Cannacurio Podcast Episode 30 with James Eichner and Ron Basak-Smith of Sana Packaging

In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss new adult-use cannabis licenses from Arizona and Colorado license expiration data as well as hemp licenses North Carolina. We also speak with James Eichner and Ron Basak-Smith, co-founders of Sana Packaging, a sustainable cannabis and hemp packaging company.

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Cannacurio Podcast Episode 30 Transcript

Amanda Guerrero: Welcome to the Cannacurio podcast, powered by Cannabiz Media. I'm your host, Amanda Guerrero, joined by my lovely co-host, Ed Keating, who is also our Chief Data Officer here at Cannabiz Media.

As you guys have already joined us for our first season and we're well into our second, and on today's show, we'll actually be joined by Cannabiz Media subscribers, and environmental activists, Ron Basak-Smith and James Eichner, co-founders of Sana Packaging.

As always, we're going to jump in with Ed and check out what he has for us today from the database. What's up, Ed?

Ed Keating: Excellent. Thanks Amanda. So, the big story is Arizona. Last week, they started accepting recreational licenses and within 72 hours, they awarded them. People started selling, big news. So, the state released 86 licenses to existing license holders the first day, and then the next day, three more licenses, and last night, one more. So they're slowly issuing the licenses.

I think from what I've read, it's a pretty straightforward process that you pay your money, you get your license as long as you're in good standing. I think it's like a $25,000 fee or something like that. They've been setting this process in the works for a while.

We actually spoke to the trade association down there last year and they had a pretty good process set up, and it seems like they're hitting things well ahead of schedule. Some experts thought we wouldn't see stores open until March, but as I said, it happened in about 72 hours. So, that's the big story.

We also added in a bunch of information from North Carolina hemp, a lot of updates and some new processors. On the cannabis side, in Colorado, we were able to add in over 4,500 expiration dates for licenses. So, for our clients who are using the database to keep track of licenses in good standing this should help that out. Then oddly, there were no new California or Oklahoma records last week.

Amanda Guerrero: Really?

Ed Keating: Who can figure? That never happens. Yeah.

Amanda Guerrero: Point of saturation has been reached you all. We predicted this on the show. We did.

Ed Keating: Maybe, maybe, we'll see.

Amanda Guerrero: Very cool. Question about Arizona, do you think that they were able to have such a successful turnaround time within 72 hours because they were basically moving their med program to their adult-use program?

Ed Keating: Yeah. Well, at the beginning of the year, we looked at programs to see which ones had gone quickly and which ones had gone slowly, and without surprise, if you've already got a regulatory scheme in place and the players in place, the regulators in place, it's a box checking exercise.

I mean, obviously, they have to do it right, but I think you hit it on the head, Amanda, that it's just a matter of changing some permissions, because in all cases, I think it's the same store, it might even be just the SKU level, like, “Is this a med product or is it an adult-use product?” So, I think they did a good job. I mean, to pull it off that quickly, it's really impressive. Contrast that with New Jersey.

Amanda Guerrero: Yeah. No kidding. Contrast that with New Jersey and New York too, if they're limiting regulations are squeezing us basically.

Ed Keating: Right.

Amanda Guerrero: So Ron, James, welcome to the show. How are you today?

James Eichner: We're good. Thanks for having us.

Amanda Guerrero: Thank you for joining.

Ron Basak-Smith: Doing well.

Amanda Guerrero: That's great. So Sana Packaging, we're very familiar just from ... I, myself, I have actually been pretty familiar with you guys because I saw you at the last conferences I went to in 2020. It was at Cultivated Synergy that you guys spoke on a cannabis sustainability panel. I think it was actually Ron that spoke on that panel. So, I'm pretty familiar, but for those of us or for our listeners that are tuning in, can you tell us a little bit about the company? What led you to the creation? The concept?

James Eichner: So, Ron and I met in business school when we were pursuing our MBAs at CU Boulder and became friends the way people become friends in school. Were both skiers, had similar tastes in music, and we ended up taking a lot of classes together because we were both there specifically to study sustainability on top of the regular business curriculum.

One of the things that we bonded over was being passionate cannabis consumers. During our second year of business school, Ron approached me. We were in a sustainable venturing class together. As part of that class, everyone had to present ideas for a group project to work on for the course of the semester.

Ron asked me if I wanted to work on something that had to do with cannabis packaging. Something we had talked about before as consumers was that along with a lot of the positivity that we saw the legal industry bringing to the world, one of the big negative externalities that we noticed was the amount of packaging waste being created.

That's not to say that there aren't other negative externalities in the industry. There absolutely are. But we saw that a lot was already being done to address things like lighting or your irrigation and stuff like that.

So, we felt like the cultivation side of the industry was pretty covered, and we just saw that not much was being done to address the packaging waste being created. So, at the time, it was really just that. It was an exploratory project to see if we could find some alternate solution to what we were seeing on the market. Then one thing led to another, and here we are four or almost five years later.

Amanda Guerrero: It started off as MBA idea concept. It's now turned into your livelihood. Ron, I noticed just creeping on your LinkedIn, you're relatively young getting into this space here, especially as an entrepreneur. Can you tell us a little bit about some of the hurdles or obstacles that you guys have had to overcome moving into the cannabis sector and taking on sustainability as well as creating packaging for the industry?

Ron Basak-Smith: Yeah. Interesting. I think, James and I have always said, I think one of the advantages to our success so far has been that we didn't approach this business model with any preconceived ideas of how packaging should work. Obviously, the cannabis industry, I think, having an approach that you can ebb and flow with the changes that come is super important.

So, I think we've been fortunate in that sense that we were able to come with a blank slate and bring basically - what I think is our driving force here is that's just passion to try to solve this problem. In this new industry, we've been able to work with some great companies that also have that same drive and want to do something better with cannabis and with the industry as a whole.

Obviously in our area of focus, that being packaging, but for the major hurdles for us, it's honestly been just figuring out how do you get from point A to point B with product launches, getting in fundraising, all of these big milestones that we needed to hit in order to get our product to market.

I think for us what we ... Our number one thing that we've relied upon is James and I being a really strong team and being able to bring people around us who also can support us and make sure that we're staying true to our cause and at the end of the day, executing on the business model.

Amanda Guerrero: Yeah. It's like they say, teamwork makes the dream work. Right?

Ron Basak-Smith: Yeah.

Amanda Guerrero: Now, looking into Sana Packaging as a whole, you guys promote a circular economy. AKA for those of you listening, moving away from a linear take, make, dispose model and moving more into a circular economic model. Can you tell us a little bit about some of your three guiding principles?

James Eichner: Yeah. So, the circular economy as defined by the Ellen MacArthur Foundation, which is a foundation that does a lot of work and research on the circular economy and is very big in promoting it in the marketplace, the way they define it is having three overarching guiding principles. One being designing out waste and pollution. Two being, keeping products and materials in use, and three being regenerating our natural systems.

So, designing out waste and pollution means looking at every piece of your supply chain, analyzing it, and seeing how you can literally design out waste and pollution from your processes. So, that could be anything from material sourcing all the way to the product’s end of life cycle.

In terms of keeping products and materials in use, those are the principles of reduce, reuse, recycle, and reclaim. So, making sure that the lifecycle of a material continues to be circular, continues to be recovered in the waste system in a way that minimizes the amount of stuff that goes to landfill.  So, can it be composted? Can it be recycled? How can we reclaim and reuse that material and extend the life cycle of that material?

Then number three, regenerating our natural systems, that is possibly one of the hardest principles to adhere to specifically in packaging, and really what regenerating our natural systems comes down to is there a way that we can create products, put them out into the market, recover them in a way that leaves the world and the environment better than we found it? Is there a way that we can do this that helps heal the environment?

So, when we look at some of the materials that we use, hemp is a rapidly renewable and regenerative resource. So, from an agricultural perspective, there's a lot of regeneration of our natural systems that happens there. Then from the perspective of using materials like reclaimed ocean plastics, the simple act of using those reclaimed materials is helping clean our oceans. So, that's how we're beginning to dip our toes into that regeneration piece. That's definitely, I think, one of the hardest tenants of the circular economy to stay true to.

Ed Keating: Yeah. Digging into that a little bit more, since you do use 100% plant hemp-based plastic and reclaimed ocean plastic, I'm curious from a sourcing standpoint, how do you find the right hemp partners? Especially out where you are in Colorado and it's a very licensed business. What is your process for finding people to work with as partners?

Ron Basak-Smith: That's a great question. I think from the very beginning with our hemp based products, it's been all about our supply chain and actually being able to manage the inputs basically. So, hemp being one of the main inputs for a plant-based product, we have to make sure, like you said, that that product's available and where can we source it? So traditionally, we are not a materials manufacturer, we're a packaging brand.

So, traditionally in the manufacturing space, the manufacturer is going to go out and source the material. So, we would stay out of that supply chain. The resourcing commodities that everyone has access to basically. So in our case, we basically had to connect the dots. Find someone who is compounding hemp-based bio composites, then their connection is with the hemp suppliers.

So, then that the compounder really works with the supplier of the hemp material. Then the manufacturer just needs to get our pallets to them on time basically, or the supplier needs to get it to our manufacturer on time.

So, managing that, it's been interesting. We've had to go through a couple of compounders and basically comes up to them to build relationships with hemp suppliers out there, and testing the material for cleanliness, testing the material for effectiveness in the manufacturing process.

I think we've seen some major progress in the last two years from where we were when we launched in 2018. A lot of our holdup was actually getting the hemp material and having enough of it to create packaging and consistently have it.

So, I feel we've moved out of days, but we definitely still, as we scale, it's always something we're concerned about, but we've definitely seen more stability at least with our suppliers and getting this specific type of hemp feed stock that we're looking for, that being the hurds. So, the innards of the stalk. And that's another thing, that just when you're conceptualizing like hemp, a lot of the hemp out there's grown for CBD. That's different than the hemp that you would grow for industrial applications, textiles, bio-based materials, and stuff like that.

Ed Keating: As you look back at that supply chain, are you in the position yet where you're going to certify that whole process so that the companies that you work with can be at the level that you are at in terms of how you're trying to run your company?

Ron Basak-Smith: You're asking the companies that purchase our product from us?

Ed Keating: No. The ones that are supplying your inputs. How do you make sure that they're good actors in this chain, because as supply chains get longer and harder to maintain, as George Carlin once said, and it can be an issue for companies who receive products that come along that supply chain?

Ron Basak-Smith: Exactly. Yeah. No, I mean, our biggest thing as a business internally is basically our relationships with our suppliers and manufacturers at this point. Then from a product quality standpoint, we have internal standards that we set with our manufacturer, testing protocols from the material. So, basically making sure that the part has the same dimensional characteristics, visual characteristics, the feel of it, all of those things that our end customer expects from us. So, batch by batch, we have tests that are done.

When there is an issue and something does arise, we can go back and say, "Hey what were the parts looking like that came out of this batch, or what was going on there," and then test that and see if there is an issue. Fortunately we've had pretty consistent parts the last couple of years with our manufacturers. I'm real excited about that.

Ed Keating: Now, you had mentioned that a lot of hemp has grown for CBD and from what we've seen in the industry, as we track licenses, is that a lot of growers came onto the market with dollar signs in their eyes. Sadly, they're still sitting on inventory or plants that they grew maybe in 2018, 2019, 2020 sitting in barns. Does that help you, hinder you, have no impact because it was grown for CBD? I'm just curious what that part of the supply chain has meant in that dynamic?

Ron Basak-Smith: Yeah. I mean, I think there's two ways to look at it. One is ultimately, if there were more CBD products in the market, there'd be more packaging. So, from that standpoint, the more that's getting the market, good from the side of ... Does the CBD market and the focus on that distract from the progress that could be made in the material space? I think yeah, that's definitely something that's happened. I think we're starting to see a transition away from that where people are understanding that in every industry, when you look outside of the hemp cannabis space, you see everyone's doing a very specific part in the supply chain.

Now that developments are happening within the hemp space where people are honing in on where their efficiencies are, where their expertise lie, and where they can actually bring a product to market. I guess to answer your question, I think early on it was a distraction away from getting people to like processors and stuff of the bio based material, because everyone was processing it for oil, versus processing it for materials that we ... Textiles and bio composites and stuff. So, yeah. I think those days are starting to change, but it definitely was a concern of ours in the last couple of years.

Ed Keating: One of the things that strikes me about your company and learning about it is this role that you can be, and I think of essentially being evangelists, you're really passionate about this. You focused on an industry, you're trying to make it better. What is that process like? And do you ever see taking it to other industries because obviously cannabis, isn't the only packaging consumptive industry? I'm just curious what that role is like for both of you?

James Eichner: It's a really great question. First touching on the evangelization part of it, I think what's important to note there, specifically what we're evangelizing about, is in a specific material, whether it's temporary reclaimed ocean plastic, it's really about an economic model, and the way packaging should work in a sustainable long-term system that will help heal the environment.

So, there's just so much education that needs to happen around that. So, we always just try to lead with education. So, whether we're putting together marketing materials or writing a blog post or even writing a press release about a new product, it's always about how can we help change the narrative around sustainability, disposable products, and waste recoveries. So, we always just try to come at everything from the point of ... We don't want to put any information out there unless it's useful.

In terms of tackling other industries, that's definitely something that's on our radar that we would like to do, but there's really three specific reasons why we are currently focused on cannabis packaging. When I say cannabis packaging, I am including hemp packaging in there as well, just because the product skews between them hemp being cannabis, products are so similar. But really the three reasons we're focused on cannabis are, one there's an exceptionally high willingness to pay in the cannabis industry for sustainable packaging materials. If you look at industries like food and beverage, you'll find that those industries are typically willing to pay a 10 to 20% premium for a sustainable packaging material. Whereas in cannabis, we've found that willingness to pay to be upwards of 200 to 300%. That's just based off of the price of our first products when we launched and the fact that they sold really well.

With that in mind, I think there's a few reasons that willingness to pay is so high. I think one is it's an industry that skews progressive and wants to do the right thing. It's also a hyper competitive industry where people are fighting for shelf space. So, packaging is a really great way to stand out, especially when you consider that you can't pick up, touch, or smell the products the way you can on an avocado at a grocery store. So, that's the willingness to pay.

Then there's also the fact that cannabis is just a rapidly growing industry that has a ton of different packaging needs and pain points. So, there's room for a company like ours, a sustainable packaging startup that's trying to do something different. There's room for us to exist because there's just such a need. At this point in time, there's not enough cannabis packaging companies out there to serve all the needs of the market. So, there's plenty of market share to be had and plenty of room for someone like us to carve out a really strong niche.

Then the last thing is that because it's a new and emerging industry, we have a really unique opportunity to try and implement the ideas of circular packaging from the ground up, as opposed to approaching another industry and trying to tackle that same issue from the top down. We do see that happening on a global scale with packaging, but in those other industries, it's these much larger packaging conglomerates that are, for lack of a better term, leading that charge, and there wouldn't necessarily be the opportunity for a company like ours to be the one leading that movement.

Ed Keating: That's great. Actually that leads into the last question I wanted us to dig into. When you look at leadership and when you look at industries and specifically leaders, you have people who lead departments, people who lead companies, people who may lead regions, but in this case, it seems that you have the ability to really try and lead the industry. So, I'm curious from a competitive standpoint, how that sets you up. Are you really competing, or are you also trying to get the whole packaging industry to go down this route because it will help heal the planet? It's not just about Sana. It's about all of us and the whole industry. So, I'm just trying to get that metaview from you if that's part of your goal too?

James Eichner: Yeah. I'd say the metaview is a little bit of both, and I can let Ron elaborate on that a little bit, but real quick, we always approach things from ... Obviously there're competitors out there, but when we see other companies that seem to share our values and are trying to accomplish similar things as us, our first thought is always, can we work with these folks?

So, we have a network of what internally we call them sister companies, although technically, the definition of a sister company is that you have the same overarching corporate umbrella or overboard, if you will. So, we're not all owned by the same people, or the same entity, but we refer to them as sister companies because that's the type of relationship we've created with them.

But it's companies that, who are creating products that compliment ours. So, we have partners that we work with to source glass jars that go along with our reclaimed ocean plastic lids. We have companies that we work with to provide our customers with hemp, paperboard, outer packaging, and so we do have this network of like-minded companies that we leveraged to be able to provide our customers with a wider spread of products. If we had approached this differently, all of these companies could be competitors of ours, but instead, now they're partners of ours.

Ed Keating: That's awesome. And I lied. I did have one more question, the data nerdy question. So once again, as I was learning about what you did, one of the metrics that you put out there is, you like this approach because it presents, I'm going to read this, "A superior carbon sequestration potential as one metric ton of hemp sequesters one and a 1/2 metric tons of carbon."

So, I'm curious as you go out to the marketplace and sell what you sell, does that resonate with people? Because what I've seen and learned in the last five years is how metric intensive, especially the cultivators are, where they know how much water they're using, how much fertilizer, et cetera. This seems to fit right in with that. So, does that resonate with your clients when you talk to them about why it's superior and they get it because it's metric, or is it new for them?

Ron Basak-Smith: Yeah. This is another good question here. I think this goes to the larger question of what we're trying to help folks understand, is really like when someone reaches out and asks like, "Hey, we're looking for a product that's sustainable." What does that really mean?

I think in the industry, and in the world, it's sometimes easy to quantify something as sustainable based upon a metric. You can say something reduces the amount of carbon, but we really want to move the conversation more towards is, what problems are we trying to solve? And looking at the environment as an ecosystem, and not just this one number.

That one number can be really important. If we get distracted by that number, we lose sight of all the other things that are happening within that process of creating the product. So, yes, numbers are really important to create the narrative, but also I think we need to, as a company and as everyone, reshape our approach to sustainability.

The examples that I always use is, we take a global approach to local issues, and it doesn't necessarily work in the world of sustainability. And so on the West coast, you might be concerned about water where on the East coast, it might be a bigger concern about landfill. And like, where are these actually located? Because there's denser populations. So these two things greatly, depending on what your concerns are as a company, as a consumer, as a human on Planet Earth, it's going to change what decision, or what you're looking for in your packaging.

So, what we try to do is take a holistic approach to the conversation and where we can provide some data to do so, but also have these conversations with folks about really what are the issues we're trying to solve. Then it goes back to your previous question around the rest of the industry and competition and stuff, and this is where, technically, anyone can have sustainable packaging. It's very easy. You can just say, customer asks, "Hey, we want it to be X, Y, or Z," and everyone's got some solution. So, I think what it really comes down to is our conversations about what issues are we trying to solve, and how did these solutions actually work towards a better environment?

Amanda Guerrero: Yeah. I love the underlying themes of comradery, education, accountability, not just within yourself as a business but also within the markets that you guys are going into, or in considering the businesses. Now, given all of the incredible things that you guys are doing, how would a team like yours utilize our platform?

Ron Basak-Smith: Before, I don't know how many of your answers with the world of COVID right now, but I guess I'll just dive into where we were before COVID started. I think as you mentioned, you saw us at a trade show-

Amanda Guerrero: Yeah.

Ron Basak-Smith: And we met there. For us as a business, we haven't spent a ton of money on advertising. A lot of it's been boots on the ground. So, that's what worked for us. Then last year, I think we had some conferences and stuff scheduled in March, April timeframe, and we couldn't go to those. So, that really changed our strategy as far as how are we going to get in front of people? How are we going to figure out who's out there? Because up until that point, we had a pathway.

So, I think we see Cannabiz as a way to see who's out there, understand the different players in each new market, especially when we, as a company, James is the only person in our company who's outside of Colorado. James is in California. We are all in Colorado.

Amanda Guerrero: Lucky us.

Ron Basak-Smith: Yeah. So, understanding who are the players in the Florida market, New Jersey market, whatever it may be. It's been really helpful there.

James Eichner: Another part of that is for a long time after we launched our sales strategy was literally just managing inbound inquiries. Part of that was due to demand, and part of that was also due to our team size and the fact that we launched a two product company, just trying to get off the ground. But we're also at a natural transition now where we have been developing more of an outbound strategy, and we've just found Cannabiz to be the ideal tool and platform for us to execute on an outbound sales strategy because of what Ron was saying. It's such a comprehensive database.

So, it really allows us to drill down on specific customer types and segments within our different customer types. We're really excited to really leverage Cannabiz for this transition that we're going through as a company from just a small startup, just trying to keep up with sales to, “All right, we're a company that's in a growth stage now. Part of being in a growth stage means we're not just talking to whoever comes to us, we're out there looking actively for who is the best customer for us.”

Amanda Guerrero: Yeah. It's more focused, more targeted prospecting. Yeah. I definitely can empathize with where you guys are at. I myself have been a part of a couple of startups here, and there's always that honeymoon phase with your sales and marketing process, where the first two years, the inbounds are common and you get to go to every trade show, everyone knows you. So, that's enough to keep your pipeline fed, but I've definitely experienced it where you don't have any more trade shows to go. How are you going to build your pipeline? How are you going to actually get yourself out there and continue to push the good word of Sana Packaging and sustainability within the industry? So, I can appreciate and empathize with that.

Now, for you guys, Ron, James, I'll leave this to both of you. Do you guys have any guidance, suggestions, thoughts, ideas, recommendations for our listeners that are interested in sustainability or want to get in touch with you to incorporate sustainability into their packaging?

Ron Basak-Smith: Yeah, I mean, I think one of the best ways is honestly to have a conversation. I think we've had, myself, James and Pete and Jill who work on sales, hundreds and hundreds of conversations with customers really understanding what their needs are, why they're looking for sustainable packaging, what their budget is and how can we ... For a lot of companies, it's not always like, “Let's do a full switch over right away.” It's, “Let's find one product and see if that works, and if you're getting the value out of it.” Then oftentimes we find that once they start using their products, they see the uptake from customers and how they interact with their push for sustainability.

So, yeah. I mean, I think having just a conversation, reach out, just be curious. We know that sustainable packaging isn't for everyone, but we hope that over time, more and more people see a case to adopt it and move towards it.

James Eichner: Yeah. And the best way to reach us is via email, or we're always available, just reach out to info@sanapackaging.com. Our sales team is incredible and super knowledgeable, and echoing what Ron was saying, we've had and they've had hundreds of these conversations. So, even if you just want to explore the idea of sustainable packaging and how it might work for you, reach out. We'll help guide you through it, because we're not just here to provide a product. We're here to help provide a roadmap and a path forward.

Amanda Guerrero: Well, you heard it here first folks. Just reach out to Ron and James and the sales team at Sana Packaging if you're interested in having this conversation.

I know I've really enjoyed this conversation between the four of us. Thank you so much, Ron, James for joining. We really appreciate you guys coming on the show. We appreciate your business, and we look forward to getting some updates here next year.

James Eichner: Thanks so much for having us.

Ron Basak-Smith: I really appreciate it.

Amanda Guerrero: Thanks. Of course. All right. Ed, let's take one more look ahead. Oh gosh that rhymes. What license data do we have to look forward to?

Ed Keating: As I said at the outset, we're going to keep our focus on Arizona pretty tightly. There's a lot of MSO opportunity there with Harvest, Columbia Care, and CuraLeaf, and for us, it's unpacking some of the limited liability companies that are there to just make sure that we understand who's related to whom I think. So, that'll be a big focus.

Also the team’s doing a lot of work in California and Colorado, just trying to make those records as accurate, timely as possible, adding a lot more people in Colorado. So, we should start seeing that over the coming months. So, definitely a lot going on from the data team.

Amanda Guerrero: That's good to know. Colorado getting some updates there. All right. Cool. Well, everyone, thank you so much for joining, for tuning in. This is the Cannacurio podcast powered by Cannabiz Media. Stay tuned for more updates from the data vault.