We sat down to with Jamie to discuss California’s craft cannabis scene
Jamie Warm, CEO of Henry’s Original as well as the Co-Founder of Artifact Nursery, talks craft cannabis in California as the worlds largest marijuana market comes online for adult use. His goal is to marry the ideology of farm to table and craft cannabis to create a unique experience for the consumer. He sat down with MRR to talk about the struggles of having a cannabis business survive the worst wildfires ever to hit California, as well as how verticality ensures quality for your cannabis product.
Marijuana Retail Report: Jamie, thanks for taking the time with us today. Why don’t you tell us a little bit about your background and what let to Henry’s Original.
Jamie Warm: Of course. I managed one of the first cannabis dispensaries in Santa Barbara when I was in college at UCSD and that’s where I first learned to cultivate. I worked there for about two and a half years, before starting my own dispensary in Goleta, the town next to it. I ran that for about a year before I ended up selling the dispensary and moved up to Mendocino County to cultivate and i’ve been there ever since. It’s really where I got my foundation for cultivation. In 2015, I partnered with Joshua Keats and him and I founded Artifact Nursery, which was a retail nursery outlet. This was just prior to Mendocino implementing their county permits, and we felt like it was an appropriate time for us to kind of establish ourselves as a cannabis business. We were excited to transition out of the 215 laws and into permitting and licensure. We’ve really worked with the county to formulate that. We invited board of supervisors, the AG commissioner, and everybody to our farm and our nursery as well as our retail sites. We were really able to work kind of hand in glove with them so that they can understand what it looks like to cultivate, and what our needs were as farmers and as a community. Mendocino obviously has had 50 plus years of cannabis cultivation seeped in through three to four generations of cannabis cultivators. It was nice to get the policymakers involved and really let them see what’s happening on the ground level. Policymakers are oftentimes a little hesitant to step into the cannabis world so that was a great opportunity. Since then, 2017 was a big year. We took our farms that were permitted to the county obviously to complete the application process with state licensure for 2018. We launched Henry’s Original, which is our brand facing company in September 2017. As we rolled into 2018, we ended up with 17 state licenses, nursery, flower farm, processing facility, and distribution, as well as retail. In our company, we essentially have two brand facing companies. It’s Artifact Nursery, which sells clones from our nursery to other licensed flower farmers. Then we also obviously grow the flower, run it through our processing facility where it gets trimmed and packaged into products, and then our distribution company takes that out. We’re in about a little over 80 dispensaries throughout California. Right now we’re a flower line. We do pre-rolls, prepackaged vapes, prepackaged flower products, as well as bulk flower. We’re going to be expanding the line here to 2018 into the oil market, vape pens and tincture, as well as two non-smokables. That’s kind of the high-level view of the journey.
Marijuana Retail Report: Being in Norcal, how did the 2017 wildfires affect your business?
Jamie Warm: Significantly. We have five farms and two of them were evacuated. One down in Redwood Valley. It was nerve-racking because we didn’t have insurance. Obviously, we had a significant amount of money invested into the infrastructure and to the crop that was growing and we couldn’t send our staff in there to water or maintain anything. It was nerve-racking for about a week and a half, but we went back and miraculously the greenhouse hadn’t been burned down and the crop was still alive. The fires were devastating to a lot of people. It’s been really challenging to 2017 and 2018. The cost to do business is astronomical to get to licensure and then just the environmental regulations, not to mention the taxes. People that really got hit by those fires, I mean they’re devastated. It definitely put people out of business. We came out pretty lucky. Unfortunately, a lot of folks didn’t. It was trying, but we made it through.
Marijuana Retail Report: How has the new regulations and compliance affected your business moving forward?
Jamie Warm: Well, it’s very expensive. It’s cost a lot money. It’s like riding the fine line of operating lean enough to stay in business and making sure you are compliant, but also making sure you’re dotting your I’s and crossing your T’s. Right now we have I think eight people in administration. Some people are cross-trained so they can do some of the client things, travel manifest and some of the track and trace items, but we have one person just dedicated to following our track and trace products all the way from the nursery into the flower farms into the processing facility, and then into products, to the distribution company. It’s just been an expensive endeavor.
Marijuana Retail Report: How do you determine which strains to put into your pre-rolls?
Jamie Warm: We’re from Mendocino County, so we have a lot of genetics that has been around for a long time and that is what we like to focus on. We do still come across some of the new age genetics, but when we look at the plants that have grown well in our area and have been there for a long time, it’s a lot of the names that people have heard of. Frankly, it’s funny the way things come full circle because three or four years ago, I’d say even two or three years ago, I was not excited about growing Blue Dream. It’s a plant that has been done as a cultivator a million times. It was hard to sell bulk flowers to dispensaries pre-2017 because every farmer grew it, and there’s a glut on the market. Now that the focus has shifted into products instead of bulk flower where we actually have to grow lots at our farms. It’s a variety of different strains to make sure that we have enough to keep those indica, hybrids, sativas, and CBD strains available for all of our SKUs. It’s been nice to I guess just grow some of these strains. I look at the customer, the consumer. You kind of have the old world and you have the new world. The old world is they know what they want. They’re as deep in the cannabis culture. Then you have the new world, people who don’t know anything about cannabis. To me, those are actually the exciting people to work with because you kind of get to bring them into your world. We get to bring back a lot of these strains that let’s say the old world cannabis consumer wasn’t that into. The new world cannabis consumer you get to teach them all about the history of the genetics and the history of the plants. That’s a lot of what we focus on is kind of the genetics that have been around for a while that we know grow well.
Marijuana Retail Report: Mentioning CBD, how’s the recent surge of CBD popularity been for you guys?
Jamie Warm: It’s enormous. In 2017, we dedicated a little less than 5% of our square footage to CBD flower. I could have never anticipated how popular it was going to be in our products. I could tell you even for myself. I’m not looking for a 30% THC product. I’m really looking for something between I’d say 12% and 20%. It’s really for a consumer that’s looking for an experience. It’s about the aesthetics. It’s about the smell. It’s about the flavor. It’s about the experience of the high. We have CBD pre-rolls. We do a 2:1 and a 25:1. We started to put our 25:1 into a prepackaged flower. Quite honestly those are our best sellers. They’re kind of the unique product that gets us into stores. Most stores will end up picking up the full line, but it’s the CBD pre-rolls that really perks everyone’s interest, and it’s really a differentiator that hasn’t been done well yet on the market. It’s been a strong product for us. We’re going to allocate probably close to 50% of our square footage to CBD this coming year in 2018.
Marijuana Retail Report: Henry’s Original has a craft feel to its packaging. What went into your methodology for creating that branding?
Jamie Warm: What our brand stands behind and how we market ourselves is you’re buying from the farmers. For us, that’s our differentiator. We’re not just distributors that are going around and trying to buy what we can on the market. We are the farmers. We are going to be able to give you farm direct product. To me that’s the bottom of the foundation, right? We’re able to select the genetics we’re working with. Then we have our flower farm licenses, which allow us to grow that flower out and have full quality control over it. Then our distribution license allows us to actually get that product to the consumer. When we’re taking this into consideration and what our brand was going to look like, we really wanted to give a farm aesthetic. We really wanted to do our best and let the consumer know that you’re buying from the farmer and you’re supporting California family farms. I mean that’s how we started and that’s who we are. We really try to show that, display that in our packaging. I mean the name Henry’s Original, it’s inspired by the first cannabis farmer I was introduced to in Mendocino County when I had a dispensary and I was driving up to supply the dispensary. I mean Henry was one of the first farmers that moved up there in the ’60s and kind of cultivated an alternative lifestyle and spawned the generations that came after him. Really the name is to honor the people that have made this industry what it is today. We hope to carry on that tradition.
Marijuana Retail Report: Aside from the branding, how important is it in your opinion to have the ability to have that verticality in your business?
Jamie Warm: I mean right now it’s a function of necessity. To rely on a nursery let’s say that I’m going to get clean starts is, I don’t know how to say it politely, it’s not reliable I guess is what it comes down to. I would be shooting myself in the foot to think that I’m going to get 15,000 plants in March from somebody and they’re all going to be clean. It’s just too much of a gamble. We really stand behind our Clean Green Certification, which is essentially us running through the USDA track. Our soil and our leaf samples get sent to USDA labs, and it’s just a third party thing that we’re an organic company. To us, that was really important. A lot of people write “organic” on their packages, but nobody has any kind of third-party verification. Sending your product to a lab to test for systemic pesticides doesn’t mean you’re organic. That just means you didn’t use systemic pesticides. Obviously, true organic certification has to go above and beyond that. They’re looking at carbon footprints and ways to reduce that as well. For us it’s just an overall I guess value. We’re looking at our values and taking that into consideration as a company. Certification is important to us. Having that quality control within our vertical is everything. I just wouldn’t be able to rely on other people’s standards. That goes all the way to distribution. That’s why it was important for us to get our farm product directly to consumers, directly to the retailers. Our processing facility as well. There’s just no way to guarantee that using a third party processing facility will not cause us to get cross-contaminated with another farm’s product that isn’t going to meet the standards that we hold ourselves to.
Marijuana Retail Report: As a former dispensary manager, if there’s one tip that you could give to retailers, what would it be?
Jamie Warm: Just be compliant. You need to keep a tight eye on what the regulations are, which are changing for distributors and for dispensaries, but it’s everything from carrying … For dispensaries, it’s making the transition from buying bulk flower into prepackaged. Compliance comes before everything. If you’re not compliant, you don’t have a business. It’s not just for retailers. I supposed this is across the entire industry, but I think you just need to keep your eyes on compliance. You need to make sure that you’re relevant. In terms of operating a successful retail operation and some of the secondary and tertiary things you should be looking at, you really need to take a hard look at the analytics of what’s selling. I think if you haven’t transitioned to a good point of sales software, that’s essential. That’s going to help you in your analytics in making the decisions you need to make for what should be on your shelf space and targeting your demographic.
Marijuana Retail Report: What’s next for Henry’s Original?
Jamie Warm: We have ambitions outside of California, but I don’t see that happening this year. I want to make Henry’s ubiquitous. I want our story to be told all through California. It’s a story we’re proud of. I want to see our products in every dispensary in California. I think once we get there, then we can start looking at other states. What’s next for us is to really build out the distribution. We’ve done an excellent job here in Southern California, and we need to start working on Northern California, Bay Area, Sacramento, even all the way from Miranda, Humboldt, and rolling out other products. Right now we’ve been really focused on being a flower company. We’re going to come out with a vape pen here in Q3. We’re looking at introducing a tincture line as well, and then we’re also focusing on two non-smokable products. That’ll probably be the next push for us is really look at our product line and doing a hard push to get the story out and have brand recognition throughout California.