PP 36 | Best CBD Investment

 

As the cannabis industry continues to grow, more and more investment opportunities are opening up as well. If you’re wondering what the best one to choose is, then this special solo episode will help guide you. Host, Anthony Frischkneckt tackles the topic of investing in CBD and trying to create your niche in the supply chain. Before that, he lays down some foundation by sharing where the market is heading, giving you a view on how to plan the best strategy for what is to come. Anthony then shares his experience starting in the industry and offers some advice on getting your business off the ground. Tune into this episode to learn more about starting out in the cannabis industry and putting your ideas into action.

Listen to the podcast here:

The Best Investment In CBD: Creating Your Niche In The Supply Chain

I wanted to revisit one of my previous podcasts, The Cannabis Business That Fits You. I believe it was number nine. I want to go into a little bit more depth on what’s happening in the industry. My topic is going to be investing in CBD and trying to create your niche in the supply chain. There are a lot of great things happening, but it’s not talked about as much. I want to share some stuff with you where I see the market heading. There are a lot of people out there that are trying to figure out what’s the best strategy and what they want to take on. I’m going to share with you my thoughts and where I see the market going. These are coming from what is happening in the industry with a gentleman that I’ve been working with and talking to, along with a lot of my knowledge past that’s happened in THC and the legalization here in Colorado.

What’s hot right now? Hemp as a whole is on fire right now. What I’m still not seeing a lot of discussion of the mainstream, everybody’s talking about what’s normal, when’s legalization going to happen in my state? When am I going to be able to buy recreationally? That’s all great stuff and that’s going to be the sexy stuff that you see. That’s what grabs headlines. A majority of your news outlets are going to be carrying something like this or talking about this, especially given the new election that’s coming up here. We had the primaries.

I want to share with you the three topics. I believe it was episode nine. This is a little more in depth than what is happening, what I see on the ground level. Growing seems to be an easy place to get into hemp. Growing anything has a lot of work that’s involved, even if you’re a farmer and there are a lot of variables you’re dealing with. The biggest one is the atmosphere and the environment. Those are huge. What I see happening and growing right now is that there are a lot of farmers that have popped on board. This is a great place and it’s an exciting place to be. However, there are so many things that you can’t control.

As a farmer, it can affect your harvest. If you’re going to be growing something, one of the most challenging things I think is, how do I choose what type of hemp strain I want to grow and deciding which THC as well? Also, finding a stable strain that you can grow is very key. There is a very small amount of stable genetics that are available out there. Most people are buying clones over there. They’ve found seeds from a European connection and they grow differently in every climate.

There’s a company out of Colorado called New West Genetics. They are one of the few I know that’s certifying seeds with the state and they started growing their strains back right when the original Farm Bill passed in 2014. They hit the ground running, so they’re creating stable genetics. I am not aware of a lot of other people doing this. You can search it. I’ve had some personal contact with them, so I understood what their platform looks like and how they’re building their business. I see why they’re doing what they’re doing.

PP 36 | Best CBD Investment

Best CBD Investment: With white labeling, you can run a small business on your own.

 

With that said, all the farmers that have jumped on board and are like, “We can grow it.” There is a lot of competition out there. The competition has come from the passing of the bill. Also, it has come from the height of the value that this product was last spring. People were selling out and there wasn’t enough supply. In about a year, that’s changed. I know a lot of farmers that are still holding onto their crop from 2019, trying to find the right deal that makes sense to them. You’ve got that in place. I also know farmers that have been talking with the processors and there are a few of them that are not up and running yet to full capacity or as large as they have to be to be able to process this crop.

The other side was white labeling. It’s a great spot to start. It’s very simple to talk to these processors. If you’ve got a brand you want to create, they can create the product for you. Of course, it will cost you a bit more than if you were doing it here, but it doesn’t come at the expense of processing and all the tools and the machines that you need to create a product. I like the white label mostly due to the fact that you can run a small business on your own. If you want to dabble, it’s very easy to be going on your own.

All these products are being watched by the FDA, but there are no clear-cut information and guidelines that you have fallen. There’s a little bit coming out. For example, you can’t claim any medical ailments that this will solve like headaches. They have to sell more as much as like a supplement that you see in a GMC or a Walgreens at this point. Out of those three, right now I think the hot thing to get into and the hot thing to be a part of is processing. Processing is left up to the machinery and the facility you can get in place.

One of the drawbacks is it can be expensive, but I worked through that and talked to you about that. As a processor, you have plenty of products to choose from. There were farmers with thousands and thousands of pounds of this product right now that’s been harvested from 2019. From what I’m seeing, they have very few places to process it. There is a demand for that. That demand can be great for you. I have to take you back to a little story. If you guys aren’t familiar, I started a company back in 2012 with a lab called O.penVAPE.

Me and my business partners were a very new dispensary here in Denver, Colorado. We were selling a local vendor’s vaporizer or vape pen. There were only a couple of guys that were selling these at the time. I was very new. One of my business partners, he was the visionary. He saw a need for it and shared the story with us. What was happening was after we started getting these vape cartridges in, I think within the two months, we were selling a thousand a week and we were paying the creator of this product $35,000, $40,000 a month. We were like, “This is huge. What’s going on?” My business partners were like, “We need to figure out how to make these.”

PP 36 | Best CBD Investment

Best CBD Investment: Every small business’ nightmare is having an idea but not the money to get it off the ground.

 

We were missing a huge opportunity and we saw the writing on the wall. These convenient little electronic joints were going to blow up. We thought, “How can we make them?” We tried hiring some old school guys who have been in the industry for a long time. We thought they knew we could put this together with them. That’s what we thought at the time when we were doing what they call a bubble hash, like a washing machine type of hash system. We were like, “We can figure this out.” We spent a couple of months messing around with that. We wasted some time, a little bit of money and we ended up parting ways from these couple of guys. We had to start from scratch on how do we do this because it’s expensive. That’s the point of my story is coming back to this. The reason why I’m sharing this is because it’s expensive to do a lot of this processing.

We had to figure out a way how to work this out without any money. It’s every small business’ nightmare. We got an idea, we just don’t have the money to get it off the ground. There were four of us and one of our other business partners was talking to his old college buddy and he owned a dispensary and a lab. They were selling their lab. We were like, “It’s worth checking this lab out. We don’t have any money but let’s check this place out.” We ended up driving over there, not too far from our facility, maybe twenty minutes. We start walking. They let us in the front door with a little security system. It was nothing like it is nowadays. Nowadays, it’s like Fort Knox walking into a lot of these facilities. We started a tour with these guys. There were two gentlemen and they were walking us through the facility. We saw a lot of what looked like to me at the time were a lot of different lab equipments. I have no idea what was involved. It was things like a big giant, shiny extraction machine and big, round ball rolling, which now after several years I’ve seen. I saw scales and plant material all over the place. There were maybe a handful of people working in this lab. This lab was probably 1,500 square feet.

They were walking us through each stage of the process and we were like, “This looks expensive. What do I do here?” “Let’s go on the tour.” We were looking at are our business partners like, “This is pretty amazing.” We spent 30, 45 minutes talking to them about their situation and what they were looking at trying to do. We get to the end and they looked at us like, “We’re asking $1 million.” I looked over at one of my partners and I mouth like, “What are we even doing here?” When you don’t have any money, you’re blown away by anything that costs over $10,000. You’re like, “Where do we get that?” I was sitting there, probably was ten seconds it felt like or maybe longer. I looked at him and I said, “Guys, we don’t have any money.” Our business partner, the visionary says, “We’ve got a great idea.” At that point, we started to share ideas of these vaporizing pens and they had created a couple of products that were vaporizers and they never took off.

It seemed like we were on the same page on how to work something like this out. We started talking back and forth for the next couple of days and it seemed a week or two went by and all of a sudden, we were partners creating something with these two other guys that have the equipment. We had some great ideas to back this up. I want to share that with you because we didn’t know what we had at the time. Years later, as our process built, we were selling millions of dollars a month of these vaporizers across the state of Colorado and in other states. Had we gone into the mindset of, “We can’t afford to do this. What are we even doing here?” all of us could have missed that huge opportunity. I don’t want you to avoid looking at opportunities just because you don’t have the money.

The mind is an amazing thing. It will solve problems for you like you wouldn’t believe that is if you stretch your mind far enough. Dream a little bit and a little bit bigger, you’ll be amazed how you can solve those problems. There was a group of us, so we were able to put our heads together to try to make this successful. It doesn’t take 5, 10, 15 people. It can take two of you. I have a lot of experience with partnerships and you can do some amazing stuff with partners. You just have to be careful who you’re partnering with.

PP 36 | Best CBD Investment

Best CBD Investment: Look for likeminded people that are interested in the vision. Money doesn’t always get you there.

 

This was one of the turning points in my life, creating this company with this group of guys. At the time, I didn’t know it. At the time, I was unsure. We plowed forward and within a few months, we were blowing through our product and creating an amazing business. We were able to partner up with some guys that had the right tools to get us going. Sometimes that’s all it takes. You definitely want to look for like-minded people that are interested in the vision. Money is the byproduct, but it doesn’t always get you there.

Fast forward to now, this time where we are at right now. I still believe the processing of this plant is a very big market. Once you have the raw material, you can sell that raw material. Other people are going to be creating a lot of raw material, but the capital that it takes to put this together is quite overwhelming unless you create a partnership. If you don’t have any money, I’m telling you, it doesn’t matter. You can find ways to get this done. I work on stuff now. It’s not requiring me to input money into it. A lot of information, yes, but this has not required me to hand over a check to these people to make something happen. That’s been a great lesson in my life. Money does help. It makes things easier of course, but I know it can be done without it.

Back to investing, if you don’t want to build a processing, I completely understand. You don’t have to, but you do have to find some people that are working on it and if you have capital that you can inject into some of these companies, that’s another great way to do it. There are investors out there right now that are reading, but everybody that’s extracting doesn’t have great ideas. They may have figured out how to get the tools together to do it, but that doesn’t mean that you don’t do your due diligence and find out where their vision is and their business plans. These are all very key, especially the new investors out there that are thinking of investing in their families, cousins, son, daughter or any of that. A family is tricky, but it’s usually a great starting point if you’re trying to create something. That’s where I started. I can share that story some other point, but you can start anything with a couple of grand. It’s amazing what your mind will do to put stuff together to make a vision and a dream complete.

I hope I’ve been able to give you something to think about. If you’re thinking about that, please reach out to me and leave comments or questions. I would be happy to dig in deeper to each one of these if there’s some interest in that. I’m here for you. I want to be a resource, and I know I’ve mentioned this in the past, but I practice what I preach. There is a lot going on and I am an active investor. A lot of mine is not hands-on anymore, but I do a little bit and I know the people that are in the day-to-day. Please feel free to reach out to me. Let me know what you’re looking for. I’d love to solve your problem. I hope you enjoyed this episode. It’s been fun for me and I look forward to speaking again soon.

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