Gold Leaf Packaging founding partner David Rula joins Ed Keating to talk about how the company sprang up in Alabama to become a nationwide distributer and stand apart in the cannabis industry, what they do to utilize the Cannabiz Media database, and more!

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Cannacurio Podcast Episode 37 Transcript

Ed Keating:

This is the Cannacurio Podcast by Cannabiz Media, your source for cannabis and hemp license news directly from the data vaults. Welcome to the podcast. I'm your host, Ed Keating, and on today's show we're joined by David Rula, the founding partner at GoldLeaf Packaging. So, David, welcome to the podcast.

David Rula:

Thank you. Thanks for having me.

Ed Keating:

Absolutely. So, when we were talking last week, getting ready for the podcast, I learned that you're in the state of Alabama, which doesn't even have an operating cannabis program, and yet GoldLeaf is selling to over 400 brands nationwide. How did this happen? How did you guys spring from Alabama to suddenly be selling nationwide?

David Rula:

Well, the backstory, really, is we've been strong in the craft brewery business for years. SweetWater Brewery has been a client of ours for over 14 years, and we've enjoyed that 420 branding that they've had in the South. We're a large, digital print shop. We're one of the top 10 largest digital print shops in the United States.

Ed Keating:

Wow.

David Rula:

And I was at a craft beer conference in Nashville, Tennessee, and all the buzz was who's going to New Orleans next week for the cannabis conference, and I called my partner and said, "I'm going." After that conference, driving back, this was about three years ago, I said to my partner, "All we need is a label machine and a converter, a blue folder machine as a capital outlay," and they both immediately said, "Let's do it."

Ed Keating:

Awesome.

David Rula:

The first six months we didn't even have a brand, right? We were a design firm and had all these people that can do it in-house. We actually hired a firm out west to assist us, and here in Alabama we had the marijuana leaf all over the branding, and the first thing they said was, "No. We've been down that road out west. Let's get that out of there." And they gave us a really cool brand, and we're very appreciative of that, and so the first six months was just kind of getting that piece going, and then, the last two and a half years, three, it's been off to the races. We now have sales reps in Seattle and Denver and California and Virginia and Florida, kind of trying to throw a little net out across, and partnerships in other states.

Ed Keating:

That's great.

David Rula:

It's just amazing how the people in this space all enjoy this space, and so that has just been fun.

Ed Keating:

I agree, I agree. When we started Cannabiz Media about six years ago, we found that too. We started going to a couple of shows. People were really friendly, really helpful, and really trying to grow the industry. We all realized we had sort of this federal umbrella over our heads of like, wow, what's going to happen tomorrow? Who knows? It's been a good industry to be in, and it's certainly been one that's been growing as well for us. Now, you mentioned craft beer, cannabis. Are there other markets that you're in?

David Rula:

We are. Our parent company, DMS Color in many verticals, healthcare, finance, construction, restaurants, entertainment. We do a lot of direct mail. We've been a traditional printer, commercial printer, right? But anybody can print. I think our two differentiators have been, one, our embellishments that I know we'll probably dive into that make sense for the cannabis space. We're the first in America to purchase these machines from France that do raise foil and raise varnish without dies and plates, so that's been a cool space for us, so we have two of those machines, the only company in America with two of those, and looking at a third. The other differentiator is our software. We've developed our own marketing asset management system called DigiFlow that we have Fortune 500 companies that use our software and other verticals, and we just feel like it's a natural fit when companies have multiple skews, multiple brands. They're in multiple states. It just organizes that chaos and really streamlines the processes, the mundane processes and print for the platform.

Ed Keating:

Absolutely. Now, you mentioned a parent company with different brands, and over the years we've seen that this is often how a company gets into the cannabis space, where sort of they create a brand that just goes off and does this. What was that like for your company? Because sometimes in some companies, they almost don't talk about it, like it's not known, like oh, those guys are doing the cannabis stuff, and other people in the company just don't get it. What was that like for you guys? You were already well-established, and then, suddenly, hey, I got an idea. How did that roll out with the staff? I mean, I know your partners probably loved it, but...

David Rula:

You know, I definitely think there was some eyebrows that got raised, but you know, it was funny how many employees came forward like, ooh, I like this. Ooh, I want to be a part of this. Hey, if y'all ever separate the companies, I want to go with GoldLeaf. It had this culture and momentum, and it was just the morale, it was very positive, and then it was like, our head graphic designer is like, "Yeah, my father was a head." And it's like, wow, you grew up in this? I didn't. So, it was just sort of cool to hear people come tell about their lives and their families and how this is [inaudible 00:05:34]. Everybody's talked about it now freely, especially in Alabama a little bit more. We still have to be very careful, but we're just... There's never any product here. We have had some companies send us their tincture bottles with isolate CBD in it, which can cross state lines, and we'll produce the label and apply the label to that, and then ship it back to another state. But we're just laying flat boxes on pallets and shipping them all over the US.

Ed Keating:

Yeah. Oh, interesting. Cool. Now, David, tell us a little bit about your background too. How did you come into this space, printing and then sort of the cannabis space we just talked about?

David Rula:

Wow, now that's another story in itself. My family is in construction in Mississippi. I moved over here to be with my children probably 14 years ago. I was also an NBA agent for a while, kind of always been a little serial entrepreneur, and I had this opportunity. My partners had the software, and I thought it would benefit my family business, and I just signed a little short-term contract with them, and at the end of that, we enjoyed working with each other, and really, we've just grown this thing together. I have great partners that are also very passionate about this space-

Ed Keating:

Great.

David Rula:

... and they're hardworking, smart, and we're very fortunate to have a good team here, and I think it's all... Since we are from Alabama, it's extra challenging.

Ed Keating:

Indeed, indeed. Now, you talked about having a great team. That's really an asset to any successful business needs, and earlier you touched on some of the kind of investments and strategic decisions that you and your partners made in terms of how to grow or build a business. So, focusing on toner instead of ink, print versus digital, digital technology. Why don't you talk a little bit more about how that lets you stand apart from others in the industry? Because it sounds like you made some choices early on that the company is benefiting from now.

David Rula:

Okay, great question, so I think the main thing there is really plates and dies. If anybody's ever had print experience, you have to buy plates or dies to create things, and they can be anywhere from $250 all the way up to $1,500, and I think so many digital technologies, especially with foils and varnishes, you don't have those costs anymore. Also, I believe a breakthrough has been in the past, toners production could not keep up with ink production. That is not the case today. I think the equipment... We've probably changed machines six times in 13 years because of all the upgrades, right? So, every two years we're updating to the latest, greatest Konica Minolta equipment, and I want to give them a real nice shout out, because they've been a phenomenal partner for us through this journey, and their equipment has stood the test where others has not.

David Rula:

The pantone colors, I think that's the number one important thing here for brand consistency, which the software also provides that, and we encourage companies to provide us their pantone colors. The nice thing about digital is there's a bunch of shades of blue, but every one of them has its own designated number now, and our machines are calibrated daily to match these pantone colors. So, when someone says their color's 393, it really is that every time it comes off the machine, whereas if they do a job next month, that client expects that blue to be that blue. In the ink world, you can't do that. It's like going to Home Depot and mixing the paint and you're just a little off. So, I think the digital world has really provided brand consistency that we haven't had, and that's the other nice thing about the software, is not only are your paper specs built in, but your pantone colors are built in through the DigiFlow platform as well.

Ed Keating:

Well, one other angle on the digital side, I'm going to stretch this a bit, but it goes back to my background, which is in software and compliance, is that I know, based on some books that we've published at Cannabiz Media, that there are a lot of rules and regulations around packaging, and each state's different. I know in Connecticut, last time I checked, they had a 16-page PDF that covered not just packaging, but advertising, rules, and colors you could use, fonts you could use. So, tell us a little bit about how you manage this? Because if you're in so many states with so many different regulations, how do you keep it clear and successful for your clients? Because nobody wants to get in trouble for a packaging violation, or really, any violation.

David Rula:

You know, that's really where DigiFlow is extremely powerful in this space, Ed. We have a client care division out of Denver, Colorado area that are in multiple states for multiple brands, and it's funny, I mean, certain states you can only have black and white in a white box. Some states you can get as holographic and trippy as you want to. So, this particular company has the menu filtered and broken down per state, so it eases that pain for them, and they've got this nice infrastructure in place to help increase value to their company as a tool to manage these assets. So, again, the technical term for DigiFlow is it's a marketing asset management system, and that really helps organize the state if you're in multiple states.

David Rula:

You know, we really lean on the client, because a lot of times we've completed the artwork, or they've had their designer... We've sent them a template. Their designer lays out, puts the art into our template, sends it to us. We might do a little pre-press art to get it ready, or we may in-house turnkey all of the artwork for a company. We're assigning pantones to it so that that's set early on, and then they actually turn that into their state departments to get approval before they put it on the retail shelves a lot of times. The QR code world has been a very interesting piece through this process and to making life easier. These chiefs in each state are requiring the QR codes now to go directly to a COA to provide more data to the client, and that's almost a requirement now in a lot of states.

Ed Keating:

David, what's a COA? I'm not familiar with that term.

David Rula:

Okay, that's a certificate of analysis, Ed, when any brand, any company, whether it's flower, gummy, even creams, tinctures send it to the labs and get the official results back to make sure it's legal and kind of what the THC levels and... So, we're big on... Linking the QR code to COAs for companies has been a digital part of this process as well that I did not expect, but linking people through their labels and boxes to their COAs is a big piece of this.

Ed Keating:

Well, I would imagine, just thinking of it from a relationship that you have with your client, it must cement it even more so by having all that information, sort of bringing it together into that package and sort of having that compliance piece, the QR code, as well. I mean, I guess others can do that, but since you've got that whole digital store with all their information, that's got to be really helpful for them to, I imagine, get packaging done kind of quickly and hopefully get approvals quickly.

David Rula:

Well, you nailed. I mean, it's like a construction project. It sort of gets worse before it gets better, and when you're setting all this up on the front end, it's normal work. It's fun. I'm working on one right now. I've been working with this company for two months. They now have 25 files, four brands. Guess what? Now it's time to go throw this into DigiFlow. They can now go on Sunday afternoon at four o'clock, say, "I want 2,500 tamper-proof flower jar gummy labels for the 3.5-gram jar," and order them right there. Then that immediately goes to our server here and is already in our queue instead of waiting to Monday, letting the sales rep enter a ticket.

David Rula:

Now it's Monday afternoon before it gets in the queue, and we've lost a day, whereas having someone automate it, you gain that day. In today's world, especially in a retail setting... In my old digital print world... Not that it's old, it's still here, but what I'm finding about the cannabis space that's interesting is since we don't touch product, right, they're waiting on our stuff, they've got a team of people at their facility to load the stuff, and so they've kind of gotten extra help for that particular day. So, they need their boxes or their stuff on that day. It's a little more sensitive or time sensitive than just some restaurant needing their menus to be up. They can wait an extra day, something like a bunch of brochures.

Ed Keating:

I also imagine too... You mentioned before that some people have been getting printing done overseas, but with your system, being able to turn it around that rapidly, and really, it's in the client's control to be able to just get out their device and be able to put that Sunday afternoon order in and gain that day. That's a pretty powerful value proposition, I would think.

David Rula:

Well, it has been in other verticals. We've seen it, and we're just now starting to gain some momentum in the cannabis space. We've probably gotten, I don't know, 10 customers on the portal at this point, because they have enough assets. Make sense? The other beautiful thing about the portal is it's unlimited users, it's unlimited locations, based on the number of files you have on it, but this is anywhere from a $20 a month to $100 a month platform based on the number of files you have to organize your chaos.

Ed Keating:

That's great. That's great. Now, David, one thing we always like to ask on our podcast is how do people view the marketplace? Because it depends what part of the value chain you're in, and as an ancillary company, you have a different view than, let's say, somebody who's plant-touching. So, one question I'm curious about is as you go out and sell, are you selling sort of one store at a time? Are you just trying to knock down the big MSOs or those big single-site operators, or is it kind of all of the above?

David Rula:

I'd say definitely all of the above. I come from the school of I'd rather hit four singles to get a run, and then, as they grow and develop, you've kind of been planning with them. I enjoy that a lot. I love seeing the single grow to the triple, and we were a part of that, and they got there because of their infrastructure and their partners. The big boys have been in this longer than I have, for the most part, and they've already got a lot of established relationships. They've definitely been more difficult to crack, because they have been ordering from China for so long. But to your point, your question earlier, I'm glad you brought that up.

David Rula:

One of our strengths also is we have a low MOQ, minimum order quantity. We're playing with sometimes even 250 labels for people just to accommodate them if they're startup, or 500 boxes kind of an MOQ for people. The China boys don't want that at all. They're really starting at 100,000 quantity and above. I definitely think we're the 100,000 quantity and below domestic partner and shorter turnaround person domestically. We can certainly handle quantities larger than that, but that is really our sweet spot, and I think 80% of the cannabis companies in America today fit that.

Ed Keating:

You're absolutely right. I mean, we've been doing a lot of analysis on sort of the size of the market and how they're set up, and really trying to look at license counts and whatnot, and you're right. I mean, for the most part, it's a lot of small stores or small chains, and certainly, they're starting to grow, but if you're already made inroads into them, you're going to grow with them as well. Now, one other delineation in the market is medical states versus adult states. Is that an issue, an opportunity for you, or it's just another dynamic that you factor in when you're selling?

David Rula:

I'm going to throw in CBD in there and say we have three lanes to go down here, because I really-

Ed Keating:

That was my next question anyway, so that's perfect.

David Rula:

Well, I got a partner that lives in Bend, Oregon, and he's pro-THC, CBD doesn't exist, dead, and I wanted to believe that. I truly did, but in the South in particular, CBD, delta H has just been on fire, right? I mean, Virginia was the first state in the South to go adult last week, July 1. I think Louisiana just opened up flower last week. They were medical. Louisiana is only releasing it through pharmacies instead of traditional card like in Florida to walk in and get it. Every state's so different. I was in Oklahoma two weeks ago, they're medical, but they require child-resistant packaging, which we have gotten certified through Tread Global out of Denver on numerous child-resistant packaging, so we also now offer that and have that with our embellishments, and here's Oklahoma, medical, needing child-resistant, which I thought was interesting, because every state's just different.

Ed Keating:

No, I mean, that's always a fascinating part of sort of tracking this and just seeing-

David Rula:

But they're all three wonderful... I think they're all equal. I don't think I can say that adult is an easier sell or 80% of our business, because it's not. I think it's all equal and I'd almost say 33.3% on all of them.

Ed Keating:

Last week I think you said something like, "But this industry loves its bling," the foil and whatnot. What's going on there? Is that a particular market that sort of prefers the more fancy packaging?

David Rula:

Well, I mean, look at Vegas. Go to Planet 13 and you walk through the packaging and it's just awesome. They have great companies and great packaging in there, and it's silver foils, gold foils, holographic foils, metallics, varnishes, soft cut, velvet, laminates. There's just all these levels of premium, right? And I just think the people like the touch, the feel, the look. It just sort of complements the plant.

Ed Keating:

Yeah, yeah. Excellent. So, can't do one of these interviews without asking, so how does Cannabiz Media help you reach some of your goals, and how is your team using it?

David Rula:

Look, I wouldn't be on this podcast with you, Ed, if I didn't love your product.

Ed Keating:

Great.

David Rula:

I think you have helped our company grow. Your team has helped GoldLeaf more than you realize. I mean, we have a weekly meeting that is with all of our sales reps. It's fully based around your platform. We use it as a CRM tool, we've been using it now for over a year, and I can tell you every week we get better at it and we learn things that it offers.

Ed Keating:

Oh, great.

David Rula:

The data is just... The amount of time and effort your team's put in to getting that license data is very helpful per state, the way you break it down, and I'm glad that... I know my marketing director tried for months, I found out, after you and I talked, to get on your podcast, and I told him I met one of your associates at a show, and I'm on it in two weeks. So, I'm honored to be here. I love your platform.

Ed Keating:

Oh, good.

David Rula:

It's helped our company, and I can't say enough great things about it.

Ed Keating:

Oh, great. Well, that's great to hear, that's great to hear. So, looking ahead a bit, here you are, you're in a state that's got a new cannabis program coming. I think it's five vertically integrated businesses, and the operators could run dispensaries as part of those licenses, a little bit like what George is doing. How do you think this is going to play out in Alabama?

David Rula:

Well, it's interesting. The only two products they've really approved thus far is suppositories and capsules, so leave it to Alabama to enter the market that way. I am also involved with a company that does have licenses. We have a cultivation license, a processing license, and distribution license now currently under the local CBD ag rules. So, I've enjoyed learning what my customers are dealing with since I'm also kind of putting my foot in that water, and I've also recently gotten involved with a group that is going after one of these five licenses. Currently, in Alabama, our governor appointed... It's a 14-person committee that is going to be fully... They're going to rule on this in about 10, 12 months. They appointed the first three members last week. I believe it was a pharmacist, a banker, and something else.

Ed Keating:

Probably a lawyer.

David Rula:

It was. It was a lawyer, and so we're finally starting to see the needle move a little bit in our state. I'm hoping that our group can get one of these five, because I think we have a lot of experienced personnel that have been in this space for a while. We're not just some lobbying firm trying to get one of these. We're true people that are passionate about this space, been in this space, have a network in this space, and so we're hoping that that gives us an edge.

Ed Keating:

Well, that's great. Keep us posted on that. That'd be [crosstalk 00:24:27].

David Rula:

Of course, GoldLeaf would be exclusive packager for...

Ed Keating:

Oh, of course, that's right, that's right.

David Rula:

Hopefully.

Ed Keating:

Now, there's been so much going on with new states coming onboard. We've got New Jersey, New Mexico, New York, Connecticut. What states are you keeping an eye on, and what does that mean for you? With some of our clients, when we hear that a new state is coming on, they've got certain steps they have to do to be in that state. How does that work for you? Because you already have a giant sales force, it sounds like, or a very effective, broadly-covering sales force.

David Rula:

I want to give Brian at Lemon Haze a big shout out, because he's developed something through COVID when we couldn't have conferences. He's done a phenomenal job going into these states with momentum, having a golf tournament, and then having nothing but CEOs and executives, owners of these companies be present at these events. So, we've now done about five of them. We've been in Vegas, Phoenix, California, Oklahoma. You heard me say I was... So, you're kind of meeting the leaders in each state through Lemon Haze. We've got about seven more events. We got Tampa coming up, Boston, Detroit, and so we are... Illinois, Chicago. So, I think he has done my market research for us, knowing where we spend time in these progressive, moving states right now. So, we're having a presence there, going to each state, learning how each state's different. I mean, Michigan's almost like the wild, wild west, right? I think you pay 1,000 bucks, you get a license. But whereas Arizona, I think they're maybe 135 licenses, right?

Ed Keating:

Yes.

David Rula:

So, the value of those licenses are worth so much more. I was playing golf with a gentleman who had been in it for maybe three years, started in CBD, then they got medical. He dotted his I's, crossed his T's, was one of the ones to get these licenses, adult. I think he sold out to a large company. That person was playing in the golf cart with him, and it was interesting to hear the numbers they were throwing out. I like that model. I hope Alabama adopts the limited license model to make it more valuable. But going back, we get a lot of web leads for Michigan. We get a lot of web leads from Illinois, because there are a lot of startups. It's not real. So, you almost have to filter through, and I hate to say it, we require them now to pay half upfront and half before it leaves, and you can kind of see who's credible or not on who's willing to do that.

Ed Keating:

No, that's right, that's right. Well, one research that I've been doing over the last several years is looking at which companies on the software side connect to metric or Leaf data system, and I've compiled probably a list of four or 500 companies, and I've been going through it again over the last week, and it appears that what they've said about the pandemic creating lots of businesses is true. I've been finding lots of new companies coming into this space, so I think it's probably also happening, certainly, on the licensing side as more people are trying to get in and really take advantage of this industry. So, David, one final question I want to throw at you is I'm curious, looking ahead, from the technology development in the print packaging industry, what else is coming down the pipe? Are there things that are going to be happening that you see that may benefit people in the cannabis, hemp, and CBD space?

David Rula:

I'll tell you, this new... The laminate world. They have a cracked ice laminate, gold. When you see gold foil on the inside of a box completely, it's really a laminate. It's not toner, it's not a foil, and I think you can get real creative with laminates to add to your product would be my first thought. I think there just aren't many American companies that are really trying to... It's amazing how China has had 80, 90% of this market, so it's almost... It's a nice adventure right now. It's crazy that we don't have a model company in America to teach us. We're having to learn on the OJT and be a pioneer, which is fun.

Ed Keating:

Well, it sounds like you're doing a great job, so thanks for joining us today, David. It's been great talking to you. I'm your host, Ed Keating. Stay tuned for more updates from the data vault.