To Be Blunt: The Professional Cannabis Business Podcast

086 The Cannabis Farm of The Future: Powering Brands From The Ground Up with Jesus Burrola of POSIBL

February 07, 2022 Shayda Torabi Season 3 Episode 86
To Be Blunt: The Professional Cannabis Business Podcast
086 The Cannabis Farm of The Future: Powering Brands From The Ground Up with Jesus Burrola of POSIBL
Show Notes Transcript

“I think the biggest equity opportunity for a brand is for somebody to come in and build a national brand, a powerful brand in cannabis. And I think folks that have learned how to operate in this way through partnerships and asset-lite model and understand the opportunity of licensing in other states… I think they've done a phenomenal job.” - Jesus Burrola 

 

Welcome back to the To Be Blunt podcast! In this episode, Shayda Torabi welcomes Jesus Burrola, Chief Executive Officer of POSIBL, as he tackles the future of cannabis in the lens of agriculture. He explounds his thoughts on sustainable cultivation, building a powerful brand, and understanding marketing and competition in a new light.

 

[00:01 – 06:50] Shayda shares Updates Regarding Delta-8

[06:51 – 15:23] California Cannabis Production and Vertical Integration

[15:24 – 25:14] Building a Powerful Brand and Working on Sustainable Cultivation

[25:15 – 31:58] Competition and Comradeship Between Cannabis Brands

[31:59 – 53:23] Operation on Facilities for Environmentally Friendly Production

[53:24 – 56:26] Food for Thought: How do you capitalize on the opportunities out there?

 

Jesus Burrola is Chief Executive Officer of POSIBL, the cannabis farm of the future and engine for several of California’s leading brands. With over 1,000,0000 units of packaged product to date, POSIBL is redefining what it means to produce the highest quality cannabis. Jesus is a proven leader who believes in his teams as the primary driver of growth. He leads the organization’s growth strategy in sales and operations and the best team at POSIBL to position the company as a global market leader. Prior to POSIBL, Jesus worked for 15 years at Beacon Building Products, the largest publicly traded building materials distributor in North America. Jesus was at the company during growth from $1 Billion to $8 Billion — through a combination of 30+ acquisitions and launches into new markets. Jesus worked his way up from a trainee to a National Vice President, managing a $700M  business segment. During Jesus’ time there, he held roles in both Sales Management and Operations, and was tasked with integrating several large acquisitions. Jesus holds a Bachelor of Science in Supply Chain Management from Arizona State University. He enjoys quality time with his family, playing golf, and exploring great cuisine.

 

Connect with Jesus 

Visit https://www.posiblproject.com/ and follow him on Facebook, Instagram, Twitter, and LinkedIn @posiblproject

 

Shayda Torabi has been called one of the most influential Women in WordPress and now she’s one of the women leading the cannabis reformation conversation building one of Texas’ premier CBD brands. She's currently the CEO and Co-Founder of RESTART CBD, a female-run education first CBD wellness brand. And has formerly held marketing positions at WP Engine and WebDevStudios. Shayda is the host of a podcast for cannabis marketers called To Be Blunt, where she interviews top cannabis brands on their most successful marketing initiatives. When Shayda's not building her cannabiz in Texas, you can find her on the road exploring the best hikes and spots for vegan ice cream. Follow Shayda at @theshaydatorabi

Key Quote:

“There's a pathway for anyone looking to participate in the industry as a brand.” -  Shayda Torabi

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Jesus Burrola  0:00  
So the supply chain to be able to launch a brand without having to go through a licensing adventure is there. So today in California, you could do that through, you know, you can partner up with a licensed cultivator and CO packager, California goes to market through distributors that are obviously licensed as well. So as long as you have a licensed distributor buying from you know, that licensed cultivator and ultimately shipping it to a licensed retailer, and you're not taking possession of the product and putting it let's just say in your office, you could do that. And so, you know, I would say, about half are the brands that we work with don't actually have a license on, you know, themselves. They are contracting with us they are contracted with a distributor who's ultimately fulfilling those orders at the dispensary level.

Announcer  1:01  
You're listening to to be blunt, be podcast for cannabis marketers, where your host Shayda Torabi and her guests are trailblazing the path to marketing educating and professionalizing cannabis light one up and listen up. Here's your host Shayda Torabi.

Shayda Torabi  1:24  
Hello and welcome back to a new episode of The to be blunt podcast. I'm your host Shayda Torabi, cannabis business owner and brand marketer. I'm kicking things off to provide a really quick check in regarding what is happening in Texas cannabis, since that is my home state and I do own a CBD dispensary here in Austin, the state of Texas is still in the middle of two cases which have been taken to the Supreme Court here. One is on Delta eight THC and the other is on smokable hemp. They're both unfortunate things that the state is fighting us against as an industry. But regardless, we persist. The hearing for Delta eight was actually on January 28. So just a couple of weeks ago, and I don't believe at this time that they've set a new date. But they basically continue to push that off. And we are looking forward to hopefully getting some resolution on that case. But as of right now, it is legal to sell Delta eight in Texas. Now regarding the smokable hemp ban, that case is supposed to be heard on March 22 of 2022. And to be honest, I wouldn't be surprised if that case gets pushed as well. And for those curious, the state originally banned smokable hemp back in 2019. And well we've been back and forth with it ever since. So it just goes to show how politics work, how things happen inside legislation like legalizing hemp or banning smokable hemp, and then when lawsuits open up how that adjusts things and we just have to continue to navigate it. So I'm half joking when I say this, but equally serious. To all of you who want to work in cannabis. Buckle up. That's all I have to say about that. Now in today's episode, we are going to tackle what is possible in the cannabis industry at large, but specifically in the state of California and in the California market. I think because so much of our industry is regulated and tied to licensing, we don't always clearly understand the available paths to move forward. And that is certainly one of my main goals of the podcast, I started this show to try to highlight all these different stories and backgrounds. In the hopes of educating you my sweet listener on opportunities, you might not have thought were a possibility. Now you'll know from tuning into the podcast that I like to bring up and reference how every State operates uniquely. It's certainly not exclusive to the cannabis industry. But I believe we feel it very closely and more frequently in terms of just little nuances from packaging requirements varying state to state to actual licensing laws, for example, how some states are open for licenses like Oklahoma, and there's no vertical integration requirements compared to states like Illinois, which is issuing a lottery system for licensing or even Florida where there are limited licenses available and it's vertical integration only. So given that context, I hope you'll give me your full attention on this episode, because it completely opened my mind to what is truly possible. And today's guest is eager to share what he's learned and especially what he's building. I'm joined by possible CEO Hey Soos Birla, possible is the cannabis farm of the future it's actually spelled a P O S i bl, if you can imagine and hey Soos will certainly cover this in more detail in the episode. But I personally was under the assumption that to operate in the cannabis industry, and I'll caveat that with anything plant touching so, a brand or grow a dispensary. In any state in any capacity, you probably need a license. And that is true for most of those avenues and certainly for some states, but with California at the forefront of today's conversation, and going back to building a brand specifically, for example, this isn't always the case. Possible is already the engine for several of California's leading brands. And over 1 million units of packaged products today possible is redefining what it means to produce the highest quality cannabis. They leverage a state of the art system that uses less to do more and possible brings the best greenhouse technology and expertise from traditional agriculture into cannabis and pairs it with the best possible genetics to produce the perfect flower. It's also grown in an ethical sustainable free of pesticide and cost efficient way year round. So what they're doing is essentially powering the brands truly from the ground up by allowing someone with a brand a true look feel packaging and go to market strategy to operate in the cannabis industry without obtaining a license. Now before you jump the gun, you'll want to hear more about why this model won't work for just anyone or any brand.

There are some clear things that brands need to do to be successful with this model and hey Soos touches on those today. So with that said, let's get straight to the episode. Please join me by lining one up and let's welcome Hey Soos to the show.

Unknown Speaker  6:51  
Hello, my name is Mrs. Barolo I am the CEO for possible wear rower and CO packager based out of Salinas, California. We growing and CO package for 13 of the largest brands in California, we got started in December 2017. We operate a 12 acre farm, all greenhouse with supplemental LED lights, our focus is on trying to produce you know indoor quality flower in a greenhouse setting in a much more sustainable and cost efficient way. That's what we're set out to prove background the company is really in ag so the lead who is main founder comes from traditional ag does this in tomatoes in Latin America saw the opportunity to bring ag technology into cannabis obviously, you know, because of how it came from. It either had to be done out in the mountains hidden or it has to be done in basements. And there's pros and cons to both of those both indoor and outdoor, a lot of it being the sustainability impact of indoor grow. Obviously you get all the high quality and indoor all the high THC you get year round production, but it's expensive to grow that way. It's also not that great for the environment, got outdoor grows, that there's some great flower from outdoors, but you really can't control mother nature and the weather elements and you're obviously much more exposed to pests and diseases. And you're gonna get you know, one crop a year. So the idea is to combine the best of those worlds which we feel is greenhouse growing, that allows you to have a controlled environment where we can give the plant optimal needs so you can have supplemental lighting, so that your so the winter crop is still very good, very good yield very good quality. But yet you're taking advantage of natural conditions, whether it be whether sunlight, co2, you're not having to recreate everything from scratch, which makes growing that way a lot more cost efficient and just ultimately better for the environment. We feel that that leads to, you know, better future for the industry as a whole and ultimately a better value proposition for the consumer.

Shayda Torabi  8:58  
Yeah, I was really fascinated when I learned about possible just understanding what I know about cannabis. And obviously what I know about California cannabis and kind of putting y'all in that interesting position of one I thought it was really fascinating just to pull some you know, information from your press releases and things like that you're empowering brands by being a b2b vehicle business to business vehicle. You want to create a cannabis brand but don't know how to do it. There's a pathway for anyone looking to participate in the industry as a brand. So that's really fascinating to me, because I think it's great to have an idea of wanting to be in the cannabis industry or wanting to create a brand in the cannabis industry but knowing that there's different I guess hurdles to go through whether you're in a state that's requiring vertical integration or not. Obviously California doesn't require that and I think I even saw some article that y'all were quoted in talking about, you know, which is the spirit I think of the cannabis industry at large which is stay in your lane like be a really great expert at what you do. I'm and kind of work with different leaders respectively, whether it's the growing and the cultivating side to the distribution, or the actual dispensing side. And so focusing on not only the, I guess, opportunity and possibility, but that empowerment of being able to create new brands. And so I want to dig a little bit deeper and kind of set the stage for people. What is, I guess California cannabis look like? Currently, in terms of, let's say, I have an idea. I live in California and I want to make a cannabis brand. Do I need to go get a license to be able to work with you? Do I bring you my brand identity and idea? Like, how does that connection happened from a brand to working with possible to ultimately having a product that's being sold in dispensaries? Yeah, absolutely.

Unknown Speaker  10:51  
That's a great question. So the supply chain to be able to launch a brand without having to go through a licensing adventure is there. So today in California, you could do that through, you know, you partner up with a licensed cultivator and CO packager, California goes to market through distributors that are obviously licensed as well. So as long as you have a licensed distributor buying from you know, that licensed cultivator and ultimately shipping it to a licensed retailer, and you're not taking possession of the product, and putting it, let's just say in your office, you could do that. And so, you know, I would say, about half our, the brands that we work with don't actually have a license on up, you know, themselves, they are contracting with us, they are contracted with a distributor who's ultimately fulfilling those orders at the dispensary level. So what they have to do is really come up with the marketing concept behind what the brand needs to look like, they have to, you know, invest their time and energy into consumer acquisition and having a brand that represents something to that consumer that is going to pick them over everything else on the shelf. But I think that that's a much easier path than let's just say, the other way of trying to be a vertically integrated company and say, you know, one that requires a lot of capital. And I think that common misconception with cannabis is that Oh, everybody, everybody is probably has a pretty smooth ride, it must be a pretty easy and fun, it's a hard business requires a lot of man hours, requires a lot of capital. And so when you're trying to let's say, you know, oh, I want to be vertically integrated, then you have to learn about agriculture, you have to learn about real estate, you have to learn about compliance, you have to learn about, you know, what the ins and outs of distribution are, how to operate a retailer. So it's, it's hard enough to do any single one of those things than to try to do all 10 of those at the same time. It just gets very, very complicated. You know, farm like ourselves, we have over 100 folks working day in and day out. So that's a lot of people to manage a lot of processes that happened that need to happen every single day. And so I think that there's a better way to do that. There's folks that are fantastic at branding and marketing and consumer acquisition and using the internet to gain visibility, it's much more better use of their time to go and put those talents to use in creating a brand than it is to go through everything else from scratch.

Shayda Torabi  13:23  
That's so fascinating. To me, it kind of makes me I mean, my brain is going in a couple directions. One kind of wanting to understand was that yalls intention, originally was launching possible to really, I mean, almost be like a, I don't want to call it like a ghost kitchen. Right? But that kind of scenario where you're producing for other people. Do y'all produce your own brand to some extent with anything? Or is it really just growing for other people? And then kind of the secondary side of that is, does this model exist in other markets Currently, our other businesses doing this in California because it's almost a little bit of a, a mindfuck? Pardon my French of I think so much of what we're taught and expecting to participate in the cannabis industry is like acquiring licenses, right, depending on whatever state you're trying to operate in. It's when you want to own a license, you want to get a license, you want to be somebody who's holding that golden ticket, so to say, to actually be able to grow or process or distribute or sell. And basically what you're saying is, hey, if you're a really great marketer, which you know, a lot of us are who are listening, they can really just go through you. I mean, it sounds like I don't even have to be I mean, a California resident to actually produce a brand potentially in California.

Unknown Speaker  14:40  
No, exactly. And I mean, in this model is actually being put, I mean, some of our brand partners have started to license and expand across the country. And that's going to be much easier to do through this asset light model than it is going to be buying assets in a bunch of different states. And I mean, I think the biggest equity opportunity Before a brand is for somebody to come in and build a national brand, powerful brand and cannabis and I think, folks that have learned how to operate in this way through partnerships and asset light model and understand the opportunity of licensing in other states. I mean, take old pal, for example, one of our partners, they're in six different states. Right. And I think they've done a phenomenal job.

Shayda Torabi  15:24  
Yeah, I just talked to somebody who works with them also. And they were kind of expressing, I guess, like teeing up almost what y'all are doing for them, but understanding that you're only in California. So if they're operating in another state, it's obviously not possible who's growing it's a another maybe cultivars or, or asset light, I love that kind of framing of it version of this, this grow operation that is supplying the quality of flower that they are, you know, selling to customers through their brand and brand packaging. Now, I want to kind of go back a little bit and get a better scope and understanding of the actual facility and how, I mean, you said 12,000 square feet. So like, how many plants are 1200 120,000

Unknown Speaker  16:12  
square feet and cultivation right now?

Shayda Torabi  16:16  
120,000? Okay, I misheard a couple of zeros,

Unknown Speaker  16:21  
actually, in the process of building out another 120,000. So

Shayda Torabi  16:26  
she's okay. So like, put that in numbers of plants for me. And all kinds of, you know, explain express this for the listeners as well. Right. When you're you kind of mentioned it as well, when you're doing outdoor growing, you're really limited based on the seasonality, which is why I often tried to educate and express you know, depending on geographically where you're located, it might be better suited to grow cannabis. So for example, in Texas, just because hemp is legal, and you can now grow hemp outdoor growing is probably not the best situation for Texas brands to take. Because it's difficult, you only get so much yield out of those crops. And like you said, you're dealing with the weather and other forces, external forces versus if you're indoor growing, you have more control over that. And so I know that one, y'all are greenhouse growing. So there's that set, so you're able to grow year round. I know, you'll also take some other measures to make it a little bit more automated, if you can talk about that as well. But kind of at a capacity level, how many plants? Are you growing? On a yearly basis? Is there constantly rotation? How many strains? And then kind of what does that output to for your customers? Like I'm envisioning Is it almost like old pal has a little section and those are all their plants? And, you know, maybe your other client has another little section? And those are all their plants? Like how does that work for you to set up this and scale it for new brands who want to come on the market?

Unknown Speaker  17:55  
Yeah, I think from a volume standpoint, you're right. So the turns is a very important component to it. Since we can control the photo periods of the plant, we actually get five and a half to six harvests a year. So we have six turns on the 120,000 square feet. So it's actually the equivalent of having 600,000 square feet in cultivation, at any given point where flowering, you know, somewhere around 30,000 plants at any given point, and those will rotate five to six times a year, you know, the way we work with brands in terms of well, how do you dedicate, you know, certain strains, certain genetics, or how do you how do you carve out the menu that that really is a combination, and so that we work with brands that want to control everything from genetics and have exclusives and say, hey, I want you to grow these five strains for me that, you know, I've grown forever, or I've sourced and a really special to me, or match, you know, what my consumer wants. And then there's brands that just say, Hey, you're the grower, you figure out what the best strains are. That's your expertise. Tell me what yields and tests the highest here's my spec I want in because the tests, test over 25%, THC and cetera and then we're always constantly going through genetic acquisition. So we work with a lot of breeders in the market, Legacy breeders to source the best strains. You know, a lot of brands will come here at the end of every month, trying to determine what they want to package for the next month. Come and see all the latest harvest, go and walk the greenhouses and see what's coming up. And we can give the brand's visibility six months out of what we're going to have in what volume and and what strain and so you know, for those that haven't predetermined their strain selection, it's kind of first come first serve, they'll come and see what makes the most sense for their brand.

Shayda Torabi  19:42  
Now that's really cool because again, it goes back to empowering and almost streamlining that experience for ultimately what's being delivered to the customer. So high quality flower but really that experience for these brands to again do what they do best and not maybe get bought down, and I'm sure there are some brands, like you said, who really care about the genetics, and they really want to have their oversight in terms of the percentages or the terpenes, I'm sure, or the profiles of the strains versus some brands, who maybe their brand is all about, you know, we change the strain every month, and it's the better high quality strain from the next month. And, you know, it can kind of maybe part of their brand identity to kind of be keep it a little bit more changing versus consistency, right, there's

Unknown Speaker  20:28  
100%. And we and we have both, we have brands that always want the latest strains, whatever, you know, hottest the newest in the markets. And then there's brands that say, Hey, these are the six strains that that that are key for us and are going to be staples, and that's what we want to grow and package over the next year.

Shayda Torabi  20:48  
On packaging, I saw that was a part of what you're offering is and you mentioned as well, being able to essentially create a brand and not have to touch it. So I'm assuming if I actually took the flour from you and packaged it myself, I would have to get a license. Right, your component would require your word

Unknown Speaker  21:09  
or you would have to, you know, contract with a licensed cope packager, I think the beauty of Gone able to do both in house is that, and that's, I think, very typical in the market. Right. So you typically have all these growers, but they don't have a co packaging facility. And so then you've got contracts with both. And you have to streamline both supply chains, because they're all on different schedules. And then there's QC that happens. And there's finger pointing between both parties and saying, hey, you know, you bought 50 pounds, but after I QC, that there's 38 pounds of usable flour, and then who, whose fault is that, then you're stuck with all the finger pointing back and forth between your co packager and your grower, by the way, you know, you have to pay your grower upfront for those 50 pounds, wait till it gets worked out, you know, take another month for your co packager to handle it. So with us, it's one supply chain, and you're paying for what you get. So you're not having to deal with any of the shrinkage, you're not having to be the mediator between two QC departments of like, why you may have not gotten what you thought you paid for. You have one phone call, you have one supply chain, you don't you place your order, you pay for it when you're ready to come and pick up finish flower. Finish.

Shayda Torabi  22:31  
Well, going off of that to just understanding I think some of the, I guess, nuances of the industry in terms of packing, and labeling, right? Do y'all provide almost like consulting to these brands? Or is it really up to the brand to come and say, like, hey, labels gotta change, I gotta change what's on them? And like, How involved are y'all in that process? In terms of keeping track of not only the N? I'm curious, does the growing regulations change that much year over year? Or have those been pretty consistent? And then because on the packaging side, I imagine that kind of is ever evolving? I mean, just all the guests I've talked to, it's like, oh, we gotta use a different symbol. Yes, that is, so

Unknown Speaker  23:18  
it changes. And we didn't set up or pretend to be, you know, compliance experts. But at the same time, when you're packaging for, you know, 13 to 15 brands, you learn a lot like, you have all this information that, you know, one of your 15 brands is ahead of that curve on compliance and coming and saying, Hey, this is going to happen next month, I'm adapting. So there's a lot of built in knowledge that we get that we obviously, you know, there's anything that's compliance related, we want to make sure all our brands stay compliant, we wouldn't, we wouldn't say that, you know, we go we become their compliance arm, I think that's ultimately still on the brand. And especially when it comes to packaging, because there's so much that's design and in marketing as it relates to packaging, that, that we want to have the brands take control of that. But we absolutely help them make sure that if we're seeing something that's not going to be compliant, especially for the brands that are newer to the market that are coming to us, we always, you know, Hey, have you thought about X, Y and Z, not only on a compliance standpoint, but actually on an efficiency, I'll take something that people, you know, have learned lessons, the hard way is pre rolls. So you know, you have a lot of brands that it makes a lot of sense to have a super skinny cigarette looking pre roll looks great. But then what happens, it's impossible to package. And so then you're in efficiencies as a co packager, and your costs go way up, and it ends up kicking these brands from the price point that they originally thought it was going to cost them. So we do say, Hey, listen, let me help you there. These are cones that we already know we can implement automation to and drive your cost down as opposed to hey, maybe this Super Bowl Tiki Cohn, but it's a nightmare to package and you know, you're going to things like pre rolls, it's almost as much labor costs that go into package it as it is flour costs. So it makes it can end up becoming a huge difference.

Shayda Torabi  25:15  
Yeah, I understand completely, we just started doing pre rolls in house with our CBD brand. And I mean, by no means are we at the volume that y'all are doing it, but it is so nuanced. Even just the other day I went into our operations and noticed, you know, one pre roll was slightly thicker than the next pre roll. But my team was like, well, by weight, they're both still one gram, but visually one kind of looks taller than the other. And then you layer on top of that, like you're saying, you know, trying to put it into packaging. And so I guess it's just an interesting, there's real problems that people are trying to navigate, right. And I think people don't really understand all those different, I guess, little kind of like hooks that you have to kind of think through. And so like you're saying to the customers, or maybe up front, like this is what we want for our brand. This is the style, this is the aesthetic, and then it's like in actuality will, it's gonna maybe cost you $2 More per pre roll for us to execute it looking like that. But that kind of leads me to my next question, which I'm really fascinated to understand more on. You know, I totally believe that the rising tide lifts all boats. So it's great to hear, obviously, you have this great group of clients, and they are some maybe are a little bit more ahead of the curve. And also I stand by which is kind of the ethos for this podcast, you know, sharing information, because not everybody is you you're uniquely you, you have you know, the way that you formulate or put things together or you're an expert in this area that maybe I'm not in, but competition like how does that kind of exist? And what's been your experience working with the brands that you've worked with? Do they feel there's competition? Or is there more like camaraderie like oh, we all work with possible because I saw some of your brands like Union Electric is very proud to be a possible power company. And so it seems also, like a value add to obviously, you know, like work with people like yourselves versus hide it almost in like a white labeling situation. So I'm just curious, as I imagine this model is going to continue to evolve in the cannabis industry at large. And when you're talking about brands, like obviously competition, but price point varies quality of product, the actual packaging, they go to market strategy, those are all nuanced things. But you're kind of at that epicenter of like, yes, brands come I'll get your flour from us. And we'll all you know, grow it and pack it for you. What does that actually do to the industry in terms of competition?

Unknown Speaker  27:50  
Oh, actually, I would say I mean in cannabis is even though it you know, $18 billion industry is still a small circle. So most of our brand partners, No, the other founders and owners of the brands and there's actually a lot of good camaraderie and friendship that that exists there. I would say there is not a lot even though I could say there's 15 brands there's very few that compete head on at the same price point with the same product right because we're manufacturing pre rolls for some companies where you know, we're packaging, top flour eighths over 30% thc for some companies at one price point and then we'll be packaging smalls for a different company at a different price point with very different targets on the THC or not count. So there is actually not as much overlap as you would think in direct competition. And I think the second part is who they branded market to so we have brands that are focused let's just say one of the recent brands that we signed up they're going after a heavy metal music crowd well that what does that have to do with somebody that's going after West Side la surfer crowd and and you see these two packaging you know, even though maybe the price point is similar, you say this actually doesn't speak to the same consumer at all.

Shayda Torabi  29:15  
Hello, just want to take a quick moment to thank my sponsor and full disclosure, my company restart CBD, restart CBD is a brand that I built with my sister so we are family owned and women owned we do operate a brick and mortar in Austin. So if you ever find yourself in Central Texas, we'd love for you to come say hi, but we also ship nationwide and we carry a wide range of CBD products. We really care about this plant we really care about educating our customers, this show would not be possible without their support. So please go check us out at restart cbd.com and use code to be blunt for $5 off your next purchase. Thanks. And let's go back to the show. No, that's a really cool and fair perspective to point out, because I think it's such a I mean, the podcast again, for me has done such a good job of kind of like, showing more behind the scenes of the cannabis industry, but existing in Texas, competition is relevant, and it's there. But you also have such it, just like the market is so unstable here in Texas, that, you know, you could have a really great brand, but just due to the operations and how things are going. And certainly COVID played a factor in that, you know, we had a lot of brands that existed prior to COVID, here in Austin, and then after COVID, more than half those brands are gone. And now you've got a handful of other brands that are popping up. And so it's just I think, always kind of in the back of I think any business owners mind, you know, how do I carve out a niche in the industry and also, you know, work with my providers to partner up and deliver on that quality and excellence. So it is just like a really interesting kind of position that y'all are in where you're able to work with so many different brands and cool to hear that there is not so much competition, but more camaraderie. I do want to go into a little bit to understanding more about the sustainability of your grow, you touched a little bit on, obviously, the capacity. And also my observation, from what we've talked about what I understand about possible you're just touching flour and packaging, flour, there's no, you know, extraction or processing happen. So nobody's really coming to you to be like, I want to make a really great edible, right? Not that's not not today,

Unknown Speaker  31:42  
we are actually in the process of a major build out. We're building a brand new state of the art processing facility, and also building out additional high tech greenhouses as well. So those, that new processing facility will include extraction. So that is something that we're getting into, but we don't do today.

Shayda Torabi  31:59  
Okay, got it. Well, cool. I'm excited for this. Because again, I think it's empowering a lot of people to get involved in the cannabis industry who maybe had like prior limitations. But again, going back to your grow operation, just some of the stats I pulled from your website, you know, y'all are able to use 150%, less power 50% less water. Again, obviously, you're around production with no pesticides, how do you operate that facility? What tech is involved? And you mentioned the volume of your team size? But in actuality, like how do you execute against that? And how do you scale that as you're adding on, you know, 100,000 more feet of operations?

Unknown Speaker  32:48  
The Easy question is that you get very smart people. So which is not me. So the background of our company that comes from Big Ag and we have to keep people I would say that handle the Ag side, for us. One would be epic as their own who's our Director of cultivation, he's worked at some of the largest greenhouse projects in the United States. So for a lot of large tomato companies, he I think he was recently with a company called App harvest, which is a giant, very tech forward company greenhouse in Kentucky. And then I have, you know, we have Hector, who's our CFO who comes from running 600 acres of greenhouses down in Mexico. So those guys have grown at a at a industrial large scale, and understand technology and understand automation very well. So I think it starts with a climate control system and sensors and how to put the right information to help that greenhouse automate. So things like lighting or automated things like blackout covers irrigation, ventilation, dehumidification strategy, I mean, and all that ties together. And there's a lot of science and knowledge that goes into that. But having a team that's operated at a large scale is critical. It's the larger you get, the harder it is to execute to your point. So 5000 square foot grow is different than running than 150,000 square foot grow and you can't necessarily touch every single plant and see every single plant and so you do have to depend on some technology and then obviously some processes to institute with the team to make sure things are getting done, but I tip my hat to those guys. They do a great job.

Shayda Torabi  34:33  
Yeah, it's a great obviously like feat and endeavor to be able to pull off and execute but like you're highlighting, it's not by chance that you've happened upon this successful system. It's people who have joined your team who have been operating ag tech and cultivating other commodity crops for years and decades that sounds and being able to transfer that knowledge into cannabis. is a very relatable story, right? I think that's the exciting thing is so many people who I think agriculture is challenging, right? There's definitely big wins in it. But it's also a very difficult industry to be in, especially I imagine for some smaller farmers, or growers, and so to be able to see an opportunity of getting into cannabis and being able to implement that is really empowering, I'm sure for all the people on your team to be able to like, hey, let's like take this information and like transfer it into this output. But then to kind of add this b2b machine on top of it, to me is just so fascinating, because you really, I mean, I haven't heard of anybody doing it to this capacity. I've heard of people. I did an episode with copperstate Farms early on. Yeah, exactly. There. Are they still the largest indoor grow in the United States? I think that was what they were saying about a year ago. Yeah. I mean, they're, they're a very large day, or they're growing for their own brands,

Unknown Speaker  36:08  
correct? Correct. Correct. And I mean, they have a little bit

Shayda Torabi  36:12  
smaller growing for other people's brands,

Unknown Speaker  36:15  
correct? Yeah, they're growing for their own brand, they have a similar background, actually. So they also migrated from the tomato industry, in a high tech greenhouse setting with automation. So it's a lot of the same similar foundation of the company, you're right. The difference with us is that our focus is on the b2b side. And so some of that has to do with how to match up production and scale to sales demand for product to have efficiency, you need scale, to kind of bring your cost curve down. But it is very difficult. You know, I work again, with 15 large brands in the state, and it's hard for them to go through all my product nets, 15 brands. So imagine, if I had one brand, and I was trying to sell up this grow it, you know, it'd be very, very hard to do. And I would end up having a run, you know, one of the largest grows and one of the largest brands. And that's not a very easy thing to do, I think we're interested in going way deeper ag side, gaining scale, continuing to gaining efficiencies, introducing new technology, and really kind of trying to pursue that top end quality spectrum that you can in a greenhouse setting like, you know, our, you know, I mentioned that we're building out another 120,000 square foot that is state of the art, greenhouses, like we feel like we've proven our thesis with the greenhouses that we have today, which is like you can get very, very good quality in a greenhouse setting. I think the final proof is well, what can you actually make it match or be better than indoor, and we feel we can with the right technology. So that's what we're building today. And excited to see that come to light.

Shayda Torabi  38:12  
I want to talk a little bit more about, I guess, the brand partnership side and how you maybe look to bring on new clients or partners. Is there any, you know, checklists or quality that you have to kind of go through to make sure that someone might be a good fit for you to work with them? But before I go into that question, I did want to ask just because I know California cannabis is so I guess proud is probably the word I'll use. They're so proud of their outdoor grow. What has been the sentiment as y'all have entered the market into this industry? And you said you're working with some of the top brands, you know, kinda from an output perspective of who's like on a shelf? How does that kind of go over? Do you talk to a lot of the outdoor growers? Are they like, oh, you indoor growers are crazy or is there some like okay, you know, we see the tech we see the, you know, the scalability of what you're doing, kind of like what's that like now?

Unknown Speaker  39:17  
I mean, I think I tip my hat to the outdoor growers. And a lot of them are the legacy growers that created this industry. So there is nothing but respect, right Farmer to Farmer grower to grower, what they do is not easy. I think you know, and maybe sometimes the market has been a little bit unfair, because what they've done is separate price ranges into how cannabis is grown. And that doesn't always necessarily translate into what the actual quality is because there's crappy greenhouse cannabis being grown and there's some fantastic outdoor cannabis being grown and unfortunately, you know, for a lot of the buyers or the brand selling into dispensaries The first question is, well, how is it groaned and, and really, that's kind of backwards in my mind. You know, you know, if you're buying, you know, an apple or if you're buying whatever fruit or vegetable, you care about how good the quality is, How great does it taste? How good does it look, you don't really care how it was grown. And so I think it's it's finally there that we're both participants in the industry. And there's absolutely room and space for both the outdoor indoor and greenhouse growers to all coexist in that space. It's ultimately, different consumers want different things. I think, from a brand standpoint, depending on outdoor gets harder to do, because, you know, you want consistency year round, and obviously, with the outdoor growing growers having one one harvest a year maybe to have they do an auto flower zone, and then how do you have fresh product on the shelf year round? You know, when you're depending on an outdoor row, that's harder to do, it doesn't mean that they don't produce great flower, when they have their harvest. It just means, you know, from a year round production, empowering a brand, it's harder to

Shayda Torabi  41:10  
do. No, I mean, that makes sense. And I totally hear you on what you're saying in terms of you know, for sure, respecting the legacy growers. I think that's a given from a cannabis industry perspective. I mean, they certainly have paved the way especially California growers, it's, it's been underground for so long. And finally, to see it transitioning into the light, I'm sure there's still mix sentiment, because some people are able to not profit off of the conversion and going into the legal market. But at least it's trying to make an honest opportunity, I think, for people to exist. But yeah, I think you hit the nail on the head in terms of categories, right? I mean, it's an interesting conversation, when kind of using black market to, you know, the rec market, it's, you used to not really get to have a lot of choice in what you were consuming. And now that you have choice, and you have markets, and you have brands, and you have customers, I mean, you just even saying, you know, you have a heavy metal client, that's a particular customer base, you know, they want their packaging a certain way they want their flour a certain way or that brand, at least is educating that customer to want their flour a certain way. And so I think it happens on both sides of the aisle, right? You have people who are very diehard about outdoor grow for respective reasons. But there's so much value and greenhouse grow just based on the quality and scalability that you're able to offer to your clients. So going back into the question a little bit wanting to understand, do you see people are coming to you with their brand already actualized for your, I guess products to be, for lack of a better term, like fit into, like, hey, I want to make a pre roll brand. This is my name. This is my packaging, I just need flour, or are people maybe like, I have no idea what I want to do. But I know I want to make something with you guys. And do you have kind of like a checklist or gatekeeping? Of Yes, we'll work with you or no, we won't work with you and kind of what does that look like?

Unknown Speaker  43:15  
Yeah, I mean, I think the biggest thing is, and it goes a little bit to the intricacies in the market. I mentioned California goes through distribution, I think because and I talked about some of our partners not having an actual license, which means they can't buy the product or take possession directly. And some of the distributors that work in the space, actually, a lot of the larger ones go through a consignment model where it's ultimately us as growers holding the bag on the product until it gets sold. Right. So we're carrying the financial burden. So for me, what's important is, is there is a good sales plan to the brand, right? Because especially if you're an asset like brand, and you know you're more than likely working with a distributor that's not going to take possession of the product, then that I'm actually carrying all the commercial risk in the relationship. So that's the only part that I think we're, you know, it's kind of the goal or no go like you could be a new brand. But hey, are you actually committed to dedicating resources on the sales side? Like what does that look like? Do you have a sales team? You have a distributor, have you sold? You know what, what's your team makeup? Like? Is there a budget to put this thing into market? Or is it you know, because you're not taking possession and not necessarily paying up front? Like, is it just a well hey, you're you're you're carrying all the risks? Like Sure I'll do a brand if it doesn't work. Doesn't cost me any money anyways. Right? So I think that that's the most important component to that. But I think branding is some brands hit some brands don't and even the great marketers can tell you sometimes it's a little bit have a have a crapshoot. You don't know why certain brands took off and some didn't. And you know, they're wrong half the time. So you know, their guesses as good as mine, everybody can have an opportunity to go put that brand to market, I think, you know, the only thing we're trying to make sure is that were not bearing unreasonable risk on the commercial side.

Shayda Torabi  45:21  
So I didn't really understand this consignment model. So when you were saying that you have to take on the cost for some of these brands that makes sense from a qualification of like, why someone would or wouldn't maybe work with you guys, because you are taking it and incurring some of that cost. But is that normal? I mean, I haven't really heard or learned a lot about the consignment model, is that unique to your position? Because of what you're doing based on the lack of that middle brand having the license? Or like, how does that kind of work out?

Unknown Speaker  45:59  
It actually has to do more with the distributor strategy. So this model is actually newer. And I think what what was happening in the past was distributors started to pivot in this direction, because you had distributors that were paying for these brands products to go and distribute it. But again, the same dynamic I spoke about not necessarily having a sales plan, or, you know, really a way to go get the product in market, then the distributor was left holding the bag because they bought the product from the brand. And when the rain and then the brand did in place it in the in the dispensaries or didn't do their part of the heavy lifting to get that done. And so what you saw, were distributors starting to say, well, listen, I can't be incurring this cost. So sure brand, I'll take your product, but I'm not paying you until it's sold. Right. And, and so ultimately, what that became is because these brands were asset light, you know, it really is on the coke packager to bear that burden, if you will.

Shayda Torabi  47:04  
No, that makes sense. And I will highlight one of your brands because I saw it on your website. So I hope it's okay to mention them. But space Coyote, I had Libby on the podcast earlier this year, last year, some time, time is fleeting, me sometimes. But just remembering from her podcast episode, she was very much expressing. And she lives in Hawaii, right? Like she's living in Hawaii out of the state. So this model makes sense, to kind of full circle for me to understand kind of how her operation is running. But she was expressing how she goes to these dispensaries and is promoting and peddling and educating on her products. So it's no surprise why space coyote is being successful in that capacity. And it's because like you're articulating, you know, it's one thing to have an idea for a brand or to find all the partners and components to like, Okay, we got a good packaging. Well, we got good product in the bag. Well, yeah, if it's just sitting there, the distributor, nobody's buying it, and you haven't figured out how am I going to sell this? What's my go to market plan? I think that is such good advice for anybody listening to just kind of really take some time and think through because I'm sure when we started this podcast episode, people were like, Oh, I'm gonna go, maybe talk to Hey, Soos and start a brand in California. And the reality is like, yes, you can do that. But do you have the, like you said sales team in place? Do you understand how you're gonna get a distributed? Kind of what's that plan? How are you going to sell this product? How are you going to market and get to those consumers? And I think that that is such a real narrative, again, for people to just really understand whether they're trying to play in the California market or just hemp in general and cannabis in general. I think that's where personally speaking again, I think just what I've observed watching the cannabis industry unfold from my corner of the universe. Yeah, you can have a really great brand, but a really bad, you know, marketing strategy or just not really executing with the right partners. And so there's a lot of people who want to be in cannabis, but the execution of how you navigate through the industry is really, really important. So I really appreciate it, that little piece of information

Unknown Speaker  49:20  
and living and Scott are great, they're awesome partners. We'd love doing business with them. I'd say not just the hard work they've put at the dispensary level, but they've also really connected with the consumer base that that brands mean something to a lot of people and so there's seven 800 brands in California competing for shelf space, you know that dispensary is going to buy you know what 30 To 40 brands that are going to get shelf space. So your brand has to has to mean something. I mean, you go to the Hall of flowers and you can meet 200 brands so you have to be able to speak to A specific consumer. And I think you've got to be able to execute on not just packaging and designing a cool brand, but and actually getting it to market.

Shayda Torabi  50:09  
Yeah, no, I love that. And I really respect that too. And just obviously coming from California where you are, in a good way, but saturated with cannabis brands and people trying to navigate the market and bring these products to market. And so yeah, I was always fascinated with how you know, who picks these brands to be on the shelves and like what kind of goes into that process to, to be chosen, so to speak. And it's obviously a combination of all of these things, but then that truly execution on how you're going to deliver it is what I think is differentiating certain brands from other brands.

Unknown Speaker  50:45  
And I would say I mean, as cannabis evolves, like the entire supply chain, I came from a background that was more on building materials distribution, and it was common there to you know, and I know it's very common in liquor, to have sales agencies that focus just on going, you know, knocking on doors, educating the buyers at the different, you know, liquor stores or a retail outlets on the brands, and drumming up demand. So that's now beginning to occur in cannabis as well. So there's, you know, three or four different sales agencies that help support brands, because you want to be a statewide brand that that's the hard part, like, Okay, well to cover the state of California is pretty big, you can't do it one or two persons you need, you know, probably a team of 810 different people. So how do you do that as a start as a startup brand, you know, maybe Bootstrap, like, that's very hard to do. So I am happy to see that now. That part of the supply chain is also coming along. And there's sales agencies that can also help support brands. So like, pedal fast is one that we've worked with. And and, you know, I know, for example, some of our brands worked with as well, that that's done a very nice job and in filling that hole for brands of California as well. Well, so

Shayda Torabi  52:05  
you're just a circle back around on this, too. You're in Salinas, California. Where is that in relationship to the state? I mean, you say California is a large state, especially elongated. So I don't know. But what is the distance from, let's say, South California to North California, like the tip, it's got to be what, like, five, six hours,

Unknown Speaker  52:31  
way, way more than that, way more than that. We sit in the middle or not in the middle, but between San Francisco and Los Angeles, which is not even the most southern and northern part of the state, and we're five hours north of LA to our south of San Francisco.

Shayda Torabi  52:50  
Would you say that a lot of your clients are coming from that region or that area? Or are they really coming from all over California, just trying to look for partners and suppliers that can execute on their brands? Most of

Unknown Speaker  53:05  
the brands do come from either LA or the bay. I wouldn't say the brands but I mean, for a brand you're looking to cover dispensaries. And that is all throughout the state that you have, you know, East Bay Sacramento. It's just the big state. Water. Yeah, a lot of grass cover

Shayda Torabi  53:24  
a lot of ground to cover indeed. Well, I really appreciate it this conversation, I thought that it was super informative. And I'm really excited about the future of not only possibles business, and certainly the expansion that you're going after, but truly about the impact that you're able to make in the cannabis industry by empowering these great brands to come to market and educate because at the end of the day, you know, that's where my passion and heart lies is. We're selling consumer products. And people are at the other end of all of this work we're doing, they're sitting there, they're opening the baggie up there smelling it there lighting the joint, and there hopefully having a more personal relationship to cannabis. And it's, you know, definitely at the hand of businesses like yourself. So if there's anything that you want to kind of final add or share, I'd love to open the floor for you.

Unknown Speaker  54:09  
I appreciate I just want to say thank you for the education that you're doing. I think that that is a big part of what we've got to do as a community is educate the consumer. And so I really much appreciate the work that you do. And thank you very much for having me.

Shayda Torabi  54:30  
super fascinating to learn that you can have a brand a successful brand in cannabis in California, one of the most competitive states without the headache of obtaining a license. Now, I'm not saying if you want to secure license that that isn't a better path. In my opinion, owning a license is a security and guaranteed to operate within the legal confines. I just also know not every state is going to open up licensing or the fee or other requirements to qualify might not be attainable. And so for those people who are looking for other options out there, I hope that this was encouraging. I hope this episode ignited some inspiration and curiosity in you. And I'm curious if other states have this type of model. So if you are representing or working or you know, live do something in a state that has a similar type of opportunity or model or kind of like structure, please reach out because I'm always curious and love to learn what's going on in other states. I personally haven't heard too much about this approach from other states or just in general, but listening to Hey Soos really helped provide some opportunity and possibility of what is possible. So with that said, thanks for tuning in to another episode kicking it with me and as always, I appreciate you keeping it blunt with me. I'll be back with another episode of The to be blunt podcast next Monday, and encourage you to keep championing cannabis in your community by y'all.

Announcer  55:58  
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