#018 - Oh. Hi. Oh! And what you need to know. w/ Erin Gore from Garden Society

Speaker 1: 0:00

Hey everybody, welcome to High Spirits. I'm Ben Larson and with me, as always, is my co-host in crime, anna Rae Grabstein. It's episode 18 of High Spirits and we're excited today to jump into everything. Ohio, which you've probably heard, has recently legalized, but I don't know. I always I have like mixed emotions every now, every time I hear a new state legalize. These days it's always like how excited should I be? For a number of different reasons, and why aren't we federally legalized yet? But we'll get to all that in just a little bit. Anna Rae, I'm super happy to be here with you today. I was a little touch and go. I was spent the last two days in bed. I haven't eaten since Tuesday. So if I keel over at some point during the show, it's all right, just keep the thing going. You can kick me offstage or whatever.

Speaker 2: 0:56

Well, happy to be here together with you today, ben, and I'm glad you're feeling better. Yeah, it's been one of those weeks On the High Spirits side, for everyone listening, ben and I are gearing up to be in Vegas the week after Thanksgiving and we're even going to be putting on a morning mixer for all of you to come hang out with us, and we'll be promoting a little event in the next few days. So look for us on socials with links of how to engage in person and come have some coffee and some snacks with us on Thursday morning of the MJ Biz Week.

Speaker 1: 1:34

Yeah, and we got coffee bagels guaranteed and probably some more and some infused beverages if you need to get your day kicked off in the right direction. So we're excited to announce all of our sponsors and partners there, but it should be a good way. I know there's a ton of evening events, but for those of us that wake up early I know Anna Rae, I know ever since having kids whether I've been drinking the night before or not I'm up at five in the morning and I like the idea of doing something in the morning.

Speaker 2: 2:08

Yeah, I think so too, and yeah, you're right, there's so many parties. I think I'm RSVP'd to five different parties on Wednesday night already, but I will just give a shout out and a touch of respect to David Tran, who's putting on the MJs on Thursday, because not only is he hosting a Black Tie event, but he actually sent out an Instagram Realf with outfit inspirations for all attendees to basically level up, be stylish and show up in Black Tie attire.

Speaker 2: 2:39

So it definitely inspired me to try to up my game, so we'll see. I might be showing up with some sequins.

Speaker 1: 2:48

Well, the guy definitely has some style and he throws a good party. I know he's been at it for a number of years.

Speaker 2: 2:53

Yeah. You know, let's just get into it. Talking about this episode today, I think that you're right. Last week the industry was a buzz that Ohio legalized and it seemed only right to bring on an operator from Ohio to talk with us about their journey, their perception of the market and what's going on. So why don't I introduce our guest today? Does that make sense?

Speaker 1: 3:25

Yeah, let's do it.

Speaker 2: 3:26

Well, welcome, erin, you're live. Today's guest is Erin Gore. Erin Gore is the founder and CEO of Garden Society, and Garden Society is a brand and a manufacturer in the market in California and Ohio and soon to be New Jersey. Garden Society is also a co-manufacturer for many of the top brands in the space, giving Erin a unique understanding of company dynamics outside of just her own. Erin is a chemical and a biological engineer with her education from the University of Wisconsin Madison, and she regularly appears on top women in cannabis lists, and I'm really proud to call Erin a good friend of mine. So really happy to have you here today, erin Welcome.

Speaker 3: 4:13

Thank you. I'm just very honored to be here and excited to talk with you guys, and it's always weird hearing your own bio. You're like, who's that girl? I want to be friends with her.

Speaker 1: 4:24

It was a little weird for me too, because I remember when I first met you like when it was at Gateway and I saw these beautiful little truffles that you had created and I was like, oh man, this is elevated cannabis right here. This is awesome. And just to see how you've grown and scaled and all the things that you're doing now I'm really excited to just dig in and hear it all, because I don't think like, obviously I've known you've been doing this stuff, but it's a lot more than doing little truffle jobs. Yeah, totally.

Speaker 3: 4:53

I think it's interesting. A lot of people know what's for our brand from a consumer facing view and they're like oh, that's that cute little girl company and a whole other side of the business that not a lot of people at least from a consumer, maybe even an industry perspective, if you're not intimately working with us really fully know that we do.

Speaker 2: 5:11

So I'm excited to be here Tell us a little bit about it before we jump in on Ohio, like where is Garden Society today? We said in your bio that you're in Ohio and on the way to New Jersey, but tell us more about what that looks like.

Speaker 3: 5:23

Yeah, totally so we. So my friend was in manufacturing and lean manufacturing, lean Six Sigma. I worked at a large German CPG company a $30 billion corporation for my entire career prior to prior jumping in cannabis, and had this incredible experience between being a product development specialist to lean manufacturing, to sales, to global sales, to running a global business and building it from the ground up and I recognize that I love being a. At that time we call it an intrapreneur, like building a business within a corporation. I love building businesses and so when I started Garden Society, it was really focused on the consumer. It was these cute little boxes, the French soapbox packaging that really didn't look like weed. That was a really bad idea now, because everything needs to be clear to the customer and consumer. So a lot of education.

Speaker 3: 6:12

Anyway, we really focused over the years on how do we survive and compete by what are we good at? And so one thing we realized is really really good at manufacturing. So we doubled down on this idea that we can better utilize our assets by manufacturing for other brands in California, forming strategic partnerships and really trying to be have a bigger net than just our products on the shelf, and so we're really proud and intentional of building relationships with best in class brands, best in class partners here in California. When we were looking to go out and market Nancy at WANA as a dear friend of mine and she said get out of California. This was like in 2021. And it was challenging. As a process engineer who cares about quality and has a lot of IP within the company, it's really challenging to just give that to somebody, especially these corporations on the East Coast, that didn't necessarily know or have the experience that I would expect them to have or know what to do. And so we had a hard time finding the right product, product fit for a licensing deal for us, when garden-study products are across multiple categories in the dispensary shelf.

Speaker 3: 7:19

And then realizing, like, how do we fully capture the revenue potential of this business? And one of our investors, heather Maloy, who's also a good friend of Anne Aray's, she's like why do you have these limiting beliefs that if you can't do it yourself? And I said, well, how would I raise the money? How do I find a license? How do you stand it up? And she's like we'll try. Why not try? And I said, oh, that's a really good idea, I should try. And then we raised our series A and I thought that would never happen, and it did. We have incredible investors who believe in us and we used those used to funds to stand up our first factory outside of California under the assumption of let's try to see what it's like to run a factory outside in California, and that was Ohio.

Speaker 3: 8:04

So here we are today, so we took over a distressed asset in Ohio. I've learned it's very difficult to take over distressed assets. That's a whole separate podcast, probably.

Speaker 1: 8:15

Anyways, we took over a distressed asset in Ohio.

Speaker 3: 8:17

We took it through commercialization. It's been an incredible experience. We're going to get into it here shortly. And around the same time, new Jersey opened up a strategic opportunity for women and people of color specifically, and so we were going through the process with Ohio and we just said, well, let's do it.

Speaker 3: 8:34

So we just did it for New Jersey and we applied. So we in Ohio we purchased a distressed asset In New Jersey we applied in one license. So different strategy. But now we're probably the only, I think, multi-state processor women led that's really working to build lean, templatized, gmp, high-quality scale manufacturing across the country with a CPG approach of regional hub and spoke access with world-class California brands. So we're really focused on how do we monetizing commercialized California brands across the country and be that trusted partner to them. So we've got incredible relationships with Kiva, with Jetty, with other brands as we're rolling out nationally and we're thrilled, we're pumped, we're freaked out. Things are growing super fast and it's really hard.

Speaker 1: 9:26

How's that? I mean that truly is a unique approach, right? Because I think all the brands, like Nancy, may have recommended that you do kind of go asset light and do the brand play, but you're leaning into your German manufacturing roots and in doing that, is there's focus still on bringing Garden Society along on that platform or is it really just focused on the manufacturing for these? So we're leading with.

Speaker 3: 9:56

Garden Society in every market. So that's what's exciting. We definitely learned a lot about Garden Society as a brand and what it takes to scale a brand nationally and how difficult that is no word near just doing a deal and getting product in market. So in Ohio we took one approach. In New Jersey we decided we needed a partner with a heavyweight, which was Kiva, for us.

Speaker 3: 10:20

And be able to not ride their coattails from a brand positioning point of view but be a lot more strategic about how we're entering the market and our go-to-market strategy. And it gives us the permission to both build a brand of exceptional quality of Garden Society but then also drive faster profitability with the other brands that we partner with, with aligned values. It also allows us to be a lot more strategic. We have a lot more to add. If it was just Garden Society, I would buy less oil and have less input, but with this brand network, I have a lot more procurement power, a lot more negotiating power, a lot more retail shelf space power.

Speaker 3: 10:57

So it's allowed us to really be a larger, more relevant operator on more of a national scale. With the episodes.

Speaker 2: 11:06

I think, it's really exciting. Most of the multi-state cannabis companies are vertically integrated and we all know who those are and you're building a different model and I think about it as an MSO 2.0 kind of model it's showing focus on core capabilities and see past vertical integration as the only way to make money and instead prove ourselves through brand and quality and efficiency.

Speaker 3: 11:34

So we're super excited, thank you. I think the one thing people think about processors is they think they're so expensive to build because it's all this infrastructure and it's all this asset. And I think if you think about processing and you have an efficiency lens and you know how to run a shop and you run lean manufacturing practices and combine boards and systems and all the stuff, you can make a lot of product with not a lot.

Speaker 3: 11:56

And so there's so many graveyards in California, these huge factories with millions and millions and millions of dollars of automation, and what's really cool is now I get my kind of pick of the option lots and get to really build something that I call it like we're an asset-like heavy model, because our factories don't cost a lot to stand up, because we know how to run it, we know the systems and the processes and you don't need a lot to scale to start, because the total addressable market is only within the state. Like we're going to get into it, what is the total addressable market? But so, anyway, it's interesting, it's really really hard.

Speaker 2: 12:33

Love it. Well, let's jump in on Ohio. I'll get us started with some of the research that I did to prep for this year. So last week, on November 7th, ohio passed issue 2 by 57% of the voters, which is a comfortable margin, and issue 2 is their legalization measure, which includes the sale, purchase and possession for adults 21 and older. It also allows for home cultivation of up to 6 plants per individual, or 12 per household. It creates a tax schema and a social equity program, and the initiative required the collections of signatures from at least 3% of the voters to get on the ballot, and then it won by this wide margin.

Speaker 2: 13:23

Interestingly enough, issue 2, though, is a statutory measure and not a constitutional amendment, and that does present some interesting political maneuvering, because lawmakers with a statutory measure have the ability to amend or repeal entirely the language that the voters passed, and even though there was such a strong margin of passage, ohio is a very conservative state, and there are a lot of folks at the top levels of the government, including the governor and state senators, who are talking about changing this law, and some want it to not move forward at all.

Speaker 2: 14:04

Others want to change where the tax money is going, but either way, it seems like most people on the ground do have confidence that this is going to move forward in some way. There just remain questions to be asked, to be answered In terms of Ohio generally. Ohio has a population of 12 million people. It's the seventh most populous state in the entire country and of those seven most populous states, the ones ahead, more populous than Ohio in order, are California, which has an adult use program, texas, with no adult use program, florida, with no adult use program, new York with an adult use program that is a disaster really has yet to be realized Pennsylvania, with no adult use program, and Illinois, which does have an adult use program. So Ohio is a market that people are really excited about. I'm really excited about it.

Speaker 1: 15:06

Yeah, michigan's at number two to California and they only have 10 million people. So it's like, and it's a similar geography, right, so it could become number two if everything goes well.

Speaker 2: 15:19

Ohio could totally be the second biggest adult use market in the country if all goes well. Hard to say what happens next, but we'll see. So let's jump in. Arianne, how do you see Ohio in terms of the policy that's just been passed by the voters? What does this mean for you and Garden Society?

Speaker 3: 15:41

Sure, I mean, I think there's a lot to unpack here, I think. First, the one thing a lot of people don't understand and there's a lot of misinformation out there going on I got an email that says going live adult use in 30 days and I was like why? So I think the thing that is unknown to the industry right now is how the final regulations are actually going to end up. So there's a lot of discussion at the state legislative level about what they're going to repeal, what they're going to change, how the program's going to look. Just because an array to your point was approved by the voters doesn't mean it's locked into law. I think that's a distinct difference between Prop 64, if you're a Californian, where we voted on Prop 64 and then Prop 64 was the rule of the law, there was no changing Prop 64,. Good and bad. As an operator, we probably hate this three tiered distro model, but that was because that's what the voters elected. So I think that's just incredibly different what that means from what they might change.

Speaker 3: 16:41

I did some boots on the ground research. What people are talking about from a legislative position of eliminating or changing is homegrown. So getting rid of homegrown, which I think would be incredible to service to the adult use market. Tap rate delivery service outside smoking. They have a big fear as a government around smoking, which is really ironic considering the opioid pandemic in Ohio. But I'll get to smoking in a minute. Social equity allotments they're talking about eliminating the social equity allotment program. The other thing that I think most people don't understand is the license of guaranteed. So one thing interesting that's buried in the regulations today is that if you're a legacy operator by a certain date you get guaranteed stack licenses. So if you're a cultivator, for example, before 2021, which is some arbitrage, random date, october 2021, you would get two dispensaries and 15,000 square foot more of cultivation. If you're a processor, you would get one dispensary. So there's this very interesting and that's all still trying to be negotiated. There was a regulation roster. Is that right?

Speaker 2: 17:53

Pardon me, that's in the medical regulations.

Speaker 3: 17:56

It's in the adult use regulations. So when you put in the advertees you would be grandfathered in these license stacks, basically this vertical license stack, and so it's an interesting way for the lobbying going behind the scene. The lobbying logic was the MSOs already have it. So this is a way for the independent operators in the Ohio medical market to have a strategic advantage come adult use. So I am an independent operator, I'm classified in that same category because I'm not vertical and I don't have five stores, and so what they're trying to do is basically get strategic advantage to compete with the verticals in Ohio, and so that's all totally in flux, still still figuring it out.

Speaker 3: 18:33

I think it's pretty much guaranteed at this point the cultivators will get dispensaries and 15,000 square foot more of row. But I don't think it's like processing is up in the air and what processing gets I've heard it a whole bunch of different ways so me doesn't say there's lots of change. The other thing that people don't understand from a reading the news point of view and I've had a couple of different legal opinions on this is that the government has until July 2024 to come up with the regulations. So I think, unlike New Jersey and unlike California it was like there was an election and then it was effective within a pretty short window of time. I mean, in California it was like November 16, jan 118, was that the stitch?

Speaker 2: 19:16

That sounds right.

Speaker 3: 19:17

Yeah, and then in New Jersey it was like 60 days, right, like election 60 days later. So or maybe it was like 90 days, but it was like boom, boom. Here they have until July end of July 2024 to come out with the regulations, and then they have an additional nine months after that to issue licenses. So the adult use of the market might not actually go live until January 1st 2025, if we're really just be there.

Speaker 1: 19:42

So still better than say May, I think, who took like four years. Yeah, yeah, sure. So I have a little bit of a knowledge gap. So excuse me, but can you kind of catch us up to speed on the medical program that has predated this vote? You took on a medical license and how has that been operating? Because medical in California was very much kind of like a recreational state and in some ways much better than what we currently have. But we'll leave that aside for a California episode. So how has it been? What are people looking forward to in this conversion from medical to recreational? Yeah, it's a good question.

Speaker 3: 20:26

I mean, I definitely had a rude awakening going from California to Ohio Because in the California marketplace, let's face it, there's no enforcement. Basically right, we know tons of diversion.

Speaker 3: 20:35

We know tons of somebody's out there wearing Garden Society whoo-hoo. We know of very little operator enforcement at all, like very minimal inspections In Ohio. It is incredibly regulated. So as a manufacturer, it's refreshing because you have to follow GMPs, you have to have an allergen program, you have to have HAZAPs, you have to be food grade, you have to have a vendor qualification program. So these are best-in-class operating systems for a true quality program. These are GMP policies and procedures for world-class manufacturing. This is not an amateur game. In California I started my factory in the back of a building with a piece of tape and I just put stuff on the walls.

Speaker 3: 21:22

Like let's be real.

Speaker 1: 21:23

The cottage, the old cottage lauders, Right exactly.

Speaker 3: 21:25

That's how the business started. Ok, here it's extremely capital-intensive from systems, processes, quality. You have to be certified from the state Ohio Department of Agriculture, you get reviewed on your allergen program and are you following it? Sanitation programs, et cetera. So it's actually refreshing to be regulated in that context because it makes us stand out and distinct, to be like you know what. We do have an incredible program here and this is a great skill set and distinct that we have. It sets us up, I believe, what long-term, de-scheduled federal cannabis manufacturing is going to be like as well. It's going to be that it's not going to be the California model with no regulations, no food safety, for example.

Speaker 1: 22:08

Right.

Speaker 3: 22:09

And so from that point of view it's extremely different. The other thing that's really difficult is and it was my first time it's on metric, but it's a very different model of approvals. Every product has to get approved by the state. Every packaging has multiple levels of approval, every batch label has to get approved, you have to have specific IDs in metric around dosage and THD and strain and you have to pay for all this. So there is a very over-nuanced micromanagement by the government, by the board of pharmacy and the board of commerce around how they manage what is allowed to be sold. So that was a I undervalued how steep of a learning curve that was going to be and how it might impede our path to market just by the procedures and the regulatory hurdles and the making your packaging, getting your labels, doing testing.

Speaker 3: 22:58

One thing that's really distinct about Ohio Medical Program is it's a dose by day program, so it's kind of like an old California model or other models that are medical, where you're allowed so many milligrams a day and you're allowed to buy so many days at a time, and so it's a very potent market for very low price, considering the prices are significantly higher than like a rec market. So that's just a weird way to think about product development and it took us a while. We came from a rec market to this like dose per day model, which was hard for us to learn at first. The other thing that's really weird about the medical program. In my opinion, as a beloved cannabis user, it's no smoking program, so it's very awkward to think about cannabis but it's a medical program, but you can't smoke it. You're like well, how do you use it?

Speaker 3: 23:48

So like vapes ruling the market, so everything is anchored around vaporization or oral consumption or topical consumption. They're approved methods. So we, for example, can't sell pre-rolls because that would be smoke, but we can sell ground flour for vaporization.

Speaker 2: 24:09

But if someone was to roll that into a joint and the privacy of their own home, that's their choice.

Speaker 1: 24:16

I got some zigzags here.

Speaker 3: 24:19

What do you think about product development? Okay, and then you're making like a, you know, like a dupetube, like a really great dupetube in Cali, right? I mean, they're like what seven cents? We all have stacks of dupetubes and I have my kid make like craft projects with them. Okay, after I wash them ready for the other.

Speaker 2: 24:35

So there's major product restrictions, lots of levels of regulation and this is one of the things that is proposed to shift. With adult use, like the anticipation would be that that smokable products would be allowed, there is a there is a new regulatory agency that is proposed to be formed under adult use. That is the, I think, the Department of Cannabis Control, and that will take the regulations away from the current home in the Department of Pharmacy and the Department of Commerce, which could be a big shift. So there's these operators that have had to be best in class, like you described, and now now there's going to be maybe more allowance going into the future.

Speaker 3: 25:19

And I, knowing Ohio, I would expect the best in class to continue. I would expect them to say you know, we're going to maintain you to a certain standard of expectation around operation. I think you're going to see a lot of changes in form factor, the operational metric approval riffraff that I think is going to go away. And then I think you're going to see a lot of changes in dozing, allowable THC content, because one of the things you always see in a medical market is high potency is allowed and then in adult use market it's cap typically, and I expect that same transition to happen in the Ohio market. I think what's exciting about the change to adult use is access is the major problem in Ohio. So they originally had about 48 dispensaries. Over the last year Another 50 came on board. So now they basically doubled the footprint. But the patient count hasn't improved. The patient count has gone down in Ohio.

Speaker 3: 26:14

Because it's a real medical program. You have to have a real diagnosis and a real medical card. Like gone are the days of hello MD and as much as I love hello MD, you could like have quality and everybody can get their medical card in like 10 minutes with $55. Well, that doesn't work in Ohio. So you have to have a real. You have to real medical marijuana prescription and card. It's about $250.

Speaker 3: 26:38

And what you're seeing is that people would rather drive from adult use market like Michigan to buy weed because it's so much cheaper than to get their medical card and go through the process of the medical market and then buy it in Ohio where it's a much higher price. So I think from an access point, everybody's super excited about adult use and that that goes away. Prices start to come down, there starts to be more competition. But over the next, you know, call it, let's say, let's say the program comes on in a year, let's be optimistic and say like, in the next year it's going to be really difficult as an Ohio operator because patient counts are going down in anticipation of adult use.

Speaker 2: 27:19

So I think that's a good point. I think it's really common, when a market goes from medical to adult use, that individuals who live in these places don't understand the complexities of the law. And they might show up at an dispensary and say, hey, I'm 21. Can I come in? And the store operators are left saying, no, you're not allowed to come in. Still, it's not, it's not time. And then you're allowed to come in, and then you're allowed to come in. So what's the landscape like in terms of who are the businesses currently that have been operating in Ohio?

Speaker 3: 27:56

Yeah, good question. So there's definitely MSL land. So one thing I didn't understand is how much horse trading happened in MSL land. So all the MSL players with the exception of some, but most of them are in Ohio and most of them have some level of vertical, that's either opening or opening. Open or opening. So you name your classic Cresco, verano, gti, curely, asan Jushi, you name it. The other half is these independence. So they're very bifurcated by trade organizations and trade operations. And so, like I have an incredible landlord, farkas Farms. They're an independent cultivator, they're great, but they actually have a lot of in market traction and consumer demand because consumers want to support the local. They're homegrown local, local matters, et cetera. So you're getting success with the local, homegrown independence. But then the MSOs who, like they don't play necessarily nice together. It's difficult and it's almost like competitive back and forth around. We're not going to carry that because that's a local. We're only going to carry these because they're my MSO buddies. So, as for me, who's a local MSO? I don't know, I'm not eating.

Speaker 3: 29:11

I'm not over here and I'm not publicly traded, and I'm not necessarily from Ohio, lord knows. I'm from Wisconsin, I'm proud of it. But so, like, how do I navigate this space to find a find a home? I think it's going to be really challenging. That's also why, from a regulatory point of view, they're trying to award more licenses to the locals, or the independence is for that specific reason. I'm like creating a competitive ecosystem against the, the public, to trade the companies.

Speaker 1: 29:39

So so, going back to access points really quick, I'm curious from both of your perspectives is like what is the why? Like you mentioned that they don't, they're probably going to cancel the delivery option. And like what is like, what do regulators have against delivery? Yeah, I was like why One thing?

Speaker 3: 30:05

in like, just in like true honesty. One area I haven't been able to get super involved in is like lobbying in the Ohio government because I just like, straight up, don't have the time because I'm just so focused within my business. But it's something I definitely intend to get involved with over the next six months to really help understand and drive. You know there's so much stigma and stereotype against cannabis and so much miseducation against cannabis. There are some incredible people who stand on the ground in Ohio trying to solve this and drive it and some incredible trade organizations doing the work.

Speaker 3: 30:34

But I mean, I think it again comes down to miseducation around safety, miseducation around consumers and I think there's a lot of. If I'm just totally honest, there's a lot of like everything in cannabis, competing ideas and there's a lot of money with people who want to maintain maybe, the foothold that they have and want to not enable open free market. So I think that's something that the California Legacy Operator we fully don't understand because we had a free market. There's a reason a lot of these bigger companies aren't in California because it's so hard to compete. But you know, how do they maintain that threshold and foothold in these newer markets as they're opening up, is you know, interesting, interesting for my point of view, to watch the conversation unfold.

Speaker 3: 31:18

I hope they allow for the incredibly important access method, especially for consumers, especially for medical consumers and especially for brands, because a lot of delivery companies can pick up smaller brands versus like the big box retail, it's harder to get on the shelf.

Speaker 2: 31:34

I think you clued right in on it, though, erin A lot of the times in markets where there's really a lot of public safety concerns, or that police unions have a strong foothold and a lot of power, and that clearly is the case in Ohio, we heard we heard Republicans who were saying that they wanted to shift the funding of the cannabis taxes to, instead of funding social equity programs, to instead focus on investing in and growing jails, which seems to be the complete antithesis of the social equity program. But delivery is perceived as highly dangerous, as as people driving around with cannabis or cash in their cars presenting issues related to theft, related to issues related to diversion. This is all just bringing up the fears and the stigma. So certainly not saying that any of these are true, but I think that, as long as we have challenges related to payment processing and and there's cash transactions happening for delivery, that this is going to continue to be something that law enforcement does not feel comfortable with.

Speaker 3: 32:45

You know what's really interesting in Ohio, it's incredible banking. But there's a lot of credit unions in Ohio that will bank cannabis businesses easily. I got a bank account. It took me a long time to get a bank account because of other issues in the distressed aspect, distressed asset aspect of that. That's different but, like, once I got through all those hurdles, getting a bank account was very easy in Ohio. But they'll do processing but they won't do like debit cards. You can't actually. You can't actually run your business Like I can't take a debit card and fill up my delivery vehicle of GACs, for example, like so you can't. So it's still like, even though you don't have to necessarily conduct cash, people can pay me, pay me electronically in the bank. I don't have a card to like. So it's just that kind of like nuance that makes the regulations almost so incredibly complicated and difficult to roll out.

Speaker 3: 33:36

There's banking in Ohio that does lending to cannabis companies. So that's like really interesting for any Ohio independent operator out there. There's banking in Ohio that does line of credit, equipment financing, real estate financing. So the banking aspect is actually a lot more progressive in Ohio than it is in other parts of the country that I've found and I think it's because of the regulation structure of the medical market and the government's involvement over involvement in it has made the financial institutions in the credit unions but it's made those credit unions feel really comfortable with KYC and KYCC for financial aspects. Some of the aspects of Ohio as an operator are easier. Like you can get a line of credit at a credit union for a bank to like buy weed, to scale your business, legally comply Wow, you know that's like a really incredible thing, right.

Speaker 2: 34:24

That's very hopeful. So then let's talk more about other hopeful things. I think that we've been talking about some of the challenges of the existing market and a lot of the unknowns with adult use in Ohio. But you're there, you've stuck your flag in the ground. What do you see as the opportunity for garden society in Ohio? And also, like, what will the market look like when it's mature?

Speaker 3: 34:48

I think one opportunity is around product. There's so much. It's like a white space for brands right now in Ohio, the keep is there.

Speaker 3: 34:58

Wan is there. They're doing great Old pals there, but it's nowhere near the competitive landscape of California, michigan, any of these other markets. So, like, as a brand and manufacturer, I think it's an incredible opportunity for us to really connect with our consumer in a more direct way and build something really meaningful from a product brand point of view. I think innovation is really exciting in Ohio because you know, we launched a live rosin, so we became a concentrate company in Ohio, which is very different than what we are in California Steep learning curve for garden society but incredible, incredible reception in the market and so like, really, really like, leaning into product expertise and innovation to drive this Ohio consumer. They're becoming very educated very quickly, they're recognizing quality very quickly, and so that's a really exciting opportunity. And then you're seeing the prices come down. But it's a very clear path of profitability in Ohio, given the landscape. So with prices, prices of bulk are coming down.

Speaker 3: 36:01

One thing weird about Ohio that I don't think people realize is there's no B2B marketplace. So the only way you know how you can sell is you can like, as a processor, I can buy biomass and sell finished goods to retailers, but I can't make hash and sell it on the open market. I can't make oil and sell it on the open market. So I think what the adult use, my hope is that they open up the B2B marketplace and then all of a sudden there's additional revenue streams that can come from not just being a brand but being a manufacturer with a quality brand so we can start selling hash to other manufacturers or other brands or the processors, because they're buying inputs from other people. Because, kind of limited, if you don't have a BHO brand, you can't use BHO. You got to like make it yourself whatever you use. So that's a really exciting opportunity coming down the pipe. I think it's going to really drive a lot of product innovation.

Speaker 2: 36:50

What about with ingredient sourcing? Are you able to source ingredients from the hemp space?

Speaker 3: 36:57

You are, you can source miners Anything, so this is different and awkward for a California person. In California, all miners and you can have an oil needs to be sourced from the regulated marketplace. By law in Ohio You're only allowed to source THC from the regulated marketplace, so you can't source CBD THCB.

Speaker 1: 37:19

Wait what? What True? Not THC.

Speaker 3: 37:27

All THC must be from the regulated marketplace and all non-THC must be from the hemp marketplace.

Speaker 1: 37:36

I have so many questions, then why is?

Speaker 2: 37:38

this being blown and melting right now.

Speaker 3: 37:41

It's like literally melted, yeah, so like as an evangelist for cannabis derived miner cannabinoids like an incredible THCV that we have it's like, but I think it's an opportunity adult use it's going to bring. I think it's going to open it back up and you're going to be able to start to bring really fabulous cultivars in and really interesting stuff to drive product innovation faster.

Speaker 1: 38:06

Do they have specifications around synthesized hemp ingredients, because there's a lot of other things besides THC that can't derive from them.

Speaker 3: 38:16

No, the specifications around is the vendor management program. So they have to be an approved vendor. There has to be a qualification process. You have to have their ISO accreditation, you have to have their certifications, their MSDSs, technical data sheets, like all the certificates of analysis, all of that. So they have to be viewed as an a qualified vendor. And then it has to be a THC threshold like no more THC than the federally allowable limit. So if you bring in one thing people might not know about a lot of the hemp space, when you're sourcing minor cannabinoids, a lot of times you'll get oil that's hot because when you put it in the finished good it's lower than.03,.03.

Speaker 2: 39:00

0.3. 0.3%.

Speaker 3: 39:02

Yeah, 0.3%.

Speaker 3: 39:05

But people question that as a finish good in the landscape usually, and so like we had a hard time finding hemp providers, minor cannabinoid providers in the hemp market that would send us an oil below the legal limit of THC. It was difficult for us and people thought we were crazy people. They're like well, it's going to be below that in your finished product and I'm like but then it's like a cannabis derived THC so I cannot really bring that into my facility right, because otherwise it'd be a metric item. So that's weird, but I think going to be interesting from a genetics opening up more cultivation, more genetics, more product, more cannabinoid chemistry I think that's going to be really exciting. The other thing I wanted to shout out about Ohio which a lot of people don't realize the Cleveland School of Cannabis is there.

Speaker 3: 39:50

There's a big Gen Z population of people. We have an incredible team and we're so blessed to have this team, but people really passionate and interested in creating a career in cannabis. I feel like in California it's all legacy. I've done this in the illicit market, in the medical market. Now I'm in the adult use market and it's just more of this like organic experience.

Speaker 3: 40:13

But in Ohio they're actually building curriculum and education around giving young people the skills to actually enter the cannabis industry training on metric before you hire them, training on extraction formally before you hire them. So we've been able to hire really effectively in Ohio with people who came in with skills who are local Ohioans, which is something I wasn't expecting, and I think that's a tell for the industry and I think it's really great for the adult use market that there's acceptance, especially in the younger generation, around creating careers in this and excited about the job opportunity of the cannabis industry there, especially with Ohio it's being so industrial and that landscape changing so dramatically over the last 20 years. I'm seeing people who want to be equipment engineers, process engineers, extraction experts and they're like I used to work at Abbott Labs but I want to be in weed, so I'm willing to take a huge step back in my career to learn how to extract a CO2 rate. It's exciting from that perspective.

Speaker 1: 41:18

I wanted to get it right, but my friend Brian Adams, he's with the Harrington Institute of Cannabis and so there's just Harrington being Al Harrington.

Speaker 3: 41:30

So I think they're related, they work together.

Speaker 1: 41:33

I think they are related. I was trying to figure it out really quick, but yeah, it's just hearing all the programming that they've been putting together over the years just really impressive. Yeah it's cool and, again, typical California and I say this every episode, but it's like Ohio felt so small for something like that to be centered there. But, lo and behold, it's the seventh most possible estate in the US. So it's like good yeah exactly.

Speaker 2: 41:59

Exactly, and of those seven states, four of them that are above don't even have adult use programs. So I mean, I am definitely really excited for Ohio and I'm excited for Ohio to be a state that has a conservative majority of its policymakers and to really create a program that hopefully works for the people of Ohio, for the businesses that are in Ohio and I know it's been a long slog for the businesses that have been operating in medical and you talked about how the patient count is going down, so I'm sure that there's a feeling of like, holy crap, we just need to hold on until adult use launches. That that's going to be. That could be a hard next 12 months, and so I'm curious of like, how do you plan for something like that when there is so much uncertainty?

Speaker 3: 42:51

Am I talking to my investors or am I talking to you as my friends? Just kidding.

Speaker 1: 42:56

No one watches this show, don't worry, I talked to everyone the same and everyone knows that.

Speaker 3: 43:02

I think you know what we're really trying to do is refine our product offerings, prepare for adult use, but also ensure we're successful today. So like really create better products for the Ohio consumer, understand the Ohio consumer, build strategic long term relationships with our customers, build our sourcing base Right now we only source from one supplier, but like really work to build a network, sourcing from a larger base, and use this time to build our skills internally. Like make sure we have the right team, staff the right way, running the right efficiencies. And so the beautiful thing, because it's Ohio, it's pretty low cost to operate honestly, other than like the regulatory fees and stuff. It's low cost to operate. There's a high cost of profitability. Product prices are dropping, but product prices dropping are still far and away above California. So like just really being smart around, making sure we're profitable, we're making the right products, we're building the right relationships.

Speaker 3: 43:55

So when it does come to adult use, we're ready to just really hit the gas, just because it's the market's decreasing, like we were just with some retailers last week and they're down 30% from last year. I think that's a common theme across the board at the retail landscape, but for garden society. We're new to market, so like we're not getting the impact of 30% down. It's not like we were a mature brand in the market in the medical space. So we still have a ton of growth in front of us, even before it goes adult use.

Speaker 3: 44:23

And it's really making sure that we find the right product, market fit or strategic where we're supporting our brand and market. And then we're bringing the right partners with us to Ohio. So understanding not all products and all brands are right for every market, like who's the right partner? In Ohio? We ended up launching an edible line with our landlord with the park, with Marcus Barnes, and he's such a beloved flower, top five flower in the state, so that's been a really big success for us around just creating that even deeper sense of local partnership and local, local operators. So that's how we're, that's how we're looking at the next 12 months. You know people have been emailing me like do you need my help packaging up gummies now that we're adult use? And I'm like thank you so much for offering Mr Investor to fly to Ohio to package gummies, but like we got about 18 months but that's okay.

Speaker 3: 45:14

So I mean, I think it's going to be a slog, I think it's going to be really hard until it actually goes adult use. I think there's going to be a lot of expense involved in packaging changes and product changes, and that's something we are very nimble and we understand how to do our job extremely well. So it's about just focus, cut out the noise, build the right relationships, be a good operator in town and then support the industry as best we can and keep moving forward.

Speaker 2: 45:42

Amazing. Well, we're getting closer to wrapping. I think that, as we've been talking about Garden Society's expansion into Ohio, I'm curious if you might give us a teeny preview about what your plans are for New Jersey as well, and how you're approaching that market.

Speaker 3: 45:57

Yeah, totally so similar to Ohio. We're standing up around licenses, women led. We're stoked to be the I think will be one of the first female women led processors operational in the state of New Jersey. So that's like something I'm super, super proud of. We instead of where Ohio, we launched with just Garden Society. We took a very different approach with this, but we're launching with our partners and Garden Society out of the gates. So we're incredibly proud to be partnering with Kiva and to bring Kiva to market in New Jersey. It's a very different scale than Ohio because we have these partners, so very different level of what our initial launch looks like, go to market strategy looks like, but also having the partnerships there, they've been an incredible partner. I can't say enough good things about Kiva and using their expertise of market expansion with our own experience of what we did really well in Ohio and what we missed in Ohio to really do Jersey the best we can out of the gate first time right. So that's going to be great. We are bringing gummies, pre-rolls, vapes, hash, live, resin, librazin. It's exciting and you know Jersey's really hungry for brand and product and so we're really pumped to be able to replicate that over there.

Speaker 3: 47:13

It's been so much easier being my third time, so it like gives me confidence of. People are like how can you do this? I'm like well, this is my third time. And they're like this is your third time doing what. I'm like it's like probably like giving birth. I would imagine Like it gets easier, you know, but it's like my third time starting a factory. So like there's a lot of battle scars from time one and time, two different California versus Ohio, different but now like putting that together.

Speaker 3: 47:39

Last year I really focused on building my leadership team. I really focused on my like senior management to like make sure I had the right team and the right roles ready to rock. We just got done with strategic planning and it was incredible the difference, the maturity, the experience and how that comes together and like executing over the next six months for us, for New Jersey. What's also exciting is now that we have two markets we're more interesting for the MSOs to negotiate with. So all of a sudden they're like oh well, we want you to source from us to New Jersey.

Speaker 3: 48:10

And I'm like, well, then, I need retail space in Ohio. And there's this like trade that I didn't realize happened so significantly in more less mature markets and how critical and important that is to like get on the shelf, stay on the shelf, get best pricing, but you just have to be so much more strategic in these less mature markets. It's not about just making a product and putting it on a menu. It's about like, okay, how am I going to position this? How do I help them, how do I help myself, how do I need and that's really exciting of how they all play a role that's inside baseball folks.

Speaker 2: 48:44

You guys just heard yeah, Inside baseball.

Speaker 1: 48:49

So not to put too much on your plate, but you seem like an ambitious person. What state after New Jersey would be most interesting to you?

Speaker 3: 48:57

Let's just execute what we got.

Speaker 1: 49:03

Yeah.

Speaker 3: 49:05

Truthfully, okay, truthfully. So this is not a short term project because my hands are very full. Short term Short. But things I'm watching is the farm bill. I'm really curious how D nine plays out on a national stage. Yeah, one capacity I feel like as just as enthusiast and loyal as to the plant. I could never imagine running a D nine business, but if you think about that's how Texas is going to buy legal weed, it almost feels like a disservice not to do D nine. So it's something we're watching. I think it's a totally separate business. So, like, how to do it? You know that's totally unbaked, but something I'm thinking a lot about.

Speaker 3: 49:42

I really love the south. I'm interested in Missouri, I'm watching Missouri. I think it's really interesting. There's a lot to learn there and you know, I think right now it's an interesting time because there's a lot of distressed assets coming and there's even going to be more. It's only going to get harder, like anybody who thinks this is going to let up anytime soon is like smoking too much of their own weed, because well, sometimes I guess I do that because every day I'm like around the corner.

Speaker 1: 50:10

I just got to get around the corner and then I'm like oh my God, there's like a thousand more corners.

Speaker 3: 50:14

But yeah, you know, like what? I think there's just going to be an incredible opportunity in the next three years around being thoughtful of how to build the right business and assets that you can figure out how to do it. You can figure out how to acquire or purchase or merge to really build something truly impactful and meaningful. So it's something we're starting to think about. It's something I'm really excited for my new board coming on board to help me with in Q1 of next year and really start to think about it more strategically.

Speaker 1: 50:46

I really appreciate that. That was very thoughtful response to something where I just sprung on you, anna Rae, and I talk a lot about the HEMD9 market and how it's really just kind of mind-blowing. It's just like you know we're on front and center and now we have at least another year before we get any more clarity based on recent headlines. And yeah, I think you know, if we fight against, you know the sunk cost fallacy, that it's our job as operators to kind of really understand it's like what's legal and what's not. You know it's like, wow, it's really wild.

Speaker 2: 51:20

How are people getting to the cannabinoids?

Speaker 3: 51:23

Yeah, and you know what's really yeah, it's like awesome on one side. Like I love that my dad, my dad drives to Minnesota and buys a weed drink. Like I love that. Exactly Wisconsin girl, right. But then I'm like, don't drink that.

Speaker 1: 51:36

Bless your dad.

Speaker 3: 51:36

It's not really weed, and he's like I don't understand. And I'm like, well, I can't drink it, but stop, it's complicated, but this is illegal, but it's not illegal. But this is weird.

Speaker 1: 51:47

Just tell them to look for the infused by Vartosa mark on it.

Speaker 3: 51:52

I've also like never I feel a lot of responsibility, especially maybe it's the mom side of me, the woman side of me, the legacy operator side of me but I really have never felt more responsible for lobbying and advocating for good policy. So I am part of a group called electing women Bay Area and we meet with senators, senate candidates, house candidates in the Bay nationally, but they come to the Bay Area for fundraising. And so I met with Senator Gillin brand around the farm bill and she had no idea the CBD loopholes six months ago. She just wouldn't even talk about it. She didn't understand it.

Speaker 3: 52:26

I was like, can you tell me your position on hemp derived intoxicating cannabinoids in the consumption space? And she was like and whether that was the audience, that was our education. She did meet with a cannabis group about four months after I met with her and she was a lot more educated on the issues. But like it just shows our responsibility as operators to really educate these people who are creating these policies and what this means. And I don't even really fully understand my own position on it. So it's like very hard to try to figure out, but anyway, it's something that I think is really interesting. And then how HHS schedule three factors in, how safer banking factors in. Like it's going to be a wild ride over the next few months, the next few years, and I just feel like all one can do is surround themselves with good people and smart people and try to run a good business and try to be profitable and grow smart and pray for the best, I guess.

Speaker 2: 53:19

Yeah, well, it sounds like we have lots more to talk with you about in the future, and we'll certainly have you back, but since we're getting close to the top of the hour if you've been in our audience before, you know what this means which is time for our last call, which is when we turn it over To our guests to make a lasting impression. So, Erin, what is your last call?

Speaker 3: 53:43

My last call is shout out to those incredible women in New York who founded this company by Weed from Women. Support the products you want to see in market, support the operators you want to see. And you know we're all champions of this plant. So keep educating and advocating every day.

Speaker 1: 54:02

Amazing. Thank you so much, erin. This has been an incredible conversation. I know a lot more about Ohio now, but just really excited to see again how you've grown your business over the years. Thank you. You know, as someone who works with a lot of manufacturers, knowing that someone's out there promoting GMP and German engineering and all that, I just we got to start making drinks.

Speaker 3: 54:25

maybe, Maybe not.

Speaker 1: 54:27

And why you don't have our packaging in your backdrop. I mean, well, it's all beverage, but we'll talk about that offline. There's definitely opportunity to do it. Thanks so much, erin. All right, anna Rae came through with that one. That was a good one.

Speaker 2: 54:49

There was a lot to talk about there. We could have gone all kinds of directions.

Speaker 1: 54:54

Most definitely. And, folks, what do you think? Remember that the dialogue doesn't have to stop here. You can put your comments down below or, if you're listening to the song on the podcast, just make sure you subscribe, share it with your friends and let us know who you want to see on the show, what you want us to discuss. This show is here for you, so thank you for coming back. Week after week, our audience is growing.

Speaker 1: 55:20

As Anna Rae said at the beginning of the show, we do have an event coming up at MJ Biz, so stay tuned for that. Reach out if you haven't received an invite. Yeah, just continue to engage. It keeps us coming back every week, come hell or high water, sick or not. Thanks to my team for always helping with the beverage infusions and allowing me to do this with my Thursday mornings. Anna Rae and the Wolf Meyer team making it happen. Anna Rae, we should do an episode about you and all the different markets that you're getting to play around with that little topic about New Jersey. I know you're heavily involved with what's going on in New Jersey, so maybe we'll do a little one-on-one pretty soon there. Until next time, remember, folks, stay curious, stay informed and keep your spirits high. Talk to you soon.

Speaker 2: 56:19

Bye everybody.