Highly Enlightened: Kevin Brooks, CEO at Conception Nurseries

Kevin Brooks, former CEO of Cookies Management and Connected Cannabis,
identified plant health as a key vulnerability in the cannabis supply chain
based on his experience leading vertically integrated cannabis operations
in California. This insight led him to establish Conception Nurseries, a
Sacramento-based company that provides commercial-scale tissue culture
services to the cannabis industry. In addition to maintaining a large
catalog of cultivar clones, Conception offers remediation, cold storage,
and exclusive production services. Brooks brings prior leadership
experience and successful exits from the regulated tech sector to his role
at Conception. Listen or read the transcript below, and find more episodes
of Highly Enlightened on Buzzsprout!
Listen to the episode:

Ganjapreneur · Highly Enlightened: Kevin Brooks, CEO at Conception Nurseries
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Read the transcript:

*Editor’s note: this transcript was generated automatically and may contain
errors.*

Jon Purow:

Welcome to the Highly Enlightened Podcast, syndicated by Ganjapreneur. I’m
your host, Jon Purow. So on this podcast we interview cannabis luminaries
and I also cover Golden Nugget stories, which are stories that are not
getting as much attention as they think they should. So tune in, join us,
and as always, stay grassy. My buds. Alright, now with that, I have the
pleasure of introducing Kevin Brooks, the CEO of conception nurseries.
Kevin, I’m very, very excited to have you here so we could really kind of
geek out about this stuff, but I just want, first, thank you for taking the
time out of your busy schedule to come join me for this joint endeavor, pun
always intended.

Kevin Brooks:

My pleasure. Yep, my pleasure. Thanks for having me. Glad to be here.

Jon Purow:

Yeah, yeah. So I like to talk a little bit, I mean, there are a few people
who went directly into cannabis outside of the guests that I asked that
question to the other day that made me look foolish. But there are a few
people who started out in cannabis and I appreciate something we’re going
to discuss with respect to your company, a comic book geek, and the origin
stories were always called issue number zero. So my question to you, Kevin
Brooks, is what from your issue, number zero, your origin story pre
cannabis do you believe has been most useful in the cannabis industry?

Kevin Brooks:

Oh gosh, it’s a big question. Look, I think

Jon Purow:

The second question is what’s the meaning of life? So we just thought we’d
start you easy. Okay.

Kevin Brooks:

Start easy. Yeah, A couple of softballs. Yeah. Look, I graduated college in
2002. We’re talking about right in the heart of the dot bomb. I’m in
Silicon Valley. I get thrown into my first kind of recruiter sales job, and
it was a fucking disaster, like recruiting software engineers during the
dot bomb meltdown when layoffs were going left and I had buddies of mine
that were answering the phone and making a ton of money. Then I get into
the workforce and it was tough and it was really, really tough. And I think
the one thing that I took away from my time in Silicon Valley, both in
recruiting and then getting involved with my own company is really just
resilience and grit. This is a really, really tough industry. Oftentimes,
we’re working with both hands behind of our back. We’ve got unique
regulatory challenges, we’ve got capital constraints, we’ve got interstate
commerce challenges across the board. Imagine being a blueberry, launching
a blueberry company and not being able to ship your product across state
lines or get a bank account or receive funding. It’s just being able to
pivot and read the tea leaves and just white knuckle it through tough times.

Jon Purow:

So I mean, to a certain extent I think that you’re kind of is that you
can’t take no for an answer, right? Because in this industry you constantly
face setbacks. Well, my prayer to the wifi gods might not have been
answered. I am going to try the Scientology video chat. God von next. Maybe
I’ll have more luck with that guy. Tom Cruise thinks so. Anyways, apologies
for that. So basically the idea is that you don’t take no for an answer,
right? Because I feel like even in this industry, no can be temporary. So
here’s my follow up question. So we know that you face a setback, you’re
not giving up first, you don’t succeed choke again. So if that’s the case
with you, Kevin, then what skillset sets do you think that you and your
team bring to the table in addressing issues like that that are most handy
and help you get to the next step and grow as a company?

Kevin Brooks:

Yeah, I think it’s a much bigger answer, and I think the way that we kind
of think about this business is it’s absolutely critical to have legacy
cannabis folks who understand the culture, understand and are empathetic to
growers’ challenges. But at the same time having smart business individuals
who understand supply chain and operational consolidation and financial
consolidation and being able to bridge those two, I guess two different
philosophies. You look at some of the publicly traded companies that try to
compete in the non-limited license states like California that are just
getting their teeth kicked in. I mean, they’re just seen as very
disingenuine. They don’t understand their consumer base. And then you have
some of the private companies like for example, Elliot Lewis and Catalyst
who is evangelical for his customer base, for his employees, for doing the
right thing. He’s definitely out there, I love Elliot, but he has a
workforce that lives and breathes catalyst. He has a customer base that
again, is evangelical about the company versus some of the publicly traded
or the consolidated retail footprint. So I think for us it’s having that
balance and understanding that yes, we can look to traditional agriculture
in terms of where the industry is going, but we have to stay true to the
culture, to the plant, to our customer base, our growers.

Jon Purow:

Got it. I think that this field really does breed consumer loyalty, which
is why there’s such a fixation on brands to some extent because you’re
trusting your consciousness to someone else. So there’s a lot of loyalty
that’s builds up out of that. Now I do want to talk about a specific topic
that I think is very important. So on my news rehash, I come up with the
highlights and then the golden nuggets and the golden nugget stories are
the ones that I feel should be getting more press and should be more out
there. And that’s where I first covered hop latent vir, which I believe if
you’re not aware of in the industry, you’re not in the industry to some
extent. Can you educate a little bit here about that and then we could get
into what makes your company so unique in relation to battling things like
that?

Kevin Brooks:

Yeah, so Hop-Latent Viroid or otherwise known as HLVD, is an incredibly
elusive vir in cannabis plants identified maybe six, seven years ago here
in California. And long story short, it causes duing in the plant, right?
It causes, yeah,

Jon Purow:

Gutters. Yeah, I love it.

Kevin Brooks:

I love the name of that massive, massive and significant underperformance.
So I’ll give you an example. We have a grower that we’ve worked with for a
while who bought, I don’t know, a thousand plants from us and a thousand
plants from a competitor just de-risking their operation, not relying on
two nurseries. The competitor who I won’t use, their name is a great,
they’re a good nursery, they’ve got a good reputation. But we’re talking
about again, an incredibly elusive thyroid that you can test the plant at
different points or at different times and it can test negative for this
thyroid negative. And so I’m not saying this was done on purpose, but this
grower bought a thousand plus plants from us and a thousand plants from a
competitor. Now, we don’t claim to eradicate HLVD, that’s not what we do.
What we do is we go out and find plants that we know are clean, we test it
in seven different points in the plant.

We test it over multiple iterations. We know with a very, very, very high
level of certainty and a high level of confidence that it is a clean plant,
meaning there’s no vir present in it. And so this plant that they got from
us and the competitors, the VIR Express itself kind of halfway through
quarters through the system, through the grow cycle, and it resulted in the
conception plants having a 10 x value over the competitor’s plants. And so
look, the sophistication of the testing is getting better. Nurseries are
getting smarter, growers are getting smarter, but there’s a tremendous
amount of money lost. We’ll see, wall Street Journal did a article a few
months ago called the billion dollar Weed Problem around Hhl V. So it’s
serious.

Jon Purow:

They did. Oh wow. So now it’s getting a lot more. Got it. Okay.

Kevin Brooks:

Yep. And the bigger challenge, John, and why this impacts the worldwide
supply chain is look, I’ve had the opportunity to go visit Barcelona many
times for Spana bis. I’m on the east coast, often visiting grows and
talking with some of our satellite lab expansion. Everyone is getting
genetics from California. So what you’re seeing are these dirty plants
really finding their way around the world. And again, I haven’t seen anyone
that gives us a very, very high level of confidence that they have
eradicated a hundred percent. They may have eradicated through a few cycles
or lightened the thyroid load to be not detectable until it is detectable.
So for us, being able to guarantee clean, healthy, vigorous tru to tie
plants is a very big deal and it’s a big

Jon Purow:

Differentiator. Yes. So I mean, just as you said, when the articles first
came out and they were trying to estimate the size of the problem, it was
that they estimated it could end up being a billion dollar problem in a 30
billion industry. And the specific, I forgot the nurseries that started
investigating this for the good of everybody when they started testing
around different places, specifically in California, they hit HLVD and some
incredibly high percentage disturbingly high. It might have been even high
as 90, but I don’t know if I’m confusing that with the heavy metal or one
of those studies or whatever. But it was crazy high. And then you
understand the scale of it and in an industry where you are scraping by
where you were talking about all the challenges that you encounter to have
to run into that on top of everything else.

I mean, look, systematically, we’re just looking as an industry to find
efficiencies to deal with the unique hurdles that we have to deal with.
Something that to invest all the time and effort into a plant only for it
to end up as a dud, that’s pretty devastating and can be certainly
devastating for some businesses that are probably just from grow to grow.
And so from paycheck to paycheck, from Grow to grow, that’s how our
industry thinks. One quarter ounce at a time. Right. That’s my fast and
furious reference instead of quarter mile. There you go. So I want to learn
a little bit more. I referenced before the comic book geek issue number
zero, right? So now you were talking about the 10 x return on your stuff.
Can you give me a little bit more detail about what you call a Generation
Zero plant and its upside?

Kevin Brooks:

Yeah. So what we’ll do is we, first off, it’ll take us call it six to nine
months to take a plant through tissue culture. The whole process of
cleaning it up, restoring its health and vigor. In order for us to take on
that kind of financial commitment and time commitment, we want to make sure
that the plant performs at commercial scale. We can take a plant through
and you and I can get in the car and fly into San Diego and drive up to
Humboldt and stop at every nursery along the way. And by every kind of
cultivar available. It doesn’t mean that those plants were meant to grow at
commercial scale. So for us, we spend an exceptional amount of time, one
that plants have the appropriate agronomic traits to grow at commercial
scale, but that they’re also backed by a known breeder. Every cult of bar
we put into the market, we pay a royalty to a breeder on. We’re really,
really big on breeder’s rights. We believe it spurs innovation, it’s the
right thing to do. So we know the plant performs well, we know it’s clean
and we know it’s backed by a well-recognized, well awarded breeder.

So we take that plant through the tissue culture lifecycle. We have no moms
in our facility. It’s all Gen zero directly out of the lab. Tiny, healthy,
clean, vigorous plants and hermetically sealed containers. So a Gen zero
plant is a plant that comes directly from our lab, directly from its
original stock. A gen one would then be a plant that’s a Gen zero that’s
grown up and you take cuts off at your traditional propagation. We all know
that plants, mother plants especially are vectors for pest disease. So the
gen zero is,

Jon Purow:

Yeah. So I remember when reading about how to remediate for hopley and vir,
and I don’t remember the specific details, but it said you had to
essentially do something at the mother level in order to knock out the
thyroid. But I mean it would be basically saying goodbye to anything that
could have been risk exposure, and it is insidious and spreads. It is a
major issue. So understood. So this is how you have to think about it. Well
look, I guess also it comes down to cost benefit, right? I’m assuming your
genetics are more expensive by comparison to other genetics, but when they
have a 10 x return because they have a higher degree of certainty that
they’re not going to manifest with something like HLVD therein lies the
value proposition.

Kevin Brooks:

Interestingly enough, we are less expensive than our competitors and we can
get that through automation. So our price point is oftentimes less than
what you would get from a traditional nursery.

Jon Purow:

Well, that’s interesting. I didn’t mean to turn it completely into a sales
pitch. None of this was planned. Dear audience, that was spur of the
moment, but that’s fascinating. So why don’t we delve into that a little
bit, right? Because I feel that we are at this pitfall point of society
with artificial intelligence and these incredible efficiencies that it
creates. Tying back to the theme of efficiency, that what are interesting
ways that you folks leverage technology to create efficiencies that enable
you? Other examples, if there are any that come to your mind in terms of
how you leverage technology to create efficiencies that allows you to
undercut competitors with inferior product?

Kevin Brooks:

Yeah, big question. So first I would say if you get a chance to jump on our
website and look some of the videos we put out there just in terms of the
automation and our indoor growth environments. So what we do is micro
propagation, right? Micro meaning small, small propagation. To give you
some reference, we can put out around seven to 800,000 plants in a month in
20,000 square foot facility. A big part of that facility is our conference
room offices, break rooms, bathroom storage. So we’re talking about a
fairly small footprint that we’re actually producing plants in. And the
fact that we can put out 700, 800,000 plants in a month in what would
likely take upwards of 15 to 18 acres of traditional propagation allows us
to crank through a lot of plants in a small area with less employees. And
then we automate a lot, right?

A big part of our business is our media and a media is, it’s like a gel
that the plants live in. It’s the perfect environment and nutrients and
salt for that plant at that stage, that process we’re putting out, A lot of
that media is completely and a hundred percent automated. I mean, we don’t
even put the lid on the jars. Everything is done for us. So it’s a higher
output, a more consistent output. It ensures the customer is getting a more
consistent plan every single time. We have these indoor environmental
growth chambers where you can think about a growth chamber that measures
every single environmental aspect that you can imagine. That’s probably the
size of most kitchens, maybe a large kitchen. Lemme try to think of square
footage wise that can hold around 750,000 mother plants. They’re only about
that big, about that big. But we can still hold three quarters of a million
mother plants and all the racks are even lighted. It all has the light’s
fragment down evenly. So the plants are all getting even distribution of
lights. It’s got the appropriate airflow. So it’s getting too hot. It’s a
really, really cool setup. It’s a big part of our IP and allows us to put
out a superior, more consistent clean plant every single time.

Jon Purow:

Wow. Okay. I need to come up with a pop pun that describes it. When you
just hear something like that as a cannabis enthusiast, that gets you so
excited. It’s like, oh, the new harvest is ready. Oh, the new 700,000
harvest is ready. I don’t want to say bud B word. I got to come up with
something rise stoner, but a bud blank. I’ll come up with something. But I
had one of those right when you were talking about that, that is absolutely
astounding that you could fit that scale in that size while essentially
guaranteeing that quality. So as an intellectual property attorney, I
greatly appreciate the leg up that you have competitively by virtue of that
ip. But as you said, it also is a function of these are people, what their
chosen profession is is to generate amazing genetics and these folks have
to trust you too. And there is a role to play there because of patenting of
certain plants, people concerned about people patenting strains. The fact
of the matter is you’re a record right there of certain things existing at
certain points. Correct. So just like there used to be, the thing with
Mogley and Philos, it seems like similar conceptually that you have a
genetic database there that could be very, very useful not just for
creating great plants, but for also fighting against people who are acting
in bad faith and claiming that they created something. Right?

Kevin Brooks:

That’s exactly right. When we receive plants in, we send them to our
friends in medicinal genomics who test them and can help us identify if
they’re true to type and who the real breeder is. So we take as many steps
as we can to make sure that we are doing right by the industry and
protecting IP for our breeders.

Jon Purow:

And so I want people to think about that, right? You’re protecting IP for
your breeders. So also I remember speaking with Tanya and understanding
what you folks did a little bit is that you’re creating this record, this
database of different things that breeders have created and enabling them
to propagate it wherever and however they want and hold it true at the same
time.

Kevin Brooks:

That’s exactly right. Yeah. Part of our credit storage program is a cleanup
in store.

Jon Purow:

Yeah, exactly. So the cleanup in store. And so then also, let’s add on top
of this one interesting point that came up with the idea that when the DEA
post farm bill said that its policy in a letter was that if something that
you’re shipping in its current form’s less than 0.3% THC, then it is
considered hemp and it is legal. Even if it were to grow up to be what I’m
like to call high THC, cannabis HTC rather than marijuana, it’s less
racist. So isn’t that another way of looking at it?

Kevin Brooks:

I suppose so. I mean, if you’re asking me if we’re shipping plants around
the country, there are groups that are out there doing that. That’s not our
model today.

Jon Purow:

That’s not what you do. Okay, got it. No,

Kevin Brooks:

It’s not our model today. I mean, right now we service the California
market. We have a few licensing deals. We have launched our mini lab or
satellite lab program, which allows us to launch very quickly into in new
states. But yeah, I think we’re still waiting to get enough legal cover to
feel comfortable to do that. There’s quite a few loopholes

Jon Purow:

That does not count as an opinion letter for the record, right. Just
because an attorney, right. Any opinions are my own and not those of legal
opinion. I was just having a conversation again, I inadvertently gave you a
product pitch earlier. Alright, so we were talking a little bit about
leadership and we’re talking about persistence as something that’s very,
very important. But I mean, as a leader in your company, what do you think
is important in terms of instilling in the cannabis culture of your
company? Bonus points for alliteration.

Kevin Brooks:

Yeah. I mean, look, I think it goes back to the nod to the breeders. I
think it goes to acknowledging the folks that sacrifice and really got us
where we are. We held an event that was really cool a few years ago where
we brought all of our breeders together, put ’em on film, and then ’em talk
about what they like their story in this space. I mean, I think those kinds
of events are absolutely crucial. But I think also running a tight
business. I mean, I think when you look at taking outside capital, when you
look at expanding, you have this fiduciary duty to your investor base into
your employees and your customers for running a smart company. And we have
a business intelligence team internally that tells us where the market
trends are that tells us how to look and think about KPIs. So it is a very
delicate balance. I think we missed the mark when we first launched in a
thousand different ways, and I could probably spend more time talking about
areas where we than where we stepped correctly. But it’s all part of the
process. It’s all learning. And I think as long as we continue, right, say
that.

Jon Purow:

Yeah. I mean, I say that if it’s not a positive experience, make it a
learning experience when it comes down to it. So when you’re talking about
business intelligence and you’re talking about trends and everything, I
guess that could be a function of trends of where consumers are enjoying
things. Like I know that purple cannabis has been in vogue, but at the same
time, right? Here’s the interesting thing about purple cannabis, wasn’t
there, that story that came out about that specific strain, I believe it
was some type of Jamaican purple haze that was resistant to HLVD. And so I
was curious to ask myself, I wonder if the genetic trait that would help
against HLVD is something that expresses this purple, but is that the type
of thing that your business intelligence crew is checking out in terms of
anticipating the market to get ahead of

Kevin Brooks:

It? Yeah, look, I’m not intimately familiar with the example you had
mentioned. I think what we’re seeing in terms of trends are large scale
commercial growers are pivoting away from exotics and they are pivoting
towards, or they’re adopting more of what’s consistent. Most of these
growers are concerned about taking risks. So how do we de-risk our
business? And you do it by growing something that performs well in your
environment, meaning maybe it is less susceptible to things like tus or
disease resistant, or it has a very thick stem, so you’re seeing less mites
issues. So pivoting towards agronomic traits, pivoting towards what the
market they know the market wants and what they know they can grow versus
how do we try the new hottest strain. I mean, it’s called exotics for a
reason. Typically it’s very difficult to grow. And so I think what we’re
seeing is large scale commercial growers more focused on agronomic traits
to fill what the market demand is.

And some of the smaller boutiquey growers really focus on staying on what’s
hot. But to answer your question, we are in the initial stages of working
with a group who helps advance the traits, the desirable traits of plants,
and we’ve talked to them about their technology outside of cannabis and how
they can take a plant that has traits that maybe the plant is HLVD
resistant and how to use that to breed into other plants. So we are not a
breeding company. We’ll likely never become a breeding company, but it’s
pretty interesting to see what’s out there.

Jon Purow:

I mean, are you talking about CRISPR gene editing technology applied to
cannabis?

Kevin Brooks:

Yeah, this group isn’t specific to crispr, although there are groups out
there using CRISPR that are in cannabis. This group, it’s more data-driven,
right? So they’ll look at a thousand plants under a high powered microscope
to identify certain traits that are very attractive and they will breed for
those specific traits in an accelerated manner.

Jon Purow:

So now also talking about the database that you’re accumulating there for
each of these specific strains and stuff, are you also cataloging typical
terpene ratios and typical effects going that far? What do you end up
recording in this database with respect to each of these plants that are
sitting in what you have?

Kevin Brooks:

So I wouldn’t think of our library so much as a database, as much as just
cold storage. Again, we’re not a breeding company and I don’t have the
rights to use these plants for anything other than propagating and selling
them to growers or through our retail channels. Typically, we collect data
on agronomic performance. How does it yield? What’s the flower time, right?
So we run a 40 point inspection checklist prior to taking it through
culture, and then we collect as much COA information as we can to provide
to our growers. So I think we’ve gotten smarter, we’ve gotten better. We
try not to get over our skis and make promises we can’t keep, but we are
collecting what you would typically get from either a COA or from just
agronomic traits of the plant itself as a crows.

Jon Purow:

Got it. So here’s my other question. And for how folks that think of you
and the different roles that you fill. So just to be clear, right? I mean
you play the function of almost like a routing house, that if someone says,
I want this specific strain from this grower, that grower whose plants are
with you, genetics are with you, says, can we arrange that for that person
to get that in generation zero form? Or are you also reactive in the sense
that customers come up and say, I want something of this variety, and you
say, well, you know what, these five strains from these five different
growers that are sitting in our database also work? Or are you just out
there also marketing specific things that you say, alright, you large
grower because volume matters to you. This is the one that is the most
stable agronomically and you, hey, small grower, this is a couple strains
that are the hottest thing that are out there right now. These are exotics,
but they’re good for you because you want to sell out on day one. All of
those roles, all of the above.

Kevin Brooks:

Hey ha, fair question. Look, the more cultivars we have on our menu, the
more complex our operation is. So we really try to keep our open source
menu to around 25 to 35 different cultivars that we rotate off every
quarter. We’ll rotate five off and bring in four or five new. We do have a
fairly robust customer success team and part of that team, their function
is to give advice, to give suggestions. We don’t recommend growing this
cultivar in this region because it doesn’t handle heat well. Or we really,
what we’ve seen in Central Valley, this performs exceptionally well, or
this is good for indoor outdoor. So we definitely make recommendations.
Typically, our customers either order from our open source menu and those
are plants that we license from breeders or they have their own private
production where they say, Hey, I want a thousand of these three or four
different cultivars. They gave us their library, we clean them up and we
sell them back Gen zero. Those are kind of the two models we play with here
in California. You there? Did I lose you? Did I lose you?

Jon Purow:

Yeah, I don’t know what’s going on. I’m literally right next to the wifi
thing. So that was on me. So we could try and rewind, we could roll with it
and make fun of it again by saying that I need to pick different wifi
deities to pray to. If you have any suggestions, please send them to me and
we could kind of pick back up. But I don’t want to lose necessarily any of
that answer. And at the same time, by the way, if I’m getting too specific
about your business, just let me know. But I find it fascinating as you
could probably tell, but we will start covering some of these other
questions. So yeah, so I don’t know, how do you want to handle, should you
rewind what

Kevin Brooks:

Your world, I’ll follow your lead. This is your world. So you tell me what
works best.

Jon Purow:

I think, and by the way,

Kevin Brooks:

I didn’t realize you were going to pick up my screen. I had notes from your
questions, so that’s why you’re like, oh, something happened. I was
actually flipping up my screen to pull my notes earlier on. They’re like,
what

Jon Purow:

Happened? Didn’t see. Oh, I didn’t see. Oh, so that was on your end that
you were checking something out. Oh, okay.

Kevin Brooks:

I was pointing my notes on the side here, and you’re like, what happened?
So I don’t

Jon Purow:

See anything that, I didn’t see anything, unfortunately that would’ve be
kind of fun. I need to do something where they do a teleprompter on the
screen for certain things and I probably wouldn’t. Then I’d actually look
in this direction more like I should think that mean that question was very
specific about your business. Right? So here’s my question. Do you want to
leave in the question talking about the different roles that you fill, do
you think that that’s a value in terms of putting your company out there
and what you guys do? Or should we just skip it?

Kevin Brooks:

Sorry, what was the question? Go ahead.

Jon Purow:

So the question that I think that you were in the middle of answering was
asking about the different roles that you fill, like being a routing house,
you marketing people’s stuff and other people marketing. And you’re talking
about the 25 to 35. And I thought that that was useful because it’s almost
like my reaction to that was going to be like, oh, I understand. So you
don’t want to offer 700 a thousand things in a menu. It makes sense. So we
could circle back to that question and kind of cover it again.

Yeah, yeah. Okay. So let’s do that. Alright, so as you were, I lost my
train of thought, by the way. No, so as you were talking about it, right?
To understand the different things that conception nursery does with this
Titanic genetic database is, are you folks routing house where growers who
have stored their genetics with you in Generation Zero say, oh, can you
hook this person up with that? And with the knowledge knowing, sorry, with
the knowledge of that, there shouldn’t be HLVD in it or significantly
decreased chance of there being HLVD. Are you marketing strains to specific
people seasonally? Or are you having customers who could basically be any
cultivator out there coming to you, Hey, this is what I’m in the mood for,
which the latter. We know what you do, right?

Kevin Brooks:

Yeah. Look, the more VARs that we put on the menu, the more complex our
operation is, and the more complex our operation is, the more expensive it
is to produce a plant. So in order for us to keep our prices really
competitive, we limit our menu selection at any given time to 25, 35
different genetics.

Jon Purow:

Makes

Kevin Brooks:

Sense. Every call, every quarter, we sub some off. We have plants that we
like more for the outdoor season. We have plants that we like more for our
indoor growers. Our customer success team will work with our customers to
say, Hey, this works good in this region, or this doesn’t work great in
indoors. So we spend a lot of time really helping growers fine tune what
they’re looking for. We also do exclusive production. So we have a large
customer down the street from us, for example, we’ve taken in their
database, we’ve cleaned it up, we bank it, and they give us a six month
planning guide where every week we deliver them new plants and everything
in between.

Jon Purow:

Got it. Exactly. It could be many, many, many different things. I always
like to say this one because I’m a glass half full kind of guy. Can you
share any anecdotes or I mean stories about one time where the company
pulled something off and you’re like, F yeah, we really nailed the landing
on a hard one in that. Is it onboarding something quickly and then shooting
it back out? What meets that standard that I’ve set there?

Kevin Brooks:

Yeah, that’s a great question. I think we’ve had a couple of really nice
wins recently. We have a very large customer in the caria, Santa Barbara
area, large greenhouse grower, who’s been in this space for a while and
just kept underperforming to a point where they thought they were going to
potentially lose their farm. I want to say like 95, 90 8% of their plants
tested positive for Hhl BD

Jon Purow:

Oh Jesus.

Kevin Brooks:

Pretty scary stuff. We ended up switching over to conception. We brought in
our head of plant pathology. We work with them on best practices to not
infector of their other plants. We help them everywhere from clean out
their water systems to appropriate cutting techniques to appropriate
testing. And I think today that group is sitting around two or 3% of their
plants now have HLVD positive. So we’ve eradicated 95% of their issues.
We’re not the exclusive provider for this group. So they are getting plans
from internal, they get it from other places, but I think we did a great
job of turning around. They have been just a very loyal customer and a
great testament to the importance of clean genetics.

Jon Purow:

So you’re talking right there. I mean you guys also perform remediation, it
sounds like.

Kevin Brooks:

We did not take their plants in to clean them up and fry ’em back. They
ended up buying plants on our menu that were already cleaned.

Jon Purow:

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ebottles and grow boldly. That’s big one. I think I got it. So that’s
awesome. That’s very cool. You feel like you made a difference, you did
good there for someone that this is their life’s work and it get ruined by
a fricking virus. So actually I think I warned you that I could be creative
in everything. So I think I came up with a new product line for you.

So here’s what we got. So I think that we’re using the genetics we’re going
to get and we’re going to design some plants that you could essentially
have them manifest traits that you want, almost like hypnotize these plants
like a weed whisperer. And we could call the product line inception
nurseries. I’m sorry, I couldn’t help myself. I was picturing a version of
inception, but with plants, like plants versus zombies with Leonardo
DiCaprio, wading through. I’m a big Christopher Nolan fan. So I think that
suggesting plants and inception nurseries instead of just conception. I
think that there’s something there, but I may just be overly enthusiastic.
Kevin, Kevin’s got a stoic face on, oh, hashtag dad jokes, not bad jokes.
Alright. Now I would say I always like to look, I’m a geek, so I get into
data in different ways to look at data and understand things from it. And
so I like to first start with talking about internal data. So what are some
of the key internal metrics that you look at to measure your success, your
impact, where you want to go for your specific business? What data matters
in that regard?

Kevin Brooks:

So we have a look, I can answer just a hundred points. We have internal
KPIs that we hit every day. I think that the biggest threat to my business
is not a lack of demand, but contamination event or plants degrading. And
we’re not repopulating ’em quick enough. So we’re not giving optimal plants
to customers. We used to let the plants tell us over time if they’re having
issues and we’ve learned that we don’t have time. So if I send a plant out
to a customer and the customer underperforms, I hear about it five months
after we cut that plan or four months after. We want to know the day of, I
want to know within 48 if we’re seeing a downward trend in the plant
performance, any degradation or potential contamination. And so we look at
internal KPIs every single day on how’s my multiplication rate?

So multiplication rate is if I take a plant and I want to cut it and
replicate it, build more biomass, am I still getting a five x or is it
dropped to 4.7, drop to 4.7 on Thursday? On Friday it was 4.6. And so all
of a sudden you’re like, oh my gosh, I’m seeing trends in this plant. I
need to address it quicker. Is my rooting rate going up? Why is it going
up? Is it coming down? Why is it going down? So we look at internal KPIs,
it’s almost like religion for us. So I think that that is probably how
we’ve been able to just stay in front of potential problems and keep our
business moving forward.

Jon Purow:

But here’s my question, right? So you do all of this testing, as you said,
as key performance indicators internally. Now, do you say goodbye to the
ability to get data once you sell things to a customer? Or do you have some
manner of also tracking how things play out? So that could help inform the
next 25 to 35 that you offer the next season. So

Kevin Brooks:

This may come as a big surprise to you, but most growers are not great at
communication or detailed data travel. I know it’s a big shocker. In all
serious though, we do have a handful of customers that are just total data
geeks and they are excited and eager for what we’re doing and they share
everything that we can ask for. And in return, we give them some commercial
benefit, first access into genetics or discounts or whatever. But they give
us the data we need to get smarter and better and then ultimately helps
them. So we will take as much information as our customers are willing to
give us. We have a meeting every week called Case Squad where we go through
every single case or every single complaint that we get from a customer,
whether it’s we sell 10,000 cultivars and we have one of them that die off
and they call and they go, Hey, it was great 9,999, but we had one die off.

We log it, we talk about it, our team comes together, pathology looks at
it, customer success looks at it, and that’s how we continually get better.
We’ve had our version one plants, which were terrible on version two, which
we started getting some attention, our version three, which we had for the
last several years and really just launched our version four. So it’s all
about incremental daily improvements, and you get that from data, you get
it from your KPIs, you get it from customer feedback, you get it from being
really raw and honest with yourself about your performance.

Jon Purow:

Got it. Alright, so let’s talk about data again now. Talking about the
specific data that you see in your role in the industry, what are some of
the most interesting trends that are developing in your mind? And also, as
you said, you offer 700,000 way too big a menu, 25 to 35, you offer them
periodically. So looking at that 25 to 35, going back multiple generations,
what are the trends that we’ve seen and what are you anticipating in terms
of other trends?

Kevin Brooks:

Yeah, I think before launching conception, I was a CEO for the plant
touching entity for cookies. And then that company eventually rolled into
connected cannabis and Alien Labs who did the Alien Labs acquisition. And
those groups are known for putting out really, really hot strains. The
newest, coolest, like this is what you want to smoke. This is what’s
trending where it’s in rap songs, it’s changing pop culture, absolute
bleeding edge of genetic diversity. And I think what we learned was, and
what we’re seeing is there’s always going to be that demand, as I mentioned
earlier, but interesting enough, our top seller for the last three years is
the same cultivar it produces. It’s a great,

Jon Purow:

It’s old, reliable.

Kevin Brooks:

It’s reliable. It’s got the purple candy gas that the market’s looking for.
I know a large chunk of our customers rename it something else. That’s
fine. They’re welcome to do that. But it’s really that just steady,
consistent. I mean, I think everyone is just kind of worried where the
market’s going, our prices coming up, our prices going down. I just need to
know that I can sell this product, that I can grow this product and that it
gets consistent and there’s demand for it. And I think that trend is going
to continue and I think we’re going to see it normalize in other states.

Jon Purow:

I find it interesting that you say that they could call it different
things, right? Because I feel like, I don’t know if you would call it an
inefficiency in the market, it’s just a reflection of the experience of
getting high is that you can’t compare highs. You could have the exact same
stuff if it looked differently to you day one versus day two, day one, it’s
purple day two, it’s green. And theoretically it could have the exact same
effect on you and you wouldn’t be able to necessarily say that it was
genetically the same because the subjective nature of highs and also when
and how you’re experiencing them, you can’t recreate a high. And so I find
it interesting you say that they’ll slap their own name on it. It’s the
same thing. And what that is, is reliability. And ultimately also what I
feel like cannabis is either going to be an upper, a downer or a chiller,
and it’s going to fall into one of those three categories and to some
extent, and so I find it interesting, the idea that old, reliable, steady
goes the race that’s the most popular and continues to be the most popular.

And you see the trends below that, that sits first place and everything
else just follows that. So here’s the question that I always like to ask in
an industry that is constantly changing, and I like to say there’s never a
dull moment in the dope game. What are some of the biggest surprises that
you found in the industry?

Kevin Brooks:

No one knows what the fuck they’re doing. No one knows. Look, you got guys
from CPG that are coming in this space that are looking through a
completely different lens. You’ve got big ad coming in this space. They’re
looking through a totally different lens and pitching one story. You’ve got
legacy operators that believe something else. Nobody really knows what’s
going on or what’s going to happen with this space. Is rescheduling going
to happen? If it does, what does it look like? Is rescheduling not going to
happen? If it does, can we survive on family offices and higher net worth
individuals to continue to carry the shoulder, the capital constraints of
the space? So I think it’s a really, really unique industry. I think this
ridiculous pressure that the industry has put on us and the regulators have
put on us to be fully vertically integrated,

Only causes more inefficiencies than focusing on specialized parts of
supply chain. So there’s just, nobody really knows. And you get these guys,
these analysts that have been wrong across the board. I mean, I remember
sitting in, it was a canaccord in 2016 watching these presentations where
guys were sitting there with their presentations and they’re like, look,
here’s a rendering of our facility and here’s a snapshot of a example
forma, and here’s our professional team, which never has done this before,
and everyone’s going to be billionaires overnight. And to watch that trend
of the valuations go nuts and then the classic, it’s just so immature and
there’s so many rabbit holes we can go down. I just have a hard time
believing anyone too much in this space and if they’re too certain of
what’s going to happen.

Jon Purow:

Yeah, no, I think it comes a point in most interviews where that comes up,
and I always do the quote from Aaron Miles and Ano where I refer to
something as a mature market. And he said, there’s no such thing as a
mature market in this industry. It’s just less immature. Something to that
effect. And the idea is in every way that you look around the market, you
see that, right? We don’t have product diversification. We really don’t.
Right? And we certainly don’t have it in different states because of all
the regulations I’m seeing, the five bracelets that my daughters, they pick
for me every day. She went for the John Wrist world record today of five.
So anyways, that’s why I’m so jeweled for those who are watching rather
than listening, but I kind of feel like we don’t have diverse products. The
mature markets like say California, Colorado, that have been that legalize
on the earlier side, they’re still redoing their regulations in major ways,
major ways.

I mean, a lot of those early states, they didn’t tackle social equity. It
was the states that had higher percentages of people affected by that, like
New Jersey and New York who did it from the beginning. Colorado circles
back, there’s nothing mature about this industry. So I a hundred percent
agree with you that if anyone says that they know what is going on in this
industry and where it’s going to go. I think that that’s incredibly
difficult. Which leads me to my last question, which is when I ask you to
do exactly that, right? So Kevin, I can never decide if I want to call it
Toker dus or Smoker dus. So please, I need your vote first and then I want
to picture you. I want you to picture yourself putting on a wizard hat
stylized like a joint, and you are now going to tell me what you foresee on
a macro and or micro level in the near and or far future in this industry,
because this is going to be fascinating. No pressure.

Kevin Brooks:

Got it. Well, first, I think the first point, I would probably lean towards
smoker Damas, but they’re also good. It’s hard for me to decide. It’s
tough. So look, I think where this is going, or if I had to put my joint
hat on, I think what you’re seeing is folks outside of the industry
starting to dip their toe in. And I think if rescheduling happens and we
have access to traditional capital and we have folks that have played in
that schedule with other products, start to move in, I think you’re going
to see them frame up the industry a little more than outside influence has
in the past. But I also think, as I mentioned earlier, earlier, this hyper
focus on full vertical integration, I think you’re going to see multiple
companies emerge specialty in their specific vertical. I think that you’ll
start seeing that push towards specialization and less around full vertical
integration. I think companies like conception that focus on the supply
chain at the very beginning or different parts of the supply chain that can
do it better and faster and cheaper than a company can do themselves are
the ones that will lead the way in terms of innovation.

Jon Purow:

Got it.

Kevin Brooks:

Why would you have a distribution company and self distribute when there’s
someone that can distribute your products to a wider range of customers at
a lower price point and a higher guarantee of success? It just doesn’t make
sense. Nobody. Distribution sucks, right? It’s a low margin business In
fleet management, multi-generational alcohol distributors are going to own
that one, right? So it’s not going to be a brand in California who has six
drivers who don’t go to certain neighborhoods, they get robbed, and it’s
just not the same scale

Jon Purow:

Changes. No, exactly. These infrastructures exist in place in neighboring
industries that are jealously looking over and waiting for their
opportunity. And so ultimately it’s not like, oh, no big alcohol, big
tobacco are coming in. No, it could just be the distributors who know
exactly what they’re doing and could transport refrigerated products
without ease. With ease and just snapping their fingers. So I just want to
say a very, very hardy thank you for putting up with my inception nursery’s
joke, which I may need to cut out. I just think that that thing was DOA,
but who knows? Maybe the audience will think differently. But thank you so
much for taking your time and joining me. For me, this was an absolutely
fascinating conversation. In my opinion.