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Where cultivation excellence meets unfiltered insight—AROYA Office Hours LIVE Special Edition—hosted by Greg Dunaway. Powered by AROYA's revolutionary approach to data-driven growing, we bring you the brightest minds behind today's biggest breakthroughs.
Stay ahead in this rapidly evolving landscape, from cutting-edge solutions to market strategy.
Greg Dunaway [00:00:02]:
I'm thrilled to welcome a good friend of mine to the show today, Timo Bongartz. For those of you who don't know him, Timo is the co founder and CEO of Cannavigia. That is a company at the absolute forefront of shaping a transparent and compliant not just EU market, but global cannabis market. He's one of the sharpest guys in the industry. An unparalleled view of regulatory operational landscapes across Europe, Africa, Africa, you name it. He's pioneered Swiss pilot programs to complex EU GMP regulations. He's got one of the most interesting perspectives in the entire cannabis world. I am so happy to have him here.
Greg Dunaway [00:00:40]:
Thanks again for being here. I really, really want to dive into two of the major, major events that you just attended. Give us your opinion about one of the craziest festivals I've ever attended. I attended last year's Mary Jane. What was Mary Jane like and what were some of the differences from the previous years to this year, in your opinion?
Timo Bongartz [00:01:03]:
Yeah, so the Mary Jane in Berlin is now the biggest cannabis conference in the world. It had 65,000 visitors. So year over year it grew significantly, now being the biggest in the world. And what was different compared to last year when you had been there and we met was that they banned all alcohol. That is interesting. And also seeing the press clippings thereafter from the police saying, you know, we had an event with 65,000 people and had no incident, you know, not normally if you have a lot of people, something happens. But with 65,000 people just smoking weed as it is legal in Germany, yeah, nothing happened. And I think that is something really great.
Timo Bongartz [00:01:51]:
Last year they had some issues with synthetic cannabinoids and so on. That booth had these on the, on the stand and all that was also this year not happening. So I think it showed itself from the best side and show what legalization could lead to, you know, a nice community behaving well, that also the police and everyone is happy, you know, nothing happens. That is, that is fantastic. A great outcome for all the visitors and the organizers.
Greg Dunaway [00:02:24]:
And when you look at what you learned from Mary Jane, from kind of a business perspective, you know, what, what, what was out there. Describe it for people who might not get a chance to ever go. And again, we'll get into the Germany's legal framework in a quick second. But what did you learn from a business perspective out there, Timo?
Timo Bongartz [00:02:38]:
Yeah, so it is main and mainly it is a B2C conference. Right. So it has a big festival where also music artists are on, on the, on the, on the, on the floor and, and so on. But before the, you know, public days, there were a dedicated business day, which is nice that you, you had different talk tracks where German distributors, German telemedicine platforms and so on gave talks or were on panels. That was great. But also you as a, as a business were able to go around the whole show, but without all the thousands of thousands of people and squeezing around so you could do all your business in a day and you know, go to, to, to the, to the booth where you wanted to go. That was amazing for, for, for us, you know, from a business perspective it was amazing because you really could organize your stuff and then going the next day more as a visitor like everyone else and could tick off your boxes. From a business point of great.
Timo Bongartz [00:03:48]:
And I have to say that also the panels were very, very interesting because Germany has momentum and a lot of people were very interested how the different players in the ecosystem see the recent developments.
Greg Dunaway [00:04:03]:
Well, let's dive right into that, Timo. So, you know, this audience is kind of a varied one. We've got growers, we've got operators, we've got investors all across kind of Aroya's platform. Let's baseline it. Will you just give a brief overview of how the market has developed with that two tiered system that you and I are familiar with in terms of medical and social clubs and then just kind of give everybody update about where we are today. Because the growth frankly in medical has just been explosive.
Timo Bongartz [00:04:28]:
Yeah, exactly. As you said correctly, since already a couple of years, medical cannabis is legal and available in Germany, luckily. But in April last year there was a law change which enables or which, which says that cannabis is not a narcotic anymore. And with that it can be prescribed significantly easier. And that led to a significant grow year over year. Because before you need to have very severe, you know, illness like multiple sclerosis or Parkinson or epilepsy or so on, and now you can also get medical cannabis prescribed, for example, for pain regulation or sleeping problems and things like that. So it's for a lot of more and different issues and as said, doctors can prescribe it therefore significant easier. That led also to the situation that there are more and more telemedical providers.
Timo Bongartz [00:05:38]:
So you can online get a prescription, hand it into an online pharmacy and then get it delivered to your doorstep. So it became extremely easy to access medical cannabis and very convenient because you even don't need to leave your house, which gives also access to not only people in the cities which you know, have easier access to a pharmacy who also carries cannabis products. But now also the people in the countryside can easily get medical cannabis. And that led to, you know, last year the total volume was 72 tons of medical cannabis exported into Germany. And then you have some local production. And this year it's projected to be around 160 tons. So, you know, again, a huge market growth. And that is on the medical side.
Timo Bongartz [00:06:40]:
So it's easy, accessible, can get easy prescribed, easy to get, and more and more people opting in for this option for whatever situation they have. And then on the recreational side, you are allowed in Germany to grow three plants at home. So home growing is allowed. So three plants per adult per household. So if you and your partner, so your partner can have three, you can have three. So it would be six in your household. And it's also allowed to possess cannabis and to consume cannabis. There are some, obviously some rules where you are not allowed to consume.
Timo Bongartz [00:07:22]:
For example, in being close to kindergartens or playgrounds, there is a minimum distance you need to keep to be allowed to smoke their cannabis. But yeah, that all in all led to quite some big legal supply. The demand is there, right? If it's legal or not. The demand has always been there, is there today. But now more and more of this demand is also, you know, supplied by legal supply. Which is fantastic news.
Greg Dunaway [00:07:59]:
Timo, when you look at, there's two tiers in the German system that you and I know about, right? What about the social clubs? What about those growers that are domestic? You know, what, what kind of growth do you foresee for them? And what, you know, where is that market going?
Timo Bongartz [00:08:13]:
Yeah, that's a good one. That is another pillar of the recreational market. Next to the home growing is indeed the, the cultivation clubs. So there the, the, the setup is the following. You can set up a nonprofit cultivation club where, you know, you can have maximum 500 members and cultivate for them. But it's not a system where you take your sweet plants at home and put it in a club. Right. You know that in some states in the US that's not so you can grow your sweet plants at home, you can be a Medicare cannabis patient and you can be a member of a club.
Timo Bongartz [00:08:47]:
So just to be clear about that. Anyway, so the clubs as they are non profit, it's a little bit a challenge to set these up. As you all know, it is quite an investment to set up a grow. But more and more got put in the application and got also an approval to be a cultivation club. And now they are all in the process to set it up. And then as I said, you can cultivate and dispense out to your members, only to your members, the cannabis you grow in this club. You are also allowed to dispense out clones and seeds and so on, which is then interesting if you also like to grow at home so you can get easy clones. Yeah.
Timo Bongartz [00:09:38]:
The challenge for them is, you know, having the talent and the money. The passion is always there and there's a big interest around that. I think the development on the medical side is a little bit hindering a faster growth on the cultivation club side due to the fact that if you go now and can get medical cannabis relatively easy and you have right now thousand SKUs available, so you have a huge portfolio and you can also get this sent to your home address. It's also very convenient also for relatively cheap prices. So in the pharmacies you have cannabis for €5 a gram, up to €15 a gram. Right. So you can have cheaper product, more craft, more expensive product. So you have also a good portfolio in diverse portfolio.
Timo Bongartz [00:10:32]:
So where I want to go with that, there are some discussions to have a little bit more stricter rules around the medical cannabis prescription set up. I think that would boost the cultivation clubs. Again right now, you know, the easy access through the medical program hinders, I think, faster grow on the club side. But there are clubs who already set up their grow and dispense cannabis to their members. And so there are already successful stories all over Germany.
Greg Dunaway [00:11:07]:
Timo, one of my questions for you is if you are looking at the market in five years, where does this end in terms of the tension between the social clubs and the medical market? Because to your point, if I'm getting free cannabis delivered to my house, it's a little bit different of an argument to tell me to go buy maybe even better cannabis down the street at my neighborhood social club.
Timo Bongartz [00:11:27]:
Yeah, it is. Tell me how a market looks like in five years we had cannabis. Right. If we would know that. Yeah, it's really hard to say. My current viewpoint is, and I emphasize on current because it can change is the following that the current government in Germany wants to have a little bit stricter rules around the online prescriptions, especially because they are now some players who just offer a survey and you fill the survey out and then you. You are already able to get a prescription. I think that the lawmaker will make very sure that you need to see a doctor.
Timo Bongartz [00:12:10]:
It can be virtually so, but that you need to see for your first session the doctor not for your follow up prescription, of course, but for the first time. And yeah, that. So that to reduce a little bit the easiness that could help the cultivation clubs. And I think that there are the cultivation clubs, there are areas where you see them and that is not necessarily in the cities, but more in the countryside. You see also clubs who have. Not in the same building but sent up also consumption lounge. So to have really the club feeling of people getting together. So I think we will see more and more setups which really give more value to the members.
Timo Bongartz [00:13:03]:
And that's why I think this market segment will grow also. Some will fall out because they cannot succeed because they are underfunded or whatever. But I think that especially like beginning of 2020, we will see more stronger growth on the club side.
Greg Dunaway [00:13:24]:
What other countries surrounding Germany or in the EU give you hope, Timo, about kind of a progressive outlook towards cannabis? We always in the US we're stuck with kind of the negative, right? We are in a compressed market, a mature market. And on the other side, I think people look at the EU and they go, all right, I'm seeing some hope here, even though, as you and I know we've been talking for five years now, it comes and goes, kind of in progress. But what other countries give you hope for the EU right now?
Timo Bongartz [00:13:49]:
Yeah, I think there are a couple and I think generally to do also some expectation management in absolute numbers. The eu, European Union is still very small compared to the us right. But the growth is there, right? It's an interesting story, but it's not that you can make good money right now. You will in the future. And it's a great growth story, but that I want to always mention, especially for companies who are interested coming from the US into Europe. So which neighboring countries are interesting? So from a consumption point of view, legal consumption point of view, the three biggest countries are right now, Germany, UK and Poland. But you have medical programs in Switzerland and in other countries, of course, some are very strict, some are a little bit more loose, but you see that they are getting more and more softer and easier for patients to tap into. Right now we are seeing developments in France.
Timo Bongartz [00:15:03]:
France is huge, right? It's a big country, the second biggest in size of population. And there we see cultivators, but there it will be a very farmer oriented approach, really, with not flour as the final product. We see Greece coming up right now. You have cultivators there. And the medical program is also open for tourists. So that is also an interesting country to look at. Portugal, obviously not for Consumption, but as a production. It's actually the production powerhouse of Europe.
Timo Bongartz [00:15:45]:
So there's the biggest cultivation surface in Europe right now. And yeah, also Eastern Europe. So Czech Republic is interesting. So I think there's everywhere. It's always a lot look to Germany because it's the biggest population and they are seen as very conservative. And if the, you know, the Germans do it, the other thing, like what Germans do it. Why don't we. So you see a little bit of this effect right now in Europe since last year.
Timo Bongartz [00:16:18]:
And of course, I hope for the big ones. Right. For me it's France, it's Spain, it's further developments in Poland that are the big societies. Of course, from a population size. Yeah. But we see that everyone is moving in the direction. Maybe not everyone, if I see the recent development in Italy, for example. But yeah, they are more and more joining the party.
Greg Dunaway [00:16:45]:
Let's talk some stuff that I think you and I are lucky that we've gotten familiar with you in particular. Obviously it's like the back of your hand. But for. Let's say there's an average grower out here in the US listening to the two of us talk. Just not. We don't need to go by the book, Timo, but just give an idea about how different it is to grow in a medical facility. Europe versus some of the facilities that you've walked here in the U.S. you know, what are those things that stand out to you that growers just wouldn't understand about that level of difficulty and those hoops you have to jump through to grow in the eu.
Timo Bongartz [00:17:16]:
Yeah. So. And I explained you why. But you would never see anyone in cultivation dressed up like, like us in normal streetwear. It would not happen. They would all have protection gear on. Right. And you know, like suits, gloves, hair nets and so on.
Timo Bongartz [00:17:35]:
So because it's. It's medical, it's pharma. And that means in Europe you, you need to follow pharmaceutical regulation. And for. For cultivation, that is called gacp. It's good agricultural and collection practices. If you later on process the cannabis in different forms and so on and make a finer product out of it, it falls under gmp, good manufacturing practices. And if you later on want to.
Timo Bongartz [00:18:05]:
That you need to fulfill gdp, good distribution practices. And that gives you a very strict framework how to operate. And this is the same framework if you produce a painkiller pill or if you produce medical cannabis. It is a medicine. Yeah. And that's why there are rules of how, you know, to work hygiene. It's all about Hygiene, right. And you know, there are strict rules, so you need to write a lot of SOPs.
Timo Bongartz [00:18:34]:
You have a quality management system in place. You need to have segregation of duties. You need to produce a batch record for every batch you are producing and send it to your regulator and so on and so forth. So there's a framework existing which you need to follow and you need to get audited and inspected that you fulfill these to be able to participate in the supply chain. And I always like these, starting with this. You see it when you going to grow, if you are in a US facility or in a facility somewhere in Europe, how the people are sued up, dressed up, that is extremely important here in Europe. Otherwise you cannot participate in the medical market, which is by far the biggest. And I personally like it due to the fact that for me, even if it's medicine or not medicine, but I produce a product and I want to have it as similar batch over batch as possible.
Timo Bongartz [00:19:42]:
And to ensure that I need to have a framework to follow because consistency is really king here. You cannot, if you have whatever a cultivar, I don't know, Blue Dream, and it has that THC and CBD values, you need to hit it with a variance of plus minus 10%, otherwise you are not allowed to bring it to market, period. And you have strict protocols on all different kind of things. You need to prove with the certificate of analysis that you really are in line of these specifications. Because otherwise again, you cannot bring it to market. So you really ensure patient safety from A to Z. And that is something I really like because I want the same experience even as consumer, if I have the product, and I know it is, it's planned, you know, you can only do as much as you can, but all you can, you should have under control. So, and that's also why I'm personally a big fan of, of, you know, having a lot of sensor devices and having good control over your grow.
Timo Bongartz [00:20:50]:
Because there, you know very early, very preventively already, if you have a problem, if your relative humidity goes through the roof and you see your VP and it's not in your range, you will have a problem in your grow later. We know it, it will happen. So that's why more systems to control and ensure quality are something good, I think.
Greg Dunaway [00:21:16]:
Yeah. And I think you hit on something on the head which is a consistent through line for any grower, right. Which is the repeatability. I was doing deliveries for Colt yesterday and so you look at those coas here in a rec market and there is that variance level. But I think one of the things that's super interesting, Timo, for people to understand is the variances that happen in plants here in the eu. That variance could literally lead to your point. You can't go to market if you're off. Right.
Greg Dunaway [00:21:44]:
I mean, you cannot. You are out hundreds of thousands of dollars if you're off. And I think that data measurement, and I want to dovetail this into telling you, telling you a little, tell us a little about Cannavigia is what are those systems that ensure that people are losing hundreds of thousands of crops and. And tell us a little about how Cannavigia plays into that system.
Timo Bongartz [00:22:05]:
Yeah, so, yeah, there are different layers to ensure that, of course. So it all starts that you know that you are compliant to these standards. Right. And therefore you need to have a quality management system. You have a qualified person who is also allowed to release a badge. So that is his or her name on it. And if there is a problem later on, his or her.
Greg Dunaway [00:22:33]:
That's got to be a tough phone call to get.
Timo Bongartz [00:22:35]:
Yeah, you don't want. No, yeah. It's like you can lose not on your job, but the possibility to work in your job. So it's a really important release process. So what I want to say, you set up a quality management system. You need to train your employees, you need to segregate roles and responsibilities. So if I'm the cultivator, I'm not allowed to release the badge. It needs to be a qualified person or out of the quality department.
Timo Bongartz [00:23:03]:
Right. So all these systems need to be set up before you really go operational. Then you get audited and then you get inspected by your regulator. And we as a company help companies to fulfill all these criteria. Set up a quality management system, train the people, bring, you know, not only on paper, but bring it into reality. And so that then the companies are allowed to grow medical. So that is step one. Once they are compliant and have the right certification available, they really can start production.
Timo Bongartz [00:23:41]:
We have a track and trace system which is tracking the cultivation. We do it through QR code, so you don't need to buy any RFID tags or. So it is like that. For example, I go in the morning and get on my mobile phone, okay, My task is now to defoliate room number one. I scan room number one, there's a QR code and then I say I defoliate. And then it starts and then I have all the waste and I say, oh, that is because I defoliated. This is leaves. I put it on a scale and it's whatever 10 kilogram and it goes automatically in our track and trace software.
Timo Bongartz [00:24:22]:
So now it is locked. Timo defoliated room one. At this day, he had whatever 10 kilogram of biomass because it's narcotic waste. Also this need to be tracked. You know, we are Europeans, we are very precise and accurate. So, so then the scale is integrated into our system. So it goes automatically in and 10 kilogram of waste is there. And then the waste bin later on goes to the waste disposal and you say, find a disposal lock destroyed out of the system.
Timo Bongartz [00:24:53]:
And the system knows that this is now waste and this is in all aspects, but it is becoming a digital electronic batch record. So all is automatically while you do it, it's locked against the system and against your lock, your batch record. Right? And of course, these data we make also available to the grower so that you can drive more operational excellence and improve. Because as we all know in the market, the, the market saturate, it's all becoming a game of cost control and bringing down your opex. So obviously this data has value beyond being compliant. And we make this data available, that is our track and trace software. Then you produce these batch records and have your grow under control. You release a batch, you can sell it.
Timo Bongartz [00:25:47]:
And then our company supports clients because we have clients around the world in Latin America and Central America, in Africa, in Thailand, Australia, you name it. And a lot of these companies want to go into different markets because maybe their domestic market is not big enough and they want to export. And then we help to set up the supply chain and bring this product for these customers into their target markets like in Germany, Poland, UK or Australia or wherever. So we really try to be a partner for our clients, help them being compliant, help them having a software to track and trace everything and then if they grow successfully, good weed, to also give it in the hands of more people who can enjoy it also outside of their domestic market.
Greg Dunaway [00:26:38]:
I love what you said, Timo, because I think it's really funny that you and I are like, I'm dealing with the cult compressed market. And then you were even acknowledging, hey, we're in a growth phase, but we're still concerned about OPEX and wringing out costs. And, you know, it's like, it's like, I guess, I guess that leads into a question. And I assume, I have to assume there's some of the same things, but what are some of the mistakes that you see these growers in the EU making? Was it the same thing where they just saw dollar signs or tell me, tell me a little bit about what are those mistakes that are making in the EU market that that could have been avoided, you think?
Timo Bongartz [00:27:11]:
Yeah, I don't know always if it's a mistake, right. But what I see often people go in too fast, too big and this is not something special to Europe. It's everywhere.
Greg Dunaway [00:27:28]:
No, that is not unique.
Timo Bongartz [00:27:30]:
Yeah. And these companies are very often when they start startups, right? And which startups does not start with a small and scale it up, but go in big right from the get go. It's normally not what you do and especially not when you are in an asset heavy vertical. You don't do that. Right. So start smaller and then scale versus too big. That is one thing. The other is more realistic project plans.
Timo Bongartz [00:28:06]:
You know, it's nearly never the plan is matching the reality by far in time and in budget, to be frank. So they are more realistic. Planning is something which is important to also from an expectation management tool to the investors and so on. Otherwise you run behind your numbers all the time and this brings you in a difficult position. And then the last thing is really from a business model, I think the too often the leads, the customers do not really know who their target customer will be and how they get their product to it. And that is the beginning of every business. Who is your client? What does this person want or this segment want? How can I deliver it to the person? And then I build from there the size, the structure. So a little bit structure, follow strategy.
Timo Bongartz [00:29:08]:
What is your strategy? Where do you want to to bring this? Who do you want to delight with your product and in which form? So really I would like very often to just send a business model canvas template like let's fill this out first because then to check. Yeah, because very often the answer is yeah, we want to go to Germany. It's like, yeah, but not everyone can export to Germany. It's like this is a nice market but it cannot get it all right. That is my three things. I have a couple of others in regards to to talent, you know, good cultivators but good quality people from the get go. So that you have the main dimensions of what is creating your value and ensuring your value in the team from the beginning.
Greg Dunaway [00:29:57]:
Do you foresee from your. You have such a unique vantage point, Timo, because you are basically operating as you said, worldwide. There's growth going up worldwide. But what I wonder is, are you sensing that we've hit a point where we're going to see so much export into Germany and other areas that There really won't be many homegrown cultivator talents beyond the odd social club here and there. Or do you feel like we've hit, like there's so much Canadian cannabis coming out, there's Portugal is pumping out. It feels like we're hitting that level of demand, at least on the pharmaceutical side. Are you worried that there may not be. That we may lose a little bit of that kind of grower culture that I know you're such a f fan of right now, or we all are fans of or how do you feel about that?
Timo Bongartz [00:30:47]:
Yeah, so yes, we, we run in an oversupply situation, but that is normal for a market, especially a new market, you know, it needs to balance out and.
Greg Dunaway [00:30:58]:
Right.
Timo Bongartz [00:30:58]:
And market correction and also market consolidation is the next thing to happen. That's very normal. You see those in the US and this will happen in Germany. So I don't see it as something negative. It's a normal evolution of a market and it just shows that the market is developing further in its growth curve. Right. But there will be a situation of oversupply, collapse, correction, consolidation and then growth again. But once again, I don't see it as negative, to be honest.
Timo Bongartz [00:31:29]:
It shows it matures and I want a mature market because then forecasting is easier. And then I could easily answer your question, how does it look at five years? Because now it's like, I don't know. Right. So, yeah, I want that it becomes an industry, a proper industry. Right. So yeah, that is a little bit on the status of oversupply. And I see, if you ask me in which direction it develops, I think, as you know, I worked in for a lot of, in a lot of other horticulture crops. Right, right.
Timo Bongartz [00:32:06]:
Cucumbers, tomatoes, whatever, and, and at the end it becomes a game of having your cost under control. And in the market, if it's getting more and more global, you will see that it's my prediction that more and more production will move in low cost areas. Why? Because of course I want in the best situation, I want to have the cannabis on me relatively after curing. Right, Obviously. But if it is there two, three, four weeks after curing, it's still a good product. It is not that it's all of a sudden like lettuce or a strawberry, that you cannot eat it anymore. Right. So what I want to say, you can make use of the sun, you can grow in nice areas where also naturally cannabis has been grown over the years.
Timo Bongartz [00:33:01]:
So that's why I expect that more and more cultivation will go to the southern hemisphere. That's why Africa, Latam and also Asia is interesting also for the future to produce big volume in a good quality at a reasonable price. But there will be always a market also for the premium craft segment. But it is like, you know, with wine, I think 80% of the wine industry is done by corporates and then 20% is more the niche, the specialities. And if I see right now the German market, a lot of the growth currently is not in the premium segment. This stays in absolute numbers relative. It grows also, but not even comparable as big as the budget category. That is where the growth is happening big time.
Timo Bongartz [00:33:58]:
So we see this trend already. So yeah, I think having control over your costs and that doesn't need to be next necessarily in a low cost country. It can be that you take your big OPEX blocks and fix these. Energy in Europe is a big thing. That's why the big good horticulture companies, for example, are also energy companies because they have their own. They create a kind of micro grid, right. And produce their own energy and have stable pricing. And if they have overproduction of energy by whatever, wind, solar, geothermal, whatever, feed it back into the grid and get paid.
Timo Bongartz [00:34:38]:
So what I want to say if energy is a big block, if you can find a good way, you can grow also, you know, in, I don't know, you see the Dutch, they're growing in the Netherlands and as the second biggest exporter of fresh vegetables in the Netherlands. So it is possible also for cannabis. But you need to really work on the OPEX blocks and find solutions that you don't especially. And that's most cases. It's labor, of course, and energy, the big drivers.
Greg Dunaway [00:35:06]:
Labor, energy. And I love what you said earlier about like data. Right. I mean we're, you know, I think, you know this Colts moving facilities right now, Timo. And so it's just one of those things where it's like, how much data can we get into this new facility? Because we have no margin for error when you switch a facility. There's just no margin. You have to completely keep going. Right.
Greg Dunaway [00:35:25]:
And I love what you said about that. Your, your perspective on having other crops I think is really healthy because I think a lot of times when we're in cannabis, we think that we're this unique, unique flower that was just us. And no one's ever dealt with some of the shit we've dealt with. And I loved your perspective. Basically saying, hey guys, we have to look at other crops to know where we're going.
Timo Bongartz [00:35:44]:
Yeah, Absolutely. And, you know, I also like to say, you know, it does not need to be the. The veggies and the fruits look to floriculture to look to ornamentals. They produce batches over batch. They, you know, look at a chrysanthemum and you find so many similarities to cannabis. Go into chrysanthemum Greenhouse in the Netherlands, it will open your eyes how many technologies and things you like. Oh, oh, okay. There is a, whatever 4 hectare chrysanthemum grow.
Timo Bongartz [00:36:17]:
Yeah. And it's the short day plant. They grow five batches a year. They have automatic netting coming down. It's like, it's really interesting. So, yeah, there is something done. And they work with ultra slim margins, but they are good, happy, healthy companies. You need to keep the cost under control.
Timo Bongartz [00:36:39]:
Of course.
Greg Dunaway [00:36:40]:
Yeah. If you don't have your opex under control, I think in any industry in a lot of trouble, but particularly with cannabis, I think there's this allure of, okay, let's get out into as broad as we can as quick as we can. But the problem is if you scale without those controls to your point, you're in a lot of trouble. Timo, I wanted to ask you specifically about technology and Canavasia and what you guys are working on and what you guys are thinking about. What problems are you guys maybe thinking about tackling from the software side? What are you excited about for Cannavigia over the next six to 12 months? I think one of the things I think I want people on this podcast to understand is Cannavigia. You're a very humble dude. You guys have made incredible strides over the last few years in terms of being the track and trace of the eu. So.
Greg Dunaway [00:37:31]:
So when you tell us that you're thinking about something or you guys are excited about something, I think it's really important for the industry as a whole to take a listen.
Timo Bongartz [00:37:38]:
Yeah, more today we collect data which we did not really make available to the cultivator. So there are some gems still which all our clients really deserve to get. So also really on cost control, more KPI driven. And there is two additional aspects which I think further along the way are interesting. One is really better production planning and forecasting and so on because they are all in a global supply chain and you need to link at the right time and so on. So this whole planning and forecasting becomes more important and there we want to do more things. And the other thing is what we are seeing. We have a really good market understanding in this target markets and we have also a Lot of data available.
Timo Bongartz [00:38:39]:
So we have a good understanding of what price per cultivar. So if a grower wants to cultivate a new cultivar, we know is it already in Germany, Poland and UK or are they similar at which price point who is the grower? How does the price has developed for this kind of cultivar over the last six months. And this data we want to to provide back to the cultivators that they don't only grow the cannabis, the how those the in the best and efficient way, but also select the right cultivars because they are more, you know, protecting that there is no price decrease. And you know, you know exactly when you, when you want to plant or start a new cultivar, how long it takes until it's on the shelves. So there's a huge gap. In a couple of months, a lot of things can change. So you need to have more data to ensure, to have more likelihood that you know what will gonna happen. And that is something to connect a little bit the supply side to the demand side, to make the right decisions already at the beginning.
Timo Bongartz [00:39:49]:
Because we also see there are in the different market some gaps in terps, you know, and then you see why are some asking for these kind of cultivars? And you see, ah, because there is a gap of these kind of terps or you. Yeah, these kind of things are obviously interesting. Yeah. And that is something which could support cultivators and other players along the value chain making decisions.
Greg Dunaway [00:40:16]:
God, I love what you just said, Timo. I can't tell you how frustrating it is being a small operator and not, not closing that loop of going all the way from Fino Hunt to getting feedback. I was on a call with an MSO that we service and I won't say who, but they were like, oh, our customers need Sativas. And it's like more sativas. It's like, well, shit, that's a four month, five month ask, right? That kind of feedback. And the other problem in the US I think, and again, I love what you're doing is it's so segmented, right? So in the US we might have access to a POS system that charges us an ungodly amount of money to see trends. But then you have to circle that all the way back to your harvest and close to your team, your cultivation team and close that loop. So I love what you're doing and the complexity of what you're doing, Timo.
Greg Dunaway [00:41:01]:
Just to reiterate for our audiences, you're doing this on a worldwide scale where people are Exporting in and out of countries. And I think simplifying that is a herculean task and I love what you guys are trying to do there.
Timo Bongartz [00:41:13]:
Yeah, thank you. I appreciate. That's good feedback because as you also said, it is really required to close the loop because too much things happen in the black box. And also the cultivators are a little bit, sometimes a little bit shy to share. It's a little bit as everywhere secret sauce. I like also here, the comparison to the horticulture. If you are a Dutch grower and you grow tomatoes, you sit every two months together with your biggest competitor, tomatoes and talk about trends and so on. I just want to share because it's like, of course there are competitors, but maybe your competitor is not the other Dutch guy, but the grower in Spain or in Morocco or Tunisia, where also big tomato volumes are produced for Europe.
Timo Bongartz [00:42:06]:
Right. So what I want to say is it's not that open from an open innovation point of view yet. So it's even more important to provide more data and proof points to make decisions.
Greg Dunaway [00:42:20]:
Yep. I love that you have been so generous with your time, Timo, and I know how busy you are. I wanted to ask you one last question about kind of you and I looking to the future about kind of the global cannabis world. Given where we are in the EU from a regulatory perspective, where you guys have. Not unlike the US where we have the federal. That's a shit show. And in our state by state, you guys kind of have the EU and then a country by country framework. Right.
Greg Dunaway [00:42:47]:
So not too dissimilar, but different. What do you see as a realistic timeline for when things truly in the EU become a little. Do you foresee it becoming a little bit more like a dispensary model in the U.S. do you foresee it always being pharma, Always being involved? What do you see? And you know, just put on your total 10 to 15 year hat. Right. You know, what do you see?
Timo Bongartz [00:43:13]:
I see first of all that there will be a difference between medical cannabis, which is mostly flour, and pharmaceutical grade cannabis. So that would be whatever kind of formats, tinctures, pills and so on, which will be really pharma. And there also will be the big pharma getting into. It's extremely expensive. There are some products from gw, for example, on the market in this category, but we will see more of them. These because the potential of cannabinoids is. And also in combination with terps and so on is huge. And if you can make a very distinct.
Timo Bongartz [00:43:55]:
Okay, set up and produce a final product. Out of that, you have a big market. As long as there is stigmatization around cannabis, not all doctors will prescribe it, but if it's medicine, like a typical medicine, out of their view, you will have a huge market also for elderly, maybe also for other people who would not tap into it. So I see first of all that there will be more pharma kind of cannabis available then I think generally in the EU that it's a little bit like that. If you have enough states who want to change something, you can change things on the EU level. But you need a critical mass, you need more people changing it. And we see we are getting to this point that there are more and more countries in favor for more liberal cannabis laws. So yeah, I hope that this is continuing.
Timo Bongartz [00:44:55]:
I have to be honest though, the recent development in Europe where there's a shift more to conservative right political orientation is a little bit slowing that down town, to be frank, because in tendency, you see in EU states that the green and the social, more social parties are in favor of cannabis and the conservatives, more right parties are against cannabis legalization, as a general observation. And right now we have a little bit of a trend in this direction, so that is a little bit slowing down. But I believe also there things will happen and I believe that we will see recreational cancer cannabis more and more. And due to the EU law and the UN law, it's really difficult to make recreational cannabis laws because you cannot trade recreational cannabis. It's just not possible, not by EU law, not by UN law. So yeah, but you need to trade it. You cannot grow all the cannabis for Germany. In Germany it is damn cold here.
Timo Bongartz [00:46:03]:
Electricity is very expensive. Labor is very expensive. It is. It economically will not be feasible to grow all this capacity, to have all this capacity in Germany. So to have a really recreational cannabis programs available, you need to enable trade and for that the EU need to change. But I see that in the next 10 years, so we need a little bit more time. Until then, we see some pilot projects. So they will do research projects as we did it in Switzerland.
Timo Bongartz [00:46:33]:
The Swiss are doing pilot projects to see how legalization could look like, for example, in the city of Zurich, right? And look at it. We as a company do all the software with that. And I can tell you also here, the city, the police, all these different sectors love it because we do it since two years. There is no incident, there's no problem. They're like, why are we not legalizing? We have less problems. Yeah, it's Shocking. Yeah. And then you saw, because then these programs are also, for example, vapes available, which is not really possible in other programs.
Timo Bongartz [00:47:12]:
And then you saw that people switch more and more from splits and joints to especially from spliffs to vapes. As you know, Europeans like to smoke splits with tobacco. So you can bring these from a spliff to a vape. It's huge harm reduction. And that is, of course, the lawmaker has an interest in that right to do harm reduction. So, yeah, I wanted to just share that there is a recreational pilot project happening already in Switzerland and in a different shape and form in the Netherlands, maybe also soon in Germany. And these will give more data and evidence to make really evidence based decision making and for broader legalization. This is now in the progress in Switzerland already after two years.
Timo Bongartz [00:48:00]:
Now also you see that over 50% of the society is in favor of cannabis legalization. That is in a more direct democracy like in Switzerland. Need it. Right. And it should be the case. Right. We should do things for the majority of people.
Greg Dunaway [00:48:16]:
I love that. And one of the things too, and you and I can, as you know, you and I can talk for hours is, is I love what you said about the potential. You know, we can all view big pharma in the U.S. as you know, big pharma is a very tough word in the US but what I will say is we have no idea what the pharmaceutical potential is of cannabis here in the US And I do think the EU will lead the way on that, that you gu have an active and involved pharmaceutical market that takes a hard look at all the research potential of cannabis. Whereas here I think we'll always be lagging behind. Our federal government's a shit show, as you know, and it's just going to be tough again. Perhaps another podcast, Timo, perhaps another one of you and I talking about all of this. With that, I want to say thank you, Timo.
Greg Dunaway [00:49:00]:
You are a good friend. I love visiting you in Germany. This I hope, was as entertaining for our listeners as it was for me. I always learn something when I talk to you, my friend. Thank you. Thank you.
Timo Bongartz [00:49:09]:
Thank you. It was a pleasure. I cannot believe how fast the time is running, but I think that is good. Yeah. Thank you everyone for listening in. It was a huge pleasure. Thank you, Greg. Appreciate it.
Greg Dunaway [00:49:18]:
Yes. And I want to remind everyone, if you want to get in touch with Timo, if you're in the US, the eu, his company is Canavizia. They are on the forefront of track and trace and data in the EU, you can find Timo on LinkedIn. He has a very active LinkedIn, a lot of followers. And then you can also always see Timo at any EU festival. Look for a gigantic antic crowd following a German. All right, Timo, thank you so much, my friend.
Timo Bongartz [00:49:42]:
Thank you, guys. Thank you.