018 Oakfruitland - Thriving & Expanding in the California Cannabis Market

:: 00:02

You're listening to Cultivation Elevated, hosted by Michael Williamson, where we discuss vertical farming in the future of cannabis and food production. You'll be learning key insights for vertical farming success from leading industry operators, growers and executives. If you're a grower or owner looking to optimize your existing or new indoor cultivation facility, or anyone looking to cultivate more in less space, we've got you covered. Cultivation Elevated, sponsored by Pip Horticulture.

:: 00:32

Hello and welcome to another episode of Cultivation Elevated, sponsored by Pip Horticulture. I'm your co-host, michael Williamson, along with Anders Peterson, and we're here in Oakland, california, at Oak Fruitland, with co-founder Lindsay.

:: 00:44

Hi, you guys Welcome Thank you for having us.

:: 00:47

Yeah, this has been wonderful. So we get the pleasure of traveling all over the country and sometimes the world to see facilities, and it was a fresh breath of air to come into a facility in one of the hardest cities to grow in for multiple reasons, which I'm sure we'll talk about today, but we were super impressed, Thank you. There's no way around it. It's clear that you guys are putting a lot of meticulous care to the processes and things are being thought out really well and you can see your evolution from where you guys started from and where you are today, and that's really exciting.

:: 01:17

Yeah, I'm from the Bay Area too. In the cannabis industry your team definitely has a reputation for a strong work ethic. Really good canopy management. I mean we saw it today. It was evidenced here with laser level canopies. Really good defoliation strategy and then just the fire to back it up. I mean I've smoked the oak lotto, the V-Power, that's straight gas. I mean it's good quality. So it was wonderful to see an action today and seeing it in multi-level. You guys making that transition, which we hope to dive into a little bit on this today.

:: 01:50

Can you tell me a little bit about your journey into this space and also what was the thought process behind creating this business and creating this brand?

:: 01:59

So I started from helping my husband building a legal facility because he got, I would say, busted in the year of 2017. And at the time he was tired of doing traditional grow and when Prov64 was formed, I was helping him with getting the license and one of his friends was applying license over here in Oakland and was quite more smooth than the process back in LA where we lived. So we decided to move to North Cal to start this journey and luckily we were able to get the license at the time and secure a building like this, and it was just determined at that moment that if we are going to do go into the legal market and we're going to do it in the right way. So this is how we come so far.

:: 03:03

Yeah. So at the time in 2016, 17, 18, oakland was truly one of the first cities in California to say, okay, we're going to permit this, we're going to issue licenses. So some of the first cultivation licenses in California were here in Oakland, but that doesn't mean it was easy.

:: 03:22

It wasn't easy, but from what I see is you just follow the process and you have to be consistent and you have to remind yourself what is the purpose of doing this, and then you will eventually get there. It just takes some consistency to do that.

:: 03:41

In your background. What were you doing previous to cannabis?

:: 03:44

So I was doing real estate and I helped clients secure buildings and residential homes as well, and I appreciate that I had this experience dealing with real estate, secure lease agreement, and that's what my background is. It also involves marketing and sales and that's how I can implement my experience to the business, the brand we have right now.

:: 04:17

That's useful experience to translate into cannabis.

:: 04:20

Yeah, I know you'll learn along the way because this is a relatively new industry, but I don't see it so different because it's come to the end, it's just the product, right.

:: 04:30

We've all three of us have worked in Oakland. It actually works pretty close in this neighborhood and this is one of the nicer buildings that I've seen in the area. How many buildings did you look at and how did you land on this particular site?

:: 04:42

So we were looking at several buildings but at the time as a startup company, it's really hard to have people really think that you're serious about leasing the building and my attorney introduced me to the landlord and immediately we think this is the right place. It wasn't really in a good shape but we knew that we could do something really from the bottom and then the way we want it. So I would say it was just really lucky that we got this building early and at the time that a lot of people are looking for smaller spaces and these kinds of spaces are just overlooked by people and it requires a lot of funding to build a space like this. But at the time we didn't really have the funding and we're just kind of built in faces knowing that we could do something big like this, because my husband is always being in growing in larger spaces and he knows how to manage the labor and you know how to grow in large scale.

:: 05:52

So the confidence was there.

:: 05:54

Right. Can you give us an idea of the scale? I mean, I think it's what about 70,000 square feet of space?

:: 06:01

Yes, it's about 70,000 square feet with 50,000 square feet of canopy space. But we started at 20,000 square feet and as we converted to vertical growing, that added a lot more canopy space and then we went up to 50. So we have some license combined together.

:: 06:22

What year was the first phase? And then, when did you transition? What year was it when you transitioned to multi-tier?

:: 06:28

So we start building end of 2018 and that was all single-tier for our phase one, which contains four large grow rooms, and starting in the year of 2019, we start to build phase two. That's when the time was saying, okay, we're doing so well, because the market was great at the time, maybe we should try to create a way to get more space to grow. And at the time, our first floor downstairs were empty and we tried to talk to the landlord about, you know, taking the whole building, but it wasn't at the right timing. So that's why we decided, okay, why don't we just get creative? Let's just do like double-tier. And then at the time, it wasn't really a thing. You know, people are kind of scared like you are doing good and you're making good money. Why would you want to try something new? And we just did it. We just converted to some of the largest room, to the vertical, and we switched everything from HPS to LED.

:: 07:40

And how did you hear about PIP Like where did that, how did that interaction come?

:: 07:43

With this, some research. And one day I was at a Nike store looking at the rack. They were rolling in their inventory taking out the oh, like that's PIP.

:: 07:56

No way, that's awesome, that's you're the first person on all these podcasts to identify and acknowledge that. So PIP has been the market leader in back-of-house retail storage and so basically 70 plus percent of all the stores in a mall Nike, victoria's Secret, apple, macy's. When they say I need to go in the back and look for your size, there's a 70 plus percent chance that's on a PIP rack.

:: 08:19

Right. So if Nike chose, then I mean no doubt that they're good right.

:: 08:25

If you can keep a company like Apple satisfied, you've achieved some things. Some people are very demanding, but what was interesting for PIP is that back-of-house retail storage is very different than controlled environment agriculture where you have all this humidity and water and plants. So it was. It was, though it was familiar. It was extremely different and I think a lot of the other companies that worked in racking at the time and still do.

They didn't at first really modify their equipment for cannabis. A lot of it was really overbuilt. It was due to they were trying to. They were storing really heavy stuff, but the problem with a lot of those overbuilt racks is, as a customer and user, you were paying for, basically, strength in materials that really weren't necessary for the application, so you were kind of overpaying for your system Right, and PIP quickly realized that they knew a lot about certain things. But when it came with the horticulture, especially cannabis, they really needed to bring in some strategic people and we've been building a team of cultivation experts for about six years now and we've been modifying our equipment and we try and keep a really close ear to our customers and we want to hear the good stuff, the stuff that can be better. We like to find great operators like you who we can support with new trial stuff and work together to say you know how does this work in the operations, because sometimes what's on paper or engineered doesn't always translate well to operations.

:: 09:52

Right.

:: 09:52

And you guys are getting really good yields, good airflow in your rooms. I think one of the larger rooms is. I mean, it's almost 10,000 square feet of canopy. It's a big flower room, but it doesn't look like it's a 10,000 square foot room and it's very dialed in. Everything is perfect and pristine, not one thing out of place. You know it's an example of how these rooms should be run.

:: 10:15

It took several runs to get there, but it was. It was really I was at the right decision, right decision at the beginning and looking back at it was like, yeah, if, if we didn't make that decision, we might end up somewhere different. You know, like with the market being so fresh right now, and that what he really helps.

:: 10:38

In these high urban density environments where everything is very expensive, going vertical makes a lot of sense. There are times where, if you're in the middle of nowhere and you have really cheap power, sure, horizontal expansion, single tier, great. But you know, you get into a place like Oakland and you have to maximize every inch.

:: 10:56

Right, exactly.

:: 10:58

When you guys were looking at vendors. It sounds like your protocol is typically to get multiple comps, figure out who the market leaders are, and then I guess, what is that decision-making kind of look like?

:: 11:09

Well, I believe in customer service. I feel like if, if the person can communicate well and be able to deliver what the customer is asking for 100%, that I will enjoy the experience and I like to ask difficult question at the beginning and if they could fulfill, that means that that's a partner I'm looking for, because I'm not building this just just for today. I knew that my operation could expand and if I could filter out the secondary vendors market and then stick with the leader or the one that I feel comfortable work with in the future, that it saves me time, energy, money on ongoing other projects, future projects.

:: 12:03

People do business with people Right exactly. Right, you want a partner that will be there long term for you. Yeah, can I ask how you came up with the name Oak Fruitland?

:: 12:13

It was really random. Every time people ask me the question, I feel so embarrassed that I just wrote on the piece of paper Oakland. Okay, Cannabis is basically fruit. Let me just put the fruit in it, because I need to come up with a name at a time.

:: 12:31

Well, I mean even on the wholesale market here in California. Now it seems to be the candy and the fruit flavors that dominate. It's almost like you saw the future of phenol hunting and flavors and cannabis, of fruity candy, cannabis.

:: 12:46

Yeah, my main goal is I wanted people to know that the flower is coming from Oakland.

:: 12:52

Yeah, you captured it well. It's a strong brand.

:: 12:53

Oakland itself has a strong brand recognition for cannabis Right.

:: 12:57

Yeah, cannabis brands these days either sound all the same or it's like a made up word because all the names have been trademarked. So this is something that I think really tells a story without having to tell and explain much.

:: 13:12

And you guys have some really cool branding for your different genetics too. I think we had mentioned V-Power and Oak Lotto are two of the more popular genetics you guys have.

:: 13:21

Yeah, and now we have the Fortune Cookie is also the best seller on the market, looking at the data, and also my personal favorite yes, we're constantly looking for new genetics to grow with and I believe commercial cannabis should be affordable and the quality has to keep on improved. And, as a grower, you have to constantly learn, looking for new strategy, looking for new techniques to grow better. We, because it's not traditional anymore and we have all the resource help from the vendors and we should do better every year.

:: 14:02

One of the things that was clear when we were in here is that people are really focused on the tasks that they're doing and the level of consistency operationally was about as tight as we've seen. Sometimes, when we come into a grow room and we have cameras or something like that, people get really distracted. They stop working, they start to ask oh hey, who are you, what are you doing?

Where all the workers I mean they were on task didn't really pay much attention to us at all and we're focused on the job they're doing. So it's clear that the culture and the expectations here are strong.

:: 14:32

Yes, I believe part of the reason. One is that they see the owner it's also the grower over here and then he works really hard almost seven days a week and he even he get back home late and he's always researched for new product, new tech knowledge, new nutrients and trying to figure out what's going on with this batch, what we could do better. So it's, I think people see that if the owner it's working so hard, there's no excuse for you to not work hard.

:: 15:04

It's kind of like that mindset of if he's taking the trash out any zilner of the company, then why he's not good enough? Too good for any job, right? I mean, everyone's pitching in towards the end goal.

:: 15:16

And then we also believe in paying people better than anyone and then have a stable group of staff that works for us from the beginning. Trust yes, I also hire. I hire less people, but I make sure that everyone I hire are, you know, are the potential staff that will stick with me from the beginning to the end.

:: 15:43

Yeah, we were talking to your operations team and your employees per square foot is really lean compared to a lot of operations. I think it was one employee per 850 square feet or so which is really good. That's a lean staff that brings your cost of production down, and it means that every one of your staff members here is hard working and can handle quite a bit of canopy on their own. So, yeah, that's another impressive stat.

:: 16:09

That seems to be the area where new operators really struggle and they don't realize how much labor contributes to their cost of goods sold. And if it's a new state or an emerging state and the pound price on the wholesale market is high, the rationale a lot of times which I think is very unhealthy is there's plenty of margin here. We'll lean up in time and get our cost of goods sold down. But if you get your cost of goods sold lean from day one, you're maximizing all that profitability and when that state does go through rough waters and consolidation, you're not struggling to get down because you're already there.

:: 16:43

Right, right.

:: 16:45

Which you see that here. You're here and you're weathering a storm right now in Oakland or in California in general. A lot of people are giving up right now. We saw a lot of people not renew licenses this past year but you guys actually have quite a success story. You're maximizing your existing space and you're actually looking at expansion. I think that's important for people that are California operators or have ideas about what the California market is like. There are success stories going on right now, but you have to have your ducks in a row and really have a good, true North Star, which I feel like you guys have really figured out here what do you contribute to that?

you guys are advancing while other people are saying I can't do this anymore.

:: 17:28

Well, we dropped our price tremendously and I don't really feel bad about it. I don't really complain because this is how demand and supply is. If there's over supply, that means that a lot of people aren't doing the same thing that you're doing. You just have to take a step back and then willing to sacrifice for some margin to be able to stay in this game. I think we find out that that's not a secret. We realize that early and we're willing to do that. I've always been telling my team if we're still in business and we're still getting orders, that means we're doing the right thing and we just need to keep a head down and then keep up with the good work. Eventually people will realize that this is a good brand to stick with because we're not sacrificing the quality but we're going to reduce our margin to get the product into people's hands One day. I hope that how work comes to be paid off.

:: 18:36

Yeah, it's fire at a fair price. When people find that a quality brand at a fair price, they're going to keep coming back to it.

:: 18:44

It provokes loyalty which is really hard to get in the cannabis space because everyone's chasing flavors and new experiences. From a genetic standpoint, you guys are working with the 40 or 50 different genetics and then your core foundational genetics is around 16 or 18, is that right?

:: 19:02

Yes, not a lot, but we're constantly looking for new genetics. We work with breeders to get new genetics and test it out. We test without buyers and then find the right one, and we are definitely not that type of hype brand that comes with new flavors, all the time. We keep it stable and make sure that it's the one that the market actually wanted. But we're not targeting a niche market. We're targeting everyday smokers that wanted to smoke high quality cannabis.

:: 19:39

How do you decide, out of, let's say, 40 or 50 of stuff that you're working with, what makes it into consistent production? What are some of the things? That sounds like it's a lot of its retail dictated and not grower dictated, but can you? Give any insights on how do you make that selection of what makes it into production?

:: 19:56

Yeah, it's just, we hand it out to the buyers, we hand it out to the staff and let them try, and then we can't follow their comments and see if there's something, we put it out to the market. The market will give you immediate response and then you will know that if there's something, they want it.

:: 20:12

But what happens when your husband and business partner says the retail likes it, but it doesn't grow well in the grow from?

:: 20:19

He will never say that he will always try to find a way if the retail likes it.

:: 20:24

That's a great answer.

:: 20:25

He'll always find a way to grow better. That's a great answer.

:: 20:28

It does seem like some of the most beautiful plants that are highly desirable are a bit finicky or need a little extra attention and a lot of growers will just say this doesn't work in my system and they'll discard it and keep kind of sifting. But it sounds like you guys are willing to manipulate needs based off of whatever the plant needs are.

:: 20:45

He's saying, if the customers want it, figure out how to grow it to its potential.

:: 20:50

It's going to be fun. If it could grow something that other people find hard to grow, then you're winning.

:: 20:57

It's like a challenge that you have to accept. That's so cool. What's next with Oak Fruland? What are you looking forward to in the future? What's kind of like your long term plan here?

:: 21:07

Well, we like Oakland, we wanted to stay here, but I feel like there is a potential larger market in the SoCal and that we didn't really reach out yet. We do have some shops and some accounts really good accounts in SoCal, but the distance that traveling between North Carolina and SoCal is kind of tough.

Yeah, and then we're at this moment just looking for a new project and, after all the trial that we've done in this current facility, that we already know to build a perfect commercial grow. So the next step would be a new facility, a new, I would say, a larger hack-porter in SoCal, and that's what we're working on.

:: 21:56

Where can people find your products?

:: 21:58

Well, we are in 120-something dispensaries. We also started our D2C. We're slowly looking to going to retail business, where we have a new license application submitted in the city of San Francisco. So we're going to be in the Mission District and that will be a hub, an open hub, for people that likes our brand and enjoy the quality of the flour and the low price. And then I will assure that you know, even if you are going to the city, it doesn't mean that we're the expensive over there.

:: 22:36

It's always going to be the right, the freshest stuff and the lowest price Well you've got to have some storefront here in Oakland with the name being oh Fruitland. Maybe one day.

:: 22:46

Yes, maybe one day. I've been looking for it, but you know it's an ongoing project.

:: 22:52

Yeah, sure it's tough to get open as a female leader and owner in this space. What would be like any messaging of encouragement that you would have for other females who are either in the space and looking to advance or females that are really want to get in this space?

:: 23:13

Well, I don't see any difference. Maybe people will have some kind of stereotype that you know it's definitely like a majority male in this industry. But it just work hard and add some, you know, female touch into it, like design, like sales, like marketing, like communication, hr. That's all girls over here doing the back end stuff, and it's not hard. You just need to really find your way to do that, yeah, and I think we're lucky enough that you know we're well protected by the growers you know out there and then being in this market early enough to realize a lot of stuff, so it's been really helpful.

:: 24:01

Well, it's also cool to see a husband and a wife team working so closely together for so long. Can you speak to that a little bit? How is it working with your husband every day?

:: 24:09

Well, we, we feel like we're going to be able to do that. We fight a lot, of course, but when it comes to the end, we understand that it's all for. You know, just to get the job done and you just have to find your way to communicate to each other, tell each other, like, how you really feel about it, and then don't let the emotions fix out. You know, just really try to work with the fact that what you really are looking to achieve.

:: 24:38

Well, I'm sure there's a lot of passion right between both of you towards this business, and so sometimes it's hard to keep that contained, maybe.

:: 24:45

Yes, his passion is growing. My passion is looking at the numbers, looking at, you know, how the operations is growing. That's, that's. It's not about the dollar side, it's. It's all about, you know, being in this age mid 30s to achieve something that you know you've always been looking for. And then we have this opportunity in this new industry. We should always cherish that.

:: 25:11

It's incredible. What would be something that, if you could have wave a magic wand, that you would go back and just totally do differently.

:: 25:21

I would say, start the branding a little bit sooner, because when we first started we were while labeling for a brand and that kind of just all kind of missed the best period of time at the market.

:: 25:35

You were building up someone else's brand when you could have been building up your own brand.

:: 25:38

Which, which I think it's good. It's a learning curve that you have to see how you know a brand is operating in order to operate your brand. But yeah, if we could start a little bit earlier, then we would kind of enter the market at the toughest time, which is like the end of 2021. Yeah, yeah.

:: 26:01

Well, it's not cheap to build a brand either.

:: 26:02

Yeah, exactly yeah. But we built a. I know every customer. I know what kind of product they want. I know how we opened up the account. I know all the backstory about the account. That's what matters, yeah.

:: 26:18

It's nice to see owners not only that are related but also are connected to their business. You guys are here A lot of times, owners that are failing. They're so disconnected. They have an office somewhere, maybe in the city. They're not here, they're not boots on the ground, the team doesn't see them, they lose respect, they don't have good morale, good culture. And you guys are here, you're present, boots on the ground. How important is that to the success of this business?

:: 26:46

I think that's the most important thing. It's that my staff see me in the office and always be holding meetings, looking to support each other. I feel like that really helped them to grow, to connect with the brand, connect with the company and wanting to do better, because whatever they do in this office are realized by the owner, that you are contributing and I see that.

:: 27:12

Yeah, well, I know on behalf of PIPP Horticulture, we are super excited about everything we saw today. We're super excited to support you guys in the future. We have some new tools that we've been developing that we're looking for strategic people that are good operators, just like yourself, to help us collaborate and dial these things in and have a feedback loop so that we can create better products and stronger products for growers. So we're really grateful for the relationship and look forward to more collaborative efforts.

:: 27:39

Thank you, you guys are being so helpful. I remember at the time when we were just starting ordering the first batch of the and then we didn't even understand how to read. I think it was a design.

Yeah, it was a staff that really wasn't from this industry and we called the sales person. The sales person actually flew from somewhere else to lay out the plans and explain all the components. That left me impression that this is a company I want to stick with. Because they didn't judge what kind of operation we have, because at the time we're just building it was like warehouse, full of dust.

:: 28:21

We're big advocates for. Don't judge a book by its cover. Sometimes you'll go on the outside and you look at a building and you're like, oh, who knows what's going to happen in here. And then you open the door and all of a sudden it's sparkling, clean and tight, and so, especially in Oakland, a lot of the buildings sometimes from the outside can be pretty rough looking, and when you open the door it's like going into a portal into somewhere else.

:: 28:40

Yeah, oakland has a lot of great operators in here. You guys will be amazed to find there are a ton of top brands in the California operating in Oakland.

:: 28:51

Yeah Well, we want to tell you to keep pushing the bar high, because as we travel around the country and the world, people look at California as the apex and pinnacle of quality, like when they think of what Connoisseur cannabis is. They're looking at California and so therefore they're looking at you. So, as you keep elevating, you might not even know these people, they're strangers to you, but they're watching and they're learning and they're trying to mimic, and so the more good operators we have that are transparently operating and setting high bars and standards and proving that you can grow high quality at scale, that you can grow great quality on multi-tier, it opens up people's ideas to what's possible and if it wasn't for people like you pushing the envelope and setting such a good example, there may be more resistance in the vertical harming space.

:: 29:37

Absolutely, and I hope Frulin is setting an example for quality in a multi-tier vertical cannabis farm. You know it's setting the bar high for everyone else entering the space and one of the hardest markets in the state, if not the country.

:: 29:49

So yeah, in the big leagues. Well, we hope to come visit you again and thank you for your time today.

:: 29:55

Thank, you guys. Thank you, it was a great interview.

:: 29:58

Appreciate it.

:: 30:01

Thanks for listening to Cultivation Elevated. Full show notes for each episode, which includes a summary, key takeaways, quotes and any resources mentioned are available at PipHorticulturecom forward slash podcast. Be sure to follow and subscribe wherever you listen to podcasts and if you're enjoying the content and getting value from these episodes, please leave us a rating and a review at ratethispodcastcom. Forward slash cultivation elevated. We'll be sure to read these out on future episodes.