Shareef El-Sissi, CEO at Terpene Belt Farms, sits down with Sloane Barbour, Partner at FlowerHire. Shareef discusses the opportunity for cannabis CPG brands to standardize products across batches, across states and across time.
Note: Interview transcription begins at 05:45 and has been edited for brevity and clarity.
SLOANE: California is the most mature market in the US and has the most mature brand space. But I think if you were to compare it to a mainstream market like beverages, CPG or alcohol, it’s in its infancy. Have you noticed over the course of your decade that consumer patterns have changed or accelerated as it relates to brand loyalty or brand affinity?
SHAREEF: I believe that there are only a handful of real brands today. I think a lot of customers are still just deciding with their dollars based on convenience or value . . . there hasn’t been a long enough period where brands are delivering value consistently at a scalable format. The rise of manufactured goods gives that opportunity, but on a state by state basis. I think that we’re going to need to see a nationally standardized product set that will build that brand affinity (where I go buy a canned beverage in Nevada and it’s the same that I get in California). We have a long way to go to achieve those economies of scale and create that kind of product standardization that wins brand loyalty long-term.
SLOANE: Right. Because if the brand makes a promise and they can’t fulfill the promise, then the brand breaks. Creating consistency is challenging for a lot of reasons. It’s a very delicate plant that’s difficult to grow depending on the types of genetics you’re growing, where you’re growing and how you’re growing it. We are now in a unique paradigm in that cannabis companies and operators have to invest in the infrastructure within their state — whether they’re in Maine during wintertime and they’ve got to grow purely indoors, or whether they’re in Florida growing in a swamp with bugs and mildew. Without some sort of sweeping federal legalization, it’s almost impossible to create a consistent brand across state lines without unique approaches.
SHAREEF: I actually think that we’re at a point in time where brands are going to start behaving like brands and they’re going to stop behaving like manufacturers. At one point in time, you know, Ford Motor Company used to grow rubber trees in Latin America so that they could produce tires. That’s a vertical integration. Everybody knows that vertical integration will exist for a point in time. My phone may have Apple branding and it may be designed in Cupertino, but the reality is that there’s nothing actually made by Apple in my pocket.
Brands don’t actually need to produce product, but if they don’t, they’re not actually able to create 100% cannabis products. For example, you could have a beverage that has no terpenes and just THC. THC can be refined — it’s a commodity. but if you want to create a live resin vaporizer, you’re going to face challenges batch by batch and state by state.
We’re obviously choking on California’s horrible regulations and their lack of enforcement of the black market. We needed to find a way to basically get ahead of the curve and try to be the first to trial for the California export product. We’ve been working with some genomics companies to develop type three varieties that have flavor and fragrance profiles similar to cannabis. We’ve been growing them under the hemp framework and creating this cannabis essential oil.
SLOANE: So you essentially essentially breed the THC out of pure cannabis plants.
SHAREEF: I’m not going to divulge company secrets, but it’s a selective breeding process. It’s not genetic modification. They’re able to get the THC low enough where we could grow it at scale. So currently we farm a few hundred acres of this really high quality, cannabis, hemp — whatever you want to call it.It’s beautifully grown right in the foothills of the Diablo range — California is known to have the perfect climate for agriculture, specifically high-value agriculture. And we have partner farmers that grow garlic for Christopher ranch and tomatoes for Heinz. We get to leverage some of that infrastructure and trucking infrastructure with the tomato canneries. And we’re now kind of just part of this Northern California agricultural monster that really provides local economy and innovation in a lot of ways.
SLOANE: I understand. I haven’t seen it, although I look forward to one day. I’ve seen you have quite a large extraction machine up there. So you take the grow straight out of the ground and you put it right into extraction?
SHAREEF: High-value crops are treated with a lot of care. The whole reason why cannabis is frozen is to preserve terpenes, to capture those really volatile compounds (the spirit). It’s just like when a human dies, the spirit leaves the body. It’s no different with a plant. We’ve built this really well — we catch the terpenes immediately. We basically cut it and we take them fresh, never frozen. We don’t add any of those costs or material handling. They get straight to oil in about 90 minutes.
SLOANE: And when it’s in oil, it’s preserved in that oil.
SHAREEF: Yes. But essential oil terpenes have the tendency to degrade. So you have to get that oil. You have to cool that oil, you have to freeze that oil. You have to treat that oil like the liquid gold that it really is. Our whole motive is to create a hundred percent cannabis input that is repeatable across batches, across states, across countries, across time. There’s only one thing that we can’t control and that is the outdoor growing environment. So, that’s how you get our vintage product. A wine grower creates every single thing the same, but mother nature is the one that actually decides how your vintage is going to turn out. There could be a fire. There could be heat. There could be rain. All those same things impact our oil. It has quality from the genetics, all the way to the material handling until it gets to customer. And we have a maniacal focus on quality.
SLOANE: And I’ve tried your product. One of our partners, Timeless, has really great vapes. They have a newer product that has some beautiful terpenes in it that I had last night. The flavor profile is of high quality — like a hit of flower that you would get from an outdoor sun-grown flower in a shelf.
SHAREEF: And they’re actually the first company to capture the brand value of California. If you pick up a Timeless and you look at their box, it says “terpenes from Northern California” That’s the best selling product line in the state of Arizona. They’re doing a great job for me.
SLOANE: We met a few other members of their team. And it was just a great product. And you could tell the brand had been developed because the founder was a lifestyle and clothing person, right? So that’s another space where brands really truly do exist. And so I’m curious, you know, you’re building products that scale across state lines, scale across countries that can truly start to be the inklings of a global supply chain for consistency — you’ve got hundreds of acres of land. So an MSO could have the same product in every state that they operate in, in multiple states. And it tastes the same.
SHAREEF: We’re giving people the first opportunity to have a hundred percent cannabis vape that is nationally standardized. And the companies and brands that have figured that out don’t actually have to go set up these million dollar extraction labs. All they need to do is go find a lab who has a source of biomass or distillate. They teach them how they want it to be refined. They give them their SOP and their packaging. They send our terpenes and boom, you have a hundred percent live resin product, and you’re able to go and scale. Instead of one market per year or one market per quarter, you can blitz scale. And blitz scaling is going to be really key for these brands to start developing their footprints.
SLOANE: And then there’s a brand, you know, it, it is sort of an organism and the larger it gets, the more people that are affiliated with it. And when you promote that brand, the bigger the brand becomes.
SHAREEF: When you don’t have to build these extraction labs, that’s money that gets to go into marketing or money that gets to go into being more price competitive, allowing you to eat up more market share. I think that we’re doing a good job of aligning ourselves with a select few companies that are hopefully going to win the space. We all want California to be this big export stage. We have all this heritage, the legacy, the terroir, all of these things — but you can only scale flower. So far, flower is not a shelf life stable product, right? You’re not going to put a flower onto a climate control jet, right? This is not like fruits from coming from Latin America. We’ve developed a shelf life stable product that allows us to scale. And we’re selling products in multiple countries today. Our focus is domestic, but we’re getting some inquiries from all over the world and getting to do business in new languages and new places and new currency formats. That’s really exciting.
SLOANE: Very cool. Exporting the essence of California cannabis in a legal framework on an international level is certainly a pioneering spirit and opportunity. Congrats on an amazing career and all the success that you’ve had thus far, I’m excited to continue to stay connected and watch it grow.