The taxation strategy needs to be thoughtful but not prohibitive. Right now, we’re taxed under 280e which means that we’re being taxed as if we’re illegal drug dealers though we are operating in a regulated state legal system. Among other penalties, we’re unable to deduct any operating expenses that would be ordinary to every other business I can name. We pay an effective tax rate at 80% of profit; 30% of sales. Now, that’s criminal!
As part of my series about “5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business” I had the pleasure of interviewing Jeff Radway.
Jeff Radway is Chief Executive Officer and co-founder of SKYMINT Brands (formerly Green Peak Innovations). Prior to launching Michigan’s largest vertically integrated cannabis company, Radway built and sold J. America, one of the largest privately-owned licensed apparel companies in the U.S.
Thank you so much for doing this with us! Can you share with us the story about what brought you to this specific career path?
In 2016, I was finishing up an apparel tradeshow in Las Vegas for the private equity firm that had recently purchased my company. I had spent the last 30 years in the apparel industry managing hundreds of brands, and I was ready to exit, retire, and build a home with my wife in the Caribbean. And then I received a fateful text.
My co-founder Joe Neller — who at the time was a public policy and healthcare expert with more than a decade of experience in D.C. and Lansing — texted me saying that the end of cannabis prohibition was on the horizon. The hairs literally went up on the back of my neck. Cannabis was going to become recreationally legal in our state of Michigan, and reading this text was all it took to immediately re-ignite my start up fire. I told Joe we could not pass up the chance to be a part of history in our home state and help build an industry from the ground up.
Don’t get me wrong. I’m a type A personality and business person who believes in all of the fundamentals it takes to build a thriving and competitive company. However I also believe that it is possible to succeed in business while doing the right thing. I have always looked to Patagonia as a beacon for exactly that reason. Making money and making our world better do not have to be mutually exclusive.
Cannabis has the potential to change life as we know it, here in Michigan as well as beyond, and this potential continues to keep my flame lit.
Can you share the most interesting story that happened to you since you began leading your company? Can you tell us what lesson you learned from that?
Our company motto is that happy plants make happy people; and happy people make happy plants. When we launched the company, we made sure to bring on the best team of expert cultivators who not only had years of experience but also graduate degrees in sustainability and agriculture. We also built state-of-the-art cultivation facilities. So what could go wrong, right?
We began noticing that our plants were stressed. Our cultivators were doing everything right, so we really had to take a step back and look at the situation from a bird’s eye view. As it turns out, our plants were stressed, because our workforce was stressed.
Cannabis is an incredibly sensitive plant. There’s a true symbiotic relationship between the health of the plant and the happiness of those around it. Upon realizing this, we made a number of critical changes to improve the well-being of our human resources. We gave our employees premium benefits, including 401ks with a company match. We began playing music in our grows as well as offering catered lunches for all to enjoy.
As our workforces became uplifted, so did our plants. This lesson — that happy plants make happy people and happy people make happy plants — has truly set the tone for our company culture at SKYMINT Brands. We feature the saying on the walls of our retail locations.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
We launched SKYMINT Brands in 2017 with operations coming online in 2018. One of my very first meetings took place in 2016 in Colorado. I flew out to meet with a group of cannabis CEOs whose businesses were performing really well. Just as I had with every new business meeting in the past, I arrived to our conference room clean shaven and wearing a sports jacket… and was greeted by a group of men wearing shorts and flip flops. I had probably had three cups of coffee prior to my arrival, and these guys looked like they had literally just woken up. One was even staring at the TV in the room for what felt like 10 minutes straight as if it was turned on.
I suppose my mistake was assuming that, upon launching a cannabis start-up, I would be conducting business as usual. I must say though, the people in cannabis are some of the hardest working, passionate men and women I’ve ever come across.
I’m a little more casual these days….but still no flip flops.
Are you working on any exciting projects now? How do you think that will help people?
We have a number of big projects underway, but one that is particularly exciting to me is our 200-acre sun-grown cannabis farm right here in Michigan, which just completed its first harvest. It’s called SKYMINT Farms.
Michigan is a big agricultural state with conditions that are ripe for outdoor cannabis cultivation. SKYMINT Farms uses crop rotation (diversified farming), solar power, rain water, cover crops and, in the next two years, will be adding grazing animals to make the farm truly biodynamic. We aim to create nutrient-rich, living soil in which the best sun-grown, sustainably farmed cannabis in Michigan can grow.
Our core pillars at SKYMINT Brands include: elevating cannabis, cultivating premium brands and changing the world, and literally every project we undertake has to tie back to all three pillars. Cannabis is an agricultural product. It’s meant to be in the ground, growing outside under the sun and contributing to our eco-system; as such, sun-grown cannabis yields a more diverse cannabinoid and terpene profile. So with SKYMINT Farms, we aspire to eventually cultivate and harvest craft cannabis that will elevate our state’s offerings and power our premium brands. As well, SKYMINT Farms aims to become Sun+Earth Certified within the next two years. Industrial agriculture is the third largest contributor to climate change. It depletes the land of its nutrients while emitting significant amounts of C02 into the atmosphere. SKYMINT Farms is designed to help better our world by joining a growing list of cannabis farms across the country committed to sequestering carbon, mitigating the effects of climate change and healing and cooling the land.
I’m also really excited about the joint venture we’re forming with Shorts Brewery to develop – and THC-infused beverages, including teas, tinctures, water, and mocktails. They’re beverage artists, and beloved by Michiganders. They’re just so good at what they do. We have already collaborated with them on a line of gummies featuring iconic flavors from their beers. So stay tuned.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I’ve got a few stories, but my grandmother is the first to come to mind. She and her husband started a coffee business during the Depression that grew to become the largest roaster and institutional supplier of coffee in the state of Michigan. When I was a teenager, my grandmother loaned me money to start my first business while I was in high school, a lawn care business. I was dead set on paying her back. She had a fruit basket always in her kitchen and under it she kept a ledger with the names of anyone who she had loaned money to — and she loaned to plenty of people. She loaned me the money and set up a reomstallment schedule (with interest) and made sure to tell me that it’s important that I also do this for someone else. That taught me a really good lesson, and one I’ve kept to. It taught me to help others to take a risk and launch a business. It’s always been very important to me. She led by example, and that left a mark.
This industry is young, dynamic and creative. Do you use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?
Our marketing and brand team are phenomenal and getting better every day. But I’m not giving up trade secrets! The only thing I will say is that our brand, e-commerce, product and retail marketing departments are all spearheaded by truly talented and experienced women. Our Chief Brand and Product Officer, Laurie Greogry, was one of the founding Executives of Bath & Body Works and has 30+ years of experience developing premium brands and retail marketing campaigns for Victoria’s Secret, Sephora and many more. We also tapped Summer Cleveland-Ransom from Urban Outfitters where she spent 17 years creating and designing the retail experience.
Can you share 3 things that most excite you about the Cannabis industry? Can you share 3 things that most concern you?
What Excites Me About theCannabis Industry:
- It’s an industry that can help rebuild the middle class.
Cannabis can rebuild the fabric of society through mass job creation, public policy iniatives focused on restorative justice and social equity, and generating incredible tax revenue rewards for the state.
Though recreational sales only started in December 2019, Michigan’s adult use market is already a major economic driver, well on its way to surpassing 1 billion dollars in sales — a milestone achieved by California only 3 years ago. As well, Michigan State University’s Center for Economic Analysis released a report in March 2020 estimating that the retail value of cannabis sales will be in the range of 3 billion dollars a year once the market matures. It is also estimated the total economic impact — including the impact of related industries (indirect impacts) and household spending (induced impacts) — to be 7.85 billion dollars with total annual tax revenues of 495.7 million dollars. These projectons, if materialized, are absolute economic game changers for Michigan.
- It’s the end of Prohibition. The ability to build new brands and amazing teams and extraordinary value is endless. As a business guy; I want to build value across the board, and cannabis offers that opportunity. I want to build premium brands that make people feel better.
- This is a change at the crossroads of society. This is a drug policy change that meets political changes, meets social changes, meets tax policy changes, and it’s altering how we interact with plants. This opens up broader society to thinking more progressively about plant treatment as a whole. With all of the stress and anxiety that the Covid-19 pandemic has put on everyone, I hope that this leads to a more simplified approach to life. Cannabis really helps people — it is essential in just about every way.
What Concerns Me About the Cannabis Industry:
- That it be legalized and regulated in a thoughtful manner. We see wildly different laws and regulations across the country and locally, sometimes changing from month to month. That makes it incredibly challenging to scale rapidly, and it disincentivizes new entrepreneurs.
- That we keep this industry within the U.S for the long run. We shouldn’t outsource the farming to Mexico, Canada, China or elsewhere. We are looking to cannabis to be an effective economic driver here in the U.S. and that requires that it be grown, manufactured, and processed here. A rising tide lifts all boats, and it’s critical that we rebuild a middle class and our infrastructure here at home.
- The taxation strategy needs to be thoughtful but not prohibitive. Right now, we’re taxed under 280e which means that we’re being taxed as if we’re illegal drug dealers though we are operating in a regulated state legal system. Among other penalties, we’re unable to deduct any operating expenses that would be ordinary to every other business I can name. We pay an effective tax rate at 80% of profit; 30% of sales. Now, that’s criminal!
Can you share your “5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business”? Please share a story or example for each.
1. Indoor farming is incredibly difficult.
With indoor cultivation, we create a perfect day every day for the plants. That’s wonderful when everything’s going well, but when we have power outages or things go wrong with the plant’s perfect days, they’re challenged to adapt. We have weakened the plant’s response system by coddling them so that if everything isn’t perfect, they have a very exaggerated response. We’ve had some outages and errors and believe me, we’ve paid for them.
2. Whatever capital you think you’ve planned for, double or triple that amount.
Often, my team will meet on a Tuesday afternoon wondering why it feels like it’s been a hell of a week! Everything changes in cannabis, all the time, and these changes can translate to costly inefficiencies. Be prepared.
We are in a nascent industry that is being built in real time. Most of the equipment available to cannabis companies was just invented and therefore, doesn’t work optimally (if at all).
Also, be sure to follow state, local, and municipal government as closely as you do consumption trends.
3. You won’t have access to suppliers.
You won’t be able to buy software, warehouse racks, or chemistry equipment from suppliers that service other industries, because it’s federally illegal. You’ll be relegated to dealing with cannabis-only suppliers, and they are more expensive and sometimes offer subpar products (because they are also launching and attempting to scale a business).
4. Regulatory frameworks are always in flux.
Laws on the state and municipal levels are going to change more frequently and will be murkier than you can ever imagine. Expect constant change: you may have a labeling requirement on a Monday that changes by the end of the week. In fairness to the regulators and state agencies, they are trying to figure out an emerging industry and what effective regulation looks like, but knowing that doesn’t make it any easier to navigate.
5. Testing labs don’t know how to be labs.
The testing data is all over the place. You can test something three times and get three different results. We built our own lab so that, before we send to an outside lab, we know the results. We can run a test three times just to ensure we know our information and that allows us to take a proactive position with labs that have had issues getting accurate results.
Candidly, I’m kind of glad that people didn’t tell me all of those things beforehand, or I may not have invested so heavily.
What advice would you give to other CEOs or founders to help their employees to thrive?
Put as much care into your company culture as you do production, marketing, and selling of your end product. You will need your team to consistently want to go above and beyond; inspiring that drive and level of productivity starts with maintaining a happy workforce. They must feel valued and excited to come to work everyday.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Cannabis is here for good, and so are we. I’m very inspired by the potential of consumer activism in cannabis. We have a brand in parternship with Last Prisoner Project called Two Joints, which supports Last Prisoner Project’s advocacy work around the expungement of criminal records as well as clemency for non-violent cannabis prisoners, many of whom have lingered in prison since the 90s… some for selling as little as two joints to police informants.
Two Joints has been a best-seller, because it resonates with Michigan cannabis consumers who want to contribute to the social good and change that this industry promises. The opportunity we have as industry builders — to mobilize cannabis consumers around social good campaigns — is exponential. The SKY’s the limit.
What is the best way our readers can follow you on social media?
We have a very active Instagram account (https://www.instagram.com/skymintcannabis/) and are also on Facebook (https://www.facebook.com/skymintcanna/)
This was very inspiring. Thank you so much for joining us!