Cannabinoid Consolidation (Podcast)

Summary

• Derek Du Chesne, President and Chief Growth Officer at Exactus, a company that recently pivoted into the hemp space, tells us why he's looking forward to industry consolidation.
• We also discuss what's going to drive exponential growth in the hemp and cannabinoid industry, discovering how different cannabinoids affect us and why CBD is just the tip of the iceberg.
• Given his background in entertainment, we also discuss why making a movie is like creating a start up, hemp genetics and why genetics are a trust purchase.
• We also cover China, how it's substantially ahead in hemp manufacturing, but has very little related to cannabinoids, hemp farming methodology, and why high prices hinder industry growth.

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Derek Du Chesne is President and Chief Growth Officer at Exactus (OTCQB:EXDI). Prior to joining Exactus, Derek was responsible for over $50 million in revenue at his previous company EcoGen Laboratories and was the CEO/Co-Founder of Healing Ventures, a marketing & supply chain firm that helped bring several leading CBD brands to market. Earlier in his career Mr. Du Chesne served as Chief Marketing Officer of Klique, Inc., a group dating platform created to help curb sexual assaults on campuses. And before that Derek was known as a film/television producer and actor, working a variety of filmmakers and actors including Bruce Willis and Robert DeNiro.

Topics include:

• 6:00 - Derek long journey to the cannabis space - started in screenwriting, then the entertainment industry as the host of a Disney show, then as an actor. Began producing after that to be more in charge of his career. Saw huge opportunity in the app scene, started Klique - a social networking app to help curb sexual assaults on campuses; partnered with Joe Biden's charity, It's On Us. Then Derek's mother got quite sick and after having to take so many meds and drugs, but even cannabis edibles didn't help her. Then they heard about CBD. Within the next 6-12 months, she saw incredible results, no longer using a wheelchair, more active, and overall health improved exponentially. Began understanding and researching more about why so few knew about CBD and then educating others, including starting Healing Ventures, a cannabis product development and marketing company. Then came on board at Exactus this year when the timing was right - after price of CBD isolate came down from $8,000/kg to $700/kg and knew farmers and companies were in trouble. Was excited by the thought of getting into public markets.
• 18:00 - After Farm Bill passed, hemp was now an agricultural product, but internal corporate policies hadn't caught up. That's opened up over past couple years but regulatory concerns also take time to work out. Especially a couple years ago a lot of low-quality products in the market given the type of CBD and hemp they were buying and didn't want to take the loss. That's improving but still need to ensure what CBD you're buying. Make sure as a company you know where the raw materials is coming from and who's processing it. Some companies literally don't know where their hemp is coming from. And much of it is coming from abroad and is lower quality due to heavy metals and pesticides in the soil. Exactus and other leaders in the space welcome regulations from the FDA, but it's also significantly affected consumer side. COVID putting a pause on a lot of that. EU recently passed Novel Foods Act, which allows CBD in food and beverage products in EU - that was set to start in March of 2021, but that takes a lot of behind the work prep and investment which may be delayed by pandemic.
• 30:00 - Hemp demand has slightly increased but not as much as supply. Strong farming partners are salient - having enough to process you're own to have that quality control, but not a necessity anymore for everyone. Excited about Exactus' future. While they're now processing harvest from last year which has brought in significant revenue, moving forward they want to be thought leaders in the space, forefront of product development, supply raw materials to diverse industries globally.
• 55:00 - Last year was building out supply chain, this year is building itself as leader in supply chain. Genetics are a trust purchase - have to trust the supplier. So many farmers over the last few years bought hemp seeds from stores that weren't feminized - Exactus building and growing that trust to fill that quality vacuum as suppliers of genetics and raw materials. CEO was part of genetics at GenCanna. Exactus mostly supplies CBD and CBG, but looking to the future, doing product development and exciting research into CBC and CBL, CBN and eventually bringing them to market at scale. Eventually as a publicly traded company, Exactus has realistic vision of building self-sustaining ecosystem.
• 75:00 - If you're a consumer, stay away from the companies using heavy metals and toxins and remember the industry isn't yet fully regulated even though it's legal. Up to the consumer to research. Companies say they're vertically integrated, Exactus was their supplier - have to make sure companies are telling the truth, they have recent certificate of analysis that shows potency, but more importantly full panel testing. EXDI wanting to drive prices low so industry expands into big box retailers selling for $5 a bottle, not hundreds of dollars.