Truman Bradley’s pitch for a new kind of cannabis company began with a simple slogan. “It’s what’s on the inside that counts.”
Most companies that make marijuana vaporizer cartridges or concentrates buy their source materials from farmers, slap their sticker on the packaging, and ship it off to dispensaries.
The end user knows little about where their weed comes from or its quality.
That didn’t sit right with the former business manager. “None of the major companies were really providing their own source material, and as a result, they were subject to the whims of whatever they could get,” Bradley said. “So the quality was fluctuating quite a bit.”
Bradley hatched an idea for a vertically integrated marijuana concentrates and extracts company that grew its own materials. Like a brewery, Seed & Smith would offer educational tours at its facility so people could peel back the curtain on how their products are made.
The Colorado-based Seed & Smith opens for business this spring, after raising more than $1 million in funding from an angel investor who asked to remain anonymous.
The grow room will have picture windows so visitors can peer inside without contaminating the plants. Intercom systems will allow tour groups to ask questions of the lab workers while they trim buds or refine products in contained areas. There’s even a museum-style exhibit on the extraction process and a gift shop where the tour ends.
“This isn’t like Jurassic Park where you only see the [dinosaurs] that make it, and the failures are on a different island. We’re showing true production rooms,” Bradley told Business Insider. “It takes a lot of guts to do that, and it takes a lot of money to design a facility that’s capable of producing this stuff, day in and day out, on a high quality scale.”
Bradley said he met with 20 to 30 investors before finding the right backer.
“Anytime investors hear cannabis, they think high risk and they think high return — rightly or wrongly,” Bradley said. Marijuana remains a Schedule 1 drug under federal law, and its legal status is enough to scare away most banks and high net worth individuals.
People who work in the cannabis industry are often forced to pay interest rates north of 18% to 19% on a loan, according to Bradley. Investors might ask for more equity than they would of a business in a more mainstream category. Bradley says it makes it hard to be successful.
His lawyer connected him with an interested party about two years ago.
Seed & Smith won’t be the first vertically integrated marijuana concentrates and extracts company. In San Francisco, startups Bloom Farms and Lola Lola operate independent grow facilities that supply oil for their vape cartridges, though they also rely on third-party producers.
But Bradley’s pitch landed in part, he said, because he let the investor have “complete visibility into what’s going on.” He even encouraged the investor to visit other companies first.
“I wanted them to go tour a couple other production facilities and then come see ours, because I thought that would give us an advantage,” Bradley said. “Sometimes people wouldn’t recognise we were a quality organisation if they hadn’t seen what a lack of quality looked like.”