Having quality cultivars that are desirable and exclusive to your company is a clear advantage.

A strategic advantage is something that a company has—be it a product, process, idea or combination thereof—that enables it to stand out amongst the competition and, potentially, stake claim on a market niche. In a time when competition is fierce, especially in the well-established West Coast cannabis markets, any tool you can use to distinguish yourself from your peers is going to help your bottom line.

Here is a breakdown of wide-ranging advantages that may help a company define itself and remain relevant in an ever-expanding marketplace.

Having quality cultivars that are desirable and exclusive to your company is a clear advantage. Look at it this way: There are certainly ubiquitous cultivars that customers demand that many companies must supply, but if a cultivation business or retailer has access to the same cultivars as every other company, little incentive exists–outside of quality, production costs and selling price–to patronize that particular business/brand over another.

Having exclusive and superior genetics, or, better yet, breeding them in-house and never releasing them as seed or clone to the public, potentially makes those genetics patentable. This can be a strategic advantage in and of itself: If patented, the cultivars can then legally be licensed to companies in non-competing geographic locations.

Alternatively, a cultivator may choose to license exclusive genetics from a particular breeding company, similar to how today’s traditional ornamental plant industry operates.

Beyond genetics, having proprietary products and/or securing intellectual property (IP) can be a game-changer for a company. Patenting cannabis-based formulations, for example, is another way of standing out. If a patent or other IP mechanism isn’t an option, that formulation still can be kept as a trade secret not to be shared with anyone outside the company.

If your company is not in a position to develop its own proprietary products, establishing exclusive partnerships with other brands can help you gain access to those products. Many cannabis companies have successfully established themselves as a go-to for specific processed products and/or brands, and those products may only be produced by or purchased from those regional partners.

Beyond the blend of food ingredients (which can offer another strategic advantage if you’re targeting people with dietary restrictions), the cannabinoid and terpene blends created in different products can be trade secrets, whether they are water-soluble cannabinoids, bio-available cannabinoids, specific terpene formulations (in combination with cannabinoids) or the compounds used as flavor ingredients.

Drip or automated irrigation, conveyor belts, mechanical potting and seed-planting systems should be employed in any large-scale cultivation facility (if it’s within financial and logistical reason). Any possibilities of using geothermal, hot wastewater (where heat is recovered from hot exhaust gases, hot cooling water or other heat-filled waste) or any other energy-saving, eco-friendly practices can be beneficial both as cost-cutting and strategic advantage tools.

Extraction methods and processes must be at the height of efficiency as well, which begins at the time of harvest. Make sure your processes match your desired output to ensure you are running a lean operation. For example, if you’re looking to preserve all available terpenes, it is preferable to extract from fresh-frozen cannabis. To target specific compounds such as CBD and leave out terpenes, it is preferable to dry before extracting.

Whichever method is chosen, it must be performed efficiently, which means as automated as possible with minimal labor. The goal is to create a superior product that sells for a superior price at a lower cost.

The more remote the company is, the farther it is from the market/customer, which means more transportation costs to ship and receive supplies. Being close to your primary materials or supply outlets is something everyone needs to consider in their business plan. Getting specialized materials to remote locations can be problematic, and any delivery delay can be deeply disruptive to your business.

Choosing a location that keeps you near your customers and suppliers will lead to savings that will position you to remain competitive in the marketplace.

When choosing a company name and logo, consider customer perception a priority. Who is your company’s target customer? Is it a young millennial demographic? Does it include business professionals? Seniors? It is always best to keep your intended customer in mind when developing your company name, logo and branding, as well as when you are establishing partnerships with other companies, social media influencers and advertising companies.

Also, avoid parodying another company’s name, logo or brand character likeness. While it might catch your target audience’s eye or get you some social media play, it most likely will land you in a lot of trouble. The short-term success of doing so will not be worth the long-term costs.

Whenever possible, strive to be a leader, not a follower—and be the first to innovate. Successful companies continually investigate the research and development of new advanced technologies whenever fiscally wise. Successful cannabis companies are continually aware of current market trends, especially with regard to extracts and extraction technology. Many companies are rapidly developing superior equipment and technologies for both small-scale and very large-scale extraction utilizing a multitude of methods, all with an eye on efficiency and superior-quality production. As industrial hemp production comes into play with the passing of the 2018 Farm Bill, I expect to see industrial scale of CBD isolation on a never-before-seen level, which will in turn encourage development of CBD refineries to extract the targeted compound as efficiently as possible.

Companies recognize the power of social media in creating a positive company image. What can be overlooked is that a decade of hard work can be destroyed in seconds with one misguided post. Unless being edgy and controversial is part of your company’s identity, avoid putting off a significant portion of consumers with off-color or irrelevant posts. Don’t post comments or opinions that may anger or offend your customer base. Instead, stick to what you’ve identified as your target audience’s interests. Does your brand project a healthy lifestyle with posts of relaxing situations? Is it for yoga enthusiasts? Are you targeting nature-lovers, or is your focus primarily on action and sports and those who engage in them? Regardless of what it is, maintain your focus, corner your niche and develop a dedicated following.

It is undeniable that a company is judged by the behaviors of its ownership and management team, so prepare to have your every affiliation and behavior during both work and off-work hours scrutinized. Whether we like it or not, we often are judged by the company we keep and sometimes we are deemed guilty by association. This can be a positive when surrounded by the best, and a curse when partners fail to meet your standards. The most successful companies surround themselves with the best in their designated field and act accordingly as a representative of the company for which they work. Executives embroiled in scandal or lawsuits, or who have less than transparent relationships with other related companies, can ultimately hurt your entire organization. A quality and reputable team should most definitely be considered a strategic advantage, to say the least.

A positive relationship with your community is a clear strategic advantage in that customers can choose (and feel good about) where they spend their hard-earned dollars. What is your company’s reputation in your local community? Is it known to interact and engage in voluntary services or philanthropy? Do you support your neighborhood as a responsible business owner should? Don’t brag about your contributions and appear boisterous or brash, but let customers know about your passion and how their transactions directly help their community.

Making sure that you use every advantage you can come up with is a surefire way to ensure that you positively stand out from your competition and ultimately find long-term success.

Kenneth Morrow is an author, consultant and owner of Trichome Technologies™. Facebook: TrichomeTechnologies Instagram: Trichome Technologies k.trichometechnologies @gmail.com

The lowdown on extraction-refinement processes of today and tomorrow.

Crude extract is exactly that: crude. As an unprocessed material, it must be refined into a specific, desirable form—similar to how the petrochemical industry refines crude oil into petroleum jelly, kerosene, gasoline, diesel fuel, aviation fuel and hundreds of chemicals, among other forms.

Crude cannabis extracts are the result of basic extraction methodologies—be it ethanol or CO2 extraction. Further refinement is usually dictated by the desired end product. For example, a vape pen cartridge has slightly different extraction requirements than an edible. A cartridge may require an extract that has been completely refined to the point that all flavonoids (including pigments) have been filtered or distilled out, resulting in a colorless (clear) extract. An edible may not require use of a clear extract; therefore, some colorants (i.e., pigments and/or flavonoids) can remain, and the extract may require less filtering or refinement.

Filtration techniques have recently evolved, and some extraction companies offer remediation services for extracts and/or distillates that would otherwise not meet testing standards. An example is the removal of contaminants (e.g., fungicides). Filtration comes in many forms, but no matter the method, the first step is usually to winterize the extract, which involves dissolving the CO2 extract in ethanol or a similar solvent. This results in a cannabinoid-rich ethanol slurry. The cannabinoid-rich ethanol then is subjected to sub-zero temperatures to freeze fats, waxes, flavonoids and other undesirable compounds by solidifying and coagulating them, so that they can be filtered out via multiple methods. These filtration methods range from using a Buchner Funnel (a funnel with a perforated disc to filter out impurities) to the utilization of different-sized particulate filters (screen filtration).

Some advanced manufacturers mitigate this step by utilizing in-line, de-waxing apparatuses. Many hydrocarbon extractors utilize in-line de-waxers as well to avoid introducing ethanol that will eventually need to be removed to their extracts. Adding ethanol also changes the extract’s composition and increases production costs.

After winterization and/or filtration (if necessary), any remaining ethanol must be removed from the extract. The most common ethanol removal method is to utilize a rotary evaporator, which heats the cannabinoids and ethanol in a vessel under vacuum from a vacuum pump. The heated ethanol evaporates and is collected by a condenser, leaving ethanol-free, concentrated extract in the vessel. At this point, the extract is ready to be used as-is for certain products that do not require further refinement, such as Rick Simpson Oil (RSO).

Multiple options exist to further purify and refine the extract, should it be necessary. For example, some hydrocarbon extractors also utilize distillation when they are using trim, or lower-quality cannabis buds, to extract. In this case, even though the product may be cannabinoid-rich, the extract may have excessive fats/waxes and exhibit a darker color. This is a less desirable product. But it can be refined further via distillation to eliminate those undesirable qualities and produce a cleaner concentrate.

Distillation methods range from short-path distillation, wiped-film distillation, falling-film and thin-film distillation, as well as other, yet-to-be-adapted methods not commonly used by most current cannabis extractors, but that will soon become more relevant as production sizes increase.

The distillation process allows processors to further separate available cannabinoids, which yield purified compounds, such as CBD and THC exceeding 95-percent purity. The same principle would also separate other available cannabinoids such as Delta-8, THC-V and a host of others if present en masse. Distillation allows a processor to target specific boiling point temperatures of the available cannabinoids, resulting in purified cannabis compounds that can then be formulated into the final desired forms.

As production increases, equipment manufacturers will evolve. Already, hydrocarbon, ethanol and CO2 equipment manufacturers are rapidly scaling up their apparatuses (or completely re-engineering them to handle much higher capacities) and innovating large-scale automated systems that minimize production time and labor, thus lowering overall production costs.

Some companies utilize technologies common in industrial applications, such as spinning band distillation (SBD), which is used to refine fish oil on an industrial scale. Technologies such as these will ultimately migrate into cannabis extraction refinement companies. Petrochemical companies and many other chemical manufacturers, as well as flavor and fragrance industries, employ equipment and methodologies that will carry over into the cannabis space as well.

Dissolve the CO2 extract in ethanol or a similar solvent.

Freeze fats, waxes, flavonoids and other undesirable compounds.

Filter out compounds using methods such as a Buchner Funnel or screen filtration, or by using in-line de-waxing offered on some equipment.

Remove any remaining ethanol, often done with a rotary evaporator.

Step 3 may be the final step for products such as Rick Simpson Oil (RSO) that require no further refinement.

Distillation methods range from short-path distillation, wiped-film distillation, falling-film and thin-film distillation, among other less-common methods.

Using target cannabinoids’ boiling points, you can begin distilling specific cannabinoids to make isolates of THC, THC-A,CBD, etc.

In the future, production costs will factor into what is considered crude extract. Crude will be considered cannabinoids and terpenes that have been separated from the biomass (the green vegetative plant material) through fresh-freezing. The reclaimed material is kief (aka resin gland heads) and it is the most desirable component of cannabis as it contains the active ingredients (cannabinoids and terpenes). The resin gland heads will then be dissolved into ethanol for winterization, filtration and distillation; made into rosin form via heat and pressure; or further refined by utilizing CO2 or hydrocarbon extraction methods. Because extractors buy their extraction material by weight, removing the plant biomass before extractors purchase the product (i.e., separating the resin gland heads from the plant material) concentrates the amount of active ingredients available by weight, increases output capabilities and lowers production costs—enabling a concentrate company to provide final products without compromising quality. Superior quality at a superior price usually wins.

As we move into the future, manufacturers will continue to investigate other methodologies. For example, will it be possible to squeeze active ingredients out of large amounts of cannabis? While industrial-scale hydraulic presses that would be required for this process are expensive, and most do not have heating capabilities, I believe this form of extraction will be investigated thoroughly, especially when considering the possibilities of pressing 100 pounds of kief. If a manufacturer desires only cannabinoids and not to preserve terpenes, then pressing the cannabinoids out of kief with heat would be perfectly acceptable and an economical extraction method—that is, if it can be accomplished en masse.

In California, separating active ingredients has other serious implications that must be considered by both growers and extraction companies. In the Golden State, cannabis is taxed by product weight. Eliminating the green vegetative material and concentrating the active ingredients minimizes the taxable material’s weight, in that taxes paid on 1 gram of bud would be the same as 1 gram of kief, yet with kief, the available percentage of those desirable compounds is much higher.

Separating biomass from active ingredients prior to selling product to an extraction company or conducting in-house extraction has numerous benefits. It is advantageous for extraction companies to simply purchase and refine raw resin, whether it is from fresh-frozen material, dry material, bud or trim. A friend once said to me, “But nobody wants to buy kief.” That may be true—the consumer may not; but eliminating the biomass and paying taxes only on weight sold can dictate success or failure for some companies. The same friend then pointed out kief’s low market price today, to which I replied, “Soon, the industry will adapt and price kief and other crude forms by percentage of available cannabinoids and terpenes, and producers will ultimately be paid according to the milligrams of cannabinoids and terpenes, because they are, in reality, all that is desired.”

Kenneth Morrow is an author, consultant and owner of Trichome Technologies™. Facebook: TrichomeTechnologies Instagram: Trichome Technologies k.trichometechnologies@gmail.com

Deciding on a covering system for a new greenhouse can be difficult due to the many options now available.

Deciding on a covering system for a new greenhouse can be difficult due to the many options now available. The choice used to be glass, rigid poly or double co-poly film. Today, growers can incorporate energy conservation and shading into the mix. Energy conservation must be considered in many northern states, whereas shading is more important in southern locations. Three main factors affect the choice: light, energy conservation and shading. Here are a few suggestions that may help you make a decision.

Winter light is still the limiting factor for plant growth in most areas of the U.S., even in the Southwest, where the average daily light integral (DLI) is only 20 to 25 mol/sq. m/day (endowment.org/dlimaps). In most current greenhouses, only 50 percent to 60 percent of outside sunlight gets through to plant level.

Research continues to find better ways to capture and make use of natural light. Glass and plastic with nonreflective surfaces and better diffusion having up to 95-percent transmittance are becoming available. Using larger panes and smaller composite material, structural members can also increase the amount of light reaching the plant level by up to 10 percent.

Although great strides have been made in improving the efficiency of artificial illumination, the increasing cost of electricity is offsetting some of the benefits. For example, Connecticut power suppliers were given the go-ahead to increase electricity costs last year, and the new policy went into effect on Jan. 1.

Growers in northern climates are usually more concerned with heat loss during the winter. Energy requirements in cold weather are frequently 15 percent to 30 percent of production costs for many crops. To offset this, energy screen systems can be installed to reduce heat loss by 50 percent or more. New screen materials plus the use of multiple screens can also offset the loss of heat, compared to having a single-layer glazing.

Research has shown that using a translucent screen left closed both day and night on cold, cloudy days can both provide good light levels and save energy. The greater hours of use can more than offset the use of a screen having a higher U-value (meaning lower insulating qualities) but greater shading.

In warmer climates, high summer temperature is of greater concern than energy savings. Typical material shading choices are in the 40-percent to 60-percent range, but materials with a shade factor as high as 86 percent are available. By using multiple screens, the benefits of both shade and energy can be achieved.

Put all this together to choose a covering system:

For the glazing, select a lightweight material such as a corrugated polycarbonate or modified acrylic with a 90-percent light transmission. This allows a lighter greenhouse frame than if glass was chosen. A lighter frame means more light to the plants.

Add a shade screen that diffuses the light and provides the level of shading that the crop requires.

Install a transparent energy screen with 40-percent to 50-percent energy savings, translucent strips and a closed structure that can be left extended during the day without much light reduction.

If daylight exclusion is required, install a blackout screen material instead of the energy-saving material. Most blackout screens have a greater energy-saving rating. Select a material with one reflective aluminum surface. Face it up to reflect summer heat; face it down to reflect winter heat or supplemental artificial lighting.

The above suggestions will help you select a good covering system that will have at least a 10-year economic life. With the rapid development of new materials and production concepts, such as photoselective glazings and photovoltaic electric power generation panels, any structure with a longer life may be obsolete in a few years.

Bartok is an agricultural engineer, an emeritus extension professor at the University of Connecticut. He is an author, consultant and certified technical service provider doing greenhouse energy audits for USDA grant programs in New England.

Editor’s note: This article originally ran in the February 2019 issue of Greenhouse Management magazine, a sister publication to Cannabis Business Times.

Guided by a taste for highly regulated markets and a consumer-packaged-goods approach to cannabis, Cresco Labs focuses on consistency and quality across 13 production facilities—with more to come.

Scaling a business to nationwide success is challenging under any circumstances. But when that business operates in an industry that is rapidly shifting from minimal regulation to hyper regulation—with divergent state-to-state requirements, intense regulatory oversight and negative public perceptions about its products—success demands a unique skill set. Fortunately for Cresco Labs, it’s a skill set that co-founder and CEO Charlie Bachtell brought with him from the post-2008 housing crisis and resulting hyper-regulated mortgage industry. And it’s what has led the seed-to-sale cannabis company from its Chicago roots to having a presence in nine U.S. states—and counting.

When Illinois’ Compassionate Use of Medical Cannabis Pilot Program Act became law on Aug. 1, 2013, Bachtell was executive vice president and general counsel for residential mortgage company Guaranteed Rate. Joe Caltabiano, now Cresco’s president, was a standout in loan origination on Guaranteed Rate’s sales side.

While other companies failed following the housing collapse, Guaranteed Rate became a leader in the mortgage space, expanding from a few hundred to several thousand employees, licensed and operational in all 50 states with 150-plus brick-and-mortar offices. By engaging, embracing and excelling at regulation, the company thrived in the new era of hyper-regulated mortgage banking. “[On the surface], the [mortgage] industry was not similar to cannabis,” Bachtell says. “But in reality, it was almost like a foreshadowing of what the cannabis industry was about to become.”

Within 72 hours of the Illinois medical marijuana law’s signing—and Caltabiano’s semi-casual suggestion that the pair “sell weed”—Bachtell had written a 25-page white paper/business plan. Nearly six years later, the document still serves as the foundation for Cresco’s business model.

Today, the company operates in highly regulated states—Illinois, Pennsylvania, Ohio, Nevada, Arizona, California, New York, Massachusetts, and Maryland—with 13 production facilities, 12 retail locations and significant expansion plans for 2019. For starters, on March 18, 2019, Cresco announced its entry into the Florida market through the signing of a letter agreement to acquire VidaCann Ltd., one of the largest vertically integrated medical cannabis providers in the Sunshine State. One week later, the company announced it had been pre-approved by Michigan to move ahead with its cultivation and processing license process in that state.

Locations: Operational states: IL, PA, OH, NV, AZ, CA, MI*, NY*, MA*, MD*, FL** (*Pending state regulatory approval) (**Signed letter agreement March 18 to acquire VidaCann Ltd.)

Production facilities: 15 facilities totaling 1.8 million sq. ft. (when fully operational)

Cultivation types: Indoor, greenhouse, outdoor

Cultivation footage: Currently 357,000 square feet (1.8 million sq. ft. projected by 2019 year-end)

Retail licenses and locations: 51* licenses, 21* locations (6 locations slated to open by Q3 2019) (*when fully operational)

Number of employees: More than 700

Products in production: More than 500

SKUs in production: More than 5,000

Achieving Cresco’s current national reach happened fairly quickly, but deliberately. When Bachtell dove into his initial analysis of the cannabis industry, two things were immediately apparent: The destiny of the cannabis industry was hyper-regulation and the days of budtenders weighing out bulk cannabis on retail counters would pass.

From his vantage point, cannabis was a consumer packaged good (CPG), whether the industry realized it or not. It seemed obvious to Bachtell that—just like common foods, beverages and personal care items found in every American home—child-proof, tamper-evident, straight-from-the-manufacturer, consumer-ready packaging was the industry’s future.

“All cannabis needed was somebody to come in and help normalize it and professionalize it. Everything else was already there,” Bachtell says. “That was something we knew we could offer to the industry because of what we had just gone through in the mortgage banking space.”

Caltabiano, a childhood leukemia survivor, was already interested in the industry’s potential. Active in philanthropic activities and his own long-term cancer follow-up, he’d witnessed medical opinions shift from considering cannabis as snake oil toward viewing cannabis as a positive influence on cancer protocols and quality of life. He felt that Illinois’ medical marijuana law “made a lot more sense” than some less-regulated state programs. “It was set up in a way for people who could operate in compliance- and regulatory-based environments to excel. It spoke to us in such a unique way,” he says.

Cresco entered the Illinois market in cultivation, extraction and distribution, choosing not to stretch themselves too thin by expanding into retail at the same time. Cultivation launched in November 2015; the first sales came in January 2016. Despite Cresco’s success in the Illinois market, the state’s stringent program restricted patient counts and made out-of-state expansion attractive.

Successful Cresco applications in new, highly regulated Pennsylvania and Ohio markets followed in 2017. (Cresco was the first cultivation/manufacturing company to bring products to market and the first company to open retail stores in both states, in early 2018 and 2019, respectively.) January 2018 marked the company’s move into retail in Pennsylvania and Illinois. Then came merger and acquisition (M&A) transactions in existing cannabis markets, including California, Nevada and Arizona. With those moves, Cresco’s seed-to-sale expansion picked up speed.

“We refined our skills in a very difficult environment, which was Illinois,” Caltabiano says. “We put our framework together, we sharpened our tools, went into another market, did it intelligently, and then were able to really scale post-Pennsylvania.” Cresco’s choice of markets reflects its preference for strict regulatory environments that play to its skill sets.

“We like vertical integration, but first and foremost, we like creating consistent products for the benefit of consumers and making sure those are as widely available as possible, way outside of just the retail establishments we own,” Bachtell says. “Our priority is to get them onto every shelf, not just our own.”

Bachtell says his experience watching other companies fail in the mortgage banking industry while Guaranteed Rate thrived also helped shape some of Cresco’s corporate values. One of those core principles—”Know Your Audience”—guides the company’s CPG approach to building brands.

Preparing for entry into the Illinois medical market, the Cresco team identified two distinct audiences: the consumer familiar with cannabis who was seeking non-clinical solutions with a wellness approach and, as Bachtell describes it, “the 70-year-old grandmother who never tried it before in her life, but her oncologist told her it will help with the nausea from chemo.”

It was clear that a single brand wouldn’t directly address either patient group. “You’ve got these two totally divergent audiences that are basically coming into the same store to effectively buy the same product, but those two audiences want it to look and feel totally different,” Bachtell explains.

From that realization, the five brands that comprise Cresco’s House of Brands were born:

In late February, Cresco announced a new hemp-based CBD wellness subsidiary, Well Beings. Early plans call for a Well Beings line plus hemp-based CBD versions of some house brands, all designed to accelerate nationwide recognition of Cresco brands and advance Cresco products into the CPG marketplace.

“The Farm Bill and CBD gave us, the consumer products branded company, an incredible opportunity to now be able to get our brands, our portfolio, into all 50 states and, most importantly, outside of the licensed dispensary channel,” Bachtell explains. “It gave us that opportunity today.”

Biggest misconception people have about cannabis cultivation operations: “I think it’s the customer perception of how much profitability there is in new cannabis markets. A lot of times people don’t understand the cost of construction, the cost of testing, the cost of all the things it takes to enter an early market like that with a low patient count and supply and demand obviously constricted.”

Greatest cultivation challenge you’ve faced: “The scale-quality paradox: How do you scale big enough to satisfy an increasing number of patients and/or customers while maintaining quality at the same high standard that you’ve come to be known for.”

On blending traditional agriculture and cannabis: “A burgeoning cannabis industry could have a lot to learn from the methodologies used in traditional horticulture, certainly operating with low-margin crops where you have to understand the economies of scale … but there are enough caveats about cannabis as a plant, as a species, that present challenges for someone coming in who’s used to growing traditional crops. Traditional horticulture and agriculture have a lot of value they can add, but at the same time, cannabis has enough caveats to its production that a specialist in that particular field is necessary.”

Most important lesson learned in this industry: “The unknown relationship in a new market between the patient base and the supplier. We find certain markets prefer products that other markets don’t; a THC lotion sells very well in Pennsylvania and can’t get off the shelves in Illinois. You try to plan and understand what markets really want when it comes to strains, flower types, extract types, but it’s always unique, state by state. Trying to plan for those entry markets certainly is difficult, and it’s always surprising.”

Advice for other cultivators: “Establish what your true goals are. Do you want to grow the best possible flower that anybody can find or the product that everyone can get a hold of at a very low price? You have to define your production goals for yourself and then work through the situations that are conducive to those goals.

“People who’ve been working in this space should feel good about where we’re going. Obviously, there’s going to be a mountain of challenges in any new, emerging industry. But given the progress and the legitimacy that we’re all bringing into this space, I hope that for everyone who’s experiencing it, the fulfillment outweighs the challenges we’re all working so hard to address.”

From its beginnings in the Illinois market, Cresco’s marketing strategy has focused on educational and awareness campaigns, with an eye toward consumers new to cannabis.

“For the most part, up until that point, cannabis was being done by cannabis people, for cannabis people, in [parts of the country] that had a culture that embraced cannabis a lot more than Illinois,” Bachtell explains. “You needed to demystify the situation. You needed to give your customer base a baseline level of education and knowledge so they would feel comfortable wanting to participate.”

Caltabiano echoes the value of that approach. “Consumers don’t want to be told what to do. The world today wants to be educated, and they have this thirst for knowledge,” he says.

To that end, the company launched a 2015 million-dollar advertising campaign to educate Illinois residents and potential patients about the new program. By focusing on consumer education and awareness, the campaign circumvented the state’s ban on cannabis product advertising and set the stage for Cresco’s marketing approach across states.

“We believe strongly that the best form of communicating your message is through an education platform more than a direct [traditional] marketing platform,” Caltabiano says.

In recent months, Cresco steadily added top marketing talent from outside the cannabis industry, with résumés that ring with names like Nike, PepsiCo, Molson Coors, Pfizer and Walgreens, just to name a few. How these additions will affect Cresco’s marketing efforts as the company’s footprint grows is yet to be revealed.

“Charlie and I pride ourselves on building a best-in-class team through individuals who’ve done this before in different mediums. We really try not to reinvent anything in cannabis,” Caltabiano explains. “We have this opportunity to grab people who’ve been in [other] industries and build on this baseline to make a company that’s going to be a mainstay consumable product for a very long period of time.

“When we set out to explore this journey, there were law firms who wouldn’t work with us. There were people hesitant to engage in the business,” he shares. “Now to see this blossoming of the industry, where you’re able to draw talent from various industries … where you’re seeing this exodus from other industries into the cannabis industry is an incredibly exciting thing.”

The journey, it would seem, is just beginning. Cresco’s current cultivation footprint—spread across indoor, greenhouse and seasonal open-field production—totals approximately 357,000 square feet; the company’s 2019 year-end cultivation projections show more than triple that amount.

Achieving and maintaining CPG success demands product reliability, consistency and unwavering availability to patients, consumers and wholesale customers. Responsibility for finding the sweet spot where CPG-level production and Cresco quality intersect falls to Jason Nelson, Cresco’s senior vice president of production.

Nelson brings his own unique skill set to the team, blending academics with hands-on cannabis expertise. An undergraduate agronomy degree and several years in the early Southern California cannabis market were followed with a master’s degree in floriculture and horticulture, personally and surreptitiously tailored to support large-scale cannabis greenhouse production and nutrition. Several years in cultivation with one of Denver’s largest vertically integrated operations during the state’s transition from medical to recreational came next.

Having had a front-row seat to Colorado’s subsequent price compression, Nelson remains acutely aware of the necessity of sustainable production models, while still supporting the product variety that customers demand.

At any one time, Nelson has 20 to 30 cultivars in production per market. Cultivars vary from market to market, depending on the production site, the market’s needs and its consumer preferences.

“In a given market, it has to be roughly 20 to 30 to match all the patient needs. As far as sativa, hybrid and indica, we typically have four to five each of those, plus two to three CBD cultivars. We also have our Reserve genetics, which tend to flow between five and seven strains, depending on the market,” he explains.

Venture inside Cresco production facilities and you’ll find plants growing in a peat-based soilless substrate with custom-mixed liquid nutrition—all fed and watered with the same solution, at the same time, on the same intervals. Nelson credits his academic research with enabling him to find and maintain essential balance across multiple facilities.

“The key is to have a production method that allows for success across all those cultivars without having to manage cultivars on a table-by-table or space-by-space basis. For revenue forecasting and all the things that allow a company like us to have success, you have to be able to grow all those cultivars as consistently as possible, with the highest quality possible, at the largest scale. That’s where the challenge really starts to come into play,” Nelson says.

To meet that challenge, Nelson relies on soluble nutrients, with some liquids added, for a custom nutrient solution mixed in house to his specifications. “It’s really very difficult to scale effectively and sustainably on a pre-dissolved or liquid nutrient regiment that locks in specific nutrient ratios,” he explains.

A second essential to Nelson’s system is a substrate that allows sativas and indicas to remain on the same schedule despite natural, size-related differences in moisture-consumption rates. “You need to develop a scalable substrate that allows sufficient moisture to be applied to sativas to not let them flag or dry out and, by extension, keeps indicas comfortable as well,” he says.

Cultivar selection also plays a role. “Commercial production is a gauntlet. … Genetics are entering a new phase where it’s large-scale commercial production. That’s a very intense scenario for the plant itself,” Nelson says. “There’s a lot of breeders out there who aren’t selecting for stabilized characteristics. … If you’re not selecting for those characteristics, it’s going to be difficult to get those genetics to play well at acres upon acres at a time.”

Nelson points out that economies of scale inherently affect quality. “At Cresco, we put a high precedence on quality, with a more consistent supply and larger volume. I think that’s where we have the most success—finding a production model and being able to establish and refine that production model to allow high quality and scalability.”

Cresco’s momentum seems to be building, beyond its increasing national footprint. The company closed a $100-million round of private funding in October 2018. Then a reverse takeover of a Canadian company opened the door for Cresco’s December 2018 debut on the Canadian Securities Exchange (symbol “CL”). On March 6, Cresco announced shares had been approved to trade on Over-The-Counter (OTC) Markets under the symbol “CRLBF.” (Because cannabis remains illegal under U.S. federal law, U.S. cannabis companies are not allowed to trade on U.S. stock exchanges such as the New York Stock Exchange (NYSE).)

Bachtell notes key milestones in the company’s history, from its substantial market share in Illinois to its first-to-market status in Pennsylvania and Ohio, as examples of the company’s ability to “execute” in new cannabis markets.

“The next thing for us will be when we show everybody how we’re going to execute in existing markets that we didn’t help start,” he says. “I think you’ll start to see some good things from us in these prior existing markets, like in Arizona and California.”

Cresco’s team expects to face increasing regulation and complexity, heightened competition and rising consumer expectations, but Bachtell, Caltabiano and Nelson all exude optimism, confidence and gratitude at where they are now and what lies ahead.

“When we first looked at this thing when the law passed in Illinois, I knew within 24 hours that it was the most fascinating thing I had ever seen, and that hasn’t stopped,” Bachtell says. “This is a very unique industry that has the opportunity to create more win-win-win scenarios than anything I’ve ever seen. ... There’s no limit to where this industry could go.”

Jolene Hansen is a freelance writer and contributor to Cannabis Business Times and other GIE Media publications. Reach her at jolene@lovesgarden.com.

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