 I spent many years working at the street with Jim Kramer, who is obviously a big personality at CNBC, so I feel a real affinity for that television station. And joining her is Jake Heimark. He is the CEO of Plus Products. Plus Products is like the two number one and number two best-selling SKUs in the state of California. If you've been following anything about the numbers in the state of California, it is really the testing ground for products. So there are over a thousand brands in this state. It's really hard to get noticed. So when your product is number one and number two, that really tells you something. He clearly knows what he's doing. I think we can all learn a lot. I was picking his brain backstage. I was just like, oh, I have a, and asking him all kinds of questions. So really take this in and absorb it so if you guys could come on out. Good afternoon, everyone. I've been covering the legal cannabis industry since 2014. And I think what's been amazing for me as a reporter is watching the fits and starts, more fits than starts. Just yesterday I was in Santa Barbara County, which has issued more licenses to grow pot than any other county in the state of California. 35% of all the grow licenses are in Santa Barbara County. And all of a sudden the wine grape growers and the avocado and citrus growers are having a cow because they can't spray because the spray can get on the product. They're afraid the smell, the terpenes are going to change the taste of the wine. And it's become a huge, huge issue. This weekend I'm going up to Humboldt Southern Humboldt. My brother-in-law is an OG, they call him, an original grower. And there you have the other, you have an established industry that has very little interest, generally speaking, in compliance as we just heard about and paying taxes and having smaller profit margins. And they're also having to come to terms after generations of being back to the land of the detrimental effects that their grows have had on the environment. So it is a fascinating, I just thought we'd be further along than we are here. But someone who is further along and doing well is Jake. Jake, thanks for joining us. Tell us a bit about Plus Products and these number one and two SKUs. Thanks. Thanks for having me. So Plus is a company that makes edibles. We make edibles here in California. And what we've really focused on as a company is what we call achieving balance. So if you look at whether it's cannabis, THC, CBD, or hemp, all of these compounds and plants are having a moment right now. And we think the reason why Plus is that people are overwhelmed. I mean, our iPads, our phones are constantly going off. Social media has made it hard to actually connect with one another. And cannabis and hemp seem to have properties of actually calming the nervous system. And so we think at a macro level that returning to being in the moment and present and balanced is really a powerful driver for this whole industry. And Plus, we make foods because we also believe if you're going to use something every day, it's probably not healthy to smoke it. I was wondering about that because edibles have traditionally been a smaller part of the market. So why did you go in that direction? They still are, right? But at Plus, we are building what we call a company our grandmothers could be proud of. So we think that if you're going to do something every single day and there's no science to back this up at all, right? So there's not very much science in the industry in general. But all the indications from every other industry show that if you heat things up and pull them into your lungs, it's not going to be good for you to do it every day. So we think edibles are probably a safer alternative. What are these two skews? You only have three skews. So the fact that you have the number one and two selling product in California, and you only have three products. Explain. Describe the product. So we have three skews. We have an uplift, sour watermelon, gummy. It has a ratio of THC and CBD. It's actually our most THC heavy. It's five milligrams per gummy, which is a lower dose than most people. And it has a really awesome grapefruit flavor on it. And then we have a balanced gummy, which has a sour blueberry flavor. And it's less THC and a little bit more CBD. And then we have something called unwind, which is a combination of blackberry and lemon, which has somewhere in between the other two products. And so what is the range of THC in each product? You said five. So we have at the most, we have five milligrams of THC. And then at the least, we have three and a half milligrams of THC. And how many in a ten? There are 20 gummies in a ten. And what we've really focused on is making sure that every single gummy has the exact same amount of THC. Yeah, how have you been able to control dosing? A lot of work. And a lot of money, I'm assuming. Sure. I mean, money has, money has helped. We were fortunate to be well funded. Now as a company, but I think that the key that I've learned. So my uncle was a food manufacturer. It's actually how I got into the industry. So I grew up in technology. I used to work at Facebook. And then I knew a lot about e-commerce banking. And this industry has a banking problem. We'll get to that. Yeah. So I moved to Denver and went to dispensaries and saw very quickly that people didn't know how to make food. And my family is from, my uncle's from Austin, Minnesota. They made frozen California pizza kitchens, Dover's Mac and cheese, all the stuff that makes you sizable in the US. They seem to go hand in hand with cannabis, too. It's, it's the delicious stuff. And so we, we saw the food that was made in cannabis and knew that people maybe didn't have factories. You can kind of feel off of the food that they weren't being made in places where other people serve. And we thought it'd be pretty easy to take food standards and sort of apply them to the industry. We were wrong. It was very hard. But by sort of some elbow grease and adapting machinery and a lot of failure, we finally figured out how to get it right. How much did that cost? How much have we spent at the company over the last few years? Sure. Yeah. Probably $15 million. $15 million? Yeah. $15 million, yeah, yeah. And your revenues for the second quarter this year were $3.6 million. They were. Which is 125% year over year growth. And your gross margins, 20%. So they've grown also. They have. Are you profitable yet? We are not. We are not. When do you think that might happen? It's a good question. So as a, you know, as a founder, we're always focusing on what I called the point, which we go from default dead to default alive. That's, I think, Paul Graham's term from Y Combinator. And it's a really important point for, I think, any founder CEO to know about their business. It's the point at which your cash flow and your projections of your growth make it so that with the margins that you have, you are never going to have to raise another dollar. Because if you're there with the cash that you have on the bank, You're self-sustaining. You are in control. I think with the cash that we have on our balance sheet, because we have a healthy one now, we're now at the default alive point. And so the question is, how quickly do we want to move in certain areas? And, you know, that's a constant question for us on the board. Small dosing, why? So people will eat more? So we just launched this new ad campaign in California. We've been trying to figure out, and it takes years to figure out how to actually interact with customers and describe the things that we're all learning together. We call it finding your just right. So cannabis works for a lot of different things for different people, and it actually affects people differently. We see our job as making sure that every piece is the exact same, and by making it small, you can then choose how much you want to have because you can have multiple of them. You have a million, this ad campaign's a million dollars, this new marketing campaign, right? That's a big spend for a company with the revenue stream that you have. It is. I'm waiting. We talked about it a little bit in the last panel to see something other than medmen billboards outside LAX to tell me about the industry. I mean, what are you doing? Where are these ads? Yeah, they're being placed all over California. There are some billboards, and there's some other moments, which we'll unwrap as well. We just actually wrap some mini coopers that are super fun. Why do you only have three skews? That's a good question. It's like you're almost doing, it's counterintuitive. It's the opposite of what makes other people, I think people from outside the CPG world super excited. So plus what we focus on is having a few things that sell really, really, really well. And the reason why is customers go to a store, it's a confusing industry. They'll buy different things to try what works for them, and plus we really are all about balance. That's who we are. We want to make it less confusing. They try our products, if they work and they like them, they come back and they buy them again. And Coca-Cola did a really good job. I mean, it took them like, how many years to add Coke Zero? So we think if we do, yeah. Coke, no, Coke. No, no, no Coke. Coke was a mistake. But you know, you get stuff wrong. That's fine. Oh, what did you do wrong? So what was the, like, oh, let's try orange and lemon or whatever. Oh, we've had so many bad flavors internally, it's not even funny. That's why we focus on few ones. But I think the major thing we got wrong in the beginning was not letting the customers decide what works. We started as a gum company. Gum has all these really great attributes that would make it the perfect edible. It is low calorie. It is fast acting because it absorbs in your mouth. It's extremely portable. It's temperature resistant. It's like all these things that on, if you know, in the attribute list, if you're a marketer, you're like, okay, it has all the things, right? It didn't work. It's a good question. It's been thinking about this for a few years, right? Because we took us a year and a half to pivot. By the way, the reason it took us so long is because my co-founder Lucy is an amazing salesperson. She just got it into every dispensary. And if she weren't so good at her job. You would have figured it out. Yeah, because she kept selling it and then it wasn't moving on the shelves. But that's a different issue. So the reason why I think gum didn't work at the time is because edibles are scary. Everybody has that cousin or that friend or that story about themselves where they had an edible and they just passed it. The Moreno-Dowd New York Times story. Exactly. That brownie that made it so, you know, they were couch locked for four days, which is my favorite term. And so when you combine scary and new, that is not a combination that people are excited about. So until you have an actual brand equity, and I think even with where we've been at Plus, which is a leading edibles producer, I don't think we're at the point yet where we have a real brand. I think those are built over many years. Even then, it's like, are we ready to launch it yet? Maybe. We'll try it. So gum may make a comeback. At some point, my co-founders love it. And so, you know, at some point, we have to do it again. Let's start in the beginning. You started this business like so many in your parents' garage, in a Palo Alto garage. Is that just myth or is that true? No, the garage is on Waverly Street in Palo Alto. We slept, you know, my co-founder, a guy named Justin, he goes by crunchy. And he lived in my brother's bedroom and we started it right in the garage. It was fun. Well, you worked at Facebook. You worked at other places that have nothing to do with food production. You say it was in the family or in retail. What made you decide to do this? I think the short answer is I was looking for something for myself and for my wife. I think really good product companies always start from someone needing something that's not there. And I joined the industry a couple months after recreational legalization in Colorado when my dad actually sent me a video of Sanjay Gupta and one of his specials talking about the banking problem. So I moved to Colorado and I'm there at the dispensaries talking to them about how they bank and my favorite thing a dispensary ever said to me is I said, okay, I'm doing research when I'm bank. I'm thinking about doing an auditing company and the dispensary owner says, great, do you wanna see my books? And I said, absolutely. And they said, okay, which set? And I said, oh my gosh, both. That sounds wonderful. And so while I'm visiting all these dispensaries where I'm going around and I'm looking at what's on the shelves and I was and I don't like smoking. I think those like truth campaigns worked really well on me for some reason. I am frightened of it. And so I was looking for something that wasn't that and that's where Edibles came in and then the foods that were being made just weren't very high quality yet. What were some crazy stories from when you said, okay, I'm gonna do this. I'm gonna do this. It's not legal federally. When did you start, by the way, plus products? So we were about four and a half years old, so 2015. Did you start in California? We started, so I found my co-founder in Colorado and then we immediately moved to California because we didn't have any money so we lived at my parents' house. And so you started on the medical side then? We did. And then what did your parents say, by the way? They were oddly supportive. I had had, you know, I think after Facebook I went to a startup that was started by a 19-year-old just a great company called Gumroad that has nothing to do with food. It just happens with gum in its name. And I had been looking for what I wanted to do next and I think this was the first time that I felt a real calling to do something and my parents were wildly supportive of that. I couldn't have asked her more. What was your startup money and where did it come from? It was my dad. It was $100,000. What? Your dad gave you $100,000? He did and he did it as debt and he made sure that he saw every single bill and every single thing that we were doing so he could support the company and it's oversight that honestly, if we hadn't had and continued to have, he's the chairman of our company now, he's a public company. Did he get his 100 grand back yet? He did get his 100 grand back before we went public. And I think it's that oversight that's helped me grow a lot in my role and my co-founders as well. My mom still does our HR, she's our head of HR and there's a piece to really successful food companies where they've always been family companies whether it's the Nestle company or Kellogg's or Cadbury, there's this piece to food companies where every single person in the company needs to care about each other and care about the consumer in a way that you don't get at non-family companies that I think has led to us being successful. How do you build a brand? How do you do that and not only build this brand but build it into what you plan to be a national and an international brand? You've had some experience. I think that it starts with understanding what consumers want and what problem they're trying to solve. I think anything beyond that is if you don't start there you're gonna be in trouble because- What problem are you trying to solve? For us it's that sense of, with plus as a brand it's that sense of overwhelming lack of clarity of being yourself anymore that I think it's like an existential on we that a lot of people are feeling. It's very millennial my dad would say but it's real, right? And so I think that that is what we're trying to solve and help people solve it in a way that takes them not out of the reality that there's in because there are those brands in cannabis, right? Just exit me from this space but actually enjoy that moment again. How did you raise capital? We didn't for a long time. It was very hard. So I came from, I was at Facebook and then Aquina Perkins back company. I assumed that because of my background and because of Silicon Valley that you know it's like you start a company in Palo Alto Garage and somebody hands you a two and a half million dollar check which for the most part is wildly true which is not smart by the way but every VC in the world would meet with us. We were getting meetings with people who I would never have thought I could get meetings with and every meeting ended also the same way which was this is great. We have federally restricted money or we have an LP who won't put money into or we have the it always ended with the oh yeah by the way we can't touch cannabis and so it was my parents' friends and then it was a group of Canadians because they were the only people investing and they believed in us when nobody else did. The Canadian companies have a distinct advantage. They can list on the NYSE and the NASDAQ they can get coverage by Wall Street all these things that American companies cannot. Have you been approached about being acquired? Would you like to be acquired by a Canadian? Would you move to Canada? That's a lot I'm sorry. That's a lot of questions at once right? Take your time. Yeah so let me start with I'm at my core an entrepreneur who wants to create products and there could not be a better environment for that than what exists today. If this were a federally legal activity in the US and the reason why people can't list on the NYSE and why the NASDAQ doesn't allow people to list if you have US assets it's because it's federally illegal and that environment is an entrepreneur's dream because the biggest food company or the biggest food company in cannabis if it were legal federally would be Kraft, right? And so this is a really fun and exciting time. I don't think we're done yet. We have like 1% done at the company and a lot ahead of us and so we welcome of course like federal legalization. I hope especially that that's tied with some real criminal justice reform because that needs to happen. And yeah I like the environment that we're in. I am very happy with where POS is today. Biggest mistakes you've made? Made so many. Where do you want me to start? With the biggest. Yeah. I'd say the top one is actually I give you a story. Here's a good story. There's a, and I won't name the company. There's a store we were placing our product that approached us for an acquisition about a year and a half maybe two years ago and they basically said we're one of your biggest customers. You're the best selling product on our stores. We have a much bigger balance sheet than you have. We're going to either acquire you at your last round's valuation or we're gonna kick you off our stores and pour so much money into your competitor who we're going to acquire that you're not gonna exist. Really? We had $3 million in the bank. That doesn't feel good. So I wanted to quit the company and sell it to them because I didn't see a path out. And the biggest mistake that I made was not listening to my mom and my dad and our early investors who basically said you do not exit when you're doing the right thing and if your customers love your product they will support you. It was a couple months later their biggest investor came in and supported our company who's Tiger Global out in New York which is one of the best investors to have and we survived. We're on their shelf still. So you did eventually tell them no? Absolutely. You did listen to your parents. 100% but I didn't for three months and that failure to listen to them set our company back because if I just had some clarity of vision I think we would have been able to move even faster and that slow down hurt us. If you could do it over what would you've done differently in building this company so far? Started with gummies. Skip the gum? No. I think I'm really proud of what we've done so far. If I could do anything differently I think we would have gotten involved in the advocacy part of the industry sooner. I don't think we realized at plus how myopic sort of legislators can be and regulators that we trusted that as these rules in California would come to pass that they'd actually start enforcing that people who were doing the things that they were supposed to do would start to be advantaged. We didn't have a large voice with the state or nationally on those issues because we believed that of course they were going to be incentivized to help the industry grow that's turned out not to be the case and so we're getting more involved in that. Yeah, are you surprised how the fits and starts to roll this industry out in California which is the largest cannabis market already and how much of that is the entrenched black markets just like why? I'm not surprised now. I certainly was for a long time and the reason I'd say I'm not surprised now is because the issue is a funding issue. The state has not properly funded the regulatory agencies and endowed them with the ability to actually go and shut down places that are not doing it correctly and unfortunately I've learned that whether it's national or local politics it actually does boil down to money and if that changes I think we're in a different environment. Right now they're moving the people in the state government are trying their best but when you only have eight people or 16 it's difficult to shut down especially when you want to allow in California we have this historical legacy of nonprofit cannabis that helped people with cancer and with all these issues that cannabis has been known to help with and so we don't want to shut down people just because they don't happen to have a license today so it's a hard job for regulators and they're really trying to do the right thing but they're severely underfunded. How do you find management because you've hired people from Quaker Oats and Uber and UBS the Uber person is probably thrilled that you hired him or her, has it been hard to find a good management team and something that is still federally illegal? I think in the last six months it's changed I think before that most people wouldn't even take my calls but what's helped us a ton at plus is my mom runs our HR and so she's really good at piercing through someone's resume to the actual person inside and again we're trying to build a company that is all about family values and doing the right thing or we call it like being the nice vise company and so... Nice vise? Yeah, it's a nice vise company. Oh, I like that. That's a good name. Yeah, yeah we could do something. Trade works, totally, that's, you know I got the domain registered. I'm gonna do you, yeah. I'll give you 30%. No, it's, my mom has really helped us build around people who want to be around for the long-term vision of the company and as my parents have allowed me to grow in my own role and sort of step back I think it's been healthy. There's been a lot of pushback about cannabis about whether it's good or bad. We don't have the traditional peer-reviewed scientific studies for CBD because why would Merck invest in doing those sorts of studies? How long is it gonna take for us to have objective proof over the healthful effects of CBD? So, it's a good question. So my undergraduate degree is in human biology from Brown on the East Coast and so I have it like a very little but entirely incomplete. I know enough to know that I know nothing. I'll put it that way. And we have a chief science officer who came from, oh, I wanna say 12 years at the wonderful company doing food research. Before that he was at drug company. I think it was Merck as well. He came from wonderful community. Yeah, they're great, by the way. That's a great company. Well, we can talk about their water. For consumer packaged goods. But their products are amazing. Their products are and their science is good, right? So there's a pomegranate study that just came out that showed that it helps during childbirth if you drink pomegranate juice. So they've had really good science backing all their products. And he is very thoughtful about this stuff and the core problem that we have as a country is that it is not only against the law to do what I do every day. It is against the law to do research. And as long as that is the case, you're not gonna have any institution that takes federal money be willing to take money from those of us in the industry who are willing to pay to find out. Because there are so many different compounds in cannabis. If you look at alcohol, there's one alcohol compound and the reason why wine and whiskey and tequila make you feel differently is because of everything else along for the ride. In cannabis you have multiple inebriating compounds. And so whether it's CBD, THC, CBN, there's just a whole bunch of lists. We need to do so much research. I know they're doing some outside the country. What do you think the future is with edibles versus smoking with medical versus, or health and wellness versus recreational? I think as the industry matures, people will find that certain things work for different use cases. So if you're looking for something to take the edge off your day and you're going to use it every day in the long run, I don't think smoking's gonna be the way that you do that. I don't think it's healthy. What about vaping? What do you think about this whole vapocollipses? Anything that you heat up and pull into your lungs just is probably not gonna be as good for you. There's also actually another really interesting thing about edibles, which is they're digested in your stomach. And when that happens, in the absorb to your liver, some of the compounds in cannabis can do different things in the acidic environment. They can change into other compounds. And what's called the entourage effect by some people in the industry, which is really just a statement that the other things along for the ride may affect you. That may happen in edibles in a different way. Again, we have no science for any of this stuff and we're really looking into it but as both the company as an industry. But I think that long run, at least our company has placed bets on smoking not being the way that most people will wanna consume 20 years from now as they learn about how if it's good, that it's not good for you. What sort of innovations are you investing in? For example, edibles take much longer to be effective. Is there a way to boost that or increase the time lag and decrease the time lag? So I'm like, I mean obviously this is all I think about, right, is edibles, cause that's what we do. And I am a weird black sheep in the industry because I don't think that the time onset of edibles is a product problem. I think it's an education problem, meaning if you learn as I have and we're trying to figure out how to have marketing messages at work, where we can educate customers that if you take an edible to sleep earlier on, you actually don't wake up groggy but if you take it just before you go to sleep and my pseudo science, bad science assumption is that your digestion slows down so it actually doesn't digest and enter your bloodstream as much. So when you wake up, your digestion starts again, you can actually feel some groggyness. I think that there's a lot- Here's a helpful tip. Yeah, there's a lot of education to be done and that's just me, right? That's how it affects me. But yeah, I think there's a lot, there's a lot still to learn and that companies like us have a role in educating. I don't think we need to make edibles faster. I think what we have to focus on first is a company and that is a long run goal is still to this day and this is where plus sort of our brand is all about radical honesty, it was really hard to make sure that every piece had the right amount of THC a year ago. Now we're focusing on how do we get the other compounds the same and then next is how do we make it even better? But right now you have companies where like, you have a chocolate bar that has 20 pieces where one piece of the chocolate bar has all of the THC. That's not a good customer experience. I don't care if it passes a lab test. Right, right. So by solving that problem first, I think we then get to all the other stuff. I've seen more technology breakthrough claims in this industry than I ever have in other ones. And at it- That's saying something. Yeah, there's a lot of stuff in this industry. And I'd say that at its core, anything that digests in your stomach is going to be slower than anything that you inhale. Right. Cause that's just, if you could fix that, you can make a bunch of money for Tylenol. Where do you bank? I am not allowed to say that, but we do have a bank. Like a bank we would know? If you're really into banking. But it is a federally chartered bank. Part of the agreement is that we don't talk about it. But we are fortunate- But they know your business. They know our business. We're one of the few companies who's fortunate enough to open your bank. How did you do that? How did you land that? It was, I'd call it the company equivalent of our proctology exam. We spent years, so I came out of banking, right? So this was the company that I wanted to start. So the bank would have to at least be interested because you would think most federally chartered banks like, not worth it, I don't care. Or you can bend over, assume the position, I don't really care. There are, so there's sort of three levels of banking in the industry. There's not banking or cash. There's what we call it plus undisclosed bank accounts or don't ask, don't tell. There are a lot of federal institutions who sort of- I have a lighting company. Exactly, have bad compliance programs. And some of those, I think, are deliberate because they're trying to get, you know, to see what's going on. But of course then, if somebody raises an alarm bell inside the company, they shut them all down. And there are a few banks who are starting to be involved. At its core, the lack of banking to this industry is keeping, is making it harder for regulators. It makes it harder for consumers. It makes it worse for the federal government. It's bad for everything but criminals. So that needs to change. How long was the process to get them to say, okay. I think it depends on the company. For us, it was about nine months. Nine months, yeah. And how about, is the IRS 280E, does that, how much does that impact you? The fact that you can't have many traditional business deductions. So we're a manufacturer, right? So we're fortunate that most of what we do, for those who aren't familiar, 280E basically makes it so that if you are a, everything after you've manufactured a product cannot be deducted, right? Right, if you have a retail store, you can't deduct your rent or your payroll. Everything any other business person could do. It has this really cool history of basically being like, for people who are taking float planes and driving Coke to back and forth in the 80s, and then they sued and they couldn't deduct planes because that was bad. And so it's an interesting situation we're in where as a manufacturing company, we're basically incentivized to not cut any costs in manufacturing, because at least we can deduct those. And so I think it leads to lack of long-term investment by companies like us, if you're not thinking about the 20 year time horizon. But it does create more jobs. So 280E, of course, needs to change. But of the fact that we can do what we do legally in some manner with the federal government is nice. How many employees do you have now? About 85. Oh, really? Okay. And really good healthcare. Excellent. Yeah. What is the craziest war story of being in the cannabis industry? Ooh. Like when you first- Yeah, so like we started, we were first trying to figure out how to sell product to the Spencerys. We were like, it was my co-founder and I in a car at a target shopping, like a parking lot with a shopping bag full of gum handed to the distributor, because we don't know each other. We met on some weed forum to do it. And that was weird. Probably the weirdest story in my chief of staff guy named Blake would kill me for saying this. But we once, before we had a bank account, he contracted for, we had a vault we were restoring our cash in and he contracted to pay cash at the Federal Reserve in San Francisco. And he called the Federal Reserve like 15 times. Like he's very, very organized and they've agreed to take the cash and he shows up at one o'clock with about $150,000 in cash. And they say, oh, sorry, we don't have anybody here to count it today. So he said, great, when do they come in? They said, tomorrow, he said, great, so we'll leave it here overnight, they'll bring it tomorrow. I said, no, no, you have to take it back. And the security guards he had hired said, you're on your own, dude, you've only got us for another hour and we have another job. So we had to throw it in the back of a Subaru and strap a blanket over it. And I think it was the most nervous. Yeah, it's the most nervous he's ever been was driving that back. But that doesn't happen in other industries, right? That's a weird thing. No, especially when the federal government wants your money. Yeah, it's like they wouldn't take it. But you know, I understand, right? It's like you can't have a bunch of cash that you don't know sitting around, so no fault of them. Couple more questions and then we'll open it up. Just to make sure. Yeah, perfect. If you could wave your magic wand, obviously federal legalization would probably be number one, but if you could change something, what would it be? Criminal justice reform. This industry has been used as an excuse to keep men of color down and it is an unfortunate part of both CBD and THC. There aren't enough minority co-founders and I recognize the irony of me saying that up here on stage, but it is something that is real and the combination of criminal justice reform and actual support structures for those who have been damaged by the war on drugs is the thing that I would change. In the last panel, they talked about social advocacy, activism, equity, for it to be authentic. What are you doing about that? Wait and see. We have some announcements coming up at the company. I think that this has to be holistic if you're going to do something and it has to be real. It is the thing that my co-founders and I talk about all the time and that means having the right partners and doing it as a part of your company in perpetuity. Best idea someone came up with in this four-year journey? So I've had co-founders, a brilliant chef. He was a chef at two Michelin star restaurants before he joined the company. He's amazing. I met him. These people. Yeah, I met him at an event and I was so we were in Colorado, right? I was driving from California and I had caffeine gum to keep myself awake on the road. This gum thing. He's coming back. I said to him at a cannabis event, I was like, man, somebody should really make cannabis gum and he was like, oh, it's hard to get the hydrocolloids to bind to the cannabinoids, but I think I have an idea. And I was like, who are you? And that was how I met Crunchy. He has this really good idea for a CBD tattoo ink. So the problem with tattoos is that you have long sessions where it's not the artist's hand who gets tired but the arm starts to swell. CBD has natural anti-inflammation properties. So that's probably the coolest idea. We didn't do anything with it. He probably hates me that I said that. Well, you still could. We could. It's hard to commercialize. Best advice you have for the aspiring entrepreneurs in this room? We fail so much. I think every founder of any company, and I talked to my friends who are founders, would tell you that the worst idea you can ever have is founding a company. It is just exhausting and tiring and you fail more than you would ever succeed. And if you also ask them what they're going to do next after their company, they all go, I have this really good idea. And so I think the best advice I can give is believe in yourself and don't give up and let the support structures around you, whether it's your family, friends, or whoever you bring into the family that you create support you. And I do have one more question and then we'll open it up because it is candy in essence and a child-proof, what are your concerns about it getting in the hands of kids? And what are you doing about it? They're large. And that's why we were one of the first companies to move to child-proof containers. And we have a tin that's child-proof that we had to go all the way to Europe to find a family company to actually make because most of the child-proof containers in this industry are also what I would call adult-proof. And that's not good either because then people take it out of the container and leave it out. And so we focused on something that adults could figure out how to open and children would be confused by. Do we have questions? Steve. Come in. Hi there. Thank you very much for sharing your story. It's been really great to hear it. In this discussions earlier in the morning we've been talking about what is a brand? A brand is a promise. It's, we'd love to hear more about how you describe your brand, what's the essence or your positioning or your promise, however you want to say it. So great question. Thank you. And thanks for listening to me drone on forever guys. So I think that really successful long-term CPG brands have two things. One, they stand for something and you just sort of know what that is. And the second is they own a piece of somebody's shelf. So when we go to consumer packaged goods those are goods that people purchase and then refresh quite often. There needs to be a spot in somebody's home or office or suitcase where when it's gone they need to get it again. Because if you're not fulfilling a need that when they're missing they feel like they're missing something you haven't done your job correctly. So I think focusing on fewer things that deliver that oh my gosh I have to have this effect is really important to brands. And in the long run brands focus on that identity in that moment. And if they nail it they're successful and if they don't in the use case for which they were successful doesn't work anymore than they die. And what's your line? Find your right. Find your just right is our tagline. And who came up with the name plus products? So we are not good at naming things at plus. Our first name was cannabis plus gum and then we called it plus gum and then we didn't make gum anymore and it took us still another six months to call it plus. So yeah, that's how we came up with plus. Any other questions? Yeah, I had a question about shelf space and all the retailers are charging fees. How do you guys manage in that? It's starting to happen. I mean it's so shelf placement fees are traditional in other industries that plus we've always taken an odd approach to pricing which is we have one price and it's based on tiers and so it's not one price but it's one price for everybody. We didn't run any special programs and then shelf placement fees started to exist. As a brand we'd rather they didn't were the last one to pay it in a store. But there's a part of our mission which is also to be on every shelf. I believe like everybody deserves access to affordable cannabis. And so we've priced ourselves sort of mid-market so we seek being on every shelf. We've gotten in some real heated debates with stores over placement and sometimes it means we're not in stores. It sounds like regular retail. The difference between cannabis retail and regular retail is regular retail sort of been doing it for a long time and in cannabis retail a lot of people are making the mistakes for the first time and that's fun. The question, great interview by the way. First of all responsible, thoughtful questions that are great for the industry and you came off like a, yeah. Thank you. I'm talking about the answers mostly but also good questions. And then you also came off like a straight man in a sitcom which was entertaining. I have a question about ingredients. I like the part where you're complimenting me then I'm just kidding. I have a question about ingredients. You mentioned the THC going through the liver and that is a slightly different effect than smoking it but you also mentioned entourage effect and I would just assume you were using THC distillate and adding that to your product. Are there other ingredients that you're using and are you using a different kind of extraction to get those? Like how's that happening? So what's a little bit different about PLOS is that we have never done our own extraction because we instead focused on getting to HPLC machines which just stands for high pressure liquid chromatography just a way to test all the different compounds. And so what we do is we actually buy lots of oil and then we mix and match it together so it has the right blend of things that are inside of it and then use that to dose it. The combination of THC CBD and all these other compounds with also sugar and gelatin and flavoring all lead to a consumer effect. And our goal in the manufacturing side is to make it the exact same every time first and then focus on what do these things do. I can tell you that we're still chasing and make it the exact same thing every time. Where do you get your cannabis and what is happening with the wholesale price? So we have, we call it a 40-40-20 rule. So one of our suppliers is 40% and other does 40% and other does 20. The only one who we publicly talk about is Emerald Bay Extracts and that's because we almost acquired them and it was for public companies. We have to tell people about this stuff. And the other companies, they've asked, they like to keep quiet. Is the wholesale price? The wholesale, so we've paid the same wholesale price because we wanna keep our people who are making it in business. We can, I can tell you that prices are going down but we hope they come back up as well. It'll make it the right thing. I think that we have a very, plus we think that over time, the price of flour and extract will continue to go down and of course edibles will come down as well but the further you are from the agricultural product, we think there'll be some gaps that open up for, yeah, exactly. And that's how it works in corn, right? So corn's commoditized, corn syrup less so. There's some brands in corn syrup like Entromyma which is delicious and it's so bad for you though. And then there's like manufacturer goods which in the U.S. all have corn syrup. Right, King corn, we have another one. Yeah, I have a two part question for you and the first is where are you seeing the highest ROI on marketing to end users? And the second part is would you personally anticipate changing your focus on different marketing channels to accommodate new entrants into the market? So for marketing ROI, I think anything, and look, we just launched a big out of home campaign. We did a rebrand of our TINs and we wanted to make sure that people understood that as well as take some positions on being, getting a brand out there that people understood were the ones that our grandmas can be proud of. I think there's nothing better than in store work with the people who are selling the product to people who are new to the industry, especially in edibles. If people who are selling your product meaning the Bud Tender or Helper, they have a bunch of different names that people use for people who are helping new entrants decide what to buy, that is the best work period. I look forward to more and more marketing channels being open. I think marketing in general, or at least sort of our philosophy is there's no secret sauce. You have to do some of all the above and at the core of it, it's your product that keeps people coming back because marketing only gets you your first sale and every single subsequent sale is on the legs of your product. Anyone else? Right here, hi Jake. My name's R, I'm the co-founder of a software company called WebJoint. I am wondering, do you have any plans to go direct to consumer and if so, how are you doing so? That is a great question. And on the THC side in California, we would compete directly with a lot of our stores and so we wanna be everywhere, we don't wanna only be some places so we have no intention to do that here in California today. Do you have separate operations in other states? When I don't answer questions, by the way, it's because we're a public company in case that wasn't clear, sorry. By the way, let me ask you about that because the volatility goes nuts. How difficult is it to be CEO of a very volatile sector where everything you say could make huge? Have you had to learn to shut up? I wish what I said mattered. I wish that was what was moving it around. I think it's like a crazy person who wakes up and pays a different price for things every day, right? Is it worth it, I guess? Yeah, so that's a question about why we're public, right? And so the answer is we took a million dollars in an investment round three years ago for about a third of the company because we couldn't make payroll and our company was completely failed, like we were in debt. And all of my co-founders had cut their salaries back to half and somebody came in who was willing to make a million dollar investment with the requirement that we go public by October 30th of last year or else they wouldn't make the investment. And the reason why they required it, and this is super esoteric to the cannabis industry, is because they were Canadian citizens who were worried if they ever had a payout from the cannabis industry that the feds would actually seize the money or go back in time later and arrest them because our department of justice is a long arm, like they get people in FIFA for weird stuff. So they wanted a relatively quick payback. Well, they wanted, by going public in Canada because they're Canadian citizens, it's legal for them, it's liquidity for them, it was a whole. Got it. And so from that moment, you don't take that kind of money with a gun to your head. They got a 50% dilution penalty unless we weren't public. You don't take that kind of money unless that's your only avenue, right? And so without their faith and belief in us at a time when nobody else, I mean, we could not raise a dollar, we would not exist. So... Oh, glad I asked that. So then the other question is why take it, right? Because that's an awful lot of dilution to take as a young company. It's because we took my family friend's money. We took my friend's money and we took money from my father and I felt like we owed it to them. My co-founders and I were fortunate enough to have turned the corner on that. How do you feel about it now? I'm learning a lot. I am a 31-year-old CEO of a public company and that's wild. I think that it's sad that retail investors have basically missed out on all the money that VCs have made in the U.S. The retail investor basically gets towed except now finally on some IPOs like, you know, they're knocking back the prices because people are tired of this. I don't think it's fair that the really wealthy get to pull untaxed money into a VC fund and keep tripling and quadrupling their money, selling the same companies that they own to themselves. Well, I just feel like the real IPO is the IPO that is the sales shares that happens before the actual IPO. Exactly. Yeah. I mean, look, we're a weird company, right? So we're one of the, I think we're the, or I know we were the first we may be one of the only cannabis companies to actually do an IPO in Canada and not in RTO. And that was A, a mistake, but B, because it was more work, but actually really put a sense around our company that when we do things, even if we don't like them, we're going to do it the right way. But okay, so final, and I'll stop because I'm obsessed with this. If you didn't have a gun to your head, you wouldn't have gone public. You wouldn't recommend going public. It's like I said, it's great to have retail shareholders. I think they drive you to do different things. The retail shareholders drove us to get licenses at a time in California where it wasn't clear that that was an important thing. And so who am I to tell the market that they're wrong? So I think it's great. I think as a brand, a really successful brand should be one where people love the product and want to own a piece of the company and we're all in the same team. That's nice coming out of social networks where it's not clear that the product being sold understands it's the product being sold. And by the way, if you're not paying for a social network, you're the one that's the product being sold. Well, that's a good way to look at it. Yeah, it's in this industry, you can buy it and be happy and everybody along the chain is happy. And so that's nice. Oh, I'm not sure if you'll be able to answer this, but have you looked at expanding outside of California and if you do so, would you set up separate operations in other legal states or think about licensing your brand? We actually are launching in Las Vegas this quarter, which is exciting because we're almost at the end of the month, so, you know. Soon? Yeah, and the way that we launched in Nevada was by taking, we called it a Navy SEAL team from our factory and deploying them there because we've seen a lot of brands as we traveled because we started in Colorado and we go around all these states. It's the same name of the brand, but it's a packaging that's different. It's a taste that's different. It works differently and it's not the same at all. And so it costs us more to do it that way, but this is the only industry in the world where you're gonna have to make Coca-Cola in New Jersey and New York and it has to taste the exact same and your customer's traveling between both places but your product can't. And if you're a company who can get that right when other ones are getting it wrong, we think that's a really powerful statement to your customers. We could be wrong. That's just the way we think about it. By the way, are your grandparents still alive? One of my grandparents. Are they proud of you? Yeah, my dad's mom is still alive. She has Alzheimer's, which isn't great, which is tough. But my grandfather, who was a doctor, passed away a couple of years ago and he was around at the beginning of the company and he fought in World War II and he was here on the left and became a doctor. I'll never live up to that stuff. So I was talking to him about it before he passed away and he was saying that he's always wanted to do research into this stuff because some of his patients used it and had great stories about how to help them. So I think they would be. I think not being on the smoking side is really important. My grandma was a smoker and quit, so I think that would be really important to them. It's just when you said a company your grandparents can be proud of, I was wondering if how would that bring you? So there's this thing that happens when you grow as a company where you have to make this thing called a brand book. I don't know if people know this about brands, but yeah, it's like a waste of a bunch of money. No, I'm just kidding. It's a way for you to state as a company what you believe and our first page has a list of all the grandmothers of the people who work at our company because we think about it every day, so yeah. All right, we're gonna have one more question. So a huge fan of Plus Gummies is actually, I'm a really experienced user and this is actually one of the few products that allowed me to actually understand how much I can consume and off the bat, like I was able to figure out that 20 to 40 milligrams is when is my limit and after that I'm just gonna be couch locked. I just wanted to know, I noticed with topicals, they have a lot of people telling their stories like how I just told mine, but within the edible world, they don't as much and but amongst consumers, amongst each other, we all tell our stories all the time and we're always saying, oh, you know, you always find that person who ate way too many edibles. Why aren't the edible companies kind of taking off that same route that topicals, creams, lotions do? Because I think that would help with the stigmatism that we have with edibles. I mean, if you take a three milligram, that's not gonna do anything to you but if the company says that, that's one thing but if I say that as a customer writing a review and you guys market that, I feel like that would help a lot more and I don't, from you guys to Carova to no one, I don't see anyone of them doing that. So first, can we talk after this? Cause maybe we can talk about your story. I think that- He's become a brand ambassador. Yeah, I think that edible companies, I mean, there's plus, there's key whether for companies we tend to be family oriented, we tend to be sort of quieter and not know how to market very well, which is why we are in food manufacturing because you can make a different product, right? And so I think we're learning how to do it. I think it's going to take us a long time and I think that edibles have a real stigma about them that nobody wants to hear the story. And so authentic stories, I think are gonna resonate. I think that the more that we talk about stories ourselves or more I talk about on stage, it just sort of falls on deaf ears. It takes real people telling their stories to do the difference. So yes, I think that's a great idea. All right, we're going to end it there. I want to thank Jane for coming here today out of her busy schedule and Jake too.