Can you mix together compounds like caffeine and THC to create a thriving new market category? Here to help us answer that question is Peter Barsoom of 1906.
Learn more at https://1906newhighs.com
[00:48] An inside look at 1906 and its mission to redefine the edibles category with better-tasting, more effective products
[1:28] Peter’s background and how he came to start 1906
[3:19] How cannabis use changed after the Pure Food and Drugs Act of 1906
[4:12] 1906’s unique “drops” and how they’re formulated to meet different needs
[6:29] 1906 versus other wellness experience brands like LucidMood and Dosist
[11:15] Why Midnight Dark Chocolate for Sleep is the number one product at 1906
Editors note: See our top pick for the best CBN oil for sleep
[13:29] How the products at 1906 provide a quicker onset than competing edibles
[16:48] 1906’s plans to create an extended-release formula of Midnight to help consumers not only fall asleep but stay asleep
[20:55] Where Peter sees the cannabis wellness experience category heading in the next 3-5 years
[24:28] Peter’s plans to expand 1906 beyond Colorado and Oklahoma
[25:57] Where 1906 currently is in the capital-raising process
Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program. Can you mix together compounds like caffeine and THC to create a new market category that consumers will want to adopt? Here to help us answer that question is Peter Barsoom of 1906. Peter, welcome to CannaInsider.
Peter Barsoom: Thank you, Matt. A pleasure to be with you today.
Matthew: Give us a sense of geography. Where in the world are you today?
Peter: I'm in New York. I'm in SoHo in Manhattan.
Matthew: Okay. What is 1906 on a high level?
Peter: 1906 is one of the leading cannabis edibles company. It's the company that I co-founded back in 2015. Our name comes from the year that the Wiley Act was passed, which effectively started the prohibition of cannabis. Our mission is to bring cannabis back to its pre-prohibition status as a mainstream substance that was used in medicine and by individuals, and also to highlight the failed century of the war on drugs.
Matthew: Okay. Can you share a bit about your background and journey and how you got into the cannabis space and started 1906?
Peter: Yes, absolutely. I had a 20-year career in finance here in New York where I was in a number of leading roles at institutions like American Express, Merrill Lynch, Morgan Stanley, and their parent company, the New York Stock Exchange. I left the industry to found Nuka in 2015 because while working in the financial industry, I felt a yearning for a greater human connection and a personal purpose, and a strong pull to help others live a better life.
When I quit and then started to look at potential entrepreneurial opportunities, cannabis at the time had just been legalized by Washington and Colorado. As I started to dig into the history of the plant, I grew obsessed with its beneficial powers and felt certain that building a business around cannabis was my calling. We started on the belief that cannabis is one of the most versatile plant medicines that's known to man and really could play a big role as a potential alternative to alcohol or pharmaceuticals for people as they look to manage the demands of daily life.
In order to discover the plant's true potential as a daily tool for self-care, we'd have to transform much of the way people were experiencing it, and so that's what led me to the mission which is on a mission to revolutionize self-care, utilizing cannabis and other plant medicines in a very functional way.
Matthew: You mentioned you've got the name from prohibition 1906. How are people using cannabis pre-prohibition?
Peter: Pre-prohibition, you could walk into an apothecary and you would find cannabis compounds and cannabis mixed with other plant medicines. It was part of the arsenal of medical professionals back at the time. We can go back to 1906 or we can go back to hundreds of years even before that where cannabis has been one of the most widely used plant medicines. If you look at the history of how it's been used, people have used it for pain, for anxiety, for sex, for energy, so truly, we've had a relationship with cannabis probably since the beginning of human history.
Matthew: Now, you have six categories of tablets you call drops. What do the six different drops do for you?
Peter: Yes. One of the things, Matt, that we looked at as creating the brand 1906 is around understanding what people's needs are in creating products to meet those needs. In other words, it's not about getting high, it's about feeling a particular way. Relief from pain, help with anxiety, getting a good night's sleep, and so we looked at the major use cases that people use cannabis for, and we created a set of products that meet that specific need by utilizing specific cannabinoid ratios, but also by utilizing other plant medicines in order to give that effect.
For instance, we have Midnight which is for sleep, Genius which is for cognitive focus, Love which is for sex and arousal, Bliss which is for mental well-being and happiness, Chill for anxiety and relaxation, and Go which is for energy.
Matthew: When I take something, let's say Bliss, how much does this actually elicit that experience of Bliss, like how much does that get drawn out?
Peter: If you look at the testimonials and the following that we have, so if you take a look at Bliss, for instance, Bliss uses a plant from South Africa called sceletium tortuosum, also known as Kanna. That has a serotonin-boosting aspect to it. Similar to how SSRIs which are widely used as antidepressants give you that overall feeling of happiness because it floods your system with serotonin, sceletium works the same way but in a more natural fashion. We've had thousands of people tell us that they either use it in addition to or in replace of other medications that they've been using as antidepressants.
Matthew: We've had the founders of Lucid Mood and the dosist pen on the show, and they create products also that dial in the mood. This genre is becoming really popular. How would you compare and contrast what you're doing with, let's say, like Lucid Mood or dosist?
Peter: I love what Lucid Mood and dosist are doing because it's a recognition that what consumers and patients are looking for are specific states. I want to feel a particular way, I don't want to just feel a generic high. I would say two big differences between us and Lucid Mood and dosist, one is the category. They've been focused on smokables, whereas we focused on non-smokeables, edibles, and ingestibles because we believe that's especially in light of the vaping crisis and COVID which is a respiratory disease, I don't think we need to negatively impact our lungs anymore.
The second way in which we're different from them is that we utilize other plant medicines in order to deliver the effect. Lucid Mood and dosist focus on the terpene profile. The fact is that the science behind cannabinoids and terpenes is really, really premature to be able to tell us that this combination of terpenes will give you energy. We have some good guesses, but there really is very little science.
We're a science-driven company, and we utilize all of the clinical research on other plant medicines and on supplements that have been done across the world in order to deliver a specific effect. As an example, our Go product is a combination of four stimulants that have been well researched across the globe that would give you a clean boost of energy starting with caffeine, which is one of the best central nervous stimulants, and then we pair that with other plant medicines, L-theanine, theobromine, and alpinia galanga, and all those have been well studied, so we can deliver a very specific experience that is around giving you a boost of energy based upon real science.
Matthew: When you take Go, what kind of activities do you typically like to associate with that to give people a sense of real-world combination?
Peter: Think of it as a replacement for a Monster Energy or a Red Bull, or a 5-hour energy drink, except that first, you don't have all the sugar that's typically associated with those energy drinks. What we've done there is caffeine is the best central nervous stimulant that we have. It is the most popular drug globally, but caffeine also has some negative side effects for it, and so we've paired three other plant medicines with caffeine in order to mitigate those side effects.
One, for instance, is the jitteriness that sometimes you get with caffeine. When paired with L-theanine in a specific ratio, that eliminates that jitteriness. The second issue with caffeine is the crash. You get this boost, but an hour, two hours later, all of a sudden, you feel totally depleted and you're crashing. We utilize alpinia galanga which is a plant that works on your adenosine receptors to keep the caffeine in your system longer so you don't experience that same crash and you have a longer duration of energy.
The third side effect of caffeine is accelerated heart rate and blood pressure. Theobromine is an amazing natural vessel dilator that lowers your blood pressure and increases blood flow to your brain and body. What does all that do? That gives you a boost of sustained energy so that you feel like you can push your mind and your body further. Then, the low dose of THC and CBD allows you to be in a much more relaxed mental state, although you may be stimulated. For instance, we have a strong following with athletes. We've got numerous testimonials from people who will say things like, "I just ran a 6K in 5k time and I feel as great as ever," for instance.
Matthew: Which of the products is the most popular?
Peter: Midnight is the most popular. That is the number one selling sleep aid in Colorado, and it's our number one selling product. The lack of sleep, Matt, it's of major epidemic proportions. 70% of Americans today say that they haven't had at least one night of difficulty sleeping in their most recent history. We also know that the lack of sleep is one of the biggest contributors to poor health outcomes.
If there's one thing you could do to improve health outcomes, it's to give people an extra hour of sleep. That's the situation that most of America is in, that we don't get enough good quality sleep. Then, secondly, many of the products that are out there to help us sleep either don't work or have a lot of negative side effects, whether that be Ambien, melatonin, or chamomile tea.
People are looking for something to help them get that high quality, easy, restful night of sleep and wake up feeling fresh. That's what Midnight does so well, is it gets you to sleep fast in under 20 minutes, it promotes a healthful architecture of sleep, so you actually get REM sleep and all the different stages of sleep, and you wake up feeling really refreshed and able to get on with your day.
Matthew: Do people take it typically like an hour before they go to sleep or what's the time frame?
Peter: Typically 20 to 30 minutes. We always tell people get ready for bed, this is fast-acting, because if you have trouble sleeping, you don't want to wait an hour to fall asleep. It's like I either have chronic insomnia or acute insomnia or whatever it might be. When you want to sleep, you want to sleep now. We've engineered Midnight to deliver on that. Typically, like I said, it's within 20 minutes that you are fast asleep in a beautiful, dreamy place.
Matthew: That's great. That's pretty fast onset. Can you talk a little bit about how you look at onset and how you make that happen quickly?
Peter: When we started the company, Matt, we set about a number of non-negotiables as we looked at particularly the edibles market back in 2015. It's still largely true today. We saw three major problems with the edibles. One is that you have no idea how it's going to make you feel. At best, these products are labeled indica-sativa hybrid, which most of us know those distinctions are not very meaningful or helpful.
Second is that it takes way too much time to feel the effects. I'm a New Yorker. I believe impatience is a virtue, and we shouldn't have to wait 60-90 minutes for anything to kick in. Third is the poor quality ingredients and bad taste that's associated with many edibles, high fructose corn syrup, lots of sugar, or just things that taste bad. 1906, foundationally, is all of our products have to satisfy all three of those demands.
It has to give you a specific effect, it has to be fast-acting, and it has to be as good tasting and as healthy as possible. The fast-acting areas is one of the areas that we have really innovated since our launch. There were no fast-acting edibles on the market back in 2015. I would venture to say that there are still, unfortunately, very few fast-acting edibles on the market today. We have a patented lipid micro-encapsulation process that we utilize in order to allow you to feel the effects in under 20 minutes.
The way that works is it joins the cannabinoids with a medium-chain fatty acid. I think of the medium-chain fatty acid as like a bullet train with the THC and CBD as passengers. When you ingest, it allows it to go through your intestinal system much faster. You get a faster effect and you get higher bioavailability. Our five milligrams typically feels like a seven or eight milligram because it bypasses the gut, gets into your bloodstream and into your brain faster than any other edible in the world.
Matthew: That makes sense, which our liver recognizes that medium-chain triglyceride oil. It allows it to go through. It's like a Trojan horse that lets the cannabinoids in.
Peter: Exactly. It even bypasses much of the liver. It just goes through the intestinal wall. That's part of the problem with other edibles, is that it doesn't get into your bloodstream until it gets processed by the liver. This allows you to bypass the liver, permeate the intestinal wall, like you said, I love the Trojan horse analogy, and you start to feel it quickly.
Matthew: You mentioned that the most popular product is the sleep product and it helps you get to sleep 20, 30 minutes before you want to. You take a tablet. What about staying asleep? I know that's a stubborn problem for a lot of people. What can you tell us there? Is there anything, any hope?
Peter: Yes, that's a really good observation, Matt. There are generally two types of people. There are people who have trouble falling asleep and there are people who have trouble staying asleep. There are some people who have trouble with both. Midnight is superb at solving the first problem of getting you to sleep quickly. We are in development right now with an extended-release version of Midnight that would kick in a few hours after you fall asleep to help you sustain your sleep.
What's amazing is that there are very few products, pharmaceutical, definitely none in cannabis, supplements that actually specifically address this problem of helping you stay asleep through the night. We expect to launch that product in the coming months. We're currently in a trial right now getting feedback from consumers. As soon as we get through that trial period, we'll be launching that market. We think there will be millions of consumers around the US and around the globe who are clamoring for help staying asleep.
Matthew: Gosh, this market is really just by itself, just the sleep market, is going to be enormous. It probably already is. Do you know of any customers that use something like an Oura Ring or any kind of quantified self-technology in conjunction with the sleep product to optimize their sleep?
Peter: We were about to launch a sleep study that would actually be using a Fitbit that would be measuring sleep onset, sleep duration, sleep architecture, and how you feel when you wake up in the morning. This was a blind clinical study that would have recruited participants in Colorado to take Midnight. Their Fitbit was connected to servers that would automatically upload data on sleep performance. Every day, they'd be filling out a questionnaire to see how well they slept for more subjective measures.
We hired one of the leading pharmacologists in the world to design the study, a doctor by the name of Dr. Ethan Russo, ready to go out with the study. Part of what you need to do in any clinical study is go through what's an Institutional Review Board, an IRB. Because of the federal prohibition on cannabis and on the challenges of cannabis research, the IRB didn't approve us to go forward with our study. That's really unfortunate.
We're still fighting it because we believe that's the wrong approach and that we have to open this market up to research. What we have gotten is more anecdotal evidence from folks who will send us their Fitbit or send us their Oura Ring reports that show, in fact, that they're getting more sleep and they're getting higher quality, more efficient sleep on Midnight.
That's our theory. Like I said, we've gotten a lot of anecdotal data, and as soon as we can get an IRB approval, we'll be one of the first companies to do serious clinical research using a widely available cannabis product like Midnight in a scientific way.
Matthew: Where do you think this market is all headed in 3 to 5 years in terms of using cannabis and other natural products to get this specific emotion or outcome dialed in at a predictable way?
Peter: This is what people want. What they really want are low-dose cannabis products that are not damaging to your lungs and that meet the specific needs of what we have. If COVID has shown us anything, it's that, one, there is an incredible amount of increased anxiety in today's world. We've seen that in prescription drugs going up for antidepressants, antianxiety meds, sleep meds.
It's through the charts how much more prescriptions we've seen in the last couple of months due to COVID. People want something to help them manage daily life better. Cannabis could be part of that toolkit, but we have to continue to innovate as an industry to create better and better products for people that deliver on that. The direction is going to be in more microdose, low-dose products that help do that.
Especially as we have more seniors, more women, and others coming into this market, they're not looking to get blasted, they're not looking to get really high or get out of control. They're looking for just a little bit of help.
Matthew: What's the suggested retail price for the drops?
Peter: It's about $25, and that gets you 20 nights worth of sleep. For a little more than a dollar a day, you can have a great night's sleep.
Matthew: You've got a good distribution system set up it seems in a few states at least. What's it been like to having started a new brand and then get distribution? Is that difficult, or can you share a little bit about your journey there and how you made that happen?
Peter: It's been a very humbling, great story. We launched in Oklahoma on September 1st. This is our first new market outside of Colorado. We have a partnership with an amazing company, Stash House Distribution, and 24K Labs in Oklahoma as local operators. They've got a 10-person sales team with a wide distribution across the state. In literally just the last two weeks, we've gotten into 75 dispensaries so far.
We've had a massive uptake from consumers because this is what they're looking for. We've really been very fortunate at how Oklahomans have embraced 1906 in the last couple of weeks. Part of it is having a really good distribution partner. The stars aligned for us and I would say for Oklahoma patients that they now have access to one of the best cannabis products in the market.
Matthew: You're in Colorado and Oklahoma. Any other expansion plans?
Peter: Massachusetts, Maryland are up next, and we'll be continuing to expand it into other markets. Our strategy, unlike many other cannabis brands, is to focus eastward from where we are. A lot of brands are pushing into California or are already in California or started in California. Our focus has been on East Coast markets where our stated goal is to be the number one brand east of the Mississippi.
Matthew: Population density, that's where all the people are.
Peter: Population density and also the lack of available products. If you are in California, you not only have great legal products, but as you know, there is still a lot of illicit usage there. There are some great products. It may not be tested as well, but people feel like they're getting their needs met in the illicit market. In the Northeast, it's a bit of a different situation because we haven't had a legacy of dispensaries or easy accessibility to a lot of products there. I think we can be more successful on the East Coast, and I think there is frankly more demand for the legal market to provide great products here.
Matthew: Where are you in the capital-raising process? Did you raise capital or can you tell us more details there?
Peter: In October last year, we closed on an $18-million round of financing. We've been very fortunate to have an amazing group of investors from institutional investors, family offices, high net worth individuals that have supported 1906 over the years. This is a capital intensive business and we're constantly raising money. We're currently raising another round. We're about halfway through that round of financing right now and it's been very well received by investors. Our hope is that we close that round around the end of September or so.
Matthew: Are most investors in the Tri-state area there?
Peter: I'd say a disproportionate amount is in the Tri-state area. That probably reflects the fact that our focus is eastward reflects my personal networks having been in New York for my adult life, and then, frankly, there's a lot of capital here in the Tri-state area.
Matthew: [inaudible 00:27:15]. Peter, I'd like to ask a few personal development questions to help listeners get a better sense of who you are as a person. With that, is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Peter: I recently read a book on the Netflix from-- I don't read many business books, maybe one to two a year, but I came across a Netflix book on culture which really impacted the way I think about things. The gist of the Netflix book on culture was about how to create a culture where people can take risks, that people are performing at their best, and unleashing that inherent talent that you have in your employees. That's helped me evolve my thinking about our culture and our employees in a big way.
Matthew: Besides what you're doing with your brand, what do you think the most interesting thing going on in the cannabis ecosystem is?
Peter: One of the most interesting things is the increased focus on social justice. The protests of the summer and the Black Lives Matter Movement have hopefully continued to raise our awareness about institutional racism, one, and, secondly, how much the drug war was tied into institutional racism as well, that it really was a war not on drugs, it was a war on people, and particularly Brown and Black people and communities of color.
The amount of money and resources that have been wasted on prohibition around this plant and the number of lives that have been destroyed by that unjust war on racism, we still have a long way to go. Unfortunately, recently, as you may have heard, Florida, and this is unbelievable that we're in this area, but the Florida voters overwhelmingly voted a few years ago to allow felons to vote. Florida has one of the worst histories of felony disenfranchisement.
If you're a felon and even if you served your sentence, you are deprived of the right to vote. A couple of years ago, Florida voters voted overwhelmingly to reinstate that. The Republican-led legislature and the governor decided to require that if you want to vote, you have to satisfy all of your back fines and everything else before you actually can get the right to vote. That is another form of poll tax, unfortunately.
The courts did not agree with that interpretation and allowed the Florida legislature's actions to stand. Today, we have 800,000 plus felons who are out of jail, who have satisfied and fulfilled their sentence, but they still can't vote today. Two-thirds of that 800,000 are people of color. In order to continue to get change, we as a community, as voters of people, as society have to stand up and say, "This is wrong."
Matt: Final question. Many are calling for the end of New York City. You mentioned you live in SoHo which is a fun, cool neighborhood. What are your thoughts? Is it going to bounce back? If so, when? How will it look when it does bounce back or if it doesn't? What are your thoughts there?
Peter: How many people have called the demise of New York? Whether it be the end of the great depression or whether it be after 9/11, people have been calling the end of New York since probably the beginning of New York. There is a strong human need that we have for connection, for community, and for diversity. That's what keeps New York alive. New York will change. SoHo artists left SoHo years ago. Maybe this moment in New York will help to do a reset and will bring in artists back and new blood back.
Maybe we need to see rents decreased a little bit to make New York City affordable. I'm a diehard lover of New York. New York will emerge hopefully stronger and better. I was out last night. We've got outdoor dining, so there's no indoor dining allowed in New York. We have outdoor dining. It was a beautiful evening and it felt like I was in a wonderful European city with people sitting outside and having a nice meal. Car traffic wasn't around.
We have a moment in our life right now, and who knows if we'll ever get this moment again in our lifetimes, to ask ourselves, those of us who live in an urban environment, how do we want life to be here in our urban jungle and consciously create that vision?
Matt: Do you feel like your boots on the grounds sense is that the leaders are responding? Are they responding and adapting to try to make this a successful effort or did it seem a little bit behind?
Peter: As with most politicians, they're a little bit behind. It's the power of people and the power of voting and the power of our voices, that's what's going to bring about change.
Matt: Peter, thanks so much for coming on the show and educating us. This is a really interesting thing you're doing here with your 1906 brand. Tell listeners how they can find the brand. Also, for accredited investors that are interested in learning more about investing, how can they do that?
Peter: Thank you, Matt, for the opportunity to share this with your listeners. I encourage you all, you can follow our brand on Instagram. It's at 1906 New Highs, N-E-W H-I-G-H-S. Our website is 1906newhighs.com. If you're interested in learning more and participating on this journey with us and joining our investor team, feel free to email me directly, or if any of our listeners want to email me directly, I'm email@example.com.
Matt: Peter, thanks so much for coming on the show. We really appreciate it. Keep us updated on everything you have going on.
Peter: Thank you, Matt. It's really been a pleasure and an honor to be a part of your show. I'd love to be on again in the future. If there's anything that I can be of help, please let me know.
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