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Flower-Side Chats Part 6: A Q&A with Fabian Monaco, CEO of Gage Cannabis

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

The Michigan cannabis market is making pace with big time cannabis players like California (#1) and Colorado (#2). For the first quarter of 2021, combined cannabis sales in Michigan were nearly $360 million. At that pace, Michigan could see combined sales of $1.4 billion — well outpacing 2020 sales of $984 million.

Gage is the exclusive cultivator and retailer of world-leading cannabis brands including Cookies, Lemonnade, Runtz, Grandiflora, SLANG Worldwide, OG Raskal, and its own proprietary Gage brand portfolio in Michigan. The company recently secured a $50M investment in an oversubscribed round which included a $20M investment from JW Asset Management.

We spoke with Fabian Monaco, CEO of Gage Cannabis. Fabian started Gage in 2017 after meeting his operating partners in Michigan. Prior to Gage, Fabian worked as an investment banker racking up a number of firsts in cannabis industry financing and M&A transactions.

Aaron Green: Tell me how you got involved in the cannabis industry.

Fabian Monaco: My background is in investment banking – specifically 10 years of capital market experience. I was fortunate enough to be part of the initial team that brought Tweed, now Canopy Growth public. In fact, I worked on a lot of firsts in the industry: the first acquisition, the first $100 million financing, the first IPO in the space. Shortly after that, I went to XIB Financial, which co-founded Canopy Rivers with Canopy Growth. I was working on that when I encountered these two phenomenal operators. At the time, I had visited over 100 of these cultivation facilities and these were some of the best operators in the business. So that led me to start Gage in 2017.

Green: Where is Gage currently operating?

Fabian Monaco, CEO of Gage Cannabis

Monaco: In the U.S., we are purely operating in Michigan. We do have a licensing agreement with a small producer in Canada, so you will see the brand there.

Green: Tell me about your choice to settle the company in Michigan initially?

Monaco: If you look at Michigan as a historical cannabis market, it was the second largest cannabis market from a medical card holder standpoint for nearly a decade, only behind California. This was probably the case until 2019, where they went to adult use. So, for us, we knew this medical base was going to be a great platform to an outsized adult-use market. And already we see that April was $154 million in sales, adding up to over a $1.8 billion dollar run rate. That’s the third highest run rate in the country, only behind California and Colorado.

Green: What is it that makes Michigan different? You talked about medical cannabis already. Is there anything else about the demographics in Michigan or the consumer base that makes Michigan special in that sense?

Monaco: In Michigan, over 70% of the population is old enough to consume. So, when you take a look at how much of the population is 21-years-old plus, relative to other markets, the total addressable market in Michigan is just huge. Then when you take a look at their consumption habits, especially when it comes to flower, Michigan is consuming some of the highest amounts on a per capita basis. Those two stats set up a scenario where we foresaw the potential of the market. To be honest, the market has exceeded our expectations. We didn’t think it would be this strong this quickly. Right now, the state is looking to be a $3 billion market by 2024 – and it could easily surpass that.

Green: Any plans for expansion beyond Michigan?

Monaco: We’ve been to eight or so different states in the past 60 or 75 days really trying to educate ourselves on the licensing structure, the markets there and the key players in those respective markets. What are some of the costs, in terms of acquisitions? We really want to branch out the Gage brand into other states across the US. The thing is, we believe in the model that Trulieve deployed. They really focus on being the number one player in a very, very big market. For instance, Trulieve is obviously one of the top players in Florida. We’re trying to mimic that strategy.

Trulieve is a dominant market force in Florida

Once we have that deep market penetration, that market share, then we’ll start to get into other states. But for now, why would you want to go and rush out to another state when you’re already in the third largest market in the country?

Green: Are there any criteria you look for in a potential expansion state?

Monaco: We look at consumption habits. We want states with similar demographics to Michigan. Close proximity states also allows us to quickly go from one state to the other without having to take a multi-hour flight to get there. States we’re considering are Northeast and Midwest states, like Illinois, Pennsylvania, Ohio, New Jersey, Massachusetts and Maryland.

Green: What kind of consumer trends are you seeing in Michigan as it relates to products?

Monaco: Flower continues to dominate. In a market like Michigan, we have some of the top flower consumers in the country on a per capita basis. We specialize in flower and flower only, so this created a perfect scenario where we are able to ramp up our brand quite quickly, from a flower standpoint.

Now that we have that brand equity, that brand power, we are going to potentially delve into other categories, including extract-based products, such as vape carts and concentrates. You hear talk about these new beverages, but we’re not seeing that take off in this market as much as people think it would. Flower still remains at the top and that’s something we highly anticipate going after for quite some time.

Green: Can you tell me about your vertical integration strategy?

Monaco: We’re one of the larger retail portfolios in Michigan right now. We have 13 locations. Nine are operational. So, we’re really in a great spot overall in terms of how big of a platform we do have – one of the larger ones – and, frankly, in one of the larger markets in the country.

The Cookies flagship dispensary in Detroit, Michigan

We actually have a little bit of a unique scenario on the cultivation side of things. We have our own three cultivation assets that are going to be producing, on average, about 1,000 pounds of product over the next couple of months as they fully ramp up. We’ve actually contracted out a lot of our cultivation. Cultivation is time consuming, and it’s also very, very costly to build out. Luckily for us, we’re a really well-established and strong brand. We had the opportunity to contract out our growing. So, we have 10 different contract growth partners. These are phenomenal cultivators, again, some of the best in the state. They grow Gage and Cookies branded product for us. We have a great breakdown from a financial standpoint. We share the retail revenue with them on a 50/50 basis. They pay a little bit too, for packaging and testing. So, basically for $0 we’re getting product on the shelf where we’re achieving 50% plus gross margins. It’s a phenomenal setup for us on the cultivation side where we went from two cultivation assets in the latter half of last year to now eight different cultivation assets, moving to 13 by the end of the year.

On the processing side, we’re just actually finishing our processing lab. We should have extract-based products launched in Q3. We’re really excited to have our own line of extract-based products. We plan to focus on vape carts to start – a very popular category in Michigan on the retail side of things.

Green: Are those cultivations all indoor?

Monaco: Yes, we’re big proponents of indoor flower. It allows us to control the quality of our flavors and consistency in our strains when we grow indoors. From our consumers, there is a very strong demand for indoor grown high-premium, high-quality products.

Green: What sets Gage apart from other competitors in Michigan?

Monaco: I think focus. We just focused on our flower. We focus on our post-production process. We hang dry everything, we hand trim everything, and we hand package everything. That’s a little bit more time consuming. It’s a little more costly. But all that effort shows in the end product which is key.

A lot of people think you can grow great quality product, you cut it down, you dry it and put it in the pack and it’s going to be great. You really need a strong attention to detail, especially in a big consuming market like Michigan, because again, they are a refined consumer. They’re looking for the best. They’ve already been consuming some of the best quality products in the country for many years now. So for us, we put a painstaking process in place for flower production, not only from the growing standpoint, but also through the end of that post production process.

Ancillary to our cultivation process is also consistently providing new varieties of flavors on the flower side of things to the consumers. When you look at the successful brands in California, what makes them special is that they’re consistently pheno hunting, coming out with new flavors. This is similar to the wine industry where the best wineries come out with a new kind of grape or mix and consumers get excited, they rush out and buy half a dozen bottles or a dozen bottles.

It’s a very similar scenario in the cannabis industry. I hate when people say that cannabis is a commoditized industry. It’s so far from the truth. You look at brands like us or Cookies, Jungle Boyz and you can see their constant innovation, their constant drive. They are always bringing something new for the consumers to try. That’s what really sets apart the best brands.

Green: What’s got your attention in the cannabis industry? What are you interested in learning more about?

Monaco: I’m always intrigued with new ways of consuming. Across the U.S. and well-developed markets like California and Colorado, you see all these interesting new ways to consume the product. You’ve got patches, sublingual strips, etc. There are so many unique ways. I am currently seeing how they play out. Are they fads? Do people get excited about them initially, and then go back to their vape carts, pens and typically dried flower pre-rolls? I’m always trying to educate myself to see what’s on the market. What’s new? Who has a new drink? How does it hit? Are people excited about it?

Also, I am constantly learning about new brands that come out. There are so many new small brands that don’t necessarily have the scale or the capital to really expand, but are producing some of the best products in the country in a cool, unique form of packaging, etc..

Green: Alright, great. That concludes the interview!

Monaco: Thanks, Aaron.

Flower-Side Chats Part 5: A Q&A with Bob Fireman, CEO of MariMed, Inc.

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Multi-state operators (MSOs) are on the rise in the United States, navigating complex regulatory frameworks to drive profitability through economies of scale and scope. As an MSO and an early mover in the space, a significant part of MariMed’s current strategy is to complete the acquisition and consolidation of the licensed state cannabis businesses it has developed. It takes seasoned leadership to make that happen, and MariMed’s is led by one of the most experienced and successful MSO management teams in the industry. Over the last eight years, Bob Fireman and his colleagues have won 17 licenses in 6 states, and designed and developed over 300,000 square feet of cannabis cultivation, production and dispensing facilities.

MariMed has also developed a portfolio of award-winning cannabis brands and infused products which are licensed, manufactured and distributed in Delaware, Illinois, Maine, Maryland, Nevada, Rhode Island and Puerto Rico. A recently announced $46 million financing for a facility with Hadron Healthcare Fund will help repay all MariMed debt other than mortgage-backed bank loans and one convertible note, as well as help upgrade and expand the company’s owned and managed cannabis facilities.

We spoke with Bob Fireman, CEO of MariMed. Bob started the foundations of MariMed in 2008 after getting into large-scale hydroponics for urban sustainable agriculture. Prior to MariMed, Bob served as a startup lawyer focused on tech and emerging industries.

Aaron Green: Bob, tell me about how you got started in the cannabis industry.

Bob Fireman: I practiced law for decades. Part of my practice was to help startups in all sorts of industries, particularly technology and new emerging markets. At one point, I was introduced to a fascinating sustainable food business opportunity – to build hydroponic farms on rooftops in cities across the country.

Bob Fireman, CEO of MariMed, Inc.

When one of our projects in San Francisco hit some roadblocks, our team there pivoted to what was becoming the Wild West of California cannabis. My friend and current MariMed CFO, Jon Levine, and I began investing and managing a cultivation site there. That’s where we built our early foundation of industry knowledge.

Fast forward a few years, and I was afforded the opportunity to be involved in the drafting of the proposed Massachusetts medical cannabis legislation.

Through that work, we met a team that had won one of three cannabis licenses in Rhode Island. We formed a real estate LLC and raised the capital to develop a seed to sale cannabis facility in Providence, which was later leased to the Slater Center, a not-for-profit medical cannabis licensed business. Today, the Slater Center is a nationally acclaimed operation that services over 10,000 medical patients.

From there, we took our know-how and formed a new entity that was the formal beginning of the company we now know as MariMed. Initially, we helped win licenses for clients in Massachusetts, Delaware, Maryland, Illinois and Nevada. We also provided management services, working capital and other necessities. Under our management, we organically built these businesses from the ground up, advancing best practices and somewhat quietly creating a network of best-in-class operations throughout the industry.

That led to the consolidation of those businesses that we’re focused on today as a core strategic pillar.

I’m incredibly proud of our team, the core of which has been at this for 10 years. We’ve watched other MSOs try different models of success, with varying degrees of success. For us, focusing on growth markets, building at a reasonable and scalable clip, attracting incredible talent at all levels of the company, and developing fantastic brands that customers love, are the ingredients that have translated to where we are now – strong performance and an exceptionally bright future. “Slow and steady wins the race” has become a mantra.

Green: What trends are you looking at right now? What’s on your radar?

Fireman: My radar has a singular focus, and that’s to create shareholder value. That’s why completing the consolidation of the cannabis licensed businesses we’ve developed and manage into our public company is so critical. Back in the day, the initial available licenses were in medical-only state programs where applicants were required to be not-for-profit state companies. Accordingly, we raised the capital in the real estate entity which leased facilities to the licensees. Our revenue was from rents, management services and licensing fees.

Panacea Wellness in Middleborough, MA is one of MariMed’s adult use cannabis dispensaries

In 2019, we implemented a new strategic plan to consolidate these businesses. While that translates to our being structured similarly to other MSOs in that we are a vertically integrated seed to sale company, we are distinct in our operational excellence, quality product portfolio, and strong balance sheet. Other MSOs have raised large amounts of capital to pay large sums to acquire licensed state cannabis businesses and have found themselves over-leveraged and challenged to assimilate other companies’ methodologies and cultures. By consolidating the businesses and talented people we developed and managed from day one and utilizing our best practices and processes system-wide, we realize enormous capital efficiencies.

Our strategy is paying off. Our core cannabis revenue in 2020 increased 207% to $50.9 million, and our 10k reported EBITDA of $16.3 million. And now we’re on track to double our revenue in 2021.

The last piece of the puzzle is to let the world know what we’ve been doing. Slow and steady has worked for us but gone are the days of doing so quietly. We’re proud of what we’ve accomplished and exceedingly bullish on what’s to come.

Green: What do you look for in an M&A target?

Fireman: When M&A makes sense for us, we first look for single operators and entrepreneurs in states where we are not active and look to partner with business leaders that had the vision and the courage to get into this industry and build solid cannabis businesses from the ground up. I’m looking for businesses that could benefit from being part of a larger, more experienced and well-capitalized company like MariMed. Obviously, as an MSO with a solid platform, MariMed is approached regularly by other MSOs and banks suggesting candidates for M&A opportunities. Lining up with a company that has complementary cannabis licenses in other states and who shares our vision and ethics could be a win-win situation. They must embrace our commitment to diversity, the environment and proper corporate governance. We have been somewhat reticent to do this until we see some increase in our share price and market capitalization.

Green: Are there any new products, or product trends that you’re looking at?

Fireman: Marimed looks to be the most trusted source of high-quality cannabis products that consistently delivers innovative health and wellness solutions to our patients and customers. Our lab scientists are constantly creating and testing new and innovative formulations of cannabinoid compounds including CBD, THCa, CBG, CBN and others that will improve the health and wellness of our customers.

Our brand portfolio is ever-expanding with new and better product offerings. Our award-winning Betty’s Eddies Fruit Chews brand is adding new SKUs of varieties and flavors for both medical and adult use programs. Our Nature’s Heritage flower and concentrates brand is adding a line of solventless concentrates, live rosin, as well as new formulations for RSO, an oil popular with medical patients. Kalm Fusion is expanding its successful line of powdered drink mixes as we see more movement in the cannabis beverage category.

Microdosing is hugely popular right now, and we’re rolling out products in the 2-5mg dosage range. Health and dietary concerns are top of mind as well, and we offer products that are vegan, sugar-free and gluten-free. Ultimately, we want to be sure that we have something on the shelves for every single consumer. The financial hardship created by the pandemic has made consumers more attracted to value added products such as popcorn buds.

Green: You recently announced an equity financing from Hadron. I’m curious to learn more about it from a nuts-and-bolts perspective if you can share any of that information.

Fireman: Over the last year, access to the capital markets for equity raises in cannabis public companies was difficult. The cost of debt was and is still high, and we were looking for a long-term financial partner that understood the industry and could assist us. Hadron Capital has been successful for several years investing in some of the most successful MSOs and they saw the value and potential in MariMed’s experienced management and great assets.

Hadron invested $46 million in equity in MariMed this March. Approximately $16 million was utilized to retire all our short- and long-term debt but for bank secured debt and one convertible note. $7 million is committed to funding our capex and expanding the capabilities of our facilities, enabling us to grow more flower and automate production. The balance of funding will support our consolidation strategy to fund two more roll ups of state licensed cannabis businesses into the public company.

Going forward, it is comforting to have a capital partner to assist us in future acquisitions and M&A opportunities.

Green: I’d love to learn more about your Nature’s Heritage brand, particularly as it relates to the cultivation and the flower products.

Fireman: Our COO Tim Shaw has assembled a cultivation and production team with expertise in all aspects of genetics, growing methodologies, extraction techniques, and packaging innovation. That’s provided us a rich collection of quality genetics that make up Nature’s Heritage, our top-selling flower, oil and concentrate brand in Massachusetts and Maryland. We’ve recently expanded the line to include Rick Simpson Oil (RSO) and solventless concentrates (including live rosin) and have been receiving stellar feedback.

Green: What are you interested in learning more about?

Fireman: Over the last decade, the MariMed core team has seen the emergence and amazing growth of the cannabis industry. The initial medical programs in California and Colorado have now led to some form of legal medical or adult use cannabis programs in over 33 states and districts.

We are most interested in learning and following the federal, state, and international laws and regulations. It is vital to know how these laws will affect our company and the industry as a whole. When might full federal legalization become a reality? What might different versions of the law be? Will state legal programs be protected as well as the companies that took the risk in investing in the industry at its nascent state and how? What will FDA requirements and regulations look like? What medical claims will companies be allowed to make, and what kind of research or trials will be required to put a product on the shelf? What are the ramifications of the MORE Act or the SAFE Banking Act?

Responsible MSOs need to be prepared to rise to or above the standards of care of other industries. A lot of this was impossible in the past because of federal prohibition laws. Soon, if not already, labs and manufacturing processes will need to be GMP certified and more. Consumer data will need to be HIPAA compliant. Cannabis companies have to be good corporate citizens: diversity and equal opportunity should be embedded in business decisions, and commitment to ESG and sound environmental and social policies with good corporate governance need to be in planning and implemented.

Following the laws and holding ourselves to the highest possible safety and business standards will allow the cannabis industry to finally become “mainstream.”

Green: Alright, great. Thank you, Bob. That concludes the interview!

Leaders in Cannabis Formulations: Part 2

By Aaron Green
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Editor’s Note: In Part 1 of this series, green sat down with Drew Hathaway, senior food scientist at Stillwater Brands. Click here to see Part 1.


Natural cannabinoid distillates and isolates are hydrophobic oils and solids, meaning that they do not mix well with water and are poorly absorbed in the human body after consumption. By formulating these ingredients using a patented delivery system technology, trademarked VESIsorb®, Geocann has overcome common obstacles associated with fat-soluble active ingredients, including poor stability, bioavailability, absorption, and solubility. In addition, Geocann has peer-reviewed, published evidence of the dramatic improvements in Cmax, AUC, and Tmax (“time to peak absorption” directly related to “fast-acting” benefits).

Geocann is a cannabis formulation company with its headquarters in Fort Collins, Colorado, and additional offices in Chicago, Illinois and Zurich, Switzerland. The company is led by an impressive leadership team of scientists, pharmacists, researchers and natural product industry leaders. Geocann’s technology platform has been successfully applied to a wide range of cannabis product applications, including soft gel and hard-shell capsules, functional foods (e.g. gummies) and beverages, powder systems, tinctures, sublingual sprays and topically applied formulations. Brand partners in the U.S. utilizing Geocann’s technology for hemp applications include Nestlé Health Science, Cannaray and Onnit, and brand partners for medical and adult-use cannabis applications include Curaleaf, Sunderstorm and CannaCraft, among others.

We spoke with Jesse Lopez, CEO and Founder of Geocann, about their product formulation technology in cannabis and how they work with brand partners in the U.S and internationally. Lopez started Geocann in 2018 alongside the success he’s experienced at SourceOne Global Partners (founded in 2003 by Lopez), a leading formulation company in the nutraceuticals space with a reputation for pioneering innovative products that combine science-backed ingredients with patented drug delivery system technologies to address the most pressing consumer health concerns, such as heart health, cognitive function, inflammatory response, metabolic syndrome and type II diabetes, among others.

Aaron Green: Jesse, first off, how did you get involved in the cannabis industry?

Jesse Lopez: Our focus at SourceOne Global Partners has been on natural products for nearly two decades. Some of the folks involved with our natural products business decided that they would get involved in the cannabis business and they asked for my support at the Advisory Board level. I agreed to serve and figured I better learn about the cannabis industry! We realized that there was a tremendous opportunity for utilizing our drug delivery system technology to enhance the value of these cannabis-based products. Due to the regulatory environment, strategic legal counsel and new investments necessary to take an immediate leadership position in the cannabis industry we launched Geocann in 2018 with an office in a fully legal state at the time, Colorado.

Green: How do you select the natural products you work with at SourceOne?

Jesse Lopez, CEO and Founder of Geocann

Lopez: We really focus on science-backed natural product ingredients that may require high doses to reach therapeutic blood levels. By combining these science-backed ingredients with patented technologies – which we own the global rights to – these products offer desirable differentiation for leading brands, such as dramatically improved absorption and bioavailability, patent protection and trademarked “intel inside” branding.

Green: What are some of the other natural products you have experience with?

Lopez: We work with a range of some of the most popular nutraceuticals such as coenzyme Q10 and omega-3 fish oil to the more innovative natural products like resveratrol. We also work with vitamin D, and other immunity-based ingredients that can be enhanced using our delivery system technology to deliver greater benefits to the people that are taking those products.

Green: What is the technology and how does it work?

Lopez: I think it’s important to recognize our technology partner, Vesifact, in Zurich, Switzerland, who is the inventor of the VESIsorb® technology platform and serves as the scientific research, technical support, production, and product development arm of SourceOne and Geocann. We are very proud of this symbiotic relationship where our role at Geocann and SourceOne is to provide the commercial development, sales, marketing and strategic distribution infrastructure. We promote our partnership openly on our website and in our marketing materials because of their unrivaled leadership position in the global marketplace.

They have consistently been recognized as a top 10 global organization for health-related nanotechnology patent activity, ahead of many of the most well-known pharmaceutical companies in the world. It is an intellectual property portfolio that has been used to provide solutions to the most difficult product formulation challenges over the years in pharmaceuticals, medical devices, nutraceuticals, cosmetics, and now cannabis applications. Together, our focus has been on delivering novel solutions in these diverse fields of use and product applications based upon VESIsorb® formulation technology.

Each active compound identified with its own set of formulation, absorption and bioavailability challenges requires a customized solution that allows the full potential health benefits to be realized from success in the lab to commercial scale up. This is the process and we have successfully delivered unmatched solutions for close to twenty years from coenzyme Q10 to now both psychoactive and non-psychoactive cannabinoid product formulations in a wide range of product applications.

We saw the exploding interest in CBD with our nutraceutical partners and demanding consumers worldwide but chose to start Geocann to keep the markets served separate. We were confident that the VESIsorb® technology would provide much needed solutions for CBD as a wellness product, but also adult-use and medical cannabis products regarding “fast acting” and “product stability” needs.

Green: What’s the problem in cannabinoid bioavailability that Geocann’s technology helps to solve?

Lopez: It is well-recognized in the scientific literature that CBD, THC and other cannabinoids, in general, show limited bioavailability due to their lipophilicity, poor aqueous solubility and extensive first-pass metabolism.

Our VESIsorb® technology was designed to address the poor bioavailability of drugs and natural bioactives like cannabinoids exhibiting poor water solubility but high membrane permeability (Biopharmaceutical Classification System: Class II compounds). The VESIsorb® technology is a lipid-based formulation that self-assembles on contact with an aqueous phase into a colloidal delivery system. This colloidal solubilization improves the transport of the cannabinoids through the aqueous phase of the GI-lumen to the absorptive epithelium, dramatically improving bioavailability.

VESIsorb® is typically characterized as a SEDDS (self-emulsifying drug delivery system). What’s unique about our VESIsorb® SEDDS is the long history of safe and effective use worldwide and the large number of products that, over the years, we’ve successfully developed. With decades of experience delivering novel formulation solutions, there is significant and valuable “know how” that we bring to each formulation challenge.  This “know how” allows us, for example, to develop cannabinoid formulations that provide lymphatic absorption pathway advantages in addition to standard gastrointestinal absorption, therefore optimizing therapeutic blood levels for maximum benefits.

Needless to say, there are various methods that attempt to address the poor cannabinoid bioavailability. Unfortunately, too often, companies make claims that they have water soluble cannabinoids but offer little evidence to validate their claims. The popular misconception is that some degree of water solubility will consistently translate to improved bioavailability. This is clearly not accurate. We know scientifically that pharmacokinetic performance is highly variable. A review paper I read recently comparing water soluble delivery system formulation types illustrated this fact. There was greater than an eight-fold difference in bioavailability amongst the various water-soluble formulations.

Green: Can you tell me some details about your global license with Vesifact?

Lopez: Our technology exclusivity is based upon given categories. So, when we say we have global exclusivity for nutraceuticals, that can be as I’ve already mentioned, omega-3, coenzyme Q10, or resveratrol as examples, and this business is managed by SourceOne. With regards to our global exclusivity for cannabinoids and terpenes– whether we formulate these ingredients to create a functional drink, or we’re creating a gummy, or creating a softgel capsule or powder-filled hard-shell capsule, or sublingual, or topical – all of those product applications are covered by ourexclusivity for the technology and is managed by Geocann.

The beauty of our technology is that we’ve already achieved success with all of those product applications. That’s one of the big advantages of our technology versus some other approaches trying to address the challenges of cannabinoid bioavailability.

Green: What kind of validation and clinical studies have you done so far in the cannabinoid space?

Lopez: We were the first to have stability data with creating our formulation in a soft gel capsule with CBD. We recently submitted to the European market for novel food application. We invested hundreds of thousands of dollars in proprietary safety studies that are required to achieve novel food status in Europe and FDA GRAS in the U.S. We have proprietary stability data as well as proprietary toxicology data from multiple, self-funded clinical studies. Many companies that submit for the EU novel food application are only referencing the existing scientific literature about the pharmacokinetics of cannabinoids, whereas we have our own peer-reviewed, published study. In our study, we compared our VESIsorb®-CBD formulation to the industry standard MCT Oil-CBD formulation in a crossover design where we were able to demonstrate how we could dramatically improve the bioavailability of CBD.

Green: Can you talk about the benefits of your technology with regards to bioavailability and onset time?

Lopez: When you start talking about onset time we move into a broader discussion relative to cannabinoids. We’ve been very successful with marijuana, especially as it relates to THC, because of the dramatic improvement in time to Tmax, and how much faster we reach Tmax than a standard THC formula. Our formulation is generally four times faster compared to standard formulations.

When it comes to area under the curve and Cmax, we show improvements of four to six times a standard THC or CBD product. Further, when we start looking at the differences between other studies that have been published, we show an even greater improvement based upon study comparisons to what other people have done, even compared to products like GW Pharmaceuticals’ Sativex Oromucosal Spray.

Green: Can you address the SEDDS formulation and liver metabolism?

Lopez: We’ve dramatically overcome challenges with the first-pass effect. We have also formulated our products to address lymphatic absorption. So, we’re coming at it from a number of different angles.

We disagree with people who talk about water solubility as an end-all be-all solution. When you look at the range of published studies, whether it’s nanoparticles or liposomal systems or micro-emulsions, they all are water soluble systems, but yet the data shows there’s dramatic differences in the real efficacy of those approaches, and what the actual improvement in blood levels are. Ultimately, those blood levels represent the efficacious nature of the products whether we’re talking about CBD, or talking about THC.

Green: As a Colorado-based company you work with cannabis partners across the US. Can you tell me about your relationship with marijuana product formulators and brands and how you structure your licensing agreements across state boundaries?

Lopez: In a recent article about the leading fast acting gummies, the two companies they focused on were Sunderstorm with the Kanha Nano gummies and Curaleaf with their Select Fast Acting Nano gummies. Both of those companies use our VESIsorb® technology. We’re very proud of our relationship and the success they’re having as leaders in most dominant states with that particular product application.

Onset time has always been a challenge with gummies. And we’ve dramatically improved onset. Actually, we’ve shown statistically significant improvements for all measured pharmacokinetic parameters in a recent peer-reviewed published study.  We demonstrated much higher total absorption in maximum plasma concentration (Cmax), total exposure [area under the curve (AUC)]) and the time to reach the peak concentration (Tmax).

We say powered by VESIsorb® technology the product is faster, stronger, longer.

Green: How does the experience differ from a standard oil- or isolate-based formulation?

Lopez: The only way that I can answer that question is we’ve had 100% success with the companies we work with in their initial trials. When someone tells me that a group of employees are going to try the product and they’re heavy users of cannabis and they are smokers, I think, “wow, you know, gummies have to be really successfully formulated for someone like that to be pleased with the high.” Then they come back and say, “that’s the best that I’ve had in four years!” and they’re totally blown away. That’s completely different than a peer reviewed published study, but for sure, that’s the kind of feedback and anecdotal evidence that we get. I think that’s why that application is growing so much faster now because we’ve overcome this onset issue.

Green: Do you give exclusive rights on a state-by-state basis?

Lopez: We’re very selective about who we work with. Exclusivity is always part of the discussion. But at the same time, it’s really more about protecting the investment in the people that we partner with and not cannibalizing a given market. So, there are some exclusive relationships in the U.S. and internationally, like Heritage Cannabis and Pathway Health Corp in Canada, but for the most part, I would say simply, we were very selective about who we do business with and open to new partnerships.

Green: What kind of support do you provide to your licensing partners?

Lopez: We provide 100% formulation and technical support. We provide the SEDDS and then they use their own legal, licensed cannabis and their own equipment. Our system requires no special equipment or investment in changes to their process. So, not only do we provide formulation expertise, but our system is really easy to use both in a lab environment as well as producing large scale commercial productions.

Green: What geographies are you in currently with the cannabinoid formulations?

Lopez: We are global in scope. We’ve been very fortunate to have success not only in the US and Canada, but Europe, Brazil and Australia as well. Our level of participation will vary whether we’re talking about medical marijuana, adult-use or hemp extract and CBD.

Green: If somebody is interested in learning more about your product or potentially becoming a license partner, how would they how would they reach out to you to set that up?

Lopez: If they went to our website, www.geocann.com, it’s pretty easy to reach us and I am grateful that so many companies are doing that.

Green: Great, thanks Jesse that concludes the interview!

A Q&A with Matt Hawkins, Co-Founder & Managing Partner at Entourage Effect Capital

By Aaron Green
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The cannabis industry saw close to $15.5B in deals across VC, private equity, M&A and IPOs in 2020 according to PitchBook data. Early and growth stage capital has been a key enabler in deal activity as companies seek to innovate and scale, taking advantage of trends towards national legalization and consolidation. Entourage Effect Capital is one of the largest VC firms in cannabis with over $150MM deployed since its inception in 2014. Some of their notable investments include GTI, CANN, Harborside (CNQ: HBOR), Acreage Holdings, Ebbu, TerrAscend and Sunderstorm.

We spoke with Matt Hawkins, co-founder and managing partner at Entourage Effect Capital. Matt started Entourage in 2014 after exiting his previous company. He has 20+ years of private equity experience and serves on the Boards of numerous cannabis companies. Matt’s thought leadership has been on Fox Business in the past and he has also recently featured on CNBC, Bloomberg, Yahoo! Finance, Cheddar and more.

Aaron Green: How did you get involved in the cannabis industry?

Matt Hawkins: We’ve been making investments in the cannabis industry since 2014. We’ve made 65 investments to date. We have a full team of investment professionals, and we invest up and down the value chain of the industry.

I had been in private equity for 25 years and I kind of just fell into the industry after I’d had an exit. I started lending to warehouse owners in Denver that were looking to refinance their mortgages out of commercial debt into private debt, which would then give them the ability to lease their facilities to growers. I realized there would be a significant opportunity to place capital in the private equity side of the cannabis business. So, I just started raising money for that project and I haven’t looked back. It’s been a great run and we’ve built a fantastic portfolio. We look forward to continuing to deploy capital up to and through legalization.

Green: Do you consider Entourage Effect Capital a VC fund or private equity firm? How do you talk about yourself?

Hawkins: In the early stages of the industry, we were more purely venture capital because there was hardly any revenue. We’re probably still considered a venture capital firm, by definition, just because of the risk factors. As the industry has matured, the investments we make are going to be larger. The reality is that the checks we write now will go to companies that have a track record of not only 12 months of revenue, but EBITDA as well. We can calculate a multiple on those, and that makes it more like lower/middle-market private equity investing.

Green: What’s your investment mandate?

Matt Hawkins, Co-Founder and Managing Partner at Entourage Effect Capital

Hawkins: From here forward our mandate is to build scale in as many verticals as we can ahead of legalization. In the early days, we were focused on giving high net worth individuals and family offices access to the industry using a very diversified approach, meaning we invested up and down the value chain. We’ll continue to do that, but now we’re going to be really laser focused on combining companies and building scale within companies to where they’re going to be more attractive for exit partners upon legalization.

Green: Are there any particular segments of the industry that you focus on whether it’s cultivation, extraction or MSOs?

Hawkins: We tend to focus on everything above cultivation. We feel like cultivation by itself is a commodity, but when vertically integrated, for example with a single-state operator or multi-state operator, that makes it intrinsically more valuable. When you look at the value chain, right after cultivation is where we start to get involved.

Green: Are you also doing investments in tech and e-commerce?

Hawkins: We’ve made some investments in supply chain, management software, ERP solutions, things like that. We’re not really focused on e-commerce with the exception of the only CBD company we are invested in.

Green: How does Entourage’s investment philosophy differ from other VC and private equity firms in cannabis?

Hawkins: We really don’t pay attention to other people’s philosophies. We have co-invested with others in the past and will continue to do so. There’s not a lot of us in the industry, so it’s good that we all work together. Until legalization occurs, or institutional capital comes into play, we’re really the only game in town. So, it behooves us all to have good working relationships.

Green: Across the states, there’s a variety of markets in various stages of development. Do you tend to prefer investing in more sophisticated markets? Say California or Colorado where they’ve been legalized for longer, or are you looking more at new growth opportunities like New York and New Jersey?

Hawkins: Historically, we’ve focused on the most populous states. California is obviously where we’ve placed a lot of bets going forward. We’ll continue to build out our portfolio in California, but we will also exploit the other large population states like New Jersey, New York, Arizona, Massachusetts, Michigan, Ohio and Illinois. All of those are big targets for us. 

Green: Do you think legalization will happen this Congress?

Hawkins: My personal opinion is that it will not happen this year. It could be the latter part of next year or the year after. I think there’s just too much wood to chop. I was encouraged to see the SAFE Banking Act reappear. I think that will hopefully encourage institutional capital to take another look at the game, especially with the NASDAQ and the New York Stock Exchange open up. So that’s a positive.

I think with the election of President Biden and with the Senate runoffs in Georgia going Democrat, the timeline to legalization has sped up, but I don’t think it’s an overnight situation. I certainly don’t think it’ll be easy to start crossing state lines immediately, either.

Green: Can you explain more about your thoughts on interstate commerce?

Hawkins: I think it’s pretty simple. The states don’t want to give up all the tax revenue that they get from their cultivation companies that are in the state. For example, if you allow Mexico and Colombia to start importing product, we can’t compete with that cost structure. States that are neighbors to California, but need to grow indoors which is more expensive, are not going to want to lose their tax revenues either. So, I just think there’s going to be a lot of butting heads at the state level.

The federal government is going to have to outline what the tax implications will be, because at the end of the day the industry is currently taxed as high as it ever will be or should be. Anything North of current tax levels will prohibit businesses from thriving further, effectively meaning not being able to tamp down the illicit market. One of the biggest goals of legalization in my opinion should be reducing the tax burden on the companies and thereby allowing them to be able to compete more directly with the illicit market, which obviously has all the benefits of reduced crime, etc.

Green: Do you foresee 280E changes coming in the future?

Hawkins: For sure. If the federal illegality veil is removed – which means there’ll be some type of rescheduling – cannabis would be removed from the 280E category. I think 280E by definition is about just illegal drugs and manufacturing and selling of that. As long as cannabis isn’t part of that, then it won’t be subject to it.

Green: What have been some of the winners in your portfolio in terms of successful exits?

Hawkins: When the CSC started allowing companies in Canada to own U.S. assets, the whole landscape changed. We were fortunate to be early investors in Acreage and companies that sold to Curaleaf and GTI before they were public. We are big investors in TerrAscend. We were early investors in Ebbu which sold to Canopy Growth. Those were huge wins for us in Fund I. We also have some interesting plays in Fund II that are on the precipice of having similar-type exits.

You read about the big ones, but at the end of the day, the ones that kind of fall under the radar – the private deals – actually have even greater multiples than what we see on some of the public M&A activity.

Green: Governor Cuomo has been hinting recently at being “very close” on a deal for opening up the cannabis market in New York. What do you think are the biggest opportunities in New York right now?

Hawkins: If it can get done, that’s great. I’m just concerned that distractions in the state house right now in New York may get in the way of progress there. But if it doesn’t, and it is able to come to fruition, then there isn’t a sector that doesn’t have a chance to thrive and thrive extremely well in the state of New York.

Green: Looking at other markets, Curaleaf recently announced a big investment in Europe. How do you look at Europe in general as an investment opportunity?

Hawkins: We have a pretty interesting play in Europe right now through a company called Relief Europe. It’s poised to be one of the first entrants to Germany. We think it could be a big win for us. But let’s face it, Europe is still a little behind, in fact, a lot behind the United States in terms of where they are as an industry. Most of the capital that we’re going to be deploying is going to be done domestically in advance of legalization.

Green: What industry trends are you seeing in the year ahead?“We’re constantly learning from other industries that are steps ahead of us to figure out how to use those lessons as we continue to invest in cannabis.”

Hawkins: Well, I think you’ll see a lot of consolidation and a lot of ramping up in advance of legalization. I think that’s going to apply in all sectors. I just don’t see a scenario wherein mom and pops or smaller players are going to be successful exit partners with some of the new capital that’s coming in. They’re going to have to get to a point where they’re either selling to somebody bigger than them right now or joining forces with companies around the same size as them and creating mass. That’s the only way you’re going to compete with companies coming in with billions of dollars to deploy.

Green: How do you see this shaking out?

Hawkins: That’s where you start to look into the crystal ball. It’s really difficult to say because I think until we get to where we truly have a national footprint of brands, which would require crossing state lines, it’s going be really difficult to tell where things go. I do know that liquor, tobacco, beer, the distribution companies, they all are standing in line. Big Pharma, big CPG, nutraceuticals, they all want access to this, too.

In some form or fashion, these bigger players will dictate how they want to go about attacking the market on their own. So, that part remains to be seen. We’ll just have to wait and see where this goes and how quickly it goes there.

Green: Are you looking at other geographies to deploy capital such as APAC or Latin America regions?

Hawkins: Not at this point. It’s not a focus at all. What recently transpired here in the elections just really makes us want to focus here and generate positive returns for investors.

Green: As cannabis goes more and more mainstream, federal legalization is maybe more likely. How do you think the institutional investor scene is evolving around that? And is it a good thing to bring in new capital to the cannabis market?

Hawkins: I don’t see a downside to it. Some people are saying that it could damage the collegial and cottage-like nature of the industry. At the end of the day, if you’ve got tens of billions of dollars that are waiting to pour into companies listed on the CSC and up-listing to the NASDAQ or New York Stock Exchange, that’s only going to increase their market caps and give them more cash to acquire other companies. The trickle-down effect of that will be so great to the industry that I just don’t know how you can look the other way and say we don’t want it. 

Green: Last question: What’s got your attention these days? What’s the thing you’re most interested in learning about?

Hawkins: We’re constantly learning about just where this industry is headed. We’re constantly learning from other industries that are steps ahead of us to figure out how to use those lessons as we continue to invest in cannabis. We all saw the correlation between cannabis and alcohol prohibition. The reality is that the industry is mature enough now where you can see similarities to industries that have gone from infancy to their adolescent years. That’s kind of where we are now and so we spend a lot of time studying industries that have been down this path before and see what lessons we can apply here.

Green: Okay, great. So that concludes the interview!

Hawkins: Thanks, Aaron.

Recent Developments in Supercritical CO₂ Winterization

By Aaron Green
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Supercritical carbon dioxide (CO2) extraction is a processing technique whereby CO2 is pressurized under carefully controlled temperatures to enable extraction of terpenes, cannabinoids and other plant molecules. Once the extract is obtained the crude is often subjected to an ethanol winterization process to remove chlorophyll, fats and waxes.

Green Mill Supercritical is a Pittsburgh-based manufacturing and engineering company focused on cannabis and hemp extraction. The company offers a range of CO2 extraction equipment where users can tune and control their extraction methods. They recently announced  a technology advance enabling winterization in-process, which has the potential to remove the need for ethanol winterization.

We spoke with Jeff Diehl, director of marketing at Green Mill Supercritical, to learn more about the new process. Jeff was working in the tech industry in San Francisco in 2017 when he was invited to join Green Mill by his cousin, Jeremy Diehl, who is the founder and CTO.

Aaron Green: Before we get to your new technology, can you explain what industry trends you are watching?

Jeff Diehl: A big thing that I watch is the premium extract space. More and more consumers are demanding higher premium extracts. They want differentiated products. They want products that are safe and that have some kind of meaningful connection to the specific plant from which they came. Right now, CO2 plays a small role in the market for those products. Most premium products are generated through hydrocarbon extraction. So, I am watching how people are using CO2 to create the next generation of safe, premium products.

Aaron: What is the normal process for a CO2 extraction today?

Jeff Diehl, director of marketing at Green Mill Supercritical

Jeff: The current CO2 extraction process generally consists of two major phases to producing your final extract. In the first phase, you have extraction where you get your crude product. The second phase is post-extraction where you do cleanup to get your refined oil. Within that post-extraction phase, most operations include an ethanol-based winterization process.

Aaron: What does the winterization step do, exactly?

Jeff: Winterization is about removing waxes. Your main extraction is considered crude because it’s got a lot of materials from the plant that you don’t want. The large majority of unwanted material is waxes. Winterization is the process of using a solvent, traditionally ethanol, to separate the waxes from the cannabinoids. There are multiple challenges inherent in ethanol-based winterization that introduce cost, time and product loss. It’s terribly inefficient. Plus, there will always be residual ethanol left in your final product, and that’s not something consumers appreciate.

Aaron: You’ve recently announced a new process at Green Mill that moves the winterization step into the supercritical CO2 equipment. Can you explain how that works?

Jeff: With our process, which we call Real-Time Winterization, there is no ethanol involved in winterization anymore. It is all done with CO₂ during the primary extraction. That’s the major advance of our process and although it has been attempted before, no one has succeeded at doing it in a viable way. You take a process which is normally four days – one day for CO2 extraction and three days for ethanol winterization – and you do it all in less than a day. We have automated software, sensors and pumps that makes this all possible.

Aaron: How does the quality of the resulting product compare with the new process?

Jeff: You can see the difference right away, if you’re at all familiar with extraction. It just looks clean and bright. Lab analysis has been very positive thus far, but we continue to run tests. Our R&D team has done multiple tests, mostly on hemp and CBD. That’s because we don’t have a license for THC. We’re currently engaging with a licensed partner so that we can collect more data on THC-containing products, so we can give exact numbers. But with CBD, we’ve done multiple tests to validate the method and the technology, and are seeing consistently excellent results in regards to both purity of the product and efficiency of the process.

Aaron: How do yields compare between the processes?

Hemp CBD extract straight out of a Green Mill SFE Pro running Real-Time Winterization.

Jeff: From the data that we’ve seen in the industry, it looks like when you winterize with ethanol, you leave anywhere from 5 to 10% of your cannabinoids behind in the waxes. That’s just lost. With Real-Time Winterization using CO2 we have seen recovery rates as high as 99%. We are continuing to investigate that result with testing to make sure it was not an outlier, but in any case, recovery rates look promising.

Aaron: One of the other issues with ethanol is taxes and the ability to find food grade supply. Do you have any perspective you can share on that?

Jeff: There are a number of advantages to moving away from ethanol. The sheer quantity of ethanol is a factor. There are a lot of regulations and fire requirements around managing large quantities of ethanol. The ethanol winterization process itself is not just one process. There are multiple stages, from mixing, to freezing, to filtering, to removing the solvent. These are all opportunities for things to go wrong, so you’re always managing those risks. Multiple large pieces of equipment, including fume hoods, filter skids, cryo freezers and rotary evaporators, are expensive and require heavy management.

I think Elon Musk said the best process is no process. Anytime in an industrial process when you can remove steps in the process, that’s the direction you want to go in. And, that’s what we’ve done. With this recent work, we have effectively removed post processing for certain categories of end product.

Aaron: Do you have any patents on the new process?

Jeff: We have a patent pending on both the method and the equipment, which is allowing us to talk about this as much as we are.

Aaron: So, how does this work if somebody already owns an existing piece of Green Mill equipment? Is this something that can be retrofitted? Is it a software upgrade?

Jeff: There are two components. One is an equipment upgrade, which can be done retroactively for existing customers, and one is a methodology upgrade, which we assist our customers with. The automation software inherently can handle the settings that you need to run the methodology. In fact, it’s that software and the rest of our existing tech stack, the proprietary pump, the triple inline fractionation, the precision and stability of the overall system, that is what made this winterization advance possible.

Aaron: Where are you rolling this out first? And do you plan to go international?

Jeff: International is definitely in the plan, since we’ve already sold systems abroad. We are currently getting ready to announce the opening of our beta program with the new technology. So, we’re not ready to sell this widely at this time, but we are taking submissions from companies that want to get in early and join us at the forefront of CO₂ extraction innovation.

Aaron: Okay, great. Thanks Jeff, that’s the end of the interview.

Jane & Leafly Join Forces: An Interview with Socrates Rosenfeld, CEO of Jane

By Aaron Green
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As retailers accept the end of in-store shopping as we know it and start adjusting to e-commerce, an improved and more involved customer experience will be imperative for an e-retailer to grow, let alone stay afloat.

Jane recently announced a strategic partnership that combines Jane’s best-in-class product catalog and business tools with Leafly’s consumer marketplace and reach. Together, the companies will build solutions that empower cannabis retailers with fast and simple online shopping experiences that increase consumer purchase behavior. The partnership will seek to help instill consumer trust in the online shopping experience, build stronger customer acquisition tools for retailers, and help dispensaries grow their ecommerce capabilities with consistency and automation.

This strategic partnership comes after a massive year of growth for both Jane and Leafly. In the past year, Jane powered over 17 million orders and $2 billion in cannabis sales, while Leafly has seen more than 4,500 cannabis retailers in North America leverage their platform to bring new customers through the door.

Socrates Rosenfeld, CEO of Jane

We spoke with Socrates Rosenfeld, CEO of Jane to learn more about e-commerce and online marketplaces and how Jane and Leafly came together as partners, rather than competitors. Prior to Jane, Socrates was an Apache helicopter pilot for the US Army later transitioning to consulting with McKinsey.

Aaron Green: Socrates, thanks for taking the time today. What trends are you seeing and following in the industry?

Socrates Rosenfeld: Always happy to chat about the industry. Thanks for having me.

If you were to ask me that question a year ago, I’d say having a digital footprint was something that would give a dispensary or a brand a nice advantage. Today, it’s a must-have for survival. Where it used to be one or the other; online or offline, now we are able to merge the two by replicating a physical store into a digitized form to extend its reach far beyond its walls.

As things become more digitized, information becomes more necessary to run operations. With that we are able to meet the expectations of the consumers who are accustomed to convenience and curation. The omnichannel experience provides the best of both worlds. Access and ease of search with the ability to pick up or have the product delivered the same day from a locally owned and run business.

Reviews are one of the most important aspects of this unification of online and offline. It is something that is lost in solely offline purchases, that we’re now able to collect and organize. This product information allows us to provide customers the purchasing power to make a well-informed decision.

At Jane, we believe it is possible to create wins for the dispensaries, brands and customers – and digitization creates the opportunity for that to happen. I think there’s no better incubator in the world than the cannabis industry to prove that online and offline retail can work in harmony.

Aaron: Jane is the largest e-commerce platform in North American cannabis and Leafly is the largest marketplace in North American cannabis. What’s the difference between an e-commerce platform and a marketplace?

Socrates: Great question. There is definitely some overlap between the two, which is why it makes so much sense for us to collaborate. Ultimately though, our focus and expertise are different. Jane’s ecommerce platform serves as the industry’s digital infrastructure that pushes digital products across various order origination points like a dispensary’s own website, a brand’s own website and now, Leafly’s marketplace. Paired with Leafly’s industry-leading content and market information, together we can complete the entire online cannabis shopping experience – from product discovery through order fulfillment.

Aaron: At first glance, one might think that Jane and Leafly are competitors. How did you see it differently? And how did this partnership come about?

Socrates: Not only is our tech complementary, but we are aligned on mission – to empower consumers, dispensaries and brands with the integrity of the plant in mind.

We want to make it simple for consumers to reach the products that will be most helpful for them. We want to make it possible for dispensaries and brands, regardless of their size, to be able to compete on an even playing field.

It all comes back to being good stewards of the industry. Education and access create a healthy demand for a diverse range of products. That means that the plant stays in the hands of many – safeguarding it from homogenization.

Aaron: How do consumers benefit from the partnership?

Socrates: It really is all about bringing this industry in line with any other retail vertical and meeting the customer where they are. It unlocks more avenues for customers to discover products and access a vast catalog of information and verified customer reviews. Bottom line, this partnership makes shopping for cannabis as simple as shopping online for everything else in the world, while also ensuring the success of the sellers.

Aaron: When you say the sellers, are you talking about the dispensary or the brands?

Socrates: Both, we want to provide value for the entire ecosystem. We can do that directly for dispensaries and brands by enabling an automated ecommerce platform that they can use to power their own website. At Jane, we know that technology can unlock value for everyone, where it is not a zero-sum game and success for one means success for the other. With Jane, both the dispensaries and the brands win.

Aaron: What kind of regulatory challenges do you face through the partnership?

Socrates: There are no real regulatory challenges for the partnership itself. The entire industry operates under regulatory challenges, but it is those regulations that have been the catalyst for innovation. I see the opportunity for legal online payments and national product distribution to play a large role in shaping the industry soon, and a partnership like this will ensure a seamless transition for the industry as things continue to evolve.

Aaron: Final question. What are you personally interested in learning more about?

Socrates: I’ve always been curious about disruptive models. The companies, not just in tech, but any company that has set out to do things differently and has been able to hold true to a vision. That’s what interests me, and I think I will always have something to learn and draw inspiration from. 

Aaron: Excellent, that’s the end of the interview, Socrates!

Socrates: Thanks, Aaron.

Flower-Side Chats Part 2: A Q&A with Bill Conkling, Founder and CEO of Maggie’s Farm

By Aaron Green
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Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Maggie’s Farm is an integrated cannabis company based in Southern Colorado. Maggie’s Farm has seven adult-use and medical dispensaries and cultivates the vast majority of their flower on outdoor farms. All Maggie’s Farm products are sun-grown from seed in soil that is 100% custom-mixed onsite as well as spring-watered, slow-cured and hand-trimmed. Maggie’s Farm does not use any synthetic pesticides or growth hormones in its cultivation. In addition, for the past eight years, Maggie’s Farm has recently obtained Clean Green Certified®, a designation certifying organic standards and testing that mirrors the USDA organic certification. Maggie’s Farm was the first cultivator in Colorado to earn the Clean Green certification.

We spoke with Bill Conkling, Founder and CEO of Maggie’s Farm to learn more about the benefits of outdoor growing, localism and their Clean Green certification. Bill started Maggie’s Farm in 2010 after growing up on cattle ranches and farms in Colorado.

Aaron Green: Bill, thanks for taking the time today. Tell me a bit about how you got involved in the cannabis industry.

Bill Conkling: I am a native of southern Colorado. I was a medical caregiver back in the early days of legalization, and I saw an opportunity to vertically align after my first legal crop in 2010. I opened up the store in 2011. I’ve been a lifelong proponent of medical, recreational and adult use of marijuana.

I come from a background of farmers and I had worked on cattle ranches and farms throughout childhood. As soon as I graduated from college, I went back to work on a large cattle ranch in the four corners area [of southern Colorado]. That’s where I started to incorporate my indoor cultivation experience and skills with outdoor.

Aaron: What trends are you following in the cannabis industry?

Bill: I was one of the first medical operators to support legalization, so I have certainly followed legalization trends. I’ve looked at some other states in our region in terms of growth and legalization.

Bill Conkling, Founder and CEO of Maggie’s Farm

We’re trying to stay a regional supplier and producer so that we are locally grown. We believe the southwest of Colorado is optimal for outdoor cannabis cultivation.

At Maggie’s Farm, we have followed an organic trend from the beginning and I think that’s becoming more of a trend now. We recently received Clean Green certification to that effect. Our goal is to try to provide the healthiest product at a good value to the market.

I believe that all of the products that are made in the cannabis world come from the flower. Downstream products are only as good as their ingredients. It all starts with the flower. So, we focus on producing a clean, top-shelf quality flower that is produced outdoors.

Aaron: How do you define local?

Bill: Local is staying in the climate that is optimal with the least amount of carbon footprint to the earth. That also means trying to operate so that we’re not moving a lot of product across long distances.

We’re trying to set up farms that are in optimal climates. There is a two or three-state region that I believe is the optimal climate for outdoor marijuana cultivation in our country.

Aaron: What states are those specifically?

Bill: I think Colorado and New Mexico, primarily.

Aaron: What geographies is Maggie’s farm currently in?

Bill: We’re in southern Colorado. We don’t go into the plains of Colorado.

Aaron: So Colorado state only right now?

Bill: Yes. The wet mountain range is one of the mountain ranges that we are in. I’ve also cultivated in the La Plata mountain range.

Aaron: What specifically is it about that region that makes it conducive to cannabis growing?

Bill: I think if you get the right elevation and the right microclimates within those elevations, and you have the number of sunny days that Colorado offers in those areas – the intensity of the sunlight, and the cool nights – all those things are factors that coincide in these areas that we like to cultivate in.

Aaron: We’ve been talking about outdoor growth. Does Maggie’s do any indoor?

Bill: No. We’re essentially an outdoor farm. We do a little bit of breeding and we’ve got starter houses, greenhouses and hoop houses for that purpose. We’ve got one greenhouse that we use for some wholesale, but we are primarily outdoors.

Aaron: How do you go about selecting the genetics or evolving the genetics to meet your local environment, given that you’re growing outdoors?

Bill: A lot of it is honestly through testing and experimentation, historically. You just cultivate and harvest and see how the genetics performed, you know? You test, you take test inputs, you take customer reviews, and blind test results from the team and from the customers and you consider all those facts.

Aaron: Do you produce and use your own seeds or are you purchasing those?

Bill: We have done both. I think I’ve probably created somewhere north of 800 different strains at this point. So, we’ve got a huge seed bank. We do also buy from vendors and experiment with some of those genetics as well.

Aaron: Do you market your seeds in Colorado?“I don’t think that you can get anywhere near the terpene value indoors that you can outdoors.”

Bill: We do not.

Aaron: How did you settle on outdoor-only as the strategy for Maggie’s?

Bill: I believe outdoor is a premium flower. I think it has less impact on the earth. I think that there is a lot less pest mitigation than there is indoors, which makes it a healthier, cleaner product. You don’t have to mitigate the concentration of pests that you get in temperate climates of stagnant corners of greenhouses and buildings that you cultivate indoors. Therefore, you never get into the situations as often or as intensely, where you might have to really work hard at mitigating your pests. You can use the natural predator insects you can introduce and oftentimes they survive and they create their own climates and it’s a more natural, healthier product.

I don’t think that you can get anywhere near the terpene value indoors that you can outdoors. You just don’t have the value of the sun, which nothing compares to. You can hold up as many high wattage bulbs as you want and you don’t even pale to the sun and the effect that the sun has on the flower.

Aaron: What are some of the challenges of growing outdoors that you see frequently?

Bill: You have to be nimble. You can’t rely completely on a schedule. You’ve got to be able to shift around in your planting days and your harvest dates.

You’ve obviously got to be on your toes all the time for weather changes. Higher humidity years can tend to bring more insects or pests. Some years you’ve got higher winds than other years. This year, we had a snowstorm on September 9, which left nine inches of heavy wet snow on one of our farms. So, you’ve got to be nimble, very proactive and ready for those kinds of weather events that happen in very short notice.

Aaron: We mentioned Clean Green Certified® briefly. Can you explain more about the Clean Green certification and why that’s an important thing for you at Maggie’s?

Bill: The choice to become Clean Green Certified® was really an effort to validate the organic process that we have. We vetted out what we believe was and still is the premier, organic criteria certification endorsement in the market for cannabis. To this day, they really do an ethical, vetting-out process whereby if you fail the parts of any of the soils that are sent to federal-licensed labs, you do not get your endorsement. The owner of Clean Green also had a mother company that was an endorser of other agricultural products such as coffee, wheat and dairy.

Aaron: How would you compare Clean Green Certified® to USDA Organic?

Bill: Identical. When the federal government legalizes, we are poised to automatically convert to a USDA Organic certification and endorsement. The processes the founder and owner of Clean Green uses to test cannabis is the same process used to test other agricultural industries. For plants, he takes random samples of soils throughout a cultivation field and sends them to a federal-licensed lab where they test for impurities.

Aaron: Did you decide to get your Clean Green certification due to pulling from the market, or is this more something you decided to do internally as Maggie’s Farm?

Bill: I decided to do this internally. I wanted to be recognized for all of our organic efforts and I wanted to let people know that we have a safe product that doesn’t have synthetics in it. Even to this day, a lot of people in Colorado unlike the coastal states like maybe California are still pretty unaware of a Clean Green certification or even the fact that there is an organic process for cannabis or marijuana. So, it’s really just to let our customers know that there is value in a safe, healthy choice for them.

Aaron: What kind of products do you create at Maggie’s farm?

Bill: We grow flower. We are also a big producer of a very high-quality pre-roll. We are developing promoted products as well.

Aaron: Do you do fresh frozen?

Bill: We do some, yes.

Aaron: Are you selling direct to the dispensary or to manufacturers?

Bill: We finally had produced some excess. So, we started wholesaling flower this year and lots of high-quality shake for concentrates to concentrate makers. Our customer is typically a little more of a mature customer. I don’t want to say necessarily older, but I think we probably do hit a little bit of a higher, more experienced, health-conscious, connoisseur customer.

Aaron: Can you give me an idea of some of the regulatory challenges in Colorado that you’ve faced in the past or are facing today?

Bill: The perpetual change of regulation has been a challenge. Being a competent operator in cannabis means getting used to the change and having the resources to be nimble with compliance. We haven’t had common problems such as metals, mold or mildew issues. However, we have had some hardware issues, which required us to change cameras along with other technical intricacies.

Aaron: How many acres do you have?

Bill: We have about 30 acres of secured premise cultivation.

Aaron: Is that all managed in-house or sublet?

Bill: It’s all managed and operated exclusively by Maggie’s Farm.

Aaron: What’s next for Maggie’s Farm? What are you excited about?

Bill:  We want to continue to put a higher scale of a very healthy, quality, value flower out there and to be able to offer that to more states initially states that are within our region and eventually states across the US. Also, we will continue to do our best to meet the growing demand for healthier choices in general.

Aaron: Lastly, what are you personally interested in learning more about?

Bill: How we can continue to be as earth-conscious as we can be? How we can continue to look for ways to give back to our communities? How we can continue to operate as a view of made in the USA and to try to just support local regional and national products and vendors? Just how to be more aware and always look for opportunities for self-improvement.

Aaron: That concludes the interview, thank you Bill!

Flower-Side Chats Part 1: A Q&A with Sam Ghods, CEO of Connected

By Aaron Green
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Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Connected is a vertically-integrated cannabis company based out of Sacramento, CA and one of the most sought-after brands in California and Arizona. Having formed as a legacy operation in 2009, Connected has created a cult-like following over more than a decade in business. According to BDS Analytics, Connected Cannabis and their acquired brand Alien Labs now boasts the highest wholesale flower price in any major legal market – their average indoor flower wholesale price is 2x the CA average – yet also has the highest flower retail revenue.

We spoke with Sam Ghods, CEO of Connected to learn more about his transition from tech to cannabis, how Connected thinks about product and his vision for future growth. Sam joined Connected in 2018 after getting to know the founders. Prior to Connected, Sam was a co-founder at Box where he stayed on for 3 years after their successful IPO.

Aaron Green: How did you get involved in the cannabis industry?

Sam Ghods: I originally came from the tech industry. I co-founded Box, a cloud sharing and storage company, in the mid 2000s with three other friends. We grew that from the four of us to eventually a multi-billion-dollar public offering in 2015. I stayed on a few more years after that until I took some time off trying to decide what I wanted to do next. I looked at a number of different industries and companies, but personally I always had a real passion for artisan and craft consumer goods. It’s a really big hobby of mine. Whether it’s going to Napa or learning about different kinds of premium consumer goods, I really had a deep love and never knew cannabis could be like that.

When I first met Caleb, the co-founder of Connected, he instantly got my attention by telling me that they had been selling out of their product in the volume of millions of dollars a year at more than two times what everybody else was selling for. That really piqued my interest because creating a product that has that level of consumer passion and demand is maybe the single hardest thing about building a consumer goods business. For them to have been so successful in what was a very difficult and gray market to operate in at the time – this was mid 2018 that I was speaking with him and he had been building this company since 2009 – is a really big challenge, and really impressive.

Sam Ghods, CEO of Connected

So, I started spending time with Caleb and the Connected team and learned a lot about the business. Everything I learned got me more interested and more excited. The way that they thought about the product, the way they treated it was with a reverence and level of sophistication I had no idea was possible.

I was so excited to just learn about the space. I mean, honestly, it feels like the internet in the 90’s- The sheer possibility and excitement. The only difference here is that the market already has existed for 100 years plus: the gray and underground markets for this product are actually phenomenally mature. And now we’re lifting up billions of dollars in commerce that’s already occurring and attempting to legalize all of it in one fell swoop, which creates such an interesting set of challenges.

I first got involved as an advisor on fundraising and strategy. And then a few months later, they were looking for a CEO and I joined full time as CEO in September 2018.

Aaron: What trends in the industry are you focused on?

Sam: It may seem basic, but I think product quality in the broader cannabis markets nationally and internationally is really underrated. Because of the extreme weight of the regulatory frameworks in so many different markets, it’s resulting in a lot of product being grown and sold just because it can be by the operators that are doing it. In many markets, they count the number of producers by the handful, instead of being measured in hundreds or thousands like in California or Oregon. And in that kind of environment, you’re not really having competition, and you’re not really able to see the quality that has existed in this category for years and years and years.

That’s one of the things that really sets us apart – the quality is first above all else, as well as the innovation and time that has gone into it, and not many existing brands in the legal market can say that. With some of the “premium” brands on the market, it would be comparable to just jumping into the wine industry one day and thinking that you can become a premium brand, without having any knowledge of the history of the product or the industry itself. At Connected, we have a team that’s been doing this for over a decade. We did a back of the envelope calculation: there’s over one thousand lifetime harvests between our team. We’ve also brought in specialists from Big Ag and other industries to complement that experience.

Cannabis is a very, very difficult plant to grow at a very high level. It’s much more like high-end wine or spirits than other fruit or produce. I think in the cannabis community, that’s extremely acknowledged, and appreciation for that is the reason we get by with the highest prices in the legal market. I think in the broader investor and financial community, this point hasn’t really hit home, because the limited license markets aren’t mature enough, and there isn’t enough competition in many of them.

Our focus is continuing to make the best product we can, which has fed and developed our brands [Connected and Alien Labs] into what they are today. That is our number one focus, and we think it’s pretty unique to the space of not just cultivating a great quality product, but also as far as breeding, pushing the bar higher and higher on what can be done with the genetics of the plant. 

Aaron: How do you think about choosing testing labs?

Sam: So, the number one criterion is responsibility and compliance. We must be completely confident that they’re testing accurately, safely and exactly to the specifications of the state. Then from there, it is really cultivating about a partnership. There’s a lot of nuance in the relationship with a testing lab. We note things like: Are they responsive? Are they sensitive to our needs in terms of either timelines or requirements we have? It does come down to timelines and costs to a certain extent, like who’s able to deliver the best service for the best cost, but it really is a partnership where you’re working together to deliver a great product. Reliability and consistency are big pieces as well.

Aaron: Industry estimates for illicit market activities are something like 60% of the California market. From your perspective, how do we fix that?

Sam: I think it probably comes down to funding for the efforts to discontinue those activities and opening up the barrier to entry, incentivizing “illegal” operators to make the investment in the cross-over. I think the most successful attempts to tamp it down was when there were initiatives that were well-orchestrated and well-funded, allowing for legacy growers to actually cross over to the “legal” industry. You can’t launch an industry with such an extreme amount of regulation, set a miles-high barrier to entry, and then penalize legacy growers for continuing their business as-is. If the illicit market continues to be fueled by rejection, you’re not going to achieve the tax revenue that you’re expecting to see, that we all want to see. There needs to be an attitude that every dollar put into transitioning illicit markets into regulated markets is returned many times over in tax revenue to the state’s citizens.

Aaron: So, I understand you sell wholesale. Do you sell direct to consumer?“Once they hit the shelves, we blow people away again, beyond their expectations of what they had before.”

Sam: We own and operate three retail stores, so we do sell direct to our consumers, but at this point the majority of our product is sold through third party dispensaries.

Aaron: Do you make fresh frozen?

Sam: We do. On the cultivation side we have indoor, mixed light and outdoor. We fresh freeze a portion of our outdoor harvest every year, and then we use that fresh frozen for our live resin products, for example, our recent live resin cartridge. It creates a vape experience really unlike any other because we are using our regular market-ready flower, but instead we’re taking that flower and actually extracting, not just using the distillate and mixing a batch of terpenes with it. We extract the entire plant’s content across the board, from cannabinoids to terpenoids and everything in between, and then you have our live resin cartridges.

Aaron: How do you think about brand identity and leveraging the brand to command higher prices?

Sam: The cycle we’ve effectively created is that every time we do a release of a new strain or a new batch or harvest, the quality is generally going up. That quality is released under our brands, and then the customer is able to associate that increase in quality and reputation with those brands. Then for our next launch, we have an even bigger platform to talk about the products and to ship and distribute and sell the products. Once they hit the shelves, we blow people away again, beyond their expectations of what they had before. That continuous cycle keeps fortifying the brand and fortifying the product. From our perspective the brand is built 100% on the quality of the product. The product will always be our highest priority and the brand will come downstream from that. 

Aaron: Tell me about Alien Labs.

Sam: Alien Labs was an acquisition. It was a company that had built their brand really successfully in the gray market through 2017 and Prop 215 in California and had an incredible level of quality, a really loyal and dedicated fan base, not to mention a tremendous Instagram presence and following, which is where 98% of cannabis marketing happens today. We really loved the spirit of what the founders were bringing to the table. In 2018, we decided basically to join forces with them and bring them on board, creating a partnership where they leverage our infrastructure and the systems and processes we’ve built, but still keep their way of cultivation and their product vision. To this day, Ted Lidie, one of the founders, continues as the lead brand director for Alien Labs.

Aaron: In what geographies do you currently operate?

Sam: Our primary offices and facilities are based out of Sacramento, California, but we have facilities throughout the state. Last year, for the first time we launched operations in a new state, Arizona. As you may know, you’re not allowed to take cannabis products across state lines at all, so if you want consistent product in multiple markets you really have no choice but to rebuild your entire infrastructure in each state you want to open up.

There are many brands that are expanding and launching in more markets more quickly, but they’re doing so by taking product that’s already existing and putting their brand name on it. That is something we’ve decided strategically that we will not do. We’ve spent years building a high level of trust with our customers, so we’re only going to put our brand name on products that are our genetics, our cultivation, our style, our quality of product. When we launched in Arizona, we did it with a facility that we leased and took over and now operate with our staff. We’re replicating the same exact product that you can get in California in Arizona, which is really exciting.

We launched just this past November, which has been incredibly successful. Our dispensary partner Harvest saw lines of dozens of people out the door.“We consider ourselves a flower company first and foremost, so for us, that was a very calculated strategic move.”

Aaron: Any new geographies on the horizon that you can talk about?

Sam: We’re constantly evaluating new opportunities. I don’t have anything particularly specific to announce right now, but I will say we look for states where we believe there’s a competitive environment where the product quality is going to really stand out and be appreciated.

Aaron: Do you notice any differences in consumer trends between California and Arizona that stand out?

Sam: Not too many yet. We don’t have a retail location in Arizona, so we don’t have as much direct contact. However, we have heard consistently that the Connected customer demographics – as you would imagine most interested in our product – are those looking for something special, unique, different and have a really superior quality to everything else out there. We ended up launching in Arizona with the highest price point for flower in the state, and we say that’s just the beginning. The market is still so young and immature, both nationally and internationally, that this category is going to develop into one that’s really taste-driven.

Aaron: What’s next in California?

Sam: Continued growth and product development. We want to keep blowing away our customers with more and more incredible products, different product types and categories. For example, the cartridges were a really big launch for us because we don’t really consider ourselves a vape company. We consider ourselves a flower company first and foremost, so for us, that was a very calculated strategic move. We were only going to launch the product if we could fully replicate what the consumer gets from the flower experience. We are very unlikely to ever release a distillate pen, for example.

Aaron: What are you personally interested in learning more about?

Sam: We, as a society, really don’t know very much about the cannabis plant. Pretty much all meaningful research around cannabis stopped in the early 1900’s with prohibition. In the meantime, we’ve performed millions of dollars of studies and research on almost every other plant that we grow commercially. We understand these plants extraordinarily well. Cannabis science is stuck back in agriculture of early 1900s. The most interesting conversations I have are around how the plant works, how it doesn’t work and the ways in which it is so different from all other plants with which we are familiar. Our head of cultivation comes from Driscolls, the largest berry company in the world, and even he is frequently surprised by the way the cannabis plant reacts to things that are commonly understood in other plants. So, the way the actual plant responds to different environments is truly fascinating and something I think we’ll be learning about for decades and decades to come.

Aaron: Okay, great. That concludes the interview. Thank you, Sam!

Green Mill Supercritical: An Interview with CEO Wes Reynolds

By Aaron Green
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Carbon Dioxide (CO2) extraction is a processing technique whereby CO2 is pressurized under carefully controlled temperatures to enable extraction of terpenes, cannabinoids and other plant molecules.

Green Mill Supercritical is a Pittsburgh-based manufacturing and engineering company focused on cannabis and hemp extraction. The company offers a range of CO2 extraction equipment where users can tune and control their extraction methods.

We spoke with Wes Reynolds, CEO of Green Mill Supercritical. Wes recently joined Green Mill as CEO and investor in the company after a long career at the Coca-Cola Company in senior sales and general management roles.

Aaron Green: Wes, thank you for taking the time to chat today. How did you get involved in Green Mill?

Wes Reynolds: I came out of a 20-year career at Coca-Cola, where I lived and worked around the world. I was a sales and general management guy with Coke, and learned a lot about running businesses and how to drive growth. I left Coke in 2017. After that successful career I wanted to be in the cannabis space. I felt like cannabis was a growing space with a lot of opportunity and a lot of misperceptions out there, particularly around the foundations of what I would call the “evil reputation” of cannabis. I just found that abhorrent and wanted to be part of changing it.

Wes Reynolds, CEO of Green Mill Supercritical

So I ran the Florida operations for Surterra, which is now called Parallel, for a year out of Tampa, and we did a great job of growing that business in Florida. As the president of the Florida operation for Surterra, I saw everything seed-to-shelf for the industry. We had a 300,000-square-foot greenhouse in Central Florida, we had dispensaries, we had all the production, distribution and all the marketing. I was really able to learn the industry top to bottom.

When I left Surterra, I started looking at various investment opportunities and thinking about what I might want to do next. I came across Green Mill out of Pittsburgh, and was really impressed with the technology that they had put together. Having run a company where we used CO2 extraction, I had experiences with systems that didn’t work when they were supposed to or didn’t work the way they were promised, which led to lots of downtime, lots of frustration and lots of babysitting. I was impressed with Green Mill’s engineering approach and decided that I’d like to be involved with them. I originally considered just being an investor, but more and more conversations led to a greater understanding of some basic business administrative needs that they had as well. One thing led to another and I agreed to come on as the CEO, and I’m also an investor.

I’m excited about what we’re doing at Green Mill. I think that bar none, we make the best supercritical CO2 extraction equipment out there. We continue to innovate on that every day. We want to push CO2 beyond known limits, which is our stated goal as a company. We believe in CO2 and we’re living our goal in that we really are pushing it beyond known limits. There are new things we’re uncovering every day where we go, “Oh, my God, I didn’t know we can do that with CO2!” So, that’s kind of fun.

Aaron: Can you tell me just a high-level overview of how CO2 extraction works?

Wes: A supercritical CO2 extraction system is a collection of extraction vessels and fractionation vessels or collection vessels. In our case fractionation because we’re doing multiple collections through a single run. Then you need a system of pumps and valves and tubing, etc. to move the solvent in a supercritical state through the packed biomass, and then move the extracted compounds into a set of collection vessels. It sounds very easy. But the key to supercritical CO2 extraction is controlling temperature, flow rate and pressure. The better you can control temperature, flow rate and pressure, the more precise of an outcome you’re going to get. For example, say you run a three-hour extraction run, and you want to run it at 3500 psi. Well, you know, a competitive system might fluctuate 300 to 400 psi on either side of 3500. Whereas our system currently fluctuates more like five to 10 psi on either side of the 3500. So, there is much more control and precision.

Our whole goal, when we’re talking about pushing CO2 beyond known limits, is how do we continue to chase that holy grail of perfect control of temperature, flow rate and pressure? One of our advances so far is a proprietary pump, for example, that’s a liquid displacement pump that we engineer and build. It ensures a very even and consistent flow, independent of the pressure setting. So, that flow rate doesn’t change in our system compared to what you would see with another system. It sounds like a minor thing, except that at the end of a run, if you expected to get a certain set of molecules, you’re going to get a different set of molecules if your temperature and flow rate and pressure are varying, because what you’re doing is disrupting the density of the CO2 as it flows.

It’s about building a system that is precise in that way, I think, that requires enormously skilled engineering effort and design effort on the front end, and then requires us to have advanced production and manufacturing capabilities in our shop in Pittsburgh. Our customers are clearly impressed with the levels of consistency that they’re getting out of their system.

Aaron: You talked about precision and consistency as two items. Is there anything else that makes Green Mill different?

Wes: I’m a brand guy. I believe in brands. I came out of a 20-year Coca-Cola career.

The way that the cannabis industry is going in total, in my opinion, is the consumer is going to get more and more discerning along the way. Up until this point, everybody thinks “oh, we have THC and CBD and we have intensity.” But the more sophisticated and educated consumers get, the more discerning they’re going to be about what products they want to put in their bodies.

What makes Green Mill different is that we’re building a system that allows the operator of that system to create differentiated products for the marketplace. So, it’s not simply “CBD is CBD.” It’s: what plant did you start with? How can you maintain as many of the characteristics of that plant as possible?

We’re going to create the most sophisticated tool possible to allow the operator to create products that can be differentiated in the marketplace for a discerning consumer at a premium price. That way, you can create a market where there might not have been a market before, instead of just “hey, I’ve got X pounds of biomass that I need to extract. Give me your bluntest instrument and let me extract.”

Green Mill Supercritical’s SFE Pro

We currently make five different systems. First is the SFE Pro. We make a seven and a half liter and a 10-liter version, with two-vessel configurations of each of those. Then we have what we call a Parallel Pro, which has four 10-liter vessels and two pumps, with two streams running parallel to each other and emptying into shared collectors. It doubles the extraction rate, and you don’t expand the footprint very much. But 10-liter vessels are the biggest vessels we use. Because when you go too large with the vessel, you are giving up something in terms of the ability to control temperature, flow rate and pressure. Your efficiency starts to drop with higher vessel volume.

One of the things that makes Green Mill different is our extraction rate. Our Parallel Pro can do 145 pounds a day of biomass. We think that’s a significant amount, given the demand that’s out there for unique products. What we’re advocating for is multiple extraction systems instead of giant permanent installations of extraction systems, that end up limiting your flexibility. Big systems also prevent you from creating redundancies in your operating system. So, when your extraction system goes down, you’re done. Versus in our universe, we would say, you might want to have three or four extraction systems in different locations, running different products. Our price points are such that that’s very doable.

Aaron: How does the breakdown look between your cannabis and hemp clients?

Wes: A lot of that is legislative frankly. It has to do with what the environment is like at the moment. About 60% of our customers are small hemp farmers. And then we have the other 40% in the cannabis space that are medical or adult use producers.

CO2 extraction has a lot of applications beyond cannabis. We have a couple of customers using our system for hops extraction, for example. We see an enormous opportunity out there for non-cannabis botanical extraction, but our primary focus is cannabis. That is what we’re designing this system to do.

We find that small hemp farmers love our system because it is reliable and very automated. We have proprietary software that operates the whole system. You load and run various “recipes,” at least we call them recipes. What you are doing is setting flow rate, setting temperatures, setting pressures, etc., then that proprietary software has an unbelievable ability to control everything through the process. I’ve talked to several different operators who have used other machines, and then found themselves on a Green Mill system and couldn’t believe how easy, but also feature-rich it was.

I talk about it like it’s like an oven, you know, you set the oven at 375 degrees. And a really good oven stays right at 375. You still need to be a good chef to be able to make that perfect cheesecake. But without that oven, your hands are tied, so you are constantly trying to check those, “is it still 375? I don’t know!” With our system, if it says 375, it holds at 375. So we’re pretty excited about that.

And we’re going to continue to innovate. For example, we have a proprietary heat exchanger that we use on our systems. It’s actually 3D printed stainless steel. It’s about a 20-pound piece of steel that’s been printed to have a special tubing shape in the center only possible with 3D printing that allows us to heat CO₂ very quickly.

Aaron: That’s very cool. I’m noticing a lot actually, the innovations in cannabis are creating these adjacent market opportunities in botanicals. So, I think that’s interesting you point that out. You mentioned terpenes are one of the things you collect out of the CO2 extraction. Can you talk about the crude that comes off and how people are either monetizing or formulating that crude?

Wes: Our goal is to produce the “purest crude” possible. So, we want “less crude” crude. I think that we’re at the beginning of this, Aaron. We’re nowhere near the end, which is what I find so exciting, because all of our innovation, all of our continued development and all of our experimentation is designed to keep thinking, how do we push this further and further and further and get a more refined crude.

Green Mill Supercritical’s Parallel Pro

We just welcomed Jesse Turner to our team as Director of R&D, who is a well-known extraction guy in the industry. He came from Charlotte’s Web and Willie’s Reserve, and has been doing independent consulting. He’s just a rock star. He’s already off and running on experimenting with different stuff.

I think that we are just at the beginning of seeing more and more of that opportunity to help people realize, “Oh, my gosh, I did not know you could do this!” Terpenes are a good example. I think we are only scratching the surface of what terpenes can do. I mean, a cannabis plant has 400 plus molecules and we know a good bit about probably 10 or 12 of them. So, what are we going to find out about the other 390? And as we do, the Green Mill system will be ideal for separating those molecules that we don’t know today are valuable. So, I think that’s part of what we’re chasing as well.

Aaron: So where do you see CO2 extraction fitting into the cannabis and hemp supply chain?

Wes: For any product on the market that is not a smokable flower it helps to have an extraction process. There may be some products that come out that we don’t know about yet that are not going to qualify in that category. Whether you are talking about vape cartridges, or lozenges, or gummy bears, or whatever it is, they are going to start with extract. I think what consumers want is zero adulteration of their product. So if you take any botanical product, and if it is GMO-free, does not have any pesticides, maybe it is all organic, etc. — there is real consumer appeal to that. Whether you agree with it or not, it is what consumers want.

We believe that we can continue to push CO2 so that there’s no requirement for introduction of any other materials than just CO2, which is a completely inert gas. It’s got no residual effect whatsoever on the product. If we get where we want to go, then eventually you are talking about a pure botanical experience.

Initial upfront capital is higher than you are going to see with ethanol and butane extraction solutions for the same size equipment, but ongoing operating costs of those are much higher, when you weigh it out over a period of time. I think what we are going to find is that people are going to keep coming to CO2 because they realize there are things they can do with it that they can’t do any other way.

The end consumer is really who we want to keep in mind. I think for a long time, this industry was very demand driven. “I have X acres of cannabis product, whether that’s hemp, sativa, indica, whatever it is, and I need to extract this many pounds a day over this period of time.” And we keep asking the question, well, who’s going to buy that product on the other side? What do you want it to look like when you put it out on the market? As opposed to how much raw plant matter do you have? What’s the demand? And that was a difficult conversation. We’re starting to see more people come around to that conversation now. But I think that’s the question we want to keep answering is how do we create those products that are differentiated in the marketplace and that can pass muster in any regulatory environment? People are going to want to know what’s in their product.

Aaron: What trends are you following in the industry?

Wes: As the CEO, I’m particularly interested in the overall development of the landscape of the industry in terms of who’s playing, who’s winning, what’s happening with legislation, MSOs versus SSOs. I’m also interested in the international environment. We have a good bit of interest from multiple countries that have either ordered Green Mill systems or are talking to us about Green Mill systems, including Canada and Latin American countries, some European countries, Australia and New Zealand.“We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.”

The trends that I’m particularly interested in are more on the business side of the equation, in terms of how this business is going to shake out particularly from a capitalization perspective, as banking laws continue to change, which is a big deal, and the legislative environment gets a little more predictable and a little more consistent.

Aaron: Okay, last question. So what are you personally interested in learning more about?

Wes: Everything, is the short answer! I constantly run this little challenge of trying to understand enough of the science. I’m not a scientist, I’m a sales guy. That was how I grew up: general management and sales. I’ve made my living over many years being wowed by the pros. Depending on the scientists and the very specialized folks to help provide the right answers to things. I’m fascinated by the chemistry and I’m fascinated by the mechanical engineering challenges of what we do at Green Mill. So, I’m always interested in learning about that.

I think there’s a need, and it is helpful to be able to talk about those things in language that the layperson can understand, as opposed to explaining everything in scientific language. I think what I am trying to do is help people put it into a language that they can get, but that is not simple. Language that is correlative to reality. I think there’s so much misunderstanding about how these things work and what’s happening. We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.

Aaron: Okay, that’s it. Thank you for your time Wes!

Leaders in Infused Products Manufacturing: Part 5

By Aaron Green
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Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.

This is the fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.

Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?

Lisa McClung, CEO of Coda Signature

Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.

Aaron: Okay, great. Glenn, how did you get involved in Coda?

Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. Im new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.

Aaron: How do you think about differentiating in the market?

Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about gummies are going away.” No, youve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?

Glenn Armstrong, Senior Advisor at Coda Signature

I believe anything can be innovative. When I looked at the gummies I asked, what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and thats just how the flavor is.

Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.

Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?

Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.

Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?

Coda’s line of chocolate bars

We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, theres also things that have been in the food industry for years that provides sensations and experiences.

I think part of our goal is how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.

These are all dynamics of us delivering the live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.

Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.

Aaron: Thanks for that! Whats your process for creating a new product at Coda?

Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.

The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?

Coda Signature Fruit Notes

Then the last piece is the fun piece, trying to listen to what is and isnt being said in the market to really try to be a solutions company.

We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it problem detection” at Wrigley.

One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.

Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.

The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.

Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.

Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isnt rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.

Aaron: Weve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?

Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.

Sometimes the ideas start with the technology and not the market. Glenn will find something and say, Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.

Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while were getting consumer input.

We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.

I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.

Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and Ive recently worked on was making innovation a way of life so that every time you see something, you say something.

“We dont think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.

So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.

Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.

Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.

One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. Weve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.

We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We dont think of innovation solely as the next flavor that’s going to be on the shelf.

Aaron: From a supply chain perspective, how do you go about sourcing ingredients?

Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.

We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling  very fragile about our supply chains.

Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.

I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.

Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.

We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.

Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?

Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.

We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.

That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users?  Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.

That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”

So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.

Aaron: What trends are you following in the industry?

Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, were focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.

Glenn: For edibles, fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.

Aaron: Okay great! Lastly, what would you like to learn more about?

Lisa: Were fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. Were also interested in the growing body of scientific research around how cannabis products can enhance peoples health and wellness.

Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.

Aaron: Thank you both! That concludes the interview!