Cannabis Business with RICH KWESSEL
Behind the Scenes WITH A CANNABIS GURU
Let’s Talk Cannabis!
I recently hosted businessman, entrepreneur and all around cool guy, Rich Kwesell on my podcast. Rich got in on the ground floor of the cannabis business back in the 2000s when it was newly legal and in its nascent, wild-west stages. Now he’s the very successful co-owner of Strawberry Fields Cannabis, which has five retail locations in Colorado, along with a greenhouse growing operation, production facility and packaging center. They do it all when it comes to legalized marijuana, from making their own soil (I know, who does that?) to cloning cannabis plants to running enormous joint rolling machines. You’ll learn so much about this fascinating business—I encourage you to listen to our entire conversation.
I met Rich when I attended a magic conference a few months back. Turns out Rich is also a sleight of hand and magic aficionado along with his other pursuits. Rich tells me his marijuana journey all started when he and his brother did a semester abroad and had 3 illegal pot plants on the rooftop of their dorm in Tel Aviv as college students. The program he attended offered two programs: one in horticulture and one in machine manufacturing. He says he took the horticulture option because there were way more opportunities to meet girls. No girls were into machine manufacturing that he noticed. Hey, there are a lot worse reasons to do something!
Anyway, he came back to Colorado just in time for the big push here to legalize the use and distribution of marijuana, both medically and recreationally, so he and his brother decided to jump on that bandwagon. It’s been a crazy ride he says and things have changed a lot.
Back when he was first getting started around 2009, medical marijuana was legalized in Colorado, and the US Justice Department had just issued a memo that they were not going to prosecute crimes around the use and possession of pot for whatever purpose. For budding entrepreneurs that was the green light. (Medical marijuana was legalized in Colorado in 2000; in 2014, Colorado citizens passed a state constitutional amendment legalizing it for recreational use.) The playing field was wide open and people who got into the business had to, as Rich says, build the plane while flying it at the same time. It really was the Wild West.
Rich remembers that theft by both competitors and customers was a big problem back then, especially when the product was just being harvested. Most in the business thought thieves had inside info, meaning people working in the grow operations tipped off thieves as to when and where to hit. So when it was time to trim the plants, Rich and his brother would hire outside help, mostly college students from Colorado College, in Colorado Springs. In order to maximize security, they would pick up the temporary workers at a parking lot somewhere, have them don ski goggles that were taped up so they couldn’t see, take their cel phones, and then drive them to the warehouse where the work was being done. Rich bought some kind of fancy gadget that jammed any automatic GPS signals from the phones also. That way the workers couldn’t report back to a bad guy about where the plants were being processed. At some point they were making enough money so they could buy a white van with no windows in the back so the temps wouldn’t have to wear the ski goggles.
Rich said he’s learned about a lot of things he never thought he’d learn about, like horticulture, botany, water chemistry, banking law, tax law, water law, electrical engineering, factory machinery and on and on. That’s what makes the business so fascinating. You’re not just coming into something that someone else has developed all the systems for. You and your cohorts are developing the growing systems, the production systems, and the business systems all from scratch.
Banking was a massive problem in the beginning. Banks are federally regulated, so no bank wanted to take the chance that the feds would crack down on their business for taking deposits from those in cannabis production and sales. So everything had to be done in cash. Even giant projects such as utility development and factory purchases all had to be done in cash. Once, he said that I-25 was shut down so the utility company could run pipes and electrical wires underneath the highway for the grow operations. All of that was paid in cash.
Water was also a massive problem, as it is everywhere in the west. Again, they were worried that the federal government would crack down even though marijuana production was legal in Colorado, so they needed to locate their processing “plants” (pun intended) somewhere that water was free and clear of any potential claim by the government. They managed to locate a free and clear water right from 1861 that they purchased so that their operation had clear title. Again, water law expertise was not something that Rich ever foresaw having when he became involved in the cannabis industry.
What I learned is that growing and selling weed at this level is a difficult business—it’s not like growing a few plants in your closet, which is how Rich got started when he came back to Colorado. Most people have the impression that pot is this wildly profitable enterprise, but Rich was quick to educate me on that point. While it is profitable, there are so many expenses associated with it, such as regulatory and tax compliance, planning and purchasing production systems, product testing at every stage, that it is very difficult for someone who didn’t start at the ground floor or who doesn’t have deep pocket backers to make any money. Rich estimates he pays 70% on every dollar he earns to the IRS. And that’s before he pays the state of Colorado their share. The current tax policy is very punitive for those in the business although he has some hope that things will even out in the near future. For example, he’s not allowed to deduct the salaries he pays to the people manning the stores because of the federal government’s ban on cannabis, which means in their eyes it’s not a legitimate business with legitimate expenses. But he still has to pay plenty of taxes to the feds, so he believes it is hypocritical and unfair.
Cannabis Is a Business
For Rich growing, packaging and selling cannabis is like any other business venture, like making widgets or footballs or clothing. He’s an entrepreneur with all the complications that go along with owning any business, plus additional ones because of all the regulations and testing and the weird conflict between state and federal law. However, for him it’s worth it because of all the amazing stories he’s heard and testimony he’s received from people whose lives have changed because of cannabis. From seizures to joint pain to anxiety, people tell him that having cannabis in their arsenal of remedies have been game changers.
There are so many more interesting details and stories in the podcast, that again I urge you to listen to it. You might come away with a different perspective on this fascinating subject, from the business and medical standpoints, and the regulatory and tax standpoints.
Thanks, Rich Kwesell, for taking the time to share your incredible story with us.
Bio of a Motivational Speaker
Funny Motivational Keynote Speaker Brad Montgomery is an award-winning speaker. He speaks to audiences across the globe (and across the USA), and is based in Denver, Colorado.
Although he speaks to audiences in nearly every industry, he is known as a funny health care speaker, a education speaker for teachers, a real estate speaker, and a sales speaker. He got his start as a magician & comedian, but now is known almost exclusively as keynote speaker.
He speaks both at live, in-person events, as well as online and virtually as a zoom speaker. No matter what you’re trying to accomplish with your audience, if you’re ready to invest in your people, give us a call now.
Here’s Your Transcript!
Fair warning: it was done by artificial intelligence, and sometimes it’s not so…er…intelligent. ?
Talking Cannabis Biz With Rich Kwessell
2021, Brad Montgomery
Successful, Interesting & Awesome
[0:00] What’s up everybody?
I hit your buddy Brad. Oh, I’ve been looking forward to this episode and I’ll tell you why. I live in Colorado where you may know is one of the states where cannabis is legal.
It’s a big deal. It’s big money. It’s interesting. It’s bizarre to go to a party where,
And you’re probably like me and that you wanna look behind the scenes. Well, lucky us.
[0:35] We’re gonna do just that we’re gonna talk to this guy who has started his own cannabis country,
Wow it’s more successful than I thought. Cannabis company. He’s got several stores. He he’s got chemists. He’s got growing.
[0:53] Factories I don’t think we call it factories we’re gonna learn all about it starting right now.
Hey, Brad. How you doing? Thanks for having me. Excited to be here.
Will you meet somebody I caught at a cocktail party and you say what do you do and they say well I’m in sales what do you do.
Oh probably avoid the question depending on who they are.
Don’t fret it if it’s some to talk about and it’s not quick conversation then we all let them know and cannabis business and,
Usually that stems into a 10 1000 of other questions.
Alright so I know in my job if I tell him what my job is I’m a motivational speaker I know pretty much what questions are gonna ask first.
When you say you’re in cannabis what are the questions that you get all the time.
[2:06] You know people are are pretty surprised to.
[2:10] What a podcast right now buddy.
But you know very well it might get questions about what side of the business are we in are we in the store side of it,
The extraction side that might be somebody asked that question that I’ll probably know that there are somewhat into cannabis or at least to consumer themselves most people don’t even know what that that would be and applicable question,
Pillars of it and,
Yeah so it’s it’s but it’s a business just like any other bride you know it’s it’s a widget that we make and.
[2:57] You know I always say it could be match boxes or match box car.
Doesn’t matter and we just try to do it officially in the best of our ability and you know, watch the quality to the utmost ability to live with the product, you know, so.
I am assuming rich that when you are a little boy you didn’t think you would say 1 day I wanna grow up and say yeah we’re vertically integrated,
Yeah, right. No. No, I didn’t. I will tell you funny out though. My brother and I did attend the University Televive for a little while and there we did grow a pot plant illegally.
It was actually just three of them. We view it on the the roof of the doritory.
And then on the weekends I I was doing an overseas student program and greenhouse and that’s where I was kinda getting my first initial introduction into greenhouses and growing things in greenhouse technology and plant movement and things of that nature.
[3:47] And I have a my my brother would come up and you work with me on the weekends up in the north of Israel and,
Transplanting juniper small junipers and I vividly remember that conversation man could you imagine if all this was weed and,
So did I hear that right? You’re an you started,
Like in Butney or like,
Cuz it was a work study program,
The other one was they called the Habonim factory where they made things like fire hydrants and different types of big pipe fittings and cast iron fittings and whatnot. And so you know at that time in my life I was,
You know, looking at the two choices and I just thought, you know, shoot, I’ll just go over. You know, all the.
All the members of you know it was much more cohed environment over there opposed to a bunch of you know greasy factory guys so I just thought well I’ll I’ll give that a try.
And well I think my lucky stars it was it was a great decision.
[5:15] They weren’t very many girls are working in the,
I wasn’t there to try to learn how to.
Build fire hydrants.
So papi came legal in 2009 was when Eric Holder of the Obama administration signed what was called the Ogden memo which basically said that the federal government was going to leave states rights up to the states and not interfere,
So that was what was considered to be the start of the,
In the very beginning, it was very much still the wild west, you know, so cuz original frame of compliance that had yet to be built.
And were you.
[6:12] When did you get involved in? When were you starting?
My brother and I were never outside of the three plants we grew in Israel we were never pot growers we never grew in our basement or anything like that you know and and,
But when we had learned that there was a level of legitimacy around it, we thought, okay, you know, this is something let’s take a look at it. And.
[6:39] Yeah, that was pretty much the beginning of it. You know, we started growing in in a buddy’s closet and in his house and very shortly just a couple months after that, we had,
You’re enough patience back then you had to have patience to equal a plan count so for every patient that signed their rights over to us.
Now if you’re not good at growing and you don’t wanna go through the trouble,
And maybe a $3000 setup in your house to grow those six plants then you can sign those rights over to somebody like me and I’ll go home for you,
And so as multiple people start signing over their rights to us we start getting a larger plant count which then means that we need to start getting a larger grow operation,
And so, that was basically the start of it. You know, we’ve been through several different different rows.
As far as compliance goes no longer do you need to have patience for a plant count that kinda went by the wayside,
And the law since change and so you know quite a bit different for us.
And yeah or it’s necessarily pay him is what what at that time it was more we’ll grow the six plans we’ll sell them the weed back at a discount.
[8:04] And now it would have been there incentive to sign the plants over to us.
You’re growing only.
Processing but back then it was just harvesting there was no such thing as processing marijuana but,
You gotta dry it out and then you cure it. And that that’s a process that usually takes, you know, about three, 4 weeks of.
Of true pink content or for your listeners that’s kind of the marijuana skunky smell that you would get off of off of a pot planter in it.
Framework for a store,
You know in our car and it and it it would have checked out there was a darn good chance that there would have been an issue,
Just because the police officer wouldn’t have known, you know, the framework of compliance at that point. Right.
Deliver marijuana and the strangest of places I will tell you it you would be amazed at the types of people who
You would never think our cannabis users who are regular cannabis users. Well, give us a without giving us names. Tell us a story.
Oh, goodness. Officials, politicians.
[9:59] Yeah, I would have been surprised. Alright, so,
You know this is a precarious thing to build employees around because there’s so much stigma,
Competitors of ours were actually getting,
You know robbed or girls were getting broken into upon harvest and so in other words there you know an inside job somebody they helped trim it with tip them off and you know they’re they’re be a break in that night trying to you know nab that that harvest which was quite valuable at that time.
And and only do too much about it because again they haven’t yet necessarily jumped on the bandwagon,
Tax income into the county and and they’d be damned if there was competition into that.
Okay here we go.
[11:13] Hey Brad back in the day you know in our tours we always wanted
And it’s a couple of shells and a glass case and it all of it is ski goggles. There’s only like a half a dozen pairs of ski giggles in there and all the ski goggles have tape over the,
Over the eyes of the ski goggles. And this is where Mike and I were first building our operation. And we hired people to come in to help us trim the weed. Again there was a serious issue with,
Grows getting robbed and so I bought online I bought an RFD an RF scanner,
Are something that that would I detect your cellphone signals or any type of a signal at that point if you had a GPS whatever it would take that,
And we would.
[11:57] We would have everybody meet us at a parking lot. Usually at Home Depot or Target or something like that along those lines.
For the time in the back of our zoo trooper we only had the zoosu trooper it was 93 using the trooper we built all business with at that point in time and we’d bring him in and they were the sea goggles and we would collect their phones and everything like that and when they came into work they’d be there at work for,
A minimum of of an 8 hour but it could be as long as 10 hours.
But a bit minimum of 8 hours and there’s you know there’s no reason to leave whatsoever. We have the whole thing is catered out. We have,
Bathrooms. There’s no reason that you would need to leave whatsoever. So,
There’s no leaving during break or anything like that. There’s no lunch break that you would just walk out. You know, so you don’t know where you’re at the entire time that you’re working for us. And then we load you back up, take it back to your car,
And give your phones back and that would be the end of the shift,
And we would we we would take we would harvest the room every 2 weeks so we had the same crew getting together every 2 weeks for this
With no windows and that was where that was great because we could fit, you know, we could fit prior.
10 11 people in that van and we didn’t need the goggles anymore but the goggles were a great touch so we kept them and we framed them and they get a lot of questions. I’ve just tried the picture.
Me saying yeah Rich I would like a job and you say well you can have to put on these ski goggles and you can’t leave the building are you quit are you okay with that.
[13:22] There’s some funny stories about individuals first day who still work for me today but individuals first day where they come into work and and they meet at this parking lot they don’t really know what to expect,
A van pulls up and they start seeing people get inside the van. They’re like, I’m not getting in that van. I’m like, yeah, the guy jumps. Like it’s alright, dude. Just jump in, dude. Like, don’t worry about it,
Yeah, I felt the same way, you know, 3 months ago when I started but it’s all good now, right?
And yeah we we that’s how we operate it for,
The first couple of years and then, you know, as soon as we could, we we stopped that and things started to get worse more legitimate. We, you know, had cameras all over the place that you know, all kinds of security measures and and so we didn’t do that anymore but just funny and.
[14:08] Wait. Oh dang it. We’re just blinked out. I lost your audio.
[14:14] Dang it.
Just bounce back and then lost you again.
Go ahead. I’m gonna kick you out and have you log back in. I’m gonna talk to you or listeners. Don’t leave everybody cuz we’re gonna find out what happened to those goggles.
[14:47] Alright so we have we’re on a rich quest so he’s having some audio issues the next question we’re gonna ask him is about money cuz in the early days of Colorado cannabis they weren’t allowed to bank,
So, let’s see if we can figure that one out.
[15:01] Hey portal.
Yeah. If you,
Yeah, yeah, I mean, it was it was good pay. We’ve always paid well. You know, we’ve always had a higher than average pay and.
You know I it was a type of thing it was taken to leave it you know what I mean and and like our first trim that we did I think we hired.
[15:41] Damn near all of them 550 of them out at one time all CC students go to college students,
We had one of our buddies was.
You know, we asked him, hey, you know how many of you guys can get together and his answer was how many do you want? Like these guys would love to do this. So, you kidding me? Like, yeah, come in and trim weed for night. Oh my god.
Don’t. It really wasn’t. You know, and then it became a whole issue of we need to keep him serious. You know what I mean? He’s got guys.
Astronomical amount of work to get done.
You know, at that point in time, the the street price for an eighth of kind butter, good weed at that time was 50 bucks even, you know, and that was kind of a standard thing for
As long as she pretty much as long as I can remember.
You give him what he asked for.
[16:57] I’ll never complain about the price of weed again like this is takes a lot it takes a lot more than you think you know now it’s a totally different thing now it’s all mechanical and,
Machine driven and things of that nature. So, but back then, it was all by hand. None existed. So, the college kids left with money, did they leave with money and weed?
I think our attorneys at that point we’re telling us not to do that even though it wasn’t.
[17:27] It wasn’t basically it was still gray area we were advised not to do that so we would pay in cash,
And and then we we would have a sign out sheet too for the cash that was delivered so we would sign it they would sign it we would keep the sheet if they wanted to copy they can keep it too.
[17:42] But that was so that nobody could ever come back to us and say, hey, yeah, you paid me $three less than you should have every single check for the last 2 years and built up to the amount and now I’m coming after you. We’ve always been very careful about labor laws, things of that nature,
Yeah from at the so the way I understand it Rich is it became legal in Colorado but illegal federally.
[18:10] And the banks just didn’t want any piece of you,
Yes so we would we would,
Always basically like a two person protocol so every day one person we get afforded Jakota another person we get afforded to code and how the safe would be open is within eight digital code and then a next day it’d be two randomly generated new codes type of,
System, you know? So, we didn’t do that exact system but we did systems like that to where,
We would have a network of careers and basically I mean it sounds pretty rugged but coffee cans buried in the desert you know not exactly but,
To that nature, you know, and so there would be a lot of our a lot of our team would be trusted with money, trusted with current money.
There would be.
[19:19] Never had a problem at all, never had theft internally, never had an attempt, externally, but we were extremely careful about it.
No, no, no, no, no, no, no, no, no, no, no, no, we had, but you know, the cash could be put to a bank.
For what you didn’t pay out into the business for cap expense or for general operating expenser for payroll.
And it couldn’t stay at my house. It couldn’t stay in my house.
[19:53] You know so so it’s hidden somewhere,
Because we never really had too much of an issue with with stockpiling money because we expanded so quick. So, we were always trying to fight for more money.
For the next spend.
Which we already had here marked and knew what we’re gonna do. So,
Bag full of cash. Like in the movies.
Utilities that are being put into new facilities that we’re doing you know I’m talking about,
I’ve been major utilities we had I 25 shut down to run electrical and gas underneath the highway,
You know, for cannabis grow at that time, that was major red tape for cannabis growing up to,
Did any of your vendors block it that like I don’t know I don’t want this much cash no they knew they knew that would be coming to them that way and so,
I mean, yeah, yeah, yeah, actually, we,
They wouldn’t bark at it cuz they cuz that was kind of prerequisite of getting the deal. But what they would do you know we have people turn us away. Or there would be a lot of vendorship. You just wouldn’t want to deal with cannabis companies in the beginning.
[21:18] That was a big problem in a greenhouse role as well where different types of greenhouse technology or different types of,
Greenhouse automation would be off limits to asymptomatic because the stigma of cannabis you know so like there’s a couple of large greenhouse technology trade shows that happen across the country,
That I frequent and and just keep keep an eye on it.
And for the longest time for the first couple of years we’ve been business the only way that we’re able to purchase anything is just by letting people soon that we grow strawberries.
You’re on any more business being strawberry fields. I just say.
[21:54] Are you gonna do business or not? They ask questions. You know, I wouldn’t lie to him. I’ll be honest with him and sometimes that would forth the sale. You know, so.
I have to go elsewhere.
I wanna buy your stuff I’ve got a bag full of money.
I know it. Alright. So, can you tell us a story about buying stuff with cash? Like, did you buy a new house with cash and,
It’s very difficult for us to because the banking issue for us to qualify for banking loans or anything that nature. So,
Yeah where I live and everything I like that has been stagnant since it’s been in the business so.
[23:00] But I’m assuming if you’ve got cash in the desert,
You don’t need alone.
You know mattresses full of money that we sleep on that certainly isn’t the case we certainly created mattresses full of money for the IRS that’s for sure,
You know I’m I don’t know if you wanna get into the weeds on that but.
[23:43] You know, you can’t just pick up and turn around anymore. You know, we’re we’re into it but.
Hi I can’t say 2020 I wouldn’t got into the cannabis business,
No we we could have done a lot of different things. You know we wouldn’t done this. Think of a world where you can’t claim your cost of goods.
You know, think of a world where the IRS looks at you, you have to pay out to me.
No everybody’s payroll. I can claim payroll on the folks who.
[24:39] So somebody walk into one of your stores there’s a guy standing there yeah yeah that guy. Yeah.
[24:50] Isn’t that wild?
[25:05] That we have to abide by that is really the kind of the Bible for how all cannabis companies have to submit their taxes and it is incredibly punitive to the point where it’s just almost makes it.
Hey there will be years we will we will see less of a revenue than the taxes that we owe,
In other words, you know, you’re on a hamster wheel, running as fast as you can and the wheels could keeps getting bigger.
Okay that is not my.
Let’s let people think it’s totally different. People think, boy, cannabis, it’s the hot business that you wanna be in right now.
Before we close this out and go on a set mouse.
Can you summarize,
To our entire, you know, body endocrine system and makeup and a lot of people see a tremendous amount of benefit.
[26:25] You know run a business and you’ll see first hand exactly how much I mean it’s wild the stories that pour into our stores everyday.
On what it does for for folks like so I don’t wanna sound like you know.
Not grateful to be in the business it’s just hindsight 2020 don’t get into business for those reasons you get into business to make money.
And so, you know, I could have done a lot of this stuff on the side, had a great time with it, all that kind of stuff yet, still run, a lumber yard, or whatever the case is. Right.
100% truly in my business and I I can claim my my taxes as such.
It means incredible luxury. In the day that happens in cannabis and we were allowed to do that, you know, it’ll be huge shift for us. It would be a tremendous shift.
[27:14] Will you brought it up so we’re going back in time you said you should hear some other stories
That we hear in our stores about the,
Hey Facebook appreciate your help,
Yep see you tomorrow. So what I was asking is what are the stories that people come in and say oh Rich this has been such a life changer. What what are you talking about? Yeah.
Yeah things I mean mostly it’s it’s a health issues things like for instance the seizures is a huge one that we see tremendous amount of help with,
Anxiety, pain, inflammation,
[28:09] It’s here to stay. You know, I think it’s fair to stay and and now, it’s not just here to stay in,
You know, has been third party tested. We’re not doing our own testing. Those third parties are state certified laboratories that they have to go through,
Just tremendous rigor to keep their licenses intact and so there’s a lot of certainties around it. You know, no longer you drink a bathtub gin and you need to worry about your your eyesight.
You know, so. Yup,
When you and I are young there was fast times at Ridgemont High the movie and Spipoli comes out of the van and.
No I think that stigma is over. I mean I don’t see too many of that.
[29:10] I guess yeah that.
[29:21] Any more so that stigmas kinda gone to the wayside.
ID who’s nonproductive person who can’t function because of the cannabis that they’re smoking, I think is is gone to the wayside, you know, so.
I mean I think that it’s obvious that everybody knows.
Or if they don’t, they’re living in the, you know, the dinosaur times that people have great achievement from Elon Musk to Michael Phelps are potheads.
[29:52] Well, you know, personally, he’s been weird because I grew up.
I think you and I are I’m 56 how old are you,
It’s very weird to be in that generation.
There maybe not my parents age but they’re quite a bit older,
And it’s weird to be at a church party with these people these grandparents and they’re talking about pot.
And sharing stories about pot and what do you think and have you tried this and and,
Oh you you are average age especially in some of our stores cuz of depending on the demographic and downtown Denver we have a store that’s a little younger you know a little more hit but then again the demographic around it’s you know younger you know more single
Single, a professionals. You got an essential Pueblo?
All of the new that comes in the last store.
Cuz the stigma was away or or maybe they’re not consuming cannabis,
Right now very common.
[31:18] Right and a THC CBD mix does the wonders for them whereas a CBD only which you could purchase online might not do the trickfully.
[31:29] Yeah it’s.
[31:35] Cuz it doesn’t feel like it’s been that long. I I honestly it hasn’t been through. 13 years, right.
Let me see 2009 was it was about 2010 when badges came out that’s what this right here and then they started to.
Get a much more legitimate framework for what it meant to be a licensed holder a post to a caregiver,
A caregiver would be somebody who grew plants like I explained in the beginning of the conversation grows plants six of them for another individual and then you can rack up individuals. You get 100 individuals under you. You have a 600 plant count.
From being a license holder and and so that those those types of things change in the recreational weed came on that change it again.
We like to say it’s been like building a plane and flying it at the same time.
[32:33] You know so cuz some of these things that we planned for process wise might take you know a couple pieces of equipment that could be minimum of 20 grand to do a maximum of 200 grand per piece,
Before building out a production line and then something changes in the laws and it might render two or three of those pieces of equipment useless.
You know, oh it’s it’s a nightmare. You know, so there’s not a cannabis company that I know that doesn’t have a boneyard full of.
[33:03] Yeah, it’s a hard to imagine,
8 or 9 months ago,
And so I’m seeing with people I’ve never met before.
Just like someone might bring out a bag of or a box of Altoids,
After lunch and say who what’s funny.
[33:40] Yeah, I can understand that. That’s pretty forward right there. If it was in Colorado, technically, it is legal, you can gift away up to an ounce of cannabis without any renewation of any kind, but if it’s outside of Colorado, straight up, she’s,
Breaking a law.
People get it. You know, I’m, I’m sure you’ve walked out of a bar in Denver or a restaurant smelled someone smoking a joint right outside or maybe hitting a vape pen or something. It’s not, you know, at this point, it’s like, yeah, whatever.
Yeah, it’s hard to be in downtown Denver without smelling it all over that place. Exactly, right? Yeah.
Well and also too let’s face it that there is a catch 22 in the industry where you do purchase it but then you can’t use it or consume it anywhere it did just fix that with consumption lounges,
Of which I think one is open and the other one is trying to get open. There’s not, you know, that’s.
[34:37] Well let’s let’s catch people up if I understand this Rich and cover me on this I think this means if you’re a tourist and you come to downtown Denver you can buy pot,
But you can’t smoke it in your hotel room of course and you can’t smoke it on the street and you can’t smoke it in a restaurant which means you can’t smoke it.
[34:54] Right yeah you’re not supposed to be over smoking in your hotel room I understand there are some hotel
I don’t know if there’s any in Denver proper. I don’t think so in Denver proper. There are a couple as you get out to more of like the smaller Colorado towns, you know,
Whenever things of that nature dill in I think that there’s a couple of of you know,
Motel type of type of places where you can but you’re right you can’t you know you gotta sneak around you know what I mean you gotta go hide and hide somewhere and smoke a joint in the bushes you know,
[35:26] We just watched downtown smells like part of the time.
Yeah so we have,
We have a store on the I 70 corridor and what’s called Downeyville but a lot of people know that it’s Idaho Springs.
And and then to supply those stores we have two acre greenhouse that’s got a full automation stack there.
[36:13] And pretty soon they are pretty awesome greenhouse and then that’s connected to a processing facility where we harvest. We make our own soil there. We,
Handle as much as the process as we possibly can there.
In-house and then in addition to harvesting and you know, drying, curing, all that kind of stuff. We also have a kitchen, lab bear where we’ll make our own edibles. We make several different lines of products and consumer goods we do.
Let me see if we do a gummy. We do a vape pan. We do a rice crispy.
You know like the old nostalgic rice crispy treats we do a,
Six to 10 flavors to it also.
Yeah that’s pretty that’s pretty much a wrap we also have operation where we’re small part of an operation shouldn’t say we have or we’re we’re we’re small part of operation,
For a group of Saint Louis that has basically an identical structure to the one we have.
Along with three stores and a kitchen is being built there where they’ll they’ll make.
[37:30] Similar products, the ones that we make, almost identical, different branding, but very similar.
And then there’s another store that we’re part of in Maryland as well as,
And one of them is still operating in Columbus,
Man, I don’t know if that one will be sold or not. We don’t have much of a saying those types of other operations because of residency laws with the states, these other states, they were
You know residents of those states certain amount of time to be the license holder generally speaking somebody in another state that is getting into cannabis will say okay we wanna get into this you know this seems like a hot new business to be in as everybody
You know, sure like your listeners are are considering and and they won’t know where to go. They won’t know where to start and so they can start.
You know from scratch and learn all these lessons the hard way but
They’ll never be competitive in their state.
Yo there’s no questions anymore so there’s no you know we don’t need to waste money trying to figure things out we we got that done.
And so those are generally come to us and that’s how we found, you know, these other partnerships and whatnot and,
You know, there’s always AA couple that are in the works and some fall through and you know, some.
[38:55] Yeah well I don’t know I don’t think so there are some pop magnets out there I wouldn’t consider myself one of them but have show will travel I’m so impressed with how many portions of the.
[39:07] Eat a starting with a marijuana plant all the way to selling it. How many,
If you wrap up a rice crispy treat that’s gotta have a lot of rules and,
In the end the weeds no pun intended is that so child proof packaging is a big deal here in Colorado right and and there’s all kinds of rules around packaging I mean I’ve come out with award winning packaging brands that won awards another types of like we we won one of the natty award and then
And then had it on the market for a while and ultimately had to pull it because it was too close to a cartoon character,
Which ah I mean I look it was talk about maddening we even checked with.
We have some friends of ours that are also men investigators that’s marijuana enforcement division invest,
We have their cellphone they call when we answer you know they they answer. And we’re on a friendly basis. So we kinda check this by some guys. Get your unofficial off the record opinion or we too close to a cartoon.
We had to pull that. That was pretty sad. That was all around, you know, the packaging.
Packaging has to be like I said child,
There’s a certain amount of of.
[40:33] You might look at you know take a 15% into your packaging where you might not have to if you were not in cannabis right.
No more than 100 milligrams of THC per package.
And so that means that now we get a raw material that comes in that’s generally known as distill it.
That is THC that has been refined through an extraction process into a crude oil,
Very much like when you separate alcohol and water through a boiling point.
[41:25] I think that’s adorable. You think I did anything with chemistry in college but thank you for your company.
And is still away the THC from all the other plant particles and all that kind of stuff and then from there,
We will mix that into our edibles. However, that comes to us in different strengths and so through a mathematical formula, we need to basically dial that down into
How much of this would we need for that batch of rice crispy treats so that on the end product when we cut it exactly 1 inch by 1 inch squares each,
Square is 10 milligrams and then it goes out for testing and we have ovarians of I think it’s 15% on each side so it’s a milligram and a half on each side whether too much too little,
And if it’s doesn’t pass it can’t get sold and so.
[42:18] 6 months.
Until it’s harvested. And then getting extracted and there’s several steps in that process and payroll in that process. And then it gets,
So, and then after that, it goes off for testing again. It works expensive for testing. That’s not,
The company because the company is bled out each step to get it to that point,
Only to see it fail and then no recount back on anything and it,
[43:06] Negative like bacteria moles something like that you know it could be on it you know.
Companies generally fail for strain.
[43:20] And so you gotta be careful about that stuff and so every edible that you eat you know and and you see that Colorado and you wonder gosh they’re all 10 and there’s 100 for everyone. That’s the law. You have to have that and there’s you know the those folks of.
Solved a lot of problems to get it up to the to the shelf. Right. You know, at 10. I got a lot of respect for anybody who was still. It’s still in the business and still doing it because I know what they’re going through and,
I know that there you know that it’s I know that the world likes to think that that everybody in cannabis is,
You know, I was making tons of money and they certainly charge the cannabis industry as such. I’m, you know, you being in the events world, you know,
The stigma behind weddings and wedding industry and you know, a lot of venues you might say, hey, I’m interested in that space. For a corporate event and as soon as you drop the wedding word, a new price comes out.
Right? You know what I mean right? So you know,
And we have some you know great vendors you don’t got just cuz we’re cannabis but that was very much the case for a while.
[44:22] It must be after being in this as long as you have.
[44:27] And then you realize, wow, I’m an expert in this and I had no idea. I had an expert of that. I didn’t even know that exist. I know about packaging and that bacteria and what all,
Your entire business is filled with things that you didn’t know existed,
When you start.
[44:53] Plans automoon receptor systems to increase THC content it’s just it goes on and on and on it is it is it never ends and,
No just when you think you’re you’re good at selling there’s another set of expertise that you’re saying man.
We better get on that.
No, no, no, no, but it’s, you know, I I definitely enjoy the challenge. I enjoy the nonstop.
I think we thrive there as a team you know we’re very agile team we’re very,
You know, we can move quick on our feet. A lot of our competitors that are of our size are probably traded companies that don’t have that ability. They have to answer to boards and wait for decisions and things like that to come down.
In our world of competition now endless pocket books of publicly traded money that we don’t have so a lot of the decisions that I make have to have extra screwing you to go into them if we purchase,
Half a one 1 million dollars piece of equipment to automate joint rolling will be a better day and well know that that’s gonna be,
There’s a market forth that makes sense that we know our numbers down you know to the Nads app so that we don’t make a mistake. Right? That’s a hell of a piece to throw in your boneyard to collect,
So did you just say.
[46:19] Yeah, it looks like it’s out of a Pfizer factory. It looks.
[46:29] And it does it all weighs them. It does, I mean, it’ll.
Make Julian fries for you while you wait fried to a perfect golden bread.
[46:40] It is. And does every, is that the kind of thing where you can share that with other companies?
No, yeah, we can. We, and, and Shame was plugged, open to toll your joints if you want.
And so if you’re interested where we would love to produce your line too white label your product we have no pride in that you know we sure we’ll we’ll produce several different of our competitors lines as well don’t care you know we’ll do it to the same quality control so we produce ours happy to do it,
Now you know where get your joints rolled it’s funny because the it’s in in the world of cannabis and I think there is a middle machine now but in the world of cannabis automated joint rolling came out with it hits it’s been pretty archaic for a long time,
Just recently or not just I’d say probably that.
Gosh, seven, 6 years ago came out, it was called a future role and she, which is kind of a neat machine. It’s 100 at a time right now.
Very consistent, you know, and one person, you know, good. If they’re good, you know, hit three, 4000 a day. You know, and they have them all done, that’d be a great, a great goal to have.
And then and what an that machine I think was no mistake it was like 3500 bucks me it might have been seven grand.
[48:04] So they have the next up machine be over 440 grand baseline machine each attachment is like 60 grand for the attachment that you need and you can’t use it without several attachments on there,
You know, my brother and I are just sitting there being like, isn’t there a middle of the road machine that we.
Well, help me with the numbers. I think you said that earlier machine, you might be able to make 3500 joints.
Oh yeah, this one.
That’s why you have enough extra time to make a competitors joins.
[49:11] And and and they can keep stacking it on and I’ll I’ll run the thing 24/7/. You know, we’ll take a half a day shift off a week for maintenance and,
Keep it going. So, no shame here.
[49:26] When you and your brother said when you you were 27 you got a big brother or a younger brother.
Well, we never did. We never told him.
Not her politics but around at least with cannabis she’s pretty conservative Jewish mom prestrict she’d took no shit that’s for sure.
There’s a lot of stigma around it. So, we started getting into, you know, getting into caregiving and actually growing plants. We never grew legally. It was always legitimate because you know, we knew that if we ever,
I’m knocking the door on the grow room or something like that. You know, we need to be able to show this paperwork and and,
But the mom was a tough thing and so we just kinda put it off. Didn’t get to it. You know what I mean? And then like time went on and like we,
No expanded a little bit and then we still didn’t get to it and then like we expand a little bit more and we still didn’t get to it and now like you know when you have like that pebble in your shoe that’s like so big and you know like if you have to tell like oh god it’s just like it’s a it’s a
Bigger, bigger issue now.
[50:47] So, there. So, you have in Denver of the Westward. We can call her Springs. It’s the independent.
Right that’s our and that’s our you know our our counter culture newspaper here is the independent right?
Where you see all the punk rock shows and everything like that and they do. The best of Colorado Springs. You know, they best wedding venue, the best DJ, the best bartender, the best barber, you name it, right? And we won the best cannabis shop.
[51:11] And and then later you know we were like shoot you know we really gotta tell our our folks now like this is a problem and it wasn’t like before we could blink we were in California we wanted people’s choice award for
For Colorado amongst all stores in Colorado we beat out some some pretty prestigious stores at that time in Denver so good friends of ours the clinic who was lifelong friends of ours of this day based on that that,
They counter where they took second place.
[51:36] Good guys.
So, we basically just loaded up our parents into the car and at that time, we owned five different growing rooms, grow facilities, all of them were indoor at that time because you couldn’t have an outdoor greenhouse. Grow was against the law for various reasons. I I can get into but,
They’re all hidden, you know, they’re all let’s say the smallest one was probably about 2000 square feet, the biggest one was maybe about 4500.
Worthy. Yeah. Five of them running on rotation and we basically gave them the full tour through all of them. And.
My folks were,
My I think my mom was more just happy to know that there was a reason why there was so much absence with her sons cuz we were pouring our time into this business now. I mean, it’s,
You know, it just takes so much to to to do it. So, I’m sure that she at that point she’d noticed that maybe we were a little bit more unavailable for,
You know, hey, we’re getting together for Sunday Broncos or whatever the case is, you know, camp mom, you know, for whatever reason. Right. So, I think she was just.
[52:49] She had told us she was more relieved to know that.
Hey you know a reason I’ll be I would say a legitimate reason even though this wasn’t legitimate at the time. Right.
Yeah our dad is our our dad is
Say again is he still with your mom?
Okay, like be careful guys. I’m assuming you guys know what you’re doing and that you’re, you know, told me, yeah, we have, you know, we have a couple of attorneys that, you know, keep an eye on us.
You know for,
Part of the tour was explaining to them you know here’s a here’s a patient paperwork contract this allows us to grow six plants here’s the packet of all of them we get you know rated by the police of the feds this is the first thing that we show them you know,
This checks out with each of these individuals. So, you know, I just basically let them know all that stuff and I think ultimately, they were.
[54:06] You know what’s funny though you said earlier about about older folks.
You know about maybe the third facility we walk into and after the Ether’s worn off of our parents and we don’t need to explain the paperwork thing
You know, for the third time, now they get it, you know what I mean? And outcomes, the stories of, oh, you know, you know, Lisa and Suzy boy they,
Think they’re gonna like this. You know what I mean, right? Hitting like, yeah, you know, so it’s funny. People would never thought.
[54:42] Really well. Okay. Well, yeah. Let them know. If they need anything, I’m around.
[54:53] Oh gosh,
You know, we expanded pretty big in that first year. Cuz we just put all the chips back towards the table. Any money that we would make, it would go into what’s the next plan, what’s the next room? You know, we,
I think when we had our fifth room built we were,
At that point, you could say, you always kinda talked about growers by the amount of lights that they had. Each light was a 1000 watts and that allows you to produce a certain amount of cannabis, right? So, that’s like your horsepower and your in your engine.
And so at that point in time we didn’t know of a larger grower who had more lights hanging.
[55:37] Us south of you know Colorado Springs in part south and we wanted to maintain that you know what I mean we wanted to.
[55:46] We wanted to be aggressive about that growth.
You’re chewing through em. We need to expand so we can solidated. We kept one room. It kept it as like a genetics bank to keep all of our our our cannabis is is.
Canvas is grown to death and then you harvest the plant to death it’s not like a lemon tree or an apple tree to where you harvest the fruit off of it and the plant keeps growing
Rolling for another season, right? Oh, and so
When we harvest it to death you need to repopulate your plant count with another live plant and that plant has to match the same genetic code of the plant that you just harvested because if we have somebody who finds a great amount of relief with a certain strain of ours we wanna keep that consistency coming
Every time they come in there so they know that they can expect that same strain,
That same strength, that same health, all that stuff every time. In order to do that, you need to keep a mom
Plant or in our case several different mom plants and you cut clones off of that mom plant and plant your clones so it’s a perfect genetic hobby
And then you allow that plant to regain its foliage and then that allows you to cut clones down again.
[56:58] One mom might give you 100 clones each time you you go to chop it and then it might take you know a couple weeks to grow back another 100 clumps,
The speed of the girl,
So we kept one one room just for the mom plants kinda keep those separate and protected,
And then we moved into a large 30 1000 square foot indoor and that at the time that was big bite off that was a huge bite we could only fill half of it at a time,
You know, we didn’t know anybody else that was going that big. We knew outside of Denver, there was a couple handful of teams up in Denver that were going that,
Throw our chips forward and we did that.
What are we doing?
[58:10] And we looked everywhere from Denver down to Trinidad everywhere house that stood,
Do you know how to rebuild a warehouse? We’re specifically looking for places like grocery stores or things that had a lot of power already coming into them so we didn’t need to bring the infrastructure back in with the power that’s been very expensive to bring that kind of power in.
And ultimately during that search that was when the state had kinda changed laws about our around greenhouses and outdoor growth
Right? So, as soon as they recognize greenhouses, we knew, you know, click for my time in Israel. That’s the way that this is gonna work. That’s the way that the world’s,
The world’s non outdoor farmable crops are grown.
They’re not grown inside. They’re grown at greenhouses always, right? You know, so if it’s not, it can’t be farmed directly outdoors because the the rigors of the outside climates such as cabbage or peppers, those can be grown outdoor peppers maybe not a good example.
They do, you know, chillies all the time here in Port Laura Ground Outdoors,
Heirloom tomatoes are not, you know, they’re growing in greenhouses. Much like I was doing in Israel. So, I said, wow, you know, this could really be,
A grey benefit for us.
The biggest thing at that point in time bro is it was all about the water rights so yeah here getting into an area where I never thought that I would learn anything about it. Yeah.
Water law I’m not an expert in water law but I’m a couple shade shy of it you know I certainly had to learn water law,
So we were looking for land farmland that had no attachment to any federal aquifer any federal,
Pipeline system, ditch system irrigation system, any surface water rights, most likely wouldn’t work, you know, so cuz because we couldn’t go in purchase a farm or purchase a piece of raw land,
Start building a greenhouse we’re talking it’s a minimum of,
$Six. 5 million for you know the for the facility you can’t start spending that money unless you know for.
[1:00:47] Be on a shot of it out that you have water. You know, without water.
You got nothing, right? So, you could get halfway through building that. All of your money is hard to your vendors. None of it’s returnable at that point and then the federal government comes in and says, we’re gonna play water because your candidates.
Which is funny because if we were barley making beer we would have gotten a subsidies but it’s worth it.
Is where it is. So, you know, there was a certain sense that they kinda did happen to us.
[1:01:17] And that’s why we kinda got our our butts kicked pretty hardcore with that basically had to turn everything turn every bit of effort in the company with at least Mike and I towards learning water law hiring the best water attorneys that we could find in Colorado.
Meeting and learning every single personality and and and person that’s a division two water resources which is the active you know they’re they act as god for us at this point they can literally turn us off turns back on.
Yeah, yeah, yes. We own a greenhouse. Yup, the greenhouse is we don’t have an outdoor grill in that, in that we grow directly under the sun. No, we grow, we grow in a greenhouse which is a controlled environment. What we do used southern light.
Yeah, it’s coming through. Yeah, it’s coming through the glass, but it allows us to control the environment inside. So, it might be a sunny day in the dead of winter, and it could be,
2°, 4°, 5°, you know, especially with the hardcore windshield factor and you go into our greenhouse in a 72.
[1:02:25] So two acre room in a big field 72° all the time.
Pretty well interesting business dude. It is. Yeah. We put it in the middle of nowhere. I mean it’s
Yo, it’s in Colorado City. It’s about an hour south of Colorado Springs. So, you know, my commute to work is an hour. I never wanted it to be an hour. But it had to be because that was the closest.
Lot of piece of land that we found with water rights that were completely sovereign. My water rate, I believe is from 1861.
[1:02:55] So that’s bottled water right there was established in 18 in 1861,
And I’m sure in 1861 they thought I wonder if pots gonna be growing on this land. Sure. No they they never did.
They never did but yeah but it is second up the river and the and the first of the river dear friends of ours they sold us piece of land just south of us and and that individual was my,
It’s funny enough you know you talk about.
He’s one of the smartest guys I’ve ever met. He’s an an aronymist by trade but he’s like like a lot of farmers. Don’t ever underestimate how smart these guys are out here in the countryside.
To say they’re all,
Water attorneys and this guy this guy walked us through just about everything and we’re very thankful for having a neighbor who
Had a niece that found some incredible relief for her seizures with,
You guys seem like you’re sought to be earth guys you know and.
Start a relationship and then when we, you know, hit some problems with water lies anyway, no, I think or two about that. I want you more from my house or you know, some zucchini bread and and cup of coffee and so we went over there and.
[1:04:18] So we started you know get mentored from you basically looked over our shoulder and every single thing and you know.
I mean it wasn’t. Well.
[1:04:38] Did we have spent some time on this I need to respect your time but not before I ask to my favorite questions that I ask every guest even once in our involvement cannabis.
Social and emotional support which means encouragement and mentoring and leadership.
Who made you feel like you could do this or when you were young maybe someone picked you up when you fell down or.
[1:05:08] Made you feel like you’re something special.
[1:05:11] All my folks. It all started there. I’m just incredibly fortunate. My parents are amazing. They’re always been.
You know I have a 5 year old daughter now and I just if there’s one wish I just wish that I could be half the parents that my parents were to me,
You know, so it just has given me a great blueprint and and.
[1:05:34] What I want her to take away from this and yeah so I just always knew that.
[1:05:41] It might be hard.
You know, I think that’s why we met through magic. You know what I mean? And I started to see magic and just say, oh my god, what is this? You know, and magicians never reveal their secrets how do you learn?
[1:06:01] Oh I’m gonna do it now right.
I guess yeah I’ve had a lot of great mentors along the way. I’ve had you know a lot a lot of things that stick out my mind at when you ask that question. I want a hockey coach who is just a fantastic hockey coach he brought our team to state
High school state championships.
It’s just a it’s so true. It’s just every little thing that counts, you know.
[1:06:41] His name is Trevor Pachapinski and he played for the Los Angeles Kings. He also himself won a Canadian National Championship and then any coach.
Shaman high school for 6 years of hockey and one four state championships two with my brother’s team who graduated right before me and then two with my team.
Have you ever told.
Oh, yeah, yeah, yeah, I see, I saw him around you know, you could always see that coach every time you go see a CC hockey game, he was a CC hockey alum.
A matter of fact I don’t think I’ve been to a game without seeing him there,
Still a big member of the community. Yeah, for sure. And I’m sure even though they were a little surprised at first, your parents are very proud of you now. Yeah, they, yeah, they told us as much, you know, brother, they they they were surprised at first, you know,
And then it’s just kinda became the scene like those boys my boy.
Yeah but we are gonna end with the same question I ask every single person we have rich quest so he runs strawberry fields what’s the full name of your company.
It’s strawberry fields is the name of our retail stores and then the name of our greenhouse and our our production side of our company is Heartland Industries.
What’s your website Strawberry Fields.
[1:08:15] Cannabis premier.
[1:08:41] It seems like it’s gonna cannibalize itself the way it’s set up now. However, what gives me hope is that there’s still a lot of change to make. It’s not federally legal across the board yet. And when that happens,
They’ll be yet another change to the framework and the rules in the chestboard wool will change and so whatever that happens, you know, we have our ear to the grindstone. We’re in several associations that have lobbyists, you know,
And you know we’ll still have to adapt I think once once that happens I think we’ll look at a world where banking is gonna be much more legitimate for us we’ll be able to,
Access to my banking loans. I also think regulation 280 E will go away. That will mean that we’ll be able to claim our taxes like a normal business. No different than the way you do yours or a football manufacturer does theirs.
You know if it’s a desperate will change and if it’s a venom a benefit will double down so,
There are a lot of left for the industry.
[1:09:58] They fought hard to be where they’re at that’s for sure I got a lot of respect for him especially they’re doing it right paying their taxes if they’ve been ordered by the IRS so they know for a fact if they’re doing their taxes right or not we have been couple times so we know.
[1:10:18] What did I say I’m so glad you took the time to visit.
[1:10:23] It’s been an honor Brad. Thank you for having me. For you the world my man and so anything else I can do for you. Just let me know.
Strawberry fields cannabis. Com. Stay with me. Everybody else. Be good to each other. Go visit one of Rich’s stores.
If you need a massive machine that rolls joints very fast he’s.
He’s your guy.