Transcript:

Seth Adler:
David Lonsdale joins us. Welcome to Cannabis Economy, I'm your host Seth Adler. Download episodes on caneconomy.com, or wherever you currently get your podcasts. First, a word from our supporter, and then David Lonsdale.

Seth Adler:
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Seth Adler:
Okay, we've got David Lonsdale from Canafarma. David, thanks so much for some time.

David Lonsdale:
Seth, it's a pleasure to see you again, and you're very, very welcome.

Seth Adler:
All right, so I got all excited when I heard about your exploits in New York State hemp. And so I wanted to start by talking about that, discover a little bit more about Canafarma, and then see where we go. But New York State hemp, it's a thing.

David Lonsdale:
It is. And, as you know, we have a 55 acre farm there, Seth.

Seth Adler:
Yeah, let's talk about it, let's talk about why you decided to go into New York, why that state is of interest, what the hemp market looks like, all of that.

David Lonsdale:
Well, first of all, New York State's a good place to do business. And the growing climate is excellent for us in terms of the season for growing hemp, and we had the opportunity to get a 55 acre farm up in Wappingers Falls in Dutchess County.

Seth Adler:
As far as when you got the farm, when harvest was, when harvest is, just give us an idea of the supply chain that you're working with now and what you might've learned so far.

David Lonsdale:
All right. First of all, we acquired the seeds in the spring of the year, obviously, grew the seedlings. In every single acre of that 55 acre farm, we planted 2000 seedlings, which is 110,000 in total. They get planted in rows very carefully, and we have a meticulous approach to our farming. We have drip lines that run all the way up and down every single row for both water and nutrients. We, also, weed continuously between the roads because the hemp plant absolutely needs airflow, if it doesn't have air flow and if you start to create humidity with other plants around it, it will not thrive. So, we did that obviously.

And we were very fortunate. We ended up with 128,000 pounds of biomass, and we had a very good harvest. The CBD potency of our biomass was between 14 and 15%. And, candidly, most farms are just sort of a 10% range. So, we have a very meticulous approach to how we farm.

Seth Adler:
High percentage, so that's fantastic. That's the CBD product that you're pulling out that, that 100 ... how much did you say? What was the biomass?

David Lonsdale:
128,000 pounds of biomass.

Seth Adler:
For the rest of the 128,000 pounds of biomass, let's talk about what you took, and what you left, and where it goes.

David Lonsdale:
Fair enough. So, right now, the biomass was dried, the hemp plants were dried at an optimal temperature. The biomass was then formed. We were fortunate, we actually have a partnership with an extraction facility, so we are in the process of extracting the oil, and we can talk about the oil, from our harvest. For many farmers, they grew the hemp and suddenly realized there was a huge shortage of extract and there's a lot of biomass just sitting dry waiting to be extracted. [crosstalk 00:04:50].

Seth Adler:
New York State, that's all over the country, that's all over the [inaudible 00:04:53]?

David Lonsdale:
All over the country. Seth, that's all over the country. We use a warm methanol extraction process. We can either create broad spectrum, or full spectrum, the difference being one has THC, trace elements of THC in it, and the other does not. We pull the distillate out from that. The extractor we use is certified, so we're able to certify our oil. No heavy metals, no contaminants. Everything we do is organic.

Seth Adler:
All right, and your product available online, right?

David Lonsdale:
Absolutely. Yeah, the product's available.

Seth Adler:
So, as far as the fiber is concerned, where does that go from you, for instance?

David Lonsdale:
As far as the fiber is concerned?

Seth Adler:
Yeah.

David Lonsdale:
To the extraction facility, and the hemp oil is then extracted.

Seth Adler:
Yeah, and then so what I'm talking about the stocks and all of that, you're not attracting from that. The extraction facility will dispose of that at their convenience?

David Lonsdale:
Absolutely. That's how it works.

Seth Adler:
Now, as far as you are concerned, I know that we had this conversation, I know the answer is no. You don't have an interest in being in the fiber market, is that right?

David Lonsdale:
That's correct. We, certainly, have no current plans to be in the fiber market, Seth.

Seth Adler:
Okay. And so, is there a potential partnership there? It seems, to me, that with all of my things that could be made from hemp that are around here, and we have the hemp that has grown, yet we are not producing products from that hemp because an entire manufacturing and supply chain needs to be constructed in order for that to happen. So, I understand that there's tremendous cost that needs to go in. You mentioned other folks can't even get their CBD product out. It feels like we're throwing away products. What are your thoughts conceptually to that?

David Lonsdale:
I think your point is really well taken. Canafarma is not quite one year old, and we are a complete seed to consumer product company. So far we've only talked about the grow section of the four sections of our company. So, when you are focused on the growth section, the extraction, the product development and research into your products, and all the sales and marketing, I suppose the real answer is I haven't focused on the fiber side of it. But, Seth, after this discussion I will be doing.

Seth Adler:
Fair enough. No, and I know that's what I bug all of my friends, especially my old friends from Colorado I say, "You've done it, you've gotten there, you're running profitable businesses. What about hemp?" And really the feedback, most of the time, is, "I have to focus on the business that I'm running as opposed to conceiving and creating an entirely different business."

David Lonsdale:
So, you basically are saying I've given you the same answers as everybody else has done.

Seth Adler:
Very similar. You're being nicer in saying, "I'll think about it."

David Lonsdale:
I will. I think, it's a valid point.

Seth Adler:
All right, so what is your sense of the New York State market, the greater hemp US market, and then the global market? So, take those one at a time, please.

David Lonsdale:
Sure. New York State's been proactive. I mean, we were able to get a license to grow hemp. I think New York State, it's Department of Agriculture is very focused on this. They are researching, they're spending the time, and the money. And it's a very good state for us to be, to be working in. So no, I think the future is bright there.

Seth Adler:
Now, that is the feedback that I've heard from a lot of Northeast kind of geographies. Connecticut, as well, is kind of hot on hemp, so to speak. What is your sense of why specifically this area is seeing the potential here?

David Lonsdale:
In all honesty, I'm not sure that I have a good answer for that.

Seth Adler:
Okay, you're a businessman, you had the opportunity to get a license. We got a license, let's go.

David Lonsdale:
Exactly. I mean, you asked me earlier sort of about why New York and I said, "Look, for a variety of reasons," but one of them is that the state is being proactive. And I think that's just prescience on the part of the people in the state legislature.

Seth Adler:
Fantastic. Okay, fine. So, the company doing well, we like what's happening in the state as far as hemp is concerned.

Now, that you are squarely in the industry, when you look at the rest of the country and places like Kentucky, and places like South Carolina, and places like Iowa what do you see as far as the hemp market? And places like Colorado, certainly, what do you see as the hemp marketplace nationally?

David Lonsdale:
Okay, so in order to answer to that, the real question is what sort of demand is there going to be for hemp in the future? Because that's obviously going to drive just what adoption there is. And, I will say, we are looking at opportunities in a variety of other states as well. We are not just absolutely committed to New York.

If you look at the CBD market, if you look at what is going on, you look at the products that are out there that people are taking Canafarma has its chewing gum product, we have a tincture, we have a cream product. And there is no question, in my mind, that people are using these products, and they are gaining huge benefits. Candidly, the quality of product isn't well-regulated at the moment either, and the medical science hasn't caught up. But when they do, and when medical science starts to really determine what's going on, I think, the market for hemp is going to be huge.

Seth Adler:
Okay. So, that's an answer, and I appreciate that. While we don't have the guidance that we're necessarily looking for, and that could change by the time this goes up, by the way, we might get that, we might not, but we are all 0.3% and below. When you look to other global geographies, in Europe they talk about 1%. Other places talk about other distinctions. How easy, how difficult, how much of an issue is that for a hemp supplier to see different percentages of THC as far as regulations throughout the world?

David Lonsdale:
Well, it is a complication, isn't it? Because there are different standards in countries and so forth. I mean, we already are operating internationally in the sense that we sell our products internationally, and we import because our manufacturing, at the moment, a large part of it is done in Milan, in Italy. I think we are going to see, like so many things, you're going to start to see international bodies coming together and agreeing upon a standardization. And that's got to occur.

Seth Adler:
When you say that you import, talk me through the distinction that the US government places on the hemp that you import versus the hemp that you grow.

David Lonsdale:
First of all, they're not placing a different set of restrictions or rules on it. But we do have to import and we have to come through the appropriate authorities. So, we certainly have learned our way, during the course of this last year here, to know exactly how to import a hemp oil based product. But, of course, if you're growing it yourself in the country then it's a lot easier to deal with, of course.

Seth Adler:
Sure. And why then do you need to import? If we were pleased with how much hemp we got out of the harvest this past time, why they need to also supplement that with import?

David Lonsdale:
Well, bear in mind, our harvest hasn't even been extracted into oil yet. So, we have not been using our own oil in the products we've already been selling. We started with a private label relationship with a company, and we branded those products. They're very science-based, very high quality, and they happen to be made in Milan in Italy. So, we were importing from there. But over time, obviously, our intent, and we're looking at facilities now, is to do our own manufacturing in New York or New Jersey, or somewhere in that area.

Seth Adler:
Excellent. All right. How do you know what you're doing? What's your background, David?

David Lonsdale:
Well, if you want me to talk about science and undergraduate degrees, and then a career in technology and disruptive industries, and then running a private investment bank, you've pretty much got my career summed up. The reason I am running Canafarma, my entire career has been involved with disruptive technology, big changes in industries, and seeing how that's absorbed. We are dealing with a massive disruption here in terms of the emergence of hemp products. I was fortunate enough to be approached by the founders of Canafarma, and when they offered me the opportunity to run the business that was just an opportunity that was absolutely ideally suited.

Seth Adler:
Excellent. All right, so I'll give you the three final questions. And I'll tell you what they are, I'll ask you them in order. And if this plays into what you were just talking about, which is you've come into the industry. So, these questions begin with what's most surprised you in cannabis? We then, go to what's most surprised you in life? And then, on the soundtrack of your life, one track, one song that's got to be on there. We'll get to that. And I have a sense, I know what we'll be talking about from previous conversations. But what has most surprised you in cannabis? Understanding that this is new essentially to you.

David Lonsdale:
I think the answer, Seth, is seriously the size of the market and the potential growth. I was all ready to believe this was going to be a big market, but I have run into so many examples, now, of people who have had major changes by using a product. There is a body of knowledge in the UK, and while the organization is not saying this is a clinical study, their point is the overwhelming size of the body of information is clearly showing three things. Number one, it helps with anxiety. Number two, the nausea from chemotherapy. And number three, which is really interesting because I have some personal experience of this, it helps the spasticity in patients who have multiple sclerosis. And I am well aware of one example where that has absolutely been a night and day change.

So, I look at all of that, and I look at where the industry is, and I stand back and say, "Good grief, I just do not know how big this is going to be."

Seth Adler:
Do you mind if I ask who we're talking about as far as what the relationship is with you, the MS patient?

David Lonsdale:
It's my wife.

Seth Adler:
Well, I'm a happy to hear that your wife is getting results. I have also a good friend-

David Lonsdale:
It's been a night and day difference in terms of sleeping and so forth. So, I'm just totally convinced that we aren't even scratching the surface with what we need to know about how hemp oil and the cannabinoid [inaudible 00:17:00] substances help us.

Seth Adler:
Excellent. Again, congratulations. And I'm happy to hear, and give her a hug on behalf of me, if you'd like I guess.

Seth Adler:
What's the most surprised you in life?

David Lonsdale:
It's going to be down the same path, I've been married for 42 years now and I shouldn't have been given such a good girl, I really shouldn't.

Seth Adler:
There we go. That's fantastic.

David Lonsdale:
So, I'm sorry to give you a constant theme back, but that is honestly my biggest surprise. I'd love to talk about my car and how much I love it and things, that's not a big surprise.

Seth Adler:
Exactly. I just got married, and so you've heard the phrase happy wife, happy life, right?

David Lonsdale:
Absolutely.

Seth Adler:
Yeah. So, I've got a corollary, and it's really just for us husbands. So, it's happy wife, happy life. Happy husband, no one cares. No one.

David Lonsdale:
Very good. Very good, indeed.

Seth Adler:
And, really as the theory states, the only people that need to know that is us.

David Lonsdale:
Yeah.

Seth Adler:
So, on the soundtrack of your life, one track, one song that's got to be on there? And I will open this up by sharing with everyone that you and I had a conversation that you're from Leeds, and I asked you if you have been to the building that housed where Live at Leeds, The Who album, was recorded. And then, what did you say to me?

David Lonsdale:
I went to the University of Leeds for my undergrad and I missed that concert by two or three months. So, if you want one of the biggest disappointments of my life you can certainly count that.

Seth, you already know that I have a signed, by all four of The Who, a copy of Tommy. And you also know that's really not my favorite album, so we'll go to Quadrophenia. And then, we'll probably pick something like The Real Me in terms of my favorite track. And I'm not going to perform it live for you now.

Seth Adler:
Yeah, that's appreciated, I would imagine, right? That's a great song, of course, some would expect perhaps they Love Reign Over Me. Excuse me, Reign O'er Me.

David Lonsdale:
O'er Me, yeah.

Seth Adler:
But for me on Quadrophenia is 5:15. But what I love is that all four, and John Entwhistle's no longer with us, and of course Keith Moon is no longer with us, but you got it with all four of them.

David Lonsdale:
All four, sir, all four.

Seth Adler:
That's fantastic.

David Lonsdale:
Keith Moon's right in the middle.

Seth Adler:
There we go. All right. Congratulations on that. Congratulations on the success. I can't wait to kind of keep in touch with you as we go here. As this hemp market finds itself.

David Lonsdale:
Seth, thank you very much, indeed. I've enjoyed chatting with you.

Seth Adler:
And there you have David Lonsdale, very much appreciate his time. Very much appreciate your time. Stay tuned.

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