-competitive. And the job market in the pharma industry over the past 20 years has been really challenging for small molecule chemists. And so that coupled with the other day, you know, I was living in San Francisco community to Stanford. But, you know, when you're in the city, you just feel that there's a ton of opportunity. And so if you can figure out how to access your tap into that, you know, the sky is the limit. And so I was really feeling that and just trying to understand how I can make something unique happen in my life. And that led me just to say, "Hey, you know what? I'm gonna quit my postdoc, and we'll see what happens." And everything just kinda started unfolding from there.

Matthew: Okay. So when you quit your postdoc and just went to go work on a cannabis farm, did you have any insights about the rest of your life for how things might go differently? Because I've noticed this kind of point of departure for many people, including myself when I just kind of walked out of a, you know, Fortune 500 company kinda, like, if I do keep going down this road, I could see what lies ahead. So what kinda insights did you have?

Chris: It's a great question. At first, the insight was... Sorry, I almost used an expletive. At first, I was like, "Oh, no, what did I do? I just spent 15 years of my life getting a PhD and trying to achieve this status in life. And now I'm living in a tent on a cannabis farm, and I'm gonna go to jail." That was the first insight I had. And then once that kind of, you know, wore off, and you got used to just...you know, this was 2012, so they were still...you know, 2012 is coming into the season, the feds were always going up into Mendocino and making a rests. So it was always at the forefront of my mind. But as I could push that back, I had this really in-depth quick indoctrination into kind of the culture at that time of cannabis cultivation on through the prop 215 model. So learned all the different processes, you know, cloning, all the way up through, you know, taking it out for sale.

And I saw that this plant had these amazing properties that we really knew nothing about and could have a very positive impact on human health. And I saw where the state of the industry was, and there was a massive need for standardization, for new unique product types to come online, and there was also a sense...you could tell regulation, legalization was coming down the pike at some point. And so I saw that as an opportunity as, yes, it's still very gray, but now is the time to make a run for it because it's gonna be a diminishing window in the future.

Matthew: Yes, I agree. That's what I was thinking too. Like, "Hey, it's a good time to jump in while the dust is not settled yet."

Chris: Definitely. Yeah.

Matthew: So you have a background really quite heavy in science compared to most people in the space. How do you feel, like, as you create cannabis products that you look at the plant differently than a typical entrepreneur, like, the lens you use when you look at the cannabis plant, and what kinda products you wanna make?

Chris: I think just inherently, I look at the world differently because of my training. And it's who I am, which is one of the reasons why I wanted to go into chemistry. So I really try and see the world in molecules. And that's what the world looks like to me. So I think having that changes how you approach something such as a cannabis plant where you say, "Hey, there's three different major biomolecule classes, cannabinoids, terpenoids, and flavonoids." And there's a host of compounds within each of these different classes. And so you look at them in a different way as these distinct entities. You know, they all have different topology or molecular structure that leads to their physical property and how they're gonna interact with a physiological system. And so, all of that, you know, definitely has been a driving force and a foundation with which, you know, I approach how we look at cannabis.

I mean, at the end of the day people are incredibly passionate about this plant and what it can do, and that's amazing. And so they do everything they can to educate themselves about the plant. But there's a ton of misinformation out there. And if you don't have a fundamental understanding of realizing what information is correct, or what may be inaccurate, it will skew your path forward. And I think that that's been a big difference for me because, you know, fundamentally, I understand molecules. You know, I know how they go together, I can put them together, we can take them apart, and then building from that.

Matthew: Okay. Now, you gave us a 10,000-foot view of Level. But can give us a little overview of your product so we can understand what it is that you offer?

Chris: Sure. So we currently have three different product classes. We have a vape line. So we're in the packs era. That's a legacy product for us, the vape market. It was the first product we ever created as we are trying to build this company and really execute on this thesis of effects-based cannabis. Because in order to really formulate with unique and more rare cannabinoids and ratios you don't access from the plant, you have to first access those cannabinoids. And that's very expensive. And so if you try and put unique formulations in a vape, it becomes prohibitively expensive. And so you know, nobody's gonna be buying $500 vapes for you to build your company, especially when the whole thesis of...this whole market of effects-based cannabis is we're having to create it at the very time that we're building this industry.

And so you have to kinda leapfrog this thesis with the products you're putting out. And then people experience it. And they either agree with your thesis or they don't. And you have to build this sustainably. So vapes are challenging to do that way. So we started with vapes, but the whole intent was really to develop new and unique product classes, so then we could use these unique formulations, and actually make them affordable to get to market. So the other two products we have right now are a three-milligram sublingually administered tablet called a tablingual. And we also have the 25-milligram orally consumed concentrate in the form of a tablet as well. And within those product classes, you know, we have either highly enriched or single isolate cannabinoids that we originally put on the market. So for instance, in the tablingual, you can get THCA, you can get Delta-9 THC, you can get CBD, Delta-8 THC CBG. And then we also have pre-formulated blends, which is where we're really trying to shift you as we move forward.

Matthew: Let's talk a little bit about some of the...you don't see as much about these other cannabinoids that you mentioned CBG, THCV, and so forth in dispensaries. It's not as popular to see it on a box. Can you talk a little bit about that as well as the sublingual, and what that experience was like?

Chris: Sure. You know, the reason we don't see this yet is because we're building an industry out of a legacy industry that was really hyper-focused on one cannabinoid, Delta-9 THC. So all of the plants that were cultivated and any products that were made from those were gonna be very high-potency in Delta-9 THC because that's where the market was. And so it was hard for people to either have the genetics or the vision to say, "Hey, I really wanna explore some of these other cannabinoids," because there was no market for them. So nobody knew if they would sell or not. And there was an education that had to be presented, so people understood what these cannabinoids were.

So getting to these more unique, say THCV or CBG, it takes a lot of effort to get there. And without having an established market, most people didn't want to, what I would say, kinda pioneer that. But that was the opportunity for us. And so we spent several years finding the right partners that could help us with genetics, with the cultivation, so we could actually get access to these unique cannabinoids. And so once we have access to them, we put them into a product such as a tablingual so we can, A, really experienced what that effect is going to be like, because there's really no data out there. And, B, figure out if we can productize it, and get it to market, and do it in such a way that these are very expensive cannabinoids. So how can we at least make them affordable enough that people will try them? And so the three-milligram tablingual is a great vehicle for that.

Matthew: Okay. Three-milligram, I mean, I guess anything under five-milligram do we consider a microdose? I mean...

Chris: I do.

Matthew: Okay. That's what I was wondering. Like, is that generally accepted there? Okay.

Chris: I mean, yeah, I think it's really interesting, right, because it's... Yeah, I would say anything under five. But I would say three or less is really, "microdose." The name is a little inaccurate as well. I really call them millidoses because that's really what they are. Tthey're milligrams. But for the cannabis industry, you know, I would say one to three milligrams. It falls into the microdose space. Yeah. So you have to be judicious in your choice in your route of administration when you're dealing with small amounts of cannabis, because if you ingest very small amounts of cannabis orally, then you put them through the metabolism of your body.

So they go through presystemic or first pass metabolism. They're gonna get pass through the liver on their way to the bloodstream, you know, from the stomach or into the small intestine, depending on a matrix that you're trying to extract this from. So you get really delayed onset. You're gonna lose fidelity of the actual cannabinoids that you're trying to get into the system, because they're gonna be changed in different ways through this metabolism process. When you do it sublingual, you bypass most of these processes. So the fidelity of your formulation remains much more true to what you're intending. And onset is much, much faster because of the route of administration.

Matthew: Okay. I know, it varies from person to person. But what would you say a typical onset would be for the tablingual?

Chris: The tablingual is within 20 minutes. Empirically, most people who use it, they report that they reach the plateau of the effect within five minutes.

Matthew: Oh, the plateau of the effect within five minutes. Wow. Okay. What was the 20-minute figure then you said?

Chris: Well, within 20 minutes, you will know where your plateau is because after 20 minutes, excuse me, everything is mostly been taken up and it's entered into, you know, your bloodstream and into the system.

Matthew: Okay. So we skipped the whole digestive GI tract, liver, and then it goes right into the bloodstream sublingually?

Chris: Correct. Yeah. It actually goes directly into your heart, through the superior vena cava, which is the main artery there from the oromucosal area in your face. And so that's what really it's a very, very rapid onset.

Matthew: That's great. That's great. I think about CBD, you know, sublingually all the time. And I don't typically think about, you know, tablingual, so this interesting new format. Do you find people are using the, you know, CGB and THCV in different ways, then let's say Delta-9 THC.?

Chris: Yes, I do. It's a yes and a no, but I would say mostly yes because the thing about...So there's 10 classes of cannabinoids. Delta-9 THC is one class of cannabinoid that has psychoactivity to it. Other classes have psychoactivity as well, but a lot of them don't. So you take CBD it sounds like, is that correct?

Matthew: Yeah.

Chris: Yeah. So although you may not experience the same psychoactivity or headspace of Delta-9, there's a physiological change when you take CBD. And some people do register, "Hey, you know, I feel different in my head. I feel the change," right? And whether that's an artifact of, "Oh, I'm actually really relaxed in my body now," or, "My pain is attenuated, so my headspace is different," people really...they still report a change in using CBD a lot. CBG we found is even much less than that. It's purported to be very good for anxiety. And that's what empirically we see with it. People use it as an antianxiety. And especially in the tablingual, it's a very fast onset.

And then the real magic though of the cannabinoids is when you start using them in concert together. And so CBG, when combined with THCA, or CBD, or even THTV gives you different synergistic effects because you're, you know, accessing this entourage effect. This multidrug components working in concert for synergistic effect.

Matthew: Yeah. I guess people are always curious, like, what exactly is that synergy? And we talked about it with the entourage effect. But how do you experience it and your customers experience that synergy with the different combinations of the cannabinoids? Especially, I mean, you're thinking of this in terms of molecules. So you're probably saying, like, which is the optimal molecule interaction that gets me the desired outcome? So looking at that question, what would you say?

Chris: I think, you know, this is all very qualitative still, right? This is such an infancy, and we have very little data that as we keep collecting and driving toward so we can have more rigorous data collection and analysis, we can really hone in on these. But, you know, empirically what we find, and this is very interesting, I'll use the example of CBG. CBG has what I call this [inaudible [00:17:54] kind of reactivity with other cannabinoids. For some cannabinoids, it potentially eats them in a very significant ways.

So here's something most people don't know. If you have been consuming, say you smoke, and you've been smoking throughout the day, and you've had a few different strains, you kind of reach a plateau, and you really, you know, you might say, "Hey, I wanna prolong this little more, and maybe I want a little boost and I can't actually increase the psychoactivity because I've kind of been consuming all day," a little bit of CBG especially subliminally, it is amazing. It enhances your high significantly and very quickly. But if you take CPG with something like THCA, It appears to significantly potentiate either the anti-inflammatory or no subceptive qualities of THCA. And so this one cannabinoid, when combined with different cannabinoids and potentially different ratios, has a very significant impact on the nature of that experience.

Matthew: It makes sense. That's really cool. Gosh, it seems like there's so much promise in this area. It's just crazy. I see why you're excited about it.

Chris: I absolutely think so. I mean, this is a tabula rasa. This is a blank slate. We really get to push forward in exploring what plant medicine in this form can really do for humans, right? And in a new way, we know we've been using cannabis. Humans have evolved with cannabis for at least the last 10,000 years, and probably for the last hundred thousand. But, you know, we have supportive data back to 10,000 years. So this is an ally. This is a plant ally for us on this planet. And so it's really how do we really work together now in new ways, and really explore and discover. And so I think it's incredibly exciting.

Matthew: You've somewhat answered this question already. But I was hoping to get a little more detail here about how you call Level a cannabinoid company not a cannabis company. I think that's kind of the bow wave of maybe a new trend here because you're really trying to get the benefits of the cannabinoids. But why make that specific distinction?

Chris: Well, I think for us, it defines exactly what we are. So, you know, we use a lot of different terpenoids and terpenoid ratios we've gotten from the plant, terpenoid mixtures. We still have flavonoids that are present in a lot of the distillates we use and through some of the extraction processes like in our THCA that we formulate with. We still have flavonoids in there, terpenoid. So we still keep these other components of cannabis. But for us, those are really nuanced. The thing that changes unequivocally in our experience, the nature and the experience of that effect, it is the combination of cannabinoids, right? And a lot of people are understanding this now when you think about in the context of CBD, right?

So if you take a 1 to 1 THC, that's a very different formulation and effect you're gonna get, than say if you do a 20 to 1 CBD to THC. And so people may not consider that when they're looking at it. But inherently, people are being trained to understand there's a difference when you start combining cannabinoids. Now, the world is still really only playing with THC and CBD. But we're really interested in driving hard with all the other ones. And so we work in cannabinoids. We have access to 11 unique cannabinoids in isolation in our facility. And that's what we play with right now. And we have three more coming online by the end of the year. So all of a sudden, this becomes a huge combinatorial challenge of how you formulate these different cannabinoids. And the whole thesis of the company is driven by a cannabinoid. And that's why we're a cannabinoid company.

Matthew: So the tablinguals you like, because you can bypass the whole kind of GI tract and liver, and go straight to the heart, and probably more precise dosing, you know, faster onset. But is there anything else that you like from tablets or the reason you like them more and kind of the focus is moving in that direction for you?

Chris: Yes. I mean, obviously, the form factor. Tablets are the ubiquitous, right? We grew up in a culture that, you know, if you're young, and you're sick, and you have a headache, or you have a fever, you get something that's a tablet, or it's a hard capsule, right? Or if you get a prescription medication from the doctor, it's gonna be in the form of a tablet. And so I think, as a society, we have an inherent bias that if it's a tablet that, you know, "Hey, I think I can trust what's in this." Well, that that's a big thing right there for people to be like, "Okay. I'm gonna trust what's in this because of how visually looks." There's a reason why pharma and the drug companies formulate everything in tablets. This is a pretty effective way for delivering an API, you know, a drug.

And so then you take that a step further and say, "Okay. Well now, if I have those two things, why is that?" Well, it's really easy to standardize. You can make a very explicit standard formulation, it can be shelf-stable. You know, all of a sudden, you get all these properties. You want different properties when you're taking something sublingually versus when you're gonna swallow it or you're taking it orally. And so you can tune the properties through the excipients or, you know, people consider this filler, but it's the other things that make up the tablet besides the drug. And so you can really modulate these in different ways. And you can do that by using components, which we do, that are only plant-derived. They're vegan, there's no gluten in them, right? You can source all of this. And so you can have a lot of flexibility to formulate for an intended effect, not only I think through the cannabinoids you're using in the formulation, but also in how you deliver that through the vehicle. And so it just made sense to us.

Matthew: Okay. How do you think cannabinoids could help with a hangover?

Chris: Yeah. I think that they can help a lot. We actually have a product called Hangover. We developed it over the past year by working with a lot of different...We've been working with a lot of different cannabinoids for four solid years now. So anecdotally, empirically, we have a sense of what kind of effect you can expect from a given cannabinoid at a certain dose within, you know, for a range of people. Let's call the first standard deviation, say it's gonna be 80%, 85% of the people who try it will probably fall within this first standard deviation.

So we take that and then we formulate from there saying, "Well, we understand that these cannabinoids help us feel a certain way or maybe help reduce pain significantly. This one is good for anxiety. And we find that this one is really good for your stomach," right? It helps nausea a lot from Delta-8 THC. And so we looked at it approaching it that way. A lot of people who consume cannabis, if they do have a hangover or if they've overindulged one night, you know, if they consume cannabis the next day, it tends to help. And so we took that legacy information and then just applied our method of thinking about product formulation. And, yeah, came up with a formula that we think works pretty well to help alleviate some of the symptoms that you experienced from that.

Matthew: Yeah. I mean, someone with a chemistry background, we don't really think about what's happening a lot when we're drinking alcohol. But that, you know, ethanol and what it is, and what it does to our body, you probably think about that more as someone with a chemistry focus like, "Hey, what's happening to my body right now with this poison?"

Chris: Yeah. I mean, it's something most people learn in their, you know, sophomore organic chemistry class in college, you know, the process of alcohol, ethanol being converted to methanol. So it gets oxidized and then it goes through other processes in your body that lead to some of these effects, you know, that we feel if we overconsume. So, you know, and that's fairly standard knowledge that people can get to. But, yeah, it's something that I keep in mind. It doesn't prevent me from overindulging, but I definitely keep it in mind.

Matthew: So you take Hangover yourself then when you're overindulge, and you feel like it's a...

Chris: I do. Yeah.

Matthew: And how fast do you typically feel the impact?

Chris: For me, it's usually about 30 minutes, you know?

Matthew: Wow, that's quick.

Chris: Yeah. And there's different ways you can use it. And this is the beauty of these products. And everyone has, you know, an endocannabinoid system and ACS. All of us are slightly different. This is why people react to cannabis in different formulations in different ways. But part of all of this, too, is really understanding that cannabis is a journey, right? Cannabis is a journey that we all...those people who choose to use it, they're going to go on this journey because we have to figure out what works and what doesn't work for us. And so, you know, part of what we're trying to do at Level is to help guide people on this journey of what cannabis is, so they can experience the possibilities.

And in doing that, you know, it's important for people to understand cannabis is not a silver bullet. if there's something wrong physiologically with you, or you have severe depression, or anxiety, or a multitude of other things, cannabis doesn't cure that for you. What it does is it helps just get your body to a place and your mind, hopefully, that you can address the lifestyle or behavior changes that you have to take care of in your life, so you can heal. That's important for people to understand. I'm circling back now to, so there's different ways that you can use something like hangover.

Some people use it when they wake up in the morning and they say, "Oh, you know what? I feel a little hangover from last night. I'm gonna take half of a tablet right now." And 30 minutes later, they're great. Or some people say, "You know what? I think I'm gonna be hungover tomorrow morning. I'm gonna take a tablet right now. And it's gonna help me all night as I sleep, and I'm gonna wake up, and I'm gonna feel better." And so there's not a one size fits all for the products that we make and most cannabis products that anybody makes. And so, you know, it's really about giving people the confidence and trust in what you're doing that they're willing to allow...they're willing to go down this journey, you know, with you.

Matthew: I keep on thinking about that book, "Brave New World," by Aldous Huxley and the drug in there called soma. I don't know if you ever read that book.

Chris: Yes.

Matthew: But it feels like we're kinda moving towards that experience, like, that's coming at some point where you kinda have this mildly euphoric but no after-effects or, you know, you don't really lose your ability to think and reason and do things like that, but you get kind of a mild euphoria. Do you think that's coming?

Chris: I think versions of it are coming. I mean, everything still has to be in moderation. And I don't think you were suggesting it wasn't. But I think ultimately, you know, it is always a balance. And as much as I'm a massive proponent, and I'm obsessed with cannabis and what we're doing, at the same time, you still realize this is a drug. And, you know, you have to be conscious that there may be changes that happen, especially if you use it long-term. So it's good to take abstinence breaks. It's good to, you know, stop using one cannabinoid potentially and try other ones, just to let your body reset and make sure that things are still functioning how they should, you know? And I talk about that as context of cannabis, but it can be food, it can be alcohol, it can be exercise, right? We just need to live a life that has balanced to it.

Matthew: Anything of interest to you in the psychedelic space in terms of, like, MDMA, commonly called ecstasy, psilocybin, or LSD? Do you think about those areas at all and how there might be some dove-tailing with what you're doing with cannabinoids?

Chris: Yes, absolutely. So I tell people now, Level is a drug company. We are a cannabinoid company. That's what we're focusing on first. But yeah, as plant medicine comes along, and, you know, if we can get the powers to be to make changes in our lives, and allow for microdose psilocybin, that'd be amazing, right? We have a product for it now. So it's, like, "Hey, 10 years from now," and you can do it through microdose. It's, like, there are 50 micrograms of psilocybin in your tablingual, you know? You walk into Walgreens and CVS, and pull it off the counter.

Matthew: Yeah, Because that is a big problem with psychedelics, especially people, their first couple times, they're like, "How much am I taking here?" And so that's more so than, you know, other things [inaudible [00:31:06]

Chris: And it's a dedication, right? You're on that ride when you've taken it. So, you know? And I think that there are. And we see a lot of studies that there can be a lot of profound positive impacts that happened from a microdose. And, you know, when you're talking about LSD, it's a shoot in microdose. And LSD nowm it's probably, you know, your nanodosing. So I guess you have to change the actual dose in it. But, yeah, I think there can be a lot of positive things that come from it. And so it'll be exciting to see what happens in the next couple decades.

Matthew: Well, how do you think about replacing a morning ritual, like, coffee with some cannabis product or cannabinoid experience?

Chris: Yeah. I definitely think there's room for that. I think one of the things that, you know, any new or disruptive pattern or behavior industry has to deal with is inertia, right? So there's a, what is it, 3, 400 years of coffee that people have been using. And so it's deeply ingrained in many different cultures. So I don't know that it replaces it so much, especially in the near term, you know, the next 20 to 50 years. But I think it definitely comes in and it enhances, or it's used as an alternative at times. And we're actually seeing this a bit from feedback we're getting from people with our...it's called Stimulate. It's a tablingual. It has THCV in it, and it's intended to replace an afternoon cup of coffee. It's a focusing tool, if you will.

And so we have a lot of people that reach out to us and let us know how they're using it. And some people are using it to replace their coffee. Some people use it in the morning because it gives them energy for the day before workouts. And other people, they use it synergistically with their coffee. They say, "Hey, there's nothing better than a cup of coffee and a Stimulate tablingual because then I'm right where I wanna be".

Matthew: "I'm really jacked. Thank you, Chris, for making Stimulate." Okay. So what's meaningful about your products that we haven't addressed, but you feel, like, the public doesn't fully grasp or understand to a level that you think is warranted?

Chris: Yeah. That's an excellent question. Our products are fairly sophisticated. And something that we haven't been able to really put a lot of resources into yet is really education, and educating people. You know, what is the intent and purpose of this product, and then how do I use it? And one thing that's challenging for people, because it's a heavy lift, is people really understanding, "Hey, I've got six different cannabinoids available to me. How can I formulate? How can I be my own master formulator?" And I know that, "Hey, when I'm feeling this way, I take one CBG and half a Delta-9 and, you know, a Delta-8 THC." And that's hard. That's really challenging for people because there's just so much information that they have to have. And so part of the challenge that we had was we got really far out in front of where the market was.

And it was intentional why we did it. But now, we're really figuring out how to dial it in and educate people better of... We'd like to say that we make a cannabis products for anybody, right? If you want it for a recreational purpose, great, we have that. If you're looking to try and help you with anxiety or depression, there's products that will help you with that. Sleep, pain, the whole spectrum. And so if you're a human, we make a product for you. And I think that that's the challenge for us is trying to educate people on that.

Matthew: Sounds like you're discriminating against cyborgs, Chris, only make stuff for people. I hear you.

Chris: Yeah. I'll work on that.

Matthew: Where are you in the capital-raising process?

Chris: We are literally about to sign our Series A docs this week.

Matthew: Wow. Good timing. So for listeners that are interested that are accredited investors, is there room for them to reach out or anything like that?

Chris: This round is full.

Matthew: Full?

Chris: It's closed. Yeah. This was a really long fundraising process for us. So I'm happy that it's coming to a close. But they will definitely be a Series B.

Matthew: Okay. Well, you can tell us how to reach out to you for that type of thing as we close. But any notable investors? I think I heard Dave Asprey, the bulletproof guy. Did he invest in you, is that right?

Chris: So we had a safe round that we had from 2016 into the middle of 2017. And so we had quite a few safe investors. And so yeah, I don't know that I can comment on any of them. I haven't gotten permission to fully disclose who actually invested in that round. So I prefer not to comment on that.

Matthew: Okay. I think I heard him say that some months ago. So good to do it that way, though. So that's cool. You got some notable investors in there, too. That always helps.

Chris: It definitely does.

Matthew: Yeah. So Chris, let's go to some personal development questions to help listeners get a better sense of who you are. Is there a book that's had a big impact on your life for your way of thinking that you'd like to share with listeners?

Chris: Yeah. Actually, I would say there are two books, kind of a bit different than each other. "Jonathan Livingston Seagull." You're familiar with that book by Richard Bach?

Matthew: No.

Chris: So it's a short book. I read it in my early 20s when I was in the military. I can't really describe why it had such an impact other than it was just kind of one of those books that inspired you that there's no limit to possibility if you just go for it. So "Jonathan Livingston Seagull" is one of them. And the other one, shortly thereafter, a few years later that really had a profound impact was "PiHKAL" by Alexander Shulgin.

Matthew: Well, that's the first time I've heard of either of those. That's great.

Chris: PiHKAL, it's, Phenethylamines I Have Known And Loved. And so Shulgin essentially talked about his journey from his early days through the psychedelics that he experienced through his whole time at Dow, and then him developing his own independent lab, and him pioneering all of these. He essentially took MedChem, medicinal chemistry principles, and appled them to psychedelics, and then, you know, tested them on himself, and his close group of friends, and wife. And so he talks about that. And then the second half the book is all of his lab notes. And it set the DA off once he published this because he essentially was opening up a free source of, "Hey, this is how you make all these some amazing, some really challenging psychedelics." And they're not all meant, there should be in human hands, but he wanted this information out there. And so that book and my experience at Burning Man when I was 24 is what put me down this path, pretty much.

Matthew: Oh, good, good. And what do you think is the most interesting thing going on in your field apart from what you're doing at Level?

Chris: That's a really challenging question, but it's a good one. I think, ultimately, what I think is really interesting is there's perceptions in this industry across a lot of the sectors, but also outside perspectives that looking into the industry and us looking out. I think if I had to put my finger on it, it's the juxtaposition of this exponential growth that everyone thought was just gonna happen once legalization came online, and how fast this industry would be moving. And this industry is moving very fast. It's very dynamic, but it's nothing, like, the reality of what all of us thought was gonna happen over the past two years. And it's interesting to really watch as you get operators that saturate a state, then they hit a plateau. They can't grow anymore because we're having the slower growth of consumers, I think, coming online, fighting regulations, legislation, taxes, so then they start going state by state. And this process of trying to show this growth and how we're gonna have this exponential growth, like, tech companies have, it's not there. And I think over the next few years, we're really gonna see some implications from this.

Matthew: Now, I have a Peter Thiel question for you. What is one thought you have that most people would disagree with you on?

Chris: So how am I a contrarian?

Matthew: Yes.

Chris: Yes. Actually, the company that I will worked for, Emerald Therapeutics, before, it was a fully automated life science laboratory. And I worked on the research team as the chief chemist. That was a Founders Fund company. And so this was actually a question that they asked people during the interview process.

Matthew: Yay, perfect.

Chris: But yeah, what's my contrarian differentiator? I think for me, you know, it's really I think, just in how you view the world. And for me, I try and view the world in negative space, not the things that you can actually see. But, you know, it's the interstitial space. And, you know, when you talk about molecules and at the molecular level, when we look at a molecule, we see these... We can come up with a schematic of what a molecule may look like. And we can model it in three dimensions. And I can physically touch a collection of these molecules in bulk at the macroscale. But everything is really space, right? And so it's how does that space affect the world in which we live, and how we move, and everything about life as we understand it? Because it's not really about what you can see and what you can touch. It's everything that you can't see and can't touch. And I think that's really where a lot of the magic of life is.

Matthew: One more question. And this is gonna demonstrate my chemistry ignorance and biology ignorance. So maybe you could keep the answer for a layperson. So we have a molecules and smaller atoms. And then smaller than that is quarks. And is there things yet smaller we keep on discovering going on?

Chris: Yeah. So you're gonna get outside my wheelhouse here because, you know, physicists are high-energy chemists, but yes. Here's how I look at it. I think we would never stop discovering things because the more you split things apart, you're always going to create fragments in different ways. And when you start getting into subatomic particles, it's definitely a place that I don't spend a lot of time. I think that it's, like, anything, it can be a rabbit hole. And if we go chasing through these things, it's gonna be this elusive pathway. And I think we'll get information from it, but how good is the data? So for me, you know, I try and stay on the level of things that I can understand of a more holistic thing. And that's kind of where I was saying about if there's a molecule represented in space, the molecule is there, but there's all that space, too, that helps define what that molecule is. And so it's really a holistic, I think, approach for myself of how I try and view things.

Matthew: Yeah. You hear sometimes musicians even say like, it's the space or there's no sound at all between notes. That's just as important because it, like, gives rise to the tone and texture of the next sound as it unfolds. So I think I get what you're saying there.

Chris: Yeah, awesome.

Matthew: Chris, as we close, how can listeners learn more about Level products? And for credit investors, how can they reach out to you?

Chris: So our website's www.levelblends.com. And the website has a lot of information on it. You can learn about the products. You can also go to a store finder if you're in California. We're in I think 280 dispensaries throughout California. So you can find hopefully dispensary near you, and you can find products. And then, you know, people can reach out to me directly. It's chris@levelblends.com.

Matthew: Well, Chris, thanks so much for coming on the show. We really appreciate it. Are you related to Ralph Waldo at all, Emerson?

Chris: You know, I can't unequivocally say that. My mom had done a lot of genealogy. And my great uncle says that we were, but I haven't seen the actual tree. So, I'm not sure.

Matthew: I don't know. He wrote what "Leaves of Grass," and here you are playing with something similar. Okay. Have a great day. Thanks for coming on the show.

Chris: Matt, I really appreciate it. Have a great day, too.

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

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This Canadian Company Is Revolutionizing The Retail Experience…With Music

ben kaanta westleaf

The Canadian cannabis market continues to mature and flourish under a liberal national legalization policy, and here to help us understand the latest trends in Canada is Ben Kaanta, COO of licensed producer Westleaf Inc.

As a vertically integrated Canadian cannabis company, Westleaf has significant assets operating under development across the value chain. The company builds and operates cultivation, extraction, processing, manufacturing, research and development, and wholly-owned retail. 

This includes Westleaf’s new retail brand Prairie Records, a unique dispensary that creates an unparalleled purchasing experience celebrating the inherent tie between music and cannabis.

In this episode, Ben shares with us an inside look at Prairie Records and where he sees the Canadian cannabis market heading in the next few years.

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

Key Takeaways:

  • Ben’s background in mechanical engineering and how he came to enter the cannabis space
  • Differences Ben has observed between the cannabis market in the US versus Canada
  • How Westleaf has evolved since it was founded in 1992, including the scope of its grow operation and the products it currently manufactures
  • How Westleaf came up with the idea to create a record store retail experience
  • A deep dive into Westleaf’s strategy in determining where to position its dispensaries
  • An inside look at the Prairie Records dispensary and the unique customer experience it works to create
  • The capital-raising process involved in launching Prairie Records
  • Westleaf’s upcoming initiatives and Ben’s insight on what Canadian cannabis will look like in the next 5 years
Read Full Transcript

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

The Canadian cannabis market continues to mature and flourish under a liberal national legalization policy year. Here to help us understand the latest trends in Canada is Ben Kaanta, COO of Westleaf, a licensed producer, or LP, in Calgary. Ben, welcome to CannaInsider.

Ben: Thank you, Matt. It's a pleasure to be here.

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

Ben: So today, I'm actually located in Calgary, Alberta, which is home to Westleaf's headquarters.

Matthew: Okay. And I'm in Chicago. Tell us, what is Westleaf at a high level?

Ben: So Westleaf is a vertically integrated Canadian cannabis company. And what I mean by that, some people toss that term around, is that we actually own control or have interests and assets across the traditional value line of the chain. So that includes cultivation. So we actually grow our own product. We have extraction and manufacturing capabilities where we will extract the oil out of the flower trim and convert it into end products. Additionally, we have product branding and we actually have our own retail spaces as well.

Matthew: Okay. Ben, can you share a little bit about your background and journey and how you got into the cannabis space so we can get some context of how you ended up in the great white north?

Ben: Yeah, happy to do that. So I actually started off as a mechanical engineer, worked on ion thrusters and some other research for NASA. From there I went into product development for biomedical instrumentation, primarily on cancer diagnostics. And that led me to a company where I did operations, and oversaw the startup of several particle accelerator-based cancer therapy centers. There's actually, while I was working there, a friend of mine introduced me to Mjardin, who you've had on this show before, and at the time they were one of the largest producers of legal cannabis based out of the United States. So I worked there for a couple of years as their director of operations where we saw the cultivation of several indoor and outdoor grows and as well as some greenhouses. And that was a great time, and several colleagues and myself, we eventually split off and developed our own small company doing similar type of work, but mostly on the advising space.

And between that and in our time in Mjardin, we'd actually consulted in 11 different U.S. states, 5 countries, operated in 24 different facilities and we designed over 40. And so we really loved it, but one of our first clients was Westleaf. And we started working alongside them for several months and they actually asked us to join them early on and we said, "You know what, we're kind of enjoying our own thing." But we watched them develop their strategy and how they're going about their process for working in Canada and their retail strategy. And we fell in love with it and we just couldn't say no after a while, and we decided that we had to be a part of them. So we ended up joining them all as executives.

Matthew: Okay. Okay. So you've been involved in the U.S. cannabis market and now in the Canadian cannabis market. What are kind of the differences between the two? How do you compare and contrast those in your mind and keep them separate? What are the big themes and how they're different in your mind?

Ben: Yeah, so as you know, the United States is kind of funny in that there's not one contiguous market. So every market there is a little bit different. That said, there definitely are some things that are unique about Canadian cannabis I've seen. And I'll break it down kind of by the different verticals here. So if we look at on the cultivation side, one of the things we noticed is that since Canada's program was originally started as a medical program with mail order, that really drove the cultivation companies be focused more on efficiency more than quality.

So, just like a brief example on that, when you look at product at a dispensary in the United States, typically it's hand-trimmed and there's a...very much concern is put around the aesthetic appeal of it. Whereas what we'd see in Canada is that there are using processes that valued just getting that product from harvest to the customer as fast as possible, and little things such as using whole bunch of machine-trimming versus hand-trimming would reduce the aesthetic appeal, but also knock off a lot of the trichromes on the extraction.

And another piece we've seen is on the extraction side, right? So this is similar to other young markets. There aren't as many products available. And so, for example, today, you can only get extracted oils and capsules. And on October 17th, they're gonna be opening that up to more products such as vapes, edibles, topicals, things you might see more in the United States markets. But what that means is that today's extractors really don't know how to make all these other products. And then finally, I would say that on the kind of the retail and branding side, this is why one of the biggest differences that we've seen, Canada is very restrictive on what you can do. So if you got to buy cannabis today at a retail store in Canada, what you'll find is that 80% to 90% of the label is warnings and facts from Health Canada, and you have the small little space about the size of a U.S. postage stamp where you can put your brand. So there's really not a great opportunity for people to brand up here.

Matthew: Good point. So how do you brand? That's kind of a difficult question. It's kind of word of mouth, I guess, is experience and aesthetics. Some of the things you talked about are gonna become a big, big part of it. Also, there's a lot of challenges to vape pens and vape cartridges, you know, viscosity, and kind of the additives to make sure it all works properly. So I'm sure there will be some hiccups in the beginning that you've seen in the U.S. that you can bring over. Is there anything else that you feel like gives you maybe a little bit of advantage having worked in two markets?

Ben: Yeah, so I'd say there's several different things there. And you touched on a few of them. You know, so one is aspect. You know, we've worked in these 24 different cultivation facilities, so we've learned a lot about what works well and what doesn't work well. And one of the things that we're seeing is companies who are going big, they're announcing these, you know, million square feet facilities. And we've seen this happen in the United States before where people will do this, they'll take an old greenhouse and they'll think, "Hey, this could grow great tomatoes, surely it can great cannabis." And what they don't take into account, that cannabis is a unique plant and it's held to different standards such as the microbials. And so they'll grow a bunch of product, but it will all fail. So on the cultivation side, we were very thoughtful and careful about when we designed our facility, about making sure that we can go craft at scale.

And on the extraction side, you're absolutely right. There's a lot to do with the viscosity, but also even whose hardware you use and how often it will fail. And so to that end, we actually partnered with a company out of Denver called Xabis. And so they've developed over 24 different form factors and 200 unique skews working in multiple extraction labs across the United States. So we wanted to take their skill sets and knowledge because we recognize that there's a lot of mistakes that people are gonna learn the hard way and why not fast forward ahead and just cut to the end working with experienced people.

I think the one other thing that we've seen, you know, when I look across the United States markets and how many we've seen kind of mature, is that you'll see the economic shift throughout that value chain. Early on there's a lot in cultivation and some in retail. But the best thing to do that we done is to be vertically integrated so you can control that whole value chain. So those early stages you can capitalize on, you know, where some of the good profit margins are and the cultivation side, but over time it will shift. But additionally, you wanna have control over your supply chain. You know, even on the extraction side, we've seen companies who struggle to make sure they're getting good, consistent feedstock for extraction. And by us growing our own product, we can make sure that we're providing high value and good quality product for our end consumers, but also for our retail stores to pull through and for our extraction facility to use as feedstock.

Matthew: Okay. And just a practical question here, I'm pretty quick to spot Canadians when I hear the word of about instead of about, or when they say A to Z. But other than that, I really cannot tell I'm speaking with a Canadian. Is there any little things that you do, little idiosyncrasies that reveal your American-ness and kind of out you to your new Canadian countryman?

Ben: Yeah, it's funny you mentioned that, there's that and a couple others I've found. Yeah. In general, it's interesting to me. Calgary is very much like Denver where it's a busy city, right on the prairies up against the rocky mountains, but there are few things, I think, give me away. One is I've had to learn to say washroom instead of bathroom. Another is that I found that when I use my credit card, and this is just a funny little thing that, sometimes they'll require me to give a signature, whereas the Canadian credit cards almost never require you to give a signature. And then the final thing that I've certainly saw that some this weekend is that you do not go hiking in the mountains here without bear spray. There is a lot more bears up here.

Matthew: I bet you don't wanna find that out too in the wrong way.

Ben: No, you don't. So they're pretty serious about that. And I appreciated it this weekend.

Matthew: Although in boulder I did have a bear family live in our tree out front, a mother and two cubs, and they came back more than once. And you hear him in the middle of the night and that is up close and personal because you can...they breathe so loud, especially the mother is that, it's like, you can feel their breathing like through the wall. It's just unbelievable. Like the power of those creatures. And to watch them scale up a tree, they can just fly up a tree in just a moment, they're up.

Ben: That is amazing.

Matthew: I hope to never have to out run one of these things. So you carry bear spray, and have you had to use it yet?

Ben: I have not. But it's interesting when you read the directions, they say to make sure to aim down the nostrils of the beast, which I'm kind of concerned. I didn't wanna to get that close, that my aim would be that good.

Matthew: Yeah. There's a lot of YouTube videos of people shooting bears and mountain lions pretty much in the face with those things and it really seems to work. I mean there's a lot of power that comes out of that bear spray. You guys seem to shoot it pretty far.

Ben: Yeah, yeah. Thankfully I haven't had to use it yet or practice it, but it's good to know that it works.

Matthew: Yeah. Okay. Well enough about bear spray here and wild animals. Let's get back into cannabis. Okay. Now tell us how many licensed producers, or LPs, there are in Canada.

Ben: Yeah, so the last report I saw that, which was May of this year, 2019, was that there were 175 approved licenses, which is up from about October last year when it's 132 when it first become more technically legal. But according to Health Canada, there's actually like 614 applications in the queue as of March of this year. So there's still quite a people, a number of people in the queue, and they've recently made some changes where they are making it so that they're prioritizing applicants who've actually built out their facilities, which is great, because there's a lot of people who have an interest in it, but not everyone has actually gone through the work to design and build out a facility.

Matthew: Okay. And what types of products are available for consumers to buy right now?

Ben: Yeah. So right now you can buy flour and pre-rolled joints. You know, on the more traditional side, as well as they have derivative products that are quite some right now, so oils, such as tinctures or sprays and capsules. And we actually have our own brand of a store. It's called Prairie Records, which we sell those and we really focus kind of on the higher standard portion of that chain.

Mathhew: Okay. And then, what's coming down the pike in terms after October 17th?

Ben: Yeah, so they're gonna open it up pretty well. There's still gonna be a lot of restriction on the branding side of things, but they are opening up vape cartridges. So I expect to see a broad market there. And as you know, in the United States, in markets where extracted products are available, you know, it takes up typically, you know, 50 or more percent of the market. We expect to see a lot of vape cartridges coming online. Additionally, they are saying they're gonna allow concentrates, you know, so the shatter and wax type of products. Candies, beverages, chocolates and topicals are some of the different things. They're all going to be coming online there. And it's gonna be a slow roll is what we're all expecting. You know that October 17th will happen, then you'll start to see more and more products kinda coming online towards the end of this year and the beginning of next.

Matthew: Gosh, I would think that's gonna be a huge demand out of the gate. It's like getting this whole new spectrum of products that you didn't have access to before. I mean, that's exciting.

Ben: It is.

Matthew: Okay. And what's the scope of your grow operation? Give us a well more detailed what that looks like.

Ben: Yeah, so we have a grow operation that's coming online up in Saskatchewan. It's in the Battleford area. And so that place is gonna be about 100,000 square feet when it's fully built out, a little bit over than that, and able to produce 14,000 kilograms of dried cannabis flour in the course of a year once it's fully built out. But we also have a extraction facility that we're building right here in Calgary. And that's gonna be...we're finishing up construction actually as we speak right now. So it's gonna be coming online here this summer and it's gonna be able to produce or actually process about 30,000 kilograms of cannabis feedstock per year. So that's quite a bit. And from that we're gonna be able to produce all those products we discussed. So of course, day one type out products such as the, the oils and tinctures and gel caps. But then we're very much interested in targeting all these other products that are gonna become available to us, such as the edibles, the vapes, topicals, and other high value products.

Ben: How about your background in engineering from NASA, particle accelerators, and everything you were doing before? Do you use that to solve any automation or growing problems or think about things perhaps differently than another executive mind?

Ben: Yeah. So it's hard not to look at things and see problems or ways you can improve, particularly in a young industry. You know, recently one of the areas that we've been looking a lot at is the harvest process. So when you have a crop and you have to harvest it, there's a lot of labor that goes into that. And because there's a high chance of microbial contamination during that period because the plants have been cut down, it's lost a lot of its natural defense mechanisms. A lot of people are touching it. We really wanted to focus on how could we reduce the labor, but also the microbial contamination while maintaining a process that will end up with a high value product? So we've been looking a lot at what are different tools that we can use. And you know, even from just moving the product from point A to point B, as well as helping the people in their work so that they can optimize that and decrease the labor and microbial contamination.

Matthew: Okay. And you mentioned Prairie Records, the dispensary brand, but since we're in a audio medium here, it's kind of hard to express what this looks like. I've seen pictures and the design concept and it's really interesting. Can you kind of walk us through what it would look like to walk into a Prairie Records dispensary? What that look and feel of it is like?

Ben: Yeah, happy to. So this is actually one of the things that really stood out to us, and one of the reasons that the three executives here from Colorado all joined the Westleaf team. So if you look at most dispensaries or cannabis retail places, you'll notice that they kind of gravitate towards one or two different tropes. One is the head shop, you know, so you'll see a Cheech and Chong posters on the wall, tie dye. And I think there's still a place for that in the market, but it's not what's going to attract millions and millions of new users to the market. Right? That is intimidating. The other is you see what people try to say is the Apple Store of cannabis.

Matthew: I've seen a lot of that.

Ben: Exactly. And there's also nothing inherently wrong with that in my opinion. You know, it's a very clean aesthetic. It can be warm and inviting, but it also isn't any different, you know, so there no real way. If you're just another one of those, how do you stand out against everyone? You know, if you were to remove the color palette, it would be hard to tell apart some of those different stores. And we really wanted to do something different. So at a Prairie Records store, right as you walk through the door, the first thing you'll notice is it actually looks much more like a modern day record store. The difference is when you start flipping through the stacks of our records and you are looking at those sleeves, what you'll find on the sleeve is different names of strains or cultivars. So you'll see you a Blue Dream or Girl Scout cookies on there.

And when you take it over and you flip it on the back, you'll find just a little bit of prose on how this type of product might make you feel or what kind of inspired this different cultivar. You'll also find a bunch of information about how much CBD and THC there, what's the strength of that strain, you know, what are the different ways that we offer it such as a pre-roll or just flour. And even a little bit about, you know, what music this pairs with. Is this more of a sleepy time type thing or is this dancing on the sunshine as you walk into our store lab, broken down those different sections? So it really kind of plays off of this instinctual tie that we've all had between music and cannabis.

Matthew: Okay. It's a great idea, really is a great idea. If you can't be first in a category, create a new category where you can be first and own that. So if anybody tries to do that after you, it'll be a comparison. Like, is this as good as Prairie Records? So that's really cool.

Ben: Yeah. And the other thing is you mentioned that as, you know, we talked about some of those branding restrictions that make it really difficult for LPs to stand out. And what we do by having this experience where people can walk in and they have a tactile experience with something and they're flipping through it, they're looking at an album that has colors and it represents the brand that LP wants to promote, it allows them to give branding and an environment that otherwise wouldn't allow that. So with our own products as well as with our other partners, they can flip through there and they can actually see something the way that that LP wishes that they could brand it.

Matthew: That's really cool. And tell me a little bit about how you decide where to position a dispensary. I mean, what's the thought process there? I know, you know, some companies say, "I wanna be close to like a natural grocer or a high end wine bar or coffee shops." There's a lot of different strategies there. I only know, I think Kensington's Lane neighborhood I'm familiar with in Calgary. Maybe you can just touch a little bit about what's your thought processes there.

Ben: Yeah, some of that is similar to the aspects you said there, which is we're focused, I would say, on finding high caliber location where there's a good foot traffic, touristy areas or high traffic areas. But we're also trying to find areas that kind of line up well with the vision of, you know, we're looking for something where there's maybe some recreation going on there and socialization, but we're trying to get it so that there's listening emotions of happiness, discovery, enjoyment. So a couple of examples. Our flagship store right now in Saskatoon is on Broadway Avenue, which is a great walking street. You know, lots of hip cool bars and restaurants along there. It's a very vibrant, energetic community. So it fits in perfectly. You walk past our store, there's great music playing, you walk away then, you hear the music and you can start shopping. Similarly in Calgary, we're gonna have a store located at Palo Stater [SP], which is a music venue. And so it's fantastic for people who, you know, are going to that concert. Boom, we're right there, and you can stop in and experience our store.

Matthew: Yeah. What's kind of the cultural norm in Calgary versus let's say a city like Denver in terms of consuming cannabis outside? What do you see there, just anecdotally?

Ben: It's pretty similar in many ways and that, you know, it is frowned upon to consume largely in public, however, you walk down the street and occasionally get the usual smell of cannabis.

Matthew: Yeah. And where are you in the capital raising process, and what's the process been like since you got started raising capital for Westleaf?

Ben: Yeah, so we started over a year ago, actually really kicked off with a strategic partnership with Thunderchild First Nation, which is an indigenous band in Saskatchewan. They invested $8 million in the company, and it's its largest shareholder, and actually the former chief sits on our board of directors.. Yeah. So that started off and then a few different things including the vertically integrated strategy really kind of put us on the map. And since then we've developed agreements and supply agreements and investments with companies such as Xabis, Tilray, Vivo, and Candera that have allowed us to kind of leverage that and continue to grow. And then I think the one other thing that's pretty unique is that we were able to secure about up to $24 million of debt financing from ATB Financial, which is one of the first traditional lenders I know of to enter the cannabis space in Canada.

Matthew: Okay. I just wanna circle back to extraction really quick. So I'm guessing you're probably doing CO2 extraction, that's kind of the way you're going?

Ben: Yeah, that's correct. We're focused right now on CO2 for several different reasons. One, it's very clean and it's also very diable, something you can dial in. And Xabis has a quite a bit of experience on that and they've got quite a number of years of doing extraction on that.

Matthew: Okay. Okay. How do you kind of measure in your mind how much capacity you need when this market changes on October 17th and you'll be able to have all these extracted products, and how are you kind of gauging how much you should have ready? I mean, that's kind of an art and a science, I guess. What do you do?

Ben: That's exactly what it is. It's part art, part science, and part crystal ball. You know, the great thing is that we do have other markets such as Colorado and Washington and California to look at. That said, you know, so you can predict a little bit about what the market demand is gonna look like. And I always look at, you know, we've done quite a bit of modeling on different markets and what we've seen is that there's micro and macro trends, right? So within each market, as it comes online, there's an adoption rate, but then when you look globally, you'll see that there is overall a greater acceptance going on for cannabis and particularly CBD. And so that's kind of amplifying things. But then there's this last piece of we all kind of know what the other LPs are doing, but you don't know for sure.

So, when you come to your production forecast, we've made it so that we can be quite dynamic, an ability to just scale up or scale down how much production we want to do based upon what are the needs and demands of the market and what else is going on in this market, how much white space is there to grow in different areas?

Matthew: Okay. And how do you think the Canadian market will mature and evolve over the next five years?

Ben: Yeah. Well, so I think there's a few things. One is, you know, we are seeing globally there's more and more acceptance, and I hope that continues and I've certainly seen that as a trend. I've seen some of the negative stigmas being shattered there. You know, I think more and more people are coming up out about how they use cannabis. You know, whether it's for recreation or it's to help treat some mild conditions such as anxiety or depression or other concerns they may have. Additionally, I think that I suspect what we'll see happen over time is that some of those branding standards will relax a little bit over time. I think that people will start to see that the parade of horribles isn't happening and that there are ways that if we want to try to muscle out the black market, you have to learn how to compete with it. So there's things there of...and the black market today in Canada you can find well-branded products for cheap, and that have higher dosing of what would be allowed today under the current regulations. And so I expect that Canada will try to combat the black market by attacking those items.

Matthew: Okay. Ben, I like to ask a few personal development questions to help listeners get a better sense of who you are personally. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Ben: Yeah. So there's been a few. You know, one that really stands out, and this guy does a great Ted Talk. He's a gentleman by the name of Daniel Pink, wrote a book called ''Drive.'' And what he does, he looks at what motivates us, and he really looks at and he explores intrinsically versus extrinsically motivated individuals. And I've always really found, I enjoy working more with people intrinsically motivated. And so I found this to be a great read of, you know, what is it that helps reward those people and then how do you make it so that people are more likely to be intrinsically motivated than extrinsically motivated.

Matthew: Oh, cool. I think I ever read a book from him called ''A Whole New Mind,'' and I thought that was excellent too.

Ben: Yeah, he's great.

Matthew: Yeah, he really helps you see things in a different way. Is there a tool that you or your team use that you consider valuable to your productivity?

Ben: Yeah. So, you know, it's interesting, I've been watching Microsoft kind of evolve over the last few years and they have a product out called Teams, which is a very similar to Slack, which is a kind of an instant messaging chat tool. But it's really cut down on how much we need to use email and it gets people just quick updates and anyone can go in there and check in on the status of a project. Additionally, it allows us to collaborate much easier on documents. And so it used to drive me nuts when someone would send out a press release, for example, to eight people and say, "Hey, everyone, can you take a look?" And then eight different people are exchanging emails and sometimes they're talking about the same thing, sometimes not. And this allows us to all work on the same copy and to be much more efficient.

Matthew: That's a great idea. How frustrating is that when you have a spreadsheet being updated by so many different people? It's madness. That makes sense, or Word doc. What do you think is the most interesting thing going on in your field besides what you're doing?

Ben: Yeah, I think there's a couple different aspects going on. You know, one is that there is a lot of focus in the United States and in other nations about what could happen in the future with cultivation, for example, and where is that production gonna be done. I also think it's interesting to watching it now that Canada has done a federal legal program. There's two different things that kind of in mind. One is a medical research. As I mentioned before, I've worked in biomedical instrumentation but I also worked in cancer therapy. And, you know, with that heavy analytical background, one of the things that I really would love to see more of, is some great research that shows, you know, how can this plant help people and get rid of some of the stigma of that. Another thing is that, you know, with all of these new products coming online and market access, I expect it's gonna be a lot of innovation in Canada on new products and different ways to deliver it. And we have a few things up our sleeve, and hope to talk about those in the future.

Matthew: And then a Peter Thiel question for you. What is the one thing that you believe that most people would disagree with you on?

Ben: Yeah. You know, there's been a lot of talk about cannabis and the cultivation of it becoming a commodity, and I think there's an aspect of that's true, but I actually disagree in that I think that there's always gonna be a space for people who can grow a high quality product that really speaks to a certain market. And so that's something that we've really focused on and we put a lot of our strategy around, is the ability to grow craft at scale. You know, we're not gonna be everything to everyone, we're not gonna be the person with a million square foot facility that's just pumping out a lot of basic product. But I think that there actually is a space for people who are not growing a commodity.

Matthew: Ben, as we close, please let listeners know how they can find you and learn more about Westleaf.

Ben: Yeah, so you can find out more information on our website, which is www.westleaf.dot. And additionally, if you wanna learn more about Prairie Records, which I definitely recommend checking out, you can go to prairierecords.ca, or you can check us out on Instagram and Facebook at prairierecords.com

Matthew: Well, Ben, all the best to you. We wish you good luck, and keep us updated on how things progress in Canada, and I really want to see a one of the Prairie Records store in person so I can experience that.

Ben: Yeah, please come to visit us. It's a fantastic store. We have an amazing staff who are extremely knowledgeable, and they're beautiful stores.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more cannaninsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.

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

Ep 267 – Hemp Entrepreneur Building a Global Hempire

paul benhaim elixinol

The hemp and CBD market are going global in a big way, and renowned hemp pioneer Paul Benhaim is here to help us navigate the waters.

Now the founder and CEO of CBD brand Elixinol, Paul has been involved in the hemp industry since 1993. His first commercial endeavor in the space was a hemp-based nutritional bar that quickly moved from a few thousand bars per year to multi-millions and is now sold under numerous labels across the world.

This lead Paul to found the industry-leading brand Hemp Foods Australia, which continues to provide the highest quality hemp food products available.

In this episode, Paul shares with us his insight on the market and the products he sees gaining momentum worldwide, including CBD powders and liposomes.

Learn more at https://elixinol.com

Key Takeaways:

  • Paul’s personal journey through the hemp industry and how he came to start Elixinol
  • An inside look at Elixinol and its mission to provide the highest-quality CBD products in the world
  • The most profitable products around the world and Paul’s predictions for future bestsellers
  • Japanese customer behavior versus that of American customers
  • Paul’s insight on different markets including Latin America
  • How Paul believes 2018’s Farm Bill will significantly change cannabis’ global mobility
  • Where Paul sees the price of hemp shifting in the next 1-3 years, especially as more and more companies move online
  • New hemp-based protein and food innovations Paul is developing through his Hemp Foods line
  • Paul’s advice on how to build customer interest and loyalty through packaging without overspending
  • Paul’s insights on what the cannabis and hemp landscape will look like globally over the next 5-10 years
Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider.com. Now, here's your program. The Hemp and CBD market are going global in a big way. Paul Benhaim, founder of Global Hemp and CBD brand, Elixinol, is here to tell us how the market is evolving and what to expect. Paul, welcome to CannaInsider.

Paul: Good day. Nice to meet you.

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

Paul: Today, I'm in London, England.

Matthew: Okay. And what is Elixinol at a high level?

Paul: Elixinol is the number one provider of hemp-derived CBD products on a global scale.

Matthew: Okay. And Paul, can you share a little bit about your background and journey, and how you got into the hemp space and came to start Elixinol?

Paul: Sure. Love to do that, Matt. I started off in the hemp industry about 25 years ago in the early '90s where I developed the first commercial hemp food product, actually in the United Kingdom where I am today. Which kind of feels like a roundabout place to be in my journey right now. So, when I developed that product in the early '90s, there was no commercial hemp products or cannabis products that existed.

And I saw the benefits of the nutrition from the hemp seed itself, containing omega-3 and omega-6 essential fatty acids, as well as a very high-quality form of protein which, and I was studying food and nutrition at the time, and that's how I discovered hemp. Then I discovered all of its many different uses, and I decided to make it my mission to take high-quality hemp products to as many people around the world as possible.

So, I've done that through my journey, from the hemp snack bar that's now in all the supermarket chains around Europe. I created the first hemp milk, which was turned into a hemp ice cream in the early '90s. And then I created hemp pastas, hemp breads, hemp sauces, hemp tea, hemp soups, hemp everything, basically. Until I moved to Australia at the turn of the century, where I was headhunted to come and create the industry there from scratch. Which, after working with some politicians, I thought wouldn't be such a hard thing. It wouldn't take long to persuade them based upon the science that I was aware of to allow hemp as a food.

That journey took a little longer than expected. It took 17 years, in fact, to allow hemp as a food there. And that little pause, I guess, in my commercial career did allow me to write nine books on industrial hemp and continue to support others around the world in becoming experts at communicating and creating the highest quality hemp products. That led me to creating Hemp Foods Australia, which is one of the companies that we own today. Before, it was actually legal as a food, it was completely legal business. And what we recognize is that we could grow the seed, we could produce the product, and we could sell the product as long as we didn't sell it for human consumption.

So we told people to rub it on their skin, and that seemed to work very well, with politicians coming to our factory, congratulating us on how many jobs we had created in the local area and region. We won export awards, all for a product that wasn't allowed as a food that everyone was eating quite knowingly, it seems. So, that irony obviously ended with a change in legislation, better late than never. And it was during that time actually that I founded Elixinol.

Elixinol is more focused on the cannabinoid content of hemp products. And those hemp products now are 45 different SKUs in the market with Elixinol. Elixinol was actually founded in Boulder, Colorado. It seemed the most sensible place five years ago, and we started that business mainly because of the support of legislation, and I had enough of, I guess, changing laws.

Even though I still find myself doing that today, and employing regulatory and compliance people who continue to lobby around the U.S. in the states as well as having similar people here in Europe where we are based today. So, that company in Boulder, Colorado really has spread out globally. We now have subsidiaries that we partly own in Japan, we have subsidiaries in the Netherlands, Spain, United Kingdom, and other places now in Europe where we're just entering. Which is two out of the three companies under Elixinol Global. The third company is a medical cannabis startup for pharmaceutical-grade high THC products for Australia only. And those three companies were all rolled up under the Elixinol Global banner in an IPO to become a public company in Australia just over a year and a half ago.

Which has been a journey in itself, of course, moving into the public arena. Working with tier one companies such as Deloitte's and the like, to ensure that our company not only produces the highest quality products, but actually has the highest quality systems, which I fully support to know that we can grow around the world to continue my mission of ensuring everyone has the benefits of the natural hemp plant.

Matthew: Okay. So, 45 products. That's a lot of products. Can you give us a sense of what your best selling products are in the U.S., U.K., Australia, and Japan on a high level?

Paul: Sure. Well, maybe we'll start off in Australia, because that's relatively easy. Because of the legal situation, there are no medical cannabis products yet, so they are coming soon, we believe. There are no CBD products because that's considered medical cannabis in Australia. So, hemp foods are our best selling products. And we think the newest product that we've recently launched which is frozen hemp burgers are expected to be our best-selling product here in Australia right now.

In the U.S., obviously, the hemp-derived CBD products are our best selling items, and our classic capsules and tinctures are very popular. Capsules, because a lot of people still don't like to taste what they're having, which is fair enough. And our tinctures are very popular because they actually taste good. So we have different flavors like cinnamint, which is a mixture of cinnamon and mint, and due to our production methods we are able to ensure that you don't have that really super bitter taste that some people get from CBD.

Our latest products that look like they may take over in the not too distant future include our high bioavailable liposomes. So, that liposome is basically our way to ensure easy access for our body to absorb the cannabinoid content from those products. And the other product that is now launched in Albertsons and Safeways around the U.S. one of 13 products in that chain, U.S. national retail chain, is our CBD powders.

So, that's a very easy way for people just to enter into the world of CBD, for like $2 or $3, you can buy a sachet of powder that's also high bioavailable and water-soluble powders that taste really great. You just mix it with water, and can have it any time of the day or night. So, we think that is probably heading into that number one or two spot. We'll see how that goes over time, of course. Hope that helps.

Matthew: I'm curious, do the Japanese take a different approach to trying and then regulating CBD, adopting it into their culture, because, I mean, we kind of have this in the Western world, or the, I guess, the former British colonies. And it's kind of like something that's evil that's now becoming not evil. Do they have that history with the plant, or how do they look at it?

Paul: Well, the Japanese culture is quite different and is very unique in itself, of course. So, cannabis actually has a super long history in many cultures around the world is what I've discovered in my studies. And one of those cultures is in Japan. Where hemp has been very much revered, particularly for the emperor, which is the equivalent of the royal family, I guess, in Japan. And the use of hemp or cannabis in ceremonies, in temples as well. So, hemp is really seen as this thing that's nearly untouchable. It's only for the very special people. But that means that it is in their culture. Sadly, the mainstream culture in Japan is still very much against anything that relates to the drug. So they're very anti-anything THC at this time.

Of course, there's a movement like everywhere else that is moving to change that, and I have no doubt that that will change over time. But I think that will take quite a way. So, for us to get CBD into Japan, it took a number of years to work with the authorities to get all the tests and proof that our products were basically THC free.

So, we only export our completely THC-free products into Japan, and we have very special licenses and paperwork to ensure that those products are of the highest quality. Japan is known for very stringent import regulations. So, we worked very closely with the government officials for many years, which led me to actually meeting the first lady of Japan, which was an excellent opportunity for Elixinol to, you know, connect itself with, I guess, the people most respected within the country. That's probably why we've been in the Vogue Magazine and Elle Magazine many times now. We were recently on the Tokyo train stations, and now sold in, you know, you can even buy Elixinol CBD products in the Tokyo Airport. It's promoted as a jetlag reliever over there.

But, the Japanese I think, really use CBD mainly for relief of stress and anxiety because it's a very fast-paced culture. It's very active. And I think anything that brings the population into more balance or homeostasis is very healthy for them. So we very much support that use over there. So, I really do feel that there is a tipping point being led in Japan right now. And a number of other Asian countries are watching very closely and feel like they will be hot on the toes of that country also.

Matthew: Can you give us a high-level overview of your revenue now that you're a public company just to give us a sense of scope and scale?

Paul: Sure. Last year, in 2018, we turned over nearly $40 million. And that was more than double the year previously, and we're on a continually steep growth curve as we move through 2019 now. In my opinion, we're just beginning our journey and we really feel that 2019 is the transition year. Since President Trump signed the farm bill at the end of 2018, the kind of conversations Elixinol has been having have really increased in their significance.

So, those conversations and due diligence with these companies is a process, we say, for this year in 2019. And I think you'll see some of the results of that before the year end, which I think, ultimately, will lead to significant increases in revenue in 2020. I don't think we'll be the only people that will be benefiting from the interest, but I do believe that we're one of the few companies, because of our vertical integration, high-quality systems and controls for stable and safe products, that we will be taking advantage of that more than most.

Matthew: And what about the Latin American market? How do you see that?

Paul: I think Latin American market is very interesting. And we've had definitely a presence in that market for some years now. We see a lot of press about different businesses looking to rely on the Latin American market particularly for the low-cost supply chain. And, don't get me wrong, I'm sure Latin American countries have that ability. We believe everywhere has that ability including in the U.S.A. We're using, I guess, scale high technology and efficient systems that we can meet or match, you know, even Chinese prices, who we also see as competitors in the global scale of things.

So, I think, for us, Latin America is more access to the markets that will open up in Latin America, because, like everywhere around the world, is that there is a need for these hemp-derived CBD products for many different uses. So, I think we're looking at it from that perspective and have been having some very long conversations for quite some time with some great organizations there. Again, similar to everybody else, everywhere else in the world waiting for clarification of legislation before any really big moves are made. So, we generally don't talk about Latin America and what we're doing there in detail, but I hope that we can do that one day in the near future.

Matthew: Okay. And you've been educating people about hemp for a long time. How has that changed over the last few years and contrast that to previously?

Paul: I think, you know, previously, my education was really on, you know, what is hemp, all of its different uses, and actually people understanding, you know, everything about a plant, really. Most people didn't know, even today, there is still, you know, some clarity required. You know, what's the difference between hemp and marijuana, for example. So, you know, I still explain to people that it's actually still the same plant. They're both Cannabis Sativa. And the main difference is really from a legislative perspective, which is related to the tetrahydrocannabinol or the THC content. So, those conversations still indeed happen.

But I think, you know, generally, the conversations are much more move towards inspiring people about how they can be successful in this industry and why it's still worth getting involved, in any level, even if you're, you know, just a reseller. The growing market and demand for this is still very significant. So, I'm very happy to move more to the inspiring stories of our success rather than just the basics, which a lot more people really do seem to understand these days.

Matthew: Where do you see the price of hemp moving in the next one to three years? And in your mind, do you see it as kind of an international price and then you break it down by countries, or do you look at it with kind of a country view and then say, "Well, this makes sense in the context of a global hemp price."?

Paul: That's a good question there, Matt. And I think the answer is not clear yet. And the reason it's not clear yet is because we don't know how fast or how big this industry will grow to. All we know is that it's growing fast, and it's growing a lot bigger. And what we can see is blue sky. We don't know where that ceiling will be. But at some point, there will be a ceiling. I don't think that will be in the next year.

I think it will be more in the three to five-year range, if I had to put a number on it, but please don't hold me to that because, you know, there is a lot of disruptive technology in hemp and CBD products. But when that ceiling is reached, I think you will see more of a commodity-based price. But at least in the farming side and the raw material side, I think there will always be a space for high-quality branded product goods and that's where Elixinol has positioned itself.

Matthew: Okay. And so, just in terms of the mechanics of how you get the hemp, are you contracting with farmers then, and they produce the hemp for you, and you just have a relationship with a bunch of different farmers? Is that how it works?

Paul: Well, something like that, basically. You know, with 25 years of experience in growing hemp around the world, one thing I have learned is to respect farmers. And I think we all need to respect farmers for the food and anything that they grow. And that comes out of me recognizing how hard it is to actually farm in this world, particularly if you're naturally farming.

So, all of Elixinol's products are farmed without chemicals. Most of it is certified organic. But all of it is without chemical farming. And that's not an easy thing to do anywhere around the world. So we continue to ensure that we don't put all our eggs in one farmer's basket we'll say. But we also want to have a control. So, the way we've done that is we've invested in a partnership with one of Colorado's largest water rights holders. Water is the equivalent of insurance policy in farming.

So we have a 50% stake in that farming venture. As well as that farming venture, you know, obviously knowing the cost of farming, making sure others know that we know the cost of farming, we're able to negotiate excellent contracts with other partners. And one of those other partners we've worked with for nearly four years I think now. This is our fourth year that we've been contracting out to them. This year, we're actually contracted out to a number of different farmers throughout different states in the U.S. as well. Mainly so we don't have to deal with that farming risk.

You know, we think we've got some of the best prices for farming that exists, even though we're contracting those out rather than owning all the farms ourselves. But the most important thing is that we don't have to focus on that risk. Ultimately, the raw material, you know, is not a major part of our costs still. You know, it's all in the formulation and creating the high-quality products, where we add our value in the most way.

Matthew: Do you feel like there's a need yet or in the near future for a hemp futures market where you can kind of hedge your risks, or you can lock in prices, and another side of that coin that the farmers can also lock in their harvest and have some sense of a sureness that they'll get a profit, and that type of thing, or is that just not a necessary component or talked about much yet in the hemp community?

Paul: There are some people who have pitched that business model to me, and I actually do find it an interesting business model. I think it requires the entire industry to jump on that to make it viable. And I think that is a possibility in time. But, again, it's like, you know, when is that time? Is that in 1, 3, 5 or 10 years? So, I don't know where that is. And, again, you know, right now, that's not how it's done in the industry. There are a lot of people promising many years, in the last few years I would say, many people have promised that they're gonna be growing tens of thousands of acres of hemp and be able to produce it far cheaper than anybody else.

And most of those people who've made those claims to us have failed. And I don't hold it against them. I think, you know, I actually kind of try to warn them to be careful not to scale up too much, because, you know, I don't wanna see farmers being hurt. Anything new, even, hemp is known to grow as a weed and it does grow excellent when you know how. But it's like, you know, it's getting a relationship with the plant that does take some years. So, that's why we're focused on, I guess, the people that have been growing for a number of years rather than the people who say they're gonna grow the most and the cheapest. In a few years, we'll see where that leads us, of course.

Matthew: What has been harder than you thought it would be managing a business on multiple continents. So, when I've spoken to you, you've been in different places, and I've spoken to a few people at Elixinol and they're in different places. You got a lot of moving parts. What's been trickier as you kind of, the business grows, than you had anticipated?

Paul: Well, I never anticipated anything to be easy to be honest. But, you know, there continue to be a challenge apart from the legislative environment, which I wish there was one form of legislation globally. But it's extremely complicated in that form. You know, and we're trying to be a global brand, so, that brings its challenges in itself, of course. Where being a global brand means global teams. So, actually managing four global teams has its own challenges. Because it's not just about replicating a structure in one country in another country, because, I guess, those teams, you know, for example, the European team has to speak with the U.S. team to understand where they're going with their brand, and same with the European team.

You know, so, Europe, U.S., and Japan are on three time zones. So, how do we all connect together regularly to ensure that we're all headed in the same direction? And that, from, you know, an executive level is the biggest challenge. So, you know, I always anticipated that people are the most important part of our business, because they make that high-quality product. By having high-quality people, you will create high-quality systems and products. So, they are all connected. But it continues to be, you know, not always that easy to find the best in the world, which is what we aspire to in every aspect of our business.

We have recently brought on a new board member, you know, to the global level, who has had experience about building global, I guess, structures in a similar way for very large multinational companies. One of them based in Japan, actually, a multi-trillion dollar business over there that had, you know, entities all over the world. So, you know, when I find those problems, I find the best possible people I can, and I do my best, you know, to bring them on with the team so that we can grow with the best experience that we can possible.

Matthew: Okay. I've been following a trend in terms of the plant-based mimicking-type meats, where they taste like meat but they're plant-based, like the incredible burger and so forth. And I know you're big in the hemp-based proteins and so forth. How do you see that evolving to kind of replace meat in the diet?

Paul: I don't know if it's about replacing meat in the diet. And I think that's the myth that we have to bust here. Is that there is definitely a growing vegan and vegetarian interest in the world, and it's been there for a long time, and it is growing. But I think there's a bigger segment of the market that continues to eat meat but wants to eat less meat, and wants to eat more healthy foods. And I think it's that market that's looking for a more of the plant-based protein alternatives, is where this trend is growing from.

So, yes, we are seeing some successes with beyond meat and incredible burgers, but, you know, the incredible range, I believe, is genetically modified. So, you know, we think that we can create a plant-based alternative that is still completely natural, and that's the hemp burgers that I mentioned earlier that we've just recently launched in Australia and expect to take global at some stage also.

Matthew: And can you tell us a little bit about Nunyara. Is that what you're referring to? Or, what's Nunyara?

Paul: Nunyara is a medical cannabis startup. And the reason most people haven't heard much about Nunyara is because it is relying on the Australian government office of drug control giving us licenses that they told us would be about 20 working days over a year and a half ago. So, nearly coming up to two years now, in fact, I think. So, you know, when we get those licenses, I'm sure we'll talk about that more. But, basically, it is a business that we have only one employee for right now, that has very advanced plans. We've bought land, we have super advanced plans for high-tech cultivation and manufacturing of pharmaceutical-grade medical cannabis of all forms.

And just like Elixinol, we're not following what other people are doing, we're not following the Canadians or the Europeans. We actually have our own plan. Of course, we watch what everybody else is doing, and we think we have some novel and very interesting and unique ways of doing that. We're not trying to be, you know, the largest entity in the world making medical cannabis. We think we have a very strong niche in what we've developed, and I hope to be able to talk about that. Again, dependent on what the Australian government allows.

Matthew: Okay. With so many products, and a direct-to-customer brand, packaging has got to be a big part of what you're thinking about, packaging and marketing. How do you think about communicating your message so it resonates with customers in the packaging and branding?

Paul: Well, that's a very large subject that we are actually in a significant process for, mainly because, you know, we started off very small. We had some great packaging, great ideas, great branding at the beginning. But we've grown kind of organically in a lot of ways. So we've added a product on, added another product on. And we recognize that we've got to a stage now where we have to come back and relook at the entire range. Not just that we've got publicly today, but all of the many new products in development that we have in our pipeline, and look at them and going, "Okay, what is the overall message that Elixinol wants to portray and who to?"

So, we've spent some significant resources in defining the answers to those questions. And, again, 2019 for us is in that process of internal change. And I think you will see the results of that coming out next year. And it is a science and an art together. So there is a lot of science. There's a lot of data that is required to make those kind of decisions, and there is a lot of creatives that happen in the background.

You know, without giving away any of what's coming, I can say that, you know, the video that my team pitched to me for the changes that we intend to come brought a tear to my eye, not just the first time I watched it but even the second time I watched it. So, I think it was very powerful and I think will reach a lot of people, and really does resonate with the massive global change that hemp CBD products are making on the world.

Matthew: Now, where do you see the industry in 5 to 10 years? I know, with regulators, it's very difficult. But, I mean, can you paint a picture of what you think it will look like and how it will be different that it is 5 to 10 years from now, not necessarily your products, but just the marketplace and consumers in general?

Paul: I think in 5 or 10 years, we'll see much more of a big picture, where hemp and CBD products, or cannabis products, or probably most forms are widely accepted. They are known, you know, and people know what they're for, and there'll be a couple of, a few maximum winning brands, we'll say. Some brands will be known for, I guess, you know, more of a gimmick. So, you know, if you read it, you know, like a tiny amount, say a few milligrams of CBD to, you know, a two-liter bottle of water. Well, you know, it's probably not gonna give you any effect but makes you feel good that you're taking a bit of CBD mainly. So, there'll be maybe a brand like that. And then there'll be brands like Elixinol that, you know, are known for their high-quality products.

So, you know, it's like, if you wanted like an ibuprofen for a headache, you wouldn't go for a Nurofen or Advil or something. You'd going for a brand name that you would respect. I think when people choose to have CBD, they'll also choose to have a brand name. And I think there'll be more than one or two brands mainly because there are more than one or two uses of hemp-derived CBD. So, I think, you know, there will be different brands focused on different aspects of the market. But there will no longer be, you know, hundreds or if not thousands of brands trying to grow as there are now. And that gap is already, you know, expanding from the top, say, 20 companies to the other thousand or so companies out there in the world.

I think there'll always be, you know, your small mom-and-pop brands. It's a bit like, I guess, microbrewery, that always be lots of microbrewing maybe like wine, fine wines. There'll always be those forms of hemp and cannabis products. But I think there'll also be a few major brands that really can just get it right and do everything on a very scalable level, you know, on a global scale particularly. And I think that long-term picture and that long-term vision is truly what we continue to workout on a daily basis.

We're not trying to cut corners, or just get large amounts of revenues quickly. We are focused on ensuring that we have that long 5 to 10-year plan in process. And I think, you know, we'll see results of that before that time, of course. But I look forward to it just being an everyday products, you know, not too dissimilar to how Colorado is starting to see these products today. I expect that will happen globally.

Matthew: Paul, in this point in the interview, I like to ask a few personal development questions to help listeners get a better sense of who you are as a person. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Paul: I mean, there's probably been many books...not so much. I mean, maybe at the beginning the first books that I read on "Fats and Oils" from Udo Erasmus were very inspiring to me personally, and that's what led me on the journey which brought me to hemp. So, I guess that definitely had a very significant effect on my life. But at that time, I was also reading many books. I was actually studying in the Himalayas. So I was reading lots of different books about different religions particularly about the Buddhist and Hindu religions and many others.

And it wasn't that, you know, I don't feel that I, you know, became any, or followed any particular religion, but I think recognizing what was a common message is that, you know, all human beings are connected and ultimately there is no difference between any of us. There is just a different perspective between all of us. So, learning about perspectives from people like Ken Wilber, another Coloradoan, really, I guess, inspired me to see that from a science perspective, and as well as the Buddhist it gets more a spiritual perspective. But they were both two ways for me of saying the same thing.

So, you know, I treat everyone and see everyone ultimately as an equal in this life. And that all opinions, you know, really count, whether it's a person, you know, packing a box at the end of the day, or highly paid corporate advisers. That, you know, everyone has an opinion that needs to be heard. Everyone has a need for food, shelter, and connection. And I think it's always important to remember those things. And that's what I learned from those books.

Matthew: Apart from email and smartphone, is there a tool that you or your team use that you consider valuable to your productivity?

Paul: Yes, eyesight. That's a tool that I find very important, where we look into each other's eyes and communicate that way. I think it seems, you know, something that we often take for granted, but I think actually doing that consciously and actually being present with one another is an extremely important tool. And I think, you know, even though people say, "Oh, well, we always look at each other, and it's just something we normally do." I think bringing consciousness to that, just like bringing consciousness to anything, really, you know, brings more of that connection that I was just talking about earlier.

Matthew: Okay. What is the most interesting thing going on in your field in your opinion?

Paul: That's a very hard question to answer, because everything is so interesting right now. You know, the word boredom seems like this outer space place that I couldn't even imagine in my wildest dreams. So, everything is really very interesting when we're growing at such a high speed, with so many new people joining our team. So many new people, you know, learning great things, with so much development, and pushing boundaries in all levels of our business, not just from systems, or products, or formulations, but people, and places, and feelings. So, there's so much out there to be questioned. And yeah, I think you've just got to. If you're part of the industry, I'm sure you'll get that answer.

Matthew: What's one thought you have that most people would disagree with you on? This is a Peter Thiel question. It can be about anything. It doesn't have to be about the cannabis industry.

Paul: Well, I mean, I think, you know, I'll bring that back to the same answer I gave you before, which, you know, I think is true which is, you know, that we're all the same. All of us human beings, we all have this connection, ultimately, underneath our differences. Whether we're one side or the other. Whether red or blue or from here or there. I think some people would disagree with that. I think Donald Trump would say that the Chinese are different from the Americans. And I say, well, under it, we're all the same. And I think we just got to see everything from each other's perspectives. And that's not always simple. Don't get me wrong.

You know, saying we're all the same, and we can all be connected, and we are all equal is much easier to say than actually to do in different situations. So, I don't envy, you know, our politicians who have to do that on a national scale. But, ultimately, I think we all need to strive to that on a global scale. And whether we manage to get there in this lifetime or the next, it is...and whether people believe me or not, that is definitely what I strive to and I strive Elixinol to stand for as well.

Matthew: Yeah, it's weird how we have this kind of programming that like some other group that has a different color skin, or whose food smells different, they like projecting problems onto them, and then, as I travel around the world in different countries, I see like people are fundamentally the same. They just want good things for their family, and health, and, you know, it's like. There's some, I don't know if it's just background propaganda like, nope, that group over there is different. And they're really not. I agree with that. Well, this is like We Are The World here. This is Kumbaya. That song with We Are The World. No, okay. But, Paul, as we close, let's tell listeners more about how they can find Elixinol online, and follow your work, find your products wherever they are.

Paul: Yep. I mean, our corporate website is elixinolglobal.com, but I think for people who are looking at our CBD products, elixinol.com will lead them to access to the best hemp-derived CBD products in the world. We have elixinol.eu for the European Union, and elixinol.jp for Japan. But we have hempfoods.com.au for hemp foods. But they're all available via elixinolglobal.com, which is our global group. And I look forward to connecting with any one of your listeners and to any of our team so that we can move towards and be that change that we want to be in the world.

Matthew: Well, Paul, thanks so much for coming on. You're building quite a hempire here. And I wish you well with everything you do. And we'll watch closely as this grows.

Paul: Thank you very much, Matt.

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