007: How Maine is Preparing for Adult-Use Legalization – A Talk with Evergreen Cannabis Co.
007: How Maine is Preparing for Adult-Use Legalization – A Talk with Evergreen Cannabis Co.
Maine legalized medical use cannabis in 1999, long before many other states. However, after adult-use cannabis was legalized by a vote in 2016, it effectively stayed inaccessible for another two years, with licenses finally going live and prohibition being lifted on December 5 of this year and retail sales not starting until March of 2020.
Evergreen Cannabis established themselves in Maine’s medical marijuana industry and are now preparing to shift their business to accommodate a new economic model. Co-founders Andy and Kristin Pettingill, as well as Operations Director and General Manager Sergio Hernandez have become intimately familiar with the necessary licenses, change in tax structure, and shifting legal policy that is finally bringing about transformative change.
Today, the Evergreen Cannabis team joins the podcast to talk about what brought them into the cannabis industry from their culinary and medical care backgrounds, and what they’re doing to prepare for adult-use legalization in Maine. You’ll hear all about the unique hurdles they’ve overcome as they’ve built out their business, the financial challenges they’ve faced in working with bankers and investors, and how to ensure that customers have great experiences, no matter what they need.
- What held up the legalization adult-use cannabis for three years in Maine, even though it had been voted in as legal in 2016 – and how administrations have ignored the will of the people to keep cannabis inaccessible, even after yes votes.
- How city governments and the state of Maine are shifting tax structures to collect additional revenue, distribute licenses, and keep single streets from consisting of 20 adult-use cannabis shops.
- How Evergreen Cannabis is designing their first adult-use shop to cater to the needs of a broad range of consumers and create return customers.
- How adult-use staffers at a shop in Seattle showed Sergio the benefits of a full-service interaction.
- Why the Evergreen Cannabis team doesn’t expect to see full federal legalization happening anytime soon.
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TRANSCRIPTRead the Transcript
Rick Kiley: Hello everyone and welcome back to The Green Repeal. This is Rick Kiley. I am joined by my co-host, Jeff Boedges.
Jeff Boedges: Ola.
Rick Kiley: Ola, Jeff. And we are really excited to have the folks from Evergreen Cannabis with us today. They are up in Maine. We have the founders, Andy and Kristin Pettingill, and Sergio Hernandez, who is the Operations Director and General Manager. Welcome, everyone, to The Green Repeal.
Sergio Hernandez: Hello.
Kristin Pettingill: Hello.
Andy Pettingill: Thanks for having us.
Rick Kiley: Cool. So, I think this is the first time we’ve had more than one person on the other end of the line. So, it would be awesome if you could just take a minute to introduce yourselves and just talk about your role in the organization. Founder is a particularly vague word so maybe you could go into that a little bit.
Kristin Pettingill: Sure. I’ll lead off. I’m Kristin Pettingill, so Founder of Evergreen Cannabis, meaning that I am a licensed caregiver for medical marijuana in the State of Maine. And with my husband, Andy, we are owners of Evergreen Cannabis. I’m also a registered and licensed dietitian with a master’s degree in nutrition. So, I take on more of the educational arm of this with our patients.
Andrew Pettingill: Great. My name is Andrew Pettingill. I am too also the co-founder. Kristin is my wife. I’m a state-licensed medical marijuana caregiver. I’m formally a chef in the area and also a farmer of organic vegetables which kind of was the path that led me to cannabis.
Rick Kiley: Different kind of veggie to herb. Good. Alright, cool.
Sergio Hernandez: And my name is Sergio Hernandez. I am the Operations Director and General Manager for ECC. I’m new to the cannabis industry with a background in specialty food, importing distribution and retail, and restaurant and hospitality industry background as well, which is how Andy and I met about close to 15 years ago actually.
Rick Kiley: Yeah, and Sergio, that’s how you and I met. You and I met in Brooklyn when you were wearing a different hat, more culinary side.
Sergio Hernandez: Yes.
Rick Kiley: It’s amazing how much culinary sort of lends itself to the cannabis industry, a lot of people are…
Jeff Boedges: It’s the conversation of the day.
Rick Kiley: It is the conversation of day today. So, really, thank you all for joining us. And we’re really excited to have you here because we know that different states are approaching legalization of cannabis in unique ways. We have a few, of course, that have medical programs. We have fewer that have adult-use and Maine is pretty unique in that very recently, I mean, so three years ago I believe legalized recreational or adult-use cannabis. However, it has taken a bit of a time to get to the point where it’s legal. And so, I’m wondering if you could help maybe shed some light on sort of what has happened there. What was the process that basically kept it on hold for three years?
Jeff Boedges: And if I may, this is a topic very near and dear to my heart since I vacation in Maine every summer and ventured into a green cross over the summer and said, “Where can I get some weed?” and they said, “Not here,” and I said, “Well, I thought rec was legal?” They’re like, “It is, but you can’t buy it unless you know a guy.”
Rick Kiley: So, we’re hoping that you are the guy and girl but can you just help us understand what the heck has been going on in Maine and why it’s taken so long to come to fruition?
Kristin Pettingill: Sure. So, as a main resident for most of my life, I was born here. I voted in November of 2016, yes, on question one, as did a majority of people. And so, it became, it was voted in as yes but at the time the governor, Paul LePage, and his administration didn’t want to have anything to do with it. They ignored basically the people’s vote, and just didn’t set up any offices, didn’t want anything to do with it. They had two employees that were set up under the Department of Health and Human Services and that was all. So, basically, it stalled for the last two years of his administration because he didn’t want to move it forward at all. So, we flash forward to November 5, 2018, with a new governor Janet Mills, and almost immediately her administration created the Office of Marijuana Policy. They had it immediately as something that they wanted to do. So, with that, we’ve come in just a year, a long way. They’ve been able to set up full offices to the point where other cities in the State of Maine have decided to what they call opt-in. And so, Portland being one of those cities that we’ve lived in most of our lives here decided that they were going to go to city council to get it going.
So, it was really in 2018, the planning board started to set up meetings to go over zoning in the city. So, with that, we started to get really excited. As medical caregivers, our goal was always to expand to adult use. So, we started to look at spaces in the City of Portland where we could have a storefront first as just medical caregivers, but then with the potential, with the rollout for adult use to really jump into this.
Rick Kiley: Right. Okay, so wait, let me just ask a question in there. So, I just want to go back. So, the ballot initiative is passed and the governor decided to just sit on it for two years.
Sergio Hernandez: Yeah, basically, the LePage administration, there was no staffing. There was no, as you know and as Kristin stated, two employees under the health and human services were left to kind of figure it out, which obviously, it’s a policy that needs a lot more staff than two people. And the wheels just seem suspended, just laid dormant and something that, of course, you had been voting legislation and like you said, people would say yes, it was voted legal, but no sales are happening yet leaving these huge gaps, you know, and kind of yeah, this discrepancy of it’s not criminal to possess it, but it’s not able to…
Rick Kiley: Sorry. Was there any recourse? Anybody took or was able to take, you know, at that time before the administration was essentially voted out?
Sergio Hernandez: There really wasn’t anything that we as caregivers could do. We did create associations trying to move the policies along. The problem was the administration was a very conservative Republican administration that didn’t support the legalization of marijuana. So, anybody that was supportive of it in his administration, basically, they didn’t move it forward. They did support the medical program that we had in place very well. The people up there did an amazing job. Our medical program was considered one of the best in the country. We followed suit after all these other states.
Rick Kiley: Yeah. So, medically though, cannabis was legal in Maine since before it was 1999. Do I have that date?
Andrew Pettingill: Correct.
Kristin Pettingill: Yes.
Rick Kiley: Yeah. So, I mean, that was one of the – you’re one of the early states to really adopt it. And so, how long, Andy and Kristin, have you had been caregivers under the medical program? When did you start with that?
Kristin Pettingill: I’ve been a caregiver since 2016.
Andrew Pettingill: Yeah. Likewise, 2016 we became licensed state caregivers.
Rick Kiley: Got it. Got it. Got it. Got it. Okay, cool.
Jeff Boedges: And what exactly does that mean in Maine? Because caregivers I know are people to go in-home and take care of folks who need hospice.
Andrew Pettingill: Right, right. So, a licensed state caregiver in the medical marijuana program in the State of Maine allows us to, originally, it allowed us to grow a certain amount of plants per patient, and then sell that product back to that patient.
Kristin Pettingill: We had a limited number of patients in the beginning.
Andrew Pettingill: Originally, we were limited to five patients per caregiver.
Rick Kiley: Wow. Sweet. You’re growing your own product to serve to your patients.
Andrew Pettingill: Correct.
Kristin Pettingill: Correct.
Rick Kiley: Five plants a time? Sorry. Five patients at a time?
Andrew Pettingill: Five patients, yep, and our program was set up so that we were allowed to grow six flowering plants per patient in 12 vegetative plants per patient. So, it looked like in our flower rooms would be 30 plants for patients and flowering and then we would have double that in vegging per…
Rick Kiley: So, that’s interesting. You know, in the alcohol beverage industry we have people that will go and buy like a barrel of whiskey before it’s aged, like are there people that like, essentially buy the plant that you take care of?
Andrew Pettingill: Yeah. Now, that the program has changed so we can sell 70% of our product to other caregivers in the state which was a huge policy that helped basically shape and change what we’re doing now. It really helps us serve more patients. And the state actually allowed us to apply and we got a resale certificate so we don’t pay sales tax when we sell wholesale.
Rick Kiley: Oh, that’s good.
Jeff Boedges: That’s good. That’s actually one of the more forward-thinking tax policies in the US right now.
Andrew Pettingill: Yes.
Rick Kiley: All right. So, then let me ask so now that adult use is legal, does Evergreen you hold a license that is for adult use now? Is that given a separate license for that?
Sergio Hernandez: Well, nobody in the State of Maine currently holds an adult-use license. It goes live December 5, but that’s actually I believe when the state starts accepting applications because the prohibition essentially is lifted on December 5, but after application process and setting everything up, it is not really retail sales of adult-use won’t happen until March of next year.
Jeff Boedges: Okay. And do you guys have a leg up because you’ve been doing the medical now?
Andrew Pettingill: I would say, yeah, absolutely. We’ve established ourselves in the community, we have infrastructure, we have dealt with policy. And through that process, we’ve created standard operating procedures and these are all things that are going to be required on applications. So, I definitely think we have a leg up whether we choose to rush right into recreational as a different decision.
Rick Kiley: Right. So, how many then I’m imagining the state is putting a limit on the number of licenses for adult use sale that they do, in fact, grant. Do you know what that number is?
Andrew Pettingill: Yes. Infra licenses is based on square footage. So, then when they release their licenses, the licenses are based on tiers and each tier is for a different amount of square foot of cannabis are allowed to grow. The states the way they’re going to deal with it is they found like the maximum number of cannabis space that they’re going to allow to grow in the State of Maine and then they’re going to buy that upon the licensing.
Rick Kiley: I got it. So, it’s not like there’s only six licenses and they’re just managing on that. They’re managing it basically on, you know, square footage.
Andrew Pettingill: I think that they’re estimating somewhere in the 200s just to start.
Rick Kiley: Wow, okay.
Andrew Pettingill: Yeah.
Rick Kiley: Because New Jersey just like when they were doing medical just started with like six, you know, and they’re expanding so that seems to be a high number. I guess we’re having the medical program being as mature as it is in Maine, that probably helps.
Andrew Pettingill: Right. Currently, right now we have around 2,600 medical caregivers that are state-licensed.
Rick Kiley: Aren’t there only like 10,000 people in Maine? It’s like a huge, it strikes me as a very large number.
Andrew Pettingill: Actually, it used to be almost 3,600 caregivers. It’s gone down since the recreational movement has moved forward.
Rick Kiley: Really? All right. So, you’re mid licensing like do you have your application ready? Has it been submitted yet or you’re not allowed to submit until next month? Where…
Sergio Hernandez: Actually, just to finish the timeline that Kristin was on, there’s four points there before we wrap that up, which is after Janet Mills was elected in 2018 and the Office of Marijuana Policy was formed, we then had the long slow what we’re calling the long, slow summer of spring/summer of 2019. The mayor who just left office, the mayor of Portland had mandated a “slow and deliberate” rollout of city ordinances and regulations before issuing any retail licensing. And that included both medical and adult-use, which is what’s had ECC in limbo. As waiting for those city ordinances to be finalized, it has us waiting on the same timeline that everybody’s waiting on for adult recreational despite the fact that we have been caregivers and we’re ready to go about a year ago.
Kristin Pettingill: Because you need the state license as well as the city license. So, both lines have…
Rick Kiley: Yeah. So, that’s interesting. So, the cities themselves after the state has put it in place in saying, “Okay,” each of the individual municipalities is having to basically also say, “Okay?”
Andrew Pettingill: Correct. They’re doing what’s called, they’re calling it what’s opting in or opting out and that is the state left up to the municipalities and the municipalities are right now only currently 17 municipalities have opted in out of all the municipalities in the old state. And that’s due to the fact that the state hasn’t decided whether or not they’re going to share this tax revenue with the towns. So, that’s left all these towns, you know, not sure whether they want to opt-in because they have to create all this infrastructure in their town to help but yet they’re not sharing the benefits.
Rick Kiley: Right. Well, those who have opted in, are they going to levy their own city taxes?
Andrew Pettingill: The state is currently not going to allow them. It’s just one state tax.
Rick Kiley: Okay.
Andrew Pettingill: Yeah.
Jeff Boedges: Interesting. And how have they decided to use the state taxes? Do they have like the basics laid out where, sorry, not the tax but the revenues from those taxes?
Sergio Hernandez: They don’t essentially have it laid out yet. What I wanted to say was about the – what are just talking about?
Jeff Boedges: Cities raising their own taxes.
Sergio Hernandez: Where the tax revenue if people are commenting on the loss of tax revenue due to all the stalling and the delays going on here. And there was just recently an article in the news just a couple of days ago actually where the headline of the article was, I had that written down. The headline of the article, ironically, beyond gas tax and polls, finding new solutions to fix means crumbling roads and bridges, you know, where they’re basically like, you know, trying to “think outside the box” to find revenue for fixing roads that they’re proposing new polls where it’s clear in other states. You know, Colorado, for example, in April 2018, citing that they allocated 16.5 million of cannabis tax revenue, specifically to infrastructure, roads, and highways. You know, it’s this ongoing, “Hey, where does the State of Maine get more money?” Meanwhile, this process is delayed three years now. They could obviously generate a ton of tax revenue for a lot of these initiatives.
Rick Kiley: Right.
Andrew Pettingill: The thing that I wanted to bring up was that one of the ways that municipalities are grasping money since they can’t levy a tax is, for one, the City of Portland is now asking us to donate 1% of our profits to the city to help educate the community and children and school-age people. I mean, other towns are also asking similar things and putting in huge change of use fees such as like any change used fee in the City of Portland currently could be anywhere between like $50 and $150. They’re not big at all. Now, they’ve made our change of use fee $4,500.
Jeff Boedges: So, sorry, again, for the layperson, the change of use fee is changing a retail from one type of location?
Sergio Hernandez: Right. Changing like say our lease space was originally an office space and we did a change use fee permit to open a retail store. Where like if I were to just open up say a grocery store, my change use fee would have been $50 because they know I’m cannabis-related, they charge $4,500.
Jeff Boedges: And can do that?
Sergio Hernandez: Yeah.
Jeff Boedges: Yeah. All right. So, a voluntary tax and basically…
Rick Kiley: It doesn’t sound very voluntary.
Andrew Pettingill: You only suggest. I mean as a caregiver and a business owner in the State of Maine, I would rather them call it a 1% tax than ask me to donate 1%. It almost sounds like bribery or extortion.
Jeff Boedges: Almost.
Rick Kiley: I love the word almost in there.
Sergio Hernandez: The 1% from what I understand is that it’s been proposed, yeah, within the city of Portland as part of a weighted lottery as to who will draw the 20 retail licenses and those things.
Andrew Pettingill: That adds a point to our weighted lottery.
Rick Kiley: Sure. Okay. Your willingness to give back will move you towards the top of the list. All right. So, I want to talk a little bit about some of these business risks then. So, you said you have a lease on your space already. Yes?
Andrew Pettingill: Correct.
Rick Kiley: You’ve already paid your $4,500 change of use fee. You’ve already committed to whatever your lease is.
Sergio Hernandez: We actually haven’t paid the change of use fee because they won’t allow us yet.
Rick Kiley: Okay.
Kristin Pettingill: The application for the City of Portland is still not rolled out. The next meeting with the City Council to joint committee meeting with the Health and Human Services and the public safety and economic development committees will be November 26, two days before Thanksgiving, so we’ll see if they have that. But so, no application yet on there end either. It’s stalled in city council.
Andrew Pettingill: So, a year of leasing a space without even an application to fill out.
Rick Kiley: Right. So, you’re paying for a space and at worst that you’ll never be able to use because the current license doesn’t happen and at best, you’re looking at March of next year. Do I have that correct where you could be in sales?
Sergio Hernandez: We can be in sales, yeah, I would say February to March. Rec will probably be March but we’re hoping it open before that medically.
Rick Kiley: Okay. And so, you can have medical and recreational program operating under one roof.
Sergio Hernandez: Not under the same space. We did lease a space that has two spaces within the same building. And we are hoping to eventually be able to have our medical and adult-use side by side but actually since the lease was signed, it is doubtful that we’ll be able to open the two locations because there has to be either 250 or 500 feet buffer zone between cannabis businesses regardless of medical or adult use, or the same company. That is what it’s looking like. We will have to see if eventually, we will be able to use that space for what we originally intended, which was to have them both side by side.
Jeff Boedges: What would be the benefit of keeping them 250 feet apart?
Rick Kiley: Yeah, I guess another way to ask it is like what’s the differences between the program that makes them have to operate so separately? Can you help us with those two things?
Sergio Hernandez: So, currently, now the program is run by the Department of Finance because obviously they want to grab and be really the taxes is what’s most important to them. In the Department of Finance is set up so that they can grab all those taxes that and…
Jeff Boedges: To change the use fees.
Sergio Hernandez: And change the use fees and…
Andrew Pettingill: And the 1%?
Sergio Hernandez: I can’t remember what we were talking about. I apologize.
Rick Kiley: It happens.
Jeff Boedges: Yeah. It’s occupational hazard.
Rick Kiley: it’s Friday too. All right.
Sergio Hernandez: I remember what I was talking about now. So, the medical community we pay 5.5% sales tax in the state levy right now is at 10% sales tax. So, they want to be able – and also, we are allowed to serve patients at any age as long as they have the parents’ permission and anyone over 18 to serve as the patient where recreational marijuana is 21 plus. So, to be able to have those two spots operating at the same time, you really need to have them separated so 21 plus and 18.
Rick Kiley: Are the products that you have planned to service each of those two communities like wildly different or just sort of the packaging and approach? Like I’m just curious if the medical is really one type of product and recreational is much more of a variety.
Kristin Pettingill: No. I think what we want is high-quality products for our patients but we wanted to offer that for everybody over the age of 21. But in our adult-use store, we would want to bring in a lot of other products from other companies where hopefully our medical store would stay focused just on our brand and what we’re creating for our patients.
Rick Kiley: Got it. Got it. Got it.
Sergio Hernandez: And in a medical cannabis dispensary, it’s all about wellness, so any questionable products like in light of recent issues with vape cartridges with questionable vape cartridges, if we were open and operating for business, when that happened a couple of months back, we would immediately pull any of that, of course, whether the state was mandating it or not because in a medical facility, we don’t want to carry anything that would make you feel anything except better when you leave with the person consuming rather than something that might cause other health risks of course. And that’s obviously I know a whole other subject, all of that PR recently. Sorry about that.
Kristin Pettingill: I can almost state just kind of back to maybe what the city was thinking. We went to one meeting in terms of why they don’t want stores. You know, they want this buffer zone, correct? And one of the things that I can remember hearing is I don’t know exactly what they alluded to, but in my mind, it’s like they don’t want a red light district. They don’t want this one street in Portland to just be 27 marijuana shops. They want to space us out. So, that was their biggest…
Jeff Boedges: There’s a donut shop in between every two. You guys call them crawlers or doughnuts? I can’t remember what it is.
Andrew Pettingill: I love a good crawler.
Rick Kiley: Alright. So, are there any other than, well, I’m going to say other than and the things that I can imagine carrying the lease for as long as you have, having employees as long as you have, growing the I don’t know if you were growing product aimed at recreational like what are the other business pieces that you are putting in place for your…
Jeff Boedges: That was my question about supply lines when you go rec from that’s going to be, I assume much a higher demand. How do you plan for that when you don’t know for sure?
Rick Kiley: Yeah.
Jeff Boedges: How are you going to have a place to sell it?
Rick Kiley: So, maybe you can answer both of those. So, how are you planning? But is there anything else you’ve just been like carrying this whole period of time where you’ve been in limbo?
Kristin Pettingill: Oh, yeah.
Andrew Pettingill: Yeah. Just going to that when we started the process of the retail store and really rolling out, I jumped the gun and really wanted to set everything up as fast as possible. So, I got a POS system, a point-of-sale system from a company called Leaf Logix who does it in the cannabis industry nationwide and pay a monthly fee that I paid quarterly. Time Warner Cable.
Sergio Hernandez: The equipment, the workstation,
Andrew Pettingill: The workstation. I carry a product liability insurance and insurance on my retail store, my commercial grow. So, the overhead of it is totally doable when the business is up and running but to hang on for as long as we have, it’s definitely eating away at our budget.
Rick Kiley: Right. And so, have you, I’m assuming for your enterprise, have you gone out and raised some outside capital? Are you self-funding it?
Kristin Pettingill: Like, bootstrapping it right now.
Rick Kiley: You are?
Kristin Pettingill: Originally, to really go back, we started in our home. We were small-scale caregivers really doing on my salary alone. And then when it did get voted in for adult use, we did find an angel investor that was willing to jump on board with us, get us a commercial space where we could cultivate and sort of, you know, that’s where we did it medically just with the assumption that we would be able to get to recreational very soon. And unfortunately, that partnership dissolved because just of the stalling and how we nothing was moving forward. So, we are back to growing at our home.
Sergio Hernandez: Yeah. With the building we rented before with the angel investor, we rented a space that was roughly 8,000 square feet that we wanted to grow into which we had, you know, been told by multiple government officials that we should move ahead and that was the best thing to do. And luckily, we did get out of that facility and we built a 3,000-square-foot building on our property to focus on cultivating high-quality product and really do it as efficiently as possible because with recreation, you know, the price of everything is going down. So, really being efficient and trying to cut corners where you can still make grow great products is super important.
Kristin Pettingill: But we have to rely on family this year because in outside investors have been very, very leery to jump on board.
Sergio Hernandez: Because the rec movement is so slow here. I mean, once I think you see the movement, the rec movement finally on December 5, you’ll see groups starting and investors will be a lot more willing to…
Jeff Boedges: Will you remember them and say, “Yeah, I remember you. You said no.”
Sergio Hernandez: Yeah. Definitely.
Rick Kiley: Look at me now. Okay. So, I mean, I’m just curious if like the other like partners that are – and partner’s maybe the wrong word, but people like your landlord, are they understanding at all? Like, are you able to work out a deal with them? Or are they just like, “Hey, you signed the lease. You got to deal with it.” I’m just curious if people are sort of understanding what the situation.
Sergio Hernandez: Some of them are understanding and very interested in the whole industry but at the end of the day, they’re in the business of renting real estate and their ideal as I said before is there are two spaces in the building that we’re currently renting. Their current wanting to buy one and their ideal is to give us both spaces and eventually retire from their current business, which is screen printing or…
Rick Kiley: Got it.
Sergio Hernandez: As you know, in the end of the day, no, there have not been any breaks on rent or they’re not open yet.
Andrew Pettingill: I would say the one thing that was, you know, a huge thing that just happened and I called Sergio about it was I did reach out to the Leaf Logix who was a POS point of sale system, and I said, “Hey, I’ve been paying for this for a year. I haven’t used you once. Is there anything you can do for me?” And they did get back to me and they gave me a quarter for free.
Rick Kiley: Right. That’s nice. Go Leaf Logix.
Andrew Pettingill: Yeah.
Rick Kiley: Yeah. We’ll plug them. Cool. So, all right. Let’s shift gears here a little bit unless there’s something else you think that we missed in that. I think I wanted to ask a little bit more about just the situation in Maine like a lot of these states that don’t necessarily have legal weed, they find either a black market, a gray market that people are going over state lines. Have you since this hasn’t kind of come to fruition in Maine just yet, are people like heading to Massachusetts and bringing stuff back? Like what’s happening with recreational use in your state at this moment given the sort of again this limbo that you’re in?
Jeff Boedges: The rec demand doesn’t really go away even though the loss of…
Sergio Hernandez: I can speak of one thing. I do go to a friend’s dispensary quite often and visit with them. And they have a lot of actual, they have a lot of New Hampshire medical patients coming here to take part of our medical program because we accept out-of-state patients.
Rick Kiley: Okay. That’s interesting.
Andrew Pettingill: Yes. So, actually, every single medical state we accept their card which is very unique in the program.
Rick Kiley: Yeah.
Sergio Hernandez: Our prices here in a storefront retail location are half the prices that they are in New Hampshire. I almost always see New Hampshire patients here. I haven’t heard too from friends that live in New York that they travel just right over the border and they go to Massachusetts. People up here in Maine I think we are such a large cannabis community that people don’t have to go far.
Jeff Boedges: Yeah. The medical program in New York, the prices are very expensive and there’s not a lot of options.
Andrew Pettingill: Yeah. That’s what I’ve heard as well.
Sergio Hernandez: Nothing in the city yet, right?
Rick Kiley: There are a couple in the city. So, MedMen has something on Fifth Avenue. There’s a few couple in Brooklyn. Etain is a medical company that’s your…
Andrew Pettingill: EuroLeaf is there as well.
Rick Kiley: Yeah. But there are not a lot of, I mean, I think you can count the number of dispensaries on two hands really that are in the five boroughs. I could be wrong but it’s not.
Jeff Boedges: No, I think you could do it. Don’t sell yourself short, man. You can do it.
Rick Kiley: You’re tremendous.
Jeff Boedges: But you guys mentioned a little bit about the inside state thing. So, is it only and again I’m assuming that it’s this way, it’s only locally or only statewide grown cannabis flower that’s available and extracts that are available in Maine or are you guys able to get stuff from out of state?
Sergio Hernandez: No. It’s a Maine program only. You cannot cross state borders.
Jeff Boedges: Got it. Right.
Andrew Pettingill: It’s actually the same similar with hemp here. All the hemp and CBD sold in Maine is actually legally has to be grown in Maine.
Jeff Boedges: Got it. Cool. And as far as like the grow locations you mentioned yours isn’t around Portland. Obviously, there’s a lot of rural area in Maine. There’s a lot of it happening outside of the main areas, main cities, or is a lot of it really just in old warehouses and whatnot throughout? I’m just curious.
Sergio Hernandez: Oh, no, it’s statewide. The further you go out of a city, the cheaper the real estate, the bigger the buildings. The more lights people are hanging, the bigger the grow.
Jeff Boedges: Yeah. Because, again, I spend a lot of time in New England and clearly there’s a lot of real estate and old mills that are there and I always thought that would make a fantastic grow operation.
Sergio Hernandez: Yeah. I’m trying to remember the name of the town. I think it’s a Winthrop or Winslow but a company just did buy a mill and they’re putting in a restaurant, a facility, a retail store and a bunch of stuff.
Jeff Boedges: There you go. A real brand home for cannabis.
Sergio Hernandez: Yep.
Rick Kiley: Yeah.
Sergio Hernandez: And I’ve heard from friends who – I haven’t been that far north because I tend to only go in the winter to skip up like as far as Sugarloaf, Carrabassett Valley but I’ve heard friends that do go up there more in the summer that all the land on the way up there is being bought up. You can see acres and acres of it rolling out on the drive up there now.
Jeff Boedges: Wow. Will they allow for uncovered grow operations? Most of the ones like I know in California they have to be inside.
Andrew Pettingill: Oh, yeah, in Maine everything has to be fenced in. There are parameters. It has to fenced in. It doesn’t have to be covered, but it has to be fenced in.
Jeff Boedges: Okay. Cool.
Rick Kiley: Got it. All right. So, I’m just curious, Andy, Kristin, I know you started as caregivers. For each of you, what got you interested in the cannabis business to begin with? Like, what were you doing before that sort of led you to say I really want to try to make a career at this?
Kristin Pettingill: For me, personally, I was a dietitian. I am a dietitian for the last 10 years, and I really found anecdotally that so many of the patients I was talking to were, they didn’t want to be on pain pills. They didn’t want to be on opiates. They were looking for something different. Yeah, cannabis always came up. And so, I found that majority of people that I would talk with had medical marijuana listed in their meds. And that really talking to Andy and thinking about it, that this was something that is truly helping people and that was the original reason of why I went back to school was to help people and so I felt that this was something that we could do together.
Rick Kiley: That’s cool.
Andrew Pettingill: And I had transferred from being, you know, I got burnt out in the restaurant industry. I sobered up and stop drinking but I still really wanted to work with food and I really wanted to work with the people in the restaurant industry so I started organic farming and was very lucky to find a great organic farm locally to work on and I learned a lot but when it came down to it, I couldn’t work for someone else and I started trying to do it on my own and they always say if you want to make a million dollars farming start with two.
Sergio Hernandez: That’s funny.
Rick Kiley: That’s funny.
Jeff Boedges: And so, are you growing – is all of the cannabis and hemp you guys are growing are all organic? Are you guys waiting for…
Andrew Pettingill: We started out as 100% organic living soil and we’ve slowly moved production towards other fertilizers. Economically, it made the best decision. And we also are adding in a lot of bacteria and a lot of compost teas to really create that symbiotic relationship in the soil.
Jeff Boedges: Yeah, I think it’s still one of the most earth-friendly crops you can grow is hemp and cannabis.
Andrew Pettingill: Oh yes, absolutely. We’re planting an acre of hemp next year below our greenhouse, and that will be 100% organic.
Jeff Boedges: Cool.
Andrew Pettingill: Yeah. We really want to do some high CBD strains and create some of our own high CBD strain medicines.
Jeff Boedges: Great.
Rick Kiley: Yeah. And, Sergio, what about you? What got you interested?
Sergio Hernandez: Well, you knew my background in food. I was a lifelong advocate and consumer of cannabis products. But I actually started talking to Andy around shortly after they signed the lease on the space, he had floated the idea past me because he knew my background in building a retail space and of building a luxury high-end brand as I had in Brooklyn. And we’re definitely very interested and I was interested right away. My wife said, “Yeah, this sounds like something we could definitely work with.” So, we had been discussing it for the better part of this year in the spring and summer, then things took a change in the specialty food import business. That’s a whole another story but, yeah, the EU tariff war put a big tariff on a lot of the products that I was working with and importing and that put a little bit of a pinch that I said, “Let’s do this. Let’s jump in,” and now move forward with this.
Rick Kiley: That’s great. That’s great. Now, since I keep hearing about all this culinary background with everyone, I’m kind of really interested in what your dispensary experience is going to be like. I’m picturing a lot of tasty edibles. When your dispensary opens at least the adult-use ones like what’s the vision of my experience when someone walks in there?
Jeff Boedges: Extra virgin CBD oil.
Sergio Hernandez: Extra virgin CBD. Exactly. Well, and this is where I will come in for curating a selection of not – and it will begin right away with the medical space to be open first. We will feature, of course, our brand and our products, our flower as well as anything else that is top quality produced within Maine whether they’re friends, acquaintances, folks that Andy has known over the years in the business. We will also focus on the highest standards of education, customer service, focusing on each individual patient that custom tailor the experience. You’ll be greeted, welcomed, just walk in the door just like in any high-end retail shopping experience you should be. The focus should be on the customer patient because there’s a huge difference as you know, and as you guys have been exploring, the range of patients in medical and even in adult use will be anybody who, you know, from folks who’ve been using it their whole life to people who are trying it for the first time because it’s legal. And there is a very different product that you would recommend to both of those customers and everybody in between.
Rick Kiley: Got it. So, when people walk in, I mean, are you getting people from all walks of life and experience from people who are like, “I know nothing. Help me out. I’m actually kind of scared,” to, “I know exactly what I want,” like where are the people that you meet sort of falling along that spectrum of relationship with the category?
Sergio Hernandez: Yeah. The whole range, like I said, and I’m sure Andy can speak to that of patients he currently has. You have the entire range. You have people who are just trying it for the first time. Maybe they’re a little older than any of us in the room but you also have younger people who have been consuming and obviously much higher tolerance and experience with it, that you wouldn’t recommend the strongest, most potent products or somebody who’s very specific about an ailment they’re treating, whether it’s anxiety, whether again something is then more intricate as appetite or pain management, everything like that will be considered and factored so that everybody who walks out we want them to have the best possible experience because we want return of business. Like any savvy business, that’s what you’re really banking on. Not that one sale.
Rick Kiley: Yeah, of course.
Andrew Pettingill: We’re always accepting new patients and I get patients that are baby boomers and I get patients that are adolescence and they’re using it with their parents’ permission with the medical card.
Kristin Pettingill: It definitely falls on us as caregivers because in the medical world right now, doctors don’t know what to say. Doctors are like, “Sure, go try some,” but they don’t know what to tell their patients how much, how often, what form. And so, that’s where it really falls on us to help those people decide what is going to be best so that they don’t take something and then feel the worst that they’ve ever felt for the next four hours.
Sergio Hernandez: I say majority that, like we sell a lot of edibles and a lot of the people are in their 60s and they want to use it for sleep before bed and they don’t want to get high. So, every patient and every consumer are going to be different and you really need to tailor the meds to that person and start really low and try to dial it into their specific needs.
Jeff Boedges: We’ve been hearing similar stuff from other states that I’m actually surprised at the average age of the medical consumer and how really it’s much older than I had anticipated it would be. They seem to be the most in need of it and if not, the most open-minded about it. They certainly are near the front.
Sergio Hernandez: Yeah, I definitely would agree with that.
Rick Kiley: Yeah. I mean, you get the sense that, you know, when you talk about the non-medical individuals that will come through your new location when it finally opens. Have you talked to anybody in the sort of adult-use states that there’s a big difference in the consumer need when they walk through the door? Do they need less guidance? Are they more discovery minded? Are they like, tell me what the new cool thing is?
Jeff Boedges: What I have to wonder is what it does to like, let’s say you’re a medical user for five years, and then all of a sudden now I can go 250 feet away and get the same product at a rec place. Is it cheaper? Same? More expensive? What’s it going to look like?
Andrew Pettingill: Well, the price will likely be higher because they’re taxed higher. Recreational adult use…
Sergio Hernandez: And overall regulations cause licensing is more and so, we’ve received definitely rec having higher pricing because of that. I think that you’ll see a lot of people stay in the medical community and stay with the medical program because to get a medical marijuana card in the State of Maine is so inexpensive and there’s no qualifying condition now in Maine. Before we used to have the five conditions like one being cancer.
Andrew Pettingill: But now anyone can get one as long as you get a card from your doctor or any doctor that you create a relationship with.
Jeff Boedges: My neighbor is a dentist.
Rick Kiley: In New York, there is like Doctor Weed. You can just like go and find him.
Andrew Pettingill: But I think that you’re going to see the consumers still want to know as much as they can about the product. It’s like alcohol and Maine being such like a microbrew beer state where everyone’s kind of like wants to know where the hops are and where it was made. And you know what color hat the guy was wearing when he made it.
Kristin Pettingill: Any cool new name is like Garlic Breath.
Andrew Pettingill: Yeah.
Sergio Hernandez: Yeah. Absolutely. It’s like, yeah, where you take the difference of, you know, for me, personally, I have a story of going to the same place in Seattle with about a year of difference, a year in-between visits. And the first time I went into this space, I had somebody to walk me through every single stream every single form, dosage, grams. I had such a great interaction with this guy. I remember thinking to myself, I was still operating in Brooklyn at the time, Rick, and I remember thinking, “If the guy sold cheese, I would hire him.”
Rick Kiley: Right. Right. Right.
Sergio Hernandez: And a year later I was in Seattle again for business and went to the same store and had completely the opposite experience. I had a, “Hey, bro,” guy who was like, “Dude, that stuff right there, that stuff is down.” And I was just so put off by it and I think a lot of people like myself in the demographic that we’re targeting are always going to be interested in the educational experience and having somebody that full-service interaction that’s going to walk you through it, tell you about it, and you walk out of there feeling smarter. And then you go home and get really dumb.
Rick Kiley: Yeah, well, but hopefully you can remember the…
Sergio Hernandez: Hopefully, you remember. You have some notes or all of those things, those materials, point of sale materials. We want to have and we will have all of that for somebody to go home with information and proper dosage and recommend that, hey, if you’re really looking to sleep, then take this around this time or make sure you’ve cleared your to-do list before you do because we specifically found something for you that is going to make you want to go to sleep shortly.
Rick Kiley: Yeah. Yeah. I mean, we are marketers. That’s what we do for a living so like we’re very interested in this challenge of connecting consumers with cannabis brands, making that connection and helping really grow the industry and the category which is a very different challenge than just trying to bring a new vodka or a new beer to market where it’s already a really mature category. People know what it is, they know what the effect is, and the fact that people can, one, when they consume this get a very different effect based on what they’re consuming, that makes it very different from alcohol. You know, getting tipsy is there are variations, okay.
Jeff Boedges: That’s a conversation for another time. Yeah, I think it would be a good – because you got to think about it. If consumers begin to basically, they’re going to curate their buzz. They’re going to curate how they feel. In a recreational market, that’s – I can’t think of a better way to put it. Does alcohol have to follow suit? Do they have to say? You know, how do we curate our buzz? Because, I mean, I know people for sure who say tequila has a different buzz than whiskey than wine. So, I’m just wondering…
Rick Kiley: But I think that’s cannabis’ advantage though, the curated buzz and like if you think of the experience in the store and I think, Sergio, what you’re talking about is when I’m walking around, this guy was like, you know, he’s like a museum tour director. He’s like giving me every piece of information I know to make that informed decision. That’s really powerful and it’s good to hear that sort of firsthand.
Sergio Hernandez: Exactly. And in the same way that in the comparison of alcohol to the spirits industry and with wine, in particular, I keep thinking because we have a background in hospitality and restaurants, I keep thinking of the sommelier experience that you can have and the low percentage of customers. I’m one of them who when I engage with a sommelier I want to know the percentage of each grade blended into this wine but that’s a very low percentage of people and I think we’ll find the same in cannabis that how many people really need to know the name of each strain, the genetics of it, and how far it goes back? What they really want to know is how is this going to make me feel. Is it the stuff that I can work in the yard after I take a puff or is this going to be go-to-bed kind of thing? And categorizing things like that is going to be very important I think to simplify it to make it more accessible for everybody.
Rick Kiley: Yeah. I encourage you to explore that idea further and don’t call the people budtenders. Like I want to elevate that.
Jeff Boedges: Right.
Rick Kiley: Let’s elevate beyond. I like sommelier. Cannabis sommelier. That’s nice.
Sergio Hernandez: That one’s taken though.
Rick Kiley: So, cool. I think we’re kind of getting towards the end here. Just one quick question because we talked to other people in the industry. We know that banking is a big challenge for everybody. In fact, no matter what state you’re in right now, I think the Safe Banking Act, just I think it passed the House of Representatives. It’s not a law yet but I don’t know if you’re familiar with this basically where, you know, so that you guys could bank because of the interstate transactions. Is banking a major issue for you? Is it not as big a deal as maybe we think it is? I’m just curious.
Andrew Pettingill: Yeah, I mean, it’s a great point. Originally, when the program started, we all had to bank in disguise. A lot of people do really need that, banks when they catch you that you’re like a cannabis company.
Rick Kiley: What was your banking name?
Andrew Pettingill: My banking name was Maine Fodder.
Rick Kiley: Okay.
Andrew Pettingill: I grew a lot…
Kristin Pettingill: That’s your farm.
Andrew Pettingill: Yeah. It was my farm name, but fodder is another word for a cow food and that was grass. Yeah. And we came up with Maine Fodder. So, as soon as we found that we could bank, well, it started off with a local bank. It was a credit union. It’s not a bank and it’s insured differently and they created an actual cannabis sector at their bank at their credit unions. It’s called Seaport Credit Union.
Jeff Boedges: It’s 250 feet from the regular credit union.
Rick Kiley: With a donut shop.
Andrew Pettingill: Yeah, they have a compliance officer and he meets with all of the cannabis accounts and they do what most people in the industry are doing. They take advantage where they can and they charge its cash transaction fees and they charge us an annual fee and the funniest thing is their annual fee is $420 a year.
Rick Kiley: 420, man.
Jeff Boedges: 420, that is…
Andrew Pettingill: Right? The hedge is doing…
Jeff Boedges: There’s a lot of hidden things here. Yeah. You guys are very witty in your book accounts.
Andrew Pettingill: Now, it’s relatively easy to bank like we can deposit cash. We can do…
Kristin Pettingill: Air bill.
Andrew Pettingill: We can transfer cash directly from caregiver to caregiver in our bank accounts now.
Rick Kiley: Can you accept credit card payments?
Andrew Pettingill: We cannot accept credit card payments.
Rick Kiley: Debit card payments?
Andrew Pettingill: We cannot accept any card payments.
Rick Kiley: A deck of cards?
Jeff Boedges: You could barter though.
Rick Kiley: Yeah.
Sergio Hernandez: Right.
Andrew Pettingill: That aren’t too different from ATM machines that are like they call them cashless ATM so we can incorporate to our point of sale system.
Rick Kiley: Right. That’s cool.
Andrew Pettingill: But the operating exactly like an ATM machine really, but it just makes it easier so the customer doesn’t have to walk up to an actual ATM. We don’t have to have an ATM in the store but it would charge the same transaction fee like 3.50, 3.75 per transaction and just the customer can use it in our point of sale and it gives us a voucher that we get paid as if we had an ATM machine in the store, basically.
Sergio Hernandez: I’d say the one thing that we do, do that is necessary is we do bank checks directly from seaport to pay some of our vendors and like our landlord and some other people because our checks actually say that we’re Evergreen Cannabis Company and their banks won’t accept them. So, we’ll do a bank check made directly out to them so that their banks will accept it.
Rick Kiley: Cool.
Jeff Boedges: Yep. So, the lesson here is don’t call your company a cannabis company.
Rick Kiley: Yeah.
Kristin Pettingill: Yeah.
Andrew Pettingill: Yeah. Call it something that doesn’t have that any sort of word in it.
Rick Kiley: Yeah. Maine Medical Providers, Inc. and 420. Great. So, we tend to wrap up our interviews with the same question for everybody. The podcast is called The Green Repeal for a reason. You know, it’s our belief that although it’s some days it seems like it’s moving faster and some days slower that eventually we’re moving towards federal legalization of cannabis. I’m curious to what you all feel about that, what you hear on the ground, and maybe given the halting experience that you’ve had in Maine, you might be on the more pessimistic side but do you feel that cannabis is going to be legalized federally? Do you think it will happen soon, later? What are your thoughts?
Andrew Pettingill: I’ll start. I don’t think we’ll ever see federal legal cannabis in my lifetime.
Jeff Boedges: Whoa. What?
Andrew Pettingill: I think that we’ll see certain states that will never accept it and the federal government will leave it up to the states to police it and policy it.
Kristin Pettingill: I think we’ll see a decriminalization but I would agree with Andy, that there are going to be states that potentially will never get on board with this.
Rick Kiley: Right.
Sergio Hernandez: I’m slightly more optimistic, but newer to the business. I would like to think that within five years, every state will have some kind of medical program at least but then I’m also seeing the realities and maybe the reality of how this product, how long this process is taking, and all the brick walls that we’re hitting that’s going to make it hard state-by-state, depending on the state. And the more conservative ones, will they ever opt-in? I’m not 100% there.
Andrew Pettingill: I think, a good, what something that I look at is every administration change in the Netherlands, you see this ebb and flow every eight years or every 12 years there were they become more liberal towards drugs and prostitution. And then it goes the total opposite way and they start shutting down stores and they start, you know, making things illegal again. I think that in the United States, you just won’t like, for instance, Louisiana and those southern states I just don’t think will ever embrace the legalization movement.
Rick Kiley: It’s possible. We’re not sure. That’s why we keep asking the question. I think the only thing that I always sort of come back to is that, you know, when the United States needs some revenue and we’ve been talking about the history of prohibition in America and one of the main drivers of the repeal there was just the fact that the cost of enforcement was ridiculously high. And then the opportunity to recapture the revenue was really important. So, just, yeah, I think you are sort of suggesting that you think decriminalization will probably be everywhere, which would probably reduce the enforcement cost, of course, but I just feel like there’s so much potential revenue to tax.
Kristin Pettingill: Absolutely.
Andrew Pettingill: The federal government actually grabbed the tax code from prohibition called 280E and they actually apply it to our industry as well now.
Rick Kiley: Right. This is where you can’t deduct all the stuff that you want to?
Andrew Pettingill: Correct. And they do it based on the square footage of your sales floor and when you’re in the retail industry.
Rick Kiley: So, what you’re saying is the federal government’s already collecting plenty of taxes from you?
Andrew Pettingill: Yep. They have. Yeah. They are doing it in a way that makes it seem like they’re not.
Rick Kiley: It is strange. Well, the federal government does a lot of things that I think…
Sergio Hernandez: The tax code Andy’s referring to is this is word-for-word, federal tax of expenditures and connection with the legal sale of drugs. So, even in a state where it’s been legalized federally, it’s still illegal so they are collecting that tax revenue state-by-state.
Rick Kiley: Man, I got to go write some tax laws. That’s amazing. Great. Well, listen, we really appreciate you all spending your afternoon here with us today. So, before we go, I want you to be able to let everybody know if they wanted to find out more information about you, about your company, you got investors that we got to reach out to once you get your license, all that sort of stuff, consumers need to know where to find you, where should they get some information about you?
Sergio Hernandez: Yeah. People can follow us on social media using the easy to remember handle at Maine Cannabis or they can join our mailing list by pointing their browser to www.EvergreenCannabisCo.com which will very soon be a fully functional educational website.
Rick Kiley: Super cool. Andy, Kristin, Sergio, we really appreciate you joining us today. Thank you so much.
Jeff Boedges: And we wish you the best of luck in your continued fight against the man.
Kristin Pettingill: It’s wonderful.
Andrew Pettingill: Thank you. Yeah.
Sergio Hernandez: Thanks for the opportunity, guys.
Andrew Pettingill: Come to Maine and join us and hang out sometime.
Jeff Boedges: We will. I come every summer.
Rick Kiley: Jeff’s there every summer. You’ll definitely see him.
Andrew Pettingill: Great.
Rick Kiley: See you guys. Thanks so much.
Andrew Pettingill: Take care. Thank you.
Sergio Hernandez: Take care.
Jeff Boedges: Bye.