In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss cannabis testing and distribution licenses across the United States as well as hemp licenses in Texas. We also speak with Xavier Jaillet, an outside sales manager with HAL Extraction, which offers a system designed for safety and compliance in the plant oil extraction industry, including the cannabis industry.

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Cannacurio Podcast Episode 10 Transcript

Amanda Guerrero: Welcome to the Cannacurio Podcast. We’re your hosts, Amanda Guerrero and Ed Keating. On today’s show, we’re joined by Xavier Jaillet of HAL Extraction. As always, before we jump in with Xavier, let’s check in with Ed and see what news he’s learned this week from the data vault. Ed?

Ed Keating: Thanks, Amanda. We just finished up our latest Cannacurio blog, and we focused on two areas of licensing that we’ve not really delved into much. One was testing and the other was distribution licenses.

On the testing side, only 29 new testing licenses have been issued this year in six states, 41% were in Oklahoma, sort of continuing their push to generate lots and lots of licenses. What we’ve seen with testing is states seem to have adopted a variety of schemes to approve cannabis testing and licenses.

Amanda Guerrero: With these new licenses and with the states adopting these new cannabis testing groups is there, is it consistent across every single state, Ed?

Ed Keating: Not at all. Just like with so many things in the cannabis space, every state seems to be their own sovereign nation, and they all handle it differently. Here in Connecticut, what folks need is a controlled substances license. It’s issued by the same group that issues the cannabis licenses, but it’s a different subgroup.

In New Jersey, I think the testing is still done by the state itself. You’ve got that happening. And still other states, a testing license just needs to have the right certifications from an outside governing body. It really is all over the map literally how the states tend to create and approve these licenses.

Amanda Guerrero: It sounds like cannabis.

Ed Keating: Yeah, exactly. And then we did a quick look across the testing labs that we had, and we found that Steep Hill has the most licenses with eight. As I said before, it doesn’t mean that they only have eight, but there are eight that have been issued by some cannabis licensing authority. And they were way ahead of everybody else.

And then in terms of distribution licenses, we touched on this earlier in the year in Cannacurio, and nationally there were about, I think, maybe 1,800 licenses, but most of them are in California where they have about 1,200. And my view on this is it probably has to do with the fact that it’s a big state and you need to have a distribution license in order to move product around.

But one footnote, and we talked about this last week, is all those California microbusiness licenses, 97% of them chose distribution as one of their three to six possible activities. It’s obviously a really important part of the cannabis value chain.

Amanda Guerrero: Yeah, absolutely. I’m curious to see if other states adopt the distribution license moving forward. But as always, thank you for the update, Ed.

As I mentioned today, we’ll be joined by Xavier Jaillet of HAL Extraction. Xavier is one of Cannabiz Media’s power users, and we are so excited to have him on the show. Stay tuned.

Welcome back, everybody. Today, we’re joined by Xavier Jaillet of HAL Extractions. Xavier is one of the outside sales managers here. Xavier, how are you today? Welcome to the show.

Xavier Jaillet: I’m doing well, Amanda. Thanks for having me. Pleasure to be here.

Amanda Guerrero: We’re so excited to have you on. Like I mentioned earlier, you’re one of our power users and to my understanding, a long time a subscriber here. Let’s give our audience a little bit of background information. How long have you been in the industry?

Xavier Jaillet: Yeah, so I’ve always been a fan of cannabis. I’ve been in the industry since about 2013. Actually got a summer job as a budtender when I was studying for my undergraduate degree at the University of Colorado in Boulder.

I did graduate with a philosophy degree, so didn’t know what really to do with that, and fell in love with the industry as a budtender. And so just kind of kept trucking along in the space. I’ve held a variety of roles and have done pretty much everything except for cultivation. I unfortunately have a black thumb and a lack of patience and watching plants grow is not necessarily my forte.

Amanda Guerrero: No.

Xavier Jaillet: I know, it’s unfortunate. People always think I’m growing, of course, because cannabis and growing, but I’ve worked a lot of retail jobs. Like I said, budtending, managing retail operations, and then moved into the extraction side of things in 2015. Also, a variety of roles there, pretty much everything in the operation until eventually moving up into operational leadership roles.

And then after that in 2017, had the pleasure of joining a small company called Work. They sell HR, payroll, regulatory solutions for the employee management side of things specific to cannabis. And so was able to cut my teeth on the sales side of things there before joining the team here at HAL Extraction.

Amanda Guerrero: Wonderful. And as a recent college grad with a philosophy degree, Xavier, did you always intend to get into the cannabis space or how did you come to that conclusion?

Xavier Jaillet: I’ve always had a passion for the plant when I was younger. I think I unknowingly was self-medicating. I’m mostly while undiagnosed have ADHD and some anxiety issues that the plant helps with.

And so fell in love with the medicinal aspect as a kid, or not as a kid, but as a young adult let’s say, and then eventually started to work with medical patients on the medical side of things before the recreational market was adopted here in Colorado and really gained a passion for helping folks find treatments to their ailments. There weren’t necessarily Western medicine or kind of traditional, let’s say, approaches to helping folks with those problems.

Amanda Guerrero: And so how did you find your way to the HAL Extractions team, Xavier?

Xavier Jaillet: I had actually taken a year off after leaving work and was working in a safety technology firm that worked a lot with high risk industries like oil and gas, mining, construction, and decided that that wasn’t quite the thing for me.

I really had missed the cannabis industry. And so I started looking around for work and saw a posting by HAL Extraction for some help on their outside sales team. And I thought that my past experience actually working in extraction operations, along with my experience dealing with regulatory agencies and jurisdictions from work, and then the last year in the actual safety industry, let’s say.

I thought that was all kind of blended well and lend themselves well to being successful with an extraction company, but that’s also really focused on the safety side of things and making sure that extraction processes are done safely and that employees are able to make it home at the end of the day with no issues.

Ed Keating: This is a real good marriage of taking all that regulated industry experience, whether it be on the HR side, the safety side, and bringing it into this other part of the industry that you already knew from previous work experience. That’s pretty cool.

As I’ve been trying to learn about your company, it seems that HAL Extraction does a great job of really trying to comply with a lot of the codes, whether it be NFPA, NECICC, and Fire Codes – all the kind of stuff that people need to focus on.

How has that worked for HAL Extractions in the marketplace? What does that mean the fact that you guys are working with, let’s say underwriters, laboratories, et cetera, as you go out as the outside sales manager and talk to potential customers?

Xavier Jaillet: A lot of the time, because we are so dedicated to the regulatory side of things and safety, we’re brought on in a little bit of a consulting role for a lot of our clients, because typically the people that we are working with are early on in facility design or build phases for their applications.

They have to work with their local jurisdictions, fire marshals, and we’re able to come in and really show them that extraction doesn’t have to be this dangerous process, that with the right equipment and the right operating procedures in place, a lot of the time, we’re able to help them convince their local jurisdictions that they should be allowed to establish their operations in that particular area.

And that philosophy really comes from our CEO and founder Linn Havelick back in 2016. He was on the verge of retiring. He was a certified industrial hygienist who had actually been working a lot of the industries that I mentioned as far as mining, oil and gas, construction. And he saw that there was… Back in the early days of Colorado extraction facilities, there was a slew of explosions and incidents that happened and some shocking videos that you can find online of operations and explosions happening. And he thought, “Hey, there’s got to be a better approach to this. This seems like a new industry where people don’t really know what they’re doing when it comes to safety.”

And that’s why he founded our company to really come in and take that – the educated and experienced background of his – and be able to apply it to a new industry and help folks operate safely.

Ed Keating: Oh, very cool. Now, one question I had, and this is once again going back to Connecticut, when they issued their four initial grow licenses, we learned through our research that one of the companies that won a license had a lot of plant extraction expertise because they manufactured Witch Hazel, which was used in like perfumes and other things like that.

I was curious, does HAL Extractions work with other plant oils? Is it just cannabis, or is there a whole suite of things that people choose to use your products for?

Xavier Jaillet: A whole suite of things. I think the natural addition to the cannabis or THC side of things is going to be the CBD and hemp movement that we’re seeing now. But anytime there’s a volatile chemical involved in the extraction process, you’re going to have to have some sort of electrically controlled space.

And so whether or not that’s a Class I, Division 1 or a Class I, Division 2 space, if those solvents are present in the area, you’re going to have to have proper ventilation, well-controlled lights, outlets, all that, all the components in the booth that’ll actually prevent sparks or explosions from happening, basically removing ignition sources for those solvents.

A lot of other plant oil industries do use ethanol, for example, which is a flammable well liquid. You need Class I, Division 2 space for that. And actually it’s funny, one of the original extraction operations that I saw myself was the Celestial Seasonings factory in Boulder. They use a big CO2 machine to extract caffeine from all of their teas to make them caffeine-free.

Ed Keating: Oh, very cool, very cool. Just hearing you talk, I can tell, having had all that safety background heading into HAL Extraction must have been a big help because you can sort of speak with a practitioner’s perspective.

Now, one of the things you said is extraction does not have to be dangerous. However, I think a lot of us saw the story that came out of Los Angeles last week where a business called Smoke Tokes that distributes butane hash oil caused a big explosion.

And I’m curious from you with your safety background and with the company you represent now, what does that do for the industry when something like that happens. A lot of people were injured, and what is the impact plus or minus on HAL Extraction?

Xavier Jaillet: I did read up on that this weekend as well. Certainly unfortunate events. You see firefighters put their lives at risk to deal with a situation like this. I think the first reaction from us at least was, “Oh my goodness, I hope this isn’t one of our clients.” And luckily we were not.

Smoke Tokes, after a little more research, it seems like they distribute… It seems to be kind of like a smoke shop distributor. They did have butane canisters in their facility. Luckily not butane canisters that are typically used for extraction processes. More butane that you can take to fill a torch, for example. It would be used for a consumer, but not necessarily using the extraction process itself.

That being said, LA was already notoriously a hard jurisdiction to have any sort of extraction processes take place. I think any sort of negative news like this puts a damper on that. And then for us at HAL Extraction beyond making sure that wasn’t one of our clients, it does provide us a little bit of fuel to say, “Hey, guys, there needs to be more consideration even when it comes to storage of consumer-based products and not necessarily a production facility. There needs to be a little bit more safety approaches taken to ensure that these dangerous chemicals are not potentially going to be exploding canisters when you have firefighters addressing a fire in your warehouse.”

Really just making sure that everyone understands that these are dangerous chemicals and that without the proper operating procedures and safety processes in place, bad things can happen.

Ed Keating: Oh, absolutely. Well, thanks for the background on that. Looking forward a bit, we’re always curious to hear about any new product launches you’re doing or markets you’re heading into or new initiatives that you’re able to share.

Xavier Jaillet: Yeah. As we’re all dealing with the COVID-19 pandemic, I think it’s forced a lot of us to take a new approach to the way that we do business. And so I think that’s something that we’ve been focusing on as far as emphasizing our digital channels and going for experiences like this. I really appreciate you guys having me on to get our name out there.

I think one thing that’s interesting with our products is they’re seen by some as kind of just big metal boxes. They’re not necessarily the sexiest thing out there when it comes to cannabis where there’s a lot of time flashing new products.

And so our marketing team has been doing a great job of really kind of splicing up our marketing materials and making these booths and HAL Extraction on a whole maybe a little bit of a cooler player in the cannabis space.

I think the other thing as far as markets go, because we are an ancillary business, sorry, that’s not limited by licensing or any banking regulations, any new market is exciting for us. I know Missouri and Oklahoma, for example, have been quite active for us lately. Personally, I’m starting to see a little bit of traction in Eastern Europe, which is exciting. And so we’re working on finding manufacturing partners in Europe for our products.

And then we are working on some kind of extraction adjacent products with some of our key clients, things like potential curing booth technologies, offgassing chambers, just additional things that we can do to help make the extraction and cannabis curing process safer and more efficient.

Ed Keating: Cool. Yeah, it sort of sounds like owning or helping your customers own and control more of that value chain, not quite seed to sale, but sort of the part that you guys are active in.

As you talk about markets and whatnot, I was curious, do you see a difference as you’re going into states let’s say that have both med and rec or med only? I mean, obviously there’s the size of market, which goes without saying, but is it a different approach for you when you’re just hitting a market that may be, let’s say, more restricted in terms of license count and there’s only 10 companies with extraction licenses?

Xavier Jaillet: I think it definitely does affect the way that we do our outreach. A lot of time with those companies, getting buddy-buddy with consultants has been successful for us because they are going to bring in a trusted source that’s basically going to advise a bunch of people that have sufficient capital, maybe business expertise, but no cannabis expertise, and they’re going to advise them on how to set up their operation. And so working closely with those consultants to get in the door early has been successful for us.

Ed Keating: And how early? I know that with Cannabiz Media, sometimes we’re able to get applications from a state where they’re trying to be very transparent. So really early on they’re like, “Hey, these people have applied for license.” I know that could be helpful because as you said, you’re able to get in there really before they design the space or get the license. Because at that point, I assume it’s probably too late.

Xavier Jaillet: Yeah, you got it. Exactly. And that’s one of the main things I love about Cannabiz actually is the new and updated licenses and kind of the applicant phase that you guys are tracking. A lot of states actually do require applicants to submit building plans and floor plans as part of the application process. You’re absolutely correct that we’re trying to get in there a lot of time before these companies have even been approved to commence operations or break ground on their facility.

Ed Keating: Right, yeah. We don’t focus on local applications, but sometimes we do get them in the course of our research. And there could be a lot of detail in there, like a conditional use permit. Somebody wants to put in a facility like this and you know the town board of zoning is going to take a look at that very carefully. There can definitely be some good details in there.

One of the last questions we always like to ask is, what’s been the biggest achievement, either corporate or personal, in the last 12 months?

Xavier Jaillet: I think personally for me, as I mentioned, I took a little hiatus from the cannabis industry. So I’ll just say my personal achievement would be coming back into the industry and feeling like I’ve been greeted with welcome arms and talking to old friends.

Ed Keating: Welcome back.

Xavier Jaillet: Appreciate that, yeah. Being able to continue building my network here in the industry. And then from a corporate perspective, we did just release our 3.0 booth, and a big change on those is going to be our actual… We have a human machine interface now in our control panel. You can actually get in there and communicate with the components in your booth, set variable air flows, kind of talke to the sensors, if you will.

It allows for a lot more customization from our client side as far as the work environment for their employees and how the booth as a complete unit with multiple components responds to various situations. That’s been, I think, very exciting to see that get adopted by a lot of our clients.

And hopefully we’ll be able to continue the trend of ease of use when it comes to our products.

Ed Keating: Great.

Amanda Guerrero: Well, again, echoing what Ed said here, Xavier, welcome back to the industry. We’re so happy to have you and hopefully we’ll see you at a trade show sometime soon. But I wanted to switch gears here and kind of check in and see as a long-standing subscriber with the Cannabiz Media team here, what are some of the ways that you and your various teams have utilized our platform?

Xavier Jaillet: Yeah. As I mentioned, especially in light of COVID-19, we’ve been taking a concerted effort to improve our digital channel outreach, and so being more active, social media through email campaigns. And Cannabiz as a CRM has the ability for us to communicate as a team, but also has a lot of that contact information readily available on the platform.

It’s been immensely helpful to be able to at least plan these campaigns and get our foot in the door with a lot of folks through Cannabiz as far as providing email contact, even social media pages, and other ways for us to engage with our prospects and our clients. And so that’s been really big for us.

And we’ve also been using the email campaign tools to promote a webinar series that we’re doing, just sharing some knowledge with the community as far as what we’ve experienced over the years. We’ve got a pretty extensive team of engineers, but also extraction consultant types that we’re able to give that information back to the community. Being able to use Cannabiz to promote that outreach has been a huge help for us.

Amanda Guerrero: I love it. It sounds like you’ve had some great successes just in terms of the communication. I know when I used the platform outside or when I worked for the staffing group previously, it was such a helpful tool to continue kind of getting a pulse on the various markets and to stay connected without having to travel for trade shows. I can definitely empathize with you there. Now, in comparison to other sales tools, how does the Cannabiz Media platform stack up?

Xavier Jaillet: I would say, again, because it has the data in it, it’s really unlike any other CRM or sales tool that I’ve used before. I think one other thing that you kind of touched on as far as tracking new application licenses goes, I think for me at least, one of those valuable things about Cannabiz is just the daily updated license emails that I get. I can defacto follow a license and get any news updates or changes in licensing relative to that company and the associated licenses, or update a contact information for key stakeholders in that company. I think almost sitting down on my computer every day and having a list of people to reach out to that have had recent events that might make sense for me to reach out to them for.

I’m a big fan of always providing value in my touches. I don’t like checking in on people just for the sake of checking in. And so giving a little context to my outreach really helps with the initial relationship building when it comes to communicating with those stakeholders.

Ed Keating: It makes a lot of sense. Now, sort of speaking of making value added touch and having information, we rely on a lot of data in what we do. And one of the trends that we’ve heard for some time now coming through folks like Headset and BDS Analytics or BDSA is there seems to be a nationwide, or maybe even global, decline in consumption of flower. And people are really going more toward extracted products, whether it be edibles or other things.

It’s sort of an obvious question, but what’s the impact on your business because that seems like it would be a really favorable trend if you’re helping people extract the value out of plants?

Xavier Jaillet: Yeah, absolutely a positive trend for us. And as almost a subset of that trend, we’re starting to see a little bit more consumer preference towards extraction products that are actually made through hydrocarbon solvent extraction processes.

A lot of folks are starting to be educated on the quality of different extracts. I think as dabbing or smoking hash oil directly becomes less stigmatized, folks are more willing to try that out, and they’re starting to realize that sometimes the ethanol-based extractions or the CO2-based extractions are not going to be the best ones to directly vaporize.

While those might be a little bit more, let’s say, efficient for the edible creation process, if you are someone that wants to smoke some live resin, for example, that’s a product that can’t be made with those solvents.

And so as consumers are asking for more of those products, the producers and manufacturers are, of course, moving towards adopting hydrocarbon extraction processes in their facilities. Those, of course, contain or use at least very volatile solvents like propane and butane and those require Class 1, Division 1 spaces.

And so for us from a sales and company development perspective, it’s certainly a positive trend. And I think we’re also starting to see some legislative groups and regulatory groups move to allow a little bit more of those processes.

Some states like Florida comes to mind. They’re still CO2 only. CO2 is inherently probably the safest solvent to use because it’s just carbon dioxide. With that being said, again, it limits the amount of products and the type of products that a lot of these manufacturers can create. And so there’s still some illicit black markets in these states as consumers are going to other states or illicit sources to actually source these materials.

And so we’re seeing a trend of states along with the manufacturers or at least regulatory bodies start to promote and enable us to have our clients actually use these solvents and then, of course, need our booth to do so.

Ed Keating: Yeah, that’s pretty cool. I was going to say that what you described is almost a regulatory market segmentation based on what the state or jurisdictions will allow. Like there may be some places where your solution or solutions of others in the industry just aren’t going to be all that useful if they’re so restrictive. Thanks sharing that. That’s a really interesting insight.

Xavier Jaillet: Of course.

Amanda Guerrero: Well, Xavier, you have quite a bit of historical and anecdotal knowledge, and we’re so grateful to you for sharing that with us on today’s podcast. Thank you so, so much for joining us, and we look forward to hopefully seeing you after quarantine at the next trade show.

Xavier Jaillet: Yeah. I really appreciate the opportunity to speak with you guys. And while we do wait for trade shows to get back online, I think this is a good resource and way to connect with the community and share some of our knowledge and get the conversation going.

Amanda Guerrero: I love it. You heard it here first, folks. Cannabiz Media is the tool and the resource.

Ed, what a great interview. But I wanted to ask you, looking ahead, what data and license updates do we have to look forward to from the data vault?

Ed Keating: The big story for us is Texas hemp. They just kicked off their program back in March – issued a lot of licenses. We just got the first look at the data last night. There’s 623 hemp producers, which are growers. There’s 44 that are hemp handler samplers, which I have to figure out what exactly a sampler is, and then there are 97 that have a hemp handler designation.

We’re going to be digging into that, finding out what’s there, seeing sort of what the story is, but that’ll likely be this week’s upcoming Cannacurio blog post as we dig in there and really try and understand how that state is regulating hemp and what it means for the industry.

Amanda Guerrero: I’m looking forward to this week’s Cannacurio because hemp has been something we’ve been tracking for a while. You guys also did one on the Connecticut hemp licenses as well. Can’t wait to see what you and the team uncover this week.

Thank you everyone for joining us on today’s podcast. We’re your hosts, Amanda Guerrero and Ed Keating. Stay tuned for more updates from the data vault.