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Alan Gertner is the CEO of Hiku Brands (HIKU) in Canada. Listen in as Alan goes deep on why cannabis consumers choose brands and not products. Hear how Alan’s background at Google, baking sourdough bread, and being a ski guide in Japan forged him into the brand building Jedi he is today.
Fun fact, the president of Hiku brands is Trent Kitsch who co-founded Saxx underwear. Matthew geeks out a little on this underwear and it’s fun to hear why.
What are the five major trends disrupting the cannabis industry
Find out with your free report at http://www.cannainsider.com/trends
– How Alan’s father grew the first legal cannabis in Canada
– Why Alan left Google for a meaningful life in cannabis
– The way Alan measures happiness
– Why customers choose brands not products
– The evolution of cannabis preferences
– Alan’s favorite book and business tool
As cannabis companies grow and prohibition ends, consumer choices abound. Our next guest believes as more and more options become available for cannabis consumers, having a brand that resonates with customers becomes increasingly important. Here to tell us about brand building in the cannabis space is Alan Gertner of Hiku brands. Alan, welcome to CannaInsider.
Alan: Matt, thanks so much for having me. I'm a longtime listener, and I'm excited to be here and have a chance to chat.
Matthew: Great. Give us a sense of geography. Where are you in the world today?
Alan: I'm in Toronto. Toronto, it's unseasonably warm, which is beautiful today. So it's in the mid-20s. I'm sitting in our office, which is our fourth office in about one year. But now, our newest and latest home for Hiku.
Matthew: Okay. And I'm in Edinburgh, Scotland today and for those who are Celsius challenged like me, you're probably in like the mid-lower to mid-70s. Is that right, 20 degrees Celsius is like 68 degrees Fahrenheit, so...
Alan: Yeah, I think that's right.
Matthew: Yeah, cool. Okay, well, tell us at a high level. What is Hiku?
Alan: Okay. So Hiku today is a publicly listed cannabis company in Canada. We are one of the only vertically-integrated cannabis companies in Canada, which means that today we have four facilities that grow cannabis and two licenses to sell medical cannabis. In addition to having a full stack retail platform, we have seven stores today across the Great White North that today sell coffee and cannabis paraphernalia. But by the end of the year we expect to be the largest chain of dispensaries in the world.
Matthew: Wow. And what's your background and journey? How did you get to this point? What were you doing before? What culminated in creating Hiku?
Alan: So, Hiku is effectively three years old. The three years ago our business was called Tokyo Smoke, which is one of the brands under the Hiku banner. And three years ago, I was incredibly lucky to begin my journey with Tokyo Smoke with my father Lorne. So I'll tell you a bit about my story first and I'll get to how Lorne convinced me to work in the cannabis industry. You know, maybe then against my better judgment, but I'm incredibly lucky to have the opportunity to be here today.
But before that, I worked at Google for the better part of a decade and worked on a corporate strategy team with Google in San Francisco and California. And then, I managed a multi-hundred million dollar business unit for Google across Asia, Singapore, Bangkok, Tokyo, across the continent. Before that, I was a management consultant. And I was 30 a couple years ago. I found myself reflecting on my life and my journey till that point. I was incredibly lucky to work at Google.
I went to computer camp as a kid. This was somewhere that was my dream to be. And I found myself in a situation where my life wasn't as meaningful as I wanted it to be. I had chased this corporate ladder and career path that seemed to be the right narrative, honestly. And I think it left me in a situation where I was happy and my life was, you know, great from an outside perspective, but it wasn't as meaningful as I wanted it to be. I didn't have the kind of fulfillment I was looking for.
I was incredibly lucky at the time to have a mentor who, you know, guided me to challenge the way I thought about life. And instead of trying to focus my life on winning at work, you know, he gave me a push to try to focus on winning at life. And I wanted to [inaudible [00:05:43] try to understand what that would be, how could I make my life more meaningful? How couldI focus my energy on winning at life? I was lucky to, you know, take a break from Google. I worked as a backcountry ski tour guide in Japan.
I bought a 20-year-old Toyota with my friends and we drove from London to Mongolia. And along this way, I had this big spreadsheet that I filled out every single morning. And the goal of the spreadsheet was to try to find out what would make my life meaningful. So every day I scored how meaningful my last day was, how fulfilled I felt. I wrote about who I talked to, what I talked to them about, what the weather was like, everything, just trying to capture what made my life meaningful.
As someone who spent too much time at Google and as a management consultant, data seemed to be the answer. And I discovered two things from this exercise. One, that my life is more meaningful when I take on a challenge. And two, that my life is more meaningful when I'm part of or building a community. So I found myself in this situation where I had these two pieces of data.
And I was talking to my father, Lorne. Lorne, for those who don't know, is one of the earliest entrance players, contributors to the Canadian cannabis industry. So 20 years ago, my father had a share of what was the only legal licensed producer of cannabis in the country. There was, 20 years ago, only 1. And we had one. We had one in a mine in the middle of our country that produced legal medical cannabis because the government wanted to sweep it under the rug as much as possible.
And Lorne was a partner in that business and they took that business public 14 years ago. He then was a co-founder of Pharmachem, which is now Kronos. So, he's co-founded two major cannabis companies along the way, and has long been a very strong believer in the value to society of medical cannabis. And so, he's been stumping this belief and disbelief in cannabis and this power to change the world for, you know, a huge portion of my life.
And when we were talking about my journey forward this desire to take on a challenge and be part of a community, and we talked about how he saw the cannabis market unfolding having been in it for a long time. But also having been someone who has, you know, truly integrated cannabis in their life, and I think really understands both the consumer journey and the, you know, continued evolution of cannabis in society.
We talked together about how we imagined this world evolving, how we imagined cannabis evolving with it. And we started on this journey and with a singular belief in thesis, which was that cannabis is a consumer product. And so, when we thought about this idea of cannabis being a consumer product, we thought that the key would be to build brands.
Because ultimately in consumer products, consumers choose these brands and they choose retail. So three years ago, with that singular thesis, my father and I together co-founded this business called Tokyo Smoke. So that's the journey in some ways that brings us to today. There's always lots of steps along the way. But that's how I ended up here.
Matthew: Wow, that's quite a background and legacy to build on in the modern era. So, when you were at Google, it seems like, you know, I worked at a big tech company and it's great because it's...there's a lot of adrenaline, and things are moving fast. And it's like, hey, you're part of this wave that's kind of changing the world. But then it's hard to sustain that, perhaps over the long run. Is that what you found, and you felt like, "Hey, I'm moving fast, but is there meaning behind it?"
Alan: So, I'll sum up my, the contrasting experiences in a simple example. When I worked at Google, I constantly dreamed of doing other things. I was lucky to be there and lucky to be part of the incredible momentum of the business. But I dreamed of the ability to live all these other lives and contribute all these other different ways to society.
Today as the CEO of Hiku, I never dream about doing other things. All I have is nightmares about this thing. This is something I believe in and I'm so incredibly lucky to get to be a part of and to work on every day. And I truly believe in what we're doing, I believe in the legal cannabis economy and the opportunity to contribute to that and play a small role. And that is so much more fulfilling and meaningful to my purpose and my higher cause than working at a big company I think ever could have been.
Matthew: Your background sounds a little bit like a Wes Anderson movie, like the guy who made "The Royal Tenenbaums" and those, you know, "Rushmore." "Oh, I was a backcountry ski guide in Japan and then did a tour to Mongolia and..." You know, that's what it sounds like to me.
Alan: I've been lucky to go on lots of journeys. And I've always been eager to take on a challenge and do new things, and it's part of my narrative and who I am. And, you know, I think part of what's fascinating to me about the cannabis market and why I'm so passionate about it is I really truly believe we have a chance to change the world. And I'm so excited to be in Canada, which to me, in some ways, is the, you know, the epicenter of the momentum that will help normalize and legalize cannabis all over the globe.
Matthew: So your grow has a bit of some interesting characteristics in kind of Canadian history from what I understand. Can you tell us about where your grow is and kind of the context of why that's important for agriculture in Canada?
Alan: Yeah. So we have two locations for our grow. One is in Kelowna, which I think is the one that you're talking about, and one is in Ontario, just outside of London, Ontario. So, just as a quick recap, we recently acquired and merged with a company called WeedMD, which has a large scale greenhouse just outside of Toronto and an indoor facility. But our first grow was our partnership with a company called DOJA. DOJA is based in Kelowna.
Kelowna, for those who haven't been there I would encourage you to go because it is one of if not the most beautiful place in Canada. It's one of the warmest places in Canada. It's one of the sunniest places in Canada. It's one of the most fertile places in Canada. And as you can imagine, with all of those factors at play, it also happens to be one of the homes of black market cannabis in Canada.
It is this beautiful town in the middle of the mountains. And it has in some ways been one of the epicenters or Ground Zeroes for the black market. Some of Canada's best cannabis, this competent BCBud has historically come out of the Okanagan, which is the region that Kelowna is in. Today, the best wines in Canada also happen to come out of the Okanagan. And a couple of months ago, we started a dialogue, as Tokyo Smoke, with a company called DOJA.
DOJA was founded by a couple of amazing entrepreneurs who have worked on Incredible products before and they built this business, DOJA, around the West Coast lifestyle and attribute to the amazing history of Kelowna and the reach and incredible work that people in the Okanagan have done to help push the legalization of cannabis. So let's pay tribute to that. Let's recognize how important cannabis can be to the west coast lifestyle. And let's create a product that is truly emblematic of and representative of the incredible cannabis that comes out of that region.
Matthew: Alan, circling back. How do you get products to customers in Canada? I know it's different than, you know, the dispensary model. Can you tell us a little bit about that?
Alan: Yeah. Great question, Matt. So,let's talk about today and how it works today. And then let's talk about how it will work come, the legalization of adult use cannabis in the fall. So, today there are around 250,000 medical cannabis patients or customers in Canada. And those 250,000 legal cannabis customers order their cannabis today from one of a number of licensed producers, so you get a license to grow and sell cannabis from Health Canada, our regulating authority.
And then, the only way for those 250,000 people to legally acquire cannabis today is to go on the website of one of the licensed producers and order cannabis and have it shipped to their door typically using Canada Post, our government mail service. So that's today, how you acquire legal medical cannabis, direct mail from the facility, from the cultivation site. In the future, come September, October when legalization happens, you'll be able to walk into a dispensary. Now, depending on the province, it may be a private or government-run dispensary, and you'll be able to buy cannabis in a process that's more analogous to what's currently happening in the U.S.
Matthew: Okay. I bet the postal carriers have never been more popular in Canada than they are now.
Alan: I think that it's been very, very good for also propping up the Canada Post system. I think it's a great function to get cannabis quickly around the country.
Matthew: Okay. And so, you think really deeply about branding and you and I talked offline a bit about this. And it's interesting because there's a ton of movement and capital and people coming in, and they're thinking about spreadsheets and profits and things like that. But perhaps the most important thing is, where do you fit in the customer's mind as they're making their decision process? Can you tell us how you think about branding and how perhaps others could be considering branding their own companies?
Alan: Matt, we tend to think it's one of the most important parts of a company's relationship with a consumer as the brand is the experience of the product. And I think oftentimes when we think about a consumer experience, we tend to dive right into the product itself, i.e., is the product quality good? And that's an incredibly important part of the experience. Don't get me wrong. But if we look at other consumer products, I think we can start to take a bit of guidance in the cannabis space. You look to something like coffee, I'm a huge coffee drinker. Matt, do you drink coffee?
Matthew: Oh, yes.
Alan: I love coffee. And, you know, I have a tremendous amount of love for Starbucks, right? Starbucks did to me this really, truly unbelievable thing, which introduced effectively the whole world. But let's start with North America, it basically introduced America to the latte. At scale before Starbucks, we just really all drank black coffee. Now, did Starbucks do that because their coffee was fundamentally better than everybody else's? I don't know.
People seem quite quick to malign Starbucks coffee right now, as coffee snobs. I think what they did was, they created this incredible experience. They built a nomenclature. They built this safe space where you could learn about coffee, and where your coffee purchase was, all of a sudden, less about the caffeine in that drink, but equally about the community, about what the brand said about you, about the interaction that you had in that store.
Starbucks built this additional place in life for people to spend time, for people to interact. And when you look at Starbucks, and you look at how coffees evolve, you see that it evolved, in some ways, away from and became abstracted from the agricultural input coffee beans, and became a lot more about community, and a lot more about a secondary experience than the primary input. Let's even think about frappuccino.
A frappuccino is pretty abstracted from coffee, right? But it's an experience you opt into for so many other reasons. Now, it's not a perfect analogy for cannabis, but I think it starts to provide us signals, right? Why as a consumer you choose one beer over another beer? Is it purely about taste? Or is a lot of it about the signal of that brand and what it says about you?
I think that those are critical factors to a consumer making a decision. And I think that's even more important in cannabis. Because in cannabis, we live in this world where it still has an immense amount of stigma. And if we think about overcoming that stigma, I think we need to tell stories, and hold up icons, and build brands that feel normal to help consumers understand how cannabis can integrate into their lives as opposed to them feeling like they have to move towards a pre-existing cannabis culture.
Matthew: Right. So, you don't feel like you're doing something shameful, like the company that made this doesn't believe in shameful things, this is a normal natural act. So, that makes sense. It's funny that you mentioned Starbucks because I was just reading an article about how their online rewards system, an app, is more successful than any other virtual currency out there.
Alan: Oh, it's truly amazing.
Matthew: Yeah. Once you're successful in creating that experience and trust, then you can lead in other ways that you wouldn't normally be possible.
Alan: I love your use of the word trust. I think a lot about trust, especially for a first time cannabis consumer or someone who's used cannabis before but doesn't necessarily have a relationship with it yet. I think the tipping point for them is going to be trust, and they're going to establish a trusted partner in their journey. You know, I obsess over this idea. In Canada, about 25% of Canadians currently consume cannabis, which is a lot, a quarter of Canadians.
But 85% of Canadians consume alcohol. And around 85% of Canadians consume coffee. So, there's this 60% delta between people who are otherwise willing to live a high life, because that's what you do if you consume coffee or consume alcohol. They are psychoactives, they change the way you interpret and exist in the world. But they have yet to figure out a way to integrate cannabis into their lives.
And I think there are a lot of use cases where they would be better served by using cannabis, they would be better served and we would be better served as a society. So how do we build brands? How do we tell stories? How do we offer products to those people who are comfortable drinking a glass of wine at night to relax, but would probably be better served by using cannabis?
Matthew: Good point. Well, you've got a lot of upside there, 25% is a lot, but there's still a lot of room for upside in Canada. So that's good news. So what do you think is the most important thing we talked about trust? But what's the most important thing you can do to connect your brand with prospects and existing customers if you were to focus on just one thing initially, what do you think that one thing should be?
Alan: To me, it's all about education. I think I have trusted partners built through education. Let's think about Lululemon together, another business I have an immense amount of love for and I think has done a pretty incredible thing. Lululemon in some ways helped bring yoga and that wellness category to the masses, right. And I don't think it did that because it necessarily had the world's best yoga pants, it did that through an incredible sense of community.
If you go into a Lululemon store, they're positively buzzing. The stores are often community centers for education where they often throw events and they help people understand how yoga and the wellness movement can fit into their life. You can go to the Lululemon in Toronto and the space above the store, they often have meditation classes, they'll have yoga classes or Pilates classes. They help bring this experience directly to your door and make it safe for you to understand and onboard, for you to dip your toe in a world that you didn't otherwise live.
I think education is part of that key, and I think that applies to cannabis, in some ways, even more for all of these people who want to or could benefit from cannabis but just don't have the understanding, don't have the route, don't have a path today that appeals to them. So I think education, whether one-to-one me to you or a retail store to a larger group of people, I think that's... If you're going to do one thing, to me, that's the thing that I would do.
Matthew: Yeah. Now, let's talk about authenticity. How does a brand scale without losing its authenticity? When I grew up in Chicago there was this sub sandwich shop called Potbelly, and there was only one of them. And they would heat your subs for you, and make milkshakes and put a little cookie on top of the milkshake and it was just full of all these little touches and...
Alan: It sounds great.
Matthew: Oh, it's still really good but it's now blown up into this huge franchise and they're in airports and different places. And they're still good, but in my mind I'm just like, "Gosh, I kind of go back to my experiences when it seemed like...it seems small." I mean, for how big they scaled. They've done a good job, but it's like, how do you keep the spark? How do you keep that little, that essence of what the brand is when it starts to what it scales because the company has to change because there's more people, there's more gears, there's just... it's different. How do you feel about the scaling argument?
Alan: That's it. It's a really interesting fact. And Matt, can you think of a company that scale that has remained authentic? Like, so, can we find a counterpoint to the Potbelly example like that you can think of?
Matthew: I feel like that brand TOMS, the Shoes company has done a pretty good job.
Alan: Right. Oh, I like TOMS as an example. Right? TOMS is, in some ways, about this singular founder, Blake, right, and his story, and his journey. And he still seems to remain the face of that business. And they have a very, very authentic goal in mind, right, that I think they have managed to keep and hold tightly. And for me, the key to Van der Pop remaining authentic, and Van der Pop at the time and now has cultivated this incredible community. These people who believe in April's story and message, and who are part of this subculture because they want to because they identify with it, and are willing to share, proselytize to other people about this story that means something to them because they believe they fit into this idea, this concept, this community. I think, the way we're able to keep Van der Pop, Van der Pop is April, and empowering April to continue to tell her story. To make Van der Pop, not about me, Matt.
Not about Hiku, not about this public company, but for it to continue to be about April, and for April to continue to tell the story, and tell a story that resonates with her. And then, also to bring people on to Van der Pop who that story resonates with them, and they have their own unique spin, but people who identify with that brand, not corporate soldiers who just want to milk a brand or a business for money. But instead, people who want to continue to build on a movement.
And so, when we look at the Van der Pop team, you know, we have a member in Toronto of our organization named Odessa, who I can see from my desk here. And Odessa was the fashion editor of the "Global Mail," the largest newspaper in Canada. And Odessa spends the majority of her time working on Van der Pop because this brand also resonates with her. And she can help Van der Pop tell additional authentic stories and help build that subculture even larger and larger.
But it still remains focused on these individuals who the brand is authentic to who the story resonates with. That's how we tend to approach it. And that applies across all of our brands from DOJA, the team in Kelowna that continues to build a brand about West Coast to Maitri, the team in Montreal that continues to build a brand that resonates with Quebecois. That's how we tend to approach this idea of remaining authentic.
Matthew: That's, you know, a lot of people might say, "Well," you know, "by limiting the brand to just women that you're cutting out," you know, "half the marketplace," but that's still a huge segment. And also it allows you to focus in a way that a brand that's going after a larger market segment may not, and so you can speak more directly, you know, to your customers.
And it sounds like with Van der Pop, there's a bit of an aspirational quality there too. Aspirational, both in making cannabis have less of a stigma, but also into kind of a lifestyle choice. Do you think that's accurate or no?
Alan: No. I think that's right. I mean, I think, in order to break stigma, we often will tell a narrative about lifestyle, just like in alcohol or in coffee, other psychoactives in our lives, where the majority of the storytelling is about lifestyle because I think that's often how consumers think about and understand consumer products. We tend to go down that route.
I would say with Van der Pop, it's not necessarily that we're only telling a story to women, but we're telling a story from women. So, we're making sure that the story comes from people who believe in the narrative, and I think that's what's key to authenticity. You ultimately need to have a team or an organization or individuals who truly believe in what you're doing, and their belief needs to be unmoored from money, and their belief needs to be about a higher purpose.
Matthew: Yeah. It's funny because you and I are talking about the stigma because we remember, you know, when this was all mostly black market in North America. You know, when I talk to much younger people now, they don't have that stigma at all. Like, they don't think about it, that it's like, there doesn't appear to be there. Like there's a generation that's coming up now, where it's just like, yeah, it's you know, they just don't think about it that way.
And it's refreshing to see but it's also like, I never thought in my lifetime, that would be possible. Like it just, "Wow, this is crazy." So...
Alan: Oh, it's truly amazing. I, man, I'm so spoiled. I get to stand on the shoulders of giants and participate in this industry. And the amount of work, sweat, blood, tears that people in Canada, the U.S. and around the world have put in to putting us into this situation, it's unbelievable, even talking to my father. You know, I mentioned earlier that he co-founded one of Canada's first legal cannabis companies. He'll tell stories now about 16 years ago, sitting down in a dinner with a potential investor, telling them that he was building a medical cannabis company, and the potential investor, a longtime friend saying, "This dinner is over. You are a drug dealer. We're never talking again."
And I compare that to my experience now which is so transformed and really different. We're on a podcast openly talking about, in some ways, the marketing and branding of cannabis, something so second to order relative to legalization. It's unbelievable, I'm... In fact, it's hard for me to even express how lucky I am as an individual to get to be part of this. And it's part of why we work so hard because we have a fundamental belief in Hiku, that cannabis is good. And we will work hard to prove that belief.
Matthew: Any other kind of experiences you have you think that are not typical because your dad was so involved in this business and you see it a different way. I mean, you've got all this background and anything. Has that changed your view at all? Or how does it affect you as you run Hiku?
Alan: I'm sure so much. Right? I'd like to say I'm probably one of the only legal second-generation cannabis entrepreneurs. You know, I'm so influenced by my father and the incredible work that he did. And I think part of the thing that impacts me the most is an incredibly strong desire to see this happen everywhere because I think about all the sweat that my father and just, you know, my father's played some very small role, especially relative to activists who spent their whole life in this.
But he believes this so strongly. And I've been so lucky to watch him work on something that he believes so strongly, that he's still passionate about, and a chance to contribute to that, to be part of that in some small way, really motivates me because I feel very grateful that because of the work of someone that I love, and know, I get to do this. And I said because of the work in some small way of someone I love and know, I get to do this. And that motivates me very much on a day to day basis.
Matthew: Tell us about your president that came over from DOJA into the Hiku family because I'm a little bit familiar with him and his other business he founded, which is really an incredible story in itself. So maybe you can tell us a little about that.
Alan: Yeah. So DOJA, D-O-J-A. So Trent is the...Trent Kitsch. It came from... DOJA...is one of the founders of DOJA. Trent is one of the most inspiring unbelievable people I'll ever meet.
Trent is a lifelong entrepreneur who has really incredible vision to see three, five years out and imagine this world we don't live in today, and he's done and demonstrated this a couple of times. One of the ways that he's contributed to our world and demonstrated his ability to have vision and execute against it, is SAXX Underwear. I mean, Trent, in some ways, single-handedly disrupted the underwear category. Think about a category that [inaudible 00:32:46] brand. It's crazy, Matt. Go ahead. Sorry.
Matthew: But here's the thing about SAXX. It's just so crazy. It's underwear for men. And the problem with traditional underwear or the boxer brief as you put it on and it kind of smashes everything like a pancake. The SAXX creates this cove for your man-parts, so they can be safely protected in their own world and not bounced around like a speed punching bag from your legs. So, sorry, any ladies out there. That's too much detail.
Alan: I thought that was quite an eloquent explanation. I liked that.
Matthew: I mean, I don't know why someone else didn't think of this. It's amazing, but then it's like you're creating a category, people aren't sure why they'd use that. He's kind of a gritty guerrilla marketer in getting the word out.
Alen: Trent honestly is an amazing guy. Think about a category that could be harder to get into than underwear, wholly unbranded, unsexy thing, and men's underwear. Something that people historically don't even really care about, because every pair is effectively the same. And Trent comes along with this different product, and then a wholly different marketing strategy. Trent thinks, "Okay, well, where would men buy underwear if they don't currently buy it?" "Well, I bet you, they'd buy it at the golf course."
So he figures out a way to sell underwear at golf courses, right? I bet you, they buy it at the baseball game. Let's figure out a way to get underwear sold at the baseball games. And then, let's do advertising to men directly. How do I tell them a story about why they should buy my underwear? I mean, it's really unbelievable.
And you can imagine how Trent can contribute to cannabis, given the rant I went on earlier about how I think this is so much of a consumer product and about brand and about experience, and the chance to offer something different, and offer a story that's new, that's refreshing, and a story that's about education. Matt, you just basically educated me on SAXX, so clearly Trent is able to get that message out there, right? It's amazing.
Matthew: Well the funny thing is is that, I heard him on a podcast, gosh, long time ago now, like at least a year or two, maybe more, and I still remember it. And I was thinking, "I haven't gotten a pair but the moment," like, "I want to get a pair." I think once I get back to the States, I'll get one because I don't see why I should be living in the underwear dark ages anymore. It's ridiculous. I was like, "My underwear now feel like a medieval torture garment, like a chastity belt. Like, I gotta some SAXX here." Okay.
So tell me, how do you see... We're kind of evolving quickly here, very quickly. The market is changing, dispensaries are coming in Canada, you're going to have to move pretty quick. I mean, not that there's like a stopwatch on you but the market's going to be moving all over the place, preferences are going to be changing, things are gonna be happening. How do you kind of orient yourself on how you wanna build this brand? Is it kind of like a build, measure, learn? Are you talking to customers or what are you thinking about there?
Alan: I'll give just two thoughts, one, perfectly okay with the stopwatch. You know, we've had a wild three years. And the chance to continue to move fast and, and evolve is part of why we get up every day. And a year and a half ago we were one coffee shop, and you know, we had done our first raise at a $4 million pre-money valuation. And today we're north of $500 million business that has nearly 100 employees. We have been lucky to move fast, and we have, you know, I think, really big aspirations.
And so, one, I'm actually excited by the pace of the Canadian cannabis movement is happening because I do think Canada will set the pace for the entire world. So it's just my first thought. Second thought in terms of like how we think about our evolution, so much of it is about this idea of launching and iterating. I think as an individual, part of my guiding light is this idea of progress over perfection and making sure that we push forward and recognizing that every step forward is a step in the right direction for cannabis legalization and cannabis normalization.
And that the integration of cannabis in society will take time, and it will be a learning process, both for businesses and for consumers. And we need to be willing to if we believe that education is key, we need to be able to be willing to teach, to learn, to react, and to evolve. And it's part of, Matt, why we're a retail business. And I think retail is the best path to do that.
It's the only way for us to really interact with one-to-one with consumers. I'm so passionate about the chance to talk to a consumer in Winnipeg or in Vancouver or in Calgary in our retail stores directly to build a relationship with them and to learn from them about how we can tell stories better and how we can help people join the legal cannabis movement.
Matthew: Yeah. It's interesting when I talk to people at dispensaries, and mostly in Colorado, there's still such a broad spectrum of what people want and identify with. Some people go to like there's one place that considers itself like the Costco of cannabis where it's premium grade, not the best top shelf, but it's premium grade, but kind of discount pricing and there's no fluff for marketing and it's very bare bones.
Then there's other people that are identifying with brands, other people that only smoke, consume vape pens and it's just like, "Wow, this..." I imagine there's gonna be some consolidation and the market's going to move towards maybe just a few things. But it's just amazing watching this happen, this starburst. So I think it's gonna be interesting watching you build this brand, and I wish you all the best. But before we close, I want to ask you a couple personal development questions, help listeners get a better sense of who you are as a person. So with that, is there a book that has had a big impact on your life or way of thinking that you would like to share?
Alan: Oh, I love that question. I'm a huge fan of reading, it's one of the ways or the best way for me to decompress at the end of the day. I find often I get so excited about what's going on in Canada, and just in cannabis generally, that I, you know, need a chance to decompress. And I often tend to move towards science fiction books because they challenge my mind and also give me this, you know, new problem or this new world to think about. So, I can think about a recent book that's been impactful for me. It's called the "The Three-Body Problem." Have you heard of this book, Matt?
Matthew: No, no. I haven't.
Alan: All right. "The Three-Body Problem" is a Chinese science fiction book. It's one of the more prolific Chinese science fiction books. And "The Three-Body Problem" is, I won't give it away but it's very briefly about this idea exploring the thought, what happens if we do contact other life in the universe? And it explores this idea and how that might work out both positively and negatively for society. And it does it in an incredibly realistic, interesting way.
And I have had lots of love for both a thought experiment and the way it asked questions about society, about who we are, about what's important to us, about why we do the things we do, and how we would react in times of happiness and times of crisis. Because I think sometimes we think as a society as people that the way we live today is the only way that people have ever lived. And we forget that almost all of our habits are new, and even something like tobacco, I mean, tobacco is only hundreds of years old in terms of its adoption in mainstream society.
There's an argument that tobacco was effectively discovered by Western Europeans who came to North America, who historically had never really even seen tobacco. And then we see how quickly both the adoption of tobacco can happen all across the globe, and then how quickly we can work to reduce it. Our behaviors are very, very, very new.
And because I'm in the cannabis industry, I have lots of love for thinking about how our behaviors could change. If we had different information, if we had different challenges, we might make different decisions. And let's be open to that, and let's recognize that the thing we do today may very well not be the thing we do tomorrow. And the thing we do today was definitely not the thing we did 100 years ago.
Matthew: Yeah. So true, especially when you look at something like Uber. It wouldn't have been possible without total smartphone immersion of the entire culture. But then as soon as it's there, boom, taxi industry transformed.
Alan: Totally gone.
Matthew: It's like...totally gone. Yeah. People used to pay 500 to 800 to a million dollars for a medallion in New York City. And now they're just plummeting, you know, people don't want them anymore, It's a liability, and it's just like, "What happened?" That was just a phase transition. Amazing how that can happen. You're right.
Alan: Yeah. It's incredible. So, "The Three-Body Problem."
Matthew: Yes, the three body parts. Haven't heard of that one.
Alan: "The Three-Body Problem."
Matthew: "The Three-Body Problem." Is there a tool you consider helpful to your business productivity that you'd like to share?
Alan: Also a question I love. Okay. So, one very practical. One is Trello. Do you know Trello?
Alan: So, I love Trello. So Trello is like, just in terms of being productivity oriented, and having a list. Trello to me by far best digital list and project management piece of software that's out there. It's incredibly good at allowing me to say, "Here's what I need to do." Here's...I'll just very explicitly say the way I organized it. I have things I need to do in the next hour, things I need to do in the next day, things I need to do in the next week, things I need to do in the next month, things I need to do in the next quarter, things that I do in the next year.
And, you know, I have a running list of things, and probably shift between boards, because Trello is organized by boards. So it gives me this very simple way to visually see what's at stake. When I get up in the morning, what I have to do, and what I need to be ready for and, and think about. I I love Trello. So that would probably my core tool. That and I make sourdough bread. I really like baking. So, I have to work on my sourdough starter every day.
So, I think the process of getting up and getting to feed my sourdough starter and looking forward to every weekend, baking bread, is a really nice grounding mechanism for me. It's something simple, something I get to contribute, something that's in some ways both instant and takes time, something that evolves every time because it's a living thing, a sourdough starter. Every time it's sort of different but something that I can count on. I don't know, it's part of my day to day.
Matthew: You know, we're kind of in a carb bashing culture. But I've heard that there's a tremendous health benefits to the sourdough bread if made the right way. Can you talk about that at all?
Alan: Well, and there's an argument that sourdough because it's a living bacteria potentially eats a lot of the things in bread that are potential, sort of, potentially in this sort of negative bucket of things we don't necessarily want to consume a lot of. So I think there's less gluten in sourdough bread or less harmful, gluten in sourdough bread.
Honestly, I eat it because I think it's delicious. But I recognize that, you know, carbs are not for everybody. For me, it's one of the true joys in my life, is a chance to bake a loaf of bread, share it with people, get to eat this fresh living thing that I made with some butter and, you know, enjoy a sunny Saturday morning.
Matthew: Man, I'm getting hungry now. There's a huge difference between, like a store-bought, you know, Saran bagged and the fresh is just massive difference in the sourdoughs I've consumed where I don't like kind of the store in a bag version, it just doesn't taste good. And then you go someplace that's like, "Oh, I just made it fresh." And it's close to a religious experience when you get the right bread.
Alan: I love it, and so a live sourdough starter, also integrates local bacteria, right? So there is something about my sourdough starter that's local to my home or local to Toronto. And I guess I have so much love for that idea as well. Like, it's something that's both very personal as in my sourdough starter is nothing like anyone else's, and something that I can really easily share. I don't know why, but for some reason it's a part of my ritual that I find very grounding and satisfying.
Matthew: Well, Alan, we covered a lot today. Thanks for coming on the show. Before we close, can you tell listeners how they can find out more about Hiku, and your brands, and how to follow you and to see your sourdough recipe?
Alan: Matt, thank you for having me. I'm really thankful for the chance to chat. As I said, I have listened to your podcast a lot. And at some point along my journey as I was trying to understand all of the different facets of the cannabis industry, someone gave me printed transcribed notes of your podcasts.
Matthew: All right. I can't hear that enough. That was great.
Alan: It was amazing. They're like, "This is the source of truth." It's like, "Oh, okay. Well, I guess I got a lot of reading to do." So, in terms of finding Hiku, we're available at hiku.com, H-I-K-U.com. We are a publicly traded company in Canada, our stock ticker is H-I-K-U, as you could guess. We have multiple different brands, whether Tokyo Smoke, DOJA, Van der Pop, Maitri, M-A-I-R-T-R-I. So you can find all of those brands online, their individual Instagrams.
There's lots of Hiku content out there. And, you know, I would love for anyone out there to, you know, to visit Hiku, to visit our brands. And also tell us what you think. You can always email info@hiku, which I often read. And, you know, as I said earlier, and I stand by this, we have lots of work to do. And a huge part of that is learning from our consumers, our potential customers, our community, and continuing to be better.
Matthew: Alan, thanks so much for coming on the show today. We really appreciate it. And good luck to you in everything you're doing up in Canada. Keep us updated.
Alan: Thank you again, I really appreciate it. I'll come back anytime.
Karson Humiston is the founder of Vangst, a multi-state recruiting company focused on the cannabis space. Karson is on the Forbes list of The Top 30 Under 30 entrepreneurs on the rise.
Listen in as Karson describes how to hire the perfect candidate to help your business grow. Karson also lays out how to create a successful career in the cannabis industry and what kind of candidates are getting hired.
– How Snoop Dogg’s VC fund invested in Vangst
– Common mistakes employers make hiring
– The devastating math behind misfiring
– How to ensure employees are successful in their new roles
– Enticing executives from other industries
Learn more at:
What are the 5 trends disrupting the cannabis industry right now?
Find out with your free report at http://www.cannaInsider.com/trends
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.
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As the cannabis industry mushrooms in growth, businesses are struggling to find talented individuals to fill key roles. Here to tell us how companies are solving this problem is Karson Humiston, founder of Vangst, a multi-state staffing agency focused on the cannabis industry. Karson, welcome to "CannaInsider."
Karson: Matt, thanks for having me on "CannaInsider." I'm excited to be part of this.
Matthew: Give us a sense of geography. Where in the world are you today?
Karson: Well, Vangst is based in Denver, Colorado, and Santa Monica, California. Today, I'm actually in Washington, DC for the NCIA lobby days, but typically I split my time between our two offices in Denver and Los Angeles.
Matthew: Okay. And I'm in Edinburgh, Scotland today.
Karson: Wow. Not bad.
Matthew: Not bad. Yeah. Give us a little background. What is Vangst at a high level? Give us a sense.
Karson: Sure. Vangst as a recruiting resource for the cannabis industry. We started in 2015 and since that time, we've connected over 5,500 people with jobs at leading cannabis companies around the U.S. and Canada.
Karson: We connect these people, these professionals with jobs for direct hire, employee on demand in our job board, which I'm sure I can get into a little bit later on in the podcast. But that's how we go about connecting people from all different industries with jobs in this industry. And we think it's very critical that as this industry continues to move forward, the best and the brightest from all different industries are bringing their skills, bringing their experience, bringing their talent, bringing their passion into this space.
Matthew: Well, tell us a little bit about your background and journey and how you got started with the idea for Vangst and how it kind of matured and evolved.
Karson: Okay. I was a senior in college at St. Lawrence University in upstate New York. And I was running a student travel company that I founded called On Track Adventures. And as the end of my senior year came around, I sent an email out to my network which consisted of current students and recent college graduates, and I asked them which industries they were most excited about, most interested going and attempting to get a job in. And there was a huge overwhelming response to the cannabis industry, which looking back on it, it's very forward thinking of my age, millennials, to be thinking that the cannabis industry would be where it is even today and in the future because, in 2015, it was nowhere near as popular as it is today. But this is, you know, this intrigued me to go to a cannabis trade show.
And I went to a trade show and I was really impressed and surprised by the types of businesses that were there, the types of professionals in the industry. Obviously, my own stigma to the industry changed and I asked the companies, "What positions are you hiring for?" and it was mad. It was every type of position. It was chemical engineer, sales manager, CTOs. I mean, just every type of position that you can imagine was needed in the industry, which of course, I didn't realize. I thought it was growers, budtenders, dispensary managers, and there were so many more. Accountants, CFOs, controllers, everything along the financial side. And this was still very early. So, I asked the companies, "How do you go about finding your employees?" And they said, "It's tough. Right now if we post on traditional job boards, our job postings are taken down and flag because of the cannabis industry," which since that time that has actually changed. But they said, there's not an industry-specific search firm. There's not a firm that helps us with temporary employees. And so it was very hard to find employees outside of our own networks. And I let them know that I have a very big network of students and recent grads, so if they're interested in hiring one, I own a company called Gradjuana which was just something I made up on the fly. Green jobs for grad, Gradjuana.
Matthew: I like it.
Karson: And the logo was completely ridiculous. A graduation cap with a weed hat coming off of it. And I went back to St. Lawrence and I made an inexpensive website on Wix and started reaching out to all the people who I had met and I said, "I'm moving to Denver, and let me follow up. Let me help you find that in Turner recent grad that you told me that you need." And so I graduated, I moved out to Denver to start Gradjuana. Of course, my friends and family were horrified that I was starting a weed hiring company. And it was off to the races from there. Our first plan was Openvape, and we found them an accountant named Chiara. Our second client was CannaAdvisors. We help them find a construction project manager, a technical writer, and an executive assistant, and I was able to use the revenue from those first searches to start hiring recruiters.
And since that time, we're a team of 40 now. Then we've hired recruiters with all different recruiting background. And so we have recruiters that focus on all the very scientific, very technical roles, so those high-level cultivations high-level labs, high-level chemists type roles, and they know how to ask those questions that a lot of times our clients don't know how to ask. We've hired recruiters who solely focused on retail. We've hired recruiters who solely focused on all of the ancillary position. So, accounting, finance, back office. And that's a little bit about...I know I kind of went out of ramp, but that's a little bit about where we are today.
Matthew: Well, it's clear that you lack ambition, Karson, and you're lazy. Tell me, how old are you? I don't even know.
Karson: I'm 25.
Matthew: Oh, my gosh. That's great. You're busting. This is great. This is unbelievable. So you're 25.
Karson: So, someone said to me the other day on...I get asked this all the time. And so someone...I'm in the meeting the other day and the client said, "Okay, we're gonna sign up. This is all great. How old are you?" And I said, "Sixty-three. How old are you?" And the guy just started laughing and I said, "No, I'm just joking. I'm not 63. I'm 25." But I get asked this all the time and, yeah, I'm 25.
Matthew: That's great. I mean, you could be peaking here, like, what if your...this is like the peak of your existence now and it's all gonna be downhill until you get older. I mean, have you considered that?
Karson: No, no, no. I'm not...I'm so far from peaking, so let's not...That's depressing.
Matthew: I'm totally teasing. What kind of person would I be to say that? But I just...Of course, of course. So, one thing I'm curious about here is you've raised capital, correct?
Karson: Yep. Recently, for the first time.
Matthew: Now, how do you go about learning that? I mean, do you reach out to people that have done it? Do you just say, "I'm just gonna start reaching out to people and see what they say?" I mean, how did you orient yourself before you started that process?
Karson: I think the first thing to note is to get an understanding of if you actually need to raise capital. And so we got to a place where we had been going for two years and things were looking great and I hadn't thought that I was going to need it. And we realized that the opportunity in this industry is so big and the time to grow is right now. And because of how quickly we wanted to scale and to dominate in several more markets that we were gonna need some upfront capital to do so. And so I think the first step is getting an understanding of, "Do you even need to do this?" I think a lot of people think, "I'm starting a business. The first thing I need to do is go and raise money."
For us, we had a proven concept, we were well-liked and well-known in the market, and we knew exactly what it was that we were going to do. And so I would say that that's the first step, getting an understanding of if you need it. Step two is, how are you going to use it? How are you going to put it to best use? What are...Yeah. Just how are you gonna use it? How are you gonna put it to best use? So those are the first two steps that my team and I identified internally, and then, of course, from there, it's going out and finding the right investors, right partners to be part of this with you. And I think this is the most important part.
In this industry, particularly, there's so much money coming into the space that I don't think the issue is finding the money. I think the issue is finding the right people who you align with, who your values align with, who have experience doing what you're attempting to do. And that's exactly what we were fortunate to find. Our lead investors, Layer Hippo, out of New York City, and our other investors, Casa Verde, Los Angeles based cannabis firm. And I'm so excited to have them both part of this team and they both fill in gaps of areas that I lack and they complement each other very, very well. So, that's a little bit about what I have to say about raising capital.
Matthew: So, it's Casa Verde Snoop Dogg's venture capital arm?
Karson: Yep. Yep.
Matthew: Cool. Did you had an opportunity to meets Snoop?
Karson: I have not met Snoop yet, no.
Matthew: Gosh. That's fantastic. Okay. So let's dig in a little bit to Vangst here. Now, what states are you probably primarily focused on than it would just say it's mostly...I mean, California is just so big. Are you focused on that, primarily, you're based there and you're kind of you're looking at other states but that's the focus, or what's your strategy?
Karson: For direct hire, we're live in 13 states, and the states that we're in right now are Colorado, California, Washington, Oregon, Illinois, Nevada, Arizona, Massachusetts, Maryland, Ohio, Pennsylvania, Florida, and New York. Those are the 13 that we're in. Out of those states, the ones that we're most dominant are Colorado and California. And actually based on our data, one of the awesome things we have is our job board, and the job boards going great and we're able to collect so much data. And so through our data, what we were able to find was that last year the majority of the jobs that we were filling were in...I'll tell you the five most popular cities. It was Denver, LA, San Francisco, Seattle and Portland.
You know, to that extent, if you look at how many jobs exist, the market with the most jobs is California. There's right now around 41,000 people full-time employed in California, and the market behind that is Colorado with about 26,000 employees. And so it makes sense for us to be based in those two states, have the majority of our focus on those two states right now. And as additional states continue to grow and legalization continues to move forward, we, of course, will be there, meeting new clients, meeting all different types of candidates and helping those states grow. But right now the majority of jobs are in Colorado and California, and therefore the majority of our clients and our candidates are there, so it makes sense for us to be there.
Matthew: What differences do you notice between the Colorado and California markets in terms of business environment, the jobs that are being offered, maybe the style and approach of the business owners? Anything you can tell us there?
Karson: I think the main difference for us and our business is the difference in regulation around employment between Colorado and California. One thing that's very important to us, especially for our on-demand business, on-demand meaning when employers need temporary labor, they can call Vangst on-demand employee whether it be a trimmer, a budtender, a packager or somebody who works for us. There are W2, we provide them with workers compensation, we take care of all the payroll taxes, there are employee. It's very important for us to remain up to date on each state's regulation and remain compliant. So, there's a difference between who's qualified to work in Colorado than who's qualified to work in California.
So, for example, in Colorado, in order to work in a business where you're actually touching the plant, you need to have what's called MED badge. You apply for the MED badge through the MED. And the basic criteria is a clean background and being up to date on your taxes. If you meet those requirements, you're eligible to receive a badge, then every couple years, you have to get the badge renewed. It's our job to ensure that people that we're employing are up to date on their badge, their badges and expired and that they continuously check all the boxes in order to work in the state.
And California, I would say the main challenge is, the rules are still somewhat unclear. We know that there's not...1099 is not allowed with any cannabis business. This is something that recently came out. But the general rules of who's qualified to work in California cannabis continue to be somewhat unclear. Right now the standard has been clean background. So, I think the main challenge is just remaining up to date and compliant around employment regulations between the two markets.
Matthew: Okay. So, I didn't realize. You actually...They're the employees of Vangst, so you handle all kind...Do you handle the benefits and all the tax and paperwork and all the things so that the employer can just say, "Okay. I want to hire this person or not, and then here's what I pay monthly," and then Vangst takes care of all the back office paperwork?
Karson: So, there's two ways that we...Like, I was talking about a little bit earlier, there's direct hire searches, where a company says, "We need a COO. We'd love someone from consumer packaged goods. Here's all the requirements that we need." And then one of our executive recruiters will go out and actually head-hunt that individual. So they'll find them on LinkedIn, they're probably currently employed somewhere else. From there, we'll do all this interviewing, reference checking, background checking, present our clients with the top couple candidates. And then when the offer is made, the candidate goes directly on that client's payroll and that client's responsible for taking care of the benefits, etc.
What I was just referring to is our on-demand component, which is the component of our business. It's actually growing the quickest right now and that it gets me very excited. And this is for companies that have short-term seasonal needs which, as you can imagine, is pretty large in the cannabis industry. We have clients who have a harvest and they need growers for 12 days and they will be able to hire Vangst growers. So, as you were just talking about the Vangst employees, we verified their I9s, their RW2s, we're handling the benefits, we're handling the workers' compensation, we're handling all the state-federal taxes surrounding that employee and we're actually managing that employee telling them, "Hey, today you're going to be going to native roots. Tomorrow you're going to be going to good chemistry," and giving them their schedule for the week based on the demand that our clients need.
Matthew: Okay. That makes sense. That seems like it would be a popular model, that on-demand. And how long is the typical on-demand? Are you seeing that more like you mentioned in trimmers and growers and things around actual harvesting of the plant? Is that worth the on-demand the most popular?
Karson: One segment that's very popular is these entry-level positions, exactly what you're talking about, trimmers, growers, post-harvest staff. On the processing side, extraction, technicians, packagers, those types of positions. What we're really seeing kickoff is higher level on-demand longer-term needs. Let's say that somebody wins a license in Maryland. They need a Director of Cultivation to come and get them set up. They need someone to come in, help them source nutrients, help them source equipment, help them write their SOP, sometimes even help them design their facility, help them hire staff, help them train staff, and then move on to the next project. So we're getting much longer-term engagements with companies that say, "I need a Director of Cultivation. Somebody from large-scale commercial agriculture who has a scientific mind, who's then transitioned into the cannabis industry and has at least three years of large-scale commercial cannabis cultivation and management experience. I need them to come and help me get set up." We have these people who work for us. We have a great bunch of them. And we essentially lease them out to our clients for sometimes six months, sometimes six-week engagements.
Matthew: Okay. So, I imagine more for the direct hires, you're having to reach out to other industries to find talent. Can you tell us some of the other industries you find yourself reaching out to?
Karson: Sure. I think a really big one for us has been in pharmaceutical space. Another one has been large-scale commercial agriculture or consumer packaged goods. And then, you know, kind of a surprising one, I think, maybe some people would think but it's very big for us is technology startups. Technology in this space is really big. We have clients like LeafLink technology and they're recruiting engineers out of Snapchat, BuzzFeed, lots of mainstream technology companies. You know, an example I like to give is a company called Baker Technologies.
Karson: We work with them. We placed over 50 or 60 people with them and their Director of Sales, Carter, who's a total rock star, she came out of Salesforce and she's built out a team of inside sales, outside sales, and customer success, and she's pulled it in top talent from all the different technology company. So, the technology scene in this industry is exploding and it's amazing to see the type of talent we've been able to attract into the cannabis tech startups.
Matthew: I know it's a hard question to answer. But what is the relocation package look like? Is that happening a lot? Is that more the direct higher level and where do you see that going on? And then how do people put together attractive relocation packages?
Karson: Great. So, I'm gonna answer your question in two-fold. One is, we do see a lot of relocation happening particularly on the plant touching roles director level. Again, to that example that I just made, somebody wins a license in Maryland, maybe they..rather than doing the on-demand platform, maybe they would like to hire somebody full-time who can be with them and help them grow for the next five years and they need to relocate somebody from Colorado, Washington, Oregon where they've been part of the large-scale commercial legal compliant cannabis industry for the past few years, help them bring that expertise to Maryland. We see that very often.
Typically, we're seeing 20% pay increase to do so to have someone essentially uproot their life and move. And we're also seeing a lot of stock options. And so employees can have skin in the game and really be part of the new company that they're joining. In my opinion, people treat things better if they're an owner than a renter. So in our business, we are rolling out of stock option plan where everybody in the company will be part of it because we're all building this together and I think that a lot of companies in this industry have adopted that mentality and it's been able to help them get top level talent.
Matthew: Talk about turnover for a minute. How big a problem is that? And what can employers do about it?
Karson: Turnover is a huge problem and it's a very expensive problem. And in my opinion, turnover comes down to...Of course, it comes down to making the wrong hires and that's what everyone always says, "Oh, I hired this person, they're terrible. That's why I'm having turnover." But if you look inside of your company, I believe a lot of turnover comes from lack of preparation and not making necessarily a bad hire for the person, but hiring the wrong person with the wrong experience, the wrong skill set who was not set up for success to do what you need them to do. So, while I completely agree that hiring the best people is critical, more so critical than that, I think, it's setting people up for success and making sure that as employers you know who it is you want hiring. If you want, I can elaborate more on that.
Matthew: Sure, yeah. Please, do.
Karson: Okay. So, I think that sort of a recipe for success and making a hire is, step one, figuring out who it is that you need to hire, and in order to figure this out, I think, the best way to do so is getting an understanding of what needs to be accomplished through this person. What is the gap that you're looking to fill? So an example I could give is, maybe you're looking...maybe your company needs to grow sales by 10% month over month and you need to bring in sales reps to do so. Figuring out what exactly that salesperson needs to do to help you reach that larger goal. So maybe the salesperson needs to bring in $50,000 in new business a month. That needs to be clearly thought out and explained that you can get an understanding of, "Okay. My need is, I need to increase sales by 10% month over month. In order to do this, I need five salespeople who are all bringing in $50,000 worth of new business per month."
Now that you have what the goal of these hires are, it's easier to work backwards. So now we're understanding that we need to hire a salesperson, the salesperson needs to bring in $50,000 worth of new business per month. How do you anticipate them going about doing this? Are they going to be expected to create their own list of people to call? Are they gonna be going to trade shows? How many calls a day do you expect them to have to make? What kind of marketing material are they gonna have? And really putting together these things as an employer that you can...You know, so you're setting the expectation for the employee and then, you know, to that point, you are now figuring out, "Where is this? Where in the world is this person right now?"
Let's think about companies where a person would be expected to make $50,000 in sales a month, obviously, finding someone who's selling something similar to what you're currently selling whether it be a product or a technology, and so then you can identify, "This is the type of candidate who I'm looking for. I'd like to find someone with five years experience at a SaaS startup who's had to hit these goals." And then at least you have a clear picture of what you need the new hire to do, and who the new person potentially is, and where they potentially could be working right now.
Matthew: Okay. And you mentioned the expectations a little bit. That's a key thing. How do you...I mean, you mentioned putting numbers around expectations, but is there anything else you would share about creating expectations for a new hire that's coming in?
Karson: Well, it doesn't always have to be numbers, of course, because not everything is sales. That was just the example that I was using. But I think it's very important to let a candidate know in the interview process how there'll be judged. And so in that last example I was using, it would be important to say, your goals may be after three months ramp-up period are going to be to $50,000 in new business per month. Talk to me about your last company's quota. Talk to me about how you went about ensuring that each month you met your quota. Talk to me about a time you missed your quota and what changes you made to ensure that didn't happen again. And finding somebody who's done in the past what you need them to do, again, is critical and also laying the expectation out for them that, "This is how we're measuring you. This is how we're going to determine if you're successful or if you're not successful," so that you're very clear and you have communicated to people what you're expecting from them, because people, employees cannot read minds.
They're not mind readers and I've made this mistake myself where I think that if I just, you know, wave a wand in the air, the team is gonna know what I want them to do. And it's not the reality. So, setting the expectations upfront, I think, is very cool. And then, of course, when they start in the new job, giving them a clear roadmap and timeframe of, "This is what I'm expecting this month. This is what I'm expecting this month. This is what I'm expecting this month." Clear timeline, deadlines so that it's easier to keep track of and manage.
Matthew: You mentioned to me before that you consider on the job learning laziness. Can you tell me what you mean by that?
Karson: Did I say that?
Matthew: You did. You did.
Karson: No, I don't think...I think I meant when employers are expecting their employees to just come in and completely figure it out, that's laziness on the employer.
Matthew: Yes, absolutely.
Karson: Yeah, yeah. That's what I mean. I mean, how can employer... I've seen it happen all the time where they put all the blame on the employee, "This employee sucks." Right? "It's all their fault that this job isn't working out." And we asked them, "Did you lay out the expectations? Did you tell them what you were expecting them to do? Did you tell them the resources that are available to them?" "No, they should just be able to figure that out on their own. That's why I hired them." I think that that is a blame and a cop out for lack of preparation on the employer's end.
Matthew: Yeah. How bad...
Karson: And I'm guilty of it. I'm not...I guarantee you, if anyone on my team is listening to this, they're saying, "Oh, my gosh," because I'm working on improving it and so is my management and team. And fortunately, I have a great team of people around us. But we're all startups. Everybody is learning on the fly. We're all trying to do the best that we can, and so not...Of course, this isn't gonna be completely perfect, but we've found in our business and we've seen in our clients business that setting clear expectations and giving your team the tools that are needed for success has made a huge difference, and it also makes everyone happier. I mean, people want to be successful. Nobody wants to fail. And so when you can lay out a plan that foster success, I think it's a win for everybody.
Matthew: Any suggestions on how to check in on performance with employees without being too overbearing and finding the right balance? Because some people, you know, they like to be handled, you know, tenderly and other people just say, "Cut to the chase. What am I doing wrong? Give me three bullet points and that's all I need."
Karson: Sure. I think timelines and ongoing check-ins, just regular check-ins, maybe it's 15 minutes at the end of the week, whoever the direct manager is. So you've laid out the timeline, you've laid out the expectations. At the end of the week, whoever the direct manager to the employee is, there's a 15-minute check-in where you go over the progress made that week to just ensure that you're on track. And then that way, if there's a problem with them, you can catch it before it's necessarily a problem. And, of course, bigger meetings, maybe on a month, maybe on a monthly basis, every other month, but just a standard consistent check-in so it doesn't feel like an employee randomly gets an email notification, "Need to meet with you to talk about missed goals." If there's a standard recurrent check-in, I think that it's a great time to catch problems before they necessarily even become problems.
Matthew: What can you tell us about trends in pay in the cannabis industry? Any generalizations you can make or anything you can say that would help would-be employers, and also give prospective employees kind of the proper mindset how to think about compensation?
Karson: I think right now everybody thinks the cannabis industry is a gold rush. I'm gonna go into the cannabis industry and I'm gonna make it big in two years. I'm gonna have an insane salary. And that's not the reality. The cannabis industry is still faced with dozens and dozens of challenges and hurdles. Like, I mentioned, I'm here today in DC speaking with various members of Congress talking about the challenges we face. And the majority of our clients are affected by 2ADE which virtually sucks away all of their profit. I mean, there's many things working against us in our industry that don't allow our industry to pay as competitively as many other industries though there's this misconception that everyone's printing money right now. That said, employers in the industry are really starting to value bringing in top talent from other industries and they're cutting expenses and other areas to ensure they have a larger payroll budget to be able to hire the best and the brightest.
So, what we've seen and what we...You know, the clients that we work with are people that are gonna work in line with the hire that they're going to make. So if they're going to hire a retail store manager, they're gonna hire in line with where are the candidate is. So, maybe the candidate is a manager of a bar or a restaurant, they're gonna hire in line or potentially even a little bit better if the candidate is expected to take, you know, in updates minds, they're taking a small bit of a risk going into the cannabis industry. So we are seeing parallel pay and sometimes a little bit better pay. And what we're really seeing companies valuing, hiring and understanding the importance of bringing in top talent from different industries.
Matthew: Sometimes people say, "Well, I'll just hire him or her and see how it goes." But there's a real cost to hiring the wrong person. How do you think about that?
Karson: Completely agree. I mean, there's statistics out there that it can be five times the bad hires pay. If you think about... If you add up all the costs and a lot of the intangible costs, if you think about the time it took you to recruit the person, interview the person, hire the person, the time it took you to onboard and train the person, the time that the person spent not doing the right job, not to mention all the mistakes that the person made adding up those costs. And then there's the negativity that goes into having to let somebody go, the negativity to the manager or the owner who actually has to do the firing, the negative energy that this person could have cause to the rest of the organization. The majority of statistics say five times the wrong hires pay, which, again, you would think if you say to yourself, "Okay, $50,000 times five," that number in my head I'm thinking, "Oh my goodness. That is such a gigantic mistake."
But I think because there's so many intangibles that people don't often think that way and they think, "Whatever, I'll just hire this person. I'm only paying them X. It goes bad for a couple months and I'm not out that much money. Who cares?" And that's the wrong mentality and it will affect organizations in ways that employers and entrepreneurs have no way to foresee. So, again, of course, my advice and our entire business is based around making the right hire and making sure part of that is getting...You know, making sure you're hiring the right person with the right skill sets, the right background, then you're hiring the right person and then you're setting them up for success.
Matthew: So some employers suffer from, "We are special" syndrome where they think, "Hey, we've got this great organization that someone would be lucky to come in, and sure we pay last, but the upside to couple years from now is so compelling that they should recognize that." How do you level set expectations in that situation?
Karson: I think everyone thinks they're special. I think that Vangst is very special but I'm not asking people to work for us for free. I think that organizations that value hiring and value bringing in top talent need to figure out a way to have the resources to provide their staff with compelling compensation especially given where the industry is right now and how it's maturing and where the industry is going. That being said, I definitely do think it's reasonable to ask employees to take somewhat of a potentially been in pay, but there has to be a tradeoff. Maybe we're asking you to take a 20% decrease in salary, but in exchange for that we're gonna give you X amount of shares in the company, but in exchange for that, we're gonna give you an opportunity to be a manager in six months if you hit these goals. And so I think there are ways that you can offer...there are ways that you don't have to say, "Take a 20% pay cut. Come work for us. We're the best." I think there's ways you can show them that, "Hey, financially, this is where we are, but here's what we can offer you in exchange, and here's the path to getting you back to where you were previously pay-wise."
Matthew: You know, when someone's being hired, is there any suggestions in terms of how the team should evaluate the person that they go around like, "Okay. Culture, check. Skills match, check."? Is there any other kind of check marks or boxes to check that you would think about?
Karson: I think their previous experience is huge. And when doing interviews, getting concrete examples and concrete, excuse me, stories. Again, to the example I gave. You're hiring a salesperson. Good examples of, "Hey, how do you go about finding new clients? How do you go about taking on cold calls? How do you go about closing meetings? Give me an example of a time that you had a client that you knew are super-interested but they just wouldn't call you back. How did you go and break through that barrier? How did you get through gatekeepers?" And asking very open-ended specific questions so that the candidates can give you real-world experience answers.
It's very easy to say, "I can increase sales by 10%." "Okay. How did you go about doing that? Talk to me about what each month look like." And so that's one. And two, getting an understanding of, the question is, "What did you do?" People often talk about their team, people often talk about their organization. "I helped grow the organization from 2 people to 1,000 people." "Okay, that's great. But obviously, a lot of people were involved in growing the organization from 2 to 1,000. So, talk to you about some things that you specifically did. Were you involved in hiring? Were you involved in managing? Were you involved in budgeting? What were the actual things that you did?"
So, I think open-ended questions are in experience are very key. And then to piggyback off that culture is, of course, very important. Finding people who can mesh well with your team. We've seen a lot of success and people who have come from startups, who have come from wearing multiple hats, who are used to a fast-paced high-growth environment because this industry is a...The entire industry is a startup. It's a startup industry, and then every company is a startup company, so you're toppling startup industry, startup company. You're pulling somebody from a huge corporate America job where they have 5,000 people in their department and with any given problem they can pass it off to somebody else. That's not going to typically go well in the cannabis industry.
Matthew: What advice would you give to employers that don't have the funds to hire candidates they need? They go, "Urgh, I'm listening to Karson here. She's speaking to me directly. I know that I could take my business to the next level except I don't have the funds to hire the people." It's the sharpen the saw problem, like, I wouldn't have to saw as much if my saw was sharper but I don't have the time to stop and sharpen it. So, it's like a circular problem. So, what do they do?
Karson: Yes, it's a tough question. I mean, I've been there. I sell more, make more money, raise money. I mean, like, I don't really know what to tell them. I would say, increase your sales. I mean, companies go out of business because they run out of capital, and so it's important to consistently keeping your eye on the ball on sales and revenue. And so, increase sales and revenue could lead to an increase payroll budget. Beyond that, if you're very passionate about what you're doing, and you believe that maybe you could hire somebody and within three months, you would have the funds to pay them what they need, maybe you'll find a rock star and say, "Listen, right now here's where our company is. If we do one, two, three, we'll be here, and at that point I will be able to afford to pay you." So, that's a second alternative in try to find the right person and paint them a clear roadmap of, "If you do these things together, we'll be able to get the company to a place where we can afford to pay you."
And I've seen plenty of candidates take a risk. I'll give you an example that's obviously close to home for me. Our first employee named Jordan Smith. She started working for us and me, and I could only afford to pay her $15 an hour, four days a week. She was working at a company called SignPost where she was doing cold calls majority of the day and that's what I needed. I needed somebody to help us open doors and find new clients. And I said, "Listen, Jordan, I really can only pay you $15 an hour, four days a week, but if we do X, Y and Z, I'm gonna be able to get you on to a salary, and ultimately, we're going to hire more people."
And Jordan did it, and now Jordan is pretty much running the show at Vangst. Like I said, we're a 40-person team. She's making a lot more than $15 an hour. I'm pretty sure she's making more than I am. And she's killing it and she got to go through this amazing experience of taking the company from the two of us to a 40-person team and we'll inevitably get to 500 and 1,000-person team and she's gone through the whole part. And so I do think that there's a component of experience that you can't put a dollar amount on. And so if you're an employee listening, maybe you'll find that right entrepreneur who you're willing to take a risk on and as long as the employer sets clear expectations of how you can ultimately pay them, you know, sometimes it can work out.
Matthew: Let's transition to a few personal development questions, Karson, that will help listeners get a better sense of who you are, personally. Is there a book that has had a big impact on your life or way of thinking that you'd like to share?
Karson: I read a book in college called the "Seven Habits of Highly Effective People." And that was really impactful to me. And I listened to a podcast that actually my dad shared with me when I was a senior in high school called the "Strangest Secret." It's like only about a 40-minute...It's only about a 40-minute podcast, but I really listened to it every once in a while. The general message is, "You become what you think of." If you think about plants, if you plant poison into the ground, poison will grow out of the ground. You become what you think about and you get out what you put in. That's a principle that I tried to lead my life by, and I'm gonna continue trying to do that.
Matthew: Yeah, that's great. And is there a tool you consider vital to your productivity that you'd like to share?
Karson: A tool that I consider vital to my productivity. I think waking up early is something that is so important because in the morning, you don't have a lot of noise and distraction and it's a great time to think higher level without being bombarded by emails, text, calls and having your mind be cluttered. So, for me, I wake up early and I exercise and I leave my phone on airplane mode and it's just a nice time to think and basically not be harassed.
Matthew: Now, final question here. If some young people are listening or people that are in other career path that wanna get into the industry and they're really thirsting to, but they're not sure the best way to do it. Maybe for the young people first, where do you think there's the most jobs where they could, you know, if they graduate with such and such a degree or have an internship someplace that they have a really good chance of getting hired into the cannabis industry?
Karson: Great question. And, you know, I think there's so many different verticals and so many different ways you can go. I always say, keep your career changer industry. People that say, "I just really wanna work in the cannabis industry," that's not enough. You need to say, "Here's what I'm good at. I just graduated with a degree in accounting. I really understand accounting. I wanna be an accountant in the cannabis industry." And then go out and research companies that are hiring in the cannabis industry. And I bet you, the majority of them have a need for an accountant. So I think it's more a matter of determining what it is that you're passionate about and then you're able to apply that into the cannabis industry.
I mean, Matt, look at you. You're running this crazy successful podcast out of Edinburgh, right? It's not like you had a degree to do a podcast in cannabis. You're great at doing podcasts and people in this industry love you and you're able to find this awesome cool niche. There's so many opportunities like this and it's a very exciting time.
Matthew: Oh, thanks for that, Karson. Well, as we close, tell us, how can listeners find you connect? How can people looking for jobs find out more about jobs in the cannabis space and how can employers that are looking to fill an on-demand job or to have a direct hire reach out to you?
Karson: Vangst.com is the best way to get in touch with us. Vangst.com, as a candidate, you'll get redirected to a place where you can build a profile. Actually, excitingly, we have around 35,000 active candidates that have build out profiles on the platform and about 600 open positions with companies all across the country on the platform. So, if you're a candidate, go to vangst.com, build a profile, scope out the open jobs. If you're an employer, reach out to us directly through vangst.com. We'd love to get on the phone with you, get an understanding of where your business is, what your hiring needs are, and ideally meet you in person and get a plan together so that we can help you plan for hiring the best people, hiring the best people, and then, of course, retaining the best people.
Matthew: And Karson, I...
Karson: Sorry. That was the salesperson in me coming. I know I'm not supposed to sell on this thing.
Matthew: No, you gotta do it, you gotta do it. And you're good at it. Now, before the interview, I said, "Hey, Vangst, is that Dutch?" and you said, "Yes, it is." Tell everybody what Vangst means.
Karson: Vangst means "catch" in Dutch. And the idea is that we're catching talent from all different industries. But my favorite part about Vangst is that if you get place, if you find your job with Vangst, you're considered a Vangster. And if you're a Vangster, on your first day of work, you get a box from us in the mail with some Vangster swag, a cool hat that says, "Damn, it feels good to be a Vangster." And we invite you to lots of exclusive networking event just for Vangsters." We're actually launching a platform Just for Vangsters where many companies will offer discounts. And it's just a great way to connect professionally with... In our opinion, we think Vangsters are the best and brightest in this industry, and it's amazing to have this ecosystem of people that are working amazing jobs and amazing companies. And so that's a little bit about why we chose Vangst and we have this cool network called Vangsters.
Matthew: I like it. Vangster.
Matthew: Well, Karson, thanks so much for coming on the show today and educating us. And I encourage everybody that's looking for a job or that needs to hire someone to reach out to Karson and let her know that CannaInsider is where you heard about her. So, Karson, thanks so much for coming on the show. We really appreciate it.
Karson: Thank you, Matt.
Matthew: If you enjoyed the show today, please consider leaving us review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on "CannaInsider?" Simply send us an email at feedback at cannainsider.com. We'd love to hear from you. Please do not take any information from "CannaInsider" or its guests as medical advice. Contact your licensed physician before taking cannabis for using it for medical treatments.
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Rob Smith started out growing before legalization in rural Maine. Hear his journey from the black-market to the legal market. Rob became a cannabis entrepreneur renting out trim machines, and now his latest invention a plant trainer that allows home-growers that are limited by plant count to get the biggest plants possible.
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– Finding your niche by serving the cannabis community around you
– Transitioning from the black-market to the legal market
– Which trim machines are the best for cannabis
– Why Rob created the Atlas Plant Trainer
– Lessons learned from trying to raise capital too early
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.
We often talk about the dominating cannabis markets like California, Canada, Colorado, and Washington. Today, we're going to hear from a rural New England grower and cannabis entrepreneur, Rob Smith, founder of Atlas Plant Trainer. Rob, welcome to CannaInsider.
Rob: Thanks for having me today, Matt.
Matthew: Give us a sense of geography. Where are you in the world today?
Rob: Well, like you said, I'm smacked up in the middle of Real Maine.
Matthew: Okay. What's the closest city that anybody would recognize?
Rob: So we're about an hour north of Portland and about 10 or 15 minutes outside of Augusta.
Matthew: Okay. And what is Atlas Plant Trainer at a really high level?
Rob: Atlas Plant Trainer is a new innovative product. It's focused on the home growers. It is a modular, customizable, quick together tomato cage allowing growers to maximize their legal plant counts.
Matthew: Okay. You also have another business related to trim, what's that?
Rob: We started Green Harvest Solutions about two years ago where we rent and sell trimming machines. Now, we're all across New England, but we were originally focused just in Maine.
Matthew: Okay. And tell us a little bit more about your background and journey and how you became a cannabis entrepreneur.
Rob: Well, like a few of your guests, I am a long-time cannabis consumer and enthusiast. I have been a daily cannabis consumer since about the age of 15. And all throughout my young adult life, I felt normal like I was supposed to be...cannabis made me feel the way that I was supposed to feel, and that was very hard for my parents to understand. Thankfully, now I have science in the endocannabinoid system to stand behind me to be able to say there was a reason for that. So after a couple of years of consuming cannabis and realizing the benefits of the medicine and the plant, I got into the black-market supply side, helping out my friends and family procure their cannabis and other items, so to speak.
And that occurred for probably 12, 15 years before the legal cannabis industry started calling my name. So about four years ago, I started growing my own cannabis for the first time besides a few outdoor grows that were trial and error, so to speak, and found I had a really a decently green thumb, and so we started growing a medicine for other people. We became caregivers in Maine. The caregiver program in Main was very liberal. We were allowed to grow for five patients per caregiver, up to six flowering plants per patient, and we could put both my wife and I underneath one roof. So add in our own medical cannabis plants and we could have 72 flowering plants under one roof at one point in time.
So we moved out of the basement grow and built our own grow exactly the way that we wanted it on the second level of our garage and expanded our patient count and really just maximized on the opportunity that was in front of us, growing amazing medicine for patients ranging from retired school teachers to veterans. One of my favorite stories that I love to share about the caregiving side is we had a veteran that started using our fairly high dosage caramels, and after three months of working with us, was able to go into his doctor and hand over his three bottles of prescription pills for his pain and he's been with us for about two years and is still off of those pain pills. So we love being able to help people overcome whatever ailment they have with cannabis.
Matthew: Wow. What did the doctor say? Did he tell you what the doctor...was he just like, "Hey, WTF? Like, what happened here?"
Rob: Yeah. So he goes to the VA and I'm sure we're all familiar about how some of those doctors feel and their stance. But the doctor told him that if at any point in time he needed to take a drug test and tested dirty for cannabis, that they wouldn't be able to prescribe him medication anymore. And my patient basically said, "That's fine, I don't think I'm gonna need your medication anymore," and turned around and walked out the office.
Matthew: Yeah. I hear so many horror stories about the VA and I know, you know, there's some people with mixed opinions, but that's what I think what public health care would look like if we went that route in the U.S. unfortunately. It's like, it's just...I don't know if that's what everybody wants and it's probably not optimal. I'd prefer to see state by state have a best crack at it versus at the federal level.
Rob: Yeah, I totally agree. I would like to see it have the medicinal effects proven on the smaller scale and before it reaches "Big Pharma" and changes the landscape of what we're working so hard at right now.
Matthew: So, tell me what you...where you feel like we're at right now. I mean, we have 30 states where cannabis is legal on some level, whether medicinal or adult use. How do you feel like...you've transitioned from, I love how you said, the supply side. That's a great way of saying it, "I'm on the supply side." But so you were sort of growing cannabis prior to full legalization and where do you feel like we're at? You made a transition from the black market now to the legal market. Where do you feel like things are at in terms of opportunity, challenges, what you like, what you don't like, and where the industry is headed?
Rob: Yeah, it's kinda crazy. I was, you know, talking about this with a really old friend just the other day, how we used to sit around and smoke joints at 17, 18 years old, and wonder if we were ever going to see legalization. And we used to place bets that by the time we had grandkids, we would be seeing legal cannabis. So the most remarkable thing in the change of the industry for me is how fast it has evolved and taken shape and changed the landscape. Like you said, it's 29 states with some level of legalization, and I believe 60% of the U.S. population lives in a recreational legal state. So, you know, the fast-moving aspect of the industry and how it's taken hold so quickly despite the best efforts of our government.
And the other aspect is the more that the industry does take hold and things get normalized, the amount of people that are coming out of the cannabis closet and are trying cannabis for the first time and experiencing what they...you know, feeling normal and what having cannabinoids in their system feels like. Whether that's THC or CBD, it's just remarkable the medicinal effects that this plant can have in the ailments that is taking over, and the more that we learn those effects, the more people that are going to continue to try it and have success with it.
Matthew: So even, you know, when I was a kid, or a kid at high school, in high school, there was...it was so hard to get consistent product. You would get, you know, ditch weed one week and then it was something with fungus the next week and it was just...you take for granted now that you can get this consistent product that's grown in a great environment and treated well. Before, it might've been grown in diesel fumes or in questionable places using questionable methods. So just that consistency is just something that's just...it's so welcome. And I think that we're...you know, I'm already taking for granted, but well put. I wanna talk a little bit about what you see in places like California and Canada. What do you notice that's different about those markets than say where you are in Maine?
Rob: Oh, man, the openness and the acceptingness, if that's even a word.
Matthew: We just made a word. Acceptingness.
Rob: Yeah, today it is, of the way that cannabis is talked about and, you know, being a grower and working with so many growers in our two businesses, it's still very hush hush to talk about growing plants or even consuming cannabis up here in Maine. Where when we were in Canada, it was talked about at bars and restaurants and like it was a beer or what you ate for dinner last night. And our experience is like that in some of the more legal states, that is, it's more accepted and it's part of everyday conversation as opposed to, in Maine, it's still very hush hush. I even go into the grow shops around here and there is still people talking about...hinting at growing tomatoes and, you know, "If I had a grow tent in my basement and if I had this light, what size of plant do you think that I could get out of this tomato plants? How many tomatoes do you think I could get?"
So it's really comical to see that, but I'd say we're very much wanting to be part of that change in the openness and accepting of cannabis consumption and growing.
Matthew: Now, for people...You mentioned you're also involved in the trimming business and renting out trim equipment. I wanna talk about that. First, for our new listeners, can you just describe what trimming means for the small part of the audience that's listening that doesn't know? And then perhaps, what are the most common mistakes you see both new and experienced trimmers make in regards to trimming?
Rob: Sure, sure. Absolutely. Drying, trimming, and curing was one of our first passions with cannabis and the differences that we could see. One of the biggest things that...so, let me get back to the original question, sorry. Trimming is the act of taking off the fan leaves and then the sugar leaves from around the bud of the plant. That leaves you with just the most potent product and the product that is actually considered the flower and doesn't have as much chlorophyll naturally in it, where leaves, we learned in biology class, leaves absorb the sun, create the chlorophyll, and feed the plant by processing the nutrients, etc. So trimming is after you've cut the plant down, after it's ready to harvest, is taking first the fan leaves off that don't have any trichomes usually on it, and then preferably, after drying the plant, then you would trim the sugar leaves off and usually save that for processing: edibles, concentrates, and that would leave you with just the bud, the smokable flower product.
One of the biggest mistakes and I kinda hinted at it, is we really push for every grower that we work with to do dry trimming. You know, one of the reasons we got into the actual business of renting out the trimming machine was we saw a lot of product that was grown really well and cared for throughout the growth cycle but was speed dried, not cured, wet trimmed and thrown in a bag. And we feel and there's lots of science behind it that, you know, 50% of your final product comes in after you're done growing the plant. You have to, you know, care for that plant throughout its cycle until you're consuming and even through when it's in a jar. So, you know, the science behind that is every leaf has chlorophyll in it and when you cut a leaf, that chlorophyll splits to the tip and back into the bud.
So with hand trimming, maybe you cut that leaf once to three or four times and it's not forcing a bunch of chlorophyll back in, but with a machine trim like we rent out, if you were to wet trim with those, those blades are cutting that leaf, you know, 1,000, 10,000, who really knows how many times, but every time, it's forcing a little bit of chlorophyll back into that bud. So I'm sure everybody's experienced, you know, opening up a bag or a jar and smelling that, and hey, that freshly cut long smell, that's usually that leftover chlorophyll smell from wet trimming. So when you dry trim, you dry all that chlorophyll out, so you can cut that leaf a million times and you're not forcing chlorophyll back into the bud to work out that smell while, you know, the curing process continues. So that would be the biggest thing that I would wanna change in the world of trimming, is to completely insist on dry trimming alone.
Matthew: And how long does that process usually take for drying and curing for your personal grow?
Rob: So, really, it varies. We shoot for about a 10-day, 14-day at max, and 7 days on the very low end. We keep our drying rooms at 50% humidity and about 68 degrees with good light-air movement. You don't want fans blowing directly on the buds, but you do want air moving around the room so it doesn't get stale. And the other aspect is keeping it as dark as possible. So we cut our plants down to about, I'd say forearm length stems, hang them on drying racks, and put them in our drying room. And as soon as the stem is snapping all the way through, starting at the hook that's hanging all the way down to the right underneath the top bud, then that's when we consider our product dry and ready to be trimmed or start the curing process by putting it into a jar or a vault or something like that.
Matthew: What are the economics of renting out a trim machine? How often are your machines rented out and how much do they cost per day? Do you deliver? How does that work?
Rob: Yeah, yeah. So, we have currently two different products available. We have the GreenBroz 215, which is a dry trimmer only and does an amazing job on dry product. And then we have a really great partnership with EZTRIM out of Colorado, and not only...we just started getting beyond just the trimming machines and now we have their DeBudder, we have their sorting machine, all sorts of postharvest or harvesting automation equipment. But the trimming machine is where we started and is definitely our main business driver. We do delivery, set up instructions, pickup, and cleaning on all of our machines because we don't have a store front, and that also provides us the security of knowing where our very expensive trimming machines are going, and working directly with the people. And we rent out for about 24 hours per rental and the rentals are...the GreenBroz is $350 and the EZTRIM is $600 for that 24-hour time period, delivery, setup, pickup, and cleaning, all inclusive.
Matthew: Okay. So, you can't really go to a bank. So this is all kinda personal financed or friends and friends and family financed when you buy a machine like that?
Rob: Yeah, it was personal finance. The cannabis industry...you know, the caregiving business allowed us to expand into this business as well and it has been super...it's done really well for us. You know, it's allowed us to see what other opportunities there are in the cannabis industry in Maine and across New England at this point
Matthew: And then, so you get to see a lot of different growers, what they're doing, what they're doing wrong. Do you see a theme at all with all the different growers you visit where some seem on top of it and do things a certain way and some, when they're doing things, sub-optimally, they're making some common mistakes?
Rob: Totally, yeah. Part of what I do is a little bit of guidance based on my experience. We've gotten, you know, a consulting gig so to speak out of it just trying to help people get better, that truly wanna get better. Right now, we see a lot of people getting into the industry that really don't have a passion for the plant and producing top quality product. So there are the people that are just looking to make a dollar and get in while the getting is good and maximize their profits and aren't really looking to make a long-term name or, you know, a brand or separate themselves from the rest of the market. They're totally okay with producing the same type of flower that everybody else is.
Matthew: There's a lot of people listening that either have a grow or are gonna have a grow and they're like, "Hey, how did Rob arrive at which trimmers?" I mean, you've probably tried a bunch and there's pros and cons, there's no perfect trimmer, but how did you arrive at the trimmers you did arrive at ultimately? What was the decision-making process? What do you like about each? And is there any words of wisdom about selecting a trimmer?
Rob: Sure, sure. Absolutely. We went with the EZTRIM Satellite at first. It offered the most versatility and functionality in our opinion. It does both wet and dry trimming, and very gentle on the product in both of those trimming stages, and that machine particularly has kief separating bags where the trim sits in. So it's fan driven and your trim goes down into four different micron screen bags, and throughout the trimming process and that fan is circulating the trim, the kief is separated from the trim. So it does a little bit of the extraction work for you and, you know, definitely, provides value on that end. So that was a huge selling point for us, and from a business side, it seemed easy to set up, break down, and transport because it comes with its own carrying case and very easy to get dialed in and provide a good trim for every customer.
Some of the other trimmers on the market that we looked at didn't provide that ease of use that we knew that we were going to need if we wanted to make it a business. You know, part of our business is going and setting up and giving instructions. So, you know, time is money. So if I have to spend a lot of time dialing in a machine, it just wasn't part of our business model. We also didn't want to be somebody that, you know, was rented out with the machine and stood there and trimmed for them. So, then we added in the GreenBroz because we saw that at a trade show and really loved the trim quality that it provided and thought that, you know, they would be great partners for us. As this business has gone along, GreenBroz has been great for us, but EZTRIM, the CEO, Joe Black, has really taken care of us and provided us with lots of opportunities, and now we have half of their products here in-house and can do demos and rentals for a lot of their equipment now.
Matthew: Great. Well, let's turn to the Atlas Plant Trainer, your other business. Can you give us a brief introduction? Or you already gave us a little bit of an introduction, but can you tell us a little bit more about what it is, how you created it, and why you created it, and maybe anything else you'd like to share?
Rob: Sure, absolutely. Thank you. Atlas Plant Trainer was designed after a couple years of trying to maximize my plants footprint. Being limited by legal plant counts and wanting to stay inside the law, and as a caregiver, we have to register our patients and pay $240 a year. So I always, even from the very beginning of growing six plants, wanted to grow my plants wide and maximize what I can get out of each plant. And throughout starting to grow and getting a little more experienced, I tried everything that was on the market, all the do it yourself items. So I went from bamboo stakes to tomato cages to...I had suspended ceiling wire that I cut and bent with hooks in it for training. We have, you know, cut the tomato cages to fit around plants. We've done the trellis netting, PVC piping, all of it.
And I was really growing frustrated at the fact that there was no commercial solution that was made for an indoor gardener, and so started doing some drawings and showed it to a few friends and that feedback was enough to talk with a product designer, and then Atlas Plant Trainer was born. So Atlas Plant Trainer is, like I said before, a customizable click together modular tomato cage. Our pieces are vertical stakes in a horizontal connector. So you start off, the vertical stake has a male and female end with a 360-degree locking push button rotation in the center of that stake, and you start off with those stakes in the soil and they can attach to the plant with our patented plant clips that will attach to the assembly and then around your plant, not to your plants so they actually open up.
So instead of using wire ties or the clips, you will never have to worry about the plant being strangled from attaching something too tight to it. So then you can start ratcheting your plant to start growing wider instead of taller, right out of the plant pot. And as your system grows, you would insert the next vertical stake into the hollow end of the existing vertical stakes, and then the horizontal connectors connect at 270 angles to the vertical stakes all the way around your plant. Now, you can picture it like a build your own tomato cage. They extend and are able to connect at varying lengths and angles. And then the best part is the horizontal connector is actually detached from each other, the male and female ends, and then will interchangeably connect with the vertical stakes. So instead of being limited to about 20 inches in length with the horizontal connector, you can actually span any length by inserting vertical stakes in the center of that and then having the horizontal connectors kinda bridge that gap and connect the system all the way around the plant, above the plant, across the plant, whatever you'd like.
So our goal is to give growers everything they need for training and supporting their plants based inside their plant pot so they don't have to tie off to lights, walls, ceilings, PVC pipe, anything like that. So they have the flexibility to move their plant around the room, continue to work on that plant if they are trying to maximize their space, and really grow a wider plant so that the light penetration and increased yields. Obviously, you get more yield off of a wider plant. And there's a lot of health benefits that come from plant training like increased airflow, light penetration, and plant growth hormone manipulation.
Matthew: Okay. And so just a reminder, the reason that why Rob is doing this is is because there's a limit on the plants, how many the number of plants you can have. So if there's a limit on the number of plants you can have, you wanna make those plants as big as possible. So that's what Rob's invention, the Atlas Plant Trainer, is designed to help with.
Rob: Yeah. So for example, Maine and Massachusetts are getting ready to institute their recreational cannabis laws. And what was proposed was a plant count of 6 plants per person and 12 per household. And throughout the legislative process, they have reduced both of those in both states, Maine and Massachusetts, down from 6 per person to 3 and 12 per household down to 6. So if you are trying to stay legal and have to grow half the amount of plants, the only way to attain the same yield out of half the amount of plants is to grow wider plants and fill up the same space underneath the same lighting that you did with the original plant count.
Matthew: Right. I can just imagine when you're given a limitation like this, your plants look like "Jack and the Beanstalk," they go to the sky. It's like, "Still one plant, Mr. Regulator, nothing to see here."
Rob: Right. Yeah, we're trying to fill up a whole room. You know, we have four plants that we are currently growing out under 6,000 lots of lighting. So that is a...it's a 12 by 16 room, so it'll work out to be about a 14 by 10 grow space with four plants.
Matthew: Okay. And so for people that are trying to get a visual of what this looks like, it looks like a connector set or Lincoln Logs or something like that, parts that connect together in a way that's easy and manageable.
Rob You got it. We say where the connects or the erector set for growers, we just can't use that in advertising for obvious reasons. But yeah, it's depending on the age of the audience, you know, some of our older demographic doesn't know what connects are, but both of those are very applicable.
Matthew: Okay. So if I were trying to do this with a bamboo or tomato cages, it's just...it's not a purpose-built solution there, so I'm always kind of duct taping together little bits of more bamboo or like breaking the tomato cage and moving it around a little bit and it just becomes a pain because it's not designed for a cannabis plant that you're trying to make as big as possible.
Rob: Right. So the biggest benefactor that we start off with is Atlas Plant Trainer grows with your plant. So in a vegetative stage, it's important to keep your veg lights close to your plant. And if you're trying to train that plant to grow wide, it's...you can't put a 4-foot-tall tomato cage or a bamboo stake in with a 12-inch-tall plant and try and keep your lights close. It just isn't going to happen. So if you do that, your plant is gonna stretch towards that light, the nodes are gonna get further away, and it's going to become flimsier because it's stretching for that light. So Atlas allows you to grow wide immediately out of your plant pot getting a lot more plant closer to the light source, and then it grows with the plants' modular and just clicks in as your plant gets bigger. And then as your plant stretches when you transition into the flowering stage, you can just add in another piece instead of adding in more bamboo stakes or longer bamboo stakes.
One of the kickers right before we were making the decision on whether or not to move this project forward is I had a sour Kush strain that was two and a half feet tall when I put it in the flower and it was seven and a half feet tall by the time it was done stretching. So I only have four-foot-tall bamboo stakes around. So I went and bought six-foot-tall bamboo stakes, and when it stretched past that, I went and bought eight-foot-tall bamboo stakes and had to cut six inches off of them because I only have under eight feet between my floor and my lights. So to support these really stretchy, heavy flowering plants, now I have really long bamboo stakes sticking around my garden that I will never use again because I don't wanna grow plants that tall. With that list, I would have just added another piece and supported the whole structure as it went just another foot taller.
Matthew: So the market for this is more of the home growers you mentioned, but do you think commercial growers will want this at all for maybe an experimental lab or R&D or anything else they're doing?
Rob: Absolutely. We feel we have a home in a few commercial markets and a few applications everywhere. We were at MJBizCon in the fall with a booth and we always knew or thought our market was strictly home growers. And one of the first commercial growers that we talked to was like, "I think you're selling yourself short, my friend." He's like, "What about growing your mothers?" He's like, "A mother plant, you wanna grow really wide and have really great light penetration so you have healthy cuttings across the entire plant." And he's like, "I can absolutely see growing a four by four wide plant, you know, two-feet-tall, and then you can just chop all of those tops right off."
So that is definitely an avenue that we're interested in exploring, but also any place that is limited truly by plant counts instead of square footage that they can grow in. New Mexico, for example, they're allowed to have a maximum of 450 flowering plants with, from what I know, no limitation on the square footage that they can grow in. Colorado, they're limited by plant counts, but it's like thousands of plants. Our product is not as impactful with those numbers as we can have the impact on smaller numbers and growing a wider plant.
Matthew: Okay. What's your sense on how big the market is for home growers overall? I mean, do you have any...when you were making the decision to go, no, go, what are your kind of back of the napkin type of numbers?
Rob: Yeah. As I'm sure you can imagine, the market is hard to pinpoint because not every state is legal and not everybody is willing to share whether they're growing cannabis at home or not. We think that with the innovations that are happening in soil and lighting, and Grow 10 technology, that coupled with products like Atlas Plant Trainer, are making it easy for growers to grow at home, that market is going to continue to grow. Some Canadian estimates that we've heard are as high as 25% of Canadians are gonna be interested in growing at home. We like to settle around, you know, 3% or 4% of cannabis consumers will regularly grow their cannabis at home. And that number might seem small, but, you know, 60% of Americans regularly consume cannabis. So we're looking at millions of home grows.
And part of our mission is making it easy for people to grow at home. So we do a lot of education and helping people get over their fears of ruining a plant or how hard it is to grow a plant at home because it's really not that hard anymore. A lot of the innovations in the space has taken that difficulty away and we really think that along with the benefits of growing your own medicine and knowing what goes into it, you also know what goes on it, meaning that you don't have to worry about pesticides being sprayed on in a commercial application. You control your medicine and the type of plant and what you get out of it. So we really wanna be part of championing that message and helping people feel the benefit of growing their own cannabis.
Matthew: So you pitched at The Arcview Group, the Cannabis Investor Forum. Can you tell us about your experience there raising capital or trying to and provide any suggestions to entrepreneurs that are out there thinking about raising capital?
Rob: Sure, sure. So, we were really early. We thought we were a lot closer to having a finished product than we were. So we pitched in September in West Palm Beach in 2017 and we just launched and started bringing in revenue at the beginning of April, you know, just about six weeks ago. So we had lots of iterations between, you know, presenting and actually having revenue. So we did lose a bit of the traction that we gained there with the delays that we were experiencing. Now, we've learned that everything, you know, takes a little bit longer and costs a little bit more money than you can initially expect. But now that we have revenue, we're re-contacting those investors and look forward to sparking those conversations and are actually looking to get to one of the future Arcview events and maybe even present again on stage. But now, we're in a much better position to be raising capital.
So my advice for entrepreneurs, be ready, know your numbers, have some revenue, and be unique. I guess the other suggestion is be creative with how you're willing to raise money and asking...and what you're willing to give up for your company. The cannabis industry is new and very tumultuous, and from our experience, investors are looking for ways, creative ways to get their money back instead of just putting money in an equity and, you know, crossing their fingers that in 10 years that they'll have an exit because the future of cannabis is still unknown. It's definitely not the tech space where, you know, they're betting on unicorns. From our experience, cannabis investors are looking for not just equity stakes, but creative ways to get some money back out of the company while still helping us get off the ground.
Matthew: Yeah, know your numbers is good especially...I mean, there's a wide spectrum of different types of investors, but typically, what I like to call the agitator, that's the type of investor that comes over and is like wants to get you on your heels that you don't know something and they've got...and that they try to shame you for not knowing everything, and with the goal of getting you to give up more of your company or just because they like to shame you a little bit and want you to know your stuff better which is useful, but still doesn't feel good.
Rob: Yeah, that's interesting you say that. One of my experiences, and I'll be honest, I would much rather focus on building my company and selling my product, and raising capital is a necessary evil in my opinion, but I've learned a lot in the process. And one thing that I'd like to say is not everybody that seems like they're asking crazy off the wall questions is asking you to throw you off your game. I've learned a lot about they're trying to test your reaction and it's okay if you don't know something, but how you handle not knowing something and respond and follow up is just as important in knowing or not knowing some of the questions. It's important to be able to react to everything instead of getting thrown off your game if somebody is asking you those off the wall questions. Which was a big lesson for me to learn as this process has gone on.
Matthew: Good points. Now, you have some connections to growers, incubators, and LPs in Canada. Can you tell us a little bit about that and maybe compare and contrast the Canadian market a little bit more than we have so far?
Rob: Yeah. So we just recently completed the Leaf Forward Sprint to Pitch program, which was great. We did a six-week long program where we met a couple of days a week for three hours, met with different mentors, went through different presentations, and fine-tuned our pitch. And then we got together in Toronto for a group...it's not really a pitch competition because there was no award, but it was an investor meeting, so to speak. And what I learned is obviously there's lots of capital that is going around cannabis in Canada, but the angel investor community might be very shy in getting involved with certain U.S. companies which was something that we hadn't heard about, but we had talked with a couple of different angel investors and they seem to think that there were some concerns in their groups about putting their money in U.S. companies because of the volatility and the unknown future for us.
However, on the flip side, with the right setup, you know, company wise, it seemed like there was lots of Canadian money that was willing to get into the right companies and the right establishments in the U.S. as well as lots of interest from LPs, Licensed Producers, and the money that they seem to have available. Getting involved with brands such as ours in the U.S. and Canadian space. Beyond that, you know, like I said, the openness and the upfront talk about the industry being an industry and not just it being consumers and potheads where there's still that stigma that associates around especially, you know, in the New England area where we are, that doesn't exist from what we saw in Canada. Everybody, you know, the waitresses, you know, the Lyft and Uber drivers, concierges at the hotel, the Airbnb hosts, like that type of stuff, everybody knows that cannabis is on the forefront and it's an exciting time. It's something new. And I think Canada has always had a little special affiliation with cannabis, so it's good for them to get it out in the open market as it is.
Matthew: Yeah, the puritan streak in America runs deep and it can be frustrating at times. Like we'd rather make it a legal than secretly do it somehow. It's a weird pathology. I don't really understand why we do that, but we do.
Rob: Yeah, totally.
Matthew: At this point in the interview, I like to transition to some personal development questions to help the listeners get a better sense of who you are personally. With that, is there a book that has had a big impact on your life or way of thinking that you'd like to share?
Rob: Yes. So I took some time to think about this question because I'm not a huge reader. If I were to read a book, it's in bed and it's two pages to put me to sleep usually. I do a lot of audible listening and podcast consumption. The book that looking back on my life that I always end up going back to is "Awakening the Buddha Within," by Lama Surya Das. My grandmother passed away shortly after my 18th birthday and shortly after my high school graduation, and she was kind of my rock. And I was obviously in a transitionary period of my life and was having a really hard time with her passing and turned to Buddhism and this book and meditation to get me through those times.
And many times, throughout my life since then, I will gravitate back towards that book and even if it's just a chapter or two and kinda remind myself of why that was important to me, and I'll meditate and not a huge meditator, but when I feel like I need it, I will definitely dig into it for a couple of weeks or a month at a time to bring myself back. But that book is beating the heck and it's traveled everywhere with me, but it's one that I will forever hold on to. So I'd have to say "Awakening the Buddha Within."
Matthew: Okay. Is there a tool besides the Plant Trainer that you consider vital to your productivity that you'd like to share?
Rob: I use Upwork a lot. Upwork is great for hiring contractors to do pretty much anything that you don't want or can't or aren't really good at for your business. And I have spent...I've learned to focus a lot on my strengths and not trying to improve on my weaknesses. So I use Upwork when I'm hitting the wall with a project and I need somebody, you know, to bring it across the finish line or I just can't squeeze in hours in my day to edit videos that I wanna put up on YouTube. So I find a couple of contractors, put out the job description. And now, I've kinda built my own contractor team that I work with for web development, content, and video editing, and I couldn't be happier with them, and I found them all through Upwork. So it is a critical part of our businesses.
Matthew: Cool. Well, Rob, as we close, how can listeners learn more about the Atlas Plant Trainer and connect with you?
Rob: We are pretty much every social media, @atlasplanttrainer or atlasplanttrain when there weren't enough characters allowed, and atlasplanttrainer.com, or growbiggest.com. So they can find our contact information all across there. And again, that is atlasplanttrainer.com or growbiggest.com.
Matthew: Well, I'm glad you're finally starting the thought there in Maine and I hope you have a great summer. We appreciate you coming on and telling us about the Atlas Plant Trainer and about trimming and educating us, and we wish you all the best.
Rob: Awesome. Thanks so much, Matt. Thanks for having me.
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 -at -cannainsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider.
Lastly, the host or guests on CannaInsider may or may not invest in the companies, entrepreneurs profiled on the show. Please consult your licensed financial adviser before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another CannaInsider episode soon. Take care. Bye-bye.
Kyle Marshall is the founder of Morsel Bakery in Oakland CA. Listen in as Kyle shares how he deals with the challenges and opportunities in California since adult use became legal on January 1st. Kyle talks about real estate challenges, incubators, building a brand and driving a truck full of trim. http://www.morselbakery.com/
– Learning cannabis baking before finishing high school
– Discovering the affordable but high-potency niche for edibles
– Driving around a truck full of trim
– The challenges and opportunities in California
When California legalized adult-use cannabis on January 1st, it presented an incredible opportunities and challenges for many people in the industry. Today, Kyle Marshall of Morsel Bakery is going to give us a snapshot of his life in the cannabis community in California creating edibles. Kyle, welcome to CannaInsider.
Kyle: Matt, thank you for having me.
Matthew: Give us a sense of geography where are you in the world today?
Kyle: We are located in the sunny Oakland, California.
Kyle: Yes, yes, next to the water, beautiful Bay Area.
Matthew: You know, whenever I look at a seismology map which I do often that's the type of nerd I am, I noticed that Oakland is like bright red for earthquakes. Does that ever make you paranoid?
Kyle: You know, I mean that might be an implication or perhaps translated as an analogy for what's going on in the cannabis industry, you know, but no, not really. I think everybody here in California is a little numb to the possibility of an earthquake. So, it's one of the things we're willing to live with to live in beautiful California, so.
Matthew: Okay, good. And what is Morsel Bakery? What can you tell us about Morsel?
Kyle: Yeah. So, Morsel is we are infused products manufacturer based in the Bay Area and we specialized in affordable and potent infused products. So we've been, you know, growing with the industry for the past eight years and we're continuing to innovate and create tasty new products for people to get medicated with or I should say now to recreate with.
Matthew: Yeah. So usually, you don't hear affordable and high potency together. How did you arrive at that formula because I just don't hear that around?
Kyle: Yeah. So, as an infused product manufacturer, I think anybody in the industry, we all have to create what people want and that's at the end of the day what people demand is, you know, a good bang for their buck, yup.
Matthew: So you're like... are you like the Costco of a infused products that you're getting bulk size for cheap?
Kyle: I guess to an extent. You know, we like to make our own individual products affordable, and we like to say affordable but not cheap either. There's definitely a balance with providing a value but also retaining some value to your brand too, you know, that transcends the cost, yeah.
Matthew: Yeah. And how did you get started as an edibles maker? What's the background there?
Kyle: Yeah. You know, really not by choice. I think a lot of people in the industry can relate to, I didn't choose the cannabis industry, the cannabis industry chose me. You know, kind of in a way where it's the universe is incredible in the way that, you know, different things come together and I think it was really a right place right time. I was attending Humboldt State University in the year of 2009 and that was during the time that California was finally transitioning out of the black market into the gray market and now we're entering the new age and the new frontier of a full-on regulation. But really, you know, edibles ended up being really just the format in which I was best able to express myself.
You know, I wanted to, through what I did in my life, help changed the world and, you know, I think infused products really provide that platform for people. You know, there's a lot of creativity involved. I love to bake and I loved to consume cannabis, so that was, you know, a fantastic marriage right there.
Matthew: Okay, I like to express myself through quilting, Kyle, does that surprise you?
Kyle: That does, that does. I really wish I had the patients for, you know, a little bit more relaxing hobbies like that for sure.
Matthew: Yeah. I'd be happy to show you my Jedi quilting tricks if you're ever interested.
Matthew: So tell us a little bit this here. Now, you went to Oaksterdam University, what's that and what can you tell us about your experience there?
Kyle: Yeah. Oaksterdam was really interesting. That was, you know, one of the new fresh things that really helped bring the industry into an age of mainstream recognition. Oaksterdam opened up in about 2007, 2008 and I... you know, kind of a testament to how passionate I was about cannabis kind of early on is I ended up graduating Oaksterdam before I graduated high school. And, you know, that was a...
Matthew: What? That's crazy.
Kyle: Yeah. It was a... you know, I'm one of those late high-schoolers that ended up turning 18 while they're a senior. And, yeah, I mean it's just, you know, I saw this as an opportunity to kind of get my feet wet. You know, check out the early networking and it was really great. It was productive to see what people were interested in the industry and, you know, it was fantastic. It's like it was like a family reunion where, you know, the family hasn't been together for quite a while but you really find that, you know, cannabis really unites all different kinds of people in walks of life, yeah.
Matthew: Yeah. Unless you're my family and everybody just get drunk and fights, so that really depends on what family you're from. I'm like... and they don't do that. Mom feels like... Okay.
Kyle: Yeah. That's what we're trying to change with cannabis, for sure.
Matthew: We'll exhaust you today Kyle, I've had a little bit more caffeine than I normally do, so...let me explain a few things.
Kyle: Oh, no. I'm double fisting coffee and Red Bull right now, so I'm trying to catch up.
Matthew: Oh, my gosh, wow.
Kyle: It's like that.
Matthew: Well, you know, on January 1st, Adult Use was passed, it went live in California. The whole landscape changed. What's that's been like? What's the transition been like?
Kyle: Yeah. You know, I think the landscape has been, you know, you could only see so far into the horizon. You know, we're all walking the same steps. You know, and I think a lot of people had kind of a preconception of, you know, what was then happened in January 1st and, you now, the process has been a lot more collaborative and required a lot more patience I think than a lot of people anticipated. You know, I mean we felt that, you kno,w come January 1st, you know, the regulations were gonna be relatively absolute that the decisions that the state were making, was making, were gonna be effective immediately.
And so really what happened with the landscape is, you know, we were kind of, you know, the entire industry was already kind of on even playing field in the context of regulation who allows what. But, you know, you mentioned seismology earlier and I think that plays into this. It's very much been shaking up. And, you know, especially in the first months of January, there were a lot of different interpretations on the state law. And so that being said, a lot of people, you know, lost their place in the market, a lot of dispensaries had their own interpretation of how to handle the law. So, you know, we're still very much in the active states of really figuring everything out together, so.
Matthew: Yeah. And do you feel like more capital is flowing into the state and people are starting to get serious like, "Hey, it's go time now. The firing shot has been fired and people are off to the race and they're looking over their shoulder like, 'I need to put some distance between me and, you know, my competitors.'"
Kyle: Yeah. You know, I think that's one of the preconceptions that people had is that people were planning on or expecting big money to just jump into the game right away but, you know, one of the things that has limited investors in they're coming into the spaces, I mean we have, you know, properties were held up with loans, bank loans, you know, so there's a lot more obstacles than just, "Oh, hey, you know, California has it regulated." You know, there is big money coming in but, you know, you really see that in a very unique circumstances where they're utilizing, you know, a financial vehicle such as a Canadian public company or, you know, they have a public management company, or, you know, but still the industry is pretty... remain relatively grass roots. You know, there are a lot of people like myself, you know, that have been in the industry for quite a while and, you know, are looking to the investor community to kind of just expedite the growth of what we've established.
So, you know, it's investment, you know, doesn't necessarily dictate whether or not you're gonna be successful. There's quite a lot of, you know, capital coming in in the industry where even before January 1st there is a lot of capital coming in the industry and, you know, I mean really what reflects, you know, success in this industry is really I think, you know, whoever is operating that company with or without capital, you know, they're understanding what could be successful and what isn't in this industry.
Matthew: So, Kyle, let's talk about some of the challenges. You mentioned just briefly real estate but what has it been like trying to secure real estate for Morsel?
Kyle: Yeah. It's, you know... and I think there was about four or five years ago there is an article that came out with I believe one of the guys from Medicine Man and I think his quote really summarize it the best which is, "The Cannabis industry really is the real estate industry and people's growth and really people's ability to enter the market place is dictative of or dictated by the real-estate market and the real estate that they have." So, you know, I mean what we're really seeing here in the cannabis industry is, you know, we have a lot of people, a lot of participants, a lot of people who have been in the industry for a long time that are willing to comply with these new regulations, this new requirement of compliance and the ultimate obstacle is the real estate. And, you know, not only the real estate but also the limited amount of jurisdictions that are allowing manufacturing.
There are a number of jurisdictions that are licensing but very few of them are licensing manufacturing and furthermore, those that are licensing manufacturing in and of themselves have a very limited real estate market. So really what even the entire State of California which is the fifth largest economy in the world, you know, we're only looking at a handful of cities that are ultimately viable to operate out of. And, you know, when you're talking about a multibillion dollar industry with people that are very anxious to jump into it there's just a huge bottleneck.
And really, I think one of the biggest issues with real estate is that there is real estate out there and, you know, the biggest obstacle within real estate is the or are the property owners that you know are still from the Reagan era or, you know, from an era of prohibition or even if they've been... you know, have had that standpoint of a conservative view on cannabis, even some property owners have had a negative experience unfortunately with cannabis tenants in the past. So there is property, there are jurisdictions but I mean you stack all of those obstacles up and, you know, what we're left with is crumbs at the end of the day to find a place to operate.
Matthew: Yeah. In some ways I feel for the landlords because sometimes I'll walk past an industrial building in Colorado or some place and you can tell there's growing going on inside because it's just... it's the fragrance is so intense. And it's like they need some the industrial fans with filters on there. And even if you have those, you can minimize it, but you can't really get rid of it. And so what you have to do when a cannabis tenant moves out if they're cultivating, you probably have to... you have to do some more things to make it rent ready again. But it seems like there'd be...it seems like if you're a landlord there'd be an opportunity here to charge a premium to, you know, get cannabis tenants in there but it sounds like I'm wrong. What's happening with property values? Any spikes since January 1st or they're just maintaining, there already just nosebleed levels?
Kyle: Yeah. You know, again it comes down to who your landlord is or who your property owner is. You know, I mean if you're really lucky, you'll end up with a landlord that's understanding that will provide you a property with, you know, market rate. But finding that is like finding an affordable apartment in San Francisco. You know, it's extremely limited and I think, you know, the inevitability is whether you're in Oakland and you find a property with a higher than market value or you end up in another jurisdiction with a lower property value, I mean whichever way you cut the pie, you know, we're all operating on some kind of premium whether that'd be with the real estate or the fee and licensing process with the cities. So operating a cannabis industry is inherently and more expensive venture and that being said that much more challenging.
Matthew: Okay, let's talk about some opportunities. Once you surmount the challenges we talked about, what excites you the most about operating in this new environment?
Kyle: Yeah. I think, you know, I think the most exciting thing is that, you know, the industry is going through an incredible maturation process, you know, we've...especially the infused products industry. You know, there's been a lot of maturity in the flower, in the concentrate section I believe. But with, you know, with the edibles, you know, we've still been in the age of drip-on candies, you know, products that imitate a common snack food brands. I won't say any brand names or anything but, you know, I think that's the most exciting thing is that the playing field for regulation and for producing a product is a lot more even now. Obviously, you know, aside from the overhead cost which can vary widely, you know, that's the element of the playing field that is definitely uneven at least on the regulatory end and at least on a supply chain and pricing end. You know, I think the market is going to be driven more by the quality of the brands than they all are by the exclusivity of, you know, somebody happening to have, you know, the supply chain or the relationships at the end of the day.
So it's gonna be... you know, and I think too just to add on to that as I think, you know, we expected this maturation to happen a lot earlier on but I think it's, you know, I don't think we're gonna see the future of the market until perhaps the end of the year or early next year to see who's gonna be in the market and how that's gonna evolve, how it's going to evolve, sorry.
Matthew: No problem. How about cannabis incubators there in the Bay Area? Is there anything you can tell us about that?
Kyle: Yeah. We are, as I mentioned before, we are located in beautiful Oakland, California. And, you know, there's been a common theme of equity or equity incubation programs within Oakland especially. Oakland has been the poster child for equity incubation programs. I've been told that there's similar programs in San Francisco in Sacramento but I haven't explored the details of that, you know, in contrast to Oakland. But, you know, the equity program in Oakland has the best of intentions. You know, the people that voted in the equity program and I completely understand, you know, from the people who championed the equity program and the reasons for getting that past.
You know, obviously, as I mentioned before I mean there's a lot of exclusivity in this industry and I think it's fantastic, you know, that people have legislated, you know, a possibility for people who would be otherwise disadvantaged, you know, to have an entry or at least, you know, some kind of way to put their toe in the water with the industry. That being said, you know, equity is definitely a case-by-case basis. You know, with Oakland they...your equity partner has a lot like a marriage and it really depends on who you're with that dictates the quality of that relationship. You know, there's a lot of people that have qualified for the equity program that are leveraging licenses to do expensive asks especially early on when there actually was no incubation program and perhaps I'm getting a little too detailed here, but, you know, early on people were willing to give up over 50% of the equity of their company just to have a license, so, you know?
Matthew: Wow, that's a lot.
Kyle: Yeah. That was...and, you know, I mean there was definitely a lot of push back on the equity program and, you know, we've seen that hinder the growth in Oakland. But, you know, at the same time, I mean we have to be understanding of the flipside of the coin which is that this is very exclusive and, you know, I think it's been in the best interest of the local city government to champion the little guys, the small business owners. So, yeah, we've been very lucky ourselves to find a quality incubation partner, so it's been very exciting.
Matthew: You mentioned before that you think the future is brand-driven. Let's talk about that a little bit. What do you think... how do you go about creating a brand that will resonate with customers so that you stand out in this new competitive market place? I mean, to me it seems like there's just an abundance of cannabis in California. I know, people are buying it up like crazy but it's just like I feel like I'm in some sort of like Cheech & Chong wet dream when I'm out there. So it's like there's no shortage, so the reason people will buy one product over another is because they like the impact they get from it but a lot of times the story and the consistency. How do you look at a brand especially if someone that's created their own brand?
Kyle: Yeah. I mean, yeah, just like you said. There's plenty of options out there and I think at the end of the day it's understanding what your consumer wants, you know, your specific target consumer wants and also just having a quality consistent product through your good manufacturing practices and so on and so forth. I think the best way that the brand orientation can be summarized is that people buy brands, they don't buy products. And when you go to the... you know, when you're buying a candy bar, when you're buying a soda, when you're buying water, you know, at the end of the day, you know, what is your relationship with that brand? And I think, thankfully, in the edibles industry there's an element of creativity that allows you to express your brand and your product in a different way that could differentiate yourself from the competition as opposed to let's say flowers or vape cartridges especially. You know, I mean with vape cartridges, a lot of those producers are operating with the same technology, the same raw material, the same strains, the same everything top to bottom, you know, with producing that vape cartridge.
And I think the best way to draw a correlation there is that, you know, branding vape cartridges is a lot like branding water. Being that, you know, they're at the end of the day it's a water bottle. You know, your purchasing something to perform a function and, you know, it's more about the brand relationship than it is about the quality of the water because, well, all water is the same. And that's not to say that all vape cartridges are the same, I shouldn't say that. There's probably some people that are producing vape cartridges that are listening to this being like, "Oh, you know, I disagree with that."
But, you know, it's about that brand and how people feel and, you know, I think we live in an Instagram-oriented society. So people want to be seen with your brand. People want to relate to it. People want to embrace it. So I think that's...and I think we have yet to see the very tip of the iceberg with that in this industry.
Matthew: Okay. Now, you're obviously involved deeply in baking and making edibles, so your way of thinking about it is much...you've much more intimacy with day-to-day details of edibles. I was wondering if you could share a little bit about how you think about making butter. Can you tell us why you make butter and roll that feels as an edibles maker?
Kyle: Yeah. You mean butter specifically like the actual starting material of the butter and how that's changed?
Matthew: Yeah, and maybe start with why you pick something fat soluble like an oil, and butter, and so forth.
Kyle: Yeah. I mean from a consumption point of view the infusing cannabis into a fat delivery whether that'd be coconut oil, whether that'd be butter, whether that'd be vegetable oil, you know, at the end of the day infusing cannabinoids into a fat based where it could be soluble and where it could be delivered provides, you know... and again, this is just from, you know, a hands-on experience not necessarily quoting any, you know, scientific papers or anything but, you know, it provides the best delivery and really the most affordable and effective method of delivery.
You know, I think the industry is constantly evolving and there are a lot of people that are working with different homogenizers, you know, different things that they could put cannabinoids into to deliver. And, you know, us ourselves I mean we've spent a lot of time, energy, and money on exploring these different delivery methods. And, you know, as excited as I am, you know, about the cutting edge of the industry, at the end of the day I still come back to fat soluble or fat based, the delivery methods. Even with our drinks, you know, we focused on in oil or water emulsification as opposed to using unknown chemicals that deliver THC into your system.
So, you know, the delivery of cannabis has been very different over the years. You know, with producing butter we've...back in 2009, 2010 is where we're working with another edible company that I won't name the name too. That's, I'll say, very well-known for their high potency products in California.
Kyle: And yeah, I mean we started from that point and the technology is used still very widely which is a whole plant material cooked into butter with water and then pressed and distilled. So the, you know, the delivery method is constantly evolving over the years. So even within, you know, the context of making butter, you know, even that has evolved and changed over the years. You know, we started with green butter, we moved to concentrate infused butter and now we're finally at the point where we're utilizing a concentrated distillate oil which is now becoming the most common raw material for infused products, so, yeah.
Matthew: Maybe you can talk a little bit about the difference between green butter and concentrated distillate so people can get a sense.
Kyle: Yeah, definitely. Gosh, I'm trying to be clever here, I'm thinking of an analogy but I'll just go right to it. You know, the green butter is very green, has chlorophyll in it. So I mean the reason why we call it green butter is it's a whole plant extraction and the chlorophyll remains in that extraction process, and so you get a green color. But you get a green color and you get a cannabis flavor but you also get a fuller spectrum or really a total extraction of everything that's fat soluble in that plant material. So, you know, that was the very beginning of infused products, you know, kind of like how concentrate makers were doing... they were doing open plastic in their backyards, you know, I mean green butter is the glass tube and the butane can of the edibles industry.
And so now that we've graduated beyond that point, you know, the green butter was really by necessity. So, you know, we really didn't have... concentrates were not being produced in a large enough volume or a large enough quantity to provide a price point that was conducive to create, you know, an affordable product. So, you know, what myself and a lot of edible producers would do is we would drive them to the mountains, we would fill up a car or a U-Haul truck, literally packed full of trim.
Kyle: You know, I mean that's how all of us, you know, really got our start as driving on the highway with white knuckles and, you know, driving up to a metric ton of dried plant material and I mean obviously you can imagine the anxiety level that's associated with that. But...
Matthew: No wonder you're not worried about earthquakes.
Matthew: You've got bigger paranoias to deal with.
Kyle: Absolutely, absolutely. Yeah. Having the house full on our heads is a drop of the bucket compared to getting arrested by CHP. But, yeah, green butter was by necessity. You know, and now that this industry has matured and now that clear oil has become a common commodity, you know, there's no reason to compromise with green butter because...and to explain clear distillate. With clear distillate it's a heat and water based, you know, extraction process. What a lot of these oil manufactures are doing which very thankfully they're the ones that handle those white knuckles drives now which is fantastic.
So they take in the trim and what they do is they process it through their oil machines and what results is a very golden clear and cannabis-taste free starting material. So we're able to have a more consistent source of raw material that also doesn't result in a fresh-mowed lawn taste, I'll say that.
Matthew: Right. And I've experienced exactly what you're talking about. How do you think the clear oil compares in terms of how with the green oil with the chlorophyll and of the plant parts still in there?
Kyle: Yeah. You know, again I think it's one of those things that really deserves more exploration in the context of understanding what is the difference between the chemical effects of green butter versus distillate. And really a lot of us are operating on, you know, anecdotal evidence, you know, people who have tried this and that and, you know, have their own feelings about how the feelings differ. And for our opinion based on what we've produced and our transition really from a green butter company to a clear distillate-based company, it's a... the high is a lot more clear headed and, you know, I think within green butter you're getting all the other complex cannabinoids that provide that different high. And I think, you know, people end up with a groggier but also more relaxed, you know, high with green butter as opposed to clear distillate butter which provides you more higher functioning high. You feel very clean which is fantastic.
And so, you know, at the end of the day it's kind of a matter of preference and also a matter of where does your personal consumption preferences align with the products that you're consuming, you know. And the transition from being a green butter company to a clear distillate company was one of our biggest existential, you know, crises where it's like, "Okay, we'll, you know, do we stick with this format that we've had for years and years and years or do we make our product a little bit more expensive and a little bit less weed tasty with a different high?"
And I think, you know, part of our motivator to make that decision was that, you know, despite people wanting to get, let's say, very recreational with their edibles, you know, there's still a very loud representation of edible consumers that were like, you know, "I'm really tired of my weed-cookie tasting like weed, you know?"
Kyle: And I think that's it's, you know, and I mean you know, once you're compare and contrast there's no reason to compromise anymore, so, yeah.
Matthew: Okay. What about compliance? How do you deal with that in an efficient manner and how do you think about it in general?
Kyle: At the end of the day we try. We try our absolute best and in kind of as I was saying, you know, early on is that obviously we all expected, you know, things at this point to be a little bit more concrete and absolute. But the course of compliance requires communication. You know, I think the biggest component of being a compliant company is communicating with your regulatory body that, you know, you work with in particular. For us it's the California DPH, and, you know, for cultivators and for retailers, you know, it's more like the CETFA and the CalCannabis I believe I have had enough coffee but the other industry that regulates growing and so forth. But anyways, it's, you know, it requires constant communication because the regulators are...
Matthew: Schizophrenic? Sorry, sorry.
Kyle: I wouldn't say... maybe myself more than the regulators, but they're on the journey with us, you know, and they are in and of themselves on a journey to understand their own regulation that they put out. So, you know, we're quite literally, we're operation on emergency regulations which means that, hey, anything could change on any point which obviously, you know, in the course of trying to establish a product that's gonna be, you know, we're trying to achieve a point of stability. You know, having a constantly moving target is, obviously, a moving obstacle. I mean as long as you're in constant communication and perhaps pushing the envelope on how much you could actually talk to the regulators, you know, you'll be in a good place. I mean I'll say that the DPH has come to know me by first name by now whether for better or for worse.
But it's, you know, I mean that's... it's just, you know, the requirement of... you know, there's a human element, I'll say, to the law and to the enforcement of law.
Matthew: Sure, sure. It's always good to be on speed dial of a regulator. Don't envy that position, but, okay.
Matthew: Let's go to some personal development questions. Is there a book that had a big impact on your life or your way of thinking that you'd like to share with listeners?
Kyle: Yeah. I've been thinking about that question a lot and, you know, I guess even outside the context of cannabis is I guess to the course of my journey is that one of the biggest books that have hit home for me is, and the risk of sounding like a James Dean type or whatever, you know, is, you know, I really enjoyed the book, "The Catcher in the Rye."
Matthew: Yeah, that's great.
Kyle: I think it's, you know, that was the time in my life where I understood that, you know, holding it and being negative, you know, isn't gonna get you anywhere. And I think in this industry it's very easy to get frustrated, very easy to think other people are phonies, you know? And that's something that could get the best in this industry and, you know, as long as you remain positive and, you know, stay on that hill with your hands out and remain, you know, a strong pillar, you know, I think success is inevitable. But I think, you know, the ultimate lesson to be learned is I think cannabis is definitely a challenging test even for the strongest of entrepreneurs, so.
Matthew: How about, is there a tool you consider vital to your business or productivity you'd like to share?
Kyle: Yeah. It's hard to pick between, you know, all these incredible Web 2.0 programs that we have out and I don't know if I could still use the term Web 2.0. I know that's outdated in 2010 or whatnot.
Matthew: I call it, you know, it's like web infinity now, you got to say. It would be cool on the cutting edge.
Kyle: Yeah. The biggest pillars for us are G Suite. Google has done a fantastic job at creating a collaborative platform based on Gmail. Shoebox is a little secret.
Matthew: I love little secrets. Tell us your little secret, go ahead.
Kyle: Yeah. Shoebox is, you know, I think have been underrated and understated web program that's what they do is, if you're like me, if you work in a cash-based industry you're gonna have a lot of receipts. And so there's a... what they do is they send the envelope out to you and you just... rather than sifting through your Shoebox, hence the name, you just grab a handful of that. You just stuff it into that envelope. You seal it up. You send it out to... or you drop it in your nearest neighborhood mailbox and days later those receipts are rendered into a spreadsheet. And so they're even so much as, you know, retaining the image of the receipt telling you what kind of expense it is, and it's only $30 a month. So it's just a really incredible program. And I swear they're not paying me to say that, so.
Matthew: That's pretty clever how they combine, you know, traditional world of physical receipts with the digital world. That's great. Because you get all these things and like, "What do I do with it?" There's one app I like for it, right, is take a picture of the receipt and then it just sends, it emails it to myself as a PDF. It's a TurboScan, I like that because then I can be done with it, because I don't know what to do with these receipts, you know, I get handed.
Kyle: Yeah. And Shoebox kind of has a similar method where you could take the picture and it's not counted against your automated processing credits because I think you could process like 500 receipts a month or so, or something like that but it's...when you're constantly, you know, running around at the cannabis industry it's a, you know, basically grabbing a handful and stuffing it in the envelope is, you know, saves a lot more time as opposed to individually taking pictures. So it's been very helpful, very helpful.
Matthew: Before we close, is there any advice you'd have for entrepreneurs aspiring maybe outside the California market or in on what they can do to be successful?
Kyle: Yeah. You know, I think myself personally, you know, I've been ultimately born and raised in the cannabis industry so my experience can only speak to, you know, those that are in the cannabis industry. And, you know, the biggest thing for me is stay strong. You know, regardless of what obstacles come your way, as long as you have a...in your heart a strong passionate drive and a clear vision to manifest what you want to make happen in the cannabis industry, I don't think there's any stopping anybody. You know, there's been a lot of...I think a lot of people around me and who are first listening to this can attest and, you know, I mean quite literally every year has been a bounce back situation. And unless you're, you know, passionate to make a social change through cannabis, you know, succeeding in the cannabis industry really requires that, definitely more than any other industry, so.
Matthew: Well, Kyle, thanks so much for coming on the show today and educating us. I wish you all the best as you continue your journey in California as the Wild West gets tamed, keep us updated.
Kyle: That's a fantastic way to summarize what's going on. Thank you for that.
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