By Jan Evans | Sep 12, 2019
Boulder / Commerce City / Ridgway, Colorado
Vaporizer cartridges, cannabis extracts, and flower products
Shift Cannabis has taken "a long and circuitous road," says Howard, who worked as a cannabis lawyer before starting the company.
"I made a lot of connections," he remembers. "I met a lot of people in Colorado that were from the real estate side who were professionals. Then on the other side, I met clients who were cannabis activists, enthusiasts, or botanist types on the cultivation side. Through that process, I began consulting."
In 2014 and 2015, Howard was "doing a little consulting, but mostly operations management as well as license acquisition." Work with multi-state operators gave Howard and his team a tested model for building the Shift brand.
They started in the Land of Enchantment. "We had won our New Mexico license, and we were able to open a cultivation and our first dispensary in early 2016 in Santa Fe," says Howard.
In 2017, Shift acquired an extraction facility in Colorado to complement the New Mexico retail. Headquartered in Boulder, the company now manufactures in Commerce City and sells its products throughout Colorado, with its grow at Dalwhinnie Farm in Ridgway.
"That model for the last 12 months has been laser-focused on our own CPG line," says Howard. "We wanted the professionalism that Wall Street brought -- as well as the capital -- but we didn't want to lose the culture, and the heart and the soul of what makes the cannabis industry special. It's gone from 420 as an act of defiance to now an act of celebration. We don't want to forget where that came from. A lot of the clients we were consulting simply didn't care, and they still don't care. We didn't feel good about that. The intention from taking Shift from a consulting or operational brand to a real CPG, consumer-facing brand is what we recently launched in Colorado."
Shift manufactures vaporizer cartridges, cannabis extracts and concentrates (including bulk oil to edibles manufacturers), and packaged flower. The end-of-year goal is to offer every product category except edibles.
The market is responding: "We're getting double-digit growth percentage-wise every month. We're very happy about that, and the customers seem to be as happy as we are."
In Colorado, Shift sells wholesale through four salespeople and one customer service rep. The team ensures that compliance, positioning, and product or customer issues are resolved correctly.
Even with their Ridgway grow facility, sourcing can be a problem due to the huge demand. Shift is working with a test garden that will use the company's standard operating procedures and genetic cultivars to grow 100 to 200 plants of one product type to see if they can cultivate to Shift's specifications. If the test garden is successful, Howard hopes to license the protocols and brand in order to grow product around the country.
Although labor and workforce is not a problem in the Denver area, it is on the Western Slope. The unskilled labor pool is transient, and workers seldom stay more than 90 days. For skilled labor, Shift has had to offer above-market salaries and help with housing to attract and keep qualified people. Howard says selling the small-town, mountain lifestyle to East and West Coast urban dwellers has been a successful strategy.
In the cannabis industry, government regulations change more quickly than in other industries. Howard is mostly concerned with how local regulations can affect his operations. "I don't shy away from having regulations that will help us have safe products, so this industry can survive across the board. But when the local regulations change and they're not in line with the state regulations it can make it very difficult for your operation."
Sustainability is a top priority, he adds. "Nobody wants cannabis to be labeled oil and gas. We want this to be a green industry. We don't want to strip our communities of resources and put stuff in the air."
Howard says innovation is rampant in the cannabis industry. "This is the land of opportunity and the birthplace of ideas. Every single day, we see a concept that has been borrowed from another industry that hasn't been applied here yet."
Cass in point: Shift tracks data at every point of the operation and is starting to use machine learning at the grow facility to improve efficiency and consistency.
Howard says the innovation creates employment opportunities within and without the cannabis industry. Because leaders must be so flexible, he believes high-level executives will start being recruited into other industries from the cannabis industry, as cannabis attracts scientists from food and ag.
Challenges: "I think the challenges and opportunities are two sides of the same coin," says Howard. "We have an industry where you have to build your infrastructure in each market you want to move into. Because of the state regulations and the federal law as it is, you have to build an entire business in each state. So that's the greatest challenge to growing a company and a brand into national."
Opportunities: Howard says going national is a challenge, but it also offers Shift its largest opportunity: "Those businesses that are able to find nimble platforms to bring their brand and products to all customers and all markets without having to build 50 separate businesses are going to thrive over the next five years."
Needs: "This industry still needs more capital," says Howard. "It absolutely needs better banking regulations. And it absolutely needs to step out of the shadow of 280E taxation."