The fact that Pittsburgh-based Green Mill Supercritical CEO Wes Reynolds made the decision to upend a 20-year career at Coca-Cola for the uncertainty of cannabis is probably incredible to consider for most people, but the way he explained his thinking during a call in late March made the decision seem like a no-brainer.
“On the face of it, it’s pretty straightforward,” he explained. “Timing-wise, it was two big things for me:
“And then I would say – and I don’t want to disparage Coke or anybody – but the lack of growth opportunities in some of the more mainline industries was kind of an equal push,” he added. And we only grow so old. I’m 55; when I left Coke, I was 50. You realize one day that you’ve only got a certain number of years left, and you want to do something good with them, and I couldn’t find anything more compelling than trying to usher in cannabis to the mainstream, which I think is both potentially really profitable and exciting, and also just the right thing to do, frankly.”
He departed Coca-Cola in 2017, but the road to Green Mill went first through Florida-based Surterra Wellness. “I went to Surterra right away,” recalled Reynolds, “but I also went through a long process of discernment in terms of where I wanted to be. I considered other CPG opportunities, I looked at some nonprofit stuff I might have wanted to do, and I kept coming back to cannabis. I really wanted to work as an operator in the cannabis space in a sort of seed-to-shelf license operation.
“I left Coke and only had maybe six weeks or so of downtime before I started with Surterra, running the Florida operation, which at the time was the only operation for Surterra,” he added. “They’ve since become a multi-state operator and are doing a lot of different things around the country, but when I was there we had a fairly small team that we grew very aggressively. We had a large but underutilized greenhouse, so we worked to make that come to life, and we were building out dispensaries at a pretty rapid clip. All that work was a great way for me to really experience the industry as it was developing around the country. There are, as you know, various licensing structures in different states depending on how the state wants to control it. In Florida, it was a super-license kind of structure where we had one of the five original super licenses, so we did absolutely everything from seed-to-shelf by legal requirement. It was a great way to see the business top to bottom.
He had been based in Atlanta.’ I did a few stops with Coke in different places, including Tokyo and
After spending 20 years at Coke in global development and other leadership positions, was there any similarity between that type of intense job opening up of markets, building sales and market share, and opening markets in the cannabis industry?
“I guess on some level, but I think you’re romanticizing it a little bit, and I think maybe I did too in the early days,” he said. “I think it’s more the differences [between the industries], and maybe I’ll talk about those for a minute. I think the main difference is that the markets are opening everywhere for cannabis, which is exciting, and that’s a big part of the appeal, but the rules are very unclear, and I would say in some cases, there are no rules. Part of what is also happening is that we’re not only opening markets, we’re also defining business processes and business rules and expectations in a way that … really, I can’t come up with a good analog for it because I can’t come up with another industry that’s going through it in quite the same way. I think what we had at Coke was really different when we opened up new markets because we had a very clear playbook, and a very established brand.
“One of the things I see in this industry that continually surprises me – and I don’t know why it does, but it does – is how easy people think it is to build a brand. They think, ‘We’ll just put a cannabis product out there and everybody will buy it.’ And I keep thinking, no, it doesn’t work that way. It takes enormous amounts of financial resources and effort to grow a brand in a meaningful way across multiple markets. And I think we’re seeing that in the cannabis space; it’s hard to think of a brand that is taking root in this space in a way that gives it a strong competitive advantage. There are a couple, but it’s slow in coming compared to what people thought it would be. There was this ‘build it and they will come’ sort of mentality, and I think you’re seeing that over and over and over again, where the industry – and I’ve done a couple of pieces on this in publications, and spoken about it at different conferences – was all about being supply-driven instead of demand-driven, and everybody was looking at how much can I grow, therefore, how much can I extract or package, and that would be my business model in terms of how much I can sell. But they forgot that people might not buy it on the other end.
“So, one of the things we do at Green Mill Supercritical, which is my company now, is we’re making an extraction system that allows people to right-size that capital investment in order to meet demand instead of just focusing on how much biomass they have. Everybody got into the cannabis cultivation game I think somewhat blindly in a lot of ways, and found out that not only was farming difficult, but selling your crop was even more difficult, especially when prices fell to the bottom.
I mentioned that I live in California. “You see what’s going on,” he said. “Even in a place like California that has been legal for some time, there is still a tremendous black market, and it’s still very lumpy in terms of regulation. It’s just a difficult space, and for somebody like me coming out of a fairly well-defined and very well-resourced environment, cannabis is the opposite of that. It’s got a lot of interesting connections, too, because it’s a consumer product that is focused on wellbeing, and moments of refreshment and optimism and those kinds of things, but in terms of just the business model, it couldn’t be more different.
The Attraction of Extraction
Reynolds joined Green Mill in late 2018, early 2019. I asked him why he ultimately chose extraction. “I wanted to get into an ancillary,” he said, “and I wanted to get into something that was serving the cannabis space and could drive competitive advantage in the space without the licensing requirement that comes with a lot of this industry. I think there are clearly benefits to being in the licensed space but being able to help people understand where the regulations are going and help our customers with a system that provides them with the flexibility and precision they need to offer superior products in a branded environment without that licensing requirement is a real plus.”
I also wondered if, after his experience at Surterra touching all parts of the food chain, there were parts of the industry he wanted to stay away from. “Yes, there were,” he replied. “I divide it into three pieces
“Now, you can make an argument that there are strains of cannabis that you can brand and there’s an art to cultivation, and I don’t want to take that away from anybody,” he added. “I have friends who are brilliant cultivators, but in the end, the farming side of this business is going to be hard to differentiate yourself with. I think that the branding and distribution side of the business is a huge opportunity, but it’s a totally different game from a capital perspective. It’s hugely capital intensive, and you’re going to lose money for a long time before you get a brand that works. And that can be great, that’s a perfect business to be in if that’s what you want to do, but I don’t think of myself as a brilliant marketer. I think I’m a good operator, and I’m good at helping out.
“It was the same at Coke, where I put people together and organized them against a common purpose and got them moving in the same direction,” he continued. “And that’s what we’re doing now. That doesn’t change. The principles of businesses are no different in this industry than any industry, and in fact, this industry is screaming for them. There is a lack of professionalization in this space, and there is a lot of opportunity for people to get better organized and better focused on delivering what they’re trying to deliver.”
Is that particular situation improving at all? “I think it’s improving dramatically,” affirmed Reynolds. “I have been going to MJBizCon since 2017, and at that first visit, it was a bunch of what I call 420 culture folk that were just excited about this industry, and everybody was like, ‘Oh, wow, that’s cool. How did that work, and what are you doing?’ It was just that kind of atmosphere, but then this past MJBizCon, everybody that came to our booth had a very specific interest, and everybody was like, ‘Okay, we’re trying to solve this problem,’ and they knew what that problem was, and they knew why they were there. I wouldn’t say that was 100 percent true, but it was vastly truer than the first time I went to that show.”
That had to be what Reynolds wanted to see. “Absolutely,” he said. “One of the interesting things about our space is that we actually want more regulation, and that time is coming very soon. You know, Coke puts a product in the can, puts it on a shelf, and it has to make sure it’s following all kinds of regulations in terms of revealing content origin, all kinds of stuff that in this space it’s like, ‘Whatever.’ And we want that [oversight] and we’re seeing where people are expecting more transparency and regulation of the specific product, and that’s good for us.”
I asked Reynolds if the goal of Green Mill is to help producers achieve their definition of total product consistency, which is what all drink makers, candy makers, or food product makers seem to want. “In some ways, yes,” he said. “But in other ways, it’s sort of an unfair characterization of the challenge. I don’t want my tomatoes to be completely consistent, other than I want them to be exactly the right amount of ripe, the same color red, and to have the same general shape and size; those kinds of things are very important. But I expect tomatoes to have a little bit of variety because they’re natural. If they’re not, they won’t have any variety, and I’ll be pretty unconvinced that they’re natural. But I want my tomato sauce to be very consistent in a lot of ways.
“With our extraction technology,” he added, “a better example of what we’re doing is like an oven. To oversimplify, if you’re going to make cheesecake, you’re going to have a recipe, you’re going to have ingredients, you’re going to have some know-how and some capability, and you’re going to have some tools. One of those tools is an oven, and you can have the best recipe, the best ingredients, and the best know-how, but if your oven doesn’t hold the right temperature, if your oven doesn’t have an even temperature, if your oven is too big or too small, you’re going to end up with a less than ideal cheesecake.
“What we’re trying to do is make sure that once you’ve identified the biomass that is best for your product, once you’ve got a branding proposition that makes sense for a consumer, what Green Mill will do is repeat a process with zero, or almost zero, variance,” he continued. “The consistency for us is in the process. The output will vary a little bit depending on the input, just like the cheesecake is going to vary a little bit depending on what you put in it in the first place. What the extraction world is all about is controlling temperature, flow rate, and pressure, and the more precisely you can control those things, the more exactly and precisely you will know what molecules you’re going to get out in the extraction process. And nobody does that better than we do, and the holy grail for us is a temperature flow rate and pressure that allows us to control the density of the CO2, and thereby ensure that what we think we’re getting on the front end is exactly what we get on the back end.”
Green Mill also has international sales. “We have a customer in Thailand, two in Canada, one I think in Ecuador, and we’re getting a lot of interest from different places around the world,” said Reynolds. “And we will continue to sell everywhere.”
What is it about the Green Mill technology that makes it superior to other products, and is there an IP component to the machines or processes? “Absolutely,” said Reynolds, “there are a lot of IP components. The extraction game is a combination of mechanical engineering and chemical engineering expertise. From a mechanical engineering side, it’s a system, a collection of vessels, pumps, solvent, and heating and cooling capacity. In our system, we have a proprietary pump that produces a very even flow of pressure, we have a proprietary software system that controls all of the variables in the system, getting constant feedback throughout and controlling that process, and we have multiple patented technologies that allow us to control those things better and more precisely than other people on the market in general.
“I would add,” he continued, “and this is something that comes from my previous life, too, that people are appropriating stuff from all kinds of industries. For example, in an extraction system, you might see pumps that were designed to be used with oil applications, but that’s not what you need because cannabis is a different animal. Our systems are designed from the bottom up with the intent to focus on cannabis, although we sell our systems to people that want to extract any biomass, not just cannabis, and they are excellent at that too. But cannabis offers some unique challenges in terms of the viscosity of the plant and all of the aspects of that biomaterial, which is a unique animal. Our goal is to be able to say, ‘We can test the content of your cannabis on the front end in terms of what are the cannabinoids in there that you want, what terpenes in there you want to get out, and then we can automate a process and routine that ensures that when you push it through the extraction process, you get out the molecules that you thought you were going to get in the quantity that you thought you were going to get them, and from a business perspective, that’s a game changer.”
Real-Time Winterization
I asked Reynolds how specifically that translates into greater efficiencies? Do producers use less source material as a result, or create more end product more effortlessly? What is it that right-sizes the dynamic? “I’d say yes, yes, yes, and yes to your questions,” he replied. “This a little bit long-winded, but part of the extraction process with CO2 specifically – and we are a supercritical CO2 extraction system – is that there are multiple solvents used for extraction, and the big ones are butane and CO2. When you use CO2 extraction, you have to winterize the product, because after an extraction run there are lipids and fats in the crude oil that nobody wants. Winterization is a process of bathing that crude oil in an ethanol wash, freezing that, and then separating the fats and the lipids from the desired oil content.
“We have developed a process called Real-Time Winterization that removes the need for that extra step, so within our systems, you can now run your extraction process and winterize everything in real time, and end up with a vape cart-ready, concentrated oil that you could go straight to market with if you chose to do that. There is very little to no post processing required, and what that does, to answer your question, is that it gives the producer a much higher yield of cannabinoids and it also gives them a much more efficient process overall, with lower labor, and all kinds of things that are to the cost advantage of the operator.”
Does Green Mill also provide help to businesses while they’re using their machines? “Yes,” said Reynolds. “It’s part of what’s happening in the industry that we’re encouraging even though it is a little challenging for us in terms of how we want to tackle it from a business model perspective. For service and part replacement and those kinds of things, we have an online store where we sell parts. Some of our parts are proprietary, and like any working piece of machinery, things need to be replaced periodically. That’s all in the manuals that we provide to customers, and they know what to expect, and it’s very manageable.
“But as far as method development training and expertise,” he added, “we do provide quite a bit of support, but we also are building new relationships with consultants and other suppliers and providers where that’s more their area of expertise, and they become let’s call them extraction-method experts. It’s like driving a car. Mercedes doesn’t teach you how to drive, but they’re going to build a car that a driver is going to want to drive more than any other car, and that’s what we want our system to be, the one that’s preferred by people that are most capable in this field.”
I asked Reynolds about a trend in the industry toward solventless extraction, and if it is something Green Mill embraces. “We don’t embrace it or dispute it,” he said. “It has a purpose. It’s a little bit of a misnomer because there’s always a solvent, whether that solvent is pressure, or water, or cold, there’s something that’s breaking down the molecules in the biomass to allow you to put them in some other form. And that other form just provides convenience and accessibility to the consumer that wants it in that form. All of them have benefits and they all help and hurt at different times. We don’t think supercritical CO2 extraction is the only way to go, but we think it’s a really good way to go for a certain set of products in the market, and we think that it’s just going to expand.
“I’m an analogy guy” he added. “I play guitar, and I own four guitars. You might go, ‘You only need one guitar.’ Not really. If you want to play rock, you need one guitar; if you want to play classical, you need a different guitar; and if you want to finger-pick, you need a different guitar. It’s the same way with extraction. We make the very best supercritical CO2 extraction system you can find, and it can become the heart of an operation in a line of products. If you want to make a different line of products, you probably need a different extraction solution than supercritical CO2, and one of those might be solventless. Or if you wanted to make ice shatter or some kind of unique live rosin product or something like that, they would have a different production process that wouldn’t be built around a supercritical CO2 extraction solution.
“Ours is ideal for full-spectrum vape products,” he said when asked. “It’s really hard to beat it. CO2 is a completely inert gas that is gone by the time the extraction process is finished, with no residuals whatsoever. And with real time winterization, it doesn’t do anything to adulterate the original biomass, so you’re getting exactly what you wanted out of it. Ours process also is ideal for terpene extraction, for concentrated oil that becomes the foundation of various edibles and gummies, and for tincture oils and other sort of oral applications of the product.”
In other words, their process will be the foundation for people to create innumerable cannabis brands and products. “That is our expectation, yes,” said Reynolds.
I had read that two years ago approximately 60 percent of Green Mill’s customers were small hemp farmers, and the other 40 percent were medical and/or adult U.S. producers, and I asked Reynolds if that was still the case. “I would say those numbers are flipped,” he said. “It’s exactly opposite of that now, because we’re seeing more legalization, and that’s what you get. What we are targeting, and the best application for us, is more of a value-added differentiated product in the marketplace.
“I think of it like beer, another analogy,” he added. “We are not going to be servicing Budweiser with brewing equipment, but we do think that we are the best possible solution for craft brewers trying to make a differentiated product to sell in the market. It doesn’t mean they’re all small; you can have a very substantial business and still have a craft approach to the business, and when the producer has that craft approach, they want and need a Green Mill-type solution so they can make a differentiated product.”
Craft cultivators often consider themselves artisans, but what I was hearing from Reynolds was that this is the art of extraction, and the brewer has to bring his skills to bear to make the most out of the machinery, and not just the machinery but the process that Green Mill was providing them.
“That’s exactly right,” said Reynolds. “I’ve been involved in dozens of brand launches around the world with Coca-Cola, and there are zero guarantees on which one is going to work, and which will not work. Even when we know – and Coca-Cola probably knows better than anybody out there about consumer preferences and what consumers expect and want – and we think we get it exactly right, and then it just doesn’t work, it can be so subtle. It’s not something you can make people like, so I think with this industry, a lot of it is going to be timing and luck. People are going to kind of back into things that they didn’t realize they were backing into that’s going to take off. And in all these cases, I think the Green Mill Supercritical extraction system becomes an incredibly important central point of capability in the arsenal of that producer to be able to deliver what consumers want, with a very quick payback to them. It becomes a really necessary tool to have in the arsenal.”
Recession-resistant?
I noted that interest rates are rising, and we may be headed into a recession. Cannabis was a pandemic-resistant business thanks to the government, and may also be recession resistant, but the federal government continues to drag its heels on any form of legalization, and I wondered if any of that could impact his business significantly?
“The hardest thing for us across the board is capital,” replied Reynolds. “A lot of the people that are getting into this space are stretched pretty thin. They’re trying to make a business out of something, and they have to spend a lot of money upfront. We love that, and we’re supporting it as much as we can, but it just means things are unsure and unpredictable. You have an industry where people think they’re going to build something and make something and then they’re going to sell a bunch of it, and everything is going to be great. And then they build it and make it and they don’t sell it. Now what do they do?
“And we’re seeing a lot of what I would call shake out in the industry, for lack of a better term,” he added, “That’s certainly challenging for us and everybody else, as is identifying who is here now and who is going to be here. And it’s a very data poor industry. Finding good consumer data in this industry is still difficult, and while that’s not the end of the world, it makes everybody’s job a little harder.”
Our time about up, I wanted to end on Reynolds personal experience, whether he was still on a learning curve, and if he was having fun. “No, I’m not learning anything. I know everything already,” he joked. “Yeah, I’m having a great time. It sounds kind of corny, but the thing that stays true across the board, in every culture I’ve ever been in, and in the same way is the thing that stays the most fascinating to me, is the people side of the equation.
“Our team at Green Mill is a really interesting group of people,” he added. “We have a set of values as a company that is one of intellectual curiosity and rigor. And it sounds kind of mean to say, but we’re a place where people that lack that intelligence and that rigor don’t last very long, because we want to figure things out. The willingness to try new and difficult things is another dated value of our company. We interview people based on that, and we promote, and hire, and fire people based on those values, and it’s so much fun to pursue it with the focus of delivering a really differentiated product to help our customers make differentiated consumable products that it makes that whole energy kind of meaningful.
“And we do get incredibly stressed out,” he concluded. “One of the big differences between Coke and a startup world is that the only thing I didn’t worry about at Coke was cash. Never once in my career at Coke did I wonder if we had enough cash. The only thing I worry about it at Green Mill, kind of daily, is cash, and then I focus on the people. It’s just such a different environment, but it’s great, we learn stuff every day, and we’re really excited that we’ve got something that is better than anything out there on the market from a technical perspective. Now, whether we’re able to turn that into a sustainable business that is fulfilling to the people that work on it is a different challenge and equation that I find terrifically motivating and fascinating.”
My last question had to do with the many CEOs I’ve talked to who said their experience had turned out very differently than they had anticipated. Over time, I’d come to believe that it’s the companies and people with the most discipline that maintain the most control over their destiny. That might mean staying in their lane doing what they do best, because when they move out of their lane, it is usually with mixed results. Will Green Mill stay in its lane, because there surely are many opportunities out there they might grab at and get into deep trouble as a result.
“I couldn’t agree more,” said Reynolds. “What I hear you saying is the value of staying in your lane, and we talk about it a lot. It will be interesting to you, but the entrepreneurial operating system I’m a big believer in is based on a book by Gina Whitman published some years ago, and it’s essentially a full-on business process for small organizations. There’s nothing new or exciting in it, it’s just a codification of all the components of operating a business, and it’s what we did at Coke. We didn’t call it EOS, but it’s the same thing, and I think that part of that process and part of what I do a lot on my own and with my leadership team is that we think about where we’re going to be, what does it look like? And that’s how we stay in our lane as we constantly project that image of what we want to be in the future. It’s not about things like, we want to make this much money, and we want to have this much stuff. It’s what are we making, and how are people perceiving us in this industry.
“I think we’ve found a lot of what I’m going to call peace, and what I’m going to call focus, but whatever you call it, as Green Mill we feel that what we do is make the very best extraction equipment using CO2 for a discerning craft producer who wants to produce a differentiated product in the marketplace. So, when somebody asks, ‘Could you start producing vape pen cartridges,’ yes, of course, we can do all those things, but it’s not what we do. And they are appealing. One of the big shiny objects early in the life of Green Mills was to make these giant extraction systems because everybody would need an extraction system that will extract 1000 pounds of biomass a day. So, everybody scurried to build those, and I kept thinking, why? Nobody needs 1000 pounds a day. Maybe one or two people need 1000 pounds a day extracted, but nobody else needs that. They might have that much growing in the back, but they’re not going to sell that much, so all you’ve done is you’ve moved your bottleneck from one place to another in the organization, and you’ve done it by investing 10 times as much capital as you needed to invest. And sure enough, that’s kind of what we saw happen, and now a lot of these giant extraction systems just sit there. We did a piece some months ago through our communication vehicles about all the steam punk art that you could make with old, unused extraction equipment. It means that we’re focused on a smaller extraction system that is expandable if you need it, but it’s doing a reasonable amount of processing and doing it well. It’s like if you’re Porsche, and I say, ‘Hey, could you make me a 20-person passenger van?’ You had better say no!”
The great thing is that even the world of extraction is not static but also evolving. “It’s always evolving,” agreed Reynolds. “Real-time winterization is a great example of that evolution. We just came out with a huge innovation in this space, but it’s consistent with what we’re trying to do, because it makes all the sense in the world if what you’re doing is making a better end-product for the user and in a more consistent and more predictable way for a craft producer. We’ve just multiplied that, we haven’t compromised that, and we’re going to keep innovating in that space, but innovating on a platform that is very robust so that we can continue to build on it.
“If we gave a lot of our competitors our real-time winterization technology,” he added, “they couldn’t execute it because the platform they’re putting it on is not robust enough to handle it.”
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