Changing The World With Canna Business

Presented by Richard Rose at Cannafest in Prague, on 12 November, 2017.

Hello everyone, and thanks for coming today. My name is Richard Rose.

This presentation is called “Changing The World With Canna Business,” and I totally believe in it. I'll cover why, how and what to consider in starting a Cannabis business to help your community and the world, while providing yourself with Right Livelihood. And I’ll share things learned from my 4 decades in business. First, a little about me and why I'm here today talking to you.

After helping get the vote out for the first California marijuana legalization initiative in 1972, I started a small new-age products distribution business. In 1980 I started making tofu commercially, and went on to introduce over 150 new soy products into national and international distribution. My premise in business was that "Business Is Activism," that by making certain products, I could push the transition to my way of thinking. In 1980 that was Vegetarianism, later it was Cannabis legal and cultural reform. I believe that seeing products on the shelf and people enjoying them normalized that idea in society. That's one reason I advise and helped so many to start similar businesses, the more the Businesses in that segment, the more the Activism.

My company was on the Inc. 500 list of fastest-growing companies in 1993, all from selling tofu, "Americans' most-hated food," nationwide in the Reagan '80s.

In 1994 I pivoted to using hempseed as a protein ingredient instead of soya, making HempRella cheese and Hempeh Burger, which had an FDA-legal health claim, after failing with Hemp Hummus.

They were in national distribution in the US and Canada. Even this cheese was sold in supermarkets and military exchanges, putting my activism literally on the shelf. We were also known for innovative marketing, as you see.

Eventually we had 15 best-in-class hemp products in fresh and frozen international distribution in North America and Europe.

We had many firsts, and the products won a bunch of awards in the 90s, years before the others even started.

HempNut Inc. was the Best Practices company to emulate, and we were quickly making much progress on mainstreaming hemp foods in North America and expanding into Europe, when a fiber group sued DEA over a lie, killing the hempseed food market for years. I then sold my cheese company and retired to Amsterdam.

My friends and I also wrote two cookbooks on Hemp Nut, the first shelled hempseed and brand.

Today, I'm still advocating via the Medicinal Hemp Association, and developing new products and new open-source brands.

Just so we're all clear, Cannabis includes hemp and marijuana, is mankind's most-studied plant with at least 12,000 years of continuous and safe human use around world, and is considered mankind's oldest cultivated crop. It can be used in everything from textiles to food to medicine to fuel to supercapacitors to graphene.

Safe, efficacious, popular Cannabis medicines dispensed by a pharmacist pre-date FDA by a hundred years.

Cannabidiol (CBD) has been in our and our animals' hempseed foods and medicines for millennia, as it is the main Cannabinoid found in seed hemp and the Cannabinoid-containing resin sticks to the outside of the seed shell, where it is eaten.

It's a Prohibitionist lie that "we need more studies before we can legalize." Yes, we need more studies, as we've barely scratched the surface of all the good it can do. But before legalization? Not at all, we already know way more about it than we do popular drugs advertised on TV. Their opposition is NOT about safety: one FDA-approved drug (Vioxx) even killed 83,000 before it was pulled. But the Cannabis death-toll? Still at 0 and holding steady.

And scientific interest is increasing, with an almost 300% increase in studies mentioning "Cannabis" over 10 years.

A powerful way to make a positive contribution to society and your future is by starting a Cannabis business today. Why Cannabis? We are living in a time not unlike the early years of the automobile, air travel, or plastics. The difference is, Cannabis today is like combining all 3 of those watershed industries, it's just that large and diverse. To ignore it would be like ignoring automobiles or airplanes when they were new. Most Canna businesses also are ethical, and have the Mission to "help people," so it's a great way to do good while doing well, or Right Livelihood. In an age where you never hear those words because most will accept any livelihood post-recession, that Right Livelihood is even possible is a gift. Here are just the most basic of the primary products possible from the plant.

Many medicinal Cannabinoids are produced as well, as many as 144, and we are still discovering them.

Someday we may grow our fuels and oils, employing the Chemurgy principle "Anything made from a hydrocarbon can be made from a carbohydrate."

But in my lifetime, the most important development in hemp has been the commercialization of Cannabidiol, or CBD. It's way bigger than the subject of my own work, shelled seed for food. And for the movement, it's been the primary driver for reform. All us longhairs lobbying for years for seed and fiber couldn't do what one child seizing in the legislator's office did, unfortunate but true. It's partly why medical Cannabis enjoys 90% popular support in the US.

With such a wide possibility of products numbering in the thousands but woefully few acres devoted to the crop, we have to prioritize which products should be first, on an ethical basis. This is one example, medicine gets priority before food, which is before nonwoven textiles, and so on.

I'm going to concentrate here on the Hemp (low-THC) side of Cannabis, as it is easier and more legal to pursue in most countries. Once THC is legal, you can always pivot to include it. This is your grandfather's hemp, old school field style. Males and females making seed and fiber.

This is a newer model, the "Green Buffalo" using all parts of the plant. Flowers, seed, root, and stalk.

Here's an example of a hempster going big outdoors in Colorado.

But this is the new paradigm model which I call "Hemp 2.0", the one which made hemp in Colorado such a success. Female only, grown for CBD and terpenes, and often the root for topicals.

Fully one-third of the hemp licensees in Colorado are indoors, doing Hemp 2.0 under lights, 4 harvests per year or even a continuous clone model, with 10-20 cuttings per mother every 10 days. Last year about half a million square feet were licensed indoors, that's four and a half hectares.

Right now, CBD is the primary value driver for hemp. CBD is medicine good for treating and preventing many conditions, and the market is expected to triple by 2020.

Such a value driver in fact, that the CBD just from Colorado is worth 11 times more than all the Hemp imported into the US from Canada.

What kinds of people should consider starting a Cannabis business? Almost anyone, even the bed-ridden can design and the hard-to-place worker can be trained. Are you a bright grower with a green thumb? A creative social media marketer? A successful sales person? Love chemistry? Good with your hands? Like to design and build new equipment? Or develop new medicines or foods? A proven business manager looking for a change to something new and exciting? Good at operating or maintaining machines? Are you a great Chef or a Lab rat or a programmer? A lawyer wanting in on the Green Rush? Good with plants but bad with people? Disabled but functional? Have an MBA or a PhD or even a welding certificate? The young Cannabis industry has room for all of you, and many more.

Your Canna Business journey, shall you decide to embark upon it, can take you to a new world of fun, creativity, lucre, and infamy. It can also be a boring daily drudge, and bankrupt you. Either is possible, it's up to you to create what you want. But through it all, you at least have some control over the outcome, unlike a job. But how to start? Therein lies the Art, and it all begins with introspection. Look at your strengths, and consider your weaknesses. What are you good at, what do you want to do, and where do you want to be in 5, 10, 20, 40 years?

Even your high school occupational aptitude test will reveal clues: mine said I would be a good entrepreneur or musician. I ended up doing well at both. Decide what moves you, what could be done better or differently, even what pisses you off... those are all clues where your passion for the business will lie. You're going to need that passion in the face of disapproving family, no time to date, late nights working, early morning flights, and too-little income at first. You must confidently work towards your goal, even when feeling overwhelmed and hopeless.

It's not for everybody, the life of an entrepreneur, but for those of us who value independence and control of our own destiny above all, there's no other way. I especially encourage people who consider themselves disabled in some way, your own control over your livelihood is quite possible in the Cannabis industry. Even me, I essentially became unemployable due to severe bipolar (manic depression). Yet, because I had my own business I could work around my challenges and limitations, and leverage my strengths. I could get away with working manically for 20 days straight on little sleep, then not be able to get out of bed for a week. Starting it with $400, I later sold it for $3.7 million. If I can do it, so can you. Those on the spectrum, in a wheelchair, or managing their condition all can still find or create jobs for themselves. One of the early Cannabis entrepreneurs in Oakland California is Richard Lee, and he ran his empire from a wheelchair.

If you really aren't the entrepreneurial type, then work for a person who is. Learn from them, learn the industry, learn your craft. At some point a light bulb might go on in your head and you do set out on your own. The job of master grower can pay $200,000 per year. Extractors, lab techs, trimmers, growers, warehousepeople, retail sales, office clerks, marketers, bookkeepers, programmers, breeders, paralegals, production line workers, truck drivers, everybody can find a job in some aspect of the Cannabis industry. As the industry becomes normalized, someday we'll see overnight millionaires from employees granted stock options from the company once it goes public, just like in the tech space.

I prefer to not call it the black market, but rather the free market, popular market, or the legacy market. There really is no such thing as a white market, and the only difference in the US is the state’s willingness to keep the Feds away from you and not bust you itself, so it’s really just an old school shake-down racket. Hardly better ethically than the legacy free popular market. While in many countries I can't legally encourage you to look for jobs there, the fact is you should if that's all that's available.

Every Cannabis entrepreneur I know, and many natural food industry ones as well, started their careers by selling marijuana to their friends. The war on drugs created an entrepreneurial boom, where one learns supply and demand, customer service, pricing, mathematics, inventory control, marketing, quality control, packaging, regulatory (non)compliance, and the rest that'll come in handy later.

If you're really good at growing, consider breeding. We don't have all the cultivars we need commercially yet, either in hemp or the drug side. Breeding right, even genetic manipulation, might be the fastest way to build value, after you register and patent your work. One advantage is you don't have to rely on others on a day-to-day basis as much, except perhaps for testing. If you're good at designing machines, build a better extractor. There are improved processes and methods just waiting for someone to design and engineer. Novel extraction techniques emerge often, but there's also room to improve such things as trimming machines, or field clone planting machines, or hemp top harvesters which preserve trichomes, or fiber decorticators, or fiber spinners for nonwoven materials, or new ways to shell or reduce particle size, or process controls for extractors, or continuous processing, or a million other applications.

More of a nerd than a green thumb? Then develop tech solutions for common problems in the industry. Process control, compliance, quality assurance, research tools, marketing tools. Prefer books to plants? Then scour the patent office for useful patents, especially expired ones.

Even in food, it's wide open. Anything currently made in a food factory can contain Hemp flowers, seed whole or shelled, hempseed oil or essential oil of flowers, CBD, even in some places THC. Foods such as hard candies with essential oil, real cheese with flowers pressed in, baked goods with shelled seed, all with CBD.

I've long thought edibles were done all wrong anyway. I don't want your food to get me high, I want my food to get me high; so a little spray bottle with neutral flavor and consistent dosing would be perfect. Be the first to do that one.

We're all biased. My bias is that I'm a marketer, I went back to university in my late 20s to study for two degrees in it while developing notorious brands on the Inc. 500. So I'm here to tell you that the future is in Brands, not Products. That will be the case in all aspects of the industry, including B2B and wholesale suppliers invisible to the consumer. Even strain names are like little brands unto themselves, each triggers a different emotional response in consumers. You need to find ways to brand whatever it is you do, no matter what you do or whom you sell to. Consultants can develop a personal brand, like I did with The Hemp Nut or CannaCoach. Even if it's just a water pump, brand that in some way to make it different than all the other water pumps.

As you can see here, with 70 tons of hempseed on hand you can have two very different operations and sizes, depending on whether you sell it as shelled hempseed or if you put it into prepared foods under your own brand. The difference is 34 times more revenue on that 70 tons with a branded secondary prepared product, compared to a primary commodity product. It's not the first to market which succeeds, it's best to market.

Look for ways to make current products or processes better. If it doesn't exist, create it.

Like say collecting the trichomes before de-seeding. Or maybe hemp moonshine made with cellulosic ethanol from the stalk, which is usually a waste product.

Or a new way to do extraction, faster, better, cheaper.

Or find a way to remove Benzopyrene from Hempseed and CBD oils, prevalent in many areas.

You are very powerful, once you realize you really do have the power to effect change.

But don't be naive: for 90% of the businesses out there, it's a dirty nasty zero-sum war which takes no prisoners. Therefore, find the other 10% who aren't like that, and collaborate. The sooner you discern one from the other, the better. One trick: I create or look for an ethical crossroads for the potential collaborator, to see how they respond. It does you no good if they're just going to screw you down the road like they do the others, you might as well know before you get involved.

Today, I think Collaborations, Alliances and Partnerships should last as long as the average Freelance Contract: 3-18 months. The market and the world are changing so fast, long-term commitment to yesterday's technology and laws might be fatal. Co-branding, co-marketing, co-operative trade show booths, joint sales calls and promotion, Guerrilla Marketing done right with another company can be exponentially more powerful.

But not associations. While there's a very few good ones on the marijuana side, the hemp associations have actually done far more harm than good. They are the reason adult-use marijuana is more legal than hemp in 8 US states. Instead, if a grower or processor of flowers, look to groups such as the American Herbal Products Association. If a hemp food company, look to a food association which can help you in real, tangible ways. If a retailer, join the local Chamber of Commerce. Demand your association provide real value, a return on your investment.

Some say your first employee is your most important first hire, but I think your first consultant is far more critical. Inevitably you'll need one, and the wrong one will set you on the wrong path early, headed for a cliff. Choose wisely.

Look to develop Best Practices within your company, in all aspects. Leverage your core competencies. For instance, I was really good at developing and marketing products, so I out-sourced everything else: a co-packer made and packaged the product, common carriers were the logistics, brokers were the sales force, US Cold Storage was our warehouse, distributors were our delivery, and merchandisers made sure the product on the shelf looked and was set right. All my company did was develop the intellectual property (brands and recipes), and administer the bookkeeping and marketing.

Look for ways of getting the product made for you versus making it yourself. I started in food by making my products, then after 6 years got them co-packed by others. There are pros and cons for both, but at the end of the day co-packing is almost always better as it lets you concentrate on your core competencies, the things which you do best. Co-packing allowed me to scale faster than I could making it in-house, at far less cost. In an Inc. 500 company fast-growing environment, you need all the help you can get for cash flow. Besides co-packing, the other trick is to get paid by your customer before you have to pay your co-packer. Otherwise, the faster you grow, the more cash you need to finance that growth in Accounts Receivable and Inventory.

When you talk to an attorney, remember a few things: the more you fear the law, the more money he makes. The more uncertainty he can sow in you, the more money he makes. Therefore, take his opinion and then look around. Does what he say fit with what you see other companies doing? Perhaps they found the "silver bullet" yours missed? My lawyers told me not to start selling hempseed foods back in 1994, but in my gut I knew I was right, so I ran with it. It's all an elaborate juggling game; legality versus enforcement, profit versus prison, new products versus cash on hand. Uber and AirBnB succeeded despite the fact that their operations were illegal in many cities. Every day is a new set of circumstances to manage. But don't let anyone keep you from it if you know you are right. Even if no one agrees, you have to believe in yourself. It's not arrogance, it's not hubris, it's merely confidence that you can think your way through anything that comes.

Let me now explain Michael Gerber's "the eMyth" as it relates to, say, growers, because it is one of the main causes of a small businesses' failure: just because you're a good grower doesn't mean you're good at managing the business of growing. Those are two different skill sets, therefore, your first hire should be a business manager who can handle the back-end operations while you stay in the greenhouse. Insurance, payroll, banking, licenses, contracts, money in the postage meter, ordering toilet paper and soap, compliance, taxation, opening and sending mail, replying to customers, emailing requested information, all that mundane minutiae has to be handled, but not by the best grower on staff.

If you are serious about putting together a team, consider the work called Human Design as a way to have a complete team with no holes, with the right people in their proper roles. I so wish I had this tool decades ago, it'll create team synergies that won't happen otherwise.

How can all this relate to say, a nonprofit patient collective? You can help more people if you create a sustainable business out of it, even if a nonprofit. Managing it as small business would allows more efficiency in getting medicine into the hands of more patients, cheaper. Most new small businesses are nonprofit anyway, just not by design. Look for price breaks for packaging supplies, comply with employee and banking regulations so you don't get fined later, keep staff motivated, happy and well-trained. Cut costs where practical, raise more funds by getting other businesses or people to sponsor a patient, or donate supplies, or provide medicine in exchange for testimonials. Thinking of the nonprofit patient collective like an entrepreneurial enterprise doesn't change the mission, but can actually bring it into sharper focus.

One object of life is to discover your gifts, then give them to the world. Manifest the change you want, beginning with yourself. Starting a Cannabis business provides a powerful platform to do just that.

If you need a mentor or someone to bounce your idea off of, I offer a free session to see if I can help you or give you some pointers.

Ok, that's it for me. Does anyone have any questions?

Copyright 2017 Richard Rose, all rights reserved.