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Ep.304: Nicole Smith, Evolab

Cannabis Economy Podcast
Ep.304: Nicole Smith, Evolab

Ep.304: Nicole Smith, Evolab

Nicole Smith joins us and shares that after a transformative year she’s excited to be leading Evolab into it’s next decade of existence all the while innovating their product lines. We discuss goal setting in that rather than beginning with the end in mind, Nicole sets up the structure so that the means justify the ends. She describes it as a funnel. Whereas she did operate in a more linear fashion in years past, working in the cannabis industry doesn’t allow that luxury. Having to work through 5 banks, 3 Facebook pages, 15 credit card processors and 4 401K programs will wrest you from a linear mindset. Cannabis executives must continue to make progress in a linear fashion using circuitous routes.

Transcript:

Speaker 2: Nicole Smith joins us and shares that after a transformative year, she's excited to be leading evil lab into its next decade of existence. All the while innovating their product lines. We discussed goal setting in that rather than beginning with the end in mind. The sets up the structure so that the means justify the ends. She describes it as a funnel, whereas she did operate in a more linear fashion in the past. Working in the cannabis industry doesn't allow that luxury having to work through five banks, three facebook pages, 15 credit card processors, and for 401k programs will rescue from a linear mindset. Cannabis executives must continue to make progress in a linear fashion using circuitous routes. Welcome to cannabis economy. I'm your host Seth Adler. Check us out on social with the handle kanick economy. That's two ends of the word economy. Nicole Smith, you've always been a CEO, right? Always

Speaker 1: been the CEO. Yes. That has not changed. Meet the new boss. Same as the old boss, right? It's just a new place, a new place. Well, let's get it out of the way. What, uh, what's going on? Yeah, so I started with Eva lab, um, I guess the beginning of September, um, primarily because they were starting a new product line moving into medically focused products and I was available and said that they solicited me for awhile and it turned out that that was the right fit for me. Yeah. So you also have that experience. It's not that you were just available. No, I also had that experience. Yes. So where are they within their kind of a trajectory with product? Where are you coming into this, I guess? Right. So I'm evo has been around for quite a few years now, almost nine, primarily focused on, of course veep technologies.

Speaker 1: Um, see co two extraction, all the good stuff, right? No, PG, vg, all that kind of stuff. Right. So really high quality products, um, and mostly in the recreational market place and they had brought on a new scientist. I'm also very good friend of mine, um, a few months ago that had been working on some new products for them and when I was newly available then he mentioned to me that they were looking for maybe some additional leadership and we started talking and I said I would be happy to help him take the product line that he had developed and bring it to the marketplace. So a inter me now at evo. So their trajectory now is diversification of products and then also state expansion. State expansion, yes. We'll get to that in a second. Okay. Diversification of products. What are they set on? What are you thinking based on what they said, hey, we're going to do this, this and this.

Speaker 1: And you might've said, well, have you thought of that? But they. Yeah. So they had already started with um, sort of an innovative line of topical products. Um, obviously exploring some different capacities in the line of wellness vapes, which are really exciting. Um, I'm not sure if you're familiar, but there are a few companies that have been developing vape products. I'm using vitamin B 12 and some other ingredients. Like that, um, and so we'll be launching a line of vaporizers that incorporate not only cannabis but also other herbal ingredients, so very exciting stuff and it's a great transition product for them to take their technology from bape into a more of a wellness focus line and then a line of compatible products to that, which we might talk about it another time if I'm looking at your eyes, you know, so definitely topical. So there's a couple of topicals that are, be released immediately.

Speaker 2: Nicole Smith joins us and shares that after a transformative year, she's excited to be leading evil lab into its next decade of existence. All the while innovating their product lines. We discussed goal setting in that rather than beginning with the end in mind. The sets up the structure so that the means justify the ends. She describes it as a funnel, whereas she did operate in a more linear fashion in the past. Working in the cannabis industry doesn't allow that luxury having to work through five banks, three facebook pages, 15 credit card processors, and for 401k programs will rescue from a linear mindset. Cannabis executives must continue to make progress in a linear fashion using circuitous routes. Welcome to cannabis economy. I'm your host Seth Adler. Check us out on social with the handle kanick economy. That's two ends of the word economy. Nicole Smith, you've always been a CEO, right? Always

Speaker 1: been the CEO. Yes. That has not changed. Meet the new boss. Same as the old boss, right? It's just a new place, a new place. Well, let's get it out of the way. What, uh, what's going on? Yeah, so I started with Eva lab, um, I guess the beginning of September, um, primarily because they were starting a new product line moving into medically focused products and I was available and said that they solicited me for awhile and it turned out that that was the right fit for me. Yeah. So you also have that experience. It's not that you were just available. No, I also had that experience. Yes. So where are they within their kind of a trajectory with product? Where are you coming into this, I guess? Right. So I'm evo has been around for quite a few years now, almost nine, primarily focused on, of course veep technologies.

Speaker 1: Um, see co two extraction, all the good stuff, right? No, PG, vg, all that kind of stuff. Right. So really high quality products, um, and mostly in the recreational market place and they had brought on a new scientist. I'm also very good friend of mine, um, a few months ago that had been working on some new products for them and when I was newly available then he mentioned to me that they were looking for maybe some additional leadership and we started talking and I said I would be happy to help him take the product line that he had developed and bring it to the marketplace. So a inter me now at evo. So their trajectory now is diversification of products and then also state expansion. State expansion, yes. We'll get to that in a second. Okay. Diversification of products. What are they set on? What are you thinking based on what they said, hey, we're going to do this, this and this.

Speaker 1: And you might've said, well, have you thought of that? But they. Yeah. So they had already started with um, sort of an innovative line of topical products. Um, obviously exploring some different capacities in the line of wellness vapes, which are really exciting. Um, I'm not sure if you're familiar, but there are a few companies that have been developing vape products. I'm using vitamin B 12 and some other ingredients. Like that, um, and so we'll be launching a line of vaporizers that incorporate not only cannabis but also other herbal ingredients, so very exciting stuff and it's a great transition product for them to take their technology from bape into a more of a wellness focus line and then a line of compatible products to that, which we might talk about it another time if I'm looking at your eyes, you know, so definitely topical. So there's a couple of topicals that are, be released immediately.

Speaker 1: One very exciting. So they had made a sell for quite a while, um, called Angel South, but we've reformulated that now to include CBG, I believe that'll be the first product in the Colorado market to include CBG as an antibacterial, a bacterial microbial. We really exciting. Uh, and then a daily use a topical product as well. Huh? Interesting. Right. I mean how exciting is this for you? Oh, it's super exciting. It's what I love doing because you get to have the benefit of a nine year old company and also build it a little bit too. Yes. Um, it was really the perfect marriage to be honest. I am, they had built a phenomenal, a core technology in their extraction and I and all of my years in the industry, not actually seeing anybody as successfully reach production level extraction with co two. I'm also with the ripping the turps on the front end and then separation and isolation of terpenes and cannabinoids.

Speaker 1: So really what they had in my mind was the perfect platform to continue to evolve products that had been brewing in my brain for awhile. Yeah. Fantastic. Yeah, I, I, so I'm looking at you and I'm thinking to myself, you know, how much should we probably talk about because you've had a year that's been pretty difficult here, right? As far as kind of just changing transitioning as far as job and um, you know, you and I have spoken about our mothers who now have both passed away. Yes. And you and I know what this is because we have now both dealt with it. You're more dealing with it than have dealt with it. Yeah, I would say I'm certainly still dealing with it. Yes. But I did lose my, lose my mom in April. What are you doing to kind of keep yourself sane? Work?

Speaker 1: A lot of work and yeah, I've been trying to find more balanced, but I've always work has always been something I truly enjoy and I'm very passionate about and so I just redirect a energy negative energy into positive energy as much as I possibly can. I, we were just talking before I turned on the microphones that, you know, I was in a day job at the time that uh, my mom passed and I started really doing a lot of different things. Like I started doing music events again. I had done them earlier in my life and I did them again. And really that kind of energy of producing something that wasn't there before, kind of a [inaudible] was very helpful in terms of balancing my brain from what does it all mean to, okay, well at least I'm doing this. Yeah, I think it's very therapeutic. And at times I think that she would be very proud.

Speaker 1: Yeah. So. And that helps. I think all the time she would be proud because you guys were close. I mean, we talked, I don't remember how much of the conversations that we've had. We're on the microphone, but I know that you had a very close relationship with your mom. Yeah, absolutely. All right, so, so that's happening, uh, and you, you've got the boys as far as your day to day when you come into Eco Lab now knowing that you've got, you know, whatever's going on and anybody can relate to the fact that, oh yeah, there's my day job and then there's everything else that's going on in my brain. So sure, there's a ton going on. How do you organize your thoughts into let's do this today, let's do this this week. Let's do this this quarter. Let's do this, you know, over the next six months, how do you attack whatever you need to attack?

Speaker 1: That's an interesting question you're actually asking to get inside my brain. And that's kind of scary for warning, but I think really what it comes down to mostly in particularly in this industry is balancing opportunity and it's really evaluating the magnitude of opportunity that continues to present itself and then putting checks and balances to um, what is the most realistic, what is not, and then sometimes naturally the timeframe to finds itself, right. If you just continue to find that balance and look at the project holistically, they sometimes I'm sort themselves out state expansion, be a prime example sometimes the places I thought we were going to end up the first, um, you know, never ended up on the map for a variety of reasons. Right. So that's part of it. Part of it is just organizing, um, immediate and not immediate. And then also relying on my team that is just exceptional to do their jobs and be in charge of their, uh, their downstream.

Speaker 1: And just, you know, I have the luxury of working with a bunch of very high quality individuals. Yeah. So, so, and delegating to those high quality individuals. That's part of it. But I have always, as far as goal setting is concerned, I was taught to start with the end in mind it guests where I learned that and um, and then kind of work back with the goal setting. So if I want to be here in three, if, if I want to get to z in three years, I have to be at why in one year I have to be at x in, you know, six months, I have to be at whatever it let her I'm up to and then work it down to, you know, the day. So today I'm doing this so that I can get to that three year goal. It sounds like you do it differently in that you set up the structure so that z can make itself available to your structure.

Speaker 1: Yes. So more like a funnel. It isn't. I think that might be a more appropriate way, which I would say years ago my approach would have been more linear, like yours, a set the goal, here's where we're going to be. And then move. Working in the cannabis industry does not allow that luxury. Um, I gave a speech, I don't know, this was a while ago to a group of women entrepreneurs and they asked me what was the, you know, biggest risk that I took, you know, in, in that particular role. And I said, well, first and foremost, it's the cannabis industry is still federally illegal, but let me explain what I mean. So everyone in this room today is going to start a business or his started a business and they're all going to go through the same steps. You're gonna name it, you're going to register with the secretary of state, you're going to get a tax ID number and set up a bank account and a website and a facebook page.

Speaker 1: And if your company grows, maybe you'll set up for onk accounts and you know, all of these things, right? And you're all going to do the exact same thing. But for me, we've been through five banks, three facebook pages, 15 credit card processors for 401k programs. So about trying to continue to make progress in that linear fashion while continuing to do the same task over and over again. That's fascinating. You're not showing off by saying I had to go through three, four, five different banks. No, it's because I got kicked out and I got this, so I'm starting to understand that the funnel approach, because I have to go from bank to bank to bank to then I find the bank and get to that next level of the funnel. Curve ball is coming, so if you don't set up a system that allows for curve balls, your never going to be very successful in the industry because you are trying to always get to that next goal, that next linear goal and you're stopped from doing that because something came at you as far as state expansion, what would you say there, you know as to give an example of what we're talking about as far as which states or what I'm trying to do is not be specific so that we can holistically understand the thought and action that should occur.

Speaker 1: Right? So looking at different states, you're talking to a number of different license holders and everybody will guarantee that they are definitely going to get a license and you are definitely going to be able to work together and that as you go through the process and you try what would have been in your linear path to to vet them and say great check balance and go right, let's implement in 12 months is then, well we didn't get the license or the state has now decided to implement this program and so it's not going to allow for this. And while we thought we could do this type of extraction, we're not going to be able to. So now we need to rethink the plan and where they thought we would be launching in 12 months. Maybe that isn't for another 24, 36. So when you're trying to then forecast in business and the growth is a very difficult to then forecast, well I thought we were going to be earning revenue on this relationship in 12 months.

Speaker 1: Now we're not. Well how do you backfill that? So if you don't have multiple channels or multiple things going, it's very difficult to continue to have the growth or demonstrate the growth that you want in the company and moreover, as you get bigger and have maybe taken on investment, uh, to actually be able to achieve what you forecast, right, got it. Bought, you have to have multiple things going on. So someone like you who's an entrepreneur and is able to do that, can do that. How do you find a team of folks that can support that very necessary mindset? Yeah, I think part of it is that the team still has to move in a linear fashion on goals and um, I have to be the funnel, right? And were the funnel I get to be the funnel then once it's projected and executed. But that doesn't mean that there aren't a few things that are still maybe tentative and work gets done that maybe was redundant or, or just didn't pan out.

Speaker 1: But that's, it's going to be with any business, it is going to be with any business. And how much communication do you do to make sure that folks know I'm again, remember guys and Gals, you're, you're coming to work here at a federally illegal. I don't think I ever remind anybody on a daily, weekly or, but I've, I'm trying to make a point of where we are in the cannabis industry and hey, you know, things are going to change on a dime. Regulations, etc. Yeah. I'm fortunate to work with folks that have all been in the industrY for some time so they understand that or have been in dynamic industries, have their own and bring skill sets from other places. So for the most part I think they're all pretty good at rolling with the punches. What do you for when you deal with a partner or potentially an investor or someone that hasn't been in this industry, what are the first kind of few things that you either say or ask to make sure that this is somebody that will be able to kind of deal with the funnel?

Speaker 1: Um, yeah, I think that's probably it. Um, one is probably assessing risk tolerance and understanding of tax implications, financial implications of getting into the business, whether or not they have realistic expectations of what they're looking at in the space. Usually they're very skewed. Um, we're going to make this much money and we're only going to have to spend this much. Yeah, it's this idea that, oh, it's the cannabis industry. It's raining gold coins. Right? And that's not the case. How can you. So let's dive in there. Right? So you must be like a billionaire right now that you've been to different companies at a very top level job. I mean, come on, you've got to have like six mansions. Awesome. But no, how, how does it work that that isn't the case? How can you play me say that massive tax implications, largest being obviously the to add tax impact and meaning that you can't deduct anything.

Speaker 1: You can't deduct anything. It depends, again, it depends on the segment of the market that you work in. A definitely impacts retail more than it does manufacturing, which is one of the reasons I've always tried to stay in this area because at least we have the ability to write off cost of goods, which isn't a, it doesn't happen on the retail side, um, but no, it still creates this phantom income and it's very difficult to explain to people in particularly in investors coming into the industry what exactly that means, but certainly they have seen balance sheets and they understand what can and can't come off of it, right? They do, but not with the respect to. Because most businesses would be able to deduct, say sales and marketing. So if you considered that 20 percent of your expense for the year with sales and marketing and twenty cents on every dollar that you earned then was going towards that effort that, um, is not allowed to be used as a tax deduction.

Speaker 1: So if you made a million dollars that year, you now have $200,000 of phantom income that's being taxed. That now has to be impacted back against the company, which is what we're talking about, which is for most people that think, now you're starting to tell us, oh, okay, wait a second. That $200,000 just disappeared completely. Right? Because it was never there or, but actually it was, thank you very much and now it's being taxed and now it's being taxed in a way that it wouldn't if it was any other company. So for most people on earth, I can understand how they would be confused by that and that's why people think it's raining gold coins, but why would an investor not understand that? Because it doesn't affect every industry. It only affects the cannabis industry and I guess basically we're being treated like legal drug dealers and that's where that tax code is designed.

Speaker 1: So for investor a, let's call her, right, she hears you say that and then still doesn't believe you know, that'll generally believe it, but usually coming in and analyzing the industry are looking at the opportunity. A lot of people start by looking at the size of the market or the amount of money that's being made, or Colorado did a billion in sales and therefore it right and well, you know, most, you know, um, some folks are looking at the opportunity and say, oh, well we can just capitalize on one percent of that market than we would be doing x. Right. Many presentations that sounds like that. Or if I grow one thouSand plants and I make $300 a plant, I'm going to make. Yes, exactly. Um, and it doesn't just simply doesn't work that way, but on the outset, yeah, it looks great. And the reality is, is that a lot of companies are generating and they're earning a lot of revenue, but it doesn't actually ultimately hit the bottom line, get there, which is the, which is the bigger issue when you're running a company that's a does 10 million and you're nettIng $100,000 a year in profit is hardly worth the endeavor, right?

Speaker 1: It's, it's hardly believable. Is your point from an investor's point of view, like how could that possibly be the case? Whether they want to come in and try to find increased efficiencies or increased something or increase, you've got to be doing something right. You're a cannabis person, you don't know how business works, right? You have no idea. So therefore you must be, you must be doing something wrong. And I think once, once folks actually get into it and there certainly is a considerable opportunity in the industry. Don't misunderstand me when I say that it's challenging, but yes, understanding, risk tolerance, understanding whether or not they see the picture and this isn't something you're going to make an investment and your going to get your money back and 12 to 24 months, um, if you're coming in, is this something you're committed to doing for a long term because it is going to be a long, long game.

Speaker 1: On the employee level. we talked about the fact that you've got folks that have been in here for, you know, because we're in Colorado right now when you and I are talking and this has been a reality since obviously before 2014 for a long, long time. There's been an industry here. What do you think it is about a, an employee type person, meaning not a business owner who's been in this industry for as long as they've been in, you know, for however it, probably most of them for all of their careers. have you noticed a through line as far as, you know, employees in cannabis, you know, folks that work in cannabis, if you noticed a through line or and um, they all have x in common. They all have in common. There's some, I Will tell you, I think honestly it's changed over the years and I think there is certainly a considerable turnover and depending on.

Speaker 1: Oh sure, yes. Where you're, where you're looking or where you're working or what type of position I primarily. Because I think even from the employee level folks anticipate that this is going to be this occasion. Yes. I, I more mean like the folks that have been places for a number of years in a row, you know, the, the, the, kind of, the top of the heap as far as employees, that that's more what I'm talking about. Oh yeah. They all tend to have a similar. I think entrepreneurial drive are not risk adverse. I'm tenacious problem solvers. Uh, and in generally in general, I'm pretty good group of people, at least all the ones I've met here in Colorado. Yeah, like positive people. They're all very positive people. I think that if you weren't positive and didn't have the ability to laugh, um, that you just simply wouldn't make it.

Speaker 1: I mean, you the number of curve balls that you'll be thrown on any given day and slash or a week if you didn't have a positive attitude or the ability to laugh. Yeah, you just simply would not make it at the ceo level. It's your neck on the line. So that's why you have to deal with it at the employee level. That kind of riding the edge of chaos thing. What I've noticed from, cause I know a lot of people hear that term by the way, riding the edge of chaos. Yes. That's awesome. It's almost like that's the reward, you know, like why came to work today and we didn't get rated and I'll be back tomorrow.

Speaker 1: There's maybe some of that. There's certainly some folks that definitely deal with chaos better than others, but yes, I would say the, uh, the long termers yes, definitely might be thrill seekers as well. Indeed. All right. So then let's then go to that state expansion that you spoke about for evil labs in particular. Where are we? If we're making our way into 2018 generally because podcast land knows no time. Uh, what are you looking at? Where are you now? Right now? Only in Colorado. Oh really? That's so funny. I didn't, I just in my brain it's more than that, but obviously it's not so much more than that of course. But um, but what specifically, what state lines are you looking at? Yeah, well, I mean obviously everybody has to be looking at California right now and there. Yes. um, but of course looking at east coast opportunities, whether that be in Ohio or what seems to be interesting to me is a lot of the east coast opportunities tend to be grouped in states with very many single license holders, license holders that hold licenses in multiple states on the east coast.

Speaker 1: So it's usually you're looking at more of a conglomerate on that side. Um, and at the moment that's pretty much it from a state. I would also like to look at some global expansion because I firmly believe that, um, it's where cannabis company should be looking right now. One's with um, experiences deep as ours need to be looking at other states, other countries or other countries. I think it's such as a hook. There's multiple, um, obviously everybody's been talking about Canada for a while, but I think Germany really is the one that folks should be, um, setting sites on, um, is that speeding up because they're starting to. The wheel is turning, you know, and it's. So Germany will definitely be an exciting opportunity. But I think what's interesting as a business opportunity for those of us we've talked about that are seasoned in the industry, that we know that history will repeat itself and we've seen it happen.

Speaker 1: Whether it's been into new market segment I recreational or in new states. And we know that those same things are going to repeat and in, in new countries. And so I think positioning ourselves to be able to capitalize on those opportunities with experience. How much of that though is you also having to balance the fact that we continued to drag our feet federally here in the United States of America? I think that's also a definite consideration and I think that a global expansion is also, um, a way of security or you know, these businesses that have built into an established themselves, right? I mean, the idea of being able to manufacture in one location and distribute to up to 15 different countries under, you know, reciprocity laws, um, is very exciting and very comforting in a sense. Right? So I would say yeah, it's definitely a means of security without any question.

Speaker 1: Why did you expand globally? Mostly for security. Exactly right. How crazy is that? But it, it, there is obviously some truth in and I think that a companies we're trying to maybe create that security with the cbd market for awhile, which has also become and is questionable, questionable. Um, and so that's still a gray area and doesn't provide that level of security. so I think that that global really is probably the next, a real direction for companies to be looking good. We could call it the next frontier against it is certainly the next cannabis frontier for sure. All right. So, uh, it's good to see ya. You, what's that? They said it's been awhile. It's been awhile. It's been too long. Uh, so the next time that we talk has to be a in less time than the amount of time that it was between the last time that we've spoken.

Speaker 1: And this one, yes. Is that enough words? So that covers the point. So now I have three final questions for returning guests. Somewhat new. But uh, here we go. I'll tell you what they are and I'll ask you them in order. What would you change about yourself? If anything? what would you change about anything else if anything? And then on the soundtrack of your life, one track, one song that's got to be on there. That's always the last song. That's always the last song. That's always the last question. Now this might be something that you are already working on. Like I'd like to meditate more and I've been doing 10 minutes a day for two weeks. What would you change about yourself, if anything? I think I woUld like to figure out how to find time to get back in the gym again too. I'm with you whenever you just call me.

Speaker 1: I'm not here as. We live in different states to be pretty good at that. Now I'm not so just cause some serious when you're on the way to the gym, just say, hey seth, I'm on the board. Just text me. I'm on the way to the gym and then it'll kick in to me and I'll be like, oh, I'm good. thank you. How exactly do we have the. I'm sorry, I will shake your hand and that I'll do that if you do that. Perfect. This is good. This is how we're going to exercise together. Okay. I like it. And that's mine too. How about that? Okay. If you could change anything about anything else, what would it be? Um, is more industry specific, um, getting rid of to add so companies could finally be profitable since we focused on that today. Yeah, fine. I think that that's a good one. Okay. That shoUld be right. It's got to be. Let's. Yeah. Okay. Let's take. Because we're running businesses, has anybody noticed? Right? Can we just run them as businesses, right? We, we employ people. We'd like to have a 401k programs and provide benefits and do all these things for our employees. Yes, sure. Be able to grow the economy of wherever we are a little bit more. Um, nicole, the final question is always the same on the soundtrack of your life. One track one song that's got to be on there.

Speaker 1: Uh, this would be a new addition I am going to go with because I thought you were going to maybe go with a new edition. so. No, no, no. Yeah, probably, um, csgf why

Speaker 2: immigrants have Nicole Smith? If you consider the 20 percent of your expense with sales and marketing and twenty cents of every dollar that you earn was going to that effort that is not allowed to be used as a tax deduction. So if you made 1 million that year, you now have 200,000 of fan of income that's being taxed. Thanks to nicole, thanks to you. Stay tuned.

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Cannabis Economy is a real-time history of legal cannabis. We chronicle how personal and industry histories have combined to provide our current reality.