At The Heart Of The Green Rush

Very Scarce founder Steve Weiner shares on Humboldt’s heritage and craft cannabis’ future

Perhaps contrary to some people’s expectations, there’s a fairly strong representation of veterans in cannabis. How did you end up working in cannabis?

As with a lot of people, I experimented with cannabis personally in high school (sorry if you’re reading this Mom and Dad). Unlike most, however, I had to give it up, full stop, when I went to the Naval Academy and spent the next 10 years as an active member of the military.

My first job as a nuclear submarine officer in the Navy had more parallels to cannabis than you’d imagine — regulation, administration, managing people and complex operations.

“Radioactive material’s track-and-trace system, pound-for-pound, is almost identical to cannabis (although the Navy version was perhaps administered better).”

My “adult” interest in cannabis was really piqued during the summer of 2015 I interned in San Francisco. California was still only medical marijuana at that time, but I found a company that offered consultations for cards. My doctor showed up on a hoverboard, so I wasn’t sure what to expect. As we discussed my background, he interrupted me when I said I was in the military — he had seen so many veterans that were seeking some type of relief for PTSD, anxiety, insomnia that he thought the VA was letting slip through the cracks.

After my MBA at Wharton, I started working for Expa, a startup studio founded by Garrett Camp, co-founder of Uber and StumbleUpon. For me, it was like being a kid in the candy store — I was recruited to lead new projects, helping companies develop their go-to-markets, work on branding, build products and teams, and more.

After a few years of running on the venture capital hamster wheel, I wanted to work on projects that were more meaningful to me. I decided to go out on my own and start advising companies closely, which eventually led me out on assignment to Humboldt County with a company called Humboldt Sky.

For people within the industry, Humboldt’s fairly iconic but, more broadly it’s perhaps not as well known. How would you explain it to people?

Prior to my work, I’d never been there myself — it’s 200 miles from the Golden Gate Bridge straight up 101, literally no turns. One common perspective I’d heard is that Humboldt might be the up-and-coming Napa/Sonoma of cannabis. The history of Humboldt is richer than many, including myself, might have realized.

With the Summer of Love ending in the 1960s, you saw hippies and disenchanted urbanites join a back-to-the-land movement, a kind of escape for a simpler life in the mountains.

People were homesteading land and planting crops on a commune, including cannabis. They ended up acquiring strains from all over, Afghanistan and Mexico, getting very good at cultivating in the rural and mountainous terrain, (which was great for concealing prohibited plants), and really mastered the art of growing sinsemilla (without seeds). Humboldt, as part of the Emerald Triangle, became a huge producer in the United States.

When medical legalization came in the ’90s, some estimates have the Emerald Triangle supplying 90% of the cannabis grown in the United States. So, by the time of recreational legalization, the industry and operations in Humboldt were well-developed to the point that some traditional operators opposed it, seeing only more fees, taxes and oversight.

As a rural community, Humboldt is plagued by a lot of the challenges that other rural communities in America face — drug abuse, transient homelessness. But it’s truly a special place, one that took risks that we’re all benefiting from today.

Humboldt Sky has a history that echoes Humboldt more broadly. How was your experience consulting there?

The farm is a 40-year-old operation — the owner homesteaded the land in 1981 and started a garden with ancestors of some of one of the strains we grew this year. With recreational legalization approaching, Humboldt Sky was founded in 2015 and began commercializing by putting up a state-of-the-art drying facility and meeting compliance requirements (like making the farm accessible for those with disabilities).

The farm had been operating in the legal market for two years and was looking to raise capital. They were considering a few different corporate development options: brand expansion, pivoting into wholesale, becoming a leasable real estate asset (which is actually fairly complicated due to license transfer restrictions).

For me, I was thrilled at the opportunity to get my hands dirty, literally. It’s really hard to try to understand what it’s like in the supply chain until you’re actually doing something as “simple” as negotiating a sale or coordinating a transfer. There’s even more of an appreciation when I’m joining at the beginning of growing season with limited knowledge of this world, these plants are constantly doubling in size, and finally we’ve cultivated them to reach over 10 feet tall.

The California market has been challenging across the board. What are Humboldt farmers facing in particular?

Farmers face a lot of challenges. The biggest competitors are not the other growers right around you. It’s not the indoor growers or mega-farms. It’s the traditional, very professionalized black market, which is 2–3x or more the size of the legal market.

“The black market isn’t slowing down because of legalization. It’s adapting — blending in right in plain sight.”

State and county laws and policies make for an incredibly complicated regulatory overhead where you’re paying for licensing and permitting fees, environmental compliance, and more. Then, you have taxes, where you might see an aggregate rate of over 50%. Finally, there’s just not enough places selling legal weed, as local and city laws limit licenses so that only 20% of California jurisdictions have cannabis commerce.

A lot of farmers are forced to make difficult decisions: “Do I send all my crop through legal channels where I may or may not make that much money? Or do I send out the backdoor to the black market?” Those are very real questions that farmers and operators are facing in 2020.

You’re walking onto the farm with no background in agriculture or cannabis. How did you contribute?

Farmers talk all the time about what kind of products they’re using to cultivate, different nutrients, different bug and pest repellents, etc. They don’t really talk about business model improvement or streamlining operations. The first thing I did was simply integrating a normal startup software suite and processes — think Google Suite, Gusto Receipt Bank, cleaning up QuickBooks. This allowed us to create accurate financial models and be strategic about the business.

“Pricing cannabis isn’t that different than pricing a pre-revenue startup in some ways. It’s about who you know and the narrative you create.”

You’re not just selling one product or into one channel; you can make sound decisions in optimizing revenue. Are you selling your smalls (smaller buds that don’t show well enough to sell as flower) into pre-rolls, extractors, enhanced joints? Do you have the right partners and deals to maximize revenue? Are you telling the right story with your brand?

How do you think about the concept of craft cannabis?

When you’re growing large quantities in bulk, it’s an agriculture product that’s trending towards commoditization, especially as large scale operations are springing up. What is unique in Humboldt is this focus on craft cultivation, where plants grown outside are allowed to reach full term and are not grown under lightbulbs in a warehouse.

You can’t call it organic because that’s a federal designation. For all intents and purposes… it’s organic. We’re also sustainable — capturing our own rainwater and using it for irrigation, powering via solar, seeking to be carbon neutral.

Craft cannabis plants can achieve full genetic expression because it’s being grown naturally under the sun, albeit with more genetic variation. Consumers don’t really understand this yet — this delineation is an area where branding and great product development has an opportunity to segment and differentiate the market. Humboldt farmers have been growing this way for decades.

After your first season in Humboldt, how are you positioning Very Scarce for the future?

Very Scarce is a business design studio that I created to help companies with hands-on strategy projects. Cannabis companies that have been around for a while are great at doing very difficult things (such as off-grid cultivation) but struggle with easier, day-to-day things (business operations, managing finances, and HR programs). Sanding down those rougher spots is essential to building a modern cannabis business, but many can’t afford to bring on a full-time strategy professional, COO, or CFO. That’s where Very Scarce comes in.

I’m passionate about helping small businesses grow sustainably. I’ve worked with VC-backed companies trying to achieve hypergrowth, but it’s so rewarding to come up with an actionable plan for a small business to increase margins 10–20%. I see a lot of opportunity to continue to create value by focusing on the fundamentals, which is even more important during the uncertainty caused by COVID-19. It’s unfortunate that there’s little governmental bandwidth to consider more progress toward legalization. On the other hand, cannabis has been deemed an essential business in many states, tax relief may finally come our way, and consumers have been demanding the product more while stuck at home. I continue to be optimistic about the future of cannabis small businesses and hope to continue helping them grow sustainably.

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