Editors’ Note: This is the transcript version of the podcast. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below if you need any clarification. We hope you enjoy!
An enormous victory for the US Cannabis Vaping sector happened, and most completely missed it.
The recent “definitive victory” by AVD was a critical win for the cannabis industry.
A monopoly would have jeopardized the entire category and potentially put a stranglehold on crucial hardware. This ruling ensures that competition continues and allows brands and consumers to not suffer at what could have been.
The bigger question remains, is this IP battle the first of many?
We sat down with Alex Kwon, Founder and CEO of AVD, to discuss the following:
- USITC cannabis vaping dispute
- Wartime CEO strategies
- Building a Diversified Supply Chain
- Forward-thinking disruption tactics
In our former lives, we were extractors and processors. And, probably like you, we were looking for vape hardware equal to our oils. Except we couldn’t find consistently reliable cartridges. That were correctly designed. Didn’t burn our oil. And were priced for the market.So we said to ourselves,
“We know exactly how the perfect cartridge should perform. After all, we’ve been in the industry for 20-plus years. From cultivation to managing licensed extraction labs to processing and formulation. We’re perfectly positioned to engineer and manufacture our own hardware.”
Follow us: Our Links.
At Eighth Revolution (8th Rev), we provide services from capital to cannabinoid and everything in between in the cannabinoid industry.
8th Revolution Cannabinoid Playbook is an Industry-leading report covering the entire cannabis supply chain
🎥 YouTube: The Dime
📸 Instagram: The Dime
[00:00:00] video1186742022: What’s
[00:00:03] Bryan Fields: up guys? Welcome back to the episode of the Dime. I’m Brian Fields, and with me as always is Kellen Finn. This week we’ve got a very special guest, Alex Quan, c e o, and co-founder of a v d. Alex, thanks for taking the
[00:00:12] Alex Kwon: time. How you doing today? Doing great. Happy to be on and looking forward to speaking with, uh, both you, Brian and, and, and, uh, good old, uh, friend, ke Kellen.
[00:00:22] Bryan Fields: Yeah, there’s a lot of history we’re looking to uncover today. Kellen, how are you doing?
[00:00:27] Alex Kwon: I’m doing really well. Really, really excited to talk to, uh, Alex Quan had a huge influence on me in in the space and, you know, I’m just really excited to talk to, to Alex and it’s just really nice that we’re gonna bring kind of that West coast knowledge to, to educate you.
[00:00:43] Bryan Fields: Coasters. Hey, Brian. Yeah, I mean, listen, it’s needed, right? Uh, there’s a lot we’re not doing, let’s say, well, here on the East Coast, but the one thing we are doing really well is. Really enjoying those West coast brands and, and products. So, uh,
[00:00:55] Alex Kwon: it’s just a matter of time though. It’s just a matter of, I mean, it is ma I mean, it is
[00:00:58] Bryan Fields: happening now.
[00:00:59] It’s just a [00:01:00] matter of like, are we just gonna accept it or are we just gonna say, Hey, we still got it here in New York, but, hey. So Alex, far listeners unfriendly about you. Can you give a little background about yourself and then how you got
[00:01:09] Alex Kwon: into the cannabis space? Yeah, like look, um, the easiest way to kind of talk it, uh, I, I think it’s.
[00:01:15] Pointed out some of the other kind of media that we’ve done. Um, but we, we’ve been a little bit more private about things. But long story short, um, we cut our teeth for better part of a decade, um, eight to 10 years in Humboldt. Um, starting back in like oh 7, 0 8 ish timeline. Um, there was, you know, I started kind of a little, um, project there when it had to do with what we would do is, uh, we would do some land acquisitions, some land development, um, and, and worked a lot with a lot of growers, right?
[00:01:43] And so that was kind of the initial foray from a real estate perspective, and then understanding kind of how you had to develop properties, how you needed to understand kind of the different cultivation methods and how that kind of worked. And, and kind of at that time there was a lot of, um, you know, it was an [00:02:00] interesting age of for cannabis at that time, just because of the amount of time that had come off of two 15 and then kind of how the different areas and jurisdictions read into kind of medical cannabis and, and, and, and what each.
[00:02:14] Area would allow you to do, and, and Humboldt and the Emerald Triangle kind of, you wouldn’t have never guessed it, but like it was where, you know, a lot of kind of the brain trust and, and knowledge, um, and relationship with the PA plant, uh, the land, um, kind of understanding the history within it. I, I think there’s just an incredible amount of knowledge and, and, and, um, information that was kind of, wouldn’t have known it, it just, it was permeating throughout that.
[00:02:40] Area, you know, and Kellen can talk to you about that if he has not already from when he came at later times, uh, into Humboldt because it was just, again, all stages and ages. Right. I think that’ll probably be a more of a theme during our conversation. It’s just kind of the, the different way that, that that time kind of passes.
[00:02:55] And then, uh, when you look back now, how different it was. So, um, we spent a [00:03:00] better, a, a a good amount of time there. Um, and then that kinda led us to, as legalization kind of happened. Um, there was an opportunity in, in, in Washington state where we founded, uh, sun Grown. And uh, that was really, um, uh, a project at that time where we really wanna focus on.
[00:03:20] Kind of the derivatives of the plant, right? We really wanted to focus on, you know, we, we kind of always knew that we knew the right growers, the right connections to people that can grow really good flour, you know, targeting resin, kind of go after kind of the next stages of what we felt like the future of cannabis and at least one category of consumption would go.
[00:03:40] Um, and that, that project in Washington was really geared towards how do you grow something at the best cost per milligram, per milliliter, and really target two main parts, right? There was the cannabinoids and the terpenoids and kind of what you were going after from a chemical basis, but also doing it form from like a cultivation perspective, right?
[00:03:59] Here’s all the [00:04:00] different methods, here’s the different methods that existed, uh, through our experiences in Northern California. Um, what, you know, from, from indoor to mixed light, greenhouse, you know, depths, full sun, just name it, right? There’s a whole bunch of different modalities that you can use to kind of go after the type of exit.
[00:04:16] You know, product that you’re going for. And, and, and I think, um, the project in Washington really was all about understanding scale, understanding the ability to farm it, extract it, and then being able to understand kind of how it needs to be filled. And then you have to figure all this out, right? Early in cannabis you have to, you know, in, in other industries they allow you to be all these other things.
[00:04:38] But in, in, in cannabis, they actually force you to kind of do all of these things within one under one roof, right? And so, um, Washington had a different structure between being, uh, on the processing and producer side versus being on the retail side. And so, um, that’s actually kind of, you know, during that time period, I know, I know Kellen was a big part of that.
[00:04:58] When we were, we were really [00:05:00] targeting kind of again, the science of it, right? What, what actually was going on with the plant. And it was so new. Uh, I mean, there was information, but there wasn’t really any testing or real a, you know, quantitative data that was actually being collected. From, from kind of the methods cuz it was so new, right?
[00:05:19] And there weren’t people like mine, Kellen’s kind of operating in the space or coming into it. So it was very new at that time. We kind of always felt that that was the bet, right? Like, you know, liquid and vapor is gonna be a big part of where we go. Um, that, that, you know, we were pretty successful even though going through the trials and tribulations that any, um, early cannabis company owner can talk about, uh, their own, you know, battle scars, if you will.
[00:05:44] And, um, you know, that, that, that led us into kind of every kind of cartridge that you can kind of be in. And, um, you know, I, I know Callen firsthand at times, we, we went through some of these when we have failures and be like, not understanding like, well, there wasn’t a change [00:06:00] in the formulation or, or what happened on the oil batch.
[00:06:02] And then we’re going through the different parameters and then we’re trying to get understanding from the vendor, Hey, like, there’s a problem. They kind of like, put their arms up, they’re like, I, I don’t know. You know, or they’re, they’re like, oh yeah, we’re just gonna give you rebate. Well, It was a lot of oil in here.
[00:06:16] It cost us a lot of money, you know? And like now people don’t like our brand. Like there’s some of these issues, right? And so that was really like one of those, the, the things that was the impetus for AVD right? Was like, it could be done better. There were, there were not, there were not people that kind of knew cannabis and knew it the way that we do and the way that we kind of approached it.
[00:06:35] Um, and then also it was such a huge part of your cogs, right? So when you’re running the business also, it’s like you have 30, at that time it was like 30% something huge, right? it was in this piece of hardware, this widget that came from China that you didn’t understand. And I, it just at the time, right, the different types of cartridges coming over, what the efficacy of it was.
[00:06:56] And it’s tremendously advanced since then. But, [00:07:00] um, I think that was one of the initial parts, right? Knowing that it was a big cost, there was a problem with like service or safety or understanding the products. And then third was like they have no idea how to port this into oil that we’re dealing with.
[00:07:12] Because even as we’re extracting and going through it, like even, and Kellen can tell you all about it, right? When you’re running through, you know, when you’re, if CO2 is your initial extraction method, if we’re gonna do ethanol or we’re gonna even try to do any type of hash on a solventless perspective, any of these other ways, and even hydrocarbon obviously, right?
[00:07:26] These are all the main solvent, nons solvent ways that you can kind of, uh, or lighter solvent ways that you can kind of go through making the initial extraction. And so, and then it all became about the post-processing, the prep, and, and, and then understanding kind of all the constituents that were coming off the plant.
[00:07:43] And then you’re trying to take that, make it figure out if it’s stable, and then be able to introduce heat to it into a vessel and people are gonna vaporize it, right? So there was just so many complexities that were kind of going into that. Uh, but really it just started as like, let’s figure out if we could do this better.
[00:07:58] Uh, right. And it went from working with [00:08:00] somebody with a, you know, went from working with a trading company to a factory. Then, you know, obviously the biggest steps have always been for us growing up. And through upstream in the supply chain, which has been probably one of the most crucial things, um, cuz anything that’s made right, we, we, we have a very good understanding of where it’s made, who, who’s making it, what suppliers are, uh, and what actual, uh, what’s actually being done, uh, to be able to kind of be assembled.
[00:08:27] And it’s the kind of the same way that you think about when you grow or when you do any type of scientific extraction. You’re, there’s all these components and processes that you go through for the inputs for the whole, right? And it’s the same way any, it’s not any different with these widgets, right?
[00:08:39] It’s not any different with these engines and the cartridges. Uh, they’re all components, 10, 11, 12 different components that have their own quality controls that come in. So, um, You know, I know that, that, that might be a longer part of the story, but really cut our teeth in Humboldt. Um, it kind of sparked an idea of of of going after targeting liquid.
[00:08:58] Um, from, [00:09:00] from a perspective of cultivating right, fully from growing the oil, really from a crop plant perspective. Understand the cultivation methods that you’re going after, go after being able to scale it, do it repeatedly, understand the chemical part of it, and then also know the kind of the, the exit products that you were really going after and how’s that fit in a business model, right.
[00:09:17] That was really, that was really the kind of the thought process. But as we started thinking about, hey, our, our, our reputation or our livelihood, how well we do is based on this little engine. Um, it become, it, it was kind of a serendipitous path, right? Let’s see if we can do this better. And then it kind of took off on its own.
[00:09:34] Right. And then since then, it’s just, here we are with, with I’m sure other stuff that we’re gonna talk about. Yeah. I remember Alex, you spent like, uh, you, Leo and Mike probably spent. Months negotiating with CCE for like a couple pennies, right? Yeah. But those pennies were huge. Yeah. In terms of like the volume and then the light just clicked and you’re like, why?
[00:09:56] Why don’t I just make date pens myself? Like I’m just gonna go [00:10:00] do the cartridge thing. So, ho hold on a second. So
[00:10:02] Bryan Fields: Alex, I understand conceivably like the idea and the origin, right? Like your, your your large scale, you’re understanding the unit economics, you recognize there’s an opportunity here. Is the initial goal to try to help supplement your internal products.
[00:10:13] Are you trying to serve the wider market? Take us through like the internal strategy of what the original goal is. Was it just to be more self-sufficient or was the real plan, was it like, hey, like if we knocked this out the park, obviously in the long term, you can provide other else was the short term, what was the thinking
[00:10:27] Alex Kwon: in the early days?
[00:10:29] I mean, it was just serendipitous to be honest. Like, I mean, at that time, Callan, I think you were starting to think about doing your consulting. I think you were probably stopped, you were going off on kind of doing some other things. Cuz like we had grown how that company had grown really well. But it’s like, you’re a cap, you’re limited, right?
[00:10:46] Washington’s a very different animal, right? And so, um, uh, and I know that Callen knew that too. We always talk about like all these other places and some of the things cuz in, in any type of, you know, company that you have friends and family and the stuff that you’re [00:11:00] doing and you’re self-funded, like there’s a lot of, you wear a lot of hats, right?
[00:11:03] Sometimes like, well, shit, I don’t wanna do this anymore. I wanna go do something else. Right? So there, there is some of that, right? And, and people have to grow at their own a stage in age, right? Where they’re trying to go. And so I think at that time for us, um, you know, like. We did have early, you know, partners in our business and, and people that had experience over there.
[00:11:21] Right. And so there was, as, as kind of these opportunities came to us, it, it didn’t start as like, oh, I got this great epiphany as a new business and Hey Colin, we’re gonna get into hardware manufacturing. That was never like, there’s no way. Right. It doesn’t work like that. It’s, it’s the, it, that’s why I look, one of the things you’ll hear me say too is I think the plant chooses its stewards and it kind of takes its path, right?
[00:11:42] I think I can’t explain it any other way. The plant’s been really good to me, my friends, my family, all the people around us, and I think a lot of areas that it does good in, right? And so I, in this scenario, I don’t, I don’t take it any different, it was just kind of one of those things that they like, all right, let’s verify this.
[00:11:59] Let’s see if [00:12:00] with our knowledge that this can be improved. We can control some of these aspects. Cause that was when a big push on heavy metals was happening too. Like Cat three was just coming in into, into California. So vape gate, I think it was right up. Right before it happened, but like all this stuff kind of was, was percolating, right?
[00:12:18] Cars were becoming like this big momentum. Um, and, and, and at the end of the day, sea salt smore was like the, they were the 800 pound gorilla, right? They’re first to market had a monopoly share. That’s, but they had a product that was significantly better than what the cl what, what was before that?
[00:12:34] Because remember Kelly one on those stainless steel ones, the tra they put the little silicone wick or whatever. Yeah. Those little two do. Yeah. So, and then before that was like these little just WIC plastic ones that were cheap, right? So it, it, it, they did step up from that. But really, Brian, to answer your question, it was like, hey, you know, again, unit economics, right?
[00:12:54] That became an important aspect. Can we get a better price? Is it reliable? Is it something that we can [00:13:00] consistently do Well because that’s always the fear too. You, I’m sure other listeners and people that have gotten products from China or other, other types of trading companies and or factories that call themselves these things.
[00:13:12] But really they’re just. Kind of assembly products and selling you shit, right? Or, or are there reject products and putting ’em together and selling that to you? And it might be good on the first round or second round, but is it gonna be good on the third, fourth, sixth, seventh, and eighth round? Right?
[00:13:26] Which is super important, right? Are they gonna do the bait and switch? Are they switching out materials on you? These are all super important parts when you’re actually starting to do that, right? Our, uh, it’s the same thing from the plant touching, non plant touching, even business side, or when people just do what you say, right?
[00:13:40] So in, in our mind, it’s always about consistency. So, um, that was really one of the questions, right? Is can we make this consistent? Is this a product that’s gonna be better on our, on our bottom line? And can we influence, um, um, tweaking this thing, tuning it properly for the type of x extracts that we’re running, right?
[00:13:58] Because we, we just, we had very, [00:14:00] we’ve been very lucky to have a lot of different types of, Extraction artists within our house that were helping us. Kean is, I mean, you’re speak, you have one of your partners is one of those people. Right. That helped us very, very early in, in standardizing lot, standardizing a lot of the processes.
[00:14:13] And so, um, you know, that, that, that, that was an important part because knowing that, that if that was possible and it can grow, then great. And that’s literally, that’s all it was. It was a side hustle. It was just like, alright, cool, we’ll make some extra money on the carts for ourselves. We’ll have some more, more free cash flow to make some investments into, you know, branding or, or, uh, another place or, or maybe some other thing.
[00:14:41] And it just, it just kind of took on a life of its own. And, and, and we just had a lot of good relationships that we could validate not only ourselves, but we could validate with others. Um, and I think within one degree of us, we’re probably well connected to a lot of people in the space. And um, and I think, um, that was what really helped.[00:15:00]
[00:15:00] No, I would say just kind of the organic growth that it took off on its own. Sure. And I think that’s so
[00:15:05] Bryan Fields: important to highlight too, right? Like when you’re getting started, you, you kind of had a target of like, Hey, let, let’s try to set this up like this because I mean, your team has an intricate understanding of the plant and the specific nuances that have come with cannabis, not necessarily e-cigarettes.
[00:15:17] And I think that might have been a critical difference for some of the hardware providers because as I’ve heard you say before, the, the hardware is there to accentuate the brand and the product. Not necessarily take away from it, but to there to, to prop it up. And I think that’s a critical difference that most people don’t recognize that when they get a product doesn’t work as well.
[00:15:32] Sometimes they’re pointing the fingers. So kind of getting started on that, do you think the difference was that C cell didn’t understand the, the tiny nuances with cannabis? Or how do you think that that separated out?
[00:15:44] Alex Kwon: I mean, they’re gonna probably listen to this, so I don’t wanna give them too much.
[00:15:51] But yeah, I mean like, look, that that’s, that’s a part of it, right? It’s authenticity. At the end of the day, I’m not, I’m not knocking what any of those companies do. I don’t have [00:16:00] anything negative to say about, look, they’re, they’re, they’re doing what they gotta do. Right? What we, what we like to focus on is ourselves as in like, this is what we need to improve.
[00:16:09] This is what we need, how we need to carry ourselves within the company with each other. But ultimately we serve the customer. Ultimately we serve the client and it’s all about the client. Because if the client is making good oil, clean, good oil at good prices, and they got great hardware going out with it, then it’s just more access for people to experience cannabis.
[00:16:26] At the end of the day, everyone should have access to clean good cannabis, right? Cuz it should be their choice. And one way or another, if everybody had access to good, clean cannabis, hash, rosin, flour, vapes, whatever you want to call it, that is, you know, I’m, you know, people are, have levels of like their snobbiness or whatever they, they, they like, right?
[00:16:44] I, I, I, I have a certain preference on certain styles as well. And it’s like, if everyone had access to that right? The world would just be a, a less angry place. Right. It just would, it happens all the time. Sometimes when it’s like trying to put the kids on, it’s like, God, you just gotta get high. And then, then it’s [00:17:00] all good.
[00:17:00] They can run around, they can jump, they can do what they want. Right. But if not, you’re trying to hit that time, you get really upset. Right. So I, I look, I think, I think, I think when it comes to Sees Cell, um, they, they, they, they had a inherent, inherent advantage of being first, you know? Um, but again, they, they, they come from e-cigarettes.
[00:17:21] And I’m not saying that’s bad or wrong or all these other things. I’m just saying it’s just, it’s different than us. We’re born in cannabis. Right? And so for us, our purpose is also driven around that. It’s like I, we consume too, man. I’m like, I don’t want shit in our cartridges. You know what I mean? Like, I want fire risen, I want, I want fire liquid live, right?
[00:17:43] That’s, I want the dopest strains, I want all that. I want the complexity. I wanna know on the front end, it tastes a certain way and then when it tapers off, it’s gonna do something. I got, it’s the same thing, right? It’s all driven from that and making sure that it’s accessible, making sure that this makes sense, that we’re actually solving problems.
[00:17:58] It doesn’t make sense if we’re not [00:18:00] solving a problem for somebody, you know? So like, if, if we weren’t doing that, then we shouldn’t even be around, right? So I think, I think the thing that we try to focus on more than anything is, is, is the relationship with the company and the person that we’re working with, right?
[00:18:14] And then are we adding value to you, right? Is, is there some way that we can add value and it’s gonna come with shirt? It could be rooted in the plant, touching knowledge and doing this, but it’s also like, okay, what are you doing with your extract? How are you run? And Colin, that’s always been tough for me cuz our whole team can’t do that.
[00:18:28] But like, It’s, it’s a tough spot cuz Kellen knows there’s, we, we know a lot of things, especially about extraction methods know-how steps that people are skipping that they shouldn’t be skipping and that’s why they’re having is there’s a lot of that, right? There’s a lot of nuance in, in that aspect that goes to having reliability on, on their end product, not just one part of it, which is the hardware as well.
[00:18:51] So this is balance of, of education and doing that. But I, and, and, and, and what I would say is that like, I think the opportunity that we [00:19:00] have is because CSUN did that, right? It’s because they weren’t open in the market, did made advancement, price really high, did all these things. Great. You know, I, I’m, I’m grateful for all those things cause we wouldn’t have a company other otherwise, or have a position for us to go out and add more value in.
[00:19:16] You know, so at what point, Alex, did you kind of, because like in the beginning stages, your resources were in two different places, right? Like when did you decide that you’re like, Hey, I need both feet over here
[00:19:28] Bryan Fields: and I’m just gonna trust the team over there to do, do their thing. How was that transition?
[00:19:33] Because I wasn’t there for
[00:19:34] Alex Kwon: that, you know what I mean? Yeah. I walk, it’s kinda funny. I know exactly where I was sitting at that, that previous Seattle house. Um, I know exactly where I was. I remember you looking at the cross at the Yeah. I re I remember because like, it wa look a lot of things. I think business-wise, a lot of listeners may not know that as well.
[00:19:53] Like, I, I mentally have a strong philosophy around business and a lot of mentors around us, right? A lot of people that have, uh, you [00:20:00] know, dare I say, protect me from myself, right? And so, um, You know, have structure so that, so, so that you could, you can kind of meander around and create other opportunities and think about that, right?
[00:20:10] But you gotta have an incredible amount of trust. Uh, you have to have an incredible amount of rigor in place, uh, so that you, you, you kind of follow the fundamentals of business, right? Good cash flow. Understand your balance sheet, right? Have good ebitda, like, don’t have debt assets, don’t have liabilities that’re greater than an assets.
[00:20:25] So these are some things that you own versus things that you owe, right? Sometimes people lose sight of that, right? And how that needs to work on its fundamental basis. Um, but we’ve, we’ve, we obviously, you know, the folks that we’re talking about, and I, and I think what happened, Kellen was, um, at the time, it, it was really, you know, the structure that, that, that.
[00:20:45] Business endeavor prior to a v d was really about like, how do I build it with others? Right? How do I build something bigger? How do I do it with friends? And how do we, how do we empower others to kind of make it theirs and grow from it, right? Um, and so it was just a different stage and age of my life [00:21:00] at that time as well.
[00:21:01] And I think, um, with, with a v d it was kind of the side thing. And in a very short period of time, it did a tremendous amount of sales, right? Like, I remember like for six weeks, I was like, all right, I’m gonna work on this. And I’m like, 8:00 PM to 2:00 AM right? And you know that I don’t sleep on his work constantly, right?
[00:21:18] So some people just don’t really understand it. Like, I work 20 hours day. It’s just, it’s, I just can’t shut this thing off at times, right? And so, um, that’s why I need to smoke weed. Um, so, uh, the, the, the, uh, I remember it was like six weeks, right? And, and. And we did, I forgot what it was either like one, six or two, some over a million couple, like almost a couple million in sales.
[00:21:39] Right. And I was just like, I, I don’t know, we could ignore this thing, man. That was kinda, that was kinda literally the combo. They’re like, Nope, we shouldn’t ignore this. And so, um, you know, in a lot of, in a lot of ways it’s just very fortunate because it’s like, Hey, you guys, it was already kind of set up for that way.
[00:21:57] Right? I mean they al already ran everything anyways, Colin, you [00:22:00] knew that, right? Yeah, for sure. Um, It was just really like, Hey, I’m gonna, you know, scratch my entrepreneurial itch and, uh, I’m gonna go see kind of what could happen here. And if it works, it works, it doesn’t, we’ll, we’ll, we’ll we’ll look at other things.
[00:22:11] And I’ve always kind of viewed it from a, from a platform perspective on a lot of these other aspects. Right. So, um, it was a great stage of, of time right, of building that up with friends. And because my, a lot of my role is the land development, right? I, I, we, we created land there that was. I know at that time, no one had done before the speed with the county and like Terraform land, a city’s worth of power, 14 miles, an underground pipe, all licensed, zero to 60 employees.
[00:22:39] Like, you know, the whole story, Kelly, you were there, right? Two harvest zero and less than 10 months. Right? PE that’s just unheard of for all the things license in both places and doing all that, right? And so that was a tremendous task, right? That happened. And I’m glad that we documented it. So one day we could show people like, I see this grill, this happened.
[00:22:55] We, we built this thing. And when, when, when we had snow up to here and, and we [00:23:00] did it in record time. So, um, that was, that was a fun, fun period. But, um, you know, the, there were better people there to run that thing than me, right? And so that’s, that’s what allowed it. And I think, um, um, we, we all shared the same type of core values and culturally for kind of how we carry ourselves as humans and what we do purpose wise for the spa in the space.
[00:23:19] But, um, I think a v D was just kind of one of those things that like. Over time just took more of the attention. It just kind, it was, it was not planned. It was not like, and sometimes I try to tell other entrepreneurs that, right? They’re like, Hey, sometimes the things that aren’t planned are the things that have the greatest success.
[00:23:38] And it’s crazy, right? Because you just, it just comes from un unexpected places, you know? And, but, so that, that, to answer the question K, the resources, it was, it was tough to help them backend. But like, I, I was, we had some other ones that, that, with working with the teams in China, um, and then obviously, excuse me.
[00:23:55] And then, um, some of the team was helping on the backend and I brought someone in pretty, pretty [00:24:00] fast. Uh, and we just got super lucky with that hire. Uh, he’s a chief operating officer, Michael, and, and he’s speaking on other things. But, uh, that, that was, that was important. Getting lucky, right? In a lot of ways we got lucky for it to work.
[00:24:12] So, but we were prepared to take advantage of the opportunity in the sense that, like, we had structures in place at the other org. It didn’t really, it didn’t, it, it, you know, the market something is like, if, if, if. If I, if some of us were leave, then it would go like this, that’d be a problem. Right. But even if it dips like this and it goes up, that means you have good structure in place.
[00:24:31] Right. And, and, and you saw that it continued to grow Yeah. On its own, on, on their own. You know,
[00:24:37] Bryan Fields: I mean, it’s fascinating, right? You’re sitting there, you’ve got this hobby that’s accelerating pretty aggressively to a point where you’re really starting to thinking like, hey, like gotta put a little gasoline on this fire and see what it can do.
[00:24:46] So what are, what are those first steps? Are you looking to scale, uh, from a production standpoint? Are you looking to scale your, your sales team? Like, where are you in this? You understand that your Washington team is moving well, and now you’re like, all right, like, I’m gonna, I’m gonna let this rock.
[00:24:59] What’s the
[00:24:59] Alex Kwon: first step? [00:25:00] What was the first step for a b d?
[00:25:02] Bryan Fields: Yeah. Like when you’re, when you recognized that this wasn’t a hobby anymore, this needed to put a little gasoline on it to see if, like, you can really
[00:25:08] Alex Kwon: take this to where you, it’s getting the right people. It’s getting the right people, it’s finding the right people that already he had, and then, uh, think about what the pieces that you need to do next.
[00:25:17] You know, I, I think a lot of things that companies fail to do well at times is their org charts or, or the roles within their org charts are six month, six months outdated. Uh, I, I, we, we try to keep ones ahead of time, right? Six, 12 months in the future so that you know what you’re filling into. Otherwise, I’m wearing that hat, or Kellen’s wearing that hat, or Brian, you’re wearing that hat, or, or Johnny over here is wearing that hat.
[00:25:39] Or Michael’s wearing that hat, or someone is, right? And so you’re really trying to get to a point where you need to alleviate that bandwidth, right? Cuz there’s just, there’s only so much that you can execute. And then once you’re understanding that, then, then you have a structure to kind of build upon, right?
[00:25:55] But obviously sales is first. I mean, it’s the tip of the spear, right? Um, [00:26:00] supply and, and making sure that those things are, the QCs are strongly in place. Look, It was a helpful buffer that we knew our own volume. It was a helpful buffer to know other friends in their volume. Right? It was a helpful buffer to understand that.
[00:26:14] And then like being like, okay, well what do we need to do to establish, you know, stronger partnerships when it comes to, you know, uh, making sure that manufacturing lines are running right or, or what that means for supply chains. And so there, there was a lot of the earlier stages are very, very nitty gritty versus today, you know, uh, where it’s a lot more strategic, but yet has some of the same kind of, um, kind of just brute force that you need to have.
[00:26:41] But, but I think, um, I think, I think, you know, it just, the, the first steps that you always need to think about is, who am I gonna do this with? You can’t, otherwise you’re, you’re just signing yourself up for another job and then another [00:27:00] job and then another job. Right. And so you can’t do multiple jobs, and so you gotta really start identifying what the next piece is, because there’s people that love to do certain things that you hate to do.
[00:27:12] It’s in their d n they just love it. They get, you know, you ask, you ask a certain sales someone to go balance a, a spreadsheet, they’ll be like, shoot me now. This is the horrible thing, right? You ask a finance person, Hey, go on a cold call, sales call, I’m gonna slap you in a room. They’ll be like, that’s, they’ll, they’ll literally get visibly, you know, distraught.
[00:27:29] But yet some people just, they, they thrive in that, right? So you just, it’s finding the right people. It’s all about the right people, and it’s all about the right culture that you’re gonna create to, to help achieve the targets. Talk
[00:27:40] Bryan Fields: about building that supply chain too, and the importance of being diversified and, and understanding how critical that was in order to help your team kind of build up the sustainable success as you’re always thinking about for the long term.
[00:27:52] Alex Kwon: Well, I, I, I think that also has, has to do with like, be able to communicate with our clients well. Right. I think that’s, that’s key. And, and [00:28:00] again, we could speak plant knowledge, right? I I sure we could speak demand planning as well. Well, that’s some of the stuff that a lot of these companies don’t know, right?
[00:28:08] Is that like, Hey, yeah, we’re gonna double triple, they’re gonna show you a growth map of this. And it’s like you go see their sites. Like there’s, they don’t even have the extraction capacity to do that, or they don’t have, they don’t have the biomass to come down with it. It’s like, all right, well then you’re gonna go compete and buy biomass against some of these other toll processes that triple your size.
[00:28:25] You know what I mean? What gives you the buying part? So I’m not asking that, but this is what’s going through my mind, right? And or our team’s mind. It’s just understand kind of, okay, well what, what’s the actual fulfillment capacity you actually have to be able to do that, right? And so, um, I think supply chains not only on.
[00:28:41] That side, but this side also matters as well. Um, I think it’s developed over time, man. You know, um, the importance of diversifying is obviously clear. I think one way or another in any prudent business you should. Uh, but I, I’m gonna make a real clear distinction. This is not me like saying something negative about China, cuz like, in one, in the same, like [00:29:00] I I look at CCE Smore as their own company and their own entity, even our other competitors, right?
[00:29:05] I don’t have, again, nothing negative to say. People are operating their picture. They have employees, they have livelihood, they’re trying to make business. How they go about that on their own integrity is on them, right? What we do is different and we view that way and that’s how we’re gonna always operate.
[00:29:19] And I j that’s just, just a part of our d n A and um, and when it comes to like growing supply chains with China, like, like China’s important, like I think just geopolitical risks and there’s a lot of that stuff, you know, but. Business-wise, a lot of businesses have a lot of good relationships with China.
[00:29:35] Right. And I think, um, you met the people that are, you know, a, a part of our organization and what exists. It’s, I mean, it’s remarkable man. It’s tremendous, the amount of dedication, work, um, and love that that goes into everything that we do. And so it’s hard for me to be like, kind of just talk about it one way, cuz I know the work that goes in right on the other side.
[00:29:56] And so, um, the importance of that is, [00:30:00] Is understanding business-wise, right? Diversification’s important. Redundancy is important anyways, so you shouldn’t just rest your laurels on that. But also the importance of the knowledge base that is world-class manufacturing experience over there, and supply chains and how those suppliers work, what their QC standards are, how their QA work works.
[00:30:19] Like what’s the scrap rate, how’s that coming into, what that means specifically for us, right? And, and, and, and, and the components that are of that go into our assembly. So a lot of these kind of parts also have nuances within their supply chain. So let’s say that you’re an extractor and you’re, Hey, I’m gonna go get some, I’m gonna go get some offtake from somebody.
[00:30:36] Well, it’s like, okay, am I getting B buds? Am I getting trim? Am I getting A’s like, what am I getting whole plant? Has it been frozen? How has it been prepped? How has it, has it been dried? What’s the, like, there’s so much that goes into their raw material prep work, right? So it’s. Kind of, I’m trying to make it synonymous in, in, in, in both sides of it.
[00:30:53] Right. Um, and I think for us, you know, it just became apparent that it was necessary for us to really start [00:31:00] thinking about somewhere in Southeast Asia, separately from China, um, um, to, to, as we know that we’re also seeing this as, as a part of the mandates from other packaging companies or, or, or e-cigarette companies.
[00:31:10] Just like there is a larger push around diversifying the manufacturing risks. Obviously that incorporated with the overture of kind of the politics with China. Um, uh, but I don’t want to go political in that regard. I think it’s just a prudent business thing to do in general. Um, and I think with the level of technology that we’ve kind of grown into in our processes from different ways to automate different aspects of it, different parts of somebody also understanding different parts of supply chains where globally, uh, that’s a part of our initiative.
[00:31:40] Right? Our initiative is about not only, uh, taking the, it, it’s really looking at the global supply chain and obviously a lot of the, the. The know-how and, and, and ip, I would say right on that side of stuff is in China, right? And they, they obviously know how to make things very efficiently, quickly, at the cost and to spec if you have the right type [00:32:00] of team and people in place.
[00:32:01] So it’s understanding that and being able to augment that as we think about ways that have a diversified supply chain, not only in Southeast Asia, but dare I say, onshore, right? Somewhere here close to us. And I know some people that know me well, that’s a part of where, where my head goes in a lot of ways.
[00:32:18] But there’s a lot of, there’s a lot of hurdles to do that properly. But it’s, again, it’s all about safety and reliability. Not only for the client, but for the customers to know like, hey, these guys have thought about this. Cuz it’s not, it’s not just us, right? It’s in, in a lot of ways. It has to do with we’re, we’re fiduciary, we’re in a lot of ways, we’re service all the clients, right?
[00:32:38] So any brand that’s going out there and making sure if they don’t have cart, if they have oil, what are they gonna do? So it’s our job to make sure that we’re, it’s not only just like, yeah, there’s a lot of importance that we have on the China relations side on us, especially for how we work together. But, but at the other side of it, it’s like, make no mistake about it.
[00:32:55] It’s like, yeah, are we, we’re, we’re being Chinese, but I wanna make them America too. Right? There’s, there’s a lot of these [00:33:00] aspects that we have to do to make sure that this type of supply chain, uh, has a stable future. And I think that’s a, a lot of, from a supply or from a diversification of supply chain and reliability perspective, that’s always been on m i d risking the geopolitical aspects that could happen or could not happen that are out of our control that have to do with China.
[00:33:20] Right? Uh, I think
[00:33:22] Bryan Fields: that’s so important. I think so many in the cannabis industry are always kind of figuring out what, you know, what do I need to do today? And what I really enjoyed about kind of researching you and your team is that you’re always thinking four or five steps ahead. Just like we started in Washington with the idea of a v d.
[00:33:34] Now you’re thinking from a global standpoint, you know, Your brand and reputation is critical to help the industry, and they’re relying on you to provide this hardware because if they have oil and they don’t have carts, they can’t do anything. And that’s a, that’s a critical part of the supply chain from a trust standpoint that your team’s
[00:33:48] Alex Kwon: providing.
[00:33:48] Yeah, absolutely. And I, and I think that both of you know that we’ve just seen how much more Vapor has gone and look, it just, we’re just scratching the surface too. There’s so many other partnerships that we have going on around like new heating cores that [00:34:00] have to do with some count, some crazy tech, some nano stuff.
[00:34:03] Always. You wanna release s right now? I’m just not, I’m just like, it’s like way over my head, Ryan, someone’s some, I’m like, oh my God. They’re thinking like, like that. Like that’s tech. They put in drums and so there’s a lot of cool stuff. But as everyone knows, there’s a difference between r and d and invention.
[00:34:18] Versus like refinement and, and and, and adding value to, to, to clients, right? So you careful about what type of company you are. Uh, at the end of the day, we’re, we’re one that makes, you know, makes sure that we walk our talk and we, we like to make sure that we’re consistently reliable for our customers and they know that we’re rooted in understanding flavor.
[00:34:36] In the cannabis plant, really all of our decision making really all comes from like plant first client, client and plant first. Right? It’s like, how is this working? Right? Because trust me, no matter, yeah, we wish that everyone was just smoking live resident rossin, but that’s just not the truth, right? It’s just, and we’ve had to like learn ourselves, right?
[00:34:54] It’s like, okay, we gotta put this, we gotta put an engine out there that puts out vape higher vapor, right? And [00:35:00] so that’s, we’ve done that, right? And, and again, this is a part of ad adapting and, and, and listening to your customers and being able to, to, to, to give them what they’re, they’re asking for, right?
[00:35:09] And then being able to kind of create, uh, Future value for them. I think that’s a crucial part of it. Yeah. How much are you balancing, like innovation in terms of like coming out
[00:35:17] Bryan Fields: with new heating devices while kind of still
[00:35:20] Alex Kwon: maintaining the kind of core carts that, you know,
[00:35:24] Bryan Fields: are like the bread and butter of the business?
[00:35:25] Alex Kwon: You know what I mean? Yeah. So it’s a good question. Ke um, so, so it’s almost, it’s almost by, well, let me, let me like try to answer that in a different way. Um, so there’s, there’s like, I think what the ITTC has done, like I will, I’m sure we’ll talk about that if people know about that and stuff, but it’s like, what, what it’s done is it’s shined a light on, on our IP heavily, right?
[00:35:53] Because of the defense that needed to happen and everything that occurred with smore. Um, And just kind of that [00:36:00] action and what happened throughout taking a comprehensive view globally around what it is, what, not only our space, but what we are doing and what we’re trying to do. Um, we got very fortunate in a team that was built around it, which I believe is the strongest team in the world when it comes to IP strategy.
[00:36:14] Right? And so, like I, if you look at their track record, you look at their pedigree and I’m like, yeah, that’s, that’s pretty impressive, right? And so, um, I think when we think about our moats and the things that we build, I think inadvertently out of, out of all these things, they’ve created a, a, a leader in, in understanding how to create, protect, uh, and enforce some commercialized IP in a good way, right?
[00:36:37] To make sure that people are making sound decisions on a new form factor that they might go out with or a new or, or a new device that might have an ecosystem around it, right? Or, or other aspects that might view a different part of a category that they might be selling into that they otherwise would not have been before.
[00:36:54] So for us, I think there’s two lanes. To that Kelly, where, where, where I think on the, [00:37:00] on the innovation side from, from, from r and d and invention heating cores and doing that, that’s just a long validation period, right? I think what we, because we’re all about reliability and consistency and obviously delivering for customers, I, I think our validation period is probably super extensive, right?
[00:37:17] And, and we want to understand that it’s, you’re not gonna have issues with it. And so, um, I think on, on, on creation side, Yeah, you might have five, 10 different ideas, but maybe only one of ’em are good. But spending your time creating that is very different than saying, Hey, here’s, here’s some other existing tech that people are bringing to us.
[00:37:36] Cuz they wanna commercialize it or they don’t have the supply chain to do it or they don’t have the access to the customer base to do it well, we can work with that, see how to modernize it with a v d tech. Right. How are some of the things that we can do with it? And maybe that’s a route that we can take something quicker to market and supply to a customer that they MI might want exclusively or something next.
[00:37:54] Right. So there’s, there’s a part that we do in-house, then there’s a part that we do with partners and then there’s a part with [00:38:00] inbound, right? From an r and d perspective. And I think that’s important because that’s some of our calling cards, right? Our calling card is about we could scale manufacturing reliably, diversify it.
[00:38:11] And it be consistent at scale, right? Which is all about reliability for cartridge. Especially when you’re spending that much, you know what’s going on for a client. The other side of one of our greatest strength is understand the customer. we know what’s going, we know this space. We know what you might be going through whatnot, what type of stage struggle you’re going through.
[00:38:29] If you’re having some oxidation issues, if you’re going and I, that we can go down a, rabbit hole of different conversations that are going on, how they’re feeling, not feeling in all those aspects, right? So there’s that aspect. and then realistically, what happened with the IP side of stuff is really, it’s opened up this whole other strength of ours, right?
[00:38:47] That is, it was something that kind of, you were just running fast. You didn’t have to think about that. But now it’s it’s a part of every strategic item. It’s a part of hey, and not so much as a. Tip of the [00:39:00] spear, let’s say how others have tried to use it, right? I’m not gonna name who, but others have tried to use it, right?
[00:39:05] I think it’s more so you’re trying to build moats and fences, right? To protect your business if you’re gonna work with other people, right? So if we’re making a project, you can own this, let’s commercialize it properly, right? So there’s, there’s ways that we could start again, adding value, right? Is that gonna give ’em a product that has enough.
[00:39:19] Runway for a year or two and then they’re into another product, what, whatever that may, may look like. Right. Uh, and obviously all of that then, then helps inform some of the, some of the regulatory stuff that we want to kind of move more into. But, um, which has been super important. So a again, I think from an r and d perspective, innovation side, I think there’s multiple tracks, but really there’s the invention side that like takes ground up build and, and doing that.
[00:39:45] And then there’s the other, like some premium customizations and alterations that we can make. But again, have a, have kind of a menu of items that you’re doing. So it’s like kind of standard to premium then to like a hyper bottom up type of full build. Does that make sense? And [00:40:00] they have, they all have different timelines obviously, you know, a hundred percent.
[00:40:03] So just
[00:40:04] Bryan Fields: slightly switching gears to the issue with C C L, can you kind of set up for our listeners, you know, when the origin of that happened and then we can kind of go into some of the specifics and then the result that just was announced.
[00:40:15] Alex Kwon: Uh, I think I always forget this, I think it’s October, October of 21, they brought the suit on.
[00:40:24] Um, it T C’s International Trade Commission, uh, basically has to do with importing of products to the domestic industry of the United States. Um, essentially, man, I know I’m gonna butcher this. Uh, essentially, essentially, uh, smore, you know, broad in more cce, so CCEs parents, more broad inaction, um, against like 30 some odd different vapor companies, uh, that they’re, there’s three major patents that they’re saying they’re alleging are infringing on, and the ITTC is really to go after it’s.
[00:40:58] They’re call it the rocket docket. There’s no [00:41:00] extensions. There’s a certain period of time you go through discovery, you know, expert witnesses, depositions, then it goes to trial, then they have an initial determination, then a final one, and then a presidential period, and then it’s put out. So that’s kind of the, the, the speed of which they go through.
[00:41:15] And what they’re trying to do is establish domestic and technical industry, and then that there was actual infringement going on on their asserted patents. Um, and, and then they would issue technically an exclusion order. Right. Or general exclusion order. So technically, if they had succeeded, what, what would’ve happened to the cannabis industry?
[00:41:34] Would’ve been No more cartridges. Just more. And then you thought their pricing was bad before they were just gonna price that, right? You mean monopoly, right? Yes, exactly. You know, so, so, It’s important. Uh, I, there was obviously not just us, there were some others among the group that, that did defend. Um, I just, I think they all know.
[00:41:54] They all know, and we all know, like who, who carried a significant shoulder burden of [00:42:00] that and who the main target of that was. And so, um, we’ve heard it and not so many words from people that have settled with them, also others that have told us. So look, I’m, I’m not trying to toot any horn to doing that.
[00:42:10] I’m just, I’m, I’m just saying there was a tremendous amount of work with that legal team to go out and do that. And, and it was remarkable. And it was, uh, it was really good to see the industry kind of, and a lot of people don’t know, but that wa we, we felt like it was a responsibility. I if I told you guys a dollar amount numbers, which I won’t, you’d be like, how the hell did you do that?
[00:42:27] Right. So it’s, uh, it’s, it’s one of those things that I think was, uh, was make or break. It wasn’t, it wasn’t even a choice in our mind, if that makes sense. Right. It wasn’t like, oh, we’re gonna do, it was like, no, we have to go do this. Right. And so, um, And I think I, I think maybe they underestimated, um, maybe our, our resolve in our, or maybe they underestimated Alex Quan probably, I dunno.
[00:42:53] I dunno about that. You know, it’s just like, but uh, I don’t know a lot of people that know me. Right. And so [00:43:00] it’s, uh, did
[00:43:02] Bryan Fields: it start out in it TC Court? And when you first got that notice, were you like, fuck off? Like what’s the, what’s the thought process? Because obviously when you get that notice, you recognize that it’s not gonna be, uh, a seamless road ahead.
[00:43:15] Alex Kwon: Right. There’s, there’s a world time c e o. Yeah. I mean, yeah. I mean, we were, we had some other shit going on at that time with some previous, you know, partners and, and things that we had. So we were already in wartime. This is, I think this was all, I think all this happened at once. Like the, yeah, the, it, I think when the I TC came, it was, it was, it was more so like, what is this?
[00:43:36] You know, because it was like a, It was like a, I, I, I forgot what it was. It was huge. I was like, what is this thing? Right? I don’t even understand what this thing is. And we had been in other lawsuits before and some of these other things, right? And so it’s just like, I was just like, okay, keep cool. Don’t get all worked up.
[00:43:53] You know? I mean, I’m like, ask some questions. What does this mean? Does this have anything to do with tomorrow [00:44:00] or next week or not? Right? And so, um, I I sometimes, again, I gotta, I gotta protect me from myself, right? Because, you know, I, there, there’s, there’s sometimes it, it could get a little intense, right?
[00:44:11] So, um, yeah, man, I, I think, I think when it happened it was, it was gather information, understand what we need to do. It was, and I think that’s kind of one of the things that we do, well, at least I, I don’t know where it comes from or whatnot, and maybe Calvin has seen that before, is, uh, like when things get really, really hard, When it, when it gets really stressful, that’s when I feel like I am the most calm.
[00:44:34] That is when I’m, I can actually think and I can go through what sequences of what need to happen and where, where, where our risks may lie. Right. And I think at that time, with all the other things going on, there was just so much, we were just kind of ready in this mode to like, all right, well, well what else is gonna happen tomorrow?
[00:44:49] Right. Well, what else is gonna happen? And so I think we were prepared for that. And it’s, kudos to the team. It’s kudos to our management team to be able to keep their head down. Cuz dude, like big lawsuits can [00:45:00] really be debilitating. Like it could take focus away from people, do I have a job? Do I have this?
[00:45:04] It’s like, there’s a lot of stuff right. And then there’s a lot of noise now. Right. Especially like they’re distributors. They were loving it by trying to send out emails to our, to our clients and this, that and the other. And so, and it’s expensive. Yeah, exactly right. So there’s a lot of these unknowns.
[00:45:20] And so I just have an incredible amount of respect and gratefulness and appreciation for just our team and their resolve, and like the trust that exists. They just siloed down, Hey, I’m gonna trust it. They’re handling, I’m gonna trust they’re handling what they’re doing. And everyone kind of knew what to go do and tackled it.
[00:45:35] And that’s, I mean, we, we, we picked our head up after a period of time, and we had grown during that stage. We grown the most that had ever grown during that stage, right? While having like a lot of these headwinds against us. And so, um, again, another testament to the question we asked earlier, Hey, how’d you start?
[00:45:53] It’s like, people, man, it’s all driven by people, right? All these things, relationships you don’t do business with, you [00:46:00] know, you don’t do business with Coca-Cola or Nike. You know, you do business with somebody that’s a person, a human being, right? And so, um, to me that, that means a lot. And I think that’s, that’s what, uh, helped us through that stage.
[00:46:11] And, uh, back to. Explaining what the ITTC is. Basically what came out of all of that was, um, The initial determination came out that, um, there, one of their patents was, uh, unenforceable, uh, uh, due to, uh, inequitable conduct, which is a whole different frame that exists within it. Uh, then the other two were, uh, not infringing.
[00:46:33] And so that’s important. You can kind of read the id, I don’t wanna keep talking about that cuz then I don’t wanna throw shade where it doesn’t need to be thrown. Um, it’s a whole different animal, I’ll tell you that offline. Um, but like final determination just came out, which is huge because it’s really set it in stone.
[00:46:49] That’s why we’re talking about it. Like, if it was during like initial determination to having the final and all, everyone’s like talking and this, that, and the other, would that, that may in a small way have [00:47:00] maybe created some issues, but it hadn’t. Um, and, and final came out and, and I think, um, we’re just waiting kind of the, the last periods of, of, of the process and then we’ll see where they go from here.
[00:47:10] Right. Um, we’ll see again, we’ll see where, where, where they try to take it and or what they’re trying to do. Um, I understand that competition is, is important, but, uh, we don’t like unfair competition. So at the end of the day, I think I’ll take our team and what we do and our knowledge and, and the, and the access points that we have against anybody, right?
[00:47:29] And so, um, I, we look forward to the challenge of doing that and, and, and continue to serve clients and, uh, and add them. Again, it’s all bad if we, if we don’t, if we, if we don’t continue to add value to our clients who are our number one purpose in what we do, um, then we, then we should cease to exist as a company for what we’re doing, you know,
[00:47:48] Bryan Fields: re really, really powerful.
[00:47:50] But I mean, the emotional burden that you must have been carrying during that time, understanding the implications of that lawsuit and just kind of the response that the industry needed in case you didn’t win. [00:48:00] So, I guess my feeling was, was there any doubts during the process where you’re like, what are we doing?
[00:48:04] This is expensive. This is taking up all of my time. Like, is there ever any doubts in the back of your mind thinking like, Hey, Alex, like maybe we should just figure out like a solution, or you were like, no, like we’re winning
[00:48:15] Alex Kwon: this. You know, another say, I don’t, I dunno if this saying is appropriate or not, but sometimes wrong, but rarely in doubt.
[00:48:24] Right? And so, uh, Kelly was shaking his, that that’s very, very accurate. So, uh, my often, my wife would probably say often wrong. Uh, but, uh, but so, so I, I, you know, no man, I, I think if the stress gets to you at times, I’m human, right? I think everyone is. And so, um, and, and it was just a, again, there was a team.
[00:48:50] It was just, we, we had it set up so well that, that there was someone else that was emotionally dumping with, right? Working with, and then they were emotionally dumping. And so it’s like, it, it, but it [00:49:00] would get stopped there. And the rest of the, we sheltered it really well from the day, but we updated them.
[00:49:04] They knew what was going on, right. And they knew that it wasn’t right now, and everything that was gonna happen is we need to execute. Everyone knew like, we need to put your head down, you need to execute. We are rooted in execution. Our business does not exist without having pride around grit and being, execute, executed.
[00:49:18] Everything that we do now, we value, you know, partnerships over transactions. We value hugs over hand. We value, these are some of the core values that we have. And so like, these are the things that are super important for us, right? Because it, it, it, it helped maintain focus. I think that was, that was the crucial aspect of it.
[00:49:36] But was it hard? Um, and going through that, did I have any doubts? No, I didn’t really have any doubts because if you knew that the, if he was on this call, we had the, the, the head litigator on you, you ever meet him, by the way, ke we should go golfing with him because you’re an ex when of your arm heals.
[00:49:54] Um, but loves golfing and so I, I’m just saying in general, like[00:50:00]
[00:50:01] he was very resolute on, on, on what, what the law should do. Right. And what it should look like. We just have to trust the law system, which is hard for us. Yeah. From what we all really come from, it’s really, really hard. Let me make that really clear. Cause, you know, it is more than one time in different past lives is that, you know, excuse my French, but you know, f to silver.
[00:50:22] So, so, you know, I would normally be f bombing all over your podcast, by the way. So, but just pick, make me explicit if you want mindful of that. Um, yeah, man. Like there wasn’t doubt because it, it, there was no option really. And we all, we already kind of knew, to your point, second and third order derivatives of what needed to happen.
[00:50:42] Right. We kind of knew the second order consequence if this happens or if this happens, right. So we kind of knew where and how we would move and how, what we would do strategically. Um, but obviously we’re thrilled with the, with the outcome and how it came and where it is and, uh, and what the next stages are because I think I.[00:51:00]
[00:51:00] I think it’s important for the industry to know. I think it’s important for everybody to know and, and, and ultimately, again, it’s a part of our initiative to, to go and form regulatory some of these other aspects, thought leadership and, and, and because of our knowledge within it. Cuz I think that’s what makes us different, man.
[00:51:16] It’s, we’re, we’re a cannabis company that’s verticalized into the supply chain of, of, of a place like China, right? And, uh, whereas it’s the other way for other companies, they’re all trying to come here. They all just, they all got, they’re all trying to figure out ways to become cannabis people, right? Yeah.
[00:51:34] And, and so crucial too,
[00:51:35] Bryan Fields: right? Like what the, what the industry doesn’t recognize is that is a win for the industry as a whole at you as a cannabis company taking on a big giant who likely could be trying to bully you into submission or to just say, Hey, listen Alex, you don’t really want this. And instead you said,
[00:51:49] Alex Kwon: come get some.
[00:51:51] Yeah. I mean they just, I don’t know if we said it that way, like not, uh, you know, KA does, I like a good fight, but it’s just in [00:52:00] general, um, you know, you look, again, nothing against them in any negative way. Again, I’m grateful for them, right. If they’re listening. Thank you. All the competitors thank you as well.
[00:52:13] Right. Because that’s the fuel that lights us continually to keep us humble, to know that we gotta up our game and make sure that we’re always adding more value to customers and what we’re doing. And that we focus on making sure that we bring the, we, we come ready and we’re, when, when we’re on the field, we’re, we’re always gonna be ready to do battle in that regard, you know?
[00:52:31] And, and I don’t blame ’em for it because, man, that’s, I don’t, I, I might argue with the tools that they could have used, but they, they have a lot of tools, right? And so that was one of the tools that they chose to use. They just were wrong, you know? So we’ll see what, but d made no mistake about it. They got other tools and they’re using them right now and I’m sure they’re gonna continue to use more.
[00:52:51] So, uh, you know, I, it, it’s, it’s, it’s, again, it’s, it’s a part of the game. Just know what game you’re playing. Rooted in execution
[00:52:59] Bryan Fields: is [00:53:00] a, a saying. I’ve heard you say. What does the cannabis century miss or not
[00:53:03] Alex Kwon: understand about a v d?
[00:53:08] Can you repeat the question? Rooted in
[00:53:10] Bryan Fields: execution is a saying. I’ve heard you commonly use. What does the cannabis industry miss or not understand about
[00:53:17] Alex Kwon: a V D? Hmm. What is the cannabis industry? I, I don’t know. Cause I don’t go on and speak on a lot of these things, you know, and so it’s like, I, I don’t know what they know or they don’t know about us, but if they, if they didn’t, you know, I, I think.
[00:53:33] What I would want ’em to know is that we’re, we’re purpose driven around not only this plant, but also the value that we add to our customers. Right? And I, and I think that that’s super important. And what I mean by rooted in execution is like you can have all the greatest ideas in the world. You can, even hit the right timing in some of these things, but to do something great and to be great at it and be proud of it, you have to consistently execute over time.
[00:53:59] Right? A saying, [00:54:00] I think one of my mentors says, like, um, you know, doing ordinary things consistently over time creates extraordinary results, right? So it is, it is all about making sure that you’re blocking and tackling and executing on a daily basis, right? And so making sure that team knows that, make sure that it’s all aligned to where it’s going, because then you can, it gives you the foundation.
[00:54:23] To maybe go explore this other shiny object or explore this other aspect that could help grow the company or become creative, right? Or look at another way to solve a problem for a client in a different way that you maybe not have thought about before. But if you can’t keep executing, then I’m breaking my promise to you, right?
[00:54:40] So at the end of the day, what I want the world to know if they don’t know about a, b, d, is that like we care about the plant, we care about people, and we do what we’re gonna say. And when we say what we’re gonna do somewhere, we’re gonna walk our talk and we’re gonna execute. That’s, it’s, it’s as simple as that, right?
[00:54:56] If we’re, we’re not gonna agree to doing something with you if we can’t do it, how [00:55:00] does it feel to reflect,
[00:55:01] Bryan Fields: knowing you’ve had tremendous amount of influence on a lot of the industry’s disruptors, including Kellen, just littered all a, all across
[00:55:08] Alex Kwon: the space? Well, I don’t know if it’s littered across the space, but, um, look, man, I, I, uh, I’m more of a private person when, uh, some of this stuff.
[00:55:19] I know, I know, I know, I know. If Finny knows that, um, Look, man, I, I, I am, I’m just grateful for the opportunity. I, I think really to, to, to kind of beef both the student and the teacher, right? I learned just as much as I try to coach or, or give advice on, and, and I learned just as much from that, from Kelly.
[00:55:37] I mean, and, and others around us. And there are other people out there that, that we have positively impacted and they’ve grown in their career in the space or their appreciation for the plant, or appreciation for just life in general and how they’re growing as a personal human being and, and, and the, and, and kind of what purpose they have around their business and what they’re doing.
[00:55:57] Um, look, man, that’s, that’s, [00:56:00] that’s what life’s about, right? That’s where the journey is. Don’t, don’t, don’t forget kind of the, the process that you’re kind of going through. And I think sometimes that’s hard for me. Um, but I’m just really grateful, really, to be honest. Um, having the opportunity really to, for even people to say that it’s kind of weird.
[00:56:18] Um, uh, I, I don’t know. Any others in that regard, but I just, I guess I, I really just try to be authentic about, about, um, really being grateful for the opportunity with the plant. And again, I think the best way to surmise it is we’re just doing our part in liberating the plant. Man. You know, I, I, I, I firmly believe the plant chooses its stewards.
[00:56:39] Uh, I, I think that over the next two, three decades, it’s gonna impact every walk of life from this world on this planet in one way or another, whether it’s through a derivative textiles, chemicals, uh, thc, any other raw cannabinoid terpenoid. Just go down the list of all the different phytochemicals or, and or, you know, um, ling, you know, langdon’s fibers where [00:57:00] wherever you want to go, buyer remediators, we could, we could talk about this for days, right?
[00:57:04] CO2 sequestering, like we, you know, uh, so I, I just think that it’s a really interesting moment in time that we get to all live in and then our kids will live in, right? With the advent of AI and all these other things. But like cannabis being right in the middle of it. And also with psychedelics coming down the line, right?
[00:57:21] So these are all, these are all cool times to live in, I think. And, um, I’m just really appreciative realistically, o of the opportunity to have a, have a chance to influence others. Right. But that is, that is in a lot of ways the purpose, right? That, that’s kind of where I, I don’t feel like this is work, this is just my life.
[00:57:40] And it’s just been in cannabis for 15, 20 years. You know,
[00:57:45] Bryan Fields: before we do predictions, we ask all of our guests, if you could sum up your experience in a main takeaway or lesson, learn to pass onto the next generation, what would
[00:57:53] video1186742022: it
[00:57:53] Alex Kwon: be?[00:58:00]
[00:58:04] Fail fast and fail forward. Don’t be afraid to, don’t be afraid to take, think big and take risks, you know, especially if you’re young. Don’t be afraid to make mistakes and fail fast and fail forward. Learn from them all right. You either win or you learn. There should be no losing prediction times. Alex, the
[00:58:28] Bryan Fields: IP battle has just realistically begun.
[00:58:31] Where else do you see this battle taking place and what can companies do in order to get ahead of it?
[00:58:37] Alex Kwon: Cool. Where do I think the IP battle will be taking place? Yeah, the, the IP battles just begun
[00:58:47] Bryan Fields: where, for sure. Where do you see it moving and what can companies do today to start positioning themselves in front
[00:58:53] Alex Kwon: of God?
[00:58:54] That’s such a multi-layered question. That’s, that’s not the easy one to answer. Um, it’s [00:59:00] not, I, I think everyone has a different idea of what IP really means, whether you’re a capital allocator or fund manager or a. A guy sit in the corner trying to invent something or you’re a cannabis grower or, or, or you’re an extractor.
[00:59:16] Right, or, or you’re an astrophysicist. Right.
[00:59:19] video1186742022: I
[00:59:19] Alex Kwon: think, I think all these different people have a different, uh, ideology around what IP is. I think, I think, I think the battle will be fought globally and, and obviously in the US US is the strongest patent system, right? Trademark and patent system. I think people should educate themselves a bit on what IP really means to them in their specific category.
[00:59:47] Cuz it’s not what everybody thinks it is. It’s not like, oh, I have this patent and I’m gonna make a bunch of money. It’s not this patent and it does this. It’s like there’s so many different strategies that kind of go into what. The validity of a [01:00:00] patent is the enforceability of a patent is how many you have and what sector you’re trying to do and what category, right?
[01:00:07] It’s, it’s just, there’s a lot more nuance within it, and I think that people should educate themselves about it. I think the, the battle, it’s not just the battle that we’re talking about. I mean, the battle on IP has already begun a while ago on GW Pharma trying to go after cannabinoids. Like Kelly, you know, this, like, there’s a litany of science stuff that they’re trying to go after, trying to control the chemicals.
[01:00:28] So the, the, again, that’s a whole different category. I, I can’t even, like my brain is kind of hurting, thinking about that. Um, so again, I, I think it would be, I think it’ll be fought here in the US just because it’s the strongest system. Um, but you should be aware of the global patent system and how that works with PCTs, uh, PCTs and kind of different trade treaties that exist in the us and then educate yourself about what it actually means in the category that you’re going after.
[01:00:53] I think it’s important for you to just at least have a broad stroke or. Call someone and talk to them about it. [01:01:00] Really Well said, Kelly. I mean, I think that the next big like kind of uh, headline grabbing patent battle will most likely be fought in like the pharmaceutical world in terms of like one of these minor cannabinoids, right?
[01:01:15] Uh, delta A or H H C or something that’s not like quote unquote naturally occurring within the plant, right? That’s a, a derivative of C B D or some chemical conversion, right? It’s just, it’s an attractive target for big pharma. It fits into their normal kind of playbook of like find a molecule that does a purpose patent, either the molecule or the process to get to the molecule.
[01:01:38] Right? Um, but I agree with everything else Alex said. I mean, there is just, An endless array of different like topics that could be applied to quote unquote cannabis that someone might be able to get a patent around, right? Like, um, there’s just been an insane amount of patents since day one, right? The, I mean, like, I remember my first [01:02:00] time in the cannabis industry, I was like, let’s learn CO2 extraction, right?
[01:02:04] And I pulled up a patent from GW Pharma on 2000, from 2001 about CO2 extraction. And I was like, everyone is doing CO2 extraction. And it’s already been patented and they’re not doing anything about it. So I was like, what does this patent even mean? Right? So it is, it is really hard. Um, that, that is the other part too.
[01:02:23] Right? There has to be a scale where they decide to kind of go after it, right? Yeah. And make money. What Kellen just said is really important, right? Understanding pharma processes, why they do it the way they do it. Also, why they also lobby the way that they do, right? This is important because it has to do with their dollars.
[01:02:38] Follow the money, right? And like that process that Kellen just said, you’re funneling, they’re funneling their patent pro, their, their, their regulatory process into the funnel. So their patent process, right? What you just said, if it’s a pathway to that molecule and that molecule has been legalized a specific way, and it’s the cheapest form of giving a psychoactive ingredient in say a vapor cart, like this is what they’re doing.
[01:02:57] Right? Like ke as you know, right? Like it’s like [01:03:00] got the pathway, I’m gonna patent that pathway. Now everybody has to use that. So if anybody’s making, uh, T H C K F. Right. If they’re making anything that’s, that’s, that’s making that molecule in that way, right. They know that they can track it, they can go through that and they’ll be like, you know what, now you owe us this amount of money and this is sales and this da da da, da.
[01:03:18] Right? That’s the way that they will try to enforce that aspect of it. Um, that’s really interesting, right? Because that’s a totally different, I I could see that on the pharma side cuz you start thinking about the precursors of some of the. Some of the molecules and kind of how they’re synthesizing or adding to be able to get it to a different chain.
[01:03:34] Right. Or I don’t know how they’re binding or what they’re doing with the molecules coming. Cause I haven’t looked into that. I was gonna ask you if some of the stuff that you’ve seen in some of the psychoactive changes from like CBD D to D, we saw D eight before all these people remember a long time ago.
[01:03:48] Oh yeah. On the Pope, right? On the, on the, yeah. No. Accidentally trying to get like aqua clear right when using, yeah, trying and it’s just converted right over to Delta eight. Yeah. Trying to make water clear. This was like in [01:04:00] 2014. Yeah. Literally like 20 14, 15. We made D eight clear. Like it was like water clear.
[01:04:05] We’re like, well this is a different molecule and we sent you to get tested. And they said it was zero and I was like, no, it’s definitely something. Right. Because they didn’t have Delta eight in the chromatogram at the analytical facilities. Yeah. So they didn’t know what it was. They didn’t know what it was.
[01:04:18] And then, and then that, that, that’s what I’m saying, like a lot of that type of stuff now as it contested and it’s getting more prevalent. Right. It’s kind of interesting to see that. That’s why I remember when I seen this full da clip, I just had your, I didn’t call you, but I was like, in my mind I was like, just thinking, I’m like, oh my God, this actually became a thing.
[01:04:34] I can’t believe it. That actually D eight became a thing is crazy to me. Right. Because I was just like, no way. There’s no way. And then it was because of the little loopholes and, and hemp rules. Right. And laws. And so look, I, I, I think, um, yeah, sorry. I, I, I just wanted to touch on that subject to, to what Kellen said.
[01:04:53] He brought up a really good part about pharma’s approach, and I think that’s, look, these are games being played. [01:05:00] Some of the players on the field playing their games, that’s pharma’s in there that are trying to figure that out. That’s for sure.
[01:05:06] Bryan Fields: Yeah. I, I think that’s important to recognize. I think so much what we hear is like the cannabis industry’s operating the cannabis industry, but when you kind of pull it back, Cannabis industry is just an industry trying to disrupt other industries, which means, oh yeah, the pharma oil and gas backup, they’re gonna fight back and they’re gonna try to gobble up any market share that they can because this is a, a new world that we are going to more migrate into.
[01:05:26] And I think one of the things that you said, Alex, really important is, is being proactive and thinking about things three, four steps ahead. And I can only wish so many operators would
[01:05:34] Alex Kwon: think about those things. That’s kind of, I mean, if you think about it, the, it’s, it’s not just a disruption, it’s a displacement of these dollars being spent.
[01:05:43] If you look at tobacco, if you look at booze, pharma, nutraceuticals, these are all trillion dollar industries. They’re gonna make a transition with someone that ask. Cannabis is an asset class. Okay, I know which way you put it. Right. Could just, when it gets democratized and it gets opened up, it’s gonna have a whole different litany of, of, of areas that it’s gonna [01:06:00] disrupt because of its, its nature as a, as a literally the definition of renewable source of energy.
[01:06:06] Right. In a lot of ways that it’s gonna be able to be a renewable source of some, a lot of these pieces, cuz it’s an annual plant. It’s also a Biore radiator, so it has all these other attributes and what creates 400 plus different diverse chemicals, one of the fastest phenotype typing plants in the world, right?
[01:06:21] So like all these aspects from a chemical makeup perspective, people are just like, are not really understanding why it’s so hard to control, and that’s why it’s having some of these. Headwinds maybe on the regulatory side. Cause if it could have been controlled, I think we would’ve seen a lot of different changes in a lot of the operations in the space wouldn’t be trying to do what we’re doing.
[01:06:40] Right. So, um, I think, I think it’s a very good prudent message, right? It’s like it’s gonna continue to grow, it’s gonna continue to happen. Um, and it’s just educating yourself around some of these things. And that’s, that’s where our fears come from, right? A lot of our fears is, hey, there’s some change that someone doesn’t know anything about cannabis, uh, knows it from other [01:07:00] industries cuz we see this all the time.
[01:07:01] I mean, a great example is when people start doing testing. I remember the, the late nine calls outta account and talking about just their analytical standards. But it’s like, I’m like, well, help me understand it. And so he’d make it into really dumb layman term for me, right? And then he would say stuff and then I’m just like, oh, that doesn’t make a whole lot of sense.
[01:07:17] Right? And so like that’s a lot of stuff that kind of happens when you have people that are institutionalized, let’s say just from like their. Their, their, their, their business that they’re in, whether they’re PhDs or even their, you know, their institutional from a finance perspective, right? They just see numbers in a specific way.
[01:07:30] They don’t understand the other intrinsic aspects of value. So just, just kind of, kind of just trying to brush over that. I think, I think that’s the part where it kind of creates confusion on, on, on, on kind of the, the, the, the end part of, of, of what we’re talking about, right? Is, is, I don’t know man, I, I just, I feel like, I feel like with, with each of these companies, as it grows, people should be more prudent and aware of some of these, um, changes that can come down the [01:08:00] line and people that aren’t really understanding that space, that’s, that they could make a rule change that could really impact kind of access to cannabis in a lot of other companies, you know?
[01:08:11] Hundred percent. A hundred percent.
[01:08:13] Bryan Fields: So, Alex, for our listeners, they wanna get in touch, they wanna learn more about a v d. Where can they find ya?
[01:08:18] Alex Kwon: www.avdseventen.com. So it’s Alpha Victor delta number seven, number one, number zero.com. It’s probably the best way, right? I mean, I don’t, we’ll link it up in the show
[01:08:31] Bryan Fields: ups like you’re taking
[01:08:32] Alex Kwon: time.
[01:08:32] This was fun. Yeah. Appreciate it.