289: Nate Lipton On How To Sell Cannabis CBD Products Online

298: Nate Lipton On How To Sell Cannabis CBD Products Online

Today I’m thrilled to have Nate Lipton on the show because he runs numerous ecommerce businesses in the cannabis space.

For example, GrowersHouse.com is an 8 figure ecommerce store selling growing supplies and he recently launched a line of CBD products over at TruPotency.com

In any case, I have many students and readers who have been asking me questions on how to break into this space so we’re going to have Nate answer these questions directly.

What You’ll Learn

  • How did Nate get into the cannibis space and his backstory
  • How Nate sources products for GrowersHouse.com
  • The challenges of selling CBD products
  • Legal issues to be aware of
  • Nate’s primary sales channels

Other Resources And Books

Sponsors

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Transcript

Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where I bring on successful bootstrapped business owners and delve deeply into the strategies they use to grow their businesses. Now today, I have my friend Nate Lipton on the show. And in this episode, we’re going to talk about how to start and grow a successful e-commerce store in the CBD cannabis industry. So stay tuned for an excellent interview.

But before we begin I want to thank Klaviyo for sponsoring this episode. Code Black Friday is right around the corner and for my e-commerce store email marketing is a heavy part of my holiday sales strategy. And in fact last year, it was close to 50% of My overall sales. And of course as you all know klaviyo is the email marketing tool that I use for Bumblebee Linens now Klaviyo is the growth marketing platform chosen by over 20,000 Brands generating more than three point seven billion dollars in Revenue in just the last year and with the holiday season right around the corner klaviyo has created the ultimate planning guide for crushing those holiday Revenue targets for marketing creative to segmentation strategy. These are proven tactics for more personalized marketing, especially in time for the holiday season. To get ahold of this guide, visit Klaviyo.com/mywife. Once again, Klaviyo.com/mywife.

I also want to give a shout-out to Privy who’s a sponsor of the show. Privy is a tool that I use to build my email list for both my blog and my online store and right now I’m using Privy Display a cool Wheel of Fortune pop-up basically user gives your email for a chance to win valuable prizes in our store and customers love the gamification aspect of this and when implemented this form email signups increased by a hundred thirty one percent. Now, you can also use Privy to reduce car abandoned with cart saver pop-ups and abandoned cart email sequences as well one super low price that is much cheaper than using a full-blown email marketing solution. So bottom line Privy allows me to turn visitors into email subscribers and recover lost sales so head on over to privy.com/steve and try it for free if you decide you need to the more advanced features use coupon code MWQHJ for fifteen percent off once again that’s privy.com/steve. Now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast we will teach you how to create a business that suits your lifestyle so can spend more time with your family focus on doing the things that you love. Here’s your host Steve Chou.

Steve: Welcome to the my wife quit her job podcast today. I’m thrilled to have Nate Lipton on the show. Now Nate as someone who I was introduced to by my buddy Andrew Youderien and the reason I want an 8 on the show is because he runs numerous e-commerce businesses in the Cannabis space. So for example Growers house is an eight-figure e-commerce store selling growing supplies, and recently. He launched a line of CBD products over at truepotency.com. In any case I have many students and readers who have been asking me questions on how to break into this exact Space so I figured I’d have Nate answer these questions for you directly and with that welcome to show Nate. How you doing today man?

Nate: doing great. You know, it’s Friday morning. I’m feeling pretty fresh ready to get some work done and then head off for the weekend.

Steve: Are we in the same time zone? I can’t remember.

Nate: Yeah, we are. I’m on I’m on Arizona, which is a funky time zone that never changes. Okay. Whereas you’re in California, which does so but yeah. We’re on PST right now.

Steve: so Nate, how did you get into this space? And what is your backstory?

Nate: Yeah, well, I guess the back story goes where I was going to school at the University of Oregon and around you know, when I was doing school there. I was double majoring in more like economics and finance thought I was going to get into the finance industry, but I was always interested in entrepreneurship and the Cannabis industry in particular kind of thrilled me just because I saw a really long Horizon of growth, you know, and that was around 2010 I graduated so I tried out, you know, the finance industry for a little bit jumped into an And shipping Morgan Stanley and really didn’t like it.

So after about three months I decided I would go after kind of plan B and do more of a kind of a passion project. That was a little bit a little bit riskier, you know as an industry, especially back in 2010 where not a lot of the paths have been paved at that’s that’s..

Steve: everything was illegal back then right?

Nate: you know, it’s not like everything was a hundred percent illegal, but there were really what it was is there were just a few States that had medical cannabis. Okay, and the Laws for the state. Everyone was fighting about the difference between state law and federal law and which Trump’s what so the legality was a huge grey area. So, you know people getting into the Cannabis industry back then if you kind of had to be a little bit of a cowboy. you know, you have to really understand the risks and then like be okay with them. So I started looking into the industry ended up working for as a manager at a dispensary in San Francisco, and then worked for a growing Supply Equipment Company. An e-commerce one all in the Bay area for a couple of years after I graduated and you know, I was interested in opening a dispensary at that point in time.

I was interested in business did some growing, you know back in Oregon and you know, when I looked at applying for a dispensary license, the paperwork was huge. I found that even when you get a license, sometimes the police would like to raid dispensaries and deal with the legality of it in court rather than prior to them rating a dispensary. It just depends on that local county or city and whether the district attorney was anti cannabis or Pro cannabis and it’s not a place that really wanted to be in so I kind of settled more on to the growing equipment side, which is you know, growing is a passion of mine. So I said, you know what I could sell the equipment to, you know, these people jumping into the Cannabis industry and still give myself level of Separation where I’m not touching the plant or opening myself to that kind of risk.

Steve: I’m just kind of curious as you’re talking. so that equipment that you On Growershouse.com. Are they your own Unique Designs. Are you drop shipping? Are you carrying inventory? How does that work?

Nate: Yeah, so man, we do everything and honestly, it’s a little complex but we have in the back end of our system we have about 16,000 skews about yeah, it’s a lot and we have like probably 300 vendors that we work with too and but probably about 6,000 of those are actually up on our website as it enabled and we do about e percent of our Revenue, you know via shipping out of our warehouse here in Tucson, Arizona and the other 50% I revenue is probably drop shipped and we probably have 300 skews that we have that are kind of OEM private label items or items that we’ve created that were usually purchasing from direct from manufacturer whether it’s like domestically or overseas China things like that.

Steve: I’m just curious to manage all those skews. We’re just kind of curious what platform you’re on right now.

Nate: Yeah. So the front end of the site is just Magento it’s a 1.9. So we’re probably be switching over to something else soon, like a molten or Bigcommerce or Magento 2 and then on the back end. We have a pretty holistic system called brightpearl and that is basically all accounting order processing Inventory management things of that sort.

Speaker 2: I see okay. I’ve never heard of those. I had never heard of brightpearl before is that generally used for larger e-commerce operations?

Nate: you know brightpearl is I would say actually it even works with small. Lower to Mid stage, I would say once you get to the point. Like I don’t I don’t really know what their entry level is. I think they were at work with very small stores though two people even that have one or two, you know employees just starting out when we ended up switching to them. We were already doing a fair amount on a business, you know, we had probably 20 30 employees. So I haven’t used on the smaller side, but we switched off of Stonehedge

Steve: Yes. Yes. Stonehenge. I know those guys. Yeah. So when you first started out, how many skews did you have and how did you kind of drive your own early traffic.

Nate: Yeah, so driving the early traffic. So I did work for another Hydroponics e-commerce store in California for a bit to get my chops. And then we move down to Tucson Arizona to start Growershouse.com and starting out. We did have a small retail store. But we were in like the worst location you can possibly be in we are like because when you set up with certain Distributors, they give you basically a radius that you can operate within and if there are stores already You know that have a location in a radius. You can’t be within you know kind of their area. So I wanted to open up in tuscon the only place I could open up is like on the south side right next to the airport like no one hangs out down there in Tucson. So we open this tiny little thousand square foot retail store.

And then we open the online store the online store, you know, like most online stores took a while to get going like I would say the first three months were a little like, you know, almost like crickets..

Steve: sure.

Nate: And do that the retail store kind of helped us through that because we did some local advertising which I find is a little bit easier to do just with targeted keywords for your city things like that

Steve: while we’re talking about advertising. I do know that it’s challenging to advertise, right? Because the Facebook’s and the Google’s the world won’t let you advertise anything related to cannabis. Is that correct?

Nate: That is correct. So anneal if you go to Growershouse.com, you’ll notice that we do sell equipment to people who grow plants. You won’t notice that it says. Cannabis or marijuana on their it just so happens that so many people that use the equipment that we sell are doing that and that industry is booming. The thing is, I mean we sell to like USDA, NASA, you know many universities including Universe Arizona Cornell, you know, Loyola Marymount, there’s a lot of big institutions that buy from us and we have kind of a diverse customer group.

Steve: So does that imply that the word cannabis, CBD Is is not mentioned at all anywhere on the Growers House website?

Steve: Yeah for the most part unless it’s like part of a product title, but we do not really try and put the word into our site just two of our own volition. you know, we like to keep a separation because it’s top it’s like advertising on Google is something that you know is highly sought after for e-commerce stores. You can help you when you need to bridge the gap between, you know, I guess getting orders and finding out what your what your voice is and how you can not use Advertising to drive traffic which is ideal, you know.

Steve: so does that imply then that you are running Google AdWords Facebook ads and Google shopping?

Nate: Yes. So we are for Growers house.com. and you know doing multiple properties and some I cannot do but I think will probably jump into those.

Steve: Yeah, we’ll get into that later on the interview.

Nate: Yeah. Alright. Okay, so your early sales then it sounds like you built up the retail shop first and that kind of got you over the hump what happened after three months that allow you to get more sales.

Nate: Yes. Yeah, so at that point in time, we’re talking probably 2012. I was really noticing that led lights were really popular for hobbyist Growers. So I thought to myself, you know at this point in time. I was not an expert in e-commerce not an expert in SEO none of these things, but I do have a fair amount of grit and like if I want to do something then I will just figure it out. That’s kind of my personality type. So I was like, okay, I’m going to learn everything I can about LED lights. So I can be basically an expert in this room spoke to tons of Manufacturers. Everyone was you know claiming that they’re LED was the best and what I said is you know, what I there’s a lot of confusion in the marketplace. How do I reduce the confusion? And what I ended up doing was taking all the products that claim they were the best and I bought what’s called a par meter parse is an acronym for photosynthetically active radiation.

So really what I did is just imagine you just measure how powerful light is over the space that it’s intended to light and I ended up measuring all these, you know fixtures and then post graphs of how they all did and then made a video about a short YouTube video and I ended up publishing that and it took off because no one else was doing that and I was just providing the consumers with basically a way for them to to Wade through all the noise so that they can make an informed purchasing decision.

Steve: So and video that took took off for their links back to your site or was it just purely informational?

Nate: No absolutely links back to the site saying like here are the four products. We tested This Is How They did here are links. If you would like, you know, are you if you’re interested in purchasing one of these products that content ended up getting shared quite a bit and we kept going down that that kind of that strategy for growth. We ended up doing more and more videos more comparisons. I will say when you’re doing comparisons of products that you sell, you know some vendors are ot very keen when they’re not professional.. That’s number one.

Steve: That actually my next question.

Nate: Actually, you know, yeah, so dealing with that is I guess part of the process and what I could recommend anyone is trying to be as objective as possible. Tell people your vendors prior to doing the test that you’re doing the test and ask, you know, I even said when I first started out I didn’t really ask anyone but I learned this I was at okay, I want to do this test. Would you like to be included, you know, I’m going to just put objective information out there. I’m going to have your expectation prior to me even doing it and I promise I’ll share it with you. And once I did that I really did not get any Flack from suppliers. So that’s what I’d recommend that people do. I think Honesty is kind of the best policy even though you know, they may not be you know, extremely happy with the outcome.

What I found is me doing testing often Galvanize them to iterate their next product interests focus on the best features that you should so it’s almost like in a way your..

Steve: Helping them

Nate: to see the industry forward. Yeah, you know,

Steve: so on these videos then naturally people would just buy the best one, right? So would you stop carrying the other ones or did it matter?

Nate: No, I mean I would still carry them and sometimes there isn’t just a best one. Sometimes there’s you know, this one’s the best price performer maybe in this one is The All Out best in terms of performance. Okay, and sometimes this one’s better for smaller growing operation may be more compact in design or form factor, you know..

Steve: will you advertising there in the first three months or was it just kind of ramping up your YouTube efforts?

Nate: Yeah. So man, we started then even have Google shopping like product listing ads.

Steve: It had Frugal. It was free.

Nate: Oh my God, that was those are the heydays. I was literally thinking about that this morning when I was driving into work and I was like man remember when Google shopping was free for like a year and a half

Steve: Oh man, it was awesome.

Nate: I was like, yeah that honestly, I think that probably helped us just the Serendipity of having We’ll give you free advertising for a year-and-a-half to try out their new product. That was great. But you know, we just started out with AdWords like you know that showed up at the top of keywords. This is before product listing ads and it worked okay, but I found that you know, putting out high quality content is the end-all be-all, you know, it adds this certain amount of authority to you and your brand and people do recognize that you’re actually doing this testing the no one else is so why not? Sometimes they would call us to ask us about the testing and then by a light and then that kind of knowledge seeps into our brand and they trust us from any of the other products.

Steve: Yeah. Can we talk a little bit about your YouTube strategy outside of just putting out great content. Are there any little things that you do to the videos to promote them to become viral?

Nate: You know, I would say first off the most important thing is are you going to put information out there that no one else has put out before that. What I would say is priority Number one, once you do that make sure you’re doing it for things that people are already searching for so if people are searching for let’s call it the you know, the best compact LED grow light do a test on the best compact LED grow lights, right? You definitely don’t want to try and create demand where there is none. And then thirdly you know, another thing I did is I would take our videos and publish them on our site and then I would write the transcript on our site and you know.

Who’s going to read the transcript of a video not too many people but it does put the content of your video back on your site and you can hyperlink that back to your products and that process although people are like, you know, why would I do that? It’s just a whole bunch of written content Google Google really likes that content usually in the videos. I also Say things that I already pre defined as keywords that I would like in that written conten.

Steve: That’s interesting because I just wondering if that content ends up ranking because I know for my podcast I provide a transcript and I think Google is smart enough to know that it’s a podcast I guess now and those podcast post never rank, even though there’s a really long transcript in there.

Nate: Yeah, that’s interesting. Definitely haven’t tried it from that side. I wonder if there’s a difference or whether over time because we’ve gotten into we’re kind of talking about Phase 1 and video content for us right now, which is a lot of product comparisons and then we Scaled up and made girls Network and then some of our bigger Series so I’d really have to look back at our content to see if Google’s treating it differently today versus four years ago.

Steve: Well, let’s talk about what you’re doing today. What is the publishing schedule look like what sorts of content are you putting out?

Nate: Yeah. So here’s the big conundrum in cannabis. There’s what we call Whiteside companies and then there’s Dark Side companies. So I kind of like to think about it like Star Wars.

Steve: Okay, you know, you might need to explain those two terms for For the listeners

Nate: definitely so Whiteside usually means I’m a company that sells to the Cannabis industry, but I don’t really acknowledge that very overtly if at all and that’s because you want to keep certain banking relationships, maybe public perception credit card processing. You know, Google advertising groomershouse is a Whiteside company now, we’re jumping into some of our other companies which are dark side companies. So a dark side company would be like my other company growersNetwork.org and our video series can of Crips those are explicitly about cannabis and you know, it’s much tougher to get things like credit card processing banking. There’s a lot of baggage that comes with being a dark side company that makes it a lot harder and you really have to figure out what your company’s strategy is because it’s really nice to be a dark side company where you can Target your customer directly.

You know saying things like cannabis or marijuana or anything. Related to those terms that they’re searching and lightside Company. I can’t really do that because I want to keep a lot of those a lot of those tools like advertising. So this was a really big conundrum for me, you know, and I was like man, there’s all these companies that are doing this but I would lose, you know, all of my banking and credit card processing. So I thought why not create a separate entity on the dark side and really try and be able to communicate with our customer base, but actually Being tongue-in-cheek, you know, we have a shirt that we have that you may have seen and it’s really popular these days called legalized Tomatoes. It just says that on a shirt and people are like, why does it say legalized tomatoes on your shirt? And you know, I told them like when we first opened our store you actually could not talk like someone called girl’s house and they say Hey, you know, I would like to grow this cannabis plan my closet and we say, oh, you know what we can’t teach you how to grow cannabis, but if you were going to NATO’s, this is what I would I do..

Steve:.Okay.

Nate: so it’s a little bit. Yeah, that’s kind of like a way that we kind of straddle that line. Maybe that’s yeah the gray side but you know, I really wanted to be able to talk to those customers. So that’s when we created Growers Network, which is a forum and really a I would say a media company. We started creating some video content. That was our first thing that we came out with is called can of cribs kind of just think of it like MTV Cribs, but it focuses on Like the largest and most technologically, you know developed cannabis growing operations in the country and we walk through them and show you exactly how people are growing the Cannabis that people, you know smoke every day in these recreational States and the added a tremendous. Like that’s that became a video series in itself that just took off a lot of people really like the content High Times TV picked us up as their first cannabis Centric video.

Steve: I See that strategy working really well

Nate: Yeah and like we just had Are you know one of our episodes pass a million views? It was really just showing something. Like I said earlier content that no one else has really done before and you know, what people are doing now, a lot of cannabis companies are using our can of cribs series as part of their training when people come into the Cannabis industry so that they understand the products the terminology how people operate so it’s just taken a life of its own and a sense

Steve: So let’s say I mean you do have a dark side company, I guess that’s true potency is considered dark side

Nate: Yeah, so true potency, which I didn’t mention is trupotency.com. That’s TR you not there’s no e on it trooper and z.com is at its really a retailer for CBD based products and those products. Well, yeah, that is dark side. CBD is also dark side right now, but I would say which a lot of people say. It’s federally legal, you know, after the Hem bill was signed, but the thing is the FDA hasn’t really ruled on what they’re going to do is CBD. So the banking issues are still there. The credit card issues are still there. Still it’s still a tough Market to be in you got to be creative to really get started.

Steve: You mentioned a couple things earlier like the difficulty getting credit card processing Banking and that sort of thing. How do you overcome those? If you’re a dark side company?

Nate: you know, I would say there are these are things you have to do. I mean we had even though we’re in Arizona Corporation. We had to apply and become what’s called an I think it’s an alien Corporation in Washington state that Term might be off alien corporate entity. But basically we had to reincorporate in Washington as well. And then we had to use one of the Washington Credit Unions since Washington’s a recreational State Arizona only a medical State and there’s no banks really here that can Bank you so we had to go and do that and then open a bank account because those credit unions in those States will only Bank two entities that are from that state. So sting. Okay. Yeah, that was kind of a tough one credit card processing

Steve: Do you use Stripe or PayPal or?

Nate: no. Yeah, no definitely don’t use PayPal because you’ll start collecting money. They’ll find out what you’re doing. Those are show you down and keep your money for six months. not good. I mean I will tell you this I’ve had think it could counts shutdown probably a half dozen times credit cards shut down probably a half dozen times at this point. It happens and I just it’s almost comical to me but it’s happening much of much less often. This was like the first four years. It happened

Steve: To growershouse too?

Nate: even to Growershouse..

Steve: huh? Okay

Nate: people would it really didn’t happen too often, but even the girl’s house sometimes a banquet just say, you know, what were we understand that you’re not touching cannabis. They’re doing anything with it, but you’re too close to the industry. We think so. We’re making a business decision to that. We think you should not be banked by us anymore. Very unfortunate..

Steve: but you get your money still though, right?

Nate: Yeah, but I did have one Bank hold six figures for over six months.

Steve: Oh my gosh. Okay.

Nate: Yeah. So definitely be careful. I would say at this point. It’s there’s plenty of bit like you don’t have to go through what I went through, you know, four years ago today, you can find a credit union in another state. Tell them exactly what you’re doing, you know, try to be above board with your bank and your credit card processor. And there are if you look hard enough, you will find them.

Steve: If you sell an Amazon or run any online business for that matter, you’re going to need a trademark to protect your intellectual property. Not only that but a trademark is absolutely necessary to register your brand on Amazon. Now, I used to think that any old trademark registration service would work and that could even try to register my own trademark by myself on the cheap, but I was dead wrong. Securing a trademark without a strategy in place usually results in either an outright rejection or a worthless unenforceable trademark. Now, that is why I work with Stephen Wagner and his team from Emerge counsel. They have a package service called total TM, which provides the same attention to detail and process that large law firms do at a fraction of the price. Now for me personally, I like Emerge Council because of their philosophy, their goal is to maximize IP protection while minimizing the price. So before you decide to register a trademark by yourself or file for other I could protection such as a copyright or a patent, check out Emerge counsel first and get a free consult. For more information go to emergecouncil.com and click on the Amazon sellers button and tell Steve that Steve sent you to receive a $100 discount on the total TM package for Amazon sellers. Once again, that’s emergecounsel.com over at emergecounsel.com now back to the show.

So there’s no way to like, I guess Amazon payments is out too I mean are there any like real easy ways to pee outside of a credit card?

Nate: So let’s talk about the CBD industry. Each. Each industry is a little bit different and that’s the one that I feel like maybe the most people are getting into you right now. So on the CBD side, there are a few companies and there’s one that I use called T1 payments that was like an international processor. They’re widely used in the CBD industry, but you have to set up like a UK address, you know, so And establish your company in the in Europe as well. So same thing like we did in Washington. So that’s an option. You know, everyone’s going to charge you they’ll try and charge you somewhere between four and seven percent depending on my goodness. Yeah, so cost of doing business in a recent industry.

I guess you could say but there’s also some companies domestically that will do some CBD processing, you know, let me see who are some of the big ones. I think

Steve: what are you guys using for to trupotency?

Nate: Trupotency for? True potency and we basically have T1 payments that one in the UK and then we also are applying with two other companies right now to open us up more domestically and those are in process at the moment. And one of them is pay Kings. The other ones ale pay.

Steve: Does that imply that you just have these multiple payment processors just kind of lined up in case one goes down.

Nate: No redundancy is is necessary if you yeah, if you do not have redundancy and I would say both bank accounts and And credit card processing then you’re going to have a bad time because I you know, hopefully it’s not you but I would say to people just assume it’s not if but when you’ll have an issue, but it just depends how open you are with your processor. There’s some people they would even processing on you know, there’s a big avalon if you guys have ever heard of them. There are giant Bank on the backend of payment processing and they were about to bank a whole bunch of CBD companies and then they pulled out at the last minute.

So even when you know, everyone tells you it’s a sure thing it can get pulled the rug in your pulled out from under you will it be this way in 24 months? Probably not. It’ll probably be you know much more like just applying for a normal company. But if you want to get in early, then you’re definitely going to have to do a lot of work and be creative.

Steve: I mean realistically what was this lot was the last time it happened to you?

Nate: man. We first started shoot potency. Yeah about two weeks after we launched we got one shot down and we lost about three weeks ago

Steve: right. Okay

Nate: two weeks week.

Steve: All right, so it’s still a problem. Definitely. Okay.

Nate: Yeah, that was more of a processor that wasn’t really CBD friendly. So but they were just a processor that I’ve done business with for a long time. And I said hey can I connected here this it sure but then the backend Bank was like, nope, not cool. So we ended up moving over to that UK option which was our plan B.

Steve: Let me ask you this. So let’s say you didn’t have girls house and you didn’t have that forum for Growers and you just launched true potency. How would you Market that business?

Nate: Here’s the thing with with our CBD company. There’s so much. There’s also so much noise in the CBD industry. Like I heard a statistic, you know can verify it but it sounds correct just from being in the industry that 1200 brands of launched so far in 2019

Steve: It’s ridiculous, okay.

Nate: sort of and it’s okay. So that means a lot of competition that means a lot of people going after, you know, probably the top keywords things of that nature. I would say find a point of differentiation. I mean really for these 1200 Brands, there’s probably Ten formulators who are making all the products. So a lot of them are very similar. So, how do you how do you really differentiate yourself from the market and focus on pushing that point of differentiation and make that point of differentiation something that you know that people already desire like I would be going on something like ahrefs look up what people are looking for CBD for and say, how do I become the best at doing CBD for that and that could be CBD It was sleep or CBD Associated or let me see small breed pets, you know choose a niche. You can always expand from an itch. But if you’re going after the top keywords and 1,200 people are too I mean it’s it’s going to be a tough road to the top. So I would say try and find a smaller Niche to jump into and do that extremely well and really focus on pushing that point of differentiation. I mean for our site true potency we rock we actually did not even create a brand. Like a branded product the consumer packaged good right just a retailer.

So I buy wholesale sell retail. That’s what I do. But my point of differentiation is there’s so much crap in the market like so many CBD products out There are either mislabeled or formulated poorly or even have basically harmful things inside of them that you would not be wanting to take. So to me that’s a problem in the industry and like the FDA is not really regulating it because they haven’t figured anything out. There are no standards. so

Steve: actually I was going to ask you about that. Are there can anyone just off the street start creating the stuff? There’s no legality issues. No certifications.

Nate: Exactly.

Steve: Okay crazy.

Nate: Yeah. All right crazy so wild wild west. Yeah again more Cowboys. So I’m trying to Wrangle these people in and you know, what we did is said, you know, what we’ve gotten a lot of products from manufacturers and we read this study that University of Pennsylvania put out that 70% of the products that they tested. We’re not what they were. Basically, they were mislabeled. They had a whole bunch of things in them that they should not so we decided you know, even though a lot of these products have what’s called coas certificates of analysis. They tell you their products Okay, we would take their products send it to a laboratory where they would do hplc testing, which is high pressure liquid chromatography. There’s a few other ways of testing depending on what you’re looking for, but it would tell you the basically all the constituents of that product and we found out that when we did the lab test another guy so certified lab it look different than the lab result that they gave us.

So even these companies that say that their science fact tend to be what we found is misleading Their audience a little bit. Okay, so we started doing our own testing for all the products and we’re just going to say

Steve: okay.

Nate: Okay. Our point of differentiation is where high and say we’re hiring a science Advisory Board basically have like MDS and phds to help guide us on what products actually work in the first place since a lot of people I think are Making up, you know things that’s TBD can actually do and then secondly, we want to test these products with a certain amount of rigor that you know, we would be comfortable giving it to a loved one. Right? I’m especially someone who might be under medical care. You don’t want to be giving them something that has residual metal solvents in it for heavy metals. I mean residual solvents molds, you know, things like that and you know, if it says 500 milligrams of CBD, I actually want 500 milligrams. A lot of these products will say five Hundred and they’ll have 50, you know, and at that point it’s very misleading if not stealing in a sense because they’ll charge you for 500.

So we do our lab testing we take all those lab tests and we actually upload them to each product page. So everyone can review them, but they’re a little complicated. So we also tried to move a neuroscientist who’s our director of science here and he developed an algorithm based on basically all the scientific data that’s been Published about cannabinoids which are the main constituents within cannabis that you know, THC people are familiar with that’s the one that’s psychoactive that gets you high CBD not psychoactive or debatably psychoactive at a very very low level and works for things. You know, that people are discovering like epilepsy pain anxiety and there’s a whole bunch of others over a hundred other ones.

So we put cannabinoid profile in a graph along with the graph terpene profile terpenes are Kind of like cannabinoids but there are more General there. You’ll find them in fruits, you know, basically all I would say natural products and these cannabinoids and terpenoids interact with each other in this way that could make something more sedative or could make you maybe have a little bit more clarity of mind, you know, these certain things build building an algorithm and says, you know, this product is most likely better for x or y can really help people make a decision on what they should be buying

Steve: I just want to let you know that tickets for the 2020 Seller Summit are on sale over at sellersummit.com. Now what is seller Summit? It is the conference that I hold every year that is specifically targeting e-commerce entrepreneurs selling physical products online and unlike other events that focus on inspirational stories and high-level BS. Mine is a curriculum-based conference where you will leave with practical and actionable strategies specifically for an e-commerce business. And in fact, every speaker I invite is deep in the trenches of their e-commerce business entrepreneurs who are importing large quantities of physical goods and not some high-level guys who are overseeing their companies at 50,000 feet. The other thing I can assure you is that the Seller Summit will be small and intimate every year we cut off ticket sales at just a couple hundred people. So tickets will sell out fast, and in fact, we sell out every single year many months in advance now if you’re an e-commerce entrepreneur making over 250K or 1 million dollars per year, we are also offering an exclusive mastermind experience with other top sellers. Now, the Seller Summit is going to be held in Fort Lauderdale, Florida. From May 6 to May 8. And right now, we are almost sold out of Mastermind tickets already and I will be raising the ticket price regularly starting the day after Cyber Monday for more information, go to sellerssummit.com. Once again, that’s SELLERSUMMIT.COM or just Google it. Now back to the show.

Steve: Did you intentionally not private label your own CBD products? And so that these studies could come across as more impartial?

Nate: Exactly. Yep. I could come out my own product. But then it’s like how could you trust me from another person who sends says that are signs backed. I need to be objective. You know right now. I mean, I will tell you this we brought like 700 products in right now. We launched and one of our biggest problems is we have like 60 products on our site. Can’t we wanted a lot more we want in 100 and 200 but so many products have failed our..

Steve: So the testing of our product is 10% of the products have passed your testing?

Nate: you know, the ones that have gone through the lab we brought 700 in about I think right now we’ve had about 400 approximately go through test the lab testing and yeah out of that we’re at about 60 live products on the site.

Steve: that sounds like really scary to me.

Nate: Yeah. Yeah, so Basically, it’s hovering. It depends on the week. But yeah, usually hovers around 20% of the products. We test actually passed and sometimes you know passing can be as you know, as simple as you know, what we say if it has when you test scientifically I mean, we do have a threshold or margin of error. So like if it says 500 milligrams, it has to be plus or minus 10% for it to pass

Steve: right

Nate: But then also has to not have residual solvents, you know, it has two basic. Not have any molds or pesticides that ends up showing up in our lab testing and you know, I can’t have anything else that they say it does have and it ends up not having

Steve: that makes sense.

Nate: So if it passed all those tests for us, then it ends up going on the site. But yeah, like 80% of the products have not passed which for us now we’re like, maybe we should create products because we can barely find enough that are actually viable. But that that probably wouldn’t be for years probably

Steve: How are these people manufacturer. They just like doing in their home kitchens or something or

Nate: you know, you know what it is. I think everyone’s moving so quickly and since there are no standards for quality control. It’s it’s just a smash-and-grab market right now, you know people I think are focusing on, it’s tough. There are people out there that are very focused on quality of their product and then there are some people that are focusing on you know, what there’s an opportunity in CBD right. Now I’m going to be as aggressive as possible. And sometimes QA is not the top priority quality assurance is what I mean by that which is unfortunate and like that’s why a lot of people are pushing put a lot of pressure on the FDA to like say something about these products, you know, let’s come up with you know, some way to State standardized testing.

I mean, it’s even we’ve been brought up in our office like maybe we should come up with our own stamp of approval certification you mean yeah run, sir. Advocate it’s not like that’s not our core focus of our company, but maybe the industry needs it. And if no one’s doing it, like maybe we should jump into it. By the way, if anyone wants to help me do that. They know how to please reach out. I’m very busy and I don’t know if I could take on another core competency for a business.

Steve: So true potency though. So just back on marketing and if you didn’t have anything you mentioned, you know, obviously putting together a unique value proposition. Would you be going the YouTube route or the Blogging route or podcasting like what do you think would be like the best medium to use at this point?

Nate: for us podcast like this being able to tell people what’s going on in the industry. It’s it’s such a long form process like it’s tough for me to tell people how many things are wrong with the industry and how we’re trying to disrupt it in a minute sure, you know.

Steve:Yeah,

Nate: so we did upload a video only one video so far like, like I said, we just launched one video on Youtube kind of explaining our philosophy. So people can comprehend that and now that I’m you know, when I started Growers house, I was a 22 year old young whippersnapper. I’m 31 now and I’m you know, I have a successful business that’s giving me cash flow. So I’m we ended up bringing in co-ceo Angela cat who is her background was like, you know, she helped launch all of that stale otter on Estee Lauder Companies on onto the web and e-commerce. So things like clinic.com and she was a big executive over there and she came on board as a co co and we’re kind of going the more traditional like PR route hiring a you know, people that focus on PR and talking to news outlets about you know, the industry what’s going on in the industry

Steve: right

Nate: But there there is some Legacy content that we’re probably going to create that I’m more used to which is how do we help tell people about the problems in the industry and help them? You know find the products that’s actually going to be good for them effective pure safe. You know, a lot of people are just I don’t know I think right now everyone’s heard about CBD yet. They know nothing yet they know nothing

Steve: right this this is going to be a hard question for you to answer but it sounds like the way you’ve approached true potencies is very high budget, right

Nate: definitely higher budget. It’s funny. I started Growershouse with Okay saying it like a hundred and fifty thousand dollars and we were bootstrapped. You know, yeah, whereas..

stve: yeah, potency you have these scientists that you have on board. You have the PR Company. I’d imagine your startup costs are higher, right?

Nate: Absolutely. Yeah even just to get going before before we really get going. It’s probably going to cost us, you know closer to somewhere closer to the 500 came are you know, and then after that, you know, we’ll see how things are going and at that point we might look for some outside investors. Something like that,

Steve: so where I was going with that was someone small-time going to the Cannabis retail space since there’s so many people jumping in right now. Do you feel like you kind of need a larger budget these days just to get started.

Nate: You know, it depends what sector the Cannabis industry if you’re starting a let’s say you wanted to open a dispensary you it’s almost impossible to open a dispensary and establish market like Arizona unless you have a lot of money and I mean like I would say at least a few million dollars.

Steve: Wow. Okay.

Nate: It’s not north of 5 million. There’s markets that are opening up like Oklahoma just opened up medical and it’s the market was booming if you get in early and the licenses are inexpensive and they have an unlimited amount of licenses. Then you can get it in a lot less expensively. We’re talking you know it get it depends if you want to do a growing operation or a dispensary, but you can be in the lower six figures range. And if you wonder the e-commerce route, you know, that’s probably the least expensive route and the one that I’m more, you know, Familiar with and you don’t have to spend a ton of money to get into the CBD the sector really I would say I’m just looking for more accelerated growth and getting out there sure a little bit faster.

But you know how I started Growershouse’ kind of more slow and steady and there’s definitely something to be said for that in terms of you know, how many years of life you probably have because

Steve: You know, I want to start a CBD company e-commerce store, let’s say is there anything special I need to do? Certifications or or anything legal legalize that I need to worry about

Nate:. Yeah, I think it depends on the state really but I would touch base and I think really if you’re manufacturing or holding products that people going to ingest each just want to make sure you touch base with the health department consider, you know, Most states have some hemp laws or usually a department for him. So I would just reach out to them and say Hey, I want to start a hemp Farm or a hemp CBD company and I’m gonna hold inventory on On hand and they’ll tell you what to do. And usually it’s it’s very easy kind of benign process.

Steve: Okay. And then are you selling on Amazon right now

Nate: Growers house is on the equipment side, but we’re not with any CBD products and you have to actually be really careful the Amazon. So it’s also very misleading platform in the when it comes to CBD because on Amazon basically, they don’t allow CBD products, but if you get on Amazon, there are some Products that are up there being advertised almost as if there were CBD products and what they are is they’ll say hemp oil, you know, something like something related to him boil really but a lot of them tend to be hemp seed oil which actually doesn’t have any cannabinoids or CBD in it. and what we’re buying this expecting it to be CBD usually because it’s inexpensive, which it is much less expensive than CBD products right now, but the thing is you’re not really getting what you’re looking for and Actually want hemp seed oil. So if you actually receive CBD avoid Amazon, once the FDA comes out some rules, maybe Amazon will allow it. But I think right now it’s just too great for them to allow it.

Steve: have you run into any problems on Amazon with Growershouse stuff?

Nate: No never and you know, we just focus on selling equipment. We do not touch base on anything related to cannabis or marijuana, and I think you know, I don’t think that you can really on Amazon, although I can’t hundred. And confirm that but I’m pretty sure it since it’s still federally illegal big organizations like Amazon do not like to wait into that territory.

Steve: Okay, and in terms of grower house products, then it just seems weird. I guess that Google and Facebook’s seem to be cracking down more than Amazon right in this department

Nate: Well, not really I would say they’re all kind of on the same Keel for the most part. Okay, like you’ll find actually think I saw Google allowing some CBD products on product listing ads. So I think Google of anything is opening up a little bit more than potentially the other ones

Steve: and the word hemp is fair game. I don’t know anything about this industry, but I always consider hemp kind of synonymous. So that term is legal.

Nate: Yes hemp is legal because you can have a hemp. Like I said a hemp seed oil product hemp fiber all these things are legal. It’s CBD and other cannabinoids that are regulated, right?

Steve: Okay.

Nate: Well, they’re not really regulated right now, but there they have a distinction. That’s Ray so people are not allowing that terminology is better way to put it but hemp you’ll see there are a lot of CBD companies that everyone’s watching for the what the FDA is going to say and there have been some CBD companies that have had their hand slapped because they’ve said this CBD product cures cancer or something like that which you know, like no tests have been done to prove that. Yeah in a way that the FDA has given it the stamp of approval. I think there are a lot of people that are You know doing tests on CBD from you know, a multitude of reasons, but FDA doesn’t want people saying that because to their standards that hasn’t been proven and then you’re really just fooling or trying to deceive the public in a way as the weather looking at it. So they really want to manage that and write you know, rightly so they probably should

Steve: yeah that totally makes sense. Hey Nate, I’ve actually learned a lot about the Cannabis industry just from talking to you. But if anyone out there who is listening to this podcast is interested in Gaming industry or they want to learn more about you or your products. Where can they find you?

Nate: Yeah, we have a few websites in our portfolio, you know Growershouse.com, Growersnetwork.org and trupotency.com that’s TRU, you know, we we just check out our YouTube series can cribs. You know, I’m on Instagram. That might be a good way to reach out to me. It’s just nate.j.lipton on Instagram. That’s probably the only social media platform. I had a chat with people on okay, but yeah Reach Out How do you know shoot me an email? I mean, I might regret this Nate at gowershouse.com, you know, if you wanna give you the entry

Steve: before you go like you mentioned a whole bunch of sites out there. What do each one do again. So Growershouse.com is your Ecommerce store that sells growing equipment, right? Yeah, which one is your community?

Nate: So growers network.org? Okay. It is a forum and content site.

Steve: Is that paid or can anyone join?

Nate: Yeah anyone can jon. Yeah. So the public forum in a private Forum. The private forum is more for cannabis Industry professionals and then we have a lot of like Growers University there. So you can learn how to grow things of that sort great Community for anyone who’s learning how to grow or just wants to do it as a hobby or a profession and then you know Candy cribs is that that YouTube series I was telling you about largest operations.

Steve: That’s what you tore cannabis operations.

Nate: Yeah. Exactly. I don’t true

Steve: Trupotency is your newest operation, which is actually testing and selling your favorite CBD products?

Nate: Exactly. Yep.

Steve: Awesome. Well Nate, I really appreciate you coming on the show and teaching us or giving me a lesson at least on this industry, and I’m sure the listeners will get a lot of value out of it too.

Nate: Awesome. Thank you for having me Steve.

Steve: Hi. Thanks a lot, Nate. Take care.

Hope you enjoyed that episode. Now. The CBD cannabis industry is like the Wild Wild West right now, but it is quickly getting saturated with new competition. Now for more information about this episode go to mywifequitherjob.com/episode289.

Steve: Hope you enjoyed that episode like myself Michelle and I have been blogging for a very long time and there are a whole bunch of different ways to monetize your blog. For more information about this episode. Go to mywifequitherjobs.com/episode282.

Once again, I want to thank to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use the term visitors into email subscribers. They offer email capture exit intent and site targeting tools to make it super simple as well. And I like Privy because it is so powerful and you can basically trigger custom pop-ups for any parameter that is closely tied your eCommerce store. Now, if you want to give it a try it is free so head on over to privy.com/steve. Once again, that’s P-R-I-V-Y.com/steve.

And I also want to thank Kaviyo for sponsoring this episode, Kaviyo is my email marketing platform of choice for e-commerce Merchants. You can easily put together automated flows like an abandoned cart sequence a post purchase flow or win back campaign. Basically, all these sequences that will make you money on autopilot. So head on over to mywifequitherjob.com/klaviyo. Once again, That’s mywifequitherjob.com/klaviyo.

Now I talked about how I use these tools in my blog and if you’re interested in starting your own e-commerce store heading over to mywifequitherjob.com and sign up for my free six day mini-course just type in your email and I’ll send you the course right away. Thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast where we are giving the courage people need to start their own online business. For more information visit Steve’s blog at www.mywifequitherjob.com

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