Quality assessment of biological control agents (aka natural enemies) is important in a successful biological control program implementation. The success of any biological control program is contingent on receiving functional natural enemies capable of locating and killing a target host (prey). Natural enemy quality is dependent on numerous factors, including: rearing conditions, packaging, transit survival and handling by the end-user (the cultivator).
The Biologicals Supply Chain
In general, natural enemies are reared in large quantities as colonies (populations of individuals) under laboratory conditions where they feed on a food source, such as a sugar-water solution (honey-water), prey that are feeding on plants or both. Natural enemies are collected from established rearing colonies and then shipped to the end-user. Biological control companies generally produce, supply and distribute natural enemies. These may be producers/suppliers, distributors or both. Distributors typically do not rear their own natural enemies; they order natural enemies from a producer/supplier. Producers maintain facilities where they rear one or multiple types of natural enemies, which are sent to distributors upon request.
Differences between laboratory and cultivation environments may cause substantial natural enemy variability. Rearing natural enemies under laboratory conditions is ideal in terms of space, ability and consistency, due to the capacity to control environmental conditions, such as temperature, relative humidity and photoperiod. However, problems with natural enemy effectiveness may arise when they’re released in cultivation environments, due to the wide variability in conditions compared to the constant laboratory environment. For example, natural enemy-searching efficiency and dispersal may be negatively affected from rearing under laboratory conditions.
The Inspection Process
Even though natural enemies may leave a producer/supplier (or insectary) in “good” condition, inappropriate shipping and/or handling procedures by distributors or cultivators may result in a decrease in natural-enemy quality, based on the number of functional individuals (capable of flying and/or searching for a host or prey) prior to release. For instance, improper handling or exposure to extremes in hot (>90ºF or 32ºC) or cold (<40ºF or 4ºC) temperatures can negatively impact the natural enemies’ effectiveness when they are released into a cultivation environment. Poor shipping conditions can kill natural enemies or render them nonfunctional, thus impacting a biological control program’s success. Shipping containers must provide favorable environmental conditions, such as temperature and relative humidity, and allow for sufficient air exchange, which ensures natural enemies’ survival during transit.
Natural enemies should be delivered in a sturdy container packed with either Styrofoam peanuts or newspaper to minimize movement during transit. In addition, an ice pack should be placed in the container to keep the natural enemies cool.
During shipment, many natural enemies do not have an abundant food source, and some may be shipped with no supplemental food source, which can decrease survival rates. Natural enemies must be shipped by a reliable carrier for delivery within a one- to two-day period. An extended shipping time may cause high mortality rates or a reduced number of functional individuals, reducing the natural enemies’ effectiveness in sufficiently regulating insect or mite pest populations. Any delays during transit can lead to mortality due to cannibalism (eating each other) or desiccation (drying up). For example, when shipped or packed in granular carriers, populations of the predatory mite Phytoseiulus persimilis are susceptible to cannibalism or desiccation when shipping is delayed.
Once received, shipments of parasitoids or predators should be stored for a minimal period (no more than seven days) to avoid negatively affecting their fitness and foraging ability. In general, natural enemies should be released immediately upon delivery.
Before releasing them, always check to make certain they are alive. Various methods can be used to assess the shipment’s quality. For instance, for predatory mites that are shipped in containers consisting of bran or vermiculite carriers, a small carrier sample can be placed on a white sheet of paper—8.5 inches by 11 inches (22 cm by 28 cm)—and checked with a 10X hand lens to determine whether or not the mites are active.
Natural enemies shipped as eggs or pupae can be evaluated differently. For example, the quality of whitefly parasitoids, such as Encarsia formosa or Eretmocerus eremicus, that are shipped on release cards containing “mummified” parasitized whitefly pupae or aphid parasitoids (including: Aphidius colemani and Aphidius ervi (both parasitic wasps)) in plastic containers can be assessed by placing a sample release card or a plastic container of “mummified” aphids inside a glass Mason jar with a lid. Next, affix a yellow sticky card to the bottom of the lid. The jar should be regularly monitored and the yellow sticky card checked to ensure that adults are emerging from the pupae or from “mummified” aphids. The actual number of potential functional parasitoids that emerged from pupae or “mummified” aphids can be determined afterward when all the parasitoids have died in the jar. This experiment will provide an estimate of the quality of the rest of the containers.
Raymond Cloyd is a professor and extension specialist in horticultural entomology/plant protection in the Department of Entomology at Kansas State University.
7 Financial Fundamentals for Business Success
Features - Business
Experts explain how to avoid common mistakes and set yourself up for long-term profitability.
As the cannabis industry becomes more regulated, the need to perform and act like any other legitimate enterprise is paramount to success. This will test many business owners, especially those with little to no financial industry background. Here, several cannabis industry experts share tips on avoiding business mistakes young companies make, and how to handle a variety of challenges.
1. Business Strategy
Your business strategy is where you will tell your “business story,” which defines your path forward with near- and long-term business objectives, says Terry Gibson, a consultant at the financial services and accounting firm RoseRyan.
The cannabis market has a lot of moving parts, and within that market there are areas to fill that may align with a company’s strengths better than others. Gibson notes that, generally, the narrower the focus, the better advantage a business will have for scalability.
“Very few people are going to be able to check every box,” he says. “In your strategy, try to define where you fit in and why you fit that area. What niches are you going to go after today and in the future?”
While some business owners have a sky-is-the-limit approach, not every cannabis cultivator may be looking to scale. Troy Prill, chief financial officer for Colorado-based, vertically integrated cultivator and retailer Strawberry Fields, suggests there is nothing wrong with starting a “mom-and-pop” operation that covers your expenses and lets you live your lifestyle. He compares these smaller businesses to vinyl record stores in the music industry.
“They do it because they absolutely love vinyl as their favorite thing in the world,” Prill says. “iTunes is in the industry for making money, and these people are in the (vinyl) industry for providing an awesome vinyl record to go buy. You could say the same thing about any boutique marijuana store or cultivator.”
Prill says business owners should understand that if you’re running your business out of passion and not scale, you won’t have the same potential for making revenue as some of the bigger, commercialized businesses moving into the space. Regardless of how small or big you want your company to be, you’ll still need to have a basic understanding of what matters to keep the doors open.
2. Track and Analyze Key Metrics
Any business has key statistics that need to be tracked. Metrics allow you to demonstrate critical success factors and areas on which to improve, and identify how far you are straying from projected operating costs. According to Gibson, stats like average yield and how much product you can generate per acre can be crucial to a cultivator’s understanding of how to run his business.
Additionally, these same key metrics will be used as part of an evaluation process by interested third parties, such as investors. Investors do their homework on the competition, local grows and dispensaries in the region. They’ll know what metrics competitors are using and compare that to your product.
“Being crisp on your metrics, having that information available and explaining how you use that to run your business builds your credibility with [investors],” Gibson says, “and then gives them a basis for evaluating whether they want to invest in you or someone else.”
Prill says the key to keeping meticulous records is to rely on software. Accounting software, enterprise resource planning (ERP) systems, Business Intelligence, and Office-type software programs are all key to keeping records in line, he says.
After you compile your statistics, you’ll need to interpret them yourself or hire someone to do it for you. Analyzing your data correctly can point out critical inefficiencies (think about your yield per square foot) that could make all the difference in sustaining your business, according to Prill. “It’s such a competitive industry in every single micro-economic market of each state, it’s impossible to survive without being as lean as possible,” he says.
Chris Vane, director of business development at RoseRyan, notes cannabis industry operators are increasingly requesting regional data—which products are selling best and how they can make changes to their own product line to feed demand.
“We can grow 50 strains … or we can grow five that are going to be the most successful [strains that] dispensaries are buying,” Vane says. “I see the world moving to an information type of service really quickly.”
Dean Guske, a Seattle-based certified public accountant (CPA) who services hundreds of cannabis clients across the country, warns that a lot of people in the business get excited from the revenue (top line) they bring in and aren’t necessarily accounting for all of their expense obligations, such as taxes. Your bottom line is your net income after taxes.
“Don’t manage your business based on your top line,” says Guske.
3. Get Your Books in Order
RoseRyan, Guske and Prill all noted the priority of taking seriously your financial framework and processes. Businesses in the cannabis industry can be under particular scrutiny from governing bodies like the IRS, which enforces tax section 280E. This line item makes it difficult for cannabis companies to deduct expenses from total income, a situation that won’t change until marijuana is reclassified from Schedule I.
“You can’t write off your rent or your payroll all the time,” Prill says. “It’s completely plausible to be able to make $5-million revenue in this industry and come out writing a check just to keep your doors open.”
Many cultivators have been working their grows for years prior to legalization and never had to deal with regulatory requirements. Guske describes how many cannabis companies struggle to adapt to the new business climate with basic “blocking and tackling”: paying taxes, hiring employees, human resources issues and dealing with regulatory compliance.
“It’s one thing for you to grow weed in your two-car garage,” said Guske. “But once you decide that you want to scale up and, say, do a 30,000-square-foot indoor grow, well now all of a sudden you probably need $5 million to do that. ... How do you organize yourself to do business matters? What kind of entity do you want to run your business in? I think people just ignore that.” (For more on corporate structures, read “Structured for Success” in the Jan./Feb. issue of CBT sister publication Cannabis Dispensary: bit.ly/corporate-structures.)
It’s important to be on top of your accounting and finances as competition steps up, or else (as all the experts noted) smart, well-financed entrepreneurs and people from other industries moving into cannabis will siphon business away from entities that aren’t as organized.
“The train is coming down the tracks, and a lot of these guys are going to get left behind or run over,” Guske says. “You’re going to see more and more of these people muscle their way into the industry.”
4. Build a Good Ecosystem
All experts also noted the best way to become organized is by surrounding yourself with the right personnel.
“Hiring the best CPA you can afford, hiring the best lawyer you can afford are some of the best things you can do for your company,” Prill says.
Prill also discussed how a good CPA and a lawyer well-versed in the industry will save cultivation business owners time, energy and money that can be used elsewhere in an operation. For example, each state has different laws regulating and taxing cannabis, so having a lawyer and CPA who know the ins and outs of the state in which the business is located will help to avoid mistakes you might overlook while wearing several different hats as a start-up business owner.
While a good accountant and lawyer should be top-priority investments, Gibson and Vane advise that businesses should eventually fill out roles covering valuation, finance, marketing and other facets. You’ll need to lean on these employees and advisors at critical times, which makes it important to know you can trust them.
To find a good financial advisor, Vane says you should look for the advisor’s long-term vision, background and planned strategy. Have they thought through various options? On the other hand, Vane says to watch out for advisors who focus on the short term.
“They want to take advantage of you from a price perspective,” Vane says of short term-minded advisors. Business owners should be asking these people, “What are they trying to do quickly and why?” Vane says. “Because that’s not a part of your long-term vision.”
5. Have Communication and Operational Procedures in Place
Other common mistakes for cannabis companies, and any young companies, are miscommunications and not having procedures put in place.
Processes not understood company-wide, such as purchasing procedures, will have a detrimental effect on your business. For example, Prill says, officials will want to see the paper trail from the purchase of a pack of markers.
“If you don’t have that in place, get it in place now,” Prill adds regarding purchasing procedures. “It’s kind of rudimentary, but it’s so important.”
Prill also notes that keeping more than one person responsible for any transitional task is important. Internal controls such as time logs, signatures, and dual-approval for purchasing and cash-handling are paramount.
“If [the processes are] cumbersome, you’re going to waste your time, you’re going to waste your money on nine different bookkeepers because you’ve got a crappy system,” Prill says. “It might take that many people to make up for the inefficiencies.”
6. Brand Correctly
While all the above should be considered business essentials, branding still plays a significant role when done right. On an industry level, Prill observed that dispensaries and cannabis grows excel at branding their products.
“It’s proven: Packaging sells,” Prill says.
Know what your product is about, what you want your product to look like, how you want your customer to feel when they see your products or walk into whatever shop you have. Your brand ties back to your vision, which third-party companies and investors will look at to evaluate you as a competent business leader.
7. Create a Contingency Plan
Gibson and Vane also advise companies to create a contingency plan to prepare for volatility in the cannabis market. What happens if the price per pound of cannabis drops 25 percent? Do you have access to capital in case such volatility cuts revenues? These are conditional “what-if” scenarios that need to be thought out and outlined as a contingency model to help get your company through hard times.
“Plan to raise more money than you need,” Gibson advises. “You want to be able to demonstrate that you’ve thought about that and you have got some staying power should things get tough for a while.”
Sam Fiske is the executive producer at Technori and a freelance writer based in Chicago.
The Queen of the Desert
Features - Cover Story
Priscilla Vilchis, owner and CEO of Premium Produce, has gained acclaim during her fast ascent through the cannabis ranks and is building her brand around her strongest asset: herself.
Even in a room filled with spine specialists and neurosurgeons, Priscilla Vilchis never feels out of place.
In her 20s, Vilchis managed some of Southern California’s top physicians, helping them navigate regulations and negotiate with insurance companies as a medical practice consultant. She credits that experience for providing her the self-assurance and the know-how to participate in the cannabis industry.
“I looked at myself like an equal, if not better, every time I sat at the table,” Vilchis says. “Everything I said I would do, I executed... [It’s] imperative that everyone delivers with everything that they say. I think that’s a huge part of gaining respect.”
Now 31, Vilchis is the owner and CEO of Premium Produce, a medical and recreational cultivation and processing company with operations in Las Vegas, Nev., and Lynwood, Calif., and additional delivery and distribution licenses in California.
Her seemingly rapid rise to industry notability (she was the first licensed female minority in L.A. County as well as the youngest female minority to be licensed in Nevada) has earned her the monikers “Priscilla Queen of the Desert” in Nevada and “The Hollyweed Queen” in California. Asked how each of those nicknames captures her character, Vilchis has her answer ready. “Well, that’s simple,” she says. “I’m a queen.”
Convincing the Skeptics
Vilchis exudes a regal confidence. She speaks in a soft, but assertive tone, her voice passionate yet composed. She clearly expresses her objectives and details exactly how she is going to complete them. It’s no wonder that one of her greatest strengths is lobbying for herself.
She is skilled at persuading county boards and city councils to trust her with cannabis business licenses, so much so that they have, in turn, asked for her help in convincing skeptical community members. Vilchis comes in to talk to them knowing that by the end of her time, she will have convinced those community members to believe in cannabis, and in her.
She’s especially effective in majority minority-communities, like Lynwood. She has a special connection to these communities because her mother raised her the same way many of the parents she addresses raise their children, she says: by telling them that if they try marijuana, even once, they would die.
“That’s how brutal she was, and I was in my early teens,” Vilchis recalls with a chuckle.
Vilchis says most children from minority communities, especially Latino communities, are raised with that fatalistic mentality on marijuana. Many of those parents and community members don’t know about the plant’s medical benefits. “A lot of them don’t understand that CBD is being given to kids with epilepsy, and it’s helping them operate on a day-to-day basis,” she says.
And Vilchis’ persuasiveness is also what convinced Premium Produce’s lead cultivation consultant, Nathan Race, that joining Vilchis’ project was the right decision. “She is a fierce woman, and she knows how to get things done,” he says.
Race, a British Columbia native with more than 15 years of experience in the medical cannabis space, has known Vilchis for many years, thanks to mutual friends—Vilchis even attended Race’s engagement. When they reconnected years later, Vilchis shared her plan with him.
“She let me know what her aspirations were in the industry, and I let her know that I would be very happy to lend her my expertise,” he says. Race does not regret the offer.
“Working for her has been an everlasting experience of how to operate. I have sat and watched other people in other industries and also in the cannabis industry, both in the United States and Canada, and she has a particular gusto to get things done.”
That gusto was absolutely vital because Vilchis’ project almost never became reality. Had it not been for a phone call and quick decision made when she was in Italy, the Queen of the Desert may never have been crowned.
Cutting It Close
Vilchis filed her application for her Las Vegas cultivation and production center well before the May 31, 2017, deadline: She began the process in 2014, a few months after the state rolled out regulations covering the sale and distribution of medical marijuana.
Over the next three years, she made all the right moves, including making arrangements with the bank to close on what she calls the “perfect” property, and instructing her team on how to handle the next steps of the process. Thinking everything was under control, she headed to Italy for a well-deserved vacation in the middle of May 2017.
That’s when the wheels fell off.
Her lawyer called in the middle of the night, waking her from sleep. “We have an oversight,” he said.
“What do you mean?” she asked.
“I mean, there are no banks that are going to finance a marijuana company. You’re going to have to buy the building and close escrow in 15 days to qualify for this license that you’re applying for,” he replied.
With both time and distance against her, Vilchis was left with only one option: to buy the building herself. Cash. “I call that the $2 million day,” she says with a laugh.
As frustrating and stressful as that situation was, Vilchis views it as a crash course on the complexities of the marijuana business. “This goes to show how new our industry is. It was something that I think no one really could have prepared for.”
It was also a lesson in one of the basic principles of real estate: Buying is almost always better than leasing.
“Our intention was to try and get [the property] leased. I’m now happy that I didn’t do that. … The property value now went up to, I believe, $5.56 million.”
Building for the Future
In addition to her $2 million Las Vegas property investment, Premium Produce put forth an $8 million investment for the Nevada facility. And what does $8 million get you in Nevada? “A state-of-the-art facility,” Vilchis says.
Premium Produce’s facilities feature a custom-made Link4 environmental control system. The system for the Las Vegas facility, which is more than twice the square footage of the Lynwood site, cost the company more than $1 million to purchase and install.
“Each panel has been tailored for the size and the square footage [of canopy] of each room and what we intend to do in it,” Race explains. In addition to standard controls, such as temperature and humidity, the system utilizes automated louvers to control airflow; monitors the irrigation system to warn staff when parts per million (ppm) levels are too high and when filters need to be changed; and plugs into light sensors, alerting the team when a light bulb needs to be changed before grow room light levels become uneven.
The company’s lighting is set on a variable ballast system. This allows Race to ramp up the lights slowly to avoid creating large electricity spikes. He can also lower light levels during the vegetation period, again saving on operating costs. The hybrid high-pressure sodium (HPS) and metal halide (MH) lamps (manufactured by the Canada-based P.L. Light Systems) are set at 1,000 watts during flowering. As Race explains, “We dial our ballast down to 600 watts during vegetation periods to save energy. … We’ve done tests where we’ve put it at 1,000 watts the whole time, and there was really no benefit in growth.”
A point of pride for Race is the company’s CO2 system. Race has consulted on several large-scale grows throughout North America and has seen less-than-ideal CO2 system setups, including some where high-pressure CO2 bottles were simply tied to racks in high-traffic hallways.
“We have one of the most failsafe CO2 delivery systems known to man,” he says. “It’s all electronically controlled. It monitors the amount of CO2 that is being provided to the plants and adjusts accordingly.” As for safety features, “We’ve got an actual air gas cylinder that’s monitored remotely for pressure and how much it contains.”
Race says Vilchis differed from most other CEOs he’s worked with in that she worked closely with him to understand the intricacies of the cultivation business. “Priscilla makes that time,” he says. “And that’s very rare, to see a CEO wanting to know what plastics you’re using.”
Having a long-term focus is another factor differentiating Vilchis from other cannabis cultivation business owners Race has encountered—especially when it comes to environmental sustainability. “Everything that Priscilla has put toward her environmental controls is environmentally responsible,” he explains. For example, a state-of-the-art reverse osmosis water filtration system grants Premium Produce the ability to condense the water from air conditioners and air handlers and reuse that water in the grow. As Race puts it, “At the end of the day, we’re growing marijuana in the desert, and every drop of water is precious.”
Another example of the company’s long-term focus is its in-house testing protocol, which allows the company to test its products for potency and contamination. That testing program, which Race pitched and developed “essentially costs me more money,” Vilchis says, and it is not a requirement from the state. But she is OK with the investment: The last thing Vilchis wants is to have a failed test on her record.
“We definitely want to get only premium products into peoples’ hands,” she says.
Something Old, Something New
Growing a premium product sometimes means doing things the old-fashioned way.
Despite a nearly $2 million investment in automated control systems for both facilities, large swaths of the production process, such as watering, are done by hand. Race believes there’s a risk with automated feedings and waterings, namely system errors or failures, and workers who neglect system maintenance tasks.
“What our [employees] do is … hand-water the plant every day,” Race details. “They inspect the plant every day, and they chart that plant every day, and that way we can tell if there’s been any hermaphrodite weird anomalies, any kind of pests or deficiencies that the plant has, and we can address it right away.”
Currently, the Las Vegas location has three, full-time cultivation employees covering roughly 5,000 square feet of canopy space: Race; a cultivation manager; and an organic cultivation specialist, who, in addition to helping with daily watering and feedings, is tasked with developing the company’s organics program.
The company is still weighing whether to convert to all- organic inputs, Race says, “but at this time, there are specific strains that are more receptive to organic grow [inputs], such as Silver Haze, Sour Diesel, and the Blue Cherry Diesel.” The company is currently studying its strain offerings and testing different inputs to maximize both yield and flavor.
Race compares the needs of different cannabis varieties to different human dietary preferences. In his experience, he says, he’s found that “some strains just don’t like organic food.”
Research isn’t limited to the cultivation rooms. Most of Premium Produce’s research and development takes place on the business’s production side. For example, Race is exploring new formulations for vape cartridges without “glycerins and oils, and things that are not natural to the plant.” In the company’s soon-to-be-released vape line, only cannabis profile-matching terpenes are used.
“This way, we’re not putting anything into the vape juice that is not already found in the plant,” Race explains.
Both facilities focus on different products. For example, the Las Vegas market is still fairly new to cannabis, and flower makes up a large chunk of the retail market. However, Vilchis says the Lynwood facility is much more focused on the production of vape products and edibles. (Editor’s note: For more information on the state of California’s recreational market, see Sales Trends on p. 14.)
Two Brands, One Face
Vilchis plans on carrying over some of her products from the Nevada market, especially her Queen of the Desert edible line; however, in California, the line will be branded under her California moniker, Hollyweed Queen. Vilchis decided to use different branding in both states in which she operates to capitalize on the momentum and media recognition she has gained in each state.
By focusing on the local brands, Vilchis is betting that she will be able to reach more customers and patients in each market. She predicts what will keep those customers and patients locked into the brand is the quality and variety of products each banner will offer, and loyal customers are more likely to know about the company’s other brands and go out of their way to stay loyal when out of state.
“If anything, people are curious to try both. It gives them an opportunity,” Vilchis says. That said, top-selling and unique products will be carried in both California and Nevada under one brand name. For example, “We’ve got a very extravagant lubricant coming out, and we’re still working on the branding, but it is going to be able to relate with both markets,” she adds.
Ultimately, Vilchis is the face of her company. In fact, she has become one of the most prominent new figures in the cannabis industry, especially considering the headlines she’s made in the past few months in publications like LA Weekly, Crain’s or Bloomberg, and she is not shying away from the attention.
“It’s very flattering,” she says. “The fact that I’ve been almost branded as the female face of cannabis, and people tend to just refer to me as the ‘Queen of Cannabis,’ … I am humbled.”
As for the dealing with the pressures of being in the limelight, she’s got that covered, too.
“As long as I deliver, as long as I follow through with everything that I say, I have no fear,” she says. “I genuinely feel we are going to be able to put up the best product out there.”
Brian MacIver is the associate editor for Cannabis Business Times.
10 Questions with Idan Spitz
Departments - Upfront | 10 Questions
Kind Love’s chief cultivation officer shares details of the Colorado-based company’s comprehensive IPM strategy, how it uses consumer data to influence growing decisions, as well as his best advice for other growers.
As chief cultivation officer of the Denver-based, vertically integrated cannabis company Kind Love, Idan Spitz jokes that his daily responsibilities consist of “walking around and putting out fires.” Joking aside, though, Spitz has his hands full running an 80,000-square-foot indoor cultivation facility that houses two medical licenses and one recreational license—not to mention overseeing a 20,000-square-foot nursery expansion that, once complete, will be able to produce anywhere from 10,000 to 20,000 clones monthly.
Spitz is pulled in many directions by having to work daily with his growers, Kind Love’s dispensary team and wholesale buyers. As such, any product delay due to growing complications can be detrimental to the operation, especially considering Kind Love owns a large share of Colorado’s clone market, according to Spitz. To help ensure that Kind Love operates smoothly, Spitz has implemented a comprehensive integrated pest management (IPM) program, pours over compliance documentation in his spare time and constantly plans for the future.
Here, Spitz talks with Cannabis Business Times' senior editor Scott Guthrie about Kind Love’s approach to IPM, how the team develops its nutrient mix, why he relies on consumer data so heavily, and more.
Scott Guthrie: Kind Love prides itself on being at the forefront of cultivation technology. What is an example of technology you recently implemented and how is it helping your grow?
Idan Spitz: We finished construction [on our current facility] at the end of 2014, and started producing at the beginning of 2015, just a few months before I came to work for the company. So, more or less, our facility is brand new. We have automation in terms of our temperature, our humidity control. [In] each one of our cultivation rooms and our drying and curing rooms, we have complete climate control in terms of CO2, temperature and relative humidity. We have a pretty comprehensive program to control the dynamic range of those variables in those rooms. We really try to cater the environmental conditions to provide the optimal product.
Guthrie: When it comes to incoming air filtration, what is Kind Love’s approach and what have you found works best? Do you adjust your approach often?
Spitz: For the air coming in, we have air filtration sequence in our HVACs. So, for each [cultivation] room, the air that is going into the room gets either dehumidified or humidified, or heated or cooled. And that [air] goes through a series of filters before entering the [cultivation] room. That reduces fungus, bacteria and pollen that might potentially go into the room.
We really tried to set ourselves up to succeed [with this system], and we’ve stuck with it. One thing that I’ve learned is if you’re going to implement a change, you better be damn sure that it’s going to work because to make changes, it’s a nightmare. You have to go through the city, you have to go through zoning, you’ve got to get stamped and approved by the chemical engineers and the electrical engineers. Jumping through all the hoops is just a nightmare, so usually we will make a change and stick with it.
Our filtration is pretty good right now. We don’t experience too many problems in terms of pests or diseases. We don’t really see a lot of pollination, so we really haven’t had the need to update our filtration system.
Guthrie: You cite your nutrient mix as one of the reasons for your high-quality product. What went into developing that nutrient mix, and what was one of the challenges you faced?
Spitz: I have a Master of Science in plant biology, so actually I come from the biofuels world. I was working with biofuel grasses, the physiology of biofuel grasses and doing pre-breeding work, so I focused a lot on that. I focused a lot on the requirements per grow stage in terms of each nutrient and micro-nutrient, and then I took quite a few different products and broke them down by nutrient and tailored it specifically to what I need. Then I did a lot, a lot, a lot of R&D [research and development] using the scientific method to find what gives me the optimal yields, optimal potency and optimal production. So, a short answer is I use a mishmash of six or seven different companies. I kind of make my own little line that I use for my specific needs.
Guthrie: What is Kind Love’s approach to disease and pest management?
Spitz: We have a very comprehensive IPM [program]. Part of that is identifying problems before they occur-training employees to look at plants to see if something is starting to get a disease, if there is starting to be a pre-infestation. We do spray on a weekly basis up to the second week of flower. So, we spray through the cloning procedure, through the vegetative phase, and up to two weeks of flower. Once the plant starts to develop flowers, we don’t spray anymore. But, we use a comprehensive approach. I do a foliar spray once a week, I do a root soak once every few weeks. We use beneficial organisms like good fungus and good bacteria that gets rid of things like powdery mildew and other insects. We use organic oils to kill insects and bacterial spores.
We really haven’t had any problems with pests or rot or bacterial infections [in general]. Every now and again, you have a little outbreak, but for the most part we’ve stayed really clean, and that’s a big focus of ours. A lot of weed in Colorado is just infested with russet mites, and a lot of plants get really bad root aphids. A lot of plants [also] get really bad powdery mildew, so we’re really trying to avoid that. Because of our comprehensive IPM program, we do not have any such infestations at our grow. A big chunk of my effort is to supply our customers and medical patients with clean, adulterant-free cannabis.
Guthrie: What is the biggest challenge of running such a comprehensive IPM program?
Spitz: [Spring] and the beginning of winter are the worst times of year because [all the insects are] waking up. Around now when [the temperature fluctuates between cold-hot and hot-cold, insects] are waking up, but [then] it gets cold [again]. This is when you really see a lot of problems, so around this time of year is really when we are most careful. All our employees go through a decontamination process. They come in, they scrub down, we give them booties. My cultivators actually have to take showers before they can go into any cultivation rooms.
Guthrie: What is your protocol if there is a pest outbreak, and how do you implement a resolution?
Spitz: When we have a problem, we just slash and burn. The way that this facility is set up, we have relatively small cultivation rooms. Each cultivation room holds about 250 plants, and so once we identify a problem, if it’s late enough in the grow cycle that it’s not going to harm the product, when we see a problem, we just deal with it the best we can. Sometimes we’ll get a little botrytis-it’s a little gray mold-and we deal with that in post-harvest processing to make sure none of that gets to the client. If it’s early in the cycle, then we just slash and burn whatever is in there to make sure that it doesn’t spread to other compartments.
So that’s the really nice thing about having our set-up as is. I know a lot of grows just have one major, open warehouse that’s constantly being harvested, so it’s never empty. So, you never get to decontaminate the entire space.
Guthrie: You flush your plants with water. Why is this beneficial for the plant and how much water does each plant receive?
Spitz: I can’t say how much water each plant gets, that’s kind of proprietary information/trade secret. The end-of-flower soil flush is a common cultivation technique with growers that specialize in hydro and semi-hydro cultivation systems. It strips the grow medium of residual nutrients, ions and salts that have accumulated throughout the grow cycle. However, the plant still needs many of these micro- and macro-nutrients in order to sustain its metabolic processes, so it starts to slowly metabolize its own cellular structures to shuffle these nutrients from within. This decreases the abundance of chlorophyll and other cell wall components that are thought to create a "harsh" smoke. It also causes the plant to produce purple coloration and increase trichome metabolites to avoid stress. With this technique, we fool the plant into ending its life cycle quicker, while producing a more desirable end product.
Guthrie: With the size of your operation and so many moving parts, how do you ensure your staff is up to date with compliance and the ever-changing regulations?
Spitz: I read a lot of rules, a lot of regulations. Just recently in January, I read 600 pages of re-edited rules in cannabis production by the [Colorado] Marijuana Enforcement Division. For my portion of the company, I make sure that we are compliant with everything that we do. We follow all the rules. We also have a manager of operations, and she makes sure that we are totally compliant in terms of how we sell things, how we package things, how things are transported, everything that [is involved] once it’s packaged. She deals with that, and I make sure we are compliant with everything else, and that really involves just a lot of in-depth training and great communication with my managers and employees.
Guthrie: Being vertically integrated, how much consumer purchasing data do you consider when deciding what to grow and manufacture?
Spitz: Months ahead, we know what we are going to plant. Even more granular, we’re actually looking at what portions of each plant can be used for what. Some portion can go to extraction, some to wholesale, some can be sold as premium product at the store. So, we plan this months in advance. But you know with nature, a lot of times there are problems-pests and fungus and things not growing as well as they should. So it’s all about making sure that: one, we have a plan and that we follow through with it; and two, we have a back-up plan. So if plan No. 1 didn’t work, we can always go through other avenues to make sure that we optimize our crop for profit.
Our supply chain manager and I work very, very closely. We look at consumer trends over the last several years. Additionally, we look at what trends have been popular in months [leading] up to today to see how they have been changing this year. We also try to forecast what the consumer trends are going to be in upcoming months. It’s all about producing the optimal product, so if no one wants to buy Blue Dream, what’s the point in producing it? If I plant a clone today, I’m not going to be able to sell it for half a year because it has to root, grow vegetatively, flower, get harvested, dry, cure and get packaged. [It] takes about six months to produce a final product from a cut un-rooted clone.
Guthrie: Since being a part of Kind Love, what’s the best thing you’ve learned or advice you’ve received that you’d want to pass on to other growers and cultivation facilities?
Spitz: Happy cultivators grow happy plants. It’s all about making sure everyone is happy and doing what they love. Keep staying positive and having fun. It’s really just a lot of learning how a plant works. I have my education to fall back on, so a lot of these molecular processes are kind of understood from my studies. Besides that, I have about 50 different species of plants in my house. I’ve always had a green thumb and liked to grow things, so advice I could give to other cultivators would be: Don’t only grow weed, grow a variety of other plants. You can really understand plants a lot better if you understand how many plants work, instead of just one.
*This interview has been edited for clarity and length.
Scott Guthrie is the senior editor for Cannabis Business Times and Cannabis Dispensary.
Spotlight: Concentrated on California
Departments - Upfront | Sales Trends
A jump in prices has seen Californians move away from infused pre-rolls and toward vape cartridges.
The biggest legal cannabis marketplace in the world flung open its doors Jan. 1, inviting everyone age 21 and up to head to stores or call delivery services in California to legally purchase eighths of flower, pre-rolled joints, vape pens, edibles and a wilderness of other cannabis products.
Although many Californians already had been accessing legal cannabis under California’s medical regulatory regime (the first in the nation, established in 1996), make no mistake: Recreational cannabis in California represents a transformation not only of the cannabis industry in California, but nationwide. A new report by The ArcView Group and cannabis market research firm BDS Analytics predicts California’s cannabis market will reach $3.7 billion this year and grow to $7.7 billion in 2021. This year’s projected revenue for California alone is 32 percent higher than the combined 2017 sales in Colorado, Washington and Oregon, which reached $2.8 billion.
So what, exactly, are Californians buying under the new regime?
Prior to recreational legalization, California enjoyed a range of retail and consumer trends unique to the state, most notably a love for vape pens. The move to recreational only increased that affection.
While it should be noted that sales in all cannabis categories fell from November and December 2017 to January and February of this year due to fewer licensed dispensaries being open for business—during the last two months of medical—only sales in California (November and December 2017) vape cartridges captured 73 percent of the concentrates market. The Golden State’s market share for vapes was already an outlier; in Colorado, for example, vapes captured just 40 percent of concentrate sales during those months.
However, in 2018, recreational sales upped cartridges’ market share to 79 percent in California, despite the average pre-tax retail price for a vape pen rising from $36.91 during November and December to $41.95 in January and February. Boosted prices for all cannabis items, not just vapes, represents one facet of the pivot from medical to recreational: Average pre-tax prices for nearly everything increased in January.
Another California quirk—its embrace of infused pre-rolled joints—took a hit after the adult-use program launch. During the last two months of 2017, infused pre-rolls represented 28 percent of the pre-roll market. Joints that come spiked with other cannabis products, such as kief and shatter, had an average retail price of $15.90, making them premium products. The average price for a non-infused pre-roll during the period was $8.67.
But Californians’ all-in attitude toward infused pre-rolls weakened substantially during January and February this year, when the infused pre-rolls’ market share among overall pre-rolled joints fell to 18 percent.
The explanation could come, in part, due to price hikes. The average infused pre-roll during January and February was $17.57, while the price for a non-infused pre-roll was $10.27.
As adult-use cannabis in California unfolds in 2018, expect a wild ride. With many investors and entrepreneurs wading into the commercial cannabis landscape, evolution is going to be the name of the game this year.