0:00:00.0 Kurt Baker: Are you interested in delving deeper into the hemp supply chain, hemp manufacturing, and hemp industrial applications like emphatic and textiles? Would you like to gain insights into the carbon credits linked with hemp cultivation? Ryan McFarland, a prominent figure in the hemp industry, is here to share his expertise on all things hemp.
0:00:17.4 Kurt Baker: During this episode he’ll introduce WhereZ Hemp’s white label product catalog, offering a wealth of knowledge about the hemp industry. Get prepared for an enlightening episode that explores the world of hemp.
0:00:28.1 Kurt Baker: Ryan, this is awesome. I met you at the Tony Robbins live thing, Business Mastery, I should say, a couple of weeks ago. Which was awesome. The industry you’re in is very interesting to me, ’cause in some ways it’s a very old industry and yet a new industry, but I think it’s often misunderstood industry as well, that’s one of the reason I want to have you come on and maybe explain a little bit about your story.
0:00:51.9 Kurt Baker: What sparked you with the idea of doing this, and so how did you get started with this whole thing?
0:00:55.5 Ryan McFarland: Yeah, well first, thanks so much for having me on, and pleasure to connect with you at Business Mastery and certainly be here and share some insights. And what we’re doing in the hemp industry, it’s an exciting industry, and I’d say emerging 2018, the Farm Bill came out and essentially made hemp federally legal when previously it wasn’t, which allowed for a lot of cool things to happen.
0:01:22.4 Ryan McFarland: And I come from… I come from the real estate world, so jumping from flipping properties, which is what I was doing previously, to get into the hemp space was a complete 180 for me, and having to re-learn everything about farming and cultivation and extraction and chemistry, and the whole nine.
0:01:43.4 Ryan McFarland: And so it was definitely an interesting proponent growing into it, but it was funny because my ex-business partner that was in the real estate business previously was the one that told me about hemp, and he was kind of the forward-thinking entrepreneur and really ahead of the trends.
0:02:01.3 Ryan McFarland: This was early in 2018 and this is just as hemp became a federal legal. And it was the green rush, a lot of people were jumping in and raising a bunch of money and bringing a lot of excitement to the space.
0:02:20.1 Ryan McFarland: What nobody really realized is everyone came in thinking that FDA was gonna approve hemp right away and CBD was gonna go in as a food application, is an ingredient like any other ingredient, and we were gonna be drinking hemp cokes a year later, and that never happened.
0:02:39.4 Ryan McFarland: And so a lot of people have came into the space early, early on in 2018, 2019, raised a lot of capital, grew a lot of material, and a lot of biomass, a lot of hemp in the ground, the actual plant, and there was a massive over-supply of hemp in 2019. And when that happened, everything came crashing down, just it’s all supply and demand.
0:03:03.6 Ryan McFarland: And we saw off a major over-supply of hemp in 2019, there was no buyers to buy it, certainly not at the levels that a lot of these farms grew it at. And so a lot of material went to waste. So you got a material that was, went rotted in the ground, they never harvested it, they had material that was harvested that sat around for literally two years, three years in some cases, and it just never got harvested.
0:03:32.9 Ryan McFarland: But we saw an opportunity when that happened, and like I said, I come from the real estate space, primarily the distressed real estate space, we used to buy around 200 foreclosures a year and fix them up and rent a out and then sell them as a turn-key rental properties.
0:03:50.4 Ryan McFarland: And so I was familiar with the distressed asset space, and so we saw a big opportunity when this happened, because this was essentially a similar space, there was distressed assets, the asset was hemp, either in its biomass original form or some of the farmers processed it one stage to what would be a crude oil, a hemp crude. And we had an amazing opportunity to go and buy up a lot of that material in 2019 and into 2020.
0:04:25.0 Ryan McFarland: So that’s what we did, we bought up a lot of the material, we processed it into crude at stage one, and hemp is similar to let’s say, oil and other extracts, the further you process it and the further you refine it, the more valuable it gains.
0:04:44.5 Ryan McFarland: And so we kind of learned that, okay, we can keep processing this more and more and more and turn it into a distillate or an isolate, or even going as far as the Delta-8, which is now what’s really moving a lot of the hemp industry is the Delta-8 side of the industry.
0:05:01.6 Ryan McFarland: And so as time went on, that’s what we did and we started really not owning anything, we stayed very nimble and we were able to really ride the waves, there’s a lot of up and downs, and the people that went too big, too fast couldn’t survive and couldn’t pay the bills.
0:05:20.2 Ryan McFarland: And we kinda didn’t raise capital, we bootstrapped it in the early days and never raised capital, so we didn’t have a big debt obligation, and built all of our staff, we started with all of our staff in the Philippines, keep cost down and kind of built that team up, and now we have 22 people in the Philippines.
0:05:39.8 Ryan McFarland: And as time went on, we just got more and more involved in the actual process. And now we’re one of the largest manufacturers of white label hemp products, mostly consumable products in the space. And so today we own a 35,000 square ft manufacturing facility. We can store about 700 pallets.
0:06:06.0 Ryan McFarland: We’ve got vape production, gummy production, we do pre-rolls, blunts, flour. And we just purchased a 100-foot conveyor oven to be able to produce about 100 tons of baked goods a month. This is brownies, cookies, brownie bites, single-serve brownies, cookie bites, things like that.
0:06:27.2 Ryan McFarland: And so it’s exciting times, and there’s certainly a lot of demand for the products that we’re doing now. And yeah, like I said, it’s exciting time in the hemp space and lots more to come down the line with all the industrial applications as well that come from it.
0:06:46.6 Ryan McFarland: But right now we’re primarily working on the cannabinoid side, the health and wellness, and the side that people like the effects of, and so that’s what we’re participating in now.
0:07:00.9 Kurt Baker: What do you think? I gonna go back a couple of steps here. So your first thing is that you’re a real estate distressed guy, which I completely understand, that’s one of my backgrounds, it’s awesome, but how did you…
0:07:13.2 Kurt Baker: It’s interesting you pivoted, you understand distressed assets, which I thought was pretty interesting, so you saw the opportunity. But it’s one thing to see an opportunity than it is to take action, so what do you think was different about how you approached these assets than maybe how the people that were currently in the industry were approaching these assets?
0:07:29.4 Kurt Baker: I mean, similar to the real estate business, right? So what was happening there, they just didn’t know what to do with it? Or they were like, they were selling it at…
0:07:36.7 Kurt Baker: What do you think was your differentiator at that time to really leverage this whole process and get in there on the ground floor really? Which, maybe the second ground floor.
0:07:47.5 Ryan McFarland: Second ground floor, yeah.
0:07:49.6 Kurt Baker: Typically when everything becomes… I mean we saw that happen in the media world where everybody bought all the media companies and all of a sudden they crash. And you see that all the…
0:07:58.4 Kurt Baker: Anytime they deregulate something totally, you tend to get this explosion and then at some point there’s this pull-back, ’cause everybody throws their money at it at the same time. And you guys were smart, you waited for that period where, “Wow, here’s an opportunity, now we can step in.”
0:08:11.6 Kurt Baker: You didn’t join that initial surge, you waited. ‘Cause you knew better. Right?
0:08:17.0 Ryan McFarland: So that’s what we did, we sat on the sidelines and we were basically building data in the early days. And so the hemp industry was an interesting industry, we used to spend a ton of money on Facebook and Google Ads to generate leads, to generate buyers and motivated sellers and things like that.
0:08:38.2 Ryan McFarland: And when we got into the hemp industry, you couldn’t do any of that. So all the marketing that I knew previously we couldn’t do, so we’re gonna start fresh and be innovative on how… Okay, well, how do we market? How do we get our name out? How do we get clients? How do we get customers?
0:08:54.5 Ryan McFarland: And so what we did is we went to LinkedIn, and LinkedIn was one of the only platforms that was open and allowed for hemp, let’s call it not necessarily advertising, but we went another route and we started doing data collection.
0:09:07.7 Ryan McFarland: And so we started a LinkedIn group, we built that group to be the largest group for CBD and cannabis, that is still today we have about 35,000 members in our LinkedIn group. And then off the back of that LinkedIn group, we were collecting data and we were basically finding out what people did.
0:09:25.6 Ryan McFarland: And we were just connecting, we were matchmaking a buyer with a seller and making a fee. And then that turned into, okay, well let’s, instead of just making a fee, let’s go buy the material and then resell it. Okay, and now let’s go buy the material, then process it one, two or three stages, then resell it.
0:09:45.5 Ryan McFarland: And how we did that is we had all the data, so we knew all the labs that were processing, so we know the farmers that had it, we knew the labs that were processing it, and then we know the brands or the white label manufacturers that were buying in the processed oil.
0:09:57.9 Ryan McFarland: And so we basically had the supply chain built from scratch and we understood the supply chain really, really, really effectively, and that allowed for us to go and start building this model of start with the buyer first and then build back to it.
0:10:14.4 Ryan McFarland: And I think that’s why we succeeded, versus a lot of the other people took the mind state of, “If we build it they will come.” And they never came. [chuckle] And so…
0:10:24.5 Kurt Baker: So you basically created the community where they exchanged information, you were leading that, so you learned a lot from the community directly, which they tell us all the time in marketing now, you really wanna find your community. Don’t… As you said, “Build it and they will come” is wrong. You say, “Where are they?” and go there.
0:10:40.8 Kurt Baker: If you wanna buy something, you go to the mall, you go to where the stuff is. And you created the place where everybody is gonna come in and have a conversation and learn. Especially when you’re at a time of crisis, they wanna talk to each other. They wanna know, “Hey, what are you doing? What’s working now? How do I get out of this? Or how do I make this better?” And so you got a lot of knowledge from that. Which is awesome.
0:10:58.0 Kurt Baker: We’re gonna take a quick break. You’re listening to Master Your Finances. We’ll be right back.
0:11:03.2 Kurt Baker: Welcome come back, you’re listening to Master Your Finances, and I’m here with Ryan McFarland, and we’re talking about the hemp industry which, great transition, you knew a lot about buying distressed assets, you created a community where they were discussing these assets that you knew were kind of going into distress based on where the market was headed, and now it’s up to 35,000 people.
0:11:23.2 Kurt Baker: You learned, got a lot of data, a lot of information from those people by talking to them and being really the one that advocated for the communication in that community, which is awesome, which is a great way for any of us as business owners to really learn about our own business and the people that we serve.
0:11:40.6 Kurt Baker: So the hemp industry itself, as you pointed out, it just became legal in 2018. What do you think the difference was before 2018 and after 2018 when it became legal? ‘Cause this is one of these things it’s very controversial.
0:11:55.3 Kurt Baker: Do you wanna clarify maybe what hemp is and what it’s not, how it’s used and maybe what’s going on in the industry now? And some of the different products that might be out there that have been created since 2018, maybe things that were maybe there before 2018?
0:12:08.1 Ryan McFarland: Sure, yeah. Yeah, absolutely. So hemp is under the cannabis is really the mother plant. So you have cannabis, which is the mother plant, and hemp is really just a set of genetics that’s different from marijuana.
0:12:24.9 Ryan McFarland: So marijuana is the set of genetics that gets you, has a psychoactive component and gets you high, and we all know marijuana most likely. And marijuana is off the cannabis plant and it’s a set of genetics that has high THC and kind of lower CBD in it, there’s tons of other cannabinoids inside of the plant, but that’s the main genetic is a high THC Delta-9.
0:12:50.8 Ryan McFarland: Hemp on the other hand, is on the other side and it’s just a different set of genetics. The plant looks the same, it smells the same, you can barely tell the difference, but the only difference is that when you test it, the hemp genetic has a low THC.
0:13:05.5 Ryan McFarland: And what makes hemp legal is that when you harvest it, it’s under 0.3% Delta-9 THC. And so it has a low THC, but has a very high CBD. And so when you extract the hemp plant, you get a CBD oil off of that, and that CBD oil can be used to make a variety of different products, everything from tinctures that you can put under your tongue, to roll-ons, to creams, to edibles, to chapstick, literally to an ingredient in water.
0:13:42.2 Ryan McFarland: So you can utilize it for many different product applications, even cosmetics are using CBD in their products. And CBD is good for anxiety, it’s good for depression, it helps with PTSD symptoms, it helps with opioid addictions.
0:14:03.1 Ryan McFarland: And these aren’t claims and I’m not a doctor and these haven’t been approved by the FDA, but this is what actual users of CBD have said, treating epilepsy, it helps with inflammation and diabetic complications. So just tons and tons and tons of benefits from CBD.
0:14:24.9 Ryan McFarland: And as time has gone on and with chemistry they’ve figured out ways to extract various portions of the hemp plant, and so a big portion of the business today is called Delta-8, and so like I mentioned, marijuana is Delta-9. Well, you can get Delta-8 from hemp. And Delta-8 still has some psychoactive components, just not as strong as Delta-9.
0:14:47.8 Ryan McFarland: And that’s a very, very, very big product segment and category in the hemp space now, is products that are utilizing Delta-8, which still have a psychoactive component, they still give you relaxing, you get a little high from it, not as high as you do with regular marijuana, but you still get those relaxing components.
0:15:05.2 Ryan McFarland: And so you’re seeing Delta-8 seltzers now, drinks that you can buy and you can buy four-packs and slowly but surely get a buzz and a relaxing type of type of mood. And then you have vapes that you can smoke that have Dela-8. You have gummies that you can eat and get a relaxation from it.
0:15:27.2 Ryan McFarland: Going through to baked goods, you can do brownies and cookies and things like this that people are producing, all the way through to even like a joint. That’s a hemp joint, that’s a Dela-8 joint, it’s gonna give you the the same benefits.
0:15:41.5 Ryan McFarland: So lots of different products and innovation that’s happening in the space right now with this category, and it’s exciting time to be around and watch these different entrepreneurs, investors and business owners get innovative with a lot of these different products that they’re producing.
0:16:02.1 Ryan McFarland: And so that’s what we do too, is we manufacture those products in-house and we sell these off to brands that wanna give those to their customers.
0:16:12.3 Kurt Baker: Yeah. I guess two things I wanna… My understanding, maybe you can clarify this for us, is the FDA looks at certain, I guess products that are for wellness and one is like the FDA approved, but then there’s like another category where, “Okay, we found that this should not hurt you. Be careful, but as far as we can tell… “
0:16:33.3 Kurt Baker: Like there’s two levels of approval, right? Is it in one of those levels where like, “Hey, we’re putting this information out, as far as we can tell the CBD oil is not harming people. So we feel it’s like okay to sell it.”
0:16:44.7 Kurt Baker: Is that kind of where that category fits? I know that you see all kinds of products out there not FDA approved, but it shouldn’t hurt you, it’s okay to sell it, right? Is that…
0:16:53.0 Ryan McFarland: Yeah. FDA still hasn’t made any clear, definitive, approved or cleared, or not approved and cleared. So it hasn’t ruled one way or another, it’s basically in the still gathering information phase.
0:17:10.1 Ryan McFarland: A lot of like the supplements and things like that haven’t been FDA approved, but they’re allowed to be sold, and so that’s probably the difference. But FDA, as far as CBD and hemp is considered, they still haven’t made any final ruling on CBD and its health benefits.
0:17:28.8 Kurt Baker: Have there been any studies done that you’re aware of that have studied the use of these products? Maybe it’s not through the FDA level, but if any different organizations gone out that aren’t necessarily directly related to the industry, maybe third party?
0:17:41.6 Kurt Baker: You can have the industry to your own, now that doesn’t usually work so good as far as the third party, but if you have third parties coming in and saying, “Hey, we’ve tested this and so far we found,” what? What are they saying out there as far as what some of these organizations?
0:17:56.2 Ryan McFarland: So a lot of the third parties, I don’t have any studies to reference off-hand, but there’s been tons and tons of studies and research done dating back decades.
0:18:05.0 Ryan McFarland: Israel started with a lot of studies, and I think they’re probably the leading, leading medicinal research groups out of Israel have put together various studies for CBD and found a lot of the benefits that I had mentioned earlier are actually benefits. And have found very, very little adverse effects as it relates to CBD and the applications for CBD.
0:18:31.5 Ryan McFarland: There’s also been studies done at various universities here in the US that have found the same thing, and you could google various studies that have been done and probably find it pretty easily. I don’t have any, again, to reference off-hand.
0:18:50.1 Ryan McFarland: But certainly there’s been studies that companies have done, universities have done, and doctors have done, not only here in the US, but worldwide with this plant, which is pretty cool.
0:18:58.7 Kurt Baker: Are there other parts of the world where maybe they’ve legalized this further than we have or approved it through their equivalent of our ADA? Are you aware of any other countries that maybe are ahead of us in this process, anything along those lines, or?
0:19:12.7 Kurt Baker: ‘Cause sometimes we tend to be a little slow to some of these things. [chuckle]
0:19:18.1 Ryan McFarland: Yeah, the US is very slow. We’re definitely behind the 8-ball. [chuckle] So yeah, there’s been other… Like the European Commission considers that CBD qualifies as a novel food, and so the EU has something called novel foods, and you can apply in the EU and Europe to have your CBD as an application into novel foods. And so there’s certain foods that are considered novel over there, and so you can pass and get CBD in foods over there.
0:19:51.7 Ryan McFarland: Various other countries have various other rules, I’d say that’s probably the the largest one with the largest set of population that controls it, and the novel foods is something similar to FDA, but specifically in the food sector, not necessarily in the drug sector.
0:20:08.8 Ryan McFarland: But yeah, we were hoping FDA was gonna rule on it quite a long time ago, and just still waiting.
0:20:18.1 Kurt Baker: Are different states taking a position on this? Does that matter? I know the marijuana thing, you had this like the federal government has one position, but a lot of the states have a completely opposite position. And how does that affect your industry as far as the state-federal relationship?
0:20:31.8 Ryan McFarland: So it’s very confusing and it makes it hard for operators to be able to work, because every state does have a different position. For example, California came out with the Bill AB-45, which allows for hemp to go into a certain foods and cosmetics, and it’s allowed it to do that, but federally, it’s still kind of… Federally it’s legal, but the FDA still hasn’t approved it.
0:21:00.6 Ryan McFarland: So it makes it very, just very confusing on where you can grow, where you can manufacture, can you move it across state lines and things like that. Right? Because hemp is legal though, typically there’s no issue moving hemp across state lines. It’s just when you get into more of the other applications and the other cannabinoids that hemp has inside of it.
0:21:24.1 Ryan McFarland: For instance, the Delta-8 side. It’s federally illegal, but there is some states that have taken the position that Delta-8 is not legal. I think there’s 23 states right now that Delta-8 is not legal. Primarily, those are the states that have some sort of recreational or medical marijuana program in place, primarily ones that have a recreational program in place.
0:21:49.5 Ryan McFarland: ‘Cause the Delta-8 sales are really starting to hurt the sales of recreational marijuana, which has a tax associated with it, and you can only buy it at a dispensary, whereas the Delta-8 product doesn’t have a tax associated with it, you can buy it anywhere. And so that’s cutting into a lot of the tax revenues that the states are getting that have the recreational program in place.
0:22:12.4 Kurt Baker: That is very interesting, actually. Yeah, we’re gonna take another quick break here. You’re listening to Master Your Finances.
0:22:19.2 Kurt Baker: Welcome back, your listening to a Master Your Finances, and I’m here with Ryan McFarland, and we’re talking about the hemp industry, and now you do have some differential things between state and federal level, which is kind of fascinating. So eventually they’ll probably reconcile that as the governments start to figure out how they wanna handle all this stuff, so.
0:22:38.2 Kurt Baker: You mentioned one thing, you kept referring to the white label, and one of the reasons I guess you’re so big now is you do a lot of white labeling. And you wanna explain a little bit how that industry works and how that benefits you as well as the people that are, I guess they hire you for the white labeling aspect?
0:22:51.8 Kurt Baker: How does that whole thing work? I come to you and I say, “I’m interested in doing a product.” You say, “Okay.” What happens next? [chuckle]
0:23:00.9 Ryan McFarland: That’s exactly how it works, is we work with a lot of the existing brands, national brands that are selling these products. They typically have an idea of what they wanna do, they come to us and then we help ’em formulate that idea.
0:23:14.1 Ryan McFarland: So we have some brands we help soup to nuts, we help with full brand deployment, so we have in-house graphic designers, we have packaging partners, we have hardware partners. And we go from concept to finished good, and then also ship out on behalf of our clients.
0:23:33.4 Ryan McFarland: So clients will come to us that have an idea or might have a celebrity behind them, have a big following, have some sort of distribution channel that they can tap into, or have existing sales and an existing brand in the space, and they’ll come to us and we’ll basically manufacture their products with their name, their branding, their logos, their everything.
0:23:58.1 Ryan McFarland: But we manufacture it here, we package it here, and then if they need us to do 3PL, thir party logistics for them, we can also do that here. And so basically we’re kind of a turnkey solution for brands to allow them to focus on what they’re good at, which is the sales and the marketing aspect of the brand and getting it out into their customer’s hands, and we really take a lot of that back-end infrastructure and back-end business management off of the brand’s hands and we handle all of that.
0:24:27.0 Ryan McFarland: So everything from inventory management, to forecasting, to supply chain in China and bringing hardware and packaging over, to the actual hands-on manufacturing of the products in-house, whether we’re filling vapes or cooking brownies or manufacturing gummies.
0:24:46.0 Ryan McFarland: We have all of the manufacturing and packaging lines that we’ve built out here to be able to offer this solution to these various brands and distributors that are looking to launch their in-house brands as well.
0:24:57.8 Ryan McFarland: And so that’s what we do. So we’re a full turnkey solution, we manufacture products, but we also handle a lot of that back-end management. Like I said, we’re on SAP Business One, and so that allows for us to really, really give that in-depth, accurate reporting, inventory management, forecasting out to our brands so that we can be ahead of the curve and make sure that we’re getting a good product out on time and not sitting on too much inventory at any point in time.
0:25:28.8 Kurt Baker: It sounds like your real estate experience is coming into play a little bit here, like logistics and how to manage and how to process, and I bet a lot of that background in dealing with real estate probably helped out with this?
0:25:38.0 Ryan McFarland: Yeah. Yeah, we were managing construction crews in four states, doing like 50 properties per state, per month. So having the proper softwares and tools in place to be able to put business systems in place to help you manage that and have visibility into all that, has certainly helped us a lot here as well.
0:26:01.3 Ryan McFarland: ‘Cause as you can imagine, there’s a lot of moving parts, we do about a million units a month here of various product SKUs, and so there’s, like I said, a lot of moving parts. [chuckle]
0:26:16.1 Ryan McFarland: So being able to have the proper tools, systems and software in place to be able to manage all that is paramount, and obviously our team as well is second to none.
0:26:24.0 Kurt Baker: What trends are you currently seeing in the product side, since you kinda see a pretty wide variety of things happening? Any areas that may be growing or may be lagging a little bit?
0:26:36.2 Kurt Baker: ‘Cause all this stuff tries to come out right away, and it was a little bit overwhelming for those us that weren’t quite as familiar with the industry. So what’s kinda going on now, as far as you can tell? Is it a growing industry in certain areas?
0:26:51.1 Kurt Baker: I mean, I hear a lot of people selling CBD oil, no number of people are like multi-level marketing, all kinds of places selling it, right? Just everywhere.
0:26:57.9 Ryan McFarland: CBD is everywhere, I’d say it’s a growing segment, Delta-8 is obviously a growing segment. Just as new things emerge in the plant, there’s hundreds of cannabinoids in the plant, Delta-8 is one, CBD is one, there’s CBN which is good for sleep, there’s THCV which is an appetite suppressant.
0:27:22.3 Ryan McFarland: And so you have all these different cannabinoids that are inside of the hemp plant people are doing, as more money comes into the space, more research and development can be performed and figure out what does this cannabinoid do for this particular person. Every person has an endocannabinoid system and will receive a certain cannabinoid a little bit differently.
0:27:45.0 Ryan McFarland: And so as more R&D happens, we’re developing more products and more use cases for the plant. Product segments that we’re seeing go up is you have a global, not a global, but let’s say a national shift of a lot of the younger generation, a lot them are moving away from alcohol drinking and people are looking for other things to do besides alcohol.
0:28:12.0 Ryan McFarland: They don’t wanna drink alcohol and get wasted to be hungover, and so you’re seeing a big shift towards people looking for other things to drink. And so we’re seeing the seltzer space really start to grow, and we believe that there’s gonna be a massive shift into seltzers, with some of the bigger spirits brands and companies getting behind it.
0:28:39.2 Ryan McFarland: Already you have Pepsi who’s purchased a rockstar version of a hemp seed and a hemp oil in one of their rockstar plants. And so they’re kind of… We’re seeing the bigger Fortune 1000 food and beverage companies get positioned to make a big play once it becomes, once FDA makes are ruling on it essentially. Or it becomes federally legal, one or the other.
0:29:01.3 Ryan McFarland: And so everyone’s sitting on the sidelines, they can’t necessarily get in right now just because there’s too much risk with it, but as soon as FDA says it’s safe or it becomes, cannabis becomes federally legal, then you’re gonna see probably every food and beverage company jump into the space in some way, shape or form, and utilize this as an ingredient, just like any other ingredient that’s currently out there and available.
0:29:27.1 Kurt Baker: Also they’re expecting like the cigarette companies to jump on board, they’re like, they’re staying away from it until it becomes legal, but all of a sudden a lot of these smaller companies are gonna be in trouble ’cause all of a sudden you get the big manufacturing plants, they turn a switch and they give them out with new product tomorrow afternoon and flood the market. [chuckle] Economy of scale.
0:29:47.4 Kurt Baker: Now, you mentioned people seem to do shifting from alcohol to hemp a little bit as far as the younger generation. So what do you think are some of the reasons, the differences between the two?
0:29:51.8 Kurt Baker: Most people are familiar with alcohol, but not as many with hemp, so as far as the effects and the down and the ups… Is it down? Pluses and minuses is to any kind of material shift like this.
0:30:02.0 Kurt Baker: So what do you think is why they’re doing this? What are you hearing?
0:30:05.3 Ryan McFarland: I think it’s just you’re kind of seeing a shift more towards health and wellness. You got… Even like the mushroom elixir drinks that are coming out now, right? You’ll have a lot of adaptogen drinks that are coming out.
0:30:18.4 Ryan McFarland: And so I think people are just looking for an alternative, they want something that still kinda relaxes you a little bit, gets you a little social. Delta-8 is a cool thing that you can still socialize with it.
0:30:29.2 Ryan McFarland: Whereas usually Delta-9, if anybody’s tried Delta-9 and gone out in a social environment, most people don’t wanna be social if they get really high. [chuckle]
0:30:38.0 Kurt Baker: Right.
0:30:39.4 Ryan McFarland: So Delta-8 t is more of just a relaxing, it allows you to still kind of interact and be social. And I think that’s why it’s gaining a lot of popularity, ’cause it’s not so strong and you still get a little relaxing aspect from it, but it doesn’t totally knock you out and want you to just kinda lay on the couch and watch TV and eat snacks. Right? The typical… [chuckle]
0:31:02.4 Kurt Baker: Right. Your special brownies might not work as well. [chuckle]
0:31:05.0 Ryan McFarland: Right, exactly. Yeah.
0:31:09.6 Kurt Baker: So you see that happening. Any other products that are popular? I hear the gummies and the…
0:31:15.9 Ryan McFarland: Yeah, the gummies are extremely popular. People always love gummies, people love vitamins in their gummies, right? They’re easy to eat, they taste good, and if you can get in an effect from it that’s all the better.
0:31:29.6 Ryan McFarland: So gummies are certainly a huge seller right now. Vapes is also a very huge seller, people like to vape, and so you’re seeing the vape, which is a massive seller as well.
0:31:42.8 Ryan McFarland: And we think Q1, Q2 next year, there may be a change in regulation which will limit the serving sizes or the amount of milligrams per serving, and should that happen, we’re kind of forecasting that baked goods is gonna be a big mover. ‘Cause nobody wants to eat a big old gummy, right?
0:32:06.4 Ryan McFarland: But some people are, people are okay in the big cookie, but nobody wants to eat a big gummy, it’s just too much gummy. [chuckle] So we think baked goods will probably take over because you’ll have to make a bigger gummy in order to put the amount of milligrams into that gummy in order to feel… Or into that baked good in order to feel that.
0:32:24.8 Kurt Baker: Oh, so it’s based on the density of the product, not necessarily “amount per serving”, whatever that means?
0:32:30.3 Ryan McFarland: Yeah, exactly. Well, again, every state is different, and each states are taking a different approach on that, but for the most part, that a lot of the states are taking like a percentage to how big, how many grams the…
0:32:46.5 Kurt Baker: I’m wondering how it’s gonna work. I remember when New York State, New York City I think, limited the size of a soda. And then people…
0:32:51.2 Ryan McFarland: I don’t remember that. [chuckle]
0:32:53.4 Kurt Baker: I forget what it was, I forget which mayor it was, but he goes, “Well we’re getting too heavy in new New York, so we’re not gonna allow the 32 ounce soda. So you can only get like a… ” I think it was a 12 ounce soda.
0:33:06.1 Ryan McFarland: Oh wow.
0:33:07.1 Kurt Baker: I think it lasted a few months and everybody got livid. Like, “I’m just gonna keep filling it up, I’m gonna drink my 32 ounces if I wanna drink my 32 ounces.” It was kind of an interesting social experiment in my view, the way it worked.
0:33:20.4 Kurt Baker: It’s like, well, I’m not sure if that kind of a philosophy works with people, frankly. So I just, I find it interesting they’re doing it again in another industry. I know how it’s gonna work. It just sounds interesting to me.
0:33:32.2 Kurt Baker: I guess maybe it was like an alcohol content, we don’t want there to be above a certain amount of percentage of alcohol, maybe that’s the idea.
0:33:37.8 Ryan McFarland: Look, any time the government tries to come in and outlaw something you’re always gonna have the… The prohibition and alcohol. I think marijuana, most states right now I think the legal aspect is about half, the black market is still about half. Look at states like California, and there’s still a huge, huge black market in the marijuana sector. So that’s just kinda how it goes.
0:34:06.9 Ryan McFarland: Obviously, we’re pushing for federal legalization and we think it’d be great for that to happen, and then just have a framework that everybody can work from, and that’s ideally what would happen eventually, but it’s just not there yet.
0:34:21.1 Kurt Baker: Alright, we’re gonna take another quick break. You’re listening to Master Your Finances.
0:34:25.3 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m here with Ryan McFarland, and we’re talking a lot about some of things that are happening on a state and a federal level, a lot of the basically consumable products that are out there now.
0:34:38.2 Kurt Baker: So what do you see moving forward with the industry as a lot of these things, at some point they’ll probably, most likely, most people think that are actually being logical about this, it will become legal on a federal level at some point, because I think it’s just a matter of time because all this… The way the state seemed to be shifting at some point. Well actually it is legal on federal, I’m sorry.
0:34:58.1 Kurt Baker: The states will start, they’ll line up better. Over time, these conflicts will start to become more clear, and the industry, I think is gonna get more clarity on how they can grow.
0:35:08.6 Kurt Baker: So as you see that happening, where do you see it headed?
0:35:11.5 Ryan McFarland: Yeah, so look, hemp is in my mind as close to one of the cure-all plants for the environment and just the world in general, so it helps with only… You not only have all the medical side that we’ve kind of discussed previously, you have the, next is the industrial side.
0:35:31.5 Ryan McFarland: And hemp is an amazing plant. Obviously, all plants have the ability to sequester carbon from the air, but industrial hemp probably is one of the best ’cause it can suck up twice as much carbon as a typical forest tree, but you can grow a hemp plant in three or four months instead of a tree taking five, 10 years.
0:35:58.8 Ryan McFarland: A hectare of hemp can absorb around 8 to 15 tons of CO2, whereas a forest can capture about 2 to 6 tons. So it’s not only pulling more CO2 out of the air, you can grow it quicker.
0:36:13.0 Ryan McFarland: And then when you harvest the hemp you can cut it down in three or four months once it’s ready to be harvested, and the top you can take and use that for the medical side, all the cannabinoids can be extracted out of that, and then you can take the rest of the plant and utilize it for textiles. Hemp textiles to make clothing.
0:36:29.2 Ryan McFarland: You can utilize it for hempcrete to make concrete, which is stronger than normal concrete. You can utilize it to make hemp wood, hemp plastics. And so this one plant can, has all the medical benefits associated with it we discussed, the relaxation benefits that we’ve discussed, but all the industrial side as well, and there’s carbon credits available.
0:36:54.0 Ryan McFarland: And so the carbon credits are available for farmers growing hemp, and a lot of the bigger companies that are trying to get to a carbon-neutral standpoint will purchase these carbon credits, and so that is another profit center available to farmers that are looking to do this on a large scale.
0:37:16.2 Ryan McFarland: And so that’s what we’re getting involved with. There’s some federal grants through the USDA that have been provided out last year, and we’re working with a couple of the companies that were successful in getting those grants to really build out this program and make a proof of concept for for hemp itself and the carbon aspects and the industrial side as well.
0:37:42.9 Ryan McFarland: And so that’s super, super exciting. And I think ultimately is the medical and the cannabinoid side of hemp is gonna be peanuts compared to what is gonna be happening and what could be done with the industrial side once the efficiencies come into line and hemp is treated as a commodity, which is what it is, it’s a big agriculture commodity.
0:38:10.7 Ryan McFarland: And eventually there’ll be factories and facilities that will be able to grow thousands and thousands of acres of hemp, process it down, pull the cannabinoids off, take the rest of it into hemp fiber or textiles, or be able to then further process it into the what you need to process it to start making hempcrete, hemp wood and hemp plastics.
0:38:34.0 Ryan McFarland: And so that’s really, really, really exciting, and that’s something we’re paying very close attention to and starting to get in line so that we can participate in the industrial side of hemp.
0:38:46.4 Kurt Baker: What do you think has held back the industrial side so far? ‘Cause I’ve heard some of things you just mentioned as far as other ways that this can be used, that it’s actually a pretty strong material, it can use in a lot of different ways.
0:38:57.9 Kurt Baker: Why don’t you think we’re using it more now? Is it that the other items… It’s sort of like the, I guess the electric car, right, as the gas… ICE engine is still cheaper than the electric car maybe, to overall cost.
0:39:08.0 Kurt Baker: Is there some economic reason? Or is it a production reason? Or is it a legal reason?
0:39:14.4 Ryan McFarland: It really comes down to the processing facilities. It’s easy to grow hemp. And hemp is a great plant. It’s a rotational crop as well. So you can’t grow corn on the same land right after each other. You gotta let it sit and get nutrients back in it. Or you can put a plant like hemp in it, hemp help sucks all the bad stuff out of the ground and puts all the good stuff back in it.
0:39:41.3 Ryan McFarland: And so it’s a good rotational crop for these big agricultural farmers to be able to utilize. But the issue is being able to process it and then have it, like we said before, you can grow tens of millions of pounds, hundreds of millions of pounds of hemp, but if there’s no buyer for it at the end of the day, it just sits and rots and it turns into trash. Right?
0:40:01.1 Ryan McFarland: And so that’s the issue, is there’s no processing or not enough processing facilities that are able to process the hemp and get it into a final product like hempcrete or hemp wood or hemp plastics or textiles to make clothing, at a number that makes economical sense to where you’re gonna demand a big market share of, let’s say plastics or wood or concrete.
0:40:31.6 Ryan McFarland: So that’s kind of what we’re waiting for is maybe the government will be able to subsidize some of that and help some of these facilities get up and running. Or maybe they’ll reward companies for purchasing this type of product because of the aspects and how it’s gonna help the environment.
0:40:47.6 Ryan McFarland: But to date there’s nothing that’s been developed to allow for these manufacturing facilities to get the product into a state that it can be purchased at a reasonable number. And so that’s gonna take time, but as everything does. [chuckle]
0:41:07.1 Kurt Baker: Right. So it really has to do with the processing and getting into that form that actually makes economic sense. So right now, I mean, if I wanna buy a shirt, it’s probably better to buy a cotton shirt than a hemp shirt, it sounds like, from a financial standpoint. Is that kinda…
0:41:20.2 Ryan McFarland: Through a financial standpoint, yeah, that is correct. And so that’s what we’re waiting for. And that goes for the plastics, the wood, and the textiles and everything else.
0:41:31.8 Kurt Baker: To make this in economy of scale, or is it the actual process of… Like if I had a plant big enough, like if I’m like, if I’m Elon Musk and I make a giga factory for processing of the plants, is it just a matter of getting a high enough scale? Or they’ve still not quite figured out the process, maybe they’re doing it in a lab kind of deal almost?
0:41:52.3 Ryan McFarland: Yeah, no, the process is there. It’s certainly there, it’s just… Then yeah, if you made a giga factory and you’re Musk, I’d say you’re gonna figure it out. You’ll be able to produce a bunch of product, but then it’s gonna be bringing the buyers in that are gonna take that off your hands.
0:42:08.6 Ryan McFarland: So it’s the entire supply chain. It’s, yeah you can grow the hemp, yeah you can process it if you had the big enough facility, but now it’s customer adoption and what’s that timeline gonna take, and then why are customers gonna adopt it.
0:42:23.3 Ryan McFarland: And ideally we can get some sort of government incentives or program in place that rewards these companies for buying this type of product, because of the, of just all the benefits that come along with it, from the carbon aspects to the soil aspects, to it’s biodegradable.
0:42:43.8 Ryan McFarland: It’s not gonna sit in our oceans for 20 years before it, before it biodegrades.
0:42:51.7 Kurt Baker: Like heavy plastic bottles for the seltzer you talked about before. [chuckle]
0:42:52.4 Ryan McFarland: Yeah, exactly.
0:42:54.6 Kurt Baker: The bottle out of hemp as well as the seltzer water. So just like the other question, do you see anything happening overseas that might be a little ahead of us as far as any of this process goes, the industrialization?
0:43:05.5 Kurt Baker: ‘Cause I have seen like hemp clothing being sold. And so it exists, right? It is out there.
0:43:10.0 Ryan McFarland: A lot of it exists, yeah. China is massive in the industrial side, so I think the industrial hemp cultivation and manufacturing is happening in China, you’re seeing a lot of big Ag and tens, if not hundreds of thousands of acres are being utilized for industrial hemp growth. And so they’re definitely growing it for the industrial aspects, and they’re gonna be as China is, they make all kinds of different products.
0:43:44.1 Ryan McFarland: So yeah, you have a lot of the countries that are starting to adopt hemp’s industrial aspect and utilize it for that. So we’ll see where it goes, but I’m not so up-to-date on the worldwide aspect of hemp cultivation and where it’s all at, I’m moreso focused on the US right now, but it is out there and yeah, 100%, there’s other countries that are utilizing it and we’ll see where they go with it.
0:44:11.4 Ryan McFarland: But hopefully, hopefully we’ll be the leader.
0:44:15.6 Kurt Baker: Yeah. So you guys are, sounds like you’re positioning yourself, you don’t think this is gonna have the same, like after they legalize it on the federal level, the industrial side will probably be a little different, like it’ll be a growth thing, like as things get more efficient, then you’ll probably start to see the products introduced through certain specialties.
0:44:32.9 Kurt Baker: Like maybe I know there’s all iPhone cases or something, they’re made out of hemp plastic or something. There may be some niche-y things that start being used for…
0:44:42.7 Ryan McFarland: Certain product segments. I’m very passionate about putting a single-use plastics out made from hemp, and distributing those to the fast food restaurants, so straws, forks…
0:44:52.5 Kurt Baker: Like a straw. A hemp straw might be nice. [chuckle]
0:44:55.1 Ryan McFarland: You know, knives, things like that. All these single-use plastics that just sit in the landfill and they get used once, and then they go into the ocean. In a lot of these places, if we can utilize hemp to create that that’s gonna be biodegradable, that’s obviously gonna be something that’s gonna be a big benefit for our environment.
0:45:15.6 Ryan McFarland: And it’s something I’m passionate about and that we’re moving forward here on putting together and starting to do R&D with product development, things like that.
0:45:26.4 Kurt Baker: Well Ryan, has been awesome. Any final thoughts before we sign off today?
0:45:30.6 Ryan McFarland: No, no, just anybody’s listening to this, if you wanna connect, you can just get me on LinkedIn or at our website, wherezhemp.com. And our other website is whbiopharma.com.
0:45:46.3 Ryan McFarland: And it’s been great, great on the show. And thank you so much for having me and inviting me on and chatting about the hemp industry. It’s been great. So thanks again.
0:45:54.8 Kurt Baker: Well, thanks again, Ryan. Well everybody, you’ve been listening to Master Your Finance. Don’t forget to subscribe at masteryourfinances.us.
0:46:03.5 Ryan McFarland: Thanks again.