Founded in 2014 on skills honed long before legalization, Redding, California-based Alien Labs has over the years built a rock-solid reputation for top-shelf flower (and other products) that it is now exporting to other states as part of a growth strategy in tandem with Connected Cannabis, which acquired Alien Labs in 2017. The goal is simple – get great weed into people’s lungs – but goals in cannabis are often beautiful mirages that are never reached by the visionaries.
Not so for Alien Labs, which was founded by Ted Lidie, who still serves as CEO (and lead evangelist) for one of only a handful of flower brands in the cannabis space that have truly earned the loyalty of their fans and the longevity of their place in the market. That said, as Lidie explained during a recent call with Cannabis Business Executive, even a brand as stepped in quality as Alien Labs can experience a subtle weakening in standards that can demand immediate attention before lasting damage is done. If quality is maintained, however, it serves as a battering ram in new markets unaccustomed to the level of quality brought by Alien Labs and its ilk. Far more than a disruptive event, alien invasion may be the most apt analogy.
Ted Lidie, Founder/CEOOf course, invasion was not on Lidie’s mind when the idea for Alien Labs sprung into being. “Really, the goal was simple,” he recalled. “I just wanted to grow fire weed and smoke it with my friends. That was the goal, and to be honest, it remains the goal. I mean, we have done all this other stuff, and of course we have a business now, and the goal is to be the best in the world, but another was growing good weed and showing off what my area was doing in comparison to the areas that were getting the spotlight.”
The area in question is Redding, a Northern California city located in Shasta County, which is just east of the famed Emerald Triangle counties of Humboldt, Mendocino, and Trinity. Were those the places he was referring to that were getting all the attention? “More like San Francisco and L.A.,” Lidie corrected me. “Mendocino and Humboldt are all our guys. Mendocino, Humboldt, and Nor Cal in general, are intimately interlinked as opposed to the separated divisions of other California weed producers like L.A. and San Francisco, especially at the time. Cookies started their thing in 2009, and it wasn’t a brand yet, but it was something, but what we did in Redding was so much better than what they did. I don’t mean this in a cocky way, but when it came to objective quality, what we were putting out up there was so much better than what anyone else was putting out.”
The weed-growing skills they learned were the result of a communal effort to be the best. ‘In Redding, everyone shared tech,” noted Lidie. “It’s different than someplace like L.A., where the growers were hidden and worried about getting in trouble, so they didn’t share tech. But in Redding, we’d go to the grow store and all the other growers would be there, and you’d talk about things that worked and didn’t work. There was a free flow of knowledge, and that’s why there are quite a few brands that came out of Redding, especially after us, like A Golden State and Amber Valley. Those were all of our friends that we shared information and clones with, and talked with about what is working best.
“But another big leg up we had was one of the grow stores up there called Northern Roots, which was the first grow store in California to carry the Gavita light, which used a double-ended high-pressure sodium bulb,” he added. “We all got on those really early and were able to dial them in before they hit the masses. That was a big plus for all the growers up there, because [Gavita] eventually became the industry standard, and we had already done all the trial-and-error to get them to work. They ran much hotter than a typical HPS [light] so you had to build your room with twice as much AC, but that was a big one for sure.”
There have of course been plenty of California cannabis brands that have not succeeded for various reasons. How was Alien Labs able to avoid some of the problems that other growers could not avoid? “We faced a lot of the same problems that everyone has,” said Lidie, “but we were able to build the brand and attain a price point that allowed us to be very strategic with what we did and didn’t put out, so we had that on our side. I started growing in 2009, and my partner at the time started growing a little bit before that, and when we started seeing success as Alien Labs, we made the hard line [decision] to say that quality is only going to go to places that are high visibility, and we had that luxury back then.
“If there was something we didn’t like,” he continued, “if we didn’t like how a match came out, not literally, but figuratively, we would send it to a different state and let someone else buy it. Don’t put it in a high visibility area like Jungle Boys, TLC, or the Cookies stores, any of the stores that we were in, to let people know this isn’t the quality that we stand for. So, we were really specific about where batches went and what quality level those batches were that went to those places. And still to this day, we are very specific about where things go. We have QC standards that are sky high, I QC all the batches every week, twice a week, Tuesdays at noon and Thursdays at noon, and if a batch doesn’t meet my quality standard, it simply doesn’t go out.”
A Question of Brand Loyalty
The question of brand loyalty by consumers is a common and fascinating topic with opinions all over the map. For Lidie, it’s both simple and complex. “I know that our brand loyalists are with us pretty much till the end,” he said. “It’s the newer customers that we try to get that are hyper-focused. If they come and take the chance to buy an eighth and it’s not good, they probably won’t buy it again. But all of cannabis is batch to batch, and we have the unfortunate effect of being so big that customers get to see a lot of our batches. With some smaller cultivators that have been in the game for maybe a year or two, they put out maybe ten harvests. You get five harvests a year, so in two years, that’s ten harvests, and that’s not a lot, and there really isn’t consistency yet. So, a new cultivator can come and put out five great batches, and then their sixth batch is maybe not so good, and they still put it out because they have to. They’ve already created some brand loyalists that are going to stick with them, but it’s hard for them to overcome that.
“We see that same thing,” he noted, “and that’s why we have such a hyper focus on QC, because all cannabis is a living organism that we’re growing. There are going to be different battles that you fight every single harvest, and we just do a good job of mitigating those in the grow and at the end at QC. We’re pretty much at the peak of how much we’ve ever sold right now, but we definitely went through a quality downturn in late 2022 and early 2023. We saw some customers fall off, and we had to do the work to get that quality back up to where it is today. I think we’ve done it, and people are responding very well to it. Right now, we’re putting out the best phenos that we’ve ever selected, and people are loving it. But it’s not easy. It’s up and down even for us.”
So, how exactly does one take a small-batch passion and scale it without losing quality in the process? “There are two things that are big,” replied Lidie. “The first thing is somebody has to be able to be real with themselves and real with the company and say, ‘This shit ain’t it.’ And I can tell you for a fact that I’m not always the most loved person here, because I will tell the business, ‘Hey, man, we’re not there.’ And since I have both ownership and am the founder of the brand, between the two I get listened to. And I think that comes back to having skin in the game, being a grower, and starting at a place of quality. I don’t mean this to be negative towards them, but I don’t know any MSO that started from a place of quality. So, it’s ours to lose, and if you’re going from small batch and scaling up slowly and methodically, being real with the business and yourself about where quality is, is the starting point.”
And no man is an island, especially for a quality cannabis brand. “The team that we have put in place is definitely a huge reason for that,” explained Lidie. “Our head of [production] comes from Driscoll’s berries, and even he thought it was going to be much easier than it is. For us at Alien Labs and Connected, we have provided the perfect balance of what I call the marriage of art and science, because there still is an art to growing weed that science kind of ignores. It’s not like every other crop like a lot of these big ag people think it is. That science and finesse comes from the legacy grows and bridging that gap by coming together and being straightforward with each other about how we can improve things is really where we’ve succeeded, but also having a mind that’s actually scaled things up to huge numbers be able to take the input that we’re giving and combine it.”
The desire to always be learning is another trait that Alien Labs brings to the table. “Oh yeah,” enthused Lidie. “We have an R&D team that’s led by a PhD from Cornell University for plant science, and we have four rooms. We’ll do a trial in room four, for example, and we’ll run the exact same strains with our traditional methods in room three, so we can really get scientific and brass tacks with it. A lot of people are also adopting the under canopy LEDs, which came from us. We started doing that a little over three years ago, and we saw that it increased yields by 20 percent, increased cannabinoids by 20 percent, and terpenes by 10 to 15 percent. We adopted it and didn’t show our grows for two years because we wanted that competitive edge, and then we started showing it, and now pretty much everyone is adopting these under canopy LEDs.
“We’ve been doing that since our inception, especially with Caleb Counts and Connected,” he added. “Our 88th Street grow was built in 2014, when it was still illegal, and it’s still one of the most state-of-the-art facilities and a blueprint that many massive high-tech cultivation facilities were built on. Even now, we’re doing things that we’re not talking about that will change the game for many cultivators, but especially has for us.”
I asked Lidie if Alien Labs, which currently has over 350 employees, practices fiscal discipline as it expands into new markets. “Oh, yeah, we’ve been doing that from the beginning,” he said. “It really started with our head of cultivation coming from agriculture, and being able to take the snake oil out of some of the things that we were doing. Bottled nutrients, for example. They’re so expensive, but when you switch to a dry nutrient with the exact same benefits, it makes it that much cheaper. On top of that and other efficiencies in veg and how we pod, these are all standard agricultural practices that aren’t really applied in cannabis.
“And then, a few years ago, we got a CFO named Andrew Flynn, who came from Juul,” he added. “He helped us with our cash flow and how to get fiscally responsible, which is something that we struggled with in the past. And we like to let experts do their thing. If we hire someone, we let them take the wheel of their department and micromanage it. That was something that Caleb instilled in this company, and we’ve built a great team. Andrew, our CFO, is unfortunately no longer with us, but our head of finance, Josephine, stepped into that role.”
A Pesticide Problem?
Pesticide use in California has become a hot topic ever since a Los Angeles Times article on their alleged misuse in the legal market caught the attention of the state regulator and the nation. “I don’t want to call it a hit piece,” said Lidie of the article, “because I don’t think there was ill-intent behind it, but they did it in a way that there was no chain of custody. They didn’t explain how they selected who they selected, and they didn’t tell us where they got it, so I think there were missteps taken there. But on the other side, I think there were missteps with the brands, too. I don’t think they should have said it was just a hit piece, and that it isn’t real and isn’t true. I think there’s definitely some truth to it, and the DCC wouldn’t have recalled those products if they didn’t actually find those pesticides in it.
“But for the most part,” he added, “there were many steps of failure, including with the testing facilities, which are not absent blame here either. Even if they test something and the machine becomes tainted, how well they did clean that machine? And I don’t think any of the brands on that list would maliciously and intentionally use banned pesticides, but I do think that there are so many steps that we have to go through, and maybe they sent it to a processor that did process some dirty stuff for a black-market brand, and then that processor turned around to make some regulated stuff and the machines were dirty. I don’t think the article really laid out the steps it takes to go through the entire process turning something from flower into oil and really educate the consumer, so that was a miss, and that was some reefer madness in my view.”
I noted that Catalyst CEO Elliot Lewis has reacted by supposedly testing all the products on his shelves. “I really liked what Elliot did,” said Lidie. “We tested clean in the article, but when Elliot took stuff off his shelf, we were one of the first brands he pulled, if not the first. And we tested clean again, but we didn’t use it as an opportunity to cast a bad light on anyone, because we do recognize that this makes us all look bad. It’s not just one brand that looks bad.
“The approach I like that Elliot took,” he added, “was that he’s also testing stuff off the black market now, and he’s had a 95 percent fail rate, so the 50 percent fail rate of the legal market – a number I just made up – is considerably better than the 95 percent that he has gotten in reality on the black market. So, I think the approach Elliott took was probably the best, and I’m glad that it doesn’t seem like any of the stores have taken these brands off the shelf as long as they’re testing clean on the COA.
“But I would also heavily encourage stores to test the product that they get so they’re not just relying on a COA from a lab that was given to them by somebody that wants to sell a product,” he stressed. “Take matters into your own hands. But at the end of the day, it also underlines the point that the DCC (CA Department of Cannabis Control) isn’t really doing much to enforce anything. In a perfect world, the DCC would have their own lab and they’d be double-checking every test, because they have the ability to do that financially. We know, because we pay hundreds of million dollars in taxes a year.”
Aliens Near You
With a product roster that includes flower, hash rosin, edibles, prerolls, and vapes, the prospect of Alien Labs coming to a town near you should send shivers down the leg. The company sells its products in about 400 stores throughout California, and in most of the 40-odd dispensaries that currently dot Arizona. Florida came online late last year in a partnership with one of that state’s prime players.
“We tend to send our cultivator to the state to live and our cultivators are diehard,” said Lidie of the process they employ to enter a new market. “They’re ready to move for us. We set up our own grows to our standard. In Florida, with Trulieve, we built out a facility to our spec, we sent our cultivators to live there, and then we hire out. That’s really the juice, having the cultivators be able to follow the SOPs, the guidelines, and enforce them when we go into different states, but also having a cultivator that was raised as a grower here in California, who understands our brand standards, and then obviously Caleb and I visit these grow sites often to make sure the quality is up to par.”
The Florida arrangement is unique to the state. “We’re not separate with Trulieve in a sense, because you have to be fully vertical, so they still manage our grow. We send our growers there to essentially become employees of Trulieve.”
That also means that Alien Labs flower that is grown in Florida will go on Trulieve shelves only. “You can only sell the weed that you grow out there,” explained Lidie. “And we’re not backed by any billionaires like some of the brands out here in California that were able to go buy a license. We partnered up with what we thought would be the best, most logical company to be partnered with, and Trulieve has been a great partner. They’ve let us do our thing and run the program our way, and the quality out there definitely speaks for itself.”
The opportunity is there even in the face of branding restrictions imposed by the state. “They have strict rules in Florida about how you can package your weed,” said Lidie. “It’s in a white jar and that’s it, and you can’t use any fancy labels or anything like that.”
But it is quality, not packaging, that presents the true branding opportunity no matter which state is in the crosshairs. “We just do the same thing, and we think that’s really the juice,” said Lidie. “Whether or not they want to admit it, every cannabis company that pops up anywhere in any state is trying to emulate a California company. They want to be what we are, and so we come out with that same strategy: ‘We are what we are, and we hope you guys like it, but the quality speaks for itself.’ That’s our strategy, and I personally go to these areas a lot. I’m traveling every week, sometimes multiple times a week, reaching out to the culture and the community around cannabis, educating in stores and outside of the stores in cultural cannabis hubs.
“In a lot of these states,” he added, “customers don’t know what real high-quality cannabis is, so when we come and show them, it makes all the other companies have to step it up. Especially in limited license states, they don’t have to try too hard, because they’re the only access point, and they get caught up in that and rest on it. But when a brand like us comes to the state and shows customers what true quality is, they quickly get more educated, and it forces the other companies to become higher-quality as well, or else they are not going to be able to survive.”
Lidie added that other states are being considered, and Alien Labs is certainly open to inquiries for interested partners, but certainty is valued over speed. I asked Lidie if the company is profitable, and how it is paying for its expansion. “We’ve typically paid through joint ventures or interesting deals that we can do,” he replied. “In Arizona, we found a building that had a grow previously built in it, but the people who paid for it and the people who are operating it were different, and the people that were operating it took tail and ran on day one. So, we found that distressed property and linked up with the property owners and the people that funded it and said, ‘We can do this for you guys.’ They’ll actually get to make their money on the property itself even though they don’t take part in what we do out there, and that’s kind of been our specialty.
“We don’t do licensing deals or anything like that,” he noted. “It’s slower, but it maintains our quality, and it builds our brand in a way that isn’t leveraging the brand but building the brand. So, every state we go into, we find a new fan base that loves our quality, and that’s what we try to do everywhere.”
As far as states that are of interest, “We’re obviously looking at New York,” said Lidie, calling it “a big opportunity for us. Illinois and Michigan as well, but a little less so. We are a profitable company, but we don’t have a ton of money to spend on expansion, so we go where we can and where we’re going to be most effective. That’s what’s behind the Florida move, because if we can’t make a good amount of money in the state that we’re going into, we can’t dedicate the time and funds to it. We need to make the money back that we spend to go somewhere relatively quickly so that we can continue to expand.
“We’re always interested in hearing from people and listening to people that have issues that we can help with in some way,” he added. “There are only a handful of us that have done this scaling in a profitable way, and we’re always interested in understanding how we can provide somebody help and how they can provide us help and come together to form a partnership similar to Alien Labs and Connected, where one brand has some things that they are lacking, and the other brand has some things they are lacking.”
It occurred to me that nothing is off the future menu, even retail. “We don’t have an Alien Labs store, but I want to build one,” said a clearly excited Lidie. “I want to do it how we know how to do it, which is big and awesome and new, and as an education center, but also just as somewhere they come to get great product.”
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