Podcast Episode: Is Less More? The Low-THC/High-CBD Cannabis Cultivation Strategy

Chris Walsh

Welcome to Seed to CEO, the podcast about making your way in the cannabis business. I’m your host Chris Walsh, the CEO of MJBiz.

Today I’m speaking with Mason Walker, who is the co-owner and CEO of East Fork Cultivars in Oregon. The company launched in 2015 with a focus on cultivating CBD rich cannabis when many growers were more interested in THC, as many still are now. Today with Mason at the helm, East Fork still has a deep commitment to CBD, but also grows THC-dominant cannabis.

Mason made the leap into the industry from a completely unrelated field – media, journalism – and he helped grow East Fork from a very small cannabis garden to a full-scale production farm. The company is now expanding into other areas like retail and consumer packaged goods.

We’re going to talk about how you can build a successful cultivation operation with a low-THC/high-CBD focus, and we’ll look at some considerations when growing both marijuana and hemp. We’ll also explore how East Fork has diversified its business while sticking to its core strategy along the way.

Before we dive in, though, I have a little announcement. And actually it’s a pretty big announcement.

We have officially launched registration for MJBizCon, which will take place in Las Vegas October 19-22. Live and in person.

We’ve locked up our keynote Daymond John of Shark Tank fame. He’s also the founder of the clothing line Fubu, and he’s going to share some great business and investing insights from his experience.

We also have 50 other speakers and our educational sessions, as well as 1,000 exhibitors. Lots of deal flow, plenty of networking opportunities and parties, of course.

You can register and get more information by visiting MJBizConference.com.

Okay, we’re about to get started. But first, a quick word from our partner Headset.

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Chris Walsh

Welcome back to Seed to CEO the podcast about making your way in the cannabis business. I’m joined now by Mason Walker, the CEO of East Fork Cultivars based in Takilma, Oregon. It’s a very remote spot in the southern part of the state out near the California border. When I looked it up on Google Maps, one of the few businesses that showed up was a treehouse resort or a treesort. Clever.

The area was a hippie enclave several decades ago, and it’s a fantastic place to grow cannabis outdoors, hence East Fork locating there.

Mason, thanks for joining us, and welcome to the show.

Mason Walker

Thanks for having me, Chris.

Chris Walsh

Really quickly, so our audience knows your background. You were in the media business for a decade, and now you’re the CEO of East Fork. There are a lot of other people with professional backgrounds outside of cannabis that would like to make a similar jump. How did you transition from your previous background to running a cannabis cultivation company?

Mason Walker

Sure. So as you mentioned, I was in media for nearly a decade and had my sort of first career in that space. It was sort of happenstance that I was working in that publication when Oregon voters voted to end cannabis prohibition. And I got sort of a front seat to see what the industry was going to be like, writing about the rulemaking process and the early businesses that got into the space.

I was ready for a break, and so I went on a sabbatical back in summer of 2016.

And a good friend reached out to me and asked if I’d like to join up with his brother and their startup cannabis farm and help grow it from a pre-revenue, farm-based business into what we turned East Fork into today.

Chris Walsh

Fellow former journalist. I can relate. Media is not a great business in general, so I can understand why you were looking for new opportunities.

Let’s talk about East Fork Cultivars, and what new entrants can learn from your experience. Tell us about your business model.

Mason Walker

We started just growing for Oregon’s adult-use market. And we’ve since expanded into national, international markets with our hemp farm. We’re still, at our core, a production farm. But we’ve also added a couple of other components.

We’re plant breeders, so we’re a genetics house as well. We sell seed and licensed cultivars. And then we’re also quickly becoming more of a consumer packaged goods company. So we have several branded goods. We sell those through other retailers as well as direct-to-consumer through our e-commerce. And we’re opening the doors on our flagship retail concept.

Chris Walsh

Yeah, I saw that. Congratulations.

Let’s talk about the company’s intense focus on CBD in particular, which has been a part of the strategy since day one. You often hear about growers trying to produce the highest THC content and flower. Your goal overall is quite the opposite. Why focus on the CBD content versus THC, and where do you see the opportunity in specializing like that?

Mason Walker

Sure. So our motivation to grow low-THC, often high-CBD cannabis started with our founding story. We were founded by two brothers, Nathan and Aaron Howard. And they participated in Oregon’s medical cannabis community for about a decade or so. They were caregivers for their late older brother, Wesley, who passed away in 2017.

But they would grow plants for him for therapeutic use. He had some neurological disorders, including neurofibromatosis and epilepsy. And cannabis was a uniquely positioned medicine to help him with the effects of those diseases.

At the time, almost all cannabis that was available through the medical program – or just available genetically – was very high THC. So you know, you could get a lot of variety in the way the cannabis looked and smelled and made you feel, but it would always come with that side effect of intoxication.

So the brothers, Nathan and Aaron, went on a hunt to find low-THC cannabis that could still be therapeutic without that intoxicating side effect. And that’s how East Fork was founded, around that vision to provide a lot of diversity in the plant, a lot of effects, varying effects, just without a focus on intoxication.

That motivation still exists within our organization today. And 95% of what we grow is very low THC still.

Our vision there has evolved a bit though. And it’s more around a vision for what we think the future of the cannabis industry looks like.

Now, it’s not a perfect analogy, but if you look back to the prohibition of alcohol in the U.S. in the early 20th century, most folks, while it was completely illegal, were making the strongest alcohol possible – you know, bathtub gin, moonshine. And as we came out of prohibition, people still wanted liquors. They wanted high-proof alcohol, but the landscape of consumer tastes and alcohol really diversified. And now most people that walk into a bar can order a beer, a glass of wine, maybe a cocktail. Very few people are ordering moonshine.

Our vision for the cannabis industry is very similar. We’re already seeing that shift take place, as prohibition ends.

Chris Walsh

Yeah, I have couple friends who likely still order moonshine. But to your point, there has been this big rush to have more potent THC-rich cannabis in general. So you’re looking further down the road and saying, “This is where we think the industry is going, so we’re going to stay in the CBD focus.”

Mason Walker

That’s right. And really, Chris, it’s less about CBD. I think CBD is largely an anagram for low-THC cannabis. It’s hard to sell the absence of something, and so CBD has become a very convenient vehicle to talk about low-THC cannabis.

There’s lots of other compounds found in the plant, hundreds, if not thousands of compounds that interact with the human body outside of THC. And while THC is very useful, and we’re big fans of it, there are lots of people, talented breeders and growers, working on that compound. We’re working on the other ones for their benefits as well.

Chris Walsh

While I’m talking about the origins of the company, it always strikes me, even after a decade in this industry, how there are so many personal connections. As this industry grows. I hope we hear more of those, and it just doesn’t disappear and become any other business.

So you use words like CBD-dominant, CBD-rich, THC-dominant. You don’t use the words indica, sativa or hybrid. Why is that?

Mason Walker

As you know, Chris, sativa and indica are words that initially described the formation the physical appearance of the plant. When genus and species are determined around plants or animals, they’re often used to describe physical characteristics. And that’s true about cannabis sativa, cannabis indica.

Now over time, those words have been co-opted and used sort of casually to describe the expected effects you could get from cannabis. You know, many people expect a sativa plant to be uplifting in its effects and the indica plant to be more sedative or sedating. That’s simply not true.

We’re at a point where, unfortunately, we don’t have a better system, a better taxonomy to use. And so much of the industry has just used those words interchangeably to describe up and down effects.

While we understand why they’re used, we also believe in hope that there is a better taxonomy that we can work towards that is more scientifically accurate and less about the way a plant physically looks, especially when you consider that most cannabis today has been thoroughly hybridized.

One thing that we’re interested in is helping to develop that new taxonomy. And we’re working with a couple of groups on a few different efforts there. One of the simplest that we’ve adopted is to talk about cannabinoid type because we do grow plants that have varying degrees of different cannabinoids.

There is some commonly accepted descriptions. Type I cannabis is very high in THC and very low in other cannabinoids, Type II has a significant or meaningful amount of THC and CBD, and Type III is a very high CBD, very low THC, often referred to now as hemp. So we use those in our business, because we grow all those different types. However, that that hasn’t really translated to consumers just yet.

Chris Walsh

I imagine there’s some additional marketing challenges if you’re trying to change some of the language that people are used to.

Mason Walker

Yes, yeah, it’s a big uphill battle. And I know a lot of smart people are working on creating some form of taxonomy.

Fortunately, and unfortunately, the plant is incredibly complex. And it’s very difficult to tuck effects into repeatable categories. Especially because one type of cannabis can make me feel very different than it would make you feel.

Chris Walsh

Absolutely. So when you look at determining what to grow, when it comes to high-CBD, low-THC cannabis, what are the things that you look at? Can you walk us through that process?

Mason Walker

As breeders, we’re developing a range of checkpoints, a checklist of qualities that we want in our plants. Some of them are really basic from a farming perspective, the agronomic traits. So is it vigorous? Is it phenotypically consistent? Is it resistant to pests, pathogens, molds, mildews? Those kinds of things.

Then we also select for chemical traits. And those are the traits that are going to be experienced more so by a consumer that include the cannabinoid content, the terpene content, and soon we hope to test for flavonoids and some other compounds that are found in the plant that have an impact on people’s bodies.

Our guiding light in our breeding program though, is terpene diversity. So terpenes are the class of compounds that primarily give cannabis its smell, its taste and a lot of its effects are pretty wide ranging. You know, that’s why cannabis can smell like a skunk. It can smell like a lemon tree. It can smell like a pine tree. It can smell like garlic. That comes from that class of compounds.

We’re also trying to pair high-CBD cultivars, low-THC cultivars with a broad diversity of terpenes so we can have less intoxicating cannabis It still smells and looks and feels great. And it has a lot of diversity.

Chris Walsh

So you focus on outdoor, sun-grown cannabis. What are the advantages of growing, I guess, both hemp and quote-unquote marijuana outdoors versus indoors?

Mason Walker

Well, No. 1: resources. There’s a reason that most agriculture happens outdoors, it’s pretty simple. Less impact on the environment, less energy use, water use – if you use the right practices. So that’s number one.

No. 2, we’re big fans of the effect that the environment has on the plant. The plant responds really well to stresses and can develop different compounds and chemicals, depending on pest pressure, weather events, temperatures. And of course, you can recreate that stress indoors, but there is something magical about just the natural environment that a plant can grow in and how it reacts to that environment. In wine, they call it terroir.

Chris Walsh

This magical element that you mentioned, does this matter to consumers? Do they pay attention to that? Is there a difference to them?

Mason Walker

I think to the very discerning consumers. Certainly we’ve seen in competitions that we’ve participated in, certain consumers prefer sun-grown cannabis because of the way it makes them feel even in a blind study.

Now, it’s true that it’s harder to make cannabis under the sun and out in the elements that is pristine and perfect looking. And there are consumers that really care about the way that flower looks. However, I think in the future is we’ll have less focus on the way that specific cannabis flower looks.

I think more so, though, the big advantage of growing cannabis is cost. Certainly when interstate commerce and national legalization (arrives), there will just be that natural tendency for consumers to pick the lower-cost options, and those inherently will be coming from sun-grown farming.

Chris Walsh

Can you talk about some of the lessons you’ve learned along the way about growing outdoors? And maybe some challenges or mistakes that you made and had to pivot or refocus?

Mason Walker

It’s very hard. You know, there’s a common refrain for folks that comment on the industry that, well, it’s just a weed, you know. You plant it, it grows.

And that’s very true. It’s very easy to grow cannabis. It’s very hard to grow cannabis well. It’s been pretty humbling for us to grow. This is our seventh commercial season. And each season, we’ve had major setbacks, challenges, obstacles we’ve had to overcome. We’re always learning something new.

Pest pressure is one of the more difficult things. You know, one year you may deal with a pest and you learn a ton about that pest. You work with a research university to understand how to prevent that pest in the future or accommodate it, give it an alternative food source. And then next year, you’re like, “Yay, we beat that pest.” And then a brand new one pops up, and you have to do the process all over again.

And this is happening more and more, particularly in our region because of the intensive nature of cannabis farming. You know, there are thousands of acres of intensive monoculture cannabis cultivation in Southern Oregon. And with that comes new pests that are attracted to that new food source.

Chris Walsh

Well, you know, being in this industry, it’s the same all across the board. And no one thinks it’s as hard as it is, whether you’re growing or doing something else. It’s a challenge. It’s like playing whack-a-mole.

Mason Walker

Certainly.

Chris Walsh

So what’s the ideal kind of climate and location for growing outdoors?

Mason Walker

We’re really lucky. And as you mentioned at the top, you know, one of the reasons we are based where we are is because of its history being an excellent place to grow cannabis. We have long, dry, hot summers. The plant loves heat. It loves soft, direct sun.

We also have great access to water. So that combination is a great reason that we grow in Southern Oregon.

Chris Walsh

When we talk about you growing both hemp and marijuana, that’s difficult to do, especially when they’re near each other and outside. Can you replicate techniques you use in hemp for marijuana and vice versa? Are there differences?

Mason Walker

Now when you talk about hemp today, legally speaking, dating back to the 2014 Farm Bill, hemp is just low-THC cannabis. Full stop. It doesn’t have to look a certain way or be for a certain use. And so most of the hemp that’s grown today is what we call floral hemp. It’s hemp that is grown for its flowers that are going to be consumed by a person or put on a person’s body as a topical.

The biggest difference is that the regulatory space that we’re growing those in. So the one acre that we grow just for Oregon is contained in high fences with cameras everywhere. People have to sign in and wear badges when they work there and visit there. Lots more rules. We track every plant with a barcode and an RFID chip.

But on the flip side, it looks like a farm, looks like we’re growing tomatoes, you know. It’s a wide open field that we cultivate with a tractor that does not have cameras. it’s a lot more relaxed. And it’s a really odd send up because we grow them about 50 feet apart. And you can stand between them, and you’ve got a fence and cameras in one direction and then just a normal looking farm in the other direction.

Chris Walsh

That’s crazy.

So these regulations and the legal pitfalls and compliance demands that come from the hemp side for one thing and the cannabis side or another. They’re each daunting on their own. How do you navigate around the differences in these?

Mason Walker

it certainly takes up a considerable portion of our time. Sort of the cost of being pioneers in this space is to move through the ambiguity of the new rules and the quickly changing regulations.

First off, as an organization we’re very engaged and interested in helping to shape the rules of our industry. So we sit on a lot of trade association boards, advisory boards, rulemaking committees. We spend a lot of time to try to help shape those rules in a way that we think is smart and fair. That’s allowed us an inside track to understand how those rules are made and be able to adapt to them.

It’s really helped us get out of some pickles, some well-meaning but poorly crafted legislation that would have gone through. We’ve been really involved in trying to make it better.

We also have a pretty diverse legal team. So we work with a number of attorneys, third-party attorneys, on land-use issues, intellectual property issues, compliance issues. And we’re really lucky in Oregon. Here we have several boutique law firms that have a lot of deep knowledge in the cannabis space that we can pull on.

Chris Walsh

You’ve said federal regulations are the number one existential threat to hemp production. Can you expand on that?

Mason Walker

Yeah. I think, you know, that sounds a little bit bombastic. But what I mean is that the USDA and the FDA hold the keys to what the future of the hemp industry in the U.S. looks like. And they have a lot of cooks in the kitchen. Right now, there are a lot of voices that want different things, lobbyists and lawmakers alike.

You know, some folks would like to see the industry be essentially a big ag diversification tool, where you have these large mega-farms in, say, Kentucky that grow a large amount of commodity hemp, and it’s an alternative to growing tobacco that those farmers have historically grown. And then you also have voices that really want a patchwork of small craft organic farms, growing floral hemp. Then you have voices that are really keenly interested in building out a framework that supports and encourages a domestic supply of hemp fiber and seed. They don’t really care much about CBD and the floral side.

So there’s just a lot of cooks in the kitchen. And a lot of ways that the industry could go. Now the USDA spent quite a while putting together their interim final rule that they finally adopted that governs how how and what we can grow as some farmers. It started in a really troubling area and ended up being moved in a place that’s a little bit more accommodating of a diversity of farmers.

But we’re all still waiting on the FDA to give us a little bit better guidance than what exists today. And it could go a lot of different ways. We could wind up being governed like an herbal supplement. We could also be heavily FDA-regulated and require GMP-certified laboratories to do all of our product formulation. And, you know, it can go in a lot of different ways. And I think everyone is waiting with bated breath to see where the FDA comes down.

So I think that federal regulation, both from the USDA and the FDA, kind of holds the keys to where this industry can go. And it’s still a little bit unclear which direction it will go.

Chris Walsh

Well and I think, when it comes to hemp, this gives us an idea of what’s to come if the federal government starts regulating marijuana. It’s going to be messy, there’s going to be a lot of unknowns.

How do you prepare as a business for a landscape that might shift completely under you? You gave some examples of how this might play out. But how would that affect your business? How are you gearing up for whatever may be down the road?

Mason Walker

Being nimble in this space is essential. And that has been kind of a core thesis in our business plan, as we’ve raised money from investors and as we’ve added new products and participated in new markets. We’ve made sure we’ve built the business in a way that it can be nimble and responsive to those changes.

We’ve also leaned heavily into diversification of offerings. So instead of going deep on one thing that we do well, which some folks on our team would love to just grow cannabis and sell that in one market and have that be our business, we’ve instead really focused on diversification. A range of product offerings, selling through a range of channels and a range of markets to a range of different customer types. And that’s been really important for us.

As rules have changed, we’ve been able to shift resources and shift strategy into those spaces. You know, we sell products directly to consumers, we sell products to retailers, who sell products to product makers, we sell products to farmers. So we have these four very different channels and customer types. And then we have different offerings within each of those spaces.

And then of course, we sell things in two sides of the industry, in both the adult-use regulated cannabis industry as well as the hemp industry. So we’ve focused really on diversification, and we haven’t invested too deeply in any one area so we can remain nimble and respond to those quickly changing factors.

Chris Walsh

How do you balance the diversification with potentially going too broad? And this is a big challenge in the industry. There are opportunities everywhere we look. We’ve dealt with it at MJBiz. And countless other companies have to where you all of a sudden turn around and you’re doing a million different things.

So when you balance, like “What fits with our philosophy and our strategy. We want to diversify, we don’t want to be dependent on one area, whether it’s a region or a business model.” What underlies these decisions that you make about how to diversify meaningfully and mindfully?

Mason Walker

I think we’ve gotten better at this over time. We’ve certainly made some mistakes where we’ve stretched ourselves too thin and tried to do too much at once. And if you do that you wind up not doing anything particularly well.

Last year offered, with COVID and sort of all the eccentricity in the market that presented, it offered a chance for us to recalibrate and really refine our approach to the markets. Define our customers, really make sure that everything we were doing was serving our core values and also made sense for us to do as an organization.

I think, to your point, folks that rush towards vertical integration or serving too many markets lose sight of maybe that what made them special in the beginning. And we certainly had a bit of that. I think we’re doing a good job of bending back.

Our guiding light is really our founding values and principles around advancing regenerative agriculture, social justice and science-based education. And the platform we have is this terpene-rich, chemically complex, diverse cannabis that we grow as a production farm, that we breed as a plant breeder and then we package into consumer packaged goods products and offer those in different channels.

And, you know, it’s always a battle, I think, deciding, should we go deep or go wide here. We’ve definitely hesitated and said no on some opportunities for vertical integration. For instance, we don’t do any of our own extraction or concentration. We work with third-party contract manufacturers to make all of our oils and extracts. And we’ve certainly debated should we bring this in house. (We’re) probably paying a premium to have this externally. But I’m really glad we never pursued that because that technology is changing so quickly. A lot of extraction has been really commoditized. And our needs have evolved over time around which solvent is in vogue in the market and what our technical requirements are to service our customers. So that’s one example where we said no to diversifying for diversification’s sake or just vertically integrating completely. And I think it served us well.

We are tackling a very new vertical with the launch of our first brick-and-mortar retail in Portland, Oregon. It’s called Hemp Bar. It’s an alcohol-free bar that will have a minimal amount of merchandise. CBD-rich products from our branded products as well as the products that we power with our ingredients, have ingredients. And then it will be a bar setting for the community to come in, have happy hour meetings, you know, hang out with friends. To order a CBD mocktail, relax in a bar setting without being alcohol-focused. We’ll see how it goes.

Chris Walsh

That’s an interesting evolution of the strategy. Is the goal a financial one? Is it branding? What’s the primary driver of that?

Mason Walker

We’re hoping Hemp Bar serves a lot of different things for our organization. You know, certainly it’s a platform for our mission. We’re able to host education events in the space. We’re able to promote a lot of the values we have and the practices we have on our farm through imagery and one-on-one education with consumers there.

But we’re certainly expecting it to be an important part of our business as well. Retail is really hard to do, retail in adult- use cannabis is really hard to do. This is a hemp-only retail outlet, so it won’t be subject to 280E, which will hopefully be our benefit.

It is a new foray for us, but we do have a good foundation. We’ve run an e-commerce outlet called East Fork and Friends for a little over a year now. And we sell, again, both our branded hemp products as well as a range of products that are made with our hemp that are made by other product makers. And that’s a big foundation of our organization as an ingredient supplier. And then we buy those products back from our ingredient customers and sell them in the sort of cohesive shop where all the hemp comes from one place.

But it’s lots of different brands and lots of different forms and product categories. We’ll be carrying over that concept just into this physical space. People responded well to that concept so that we’ll be doubling down on it physically.

Chris Walsh

Lots of diversification. I like the innovation. Have you gone in a direction that you had to pull back on that that maybe didn’t work?

Mason Walker

Yes, yeah, one big mistake we made was in 2019. We had some really exciting conversations with product makers that wanted to source more hemp than we could grow on our farm alone. You know, we own and operate a 33-acre farm in southern Oregon. We cultivate on average about 10 acres of hemp each year. We debated leasing additional land to grow more hemp, but we decided we didn’t really want to do that. There’s something really nice about sort of a family-scale farm where you can have high attention to detail and quality.

So we put together what we called the organic hemp farm network, where it was essentially a co-op of farms our scale that shared some of our third-party certifications, some of our practices. And we could pool hemp grown on those farms along with our hemp to supply some of these larger product makers. We were a little bit too early. Most hemp farmers that participated in 2019 saw way too much hemp, floral hemp grown in the U.S. in 2019. There was a glut of supply. The commodity markets, the ingredient markets crashed that winter between 2019 to 2020.

We unfortunately weren’t great partners to some of those farms that participated because we didn’t have the outlets for their hemp that they grew on our behalf that we expected to have. So we had to pull back from that concept.

It was pretty painful. You know, these were our friends that were growing up really excited about this sort of co-op vision that just was a little bit, I think, a little bit ahead of its time.

Chris Walsh

Yeah, well, we had the co-founder of Netflix speak at MJBizCon, our trade show, two years ago. And he was talking about creating a culture of innovation. But it was interesting, because he said, “I had a thousand bad ideas, really some of them really bad, before hitting on the one good one.” So you’ve got to experiment and you’re going to have some failures and learnings along the way.

I wanted to just highlight really quick, you had some good perspective earlier, how you haven’t gone the vertical integration route. There seems to be a big rush to do that around the country, with some saying, it’s really going to be the key to survival in the long run. But that may not be true. So I hear a lot about that. And companies are moving more and more in that direction. But you’re finding success not going that route.

When it comes to market research, how do you approach staying in touch with consumer preferences and trends?

Mason Walker

We’re really engaged with our community. So like I mentioned, we sit on a lot of trade association boards, advisory boards, rulemaking committees, and we also participate in peer mentoring groups. So there’s a really lively community of cannabis and hemp industry folks in Oregon that love to share best practices and get together, gather and talk about what’s going on. So that’s been really invaluable.

I think, you know, our vision for the industry at large that the rising tide lifts all boats. That the participants today, you know, we’re better served as collaborators than competitors, largely speaking.

So that mantra’s luckily a pretty loud one in Oregon here that’s helped us immensely stay in touch with consumer trends, shifts in the marketplace, understanding new regulations.

We also are voracious readers. We have lots of folks on our team who kind of keep up with all the magazines, great magazines, like your publication, and …

Chris Walsh

I appreciate that.

Mason Walker

…attend events like MJBizCon and other industry events. You know that that’s of course valuable as well.

Looking forward, I think there’s not one right way to make it in the cannabis industry. Like any other industry, the winners are going to be those folks that do something well, are able to communicate that thing that they do well and find a market for. And that can mean many things. For some people, that means capturing every penny in the value chain by being perfectly vertically integrated so they can compete on price. For some folks, that means having really strong values they stand behind, a more niche product offering that there’s a select community of people that will pay a premium for.

At the end of the day as the cannabis industry matures, it’s going to look like the much broader economy and play by a lot of those same rules. And we’re certainly in it for the long haul. We plan to be around for a while.

We’re actually doubling down. We’re raising our series A equity round this year. So after five years of just leveraging debt for growth and cash flow for growth, we’re ready to take that next step as an organization. And we feel it’s a really exciting time for the space, especially as the chatter around interstate commerce or national legalization picks up.

Chris Walsh

Mason, you stole my thunder. I was going to end with your thoughts on the future of the CBD market. But I have one or two more questions to get out before that.

When you talked about, you know, being in touch with the consumer base, and you have this network and this connection, what is probably the biggest trend or shift you’re seeing on the CBD side?

Mason Walker

I think on the CBD side, it’s starting to be more understood by consumers as a functional ingredient and less as a sort of mysterious part of cannabis, which I think is an exciting transition. What I mean by a functional ingredient, if you go into the grocery store, there’s certain categories that you go and you buy a product for a specific function. It’s going to alter your mood, like you know, you’ll buy an energy drink or cold brew coffee for a very specific reason, a specific function. You’ll go to the health supplement aisle, right, and you’ll buy turmeric capsules for very specific function, you’ll buy kombucha for your gut health. I think that consumers are starting to evolve thinking around CBD and hemp as another one of those sort of functional ingredients that can give them a specific outcome that they’re looking for. I think that’s really exciting.

And I think what we’re going to see in CBD space is that those three letters, that acronym “CBD,” moved from the front of packaging to the back of packaging. I don’t think it’s going to happen overnight. But I think it’s going to be less of a, you’re buying a CBD product sort of thing. And moreso where CBD will be that functional ingredient that moves into all these different categories like beverages and health supplements and food. When you buy a protein bar, right? You’re not buying a very specific ingredient, you’re buying the protein bar, and it has a few functional ingredients in it. I think we’re seeing CBD slowly migrated into being that essential functional ingredient that’s found in lots of different products.

Chris Walsh

That’s great. That was again, tied to my last question. We’ll edit all this out and rearrange. Just joking.

While we’re staying on this topic, then, you know, there are thoughts that we’re at the tip of the iceberg and that this is going to be a massive global industry, or what you just described. There are also thoughts that this is a fad and will eventually become like fish oil, or echinacea. What do you say to that? There are concerns, and valid concerns I think, about where is this you know ultimately going to go.

Mason Walker

I think cannabis’ longevity and CBD’s longevity will lie in its effectiveness. So if product makers are able to make effective products that deliver on their promise on the value, that people find that function to actually be true in their lives, if it helps someone sleep it, if it helps someone with stress management, if it helps someone with energy levels, if it helps someone with mood or with joint pain. If we can actually deliver on those promises, it’ll be around for a long time. It will not be a fad.

It will be a fad if it falls flat. That people don’t get help sleeping and they’re like, “Oh well, people told me CBD would help me sleep and I took CBD and it didn’t.” Then it will be a passing fad.

I will say, anecdotally so far, they’re working pretty well. You know, of course it’s not a panacea. It’s not a fix-all for all society’s ills and people’s pains, but it seems to be a really effective supplement to add into people’s regimens.

Chris Walsh

What do you think about the market for other cannabinoids?

Mason Walker

I don’t think we’re gonna see the same star turn THC and CBD have had quite so brightly from CBG, CBN, THC-V. I think that there will be some hope and expectation put on those, but I don’t think they’re going to be as big a spike as what we’ve seen from THC and CBD.

Unless of course there is a star candidate in there that just does something so incredibly well by itself that its effects are undeniable. So a lot of chatter I’ve been hearing recently is around CBN. A lot of people hope that it that it is really a killer sleep aid. So we’ll see if that kind of takes off and has a star turn. I am skeptical though.

Chris Walsh

Well, we’re almost out of time. I promised earlier that we talk quickly about your national strategy, which I think is an interesting part of your path forward. Can you just give us the 30,000-foot view on how you are trying to approach becoming a national brand and national company?

Mason Walker

Sure, it’s three pronged. Our foundation remains as a production farm. And our bread and butter there is as an ingredient supplier. So we work with some really exciting legacy noncannabis grocery store brands of product makers to power their hemp lines, including Gaia Herbs, Rogue Ales, Brew Dr. Kombucha – which is in every Costco across the country. We provide all the hemp for those three nationally distributed mainstream product makers. So that’s a big sort of tip of the spear strategy for us, working really deeply with those talented product makers that are just viewing hemp and CBD as another functional ingredient.

Number two, getting better at working directly with consumers through our e-commerce and through retailers across the country. We have a great tincture line that serves to sort of show off the varying terpenes and effects that we can get by breeding more diversity into this plant. And we’ll continue to work there. You know, we saw that in some regional grocery stores and we’ll continue our grocery strategy there.

And then lastly, it’s working with farmers like us. That’s the most exciting part for me. We’ve been plant breeders for years, and only recently have we gotten a lot more serious about bringing stabilized feminized hemp seed lines to market for other farmers to grow what we’ve been working on and growing ourselves. So we did a very limited seed release this year. We sold out very quickly. We’re excited to offer more seed and the licensed genetics through tissue culture, clones to other small hemp farmers that want to grow resinous terpene-rich, exciting hemp varieties in the future.

So those three strategies are the way that we’re pushing into the national market.

Chris Walsh

Good stuff, I wish you success in that strategy. And I just like to end by saying this. You might not know, but Mason, I think, co-owns a company called Wet Wizard Hot Sauce. Are we going to see any CBD versions coming out?

Mason Walker

You know, we might see a crossover. We’ll see. The hot sauce is wonderful. I’m a big fan. My wife and I run that company together. I think CBD would be a great addition. Capsaicin and terpenes and CBD. I think they go together really well.

Chris Walsh

Sounds like a good mix to me. I love hot sauce. even put it on Iranian food. My wife’s from Iran, and her family was horrified. But CBD hot sauce sounds great.

Well, thank you for joining us. I really appreciate it and we’ll talk down the road.

Mason Walker

Thanks, Chris.

[Music]

Chris Walsh

All right, and that concludes my discussion with Mason Walker of East Fork Cultivars. Heading into this conversation, I was particularly intrigued about why East Fork has continued to focus on low-THC, high-CBD cannabis in Oregon. It was among the first states to legalize recreational marijuana and has a big market in that area. It seems like everyone is clamoring for high-THC strains and many growers think it’s the be all, end all and has the biggest opportunities.

But as Mason explained, there’s a huge and growing desire for lower-THC cannabis that is therapeutic but doesn’t have highly intoxicating side effects.

He predicts that CBD will soon be a functional ingredient in many different products and that will fuel demand for many years to come.

Some other takeaways from the conversation:

East Fork is a big believer in growing outdoors, even as many cultivators opt for warehouses and greenhouses. The reason is that if you employ the right practices, growing outdoors uses less resources and has less of an impact on the environment, which is important to the company’s leadership team. You can also get some substantial cost savings if done right, which can then give you a pricing edge because you can sell it for less than competitors who are burdened by those higher costs.

And then there’s the quality aspect. Mason believes the natural growing process just leads to a better product. And some consumers certainly prefer and actually seek out sun-grown cannabis.

So what’s a great outdoor environment to grow in? Long, dry, hot summers, soft direct sunlight and great access to water.

When looking at growing both marijuana and hemp, Mason said the biggest challenge isn’t in cultivation methods. It’s actually navigating the different regulations between the two and staying in compliance. Rules change frequently and quickly, as anyone in either hemp or marijuana knows. So when you’re dealing with both, you have to prepare to invest even more time and money into both sides. And you also likely need a team of lawyers with expertise in the regulations on both sides.

Additionally, Mason talked about the importance of being diversified from growing both hemp and marijuana. The company has diversified its product offerings, its selling channels, its markets, its customer bases. This allows it to seize new opportunities as demand and regulations change and allows it to be more flexible. He got to be careful, though. Too broad can be a recipe for disaster. Make sure you’re still doing what makes you special and what you’re good at. Let your founding values and principles guide you as you explore new paths.

As for the future, Mason emphasized that a lot hinges on the FDA and USDA and how they’re going to regulate hemp – and hopefully marijuana one day. If you thought the regulations are difficult now, wait until the federal government gets involved. This highlights how you must be nimble in this business, whether you’re in hemp or marijuana.

Finally, Mason thinks the longevity of CBD will lie in its effectiveness and that we’ll increasingly see products aimed at specific uses, such as to help with sleep or stress or joint pain or your mood. CBD will be around for a long time if companies provide that value and deliver on their promises.

Thank you all for listening to this episode. Feel free to share this with anyone who might be interested and post a review on whichever platform you use to listen to podcasts. You can also follow us on twitter our handle is @MJBizDaily.

Next week, I’ll be speaking with Denise Mink, the CEO of Med Pharm, a dispensary in Oklahoma. We’ll talk about how Denise and her husband navigated the new extremely competitive and fast-growing Oklahoma market without any cannabis background.

Until then, make sure to check out MJBizDaily.com for the latest news and analysis on the cannabis industry. Sign up for our newsletter while you’re there.

And again, come join us in Vegas this October.

Thanks, and I’ll see you next time on Seed to CEO.