As the cannabis industry grows, more opportunities are being opened for business people. Most often than not, greed comes with growth. A Sales Representative of CANNA, Christopher Coats, reminds everyone that greed won’t do you and the industry any good and tells us the current standing and situation of the hydroponics scene in line with cannabis. Being a veteran in the cannabis industry, he gives a warning for those aspiring to make it big in this business with unlimited potential. Chris then provides some points to ponder about the multiple reasons why Colorado is one of the top places cannabis investors should look into for both the long and short term.
Listen to the podcast here:
The Rise Of The Cannabis Industry: The Inside Track, Part 2 With Chris Coats
This will be part two of our four-part series. I have a special guest with me. He is a sales representative for CANNA nutrient line out of Holland. I had his colleague on the show, Chet Melton. I have Chris Coats with me. Chris, thanks for being on the show. I appreciate having you on.
No problem. I’m glad to be here.
Chris, I have you on to talk about the market and where things are heading and what you’re seeing on the ground floor. I wanted to give the people a chance to understand who you are. If you wouldn’t mind sharing a little bit of your background, that would be great.
I started back in the day. I’m from Colorado. Back in 2007, 2008, I was participating in my own right, doing my own thing in the basement. As life progressed, I needed to find a little bit more of a stable job, so I started looking out to hydroponic stores and got involved in hydroponic retail in Fort Collins that had a great source and a way to grow. At that time, they were one of the smaller stores. 2008 is when I joined them. I was a warehouse doctor. I was trying to learn everything I could, absorb everything like a sponge and I ended up going through that business, helping them open a couple of stores, meet a lot of people, a couple of people from this show maybe that have been involved in that as well. We all came up through there and it was like a graduate program, everything from HVAC to electrical, horticulture, business management, people management, the hydro industry expectations where things needed to be done but I want it now. It was a great experience.
I then ended up managing the Boulder store and the Lakewood store for a while. That was about 2014 when I stepped away from the industry to get into something different. While I was out doing something else in the tourism industry, I got pulled back into hydroponics because it was my people. It was a newer market, an emerging market. Ultimately, the margins were better than the tourism business. That’s hard to fathom sometimes with all the people out there traveling. Ultimately, what it came down to was I knew hydroponic products well and I still had people reaching out to me for advice and that’s where CANNA came to me, asked me if I wanted to take over the Colorado territory. That grew from the Colorado territory which takes up a decent part of our whole national sales but ultimately it took over Montana, Oregon, Washington, and New Mexico as well. I’m a rocky mountain region rep for CANNA nutrients. I wouldn’t have it any other way. It’s a great job. It’s a great company. The people who use it are great customers.
You’ve got a big territory to handle. Washington, Oregon, Montana, and New Mexico, they have their own little quirks on what’s going on. Can you walk me through what’s happening in the different states as you see it from the supply chain of nutrients?
Being from Colorado and coming up through this industry, in this marketplace specifically, has been advantageous. We’ve been able to see the rise and fall, the big wave of hydroponic sales from 2008 to 2017. In 2017 to 2018, we started to see a dip in general sales. As other states were becoming legal recreationally and medically, the Colorado marketplace started to die off a little bit. That had something to do with people moving to a different territory, realizing that they could sell off their businesses and cash out from a game that they weren’t fully aware of that they jumped into in the first place.
In Colorado, we’ve seen a lot of growth a little bit of a step back in the last couple of years but in 2019, we saw a step up from 2018. We’re starting to level off in Colorado. I’m speaking from our perspective only as CANNA nutrients. That doesn’t mean that when it comes to the entire hydroponics industry, I can’t speak for everyone. In CANNA we’ve been doing well the whole time and we’re continuing to grow and it’s great. In Colorado, there was definitely a dip in growth between 2017 and 2018. In 2018 to 2019, we saw some growth so that was great.
Ultimately, Oregon and Washington, they’re back on the rise as well. There were a lot of people up there that jumped into the cannabis game thinking that they are going to $1 million and they were going to be these founding fathers of the industry. A lot of it comes down to state policy. Unfortunately, that dictates how successful a marketplace is going to be. Oregon has a much bigger outdoor scene in Colorado. That’s not to say there’s no outdoor in Colorado or greenhouse, but Oregon is well known for that. Washington is a good mix of some outdoor and a lot more indoors because of the climate, a little farther north. In general, Colorado is a hotbed. Oregon and Washington have good success in the marketplace but prices are down up there and products, as compared to Colorado where we’ve seen prices coming up.
I’ve heard a lot of talks that many other Washington growers subsided back into or started hemp instead of THC because the prices were coming down fast and were hitting them. We’re starting to hear a surge is coming back and the prices are starting to level out. Have you heard anything like that?State policy unfortunately dictates how successful the cannabis marketplace is going to be. Click To Tweet
I could agree with that. It’s also a direct correlation to the hemp prices that have been dropping, plummeting. Everyone gets out of one and gives them to the other marketplace. Marketplaces sometimes are not ready for the supply that’s available in it. I’ve seen that. Prices are going back up in general across the board but the hemp industry has taken a bath. It’s interesting to watch this emerging market, as volatile as they are, go up and down. You have to have a stable foothold if you want to make it the game.
Do you think it’s challenging to be jumping back and forth in between? How challenging would it be to jump from THC to hemp CBD as an outdoor grower?
There’s a lot of transition there. There are a lot of things you can take with you from one to the other. Ultimately, one is more of an ag marketplace and the other is still a boutique, almost microbrew marketplace so to say. It would be difficult to try and scale up to a commodity that’s worth much less in volume and there’s not as much underground culture behind it. CBD has some people to look at and they’re like, “It goes hand in hand with essential oils.” There are a lot of holistic ideas behind it, unproven theories, a lot of great proven theories. There’s a wide variety of products that can come out of hemp.
Ultimately, that marketplace is going to be much larger than the cannabis marketplace. I don’t think that the people are ready for it yet. I don’t think that the demand is quite there for all the different textiles and boutique beauty products that can come out of CBD. The carrot is in front of the horse in the CBD market. Whereas with THC, it’s more of a beer, wine, sewer marketplace that’s driven by the counterculture that is coming into the light. A lot of people, I’m sure we all have friends out there that are like, “My uncle, the guy I thought I’d never got along with, now this stuff is legal. He’s telling me how back in his day he used it all the time, but he couldn’t tell anybody about it because that was the way of the world then.” You have a lot of people stepping out of the shadows in cannabis, whereas everyone’s still trying to understand CBD.
To answer your question, as a grower, you can make the transition. There are going to be a lot of growing pains going from one to the other and I’ve seen people do it. I’ve seen people leave the basement and start a hemp field and I’ve seen farmers try to grow cannabis. Ultimately, no matter what you’re doing, it’s a matter of how well you can adapt, how quick you can learn, and how do you make your decisions. Are they rash and quick decisions or are they calculated and well thought out?
Do you know a lot of successful guys that have transitioned from the basement to outdoor, whether it be THC or CBD hemp?
Where I am in life, yes, there’s a bunch of people in the industry that I know of. We all came from the basement. Most of us that are in the game and representing products or representing businesses, we all have to start somewhere. Most of the people that are coming in from business-to-business and coming into this marketplace, they’re trying to learn as they go and a lot of us are. You know guys that have come from the basement and succeeded well in hemp and in the cannabis industry because they’re coming from a grassroots perspective where they already have a following. They already have a network or they created a network before it was big. There’s a lot of success there, there are also a lot of failures, a lot of learning, a lot of lessons that came with that. Ultimately, anybody can do it. It takes a thick skin and that fat pocketbook.
A solid determination strips their dollar as far as they can go. That’s probably something that most people struggle with. I know I had in the past. To keep that dream alive, you’ve got to be lockdown and dedicated. Aside from Colorado, you had talked about tourism and stuff changing there. I heard a statistic that said Colorado still has control of 50% of the cannabis tourism, which is great for Colorado. It goes back to what you said that there was a little bit of a low between 2017 and 2018 and then we saw growth in 2019. The state’s opening up like Oklahoma falling away from the tourism here. We’re still making a lot of tax revenue out of Colorado. As that spreads and goes over Montana, New Mexico. New Mexico is close to us. I read that their recreational bill failed again. I didn’t read the entire article, I glanced at it. New Mexico is the only one that’s not recreational. Is Montana recreational?
Montana still got medical. They’re trying to figure out the recreational like New Mexico. At the end of the day, people want to travel. They want to see cool stuff and get a buzz. It’s the same thing. Brewery hopping all over the country, it’s a big thing. The problem with cannabis and tourism is that there is no weed light. It’s one of the biggest issues I’ve heard out here in Colorado. People come out here for cannabis tourism, they get on the weed bus, they hit that first joint and then they’re couch-locked the rest of the day. They don’t want to go to Red Rock because they got that weird like, “I want to sit here. Is this vacation a bust yet?”
I was in the tourism sector. For us, we are running rafting trips. You can’t cross cannabis in rafting. It’s a dangerous thing. I’m sure the ski industry deals with it all the time. They’re trying to nip that in the bud the best they can but at the end of the day, they can’t. It’s like alcohol consumption on the slopes. You can get in big trouble if you’re caught doing it. If you’re drunk and you crash into somebody, you’re going to pay. Ultimately, cannabis has its place in tourism, more of cultural-artistic tourism than an adventure tourism marketplace. The first person to come out with the good weed light will find themselves a nice little niche, something that’s flavorful, and has a wide variety. A lot of that comes down and jump in the statistics for cannabis right out the gate. The one-to-one ratio products tend to be easier for people to consume throughout the day.Whatever you're doing is a matter of how well can you adapt, how quick you can learn, and how you make your decisions. Click To Tweet
What do you mean one-to-one product CBD to THC ratio?
In my experience, that lends to a less psychotropic high and something that’s a little more social. We’ve been seeing a few weed pairings on food menus. Not going in and having a full weed dinner where everything’s infused, but more this vape pen pairing well with this appetizer or this extract pairing well with this main course, stuff like that is interesting. There’s a wide variety of where this can go and Colorado got it. Washington, Oregon certainly has it. I don’t think there’s much weed tourism in Montana or New Mexico and that might be why the recreation bills haven’t passed or haven’t even been proposed in some cases. Some states don’t want that tourism, and it’s understandable. You never know the crowds you’re going to get. It could be high profile businessmen or it could be somebody that makes you feel uncomfortable. There’s a wide spectrum there of people like alcohol consumption or any other kind of product in the intoxicants.
Let’s start with the entrepreneur first and then I was going to ask about working in the industry if you want to work somewhere, where do you see makes sense?
If you’re trying to get into the industry, you’ve got to earn your stripes somewhere and cut your teeth. Coming in as a trimmer and learning how the business works and seeing how the grow operates is a great starting point. In Colorado, you can come out here with a clean record and you get your badge from the state to work in the dispensary or grow. You can come out of the gates making $15 an hour trimming. It’s a remedial job but it has a minimum wage. From there, there are all sorts of ancillary businesses attached to cannabis. When I say ancillary business, I mean, trimming companies, cleaning companies, product destruction companies for all the byproducts. There’s a bunch of different stuff you can do that isn’t growing or selling cannabis and it’s created a lot of jobs. Almost all of my friends are tied into it one way or another whether it’s out of the basement or in the light. At the end of the day, there are a lot of opportunities. I’ve seen a lot of people succeed without ever touching a plant, a flower or jar of weed.
That’s hard for people that haven’t been around it a lot. It’s hard for them to understand the opportunities out there. There’s so much in the byproduct and the recycling that you never had to grow. If you have a great idea, you can do some damage because you’re thinking outside of the normal of, “I want to grow and I want to extract.” How many growers have you seen that have been there and gone already and are on to something new because they failed at that, whether it be because of their own fault or regulations? The risk you’re taking in spending the time to grow this plant is a lot. Although it is fulfilling and exciting, it’s tough being a farmer.
When it comes down to it and growing as a farmer and if people that are trying this haven’t been a farmer, then they should start talking to farmers. Get a perspective. I like your point of if you got into Colorado and you want to cut your teeth to work in it, get your badge. There’s an episode on what to do and how to apply that I launched. If you guys are interested in that, please check that out. It’s about working in the cannabis industry. I gave a step by step. Let’s say you’ve gotten your badge here in Colorado, you figured it out. If I wanted to look at Washington, Oregon, Montana or New Mexico, where would you send somebody and say, “This is where I see some growth happening where you can get in with some companies and see some true growth?” In Colorado, what I’m seeing is it’s becoming more corporate. Your growth points are going to be a lot longer to get to the top. Where would you suggest somebody look and why?
That’s a good question because you have to figure out what you’re trying to do in the end. What’s your end goal getting into this industry? Are you trying to create a career for yourself to support your family, you and your partner, or just yourself? Where do you want to live? A lot of these recreational states are cool states to live in. It’s all a matter of lifestyle choice. A lot of people that are in this industry came from being hobbyists that enjoyed gardening and enjoyed the counterculture of it and then all of a sudden, it became legal and were like, “I can make a career out of this. I can raise my family on some legitimate earning.”
To answer your question, Colorado would be the most opportunity out of all of my regions that are all the states that I manage. However, that’s not to say that there is an opportunity in Washington and Oregon, but those marketplaces are different. They operate on such smaller margins that I don’t see as much opportunity there in the cannabis marketplace as I do in Colorado. Colorado is still a hotbed specifically for hydroponics because of the indoor climates. I don’t want to say more successful, but there are probably more people growing in an indoor controlled environment in Colorado than there are in Oregon. It’s only because there is so much outdoor growth in Southern Oregon, it takes away from that ratio of indoor to outdoor growers.
In Colorado, it’s been set up to succeed. The policy from the state down is there to generate tax dollars and help the culture grow. Whereas in Washington and Oregon, the policy sandbag them a little bit and prices plummeted and all the growers that were mom-and-pop in the shadow of growers for so long are losing their money. It’s the same story in California. Colorado has still got the highest opportunity in my region for people that want to get into the industry and climb the ladder.
If you’re coming out here to start a business, if you don’t have a business plan and you don’t have a niche already set aside in your head, it’s going to be a long road. Markets don’t mature by any stretch of the imagination, but there are those first couple of years where you could come into the marketplace and fall in your face but still make some money in the end. It’s not like that anymore. It’s getting fine-tuned a little bit. The edges are getting rounded and it’s getting a little harder to be creative off of hype or to make the money to stop the hype of the industry. You have to have a well thought out plan.If you're just trying to get into the industry, you got to earn your stripes somewhere and cut your teeth. Click To Tweet
Hydroponics is a great place. It picks the shovels from the Gold Rush. Something we all used to say a way to grow is like, “You could grow for that guy who came in here to offer you a job but at the end of the day, that guy is probably going to disappear and sell his business before we will.” I don’t know if that’s how it played out in every situation. When you’re behind the counter selling picks and shovels, you learn how to dig the hole by explaining it to people over and over again. Coming up the hydroponic industry from being there for so long, we learned so much more about growing and most of the growers did because we were explaining everybody’s problems to everybody else. There was a whole reference, a whole encyclopedia of situations, theories, experiments and things that went well and things that work that shouldn’t have worked and things that failed that should have succeeded. You get all of this information that you gather in one source.
You learn all these products, network, meet many people working behind the counter of the hydroponic store, that it gives you a leg up later because then you can go into the industry and figure out, “What do I want to do? I know all these people, I know all these products,” and all of a sudden you’re open to everything. Whereas if you come into it just looking to grow and you’re trying to pigeonhole yourself into a grower position, you get bogged down and stuck because you’re in your garden. You’re doing your own specific research or experimentation and it gets close-minded. Whereas if you’re working from a retail perspective trying to satisfy several customers, at the end of the day, you learn a lot more from all their different experiences than just yours.
I always encourage people to get into the hydroponics business. If they’re trying to figure out what they want to do in the cannabis game, start somewhere safe where you have a retail job and you can learn about every product, meet a bunch of growers and network, and grow your skillset. You can start stepping out there and seeing what’s available. I know people that have tried that in Washington and Oregon have been successful. I know people that have tried it in Washington and Oregon that haven’t been successful because the hydroponic game slowed down quite a bit out there. Ultimately, you’ve got to find a place to start.
It seems like Montana would have a big indoor scene too because of the weather changes. Am I wrong in saying that?
The fact that it’s not recreational limits their potential growth. They’re still on a medical med card situation that slows down the growth of the industry up there. Here in Colorado, it’s a hand over fist, it’s still growing. There are still new people coming out and new products coming out all the time. You’ve got to get in somewhere. I would start with a trimmer or I would start behind a counter at a retail store, trying to learn products. You can see where it will take you. If you’ve got a good attitude and you’re open-minded and you don’t have the grower ego that everybody in this industry talks about, you’ll go far if you can listen to people and try to soak everything up the best you can.
As a business owner, what would you say to somebody that’s trying to come in? Obviously, they’ve got the money. They’re not going to start working for a hydroponic store. Let’s say they wanted to build a CBD product line of some sort. What direction would you point them and say, “This is probably where I would start to get an idea of where I want to build my company?” Would you have any suggestions in that area?
I get these questions from family members and people that I know from other networks of friends all the time. What I tell them is, “Go and do your research. Figure out what clicks in your head.” I’ve got one family member who’s into CBD. He thinks it’s going to revolutionize the world and I agree. I couldn’t get behind that more. What a lot of people fail to see is that the marketplace isn’t ready for it. For me, what’s exciting is it will be a great place to start. Forget CBD. In my opinion, CBD is already oversaturated with products. A lot of those products are snake oil and they’re greenwashing the idea of cannabis-infused into a hand lotion or something that’s going to save your skin forever. There are a whole health and beauty side of CBD and I agree with it when it’s done right. There’s a whole world of hemp textiles that has not been tapped into in our mainstream society, everything from clothing to building materials to plastics.
We have this huge problem in the cannabis industry where everything has to be packaged in a safe thing before it’s sold or a safe package and I get that. I agree with that, but we’re creating this ecological problem with this awesome amazing plant that we have that we’re selling but we’re not using the values behind that plant when we sell it. I would love to see somebody come out with a biodegradable hemp plastic jar with a safety lid on it. There’s an idea for you. There are a couple of hemp lumber companies out there already. I would love to see a builder push that through and have a whole ecological mindset when they’re building a new development somewhere.
There’s so much building happening in Colorado. I’ve thought about this several times over. If you were to build a green, sustainable, long-lasting, whatever you want to call it. There’s such a discussion about that throughout the world, especially on the West Coast and people are infatuated with the fact that they want to sell a THC or CBD product. The future of hemp and hemp technology is insanely huge. Those points of bringing that up, if you got the right partners together, you could build an entire house out of hemp. If you could make it cost-effective enough, of course, those first few are not going to be because they’re going to be the testing ground of it.
For those of you out there, they’re like, “I don’t know how to grow it.” These are great ideas that you can take with you and utilize to turn into something. I talked to guys such as yourself all the time about uses for hemp. It gets me excited when you start bringing this stuff up because it’s going to take so much of the oil out of our production, everything that we’ve made from all the plastics that we have around us on a day-to-day basis. That can all be specially made with hemp.
You’re right, when I sit around and talk to people in the industry, we’re all talking about the new hot genetics like twatwaffle or whatever, weird funny names. There’s always like the new LED light or the new air conditioner that came out or this new style growing and everyone’s like, “We know there’s always new technology coming out when it comes to growing and new funny genetic names and all that.” We all get more excited talking about the potential of hemp as a textile than we do about the counterculture of cannabis and the CBD health and beauty products.
At the end of the day, hemp could potentially take this marketplace to a whole new level. It’s a matter of getting the right partners together. Someone needs to knock on Jeff Bezos’s door and be like, “That $10 billion of yours dropped on climate change, cut me out a hundredth of that and let’s start a hemp business.” Get some people together that can get behind a builder and get behind a land developer. Those are the people we need seriously getting involved in this marketplace because they’re the ones that are going to be the influencers from the top down. As soon as they see that they can sell a low carbon footprint hemp house for a higher price with a bigger margin, that’s all it comes down to. It’s all numbers and cents. I would love to see some big players in the game round up some builders, round up some money people and start the first hemp lumber company in Colorado. Don’t even start a company, start a co-op.
One of my business ideas back in the day was the Colorado Hemp Coop. Let’s call all hemp farmers who are struggling and all of a sudden, get them together, everyone chip in a little money, find some grant money. Start the co-op. Buy a few plywood presses or particleboard presses or a 2×4 press and start using the hemp stock growing actual fibrous hemp and creating building materials. That’s a great start. You come with two different products, plywood and 2×4 and see how far it takes you. One of my other sayings in this industry, going back to where would you start is that it’s good to aim small and miss small. A lot of these guys come in like, “I’m going to take over the whole cannabis industry.” They fall flat on their face because they had too many products they were trying to develop or create at once. Come out simple. Start with hemp toilet paper. You can call it good right there.
Aim small, miss small. I like it because it’s focused and many of us in the industry are going in twenty different directions because it’s hard to focus because there’s so much opportunity. Somebody said this to me, you see a dog with two bones and then he sees the third one and he doesn’t know how to pick up the third one without dropping the second one. All of a sudden, he drops both of them to get the other one and somebody else comes and picks up that bone and then you’re left with no bones.
It’s a great analogy. I’ve seen it a couple times in this industry.
Some people will say it’s a great problem to have, but if you don’t know what you have in front of you, you’re going to lose it all. It’s easy to get greedy in our industry and not know that you have something great in front of you.
It’s something that I say with the other reps in the industry because we all spend a lot of time together. You’ve been there at the trade show parties where it’s the same group of reps that were hanging out at the last trade show or the same event. We all know each other from interacting over the last 10, 15 years. We all have our spokes on the wheel and at some point, a big ag is going to come into this industry and try to take over and it’s going to happen. When it becomes nationally legal, you’re going to see a huge shift in the way cannabis is grown. If we can all retain our spokes on the wheel and keep the momentum moving forward with the counterculture and the hydroponics industry and the cannabis industry and let them know this is our industry. We know it’s going to happen, you’re going to absorb a lot of it.
At that point, our momentum and not being greedy and allowing your company editors to rise as well and knowing that we all have our piece in the pie and if one person took the whole pie, the whole industry would fall apart. We’ve got to keep our spokes on the wheel, keep moving forward and keep the momentum going so that when this shift comes, they know that we’re here to stay because we built the brand. We are the ones that create the boutique products. You can grow the Budweiser cannabis all day, but at the end of the day, people are going to still pursue cannabis like it’s a microbrew and a fine wine. There’s going to be that whole other side of it. If somebody gets greedy, chances are they’re going to fall off the wheel and their spoke is going to break.
I’d like to give everyone else out there a chance to reach out to you if they have any questions for you about hydroponics, nutrients or anything. Where’s the best way to reach you and how can they contact you?
They can reach us through our website CannaGardening.com. In the contact page, there’s a link and there is a general support link and then as a product support link. From there, we disseminate down to all the reps and the territories. You can leave a message on the website and those are filtered through once a week and pass it off to the right rep. It also helps us filter through the solicitations and stuff like that too. My name is Chris Coats. Hit me up anytime.
Chris, it was a pleasure talking with you. I wish you continued success on your journey. We can catch up here in the future, I hope.
Thanks, Tony. I appreciate it. It sounds like this show is going to be a great thing. Everybody, I encourage you to keep following. Tony is a wealth of knowledge for a long time. He’s been nothing but a stand-up class act, so keep it up.
You guys can subscribe to PlantProblem.com and feel free to reach out to me on LinkedIn or Facebook as well if you have any questions. Also, on the website, if you’re interested in some more details on this or any other episodes, please leave your comments and questions there and I will be more than happy to dig in those deeper. Chris, thank you so much and thanks, everybody.
- Chet Melton – Previous episode
- Episode – The Best Kept Secrets to Cannabis Employment
- LinkedIn – Tony Frischknecht
- Facebook – Tony Frischknecht
About Chris Coats
Chris has been involved in gardening and cultivating in Northern CO since 2005. His retail sales career started in 2008 at Way to Grow Hydroponics in Fort Collins CO. he was a part of the ¨hydroponic boom¨ that exploded in CO and across the country from 2008 through 2016. With that growth in industry came opportunity to learn and develop as a horticulturalists, a salesperson and a cannabis industry expert. Chris left the hydroponic retail market in 2014. He partnered up and sustained a viable reseller’s business brokering commercial hydro equipment, nutrients and consumable goods. At the same time, he started a white water rafting business in the high country of Colorado. During his stint in the mountains, Chris became involved in several agricultural hemp projects. Geo-thermal commercial greenhouses, mass plant reproduction and the commercial hemp industry became daily life in between rafting seasons. He was approached and hired by Canna Nutrients at the end of 2017 as the CO sales representative. His territory has grown to include Washington, Oregon, Montana and New Mexico. He is an advocate for cannabis culture, the hemp industry and outdoor adventuring.