#121, Graham Farrar, President and Chief Cannabis Officer of Glass House Group

Graham is the president and Chief Cannabis Officer of Glass House Group, one of the most rapidly growing, privately-held cannabis and hemp companies in the country, and the founder of Glass House Farms, perhaps the largest greenhouse operation in California. He was part of the original team at Software.com, taking the company public in 1999, and one of the first employees at Sonos, where he was involved with product design, development, sales and customer support.

With 25 years of experience in the technology sector as well as in starting successful businesses in new and emerging markets, Graham has now created one of the largest earth-friendly cannabis and hemp businesses in the country, conducting precision agriculture in greenhouses with a cutting edge water reclamation system, filtration, recycling, integrated pest management and other industry-leading cultivation techniques. His sun-grown and ocean-grown operation is viewed as a model for tech innovation, sustainability and financial success in the cannabis space. 

Host Raj Daniels 03:31

If you were asked to share something interesting about yourself, what would it be?

Graham Farrar 03:35

I spent four years living on a sailboat and have come pretty close to circumnavigating the globe. I did it in two halves. One right after we took our company Software.com public in about 1999 bought a sailboat left with my girlfriend is now my wife, and we sailed from Santa Barbara to New Zealand over the course of two years. And then the second time after starting a Sonos, which was my second tech adventure, and left there and went and lived on a boat with my wife and my daughter at that time was one. We did four years out sailing the ocean. It was two of the most fun things I’ve ever done.

Host Raj Daniels 12:46

Can you give the audience an overview of Glass House Farms and your role at the organization?

Graham Farrar 12:51

Glass House Farms and Glass House Group, which is our combined company, is one of the largest cannabis companies in California. Our asset mix started with cultivation in about 2015. So, you know, coming up on over a half a decade here, which is not necessarily that long, but in cannabis makes us one of the older kids in the candy store, so to speak. There’s not a lot of folks that have been doing things at scale as we have for that long. 

We have two farms. It’s about a half-million square feet total. That’s about 13 acres all in a greenhouse. We really like greenhouses. It allows us to partner with Mother Nature, and control her just enough to create a really perfect climate. We have half a million square feet of cultivation. We have 22,000 square feet of manufacturing, where we do extraction work on cannabis as well to make other products like vapes and tinctures and bombs and edibles and things like that. 

We have four retail stores. The Farmacy Santa Barbara, which was the first-ever adult-use dispensary in the city of Santa Barbara that I opened about two years ago. The Farmacy Berkeley which is our most recent store opened in February of this year, the Pottery which is down in Los Angeles, and Bud and Bloom, which is in Santa Ana. And then we have four brands, Glass House Farms, which is predominantly a flower brand. Field Extracts, which is a kind of super-premium, high-end extract brand. Forbidden Flowers, which is a brand that we created with actress Bella Thorne. And Mama Sue, which is a health and wellness brand created in partnership with Sue Taylor, who is a seventy-year-old African American woman. It’s targeted at seniors and kind of how they can find relief with cannabis as we think that’s an underserved demographic that could really benefit from the plant.

Host Raj Daniels 14:53

So you mentioned tinctures, balms, and other uses. Do you use the same plant for all these different applications?

Graham Farrar 15:01

Yes, in a broad sense. I think it’s probably good to put it in context. We also have hemp grow that we do in partnership with Cadiz. I’ll start there. 

When you think about the 2018 Farm Bill and the fact that it legalized hemp, which is anything that’s cannabis, it’s just cannabis with less than point 3% delta-nine THC, that’s the definition. Everything though is cannabis, and you do you know the same things just with different genetics. So for tinctures, balms, and flowers, you can do all of that with cannabis. 

There’s quite a bit of genetic variation, which is actually one of the fun parts of cannabis. There’s lots of different strains which have different smells, different colors, different tastes, and really interestingly different effects as well. If you compare that to wine like drinking a Cab and drinking a Pino that tastes different, but the buzz from each of them is the same. In cannabis, it can be a very different mental, psychological, psychoactive effect. So a lot of times what happens is if you grow a plant and you take the top part and the buds for flower, you’re left with this trim. And the trim has quite an ample supply of cannabinoids on it. So if you take that trim, and you extract it, basically wash those cannabinoids off, you get a concentrate, and that concentrate then can be used to make tinctures or vape pens or put into edibles. And you still get all the effects of the cannabis plant which can vary from strain to strain. But again, it’s really the same plant as the short answer.

It is one of the few plants that has a bunch of keys for these locks in our body. We don’t necessarily understand how all of them work, but we know that they’re there. And we are starting to embark on a path to figuring them out.

Host Raj Daniels 16:39

So you mentioned the differences regarding the effects, can you perhaps break down some of the vocabularies around the different strains?

Graham Farrar 16:48

I would say one thing, that’s it’s the fun and the challenge of cannabis is because of the legal issues around it and the fact that we’re finally coming to an end, but we have spent for the last 50 or 60 years, a lot of energy and effort and demonizing and stigmatizing the plant, including making it Schedule 1 at the federal level. And the definition of Schedule 1 is no known medical benefit and a high potential for abuse. So I think both of those statements have pretty resoundingly been disproved. 

We don’t necessarily understand all the whys, but I think, clearly, we now have an FDA approved drug that came from the cannabis plant in the form of EPA dialects. So the idea that cannabis has no medical benefit has led to a lack of research so far. And so a lot of the things that we use in the vocabulary are more antidotal than I as a science-minded technology person would like. But that is the current state of where things are at. 

So things that you will hear vocabulary-wise, I think the cannabinoids are pretty well defined. THC is the star of the show. CBD is growing as a supporting member of the band pretty rapidly here but there’s about 100 other ones that most people have never heard of, CBN which is good to help us sleep CBC, CBG, GBA, THC B, there are lots of them in there. 

The way I like to think about it, is we have an endocannabinoid system in our body, so we have a circulatory or a nervous system. We have an endocannabinoid system. Our body makes endogenous cannabinoids. Serotonin is an example. So basically our body is making these molecules that have impacts on the receptors in our body. Cannabis especially because it makes phytocannabinoids. 

It is one of the few plants that has a bunch of keys for these locks in our body. We don’t necessarily understand how all of them work, but we know that they’re there. And we are starting to embark on a path to figuring them out. 

So when people talk about the plant, a lot of time to talk about the cannabinoids in it and that’s why THC gets you stoned, or that psychoactive feeling. CBD doesn’t really have much psychoactive effect. THC A, which is an acid form has a lot of anti-inflammatory benefits but doesn’t get you stoned because it’s too big to pass through the blood-brain barrier in the asset form. There’s lots of cool stuff in there. 

You hear about sativas and indicas. I think probably more correct terminology is narrow-leaf and broadleaf plants. But the idea generally and how it gets used is sativa is to indicate a plant that has more of a kind of energetic effect, you know, something you might want to consume before you went hiking or surfing, whereas indica has a more sustainable effect. So maybe you’d want to use that before a movie or before bed. 

I think the other thing you see is that people in our population to self medicate and sometimes they self medicate with drugs that are very harmful like prescription drugs, opiates and heroin, and fentanyl. The indica type plants actually tend to have, in some sense that similar effect. And I think that’s why when cannabis is legalized, you often see a big double-digit percent drop in opiate-related deaths is because I think that people who need that self-medication are doing it with cannabis, instead of with opiates, and as a result are not dying because of it.

Host Raj Daniels 20:23

Which one is broad, which is a narrow?

Graham Farrar 20:26

Indica’s the broad leaf typically, and sativa is the narrow leaf. You could talk for hours on all these topics. It really comes from the climates the various strains evolved in and whether or not they were high up a mountain where it was dry, and they were trying to limit their transpiration and had plenty of bright sun or maybe they came from the lower thing like an indica where they have plenty of humidity, so they’re not worried about broader leaves and transparent and the moisture loss, but maybe you’re in more competition for the light. So they have big, fat brighter leaves to make up for the photosynthesis of the shade and stuff. So it really comes from where the plants were originally evolved in their climate around them.

Fundamentally, nothing in cannabis — I’m speaking about the entire industry here — happens without the plant. The plant comes from planet earth and Mother Nature. For us to do what we do without paying respect and care to the environment seems about as incongruent as one could imagine.

Host Raj Daniels 21:09

Got it. So can you speak to yours and Glass House Farms’ approach to what I’m going to call broadly, the triple bottom line, and your focus on sustainability and the environment?

Graham Farrar 21:20

Triple bottom line is a term that we use, and live by as well. The way that we define that is we like to do things that are good for the planet, good for the business, and good for the consumer. 

An example of that might be that we collect any of the irrigation water that the plants don’t use, and we capture it, we sterilize it and then we reuse it. So typically when you cultivate you have a 10 to 15% of over drain. The water you irrigate with the plants and comes out the bottom. Rather than letting that flow into the ground and be wasted or maybe even worse, pollute the groundwater table with nitrogen-rich, fertilizer water, we capture, we sterilize it, we put it back on the plants. 85% new, 15% reused. And we like that because it’s good for the planet. We’re not wasting water or polluting things. 

It’s good for the business because water and fertilizer are resources that cost money. And so by not wasting them, we can bring keep prices lower, and we can have margins be better. And it’s good for the consumer. Because when they have a choice between someone who they know does operate and things like that, and someone who doesn’t, then we hope they pick the one who does try and take that lighter footprint on the planet than then others might.

Host Raj Daniels 22:37

And you’ll focus on the environment.

Graham Farrar 22:41

Fundamentally, nothing in cannabis — I’m speaking about the entire industry here — happens without the plant. The plant comes from planet earth and Mother Nature. For us to do what we do without paying respect and care to the environment seems about as incongruent as one could imagine. 

We were literally given this gift, this plant, our business, our livelihoods, the relief, the customers we have all come from the planet and it being healthy to grow this plant. And so everything that we do, we try and do as an eco friendly and as light touches as possible. There’s lots of good examples of that. I really am a fan of the precision agriculture approach. One of the benefits of that, and I think cannabis can be a leader there, is that it advocates the idea that you give the plant exactly what it needs, no more no less, you don’t waste anything. That I think is a real positive impact on the production, what we make as efficiently as possible relative to the impact it has on the environment.

Host Raj Daniels 23:48

And when I was doing research on your company, I came across an interview where you mentioned the words pesticide drift. Can you share with the audience what that is and what they should look out for?

Graham Farrar 24:02

Cannabis is probably the most highly regulated crop in the world. I think for sure, in the United States. California has some of the tightest regulations anywhere. One of the things that we have to do with every single batch of cannabis we produce before it leaves into the consumer market, not after, is that we have to test every batch for 66 different pesticides down to a precision of parts per billion. 

If you think about organic and all that stuff compared to cannabis is, it’s like pulled out of the gutter. It’s all self-reported. There’s tons of things you can use. There’s no actual empirical testing. 

Cannabis, on the other hand, is say all you want, but a lab has to pass the product into the retail supply chain by saying it does not contain any of these pesticides in it. So what happens and why drift becomes a topic is, it applies to everybody who uses pesticides. The rule is that when you apply your pesticide, they’re only supposed to go where you apply them. That makes a lot of sense, especially when you realize that you have a meltdown and things like that, which are literally nerve toxins. And that’s how they kill the bugs. That shouldn’t be drifting on to a house or a school or a playground or whatever. 

The thing is, is that no one goes around testing that. And so a lot of agriculture does what they do, and there’s no canary in the coal mine. Cannabis, on the other hand, not because we asked for it, but because the state-appointed it, has to check these things on the products. So we become that drift canary in the coalmine. 

What drift means is, say you’re having a field of avocados and you’re applying pesticide from a helicopter and you fly over that field and you spray the pesticide. If that pesticide goes off of the avocado orchard, that’s a drift. So technically, it is criminal trespass. Someone else’s stuff is on your stuff where it’s not supposed to be. 

No one typically knows that until cannabis shows up. And then we don’t use any of the pesticides because we can’t if all of a sudden those pesticides show up on the test, it can mean the batches are not sellable. You can have a large, you know, high-value batch of product that is unable to be sold because someone else applied a pesticide, and that pesticide drifted onto the cannabis crop and then made it ineligible for sale. 

We’ve done quite a bit of work to work with other agriculture. We support all farmers, we’re looking to help them. But we do work with them to communicate so that we can keep that drift from happening so that our plants don’t get tainted and also so the planet’s healthier and safer. And we’re not putting pesticides where they really shouldn’t be.

Host Raj Daniels 26:50

I think it’s a great idea. Cannabis is the canary in the coal mine. So, Graham, I’m gonna switch gears here andget to the crux of our conversation, which is the why behind what you do. You mentioned your tech background. You mentioned Software.com, you mentioned Sonos, sailing. Why cannabis? Why now? What motivates you? What keeps you going?

Graham Farrar 27:11

I am a tech guy by training. I’m a tech guy that loves cannabis and has loved cannabis for a long time. I find it relaxing and enjoyable and a healthier alternative to alcohol. And, I believe that the endocannabinoid system that we talked about is a system designed for homeostasis or balance. And so keeping that system balanced, almost like a cannabinoid multivitamin, helps me be a happier person. 

But I’m a tech guy. I was one of the original folks at Software.com, which was a geeky company that made digital post offices, basically. So as people got email addresses, we were the system that stored their email in it. At one point we were doing, I think, 86% of the email on the planet, took it public in 99, great timing, enabled that first sailing trip that we talked about, then came back and went on to be one of the early folks at Sonos, then started a company making apps for kids that we sold. But all the while, loving cannabis and believing that what we are seeing happen, would happen. 

Martin Luther King, Jr. has a great quote, which is “the moral arc of the universe is long, but it bends towards justice.” And I’ve always believed that the way that we demonize plants, they should not be illegal. That is not the default state of nature. If you think about cannabis, and its 6000-year history of being used by people, it’s been illegal for one percent of that time. That is not the natural state of things. So I believe that we would come to where we are, which is now currently every state except for three has some form of legal cannabis access, that cannabis would become a thing. 

I got really lucky and the fact that it became a thing in my own backyard, and so what I wanted to do is help destigmatize cannabis, build a business that helps make people feel better and made our communities better, generated jobs and tax revenue, and do it in a way that leveraged my technology background which is something that you don’t see a lot of in cannabis. At Glass House, the three legs of our school are quality, consistency, and efficiency. So first, you got to do well, then you got to do well every time, then you got to do well, every time efficiently. Computers and technology are really good at that consistency and efficiency piece. And the people on our team are really good at the quality piece. So by putting those together, we believe we can build one of the best cannabis companies in the world.

Host Raj Daniels 29:47

So you’ve been doing it for like you said half a decade now. What are some of the most valuable lessons that you’ve learned on your journey?

Graham Farrar 29:57

The stigma in cannabis is real, and it’s not just a matter of people not being educated. Some people don’t want to be educated is kind of something that surprised me. I thought that people are told things the I would call propaganda, the anti-cannabis prohibition. And I kind of always assumed that when you showed people the facts, and you showed them that opiate death went down when you showed them that Medicare Schedule D, which is prescription drugs spending went down, when you show them that car accidents didn’t go up, when we legalize cannabis, that they’d say, “Oh, okay, I get it. I’m sorry, I didn’t think that I thought was a gateway drug. And now that you showed me the data.” 

I understand that happens sometimes, but it doesn’t happen all the time. And so you have to keep going on that education train, and that creates a lot of friction. So I wish I’d known anticipated that better. The other thing is agriculture is really challenging. Plants are 24 hours a day, seven days a week. They’ll die on Christmas, just as much as a Monday afternoon. There’s no scheduling them in. 365 days, it’s your job. That’s a challenge, but it’s also an opportunity. If it was easy, there’d be lots of people doing it and doing cannabis, and having to figure it out at some scale is our competitive advantage.

Host Raj Daniels 31:28

So speaking of competitive advantage, can you speak to your CPG?

Graham Farrar 31:34

Sure. Yeah. So CPG just you know, for folks out there typically stands for consumer packaged good. We are renaming it as cannabis packaged good. And one of the things that we’ve been working really hard on is moving our cultivation which we started by doing basically wholesale, so we would grow and we package things up in a pound and in the old days, we’d sell it directly to the dispensary and then break it down into you know eights and individual packages. 

Now with prop 64 in California, you cultivate, then package and it goes to distribution, that goes to retail. So we’ve really been building the Glass House Farms brand, the Field brand for Ben Flowers and Mama Sue, which are for consumer brands. We’re working to take everything that we’ve done a pretty good job learning how to do that quality, consistency, and efficiency and now packaging them into products that consumers you know, pick up the shelf. So it’s not just cannabis, but it’s Glass House Farms cannabis, and I think we’re in the midst of a transition in cannabis, which is still early days. There’s not a ton of brand loyalty yet. But that’s changing. We’re pushing and following that trend because we think the way that we do what we do is a quality product and amazing price with a really, you know, good community environmental perspective. And I think that’s going to resonate well with the consumers that are just starting to walk in the door and we want to make sure we take advantage of giving them what they need.

Host Raj Daniels 32:59

So speaking of branding, Glass House Farms, what does the future hold?

Graham Farrar 33:10

I think it’s worth remembering that in the context of prohibition, on the federal level, cannabis is still as illegal as anything can be. Which is mind-boggling, especially as 47 out of 50 states have decided that doesn’t make sense. I think some of the next steps that we’re going to see from a broad perspective are a little bit more normalization on the federal level. I think that will open up banking and financial services, which will allow the industry to grow. I think we’re going to continue to see drastic normalization at a society level where we’re going to get to cannabis and cannabis products being treated at best on par or at least on par with alcohol. 

And if we’re realistic about it, we should probably treat them with more respect than alcohol. Not a lot of people prescribing shots of tequila for medicine, but plenty of people prescribing various cannabis products as medicine right now. 

I would love it if we had interstate commerce and what we were growing here in Santa Barbara was being shipped all around the United States, and we had millions of Glass House Farms customers and fans.

Believe in the fact that you can do it with the intention and hard work, and then realize that there’s nothing that stops you from doing it. So go out and make it happen.

Host Raj Daniels 35:13

If you were to guess, regarding interstate commerce, when do you see that changing if ever?

Graham Farrar 35:20

It is interesting when people think of legalization, I think they kind of connect those things. And it’s worth noting that there’s various forms of legalization. 

We could see something like the safe banking act, which really just solves banking access. Or we could see something like the MORE Act, which Kamala Harris, the soon to be vice president was the lead sponsor of, and really does decriminalize, and potentially even deschedule cannabis. 

And then the next step past that, is you start to talk about interstate commerce. They’re not connected. So where I could see a MORE Act, in the end of the ’21, maybe ’22 timeline. Interstate commerce, I think I would be surprised if we really see significant amounts of interstate commerce sooner than three years, I certainly wouldn’t be surprised if it was five years, because it requires not just the federal government, but it also covers states to be open to it and mean. Even alcohol, you typically don’t see interstate commerce with alcohol even today. And you know, this is the seven years after prohibition. So they’re still dry counties, right? So if you think about it, in that context, federal legalization does not mean snap your fingers, cannabis is legal everywhere, we’re shipping everything around. So I think we’re probably a good three to five years away from interstate commerce.

Host Raj Daniels 36:39

I appreciate shedding light on that. So Graham, last question. If you could share some advice, and it could be professional or personal or words of wisdom with the audience, what would it be?

Graham Farrar 36:53

One of the quotes I like is whether you think you can or you think you can’t, you’re right. I think keeping in mind that a lot of what we’re able to do is determined by our mindset. Steve Jobs, another quote, had a good one, I’ll paraphrase which is, you know, he reminded us that the world in the universe was invented by people no smarter than us. We can do things as individuals, and as companies, they get out there and they make a dent in the world. And there’s nobody who’s inherently better or in charge. 

So if you think about those things together, that you can make the rules as much as anybody else does. And whether you think you can or you think you can’t, you’re right. Think about what you want to do have that positive intention, believe that you can go out there and do it and make it happen. And then combine that with one more Steve Jobs quote in there, which is 1000 no’s for every yes. We as individuals can do anything, but we can’t do everything. So focus, I think is really key. Find what you want to do. Find something that you love, find something that you think makes the world a better place. 

Believe in the fact that you can do it with the intention and hard work, and then realize that there’s nothing that stops you from doing it. So go out and make it happen.

www.glasshousegroup.com

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