PP 37 | Cannabis Market

 

Every single year, regulations and legislations placed around the sale of cannabis shift, thus the cannabis market is also in a constant state of change. With all these changes happening, it’s important that retailers are also aware of how the market changes, and what they can do to keep up with any burgeoning trends around them that, at first, they may not even notice. Coming from decades of experience in the cannabis industry, Conal Rosanbalm is the Wholesale Manager for Kind Love Dispensaries. He speaks with Tony Frishknecht about trends in the cannabis market that retailers should definitely be aware of. Good working knowledge of the market in its current state is essential to any growing business, and it’s doubly so in a relatively newer industry like cannabis.

Listen to the podcast here:

The Shifting Cannabis Market With Conal Rosanbalm

I have an awesome guest. He is a very close friend of mine. I’ve had a few of these on but he’s also coming from decades of experience as well in the cannabis industry. Please let me welcome Conal Rosanbalm from Kind Love Dispensary out of Denver, Colorado. Conal, how are you doing? 

I’m doing very well. Thank you, Tony. How’s it going with you?

I’m fantastic. Thanks for taking some time out of your day and sharing some unique things that are happening in the industry. Conal worked for me in the past over a decade ago. We brought him on to run one of our dispensaries. I’ve got a very close business working relationship with Conal and he’s built himself into what I would call a wholesale giant at this point. He is doing wholesale work for Kind Love. He’s always into the quality side of it. He’s always moving through new avenues. He’s been through the ups and downs of what wholesale pricing is. This is going to be extremely helpful for you who are in the industry in Colorado.

Sometimes you can’t tell exactly what’s happening. You can tell what’s happening in your store but it’s hard to get a gauge on what everybody else is doing. I brought Conal in here to share what everybody else is looking at and what they’re doing. Conal may share some main names or he may not, but he’ll give you a good overview of what’s happening in the market. We are in a time period that is also entering the coronavirus situation. We’ll talk a little bit about that too. Without further ado, Conal, I would like to let you share a little bit about your background with everyone and we can go from there.

I’m working at Kind Love Dispensary. I’m the wholesale manager there. Most of my time is spent in and around the growers, all the trimmer and the trim people, as well as the rest of the sales team, the fulfillment team and our ownership group including my direct manager which is the owner’s son. That’s most of my time. Some of my time is spent at the store looking at what product they’ve gotten from our growth that I didn’t get to see. If I didn’t get a lot of that wholesale, I’m in the store checking out the quality and what end-consumers that purchase from our namesake think of the product as well which is huge.

To give people a better idea of the amount of volume you are producing, what kind of wholesale are you required to move on a monthly basis as a wholesale rep?

Monthly, our revenue goal in output as far as wholesale goes, the net does not include the retail side of the business, is $300,000 per month out the door of the finished product. They all passed testing, etc. and made its way into the marketplace. Revenue is considered anything that’s been invoiced even if it’s prior to shipment. Sometimes you’ll invoice something before the end of the month, but whatever is sold within the 30-day, a 31-day period is equal or greater than $300,000.

Your job is to move several hundred pounds of months of flower throughout Colorado.

That’s correct. It’s not just the flower. There’s a lot of byproducts when it comes to cannabis in general. When they’re producing the product, it’s my job to sell everything that comes off of it. Its flower, trim, popcorn nugs, which what we consider shake, pebbles, depending on the size and the quality of those specific products, and fresh frozen which is a cool avenue. If you’re selling a pound of weed for let’s say $2,000, fresh frozen ends up being about a fifth of the price but you end up selling more of the weight because of the wetness of it.

PP 37 | Cannabis Market

Cannabis Market: In fresh-freezing cannabis, you cut the plant down, strip it of some of the larger fan leaves and while it’s still wet, it gets put into vacuum-sealed bags and stuck into cryo.

 

With the fresh frozen, can you explain what kind of products you can use in the fresh frozen and who’s using this product? It may be a new concept for a lot of people. It’s been happening for a while in some of the more developed states. Would you share some of that with us? 

If you picture the process of getting to a cured flower that you’re going to sell in a dispensary or something, you completely cut that entire process out for fresh-frozen. What you’re doing is you’re cutting the plant down and stripping it of some of the larger fan leaves. While it’s still wet and hasn’t been hung to dry or any curing process whatsoever, no chiming, it gets put into vacuum-sealed bags. It’s then stuck into a cryo, that’s cold freezer and not the normal freezer at home so that it can get to temperature quicker and that doesn’t damage the product. It’s a frozen product. We sell it to what’s called a MIP, Marijuana-Infused Product manufacturer. It’s what’s called solventless processing, but they’ll make it into things live resin, batter or rosin.

Some of these terms are pretty specific when he’s talking about freezing this product and creating it for a lot of these other processors that are taking this and putting it into many other products. He named a few of them. Don’t think about this too much because we don’t want to make it too technical for you, but there are several things you can use the fresh freeze for. There are some huge gains that you get out of this. It’s the actual processing of this plant for the grower. For your facility, how much time is saved with the fresh freeze?

It’s huge. The curing through the trimming process takes at least six weeks’ worth of letting the plant process into where it needs to get in order to be sellable. There’s the testing part of it all. You’ve got to get potency testing. There’s a bunch of them that are microbial and now there are heavy metals, etc. That’s Colorado. For the fresh freeze, all you need to do is cut it down, freeze it and it’s available to sell practically the next day.

Your labor is next to nothing. 

It’s almost zero. The growth side of it is the same. It completely removes the trimming aspect of it and it can all be done in one day. Sometimes it’s great for me because let’s say we’re waiting for a bunch of potency testing or microbial testing to come back and I wouldn’t have anything to sell that week. They can decide to take a room down and give me 5 or 6 tables which are sometimes 20 or 30 plants, which can be a large amount of fresh frozen weight that I can sell anywhere from $200 to $280 per pound.

It’s much less but when it comes down to it, the labor that it’s saved is half the expense in growing this plant. What is the market like for fresh frozen then? It’s a very good niche for a lot of those people that are wondering, especially what you just mentioned there, how you can gain access and sell something very quickly and not have to worry about curing and everything else. What have you seen in the market? Is there a large number of people who are like, “We want fresh-frozen. We don’t want anything else?” 

In fact, those people have built their business on needing just that product. It might be worth mentioning the difference in processing dry products and fresh frozen because the products that come from those two ends are also completely different. These people that are interested in the fresh frozen don’t like using things like propane or butane in their processing. It’s a completely different process and end-material. It’s not shattering, wax or these things like live resin. Those people are very specific about what they want. The handful of customers that come to me most often typically will buy me out before I even show anybody else the inventory as long as they’ve got the capacity to put it in their freezers and it works with their process. It’s very specific though.

It’s a specific end-user but yet you have no problem selling it quickly. 

There’s a lot of it where the price to the end-consumer, the person that’s going to buy it and take it home and eventually vape that or whatever has gotten low. The need for higher volumes of the product in the marketplace is there. People need to process more to make what they would’ve made a while back with less product because the end-consumer is paying less. I need to grow more. They don’t want to pay quite as much but they’ll still pay some. It’s finding that happy medium.

Most owners are trying to figure this out at this time. If you are looking for some way to freeze it up, you might look into the process. I’m not sure how expensive it is to do the frozen part. Maybe you can speak more to that. I haven’t done it before so I’m not exactly familiar with what it takes to fresh freeze something. I imagine they do with seafood and a bunch of different products that we already use or consume now. 

The important part about freezing it quickly which is why I called it a cryo earlier and not a regular freezer is it’s like seafood. If you freeze it more quickly than typically, a lot of the flavors are going to be saved. Whereas if it takes a day or two for it to get completely solid, it’s going to ruin a lot of the things that are in there that create the flavor like the terpenes. It’ll also ruin some of the THC content which is still there when you process everything. I don’t think it’s that much more expensive. It’s about getting the right cryo freezer and as long as you can afford the electric bill.

Cryo sounds expensive.

Isn’t that how people are freezing their heads and stuff too? Walt Disney is going, “I told you.”

Aside from the fresh freeze, you’ve seen the market and its ups and downs. Right now, it seems like it’s leveling off a little bit, so people can understand where we were back in 2010. It was our banner year of dispensaries taking hold around Colorado. Our market was far different than it is now. What background did you have in that time period? What did you see that stood out to you?

I’ve thought about this a lot, especially because there are many different factors in determining all kinds of things like what the need is like, what the price is going to be set at, how much am I involved in the statewide pricing and knowing we’ve got a great product. Back in the day, in 2010 or so when I was first starting, it was so different because there was no statewide tracking system, which is what we call metric now. That wasn’t around so we couldn’t guarantee that the product that we were purchasing for the store when I was managing the store, was even from Colorado. You could never guarantee that. We called it the Wild West back then.

A guy could walk into the store with a suitcase full of half pounds or quarter pounds or whatever. We’d be like, “Is this from Colorado?” It needed to be still. It was supposed to be. He’d say, “Yes.” We’re like, “Sounds good. Open up your case.” He’d open it up on the table there. I and the other budtenders would be like, “That looks pretty good. What’s this one, the Golden Goat? How much you got of that? This is the Sour Diesel. You got some Blueberry here. Let’s get us up to two pounds.” We picked a quarter pound of each. We’d end up paying somewhere around $3,000 a pound back right when I first started. That stayed about the same level for a couple of years before a whole bunch of more people jumped in the game. One thing that I’ve noticed is it’s very different now that there’s a seed-to-sale tracking system. Those Wild West outlaw type people that are out on their own are no longer doing that. It has to come from a viable source.

How has that affected the black market in Colorado?

Ever since the recreational wave hit and everybody realized that they can grow plants on their own as long as they’re 21, people are still growing on their own everywhere. They don’t want to go to the dispensary and pay a bunch of taxes on stuff that they think they can do on their own, which is fine. A lot of people are taking advantage of it and growing far too many plants. A lot of the people that those people sell to are the people that don’t want to go to the dispensary and buy. Mostly it’s a quarterly or a half a year wave. There’s a massive outdoor growing area outside of Pueblo here in Colorado. What happens is if there’s an early freeze, if there’s a big hailstorm or something like that, a whole bunch of plants in the rec market will get destroyed.

For me as a viable salesman, I watched the price of the product that I’m selling tick up a little bit because the need is there. I’m the one that’s supplying the need. In the black market, the same thing happens, but it’s usually when there’s a large bust. If some dude with 50 houses full of weeds gets popped in and all these hundreds or thousands of pounds are taken, suddenly the black market need is huge but they need to go buy it somewhere else so they’re coming to dispensaries. That also drives the price of wholesale up because the demand is there. There are many different correlations across both sides.

Do you see that the legal market is winning at this point?

Yes, because people don’t come to Colorado to buy black-market weed. That’s why people after 10, 11 years are taking selfies in front of the first dispensary that they ever bought flower, hash, edibles or anything topical because they walked into a dispensary and bought it legally. There’s a thrill to it whereas the black market is still a hand slap.

It’s the good old boys’ network still a little bit. I don’t know how many of them anymore. Anytime you hear of a big bust like you were talking about before, you would not see people anymore. They would be gone. That would scare a lot of everybody else. They’re like, “We’re out of here too.” I’ve definitely known over the last few years a lot less of that. I’m sure it’s still happening. They’re still shipping to other states. I wonder what that price point is to neutralize the black market. Have you thought about that at all?

I haven’t really. I have known a couple of smaller-scale growers where they had a friend somewhere in another state asking about what the pricing is in Colorado so they can determine what they wanted to purchase for from the Colorado grower. The Colorado grower was like, “What’s the price that they’re paying for it in that other state? I’d rather get that price than sell it to them for what a Colorado price is.”

There's a lot of byproducts when it comes to cannabis apart from the flower. Click To Tweet

They’re gauging whether or not it’s worth driving it across state lines or not. It was going to happen. I haven’t heard it until you told me now that you’ve seen it or heard it happened.

I’ve known people all over the place that lived all over the country and that’s the thing. You got to keep your hands clean, especially for me. As a viable salesman, I don’t like to try to get into that side of everything, but you do hear things through the grapevine. Everybody likes cannabis. That’s not completely true but it seems like it for the majority of people at this point. If you don’t have access to it, you’re looking for easier access to it and dispensaries provide that.

We’ve had some ups and downs. We had a thriving market. It seemed in 2014 and 2015, we’re good but 2016 was a rough year. There was a lot of supply in the 2016, 2017 timeframe. What prices were we looking at back a couple of years ago?

There were many factors. In 2014 and 2015, the novelty was still very real. What they called cannabis tourism was massive. People were like, “Colorado went legal.” People were flocking here. They go shop at a dispensary. Even if you came for one day and you went to one store, people were stoked about it. When the rec market first opened, there were lines all day, every day for months upon months of people trying to go in and buy rec weed legally because they could. As the novelty store started going away, what happened is people started building their business models off of those max numbers that they could push. They were making as much weed as they can think that they’re going to keep selling that much weed and then they weren’t anymore because people started not traveling as much.

Another thing that started happening was the state kept on handing out licenses. This is a completely arbitrary number but let’s say it started at 200 growing facilities in the state in 2014 including med and rec. There are somewhere around 760 and 500 and something storefronts are what I read. All that stuff is on the DOR website too if you ever want to look up the real numbers. That has something to do with the two lays. Once you have all these licenses out and everybody’s trying to produce as much product as they can because the more product you have, you figured the more valuable it is to you. When it’s totally flooded, everybody has to drop their trousers and take what they can get in order to break even to get to the next cycle.

They have to pay bills too.

You’ve got to keep the doors open. You can’t hold your head high and say, “I’m not taking anything less than $3,200” because Mike down the street is going to take $800 so he can pay his bill. That happened not only with grows and stuff but with all the other vendors too. We started seeing numbers for wholesale prices even with regular products like cartridges, edibles and things sharply drop off because there were many people producing it and fewer people buying. What happened was the consumer got spoiled as I was talking about with the live resin. Once you sell somebody 100 milligrams of edible for $8, they’re never going to want to pay more than $8 again. That’s the fact. They will eventually if everybody puts their heads together, but once you introduce that, now you’ve got to figure out a way to produce your edibles for $2. You can sell it to the dispensary for $4 so they can sell it to the consumer for $8 and it becomes nearly impossible.

If you are creating a brand and you are in a new market, you’ve got to be aware that these are the types of things that you got to dig yourself out once you go down fighting price wars. It’s hard not to do as Conal mentioned. You’ve got to pay the bills. How do you keep sales up without dropping your pants to pay the bills? It’s a fine line. Hopefully, you guys that are doing this or prepared to start this have a little bit of a sense of that. When it comes to making that decision, you have to understand how hard it is to dig yourself out of that hole once you’re in it.

If there was advice to give with this discussion that we’re having, specifically the way the prices go down and tend to stay down a lot of the time. If you are building your model, you should build it on the lowest number you think is feasible. That way you’re already ahead of it once everything does reach that point. You’ll be far ahead of all the other people that thought they were going to buy the Empire State Building with their profits.

With that said, we’ve seen $1,000 swings. They go from $2,000 to $1,800 per pound. If you haven’t experienced that yet or you’re in a new market, it will happen. It is going to be different for every market. Speaking of every market, what do you think the closest market is to Colorado that’s a contender of how things are working?

With the current pricing, it would be easy for me to say California price-wise, but they’ve got many issues that I don’t think that it’s a close comparison. I luckily haven’t had to explore out of state cannabis commerce much of late or ever.

I brought you on mostly to talk about Colorado, but I wanted to see if you had heard anything or seen anything.

I’ve heard about states that have still got pretty incredibly high pricing per pound or something. I remember initially when Nevada came on, they were talking about $4,000 a pound, which was already more than I had ever made on a pound selling wholesale when I was over at LaConty’s. It was more than I’d ever bought a pound of flower for when I was working at O.pen. That was far more and so that was crazy to me. It feels new states, they come on because there is a shortage tend to have inflated prices. When things finally do even out, that’s when you start seeing the weaker people drop off in some consolidation. I don’t know who’s closest though at this point. Have you seen anything different?

PP 37 | Cannabis Market

Cannabis Market: It’s always good to do your market research. It’s nice to know what people are carrying, and you can accomplish that by regularly checking on Leafly or Weedmaps.

 

It’s tough because we are as developed as anyone is right now. I feel like regulatory-wise, it’s even. There’s always some battle with taxes and stuff like that. That’s a totally different thing. For consistency on how we’re regulated, that’s made things calm down and go into states like California. It’s everywhere. It’s still the Wild Wild West. Way up North, it’s very wild up there. They don’t understand why we collect taxes. It’s funny to talk to them but that’s been their mindset for so long. They’re not used to anything else. Conal, dealing with Colorado and where it’s at now, do we have steady pricing that’s happening in the wholesale market? Is that what you’re seeing?

Yes, and there are variables still. I’ve got some leeway when it comes to people purchasing our products based on volume. There’s going to be a difference in price if you’re buying one pound from me and if you’re buying twenty pounds from me. There’s some leeway there. We’ve also got all the different products that I listed earlier. There’s regular flower, trim, popcorn in that. Within those little verticals, there are also different things based on quality. Some of the flowers that will grow, maybe it’s a new pheno or we’re trying out a new strain that we’ve never grown. We don’t know what it likes in a room or nutrients. Some things will grow a little spindly or a little bit looser. Once we dial it all in, things start looking consistent too. That’s where the consistency comes.

How many strains are you growing right now? 

Including the ones that we’re trying and that we released, we’re growing somewhere around 24 different strains, but that’s constantly changing. There are about twelve strains that we would consider flagship. Those ones we know and treat well. They’re very responsive and that’s what we consider our cream of the crop.

I remember when we first started, we were growing 20, 60, 80 and 100. The problems that came with that were unbelievable. It was a tough road and you have kept it to around 24 which is smart. What is the market asking for right now? Are they happy with the quality or do they want everything on the side of the moon?

There are many factors. One of them is the time of the year. There’s a thing that we always experience every year in Colorado called Croptober. That’s when a whole lot of the outdoor grows and would harvest their crop from outside and there’s a whole huge influx of weight. It’s not going to be as good as the product that we’ve been growing year-round indoor that we harvest weekly, but it definitely affects the market by volume. Another factor is when there are new trends. I noticed at the very beginning when I started things like Blueberry, Sour Diesel, this old school OG Kush, names that you would have heard of a while back like Trainwreck were the popular things. That’s what people were asking for.

Ten years later, it’s almost a new generation of people. Things like Wedding Cake, Gelato, things that are dessert tastes or food flavored names are becoming popular. Right now, we’re selling Sunset Sherbet strain or something like that. It doesn’t have anything to do with weed but people buy it up. What’s happening is people are missing the old strains that we used to have. People are like, “I can’t find any Blueberry anymore.” I’m like, “It’s because you’re buying Wedding Cake for three years. We killed it off. I don’t know how to tell you.” That’s fun too. I’m sure people who have been keeping some DJ Short strains in their pocket that pop again years later.

What advice would you have to the readers that are wondering, “What strains do I pick? How many types do I need?” stuff that we’ve already been through?

It’d be good to do some market research. One thing that I’ve always tried to do a good job at visits to other locations. I don’t necessarily have to buy from every store I walk in, but it’s nice to know what people are carrying. An easy way to get ahead of that without having to go visit 25 to 30 stores is going to Leafly or Weedmaps where you can read people’s menus. A lot of times they update them either weekly or daily so you can see what the trends are there. I do think it’s important to keep with the time. If something is selling a sorbet or whatever, go for that because that’s going to sell instantly. It’s also good to remember where this all came from and keep some of those strains in your back pocket if you can. If you have the ability to hold some seeds down and keep them in your pocket for 5 or 6 years, if you can bring out an OG strain in the future, that’s a good idea too.

It goes back to the seasonal beers that you see out in the market. Christmas or October comes around and pumpkin comes out. You see that more pop in and out and then it spikes a little bit of freshness to your brand or your product. 

That happens more in the edibles market. People are going to come out with seasonal flavors a lot of the time. It’d be crazy to have a pumpkin spice cartridge. That would be awful. They did do crazy flavors back in the day. You can buy the blue raspberry flavored cartridge and stuff.

There were a lot of flavors. I don’t know if they’re around anymore.

People want to taste their weed when they’re using their weed.

When you start digging into that, we start talking about tastes and terpenes. That’s pretty big in the cartridge market right now. You’ve got a lot of experience with the vaporizer market. Conal worked for O.penVAPE for quite some time. He was their very first sales rep there. He went through a lot of different ideas that a lot of people are experiencing in new markets now. If you are in new markets, look back at some people that have done it already and that will help you understand. You can look at the products they put out over a 2 or 3-year period because we went through a ton of them at that time.

That’s something I get a kick out of. I’m fortunate enough that I get to meet a lot of people on a day-to-day basis but in general through my work and otherwise. I’ve gotten a chance to sit down with a lot of different owners, a lot of different shops and product manufacturers, and sometimes even more importantly our managers. It’s part of my job to go find new buyers. It’s not going to be the same people all the time. You meet managers that have been around what we do now. In Colorado, you have to have a badge to work in the industry. Every badge has a number based on the order in which it was released by the state.

They kept 100,000 badges. My badge starts with the one. At first glance, you might think I just moved here, “He just tried to get in the industry wherever this guy’s from.” You look closer and it starts with 1 and 0 or whatever. It’s only a five-digit number. It’s not in the 100,000. I’ve still got my old one that starts with a zero. You’ll start seeing the old managers that have been around for as long as I have and I’m like, “This guy’s got a zero on the front of his too, let’s chat.” Sometimes you can have an hour-long conversation about the way things used to be without even realizing that you had that long conversation. It’s crazy.

I like the idea behind that because, for you guys that are looking for seasoned people and people that know their shit, it could be a good idea to watch out for those badge numbers. You’d be able to tell what the person’s worth that’s sitting down in front of you right away. “What’s your badge number?” “It’s in 0015.” I’m not saying they’re going to be great, but at least they’ve hung in there for several years. 

I hope that 0015 wasn’t looking for a job at this point.

Hopefully, they’ve figured out a good management position somewhere or executive. Where do you see things going with the Colorado market?

It all depends. I do think that we reached a point where the state even with the population as inflated as it is and a lot of that is because of the rec market. One of the reasons why we’re so crowded in Denver now is because the rec market brought a whole bunch of people here. I do think that’s planning out a bit. There are not as many people moving here every week than it was a few years ago when it was first starting. That’s good. There are also not as many people looking for new licenses. There’s a lot of trade of licenses or selling of licenses that are already established. It’s not zero but there are not as many new licenses being issued as there have been in the past. People are buying up old ones.

There’s a lot of consolidation from larger companies. A lot of the companies that are already established and now making other products that they might not have been making in the past. For example, Kind Love makes our own edible called KAMA. Back in the day, if you were your own dispensary unless you are some major company like the Green Solution, you wouldn’t make your own products. You would buy them wholesale and sell them in your stores. It was one less thing to worry about. People are wanting to do as much of that as they can on their own because you cut back on the wholesale price on things. You don’t have to buy it from somebody else. You did all the work, then you save a bunch of money by paying somebody in your place to do it.

How hard is that to do that in the beginning though?

It can be tough. Once you’ve seen enough of the products that come through, what you want and what you don’t want out of a product and that’s way better start than a lot of people had at the beginning. Do you remember how we started O.pen? That was crazy. There were one company and every time you put the cartridge on the pan, it would leak all over whatever you had. The first thing we had to fix was leaking. Years later, there were all these other problems. Having seen all that stuff makes it easier.

When you’re the first one doing something, there are a lot of issues that happen. To put it for everyone, get good at one thing and then expand from there. You’re going to see a bunch of people that do ten-plus products and they don’t even have one winner. Just because you have more products, it doesn’t mean you’re better. That’s not easy to understand. Putting all your efforts into one product that you believe in is a better idea than ten products that you are trying to see what people like.

That goes back to the reason why you don’t want to grow 80 strains. Cut that down and be good at the ones you do grow. If you are going to introduce a couple of new ones, that’s fine but be ready to get good at them before you expect them to do as well performance-wise as the other.

That goes back to your very first point of market research. A lot of this you can figure out on market research, you can figure out for yourself. It’s one of the most neglected parts of the cannabis industry. People think they can just come in, “We’re going to sell a bunch of weed.” It’s a great idea in the beginning but it’s not long-term. Unfortunately, in order to be long-term, you have to think about these ideas far sooner than you used to have to. 

That’s absolutely correct, which is why it’s hard for new products to catch people’s eyes sometimes. If they’ve done the research and they pay attention to how to present the product, then that person’s gotten an advantage with their new product over some of the people that might have been around for a while as well.

How many edibles companies are in Colorado? 

There’s got to be hundreds at this point. I don’t even know.

Who stands out to you?

The bigger names are going to be Incredibles, Wana, Coda for chocolates. Incredibles also makes chocolates.

Coda makes some good products. 

Those are the top three that I can think of. I’d like to tout the KAMA brand for a moment because that’s what I’ll be selling.

What makes a good edibles product? Because there are so many. 

Marketing is huge whether your name is in all the magazines or whatever. When a customer walks into a store and they look at a wall full of items, the number one thing that they do is they ask the budtender what they recommend. If the marketing is good, the package could stand out on its own and hopefully the consumer will ask about that specific product rather than asking the budtender what they would choose first. That’s an advantage. Another one is the flavors need to be specific and true to what they say. If it says it’s a piña colada gummy, it better tastes like a piña colada and not like you took a bite of coconut. There’s a difference. If it says peach, it shouldn’t taste like an orange or else it’s like, “What the heck?”

It’s confusing to the taste buds for one because you’re going into it expecting something else.

That’s the thing that you can market to the budtenders when you’re selling the product initially. It’s part of the salesman’s job to make sure that all the budtenders are in love with the product that you sold to the store so that budtender wants to sell the same product to the consumer when they come in.

Product knowledge for the budtender was very big for us when we were growing the stores and we want a new product. If you came in and you talk to us as the owners or budtenders like, “Try some of these out. We want to be here to answer people’s questions about them,” these are all things that most sales companies do but for some reason, cannabis took a while to take that and run with it.

Part of the problem was at the beginning, there were few companies and little competition that each product sold itself. If you only have five to choose from, every store has got room for five different products in every vertical. You have five cartridges, you have five edibles and you’ve got fifteen different strains of weeds, five indicas, five hybrids, and five sativas. That’s easy to pair through. You can sell that stuff but as soon as you start encountering hundreds like you were saying and when every company is making a cartridge which has happened with all the edibles companies, it’s a lot harder to stand out.

When we started O.penVAPE, there were 3 or 4 people making cartridges on a small scale. There are well over a hundred different makers out in Colorado right now.

It’s crazy when one thing succeeds and it’s a standout, everybody needs to catch up to that. That’s what everybody made their goal is to make a new cartridge because they saw. What they started doing is picking apart the cartridges that were already on the market. I’m putting my hands up for quotes right now but exposing them for what their company wasn’t, something that they were lacking or something that the new company was doing better. That’s when people started getting cutthroat in a lot of those industries or a lot of those verticals.

Do you see a flower being still a huge part of the market over the next years?

Absolutely. One of the reasons is because I consider myself a traditionalist. I’ve gone through all those things. I’ve done a bunch of edibles and I still have a cartridge on me most of the time because it’s nice and convenient but it’s not my first go-to. If I want to smoke, if I want to experience myself some cannabis on a Friday afternoon, the first thing I want to do is either roll up a joint or put some flowers in a pipe. That’s the first thing. That’s my most favorite feeling of all the different marijuana types.

What about the new users?

What the new users are going to do is work their way through all the products in order to find out that they want to go back to flower again. That being said though, people that do dab exclusively are different market of people completely.

Dabs are concentrated. 

It’s hash that you vaporize and you take a much larger hit of a higher concentration of THC at once so they hit you harder and quicker. If that’s what you want, then that’s what you want. There’s never been a point where I am craving to do an edible like, “I need to have 25 milligrams in me right now.”

There are definitely some heavier users. 

If you’re doing it for pain, it’s a different story too. I’ve known people that have bad backs or knees and they need to have surgery. They could eat 500 milligrams in a sitting and a recommended dosage is ten milligrams. That’s 50 times as much as they recommend. I eat a quarter of the recommended, so that’s 200 times the recommended dosage. That’s insane to me.

With hemp CBD being legal right now, what are you seeing in the ratio market? There’s a lot of great products. There’s a lot of one-to-one, CBD, THC. There are people that are allowing 25% of its CBD. Are you seeing a big push for CBD mixed with THC right now?

It’s not so much in the flower market because that’s hard to do. The experience is different. When I do an edible since I can’t handle the full ten milligrams, a five milligram of THC and CBD is perfect for me and it feels they even each other out. I don’t get any anxiety that I might have back in the day. A lot of people that don’t want to experience a THC high, it’s during the day, have a tendency to go towards things that are a 10 to 1. Let’s say it is a cartridge. You can take a couple of puffs of that. The CBD will help you but the entourage effect with the THC makes it more effective.

In Colorado, there's an event called Croptober where there's a large influx of cannabis that overwhelms the market by volume. Click To Tweet

Though the thing as a whole works better for what the CBD is supposed to do if there’s that little touch of THC in it. The ratios can vary because I’ve seen 100 to 1 too. There are all kinds of stuff out there but it’s about finding what specifically works for you. If you do it for anxiety or pain, I think that will ever go away. That’s also part of the viability of the industry is the fact that CBD is such a major part of the plant itself and the treatments of it all. The way that people apply cannabis to their lives without the CBD, it’s not quite the same thing.

Do you find that the hemp CBD is competing with the THC market?

A little bit, especially for things like topicals. People aren’t looking for full-spectrum hand lotions. I don’t want to put THC on my hands. That seems weird to me. CBD, I’ll allow around all day. I do think that it’ll compete a little bit, but it’s such a different market or a different end-consumer.

In hemp, you don’t nearly have the rules that are applied to CBD and THC at this point. There are two separate markets completely, but they are cannabis still. It’s a matter of understanding because at your store and at your grow, you’re not focused on CBD. It’s a part of it but it’s not your entire focus. The hemp market is exploding here in Colorado. Price is on the isolate, which is the byproduct of the extraction site of the hemp plant. The prices are dropping right now. Are you familiar with that market and what’s happening there?

I’m not hugely familiar with that side of the market, but I do know that things are changing a little bit. A while back, you used to be able to add CBD isolate that was derived from hemp to your THC product and then sell that in a regular dispensary. They made it illegal to add CBD into a THC product and then sell it in a dispensary. I believe they changed it again. You were able to sell pure CBD products in a medical store, but you couldn’t sell pure CBD products on the recreational side for some reason. I believe that’s changing as well. The ability to use hemp-derived CBD in THC products is going to come back, which I think is huge.

A lot of it will depend on the regulation because there have been different arguments that I’ve heard on that and one of them is, how can you expect a product that’s not regulated as tough as THC to be able to add to it? It negates all the work that you’ve put in to make THC so regulated and all of a sudden you can add it in. It works both ways. It’s a double-edged sword when you look at it. I’m going to go into it this coronavirus. I’ve been reading some articles on what’s happening and everything’s being shut down. There is about to be a significant wave that is going to start plaguing our business owners and this is going to happen very quickly. A lot of it’s going to happen in packaging only because stuff’s getting hung up in customs. Have you seen any of this firsthand yet?

Not that specifically yet. We did have to have some sweeping changes at the facility at Kind Love to try to keep ourselves safe. Even locally now in our trim room, we’ve got four people sitting at a trim table two feet away from each other, listening to music and chatting. We had to have a meeting and it was the craziest thing because in the meeting, the owner came and he stood in the middle and he talked to everybody. It was great, but we all were a little freaked out. Everybody in the meeting is standing six feet apart from everybody else. That was introduced to new guidelines. You sat on your own table and all this new stuff.

I haven’t seen it as far as packaging and stuff-wise. I do think that what’s going to happen is people in those closer congregated type areas are going to start getting sick at a quicker pace than people that can isolate themselves. I’m lucky I can work from home doing my sales until I do need to go out and do some deliveries. I’ve been pretty vigilant with everything. I do think you’ll see some loss of workers. You won’t be able to get as much work done as a company, whether that’ll affect your bottom line. I do think there’s going to be some things happening.

As a business owner, I would be freaking out because there are many things that we get out of China that we have nowhere else to get them. The opportunities I see though are for people that are in hemp. We have a lot of hemps that’s being shipped in from China too. They grow a ton of it there. Most of the products that have been legal to create in the US have been made from imported hemp, oil, lotions, and different topicals. There is a huge opportunity that’s coming our way because we’re going to be forced to do a lot of it on our own again. Some people are going to love it and some consumers may not like it because it’s going to cost more. Bringing us back to a more of a safety, it’s local. It’s grown here. How many years have we been talking about locally owned and sourced and everything is here? It’s truly going to happen. We get our cannabis that way. We should be getting our hemp that way too. With the prices dropping now, I am hoping that some guys take this and run with it because it’s huge.

Me too. What an opportunity. That’s crazy to think about.

It could change the way all the hemp farmers are looking at it now. I was concerned for them because there were a lot of them that were going to be jumping into growing. It did. Prices got driven down but there’s still so much imported hemp that we’ll be changing the way we move forward with this lockdown.

The good thing is the need won’t ever go away. As long as we can find some weight to keep the cup full, then that’s going to be our advantage. As I said, it’s never going to go away whether you’re doing it for medicinal purposes, recreational purposes or if you’re using a cannabis product, you’re getting something positive out of it. It’s doing something good for you, for your life, for your health, whatever it is. That is never going to go away, especially in times like these. I know that our dispensary for example, ever since this lockdown when things started getting pretty real, our store has set some records, especially on the medical side, but definitely on the recreational side as well.

They’ve been having a hard time with the grow making sure that the store has got enough stuff for me to still sell into the marketplace. Some customers that haven’t talked to me in months because they tend to only talk to me when they need something badly, they have to come out of the woodwork. They’re hitting me up. That’s a great thing for me too. It won’t ever go away. That’s one of the reasons why they decided they’re going to leave grocery stores, dispensaries and liquor stores open. People need some alcohol.

PP 37 | Cannabis Market

Cannabis Market: A good amount of hemp products sold in the United States is actually imported, so this lockdown is a good opportunity for local farmers to get their products out there.

 

What else have you got to do?

You’re at home, locked down. It’s crazy.

I had stuff booked and I was calling to confirm like, “We’ve got to close.” We are in a weird time frame. Not to go too far into that, but I did want to touch on that. Before we go, what do you feel are the top 1 to 2 jobs that are in the industry right now if you were going to say, “I want to work in this industry, where do I want to put my efforts towards and what do I want to shoot for?”

I’ve got to do a lot of things in this business.

What have you done? Let’s do that. What jobs have you done in the industry?

My entry-level job was budtender. I remember walking in for the interview and I didn’t even know what the difference between Indica and Sativa was that day. I knew that I had an opportunity to do this job that they called budtender. I was like, “That’s crazy. I never heard that term before.” I walked in and she asked me if I smoke a lot of weed and I was like, “No, I don’t really.” She goes like, “Oh.” You could tell there was disappointment in her face and she sends me behind the counter. She was like, “Do what you can.” I walked back there and there’s a girl I was working with. I said, “What’s the difference to an Indica and Sativa?” She told me. The next few customers that came in, I put my best face on and pretended like I knew everything about it. I was able to upsell them into buying a couple more products. She sent me home. She gave me the job and I was back the next day.

From that budtending job, I got acquainted with the processes of the business. The way that the product worked with the people came in to buy it worked, what they needed, what they wanted to hear from us, that I was offered a management position at another store with the same name downtown. I did that for two years. After that, I was recruited by the company, O.penVAPE. I am one of the very first salesmen that they had. It was an amazing opportunity. I ended up being there for four years. I ended up leaving the company as what they’d call Senior Sales Manager. I’m overseeing the Colorado sales team and running my own team of Denver salespeople, managing popups and events.

I went into the broker game for a little while. I represented a bunch of different grows and did sales for those grows to dispensaries that needed to purchase which was nice. Now, I am a Wholesale Manager for Kind Love. During the time that I was budtending and trying to become a manager, I also was required to work at the grill for a while so that I understood the back half of everything. I’ve done trimming and any kind of transplanting. I knew the operation head to toe like how to work with the mother plants, how to do cloning, how to keep the plants healthy. I didn’t get into the chemistry side as much, but I still got to call myself a grower for a while. I’ve seen a ton of it. That all being said, I’d say I am not a huge fan of retail in general. I don’t ever want to see myself as a General Manager of a retail location of any business, although that is a decent job if that’s what you’re good at and you can manage people.

You’ve done other retail besides cannabis too so you’re definitely familiar with it. 

I did a lot of stuff in the restaurant business too. There’s a lot of face-to-face interaction with end consumers. Managing a team of people is a tough one to do too. I’d say the top two that I could think of would be lead anything. If you end up being lead grower, you get to choose what strains you’re going to try out this next cycle or whatever. You get to choose how to fix a problem that you might have had in a certain room or how to make the product better, how to get your yields higher. As a lead grower, that’s satisfying. It takes a lot of know-how and a lot of wherewithal about what you’re capable of, what your team is capable of, especially what the location is capable of like your facility. Another one I’d say that I never got a chance to do would be a lead extractor somewhere. Figure out how to take the products that we were talking about earlier like fresh frozen, trim. Run them through your cycles and systems and turn them into the best quality product in order to be sold to the dispensaries to sell to consumers. Imagine making the first set of live diamonds and naming it diamonds. How cool would that be to put your name on?

There’s a few of them now, especially that have bounced from Colorado to other places. What I have noticed is a lot of them have gone into the consulting side too because they enjoy creating those new products and making a creation. They’re not doing the growing of the plant, but they’re creating a product no matter what. Conal, it’s been great having you. Thanks for sitting down with us. If people are interested and they want to talk more about wholesale or about the market, what’s the best way that they can reach out to you?

CBD is competing a little bit with the THC market, especially when it comes to topicals. Click To Tweet

Most of the time, my office is mobile considering I’m having to do things like deliveries and meetings with new people that are going to buy products from us, etc. The best way to get ahold of me would be through my work email, Conal@KindLove.com. That’s the easiest way to get ahold of me. I won’t forget to get back to you because it’ll be in my inbox staring me in the face and I’m like, “I got to get back to Mark. Trisha hit me up earlier.” That’s the best, easiest and quickest way to get a response from me if you have questions.

If you have any questions for me, please reach out to me at PlantProblem.com. If you have questions about this podcast or another podcast, please let me know and I will get those answered for you. I will bring them into an episode and we can discuss it. I’m trying out a call-in number. If you feel that it’s more challenging for you to type it in, please feel free to call me at (720) 551-8530. Leave your message there. I’d love to use it in one of the episodes, reply to it and get some information for you. Conal, thanks again for being here. It’s been great. I look forward to talking to you in the future about the market and what’s happening. Thank you so much, guys. I wouldn’t be doing this unless it was for you. I hope I can bring you as much solid information as possible. I look forward to talking to you again soon.

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About Conal Rosanbalm

PP 23 | Cannabis Tracking And TracingConal is a cannabis professional who has been in the legal industry for 10 years.  He is the head of wholesale management for The Award-Winning Cannabis Dispensary in Denver Colorado “Kind Love.”  Most of his life has been spent working directly with the customer and helping them find the best product that suits their needs.  Starting from the ground floor as a budtender, and working his way up through each position in retail (including cultivation) has taught him the expertise and knowledge to be a leader in the field.  The joy he brings others flows through every part of his life. Especially when performing his passion for music on a live stage.   Colorado is his home, and lucky for him it is the epicenter of the American cannabis industry.

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