Article19 How to Take Control of Your Cannabis Business - Hash it Out with Dr. Peter Huson of Backbone
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In this episode RJ Balde talked to Dr. Peter Huson, Chief of Operations at Backbone, a supply chain management platform for cannabis businesses. They discuss how to provide innovative business solutions for cannabis companies. Peter also talks about his event company and how they're handling the pandemic, and more.
Peter Huson, PhD, is Chief of Operations at Backbone where he oversees Professional Services, Sales, and Partnerships. Peter holds a Bachelor of Science in Mechanical Engineering from UC Santa Barbara, a Master of Science in Aerospace Engineering (subcontracting for NASA), and a PhD in Structural Engineering from UC San Diego. Peter is also co-founder of the Northern Nights Music Festival in partnership with Starr Hill Presents/Red Light Management, having co-authored AB2020 allowing Northern Nights to be the first festival with legal cannabis sales — this led to co-managing compliance and operations for both the Northern Nights Tree Lounge and Outside Lands Grasslands, paving the way for future events in California. Additionally, Peter is Co-Founder and COO at One Log Cannabis Business Park, Compliance Officer at Mesh Ventures, and to date, he’s successfully acquired over 50 cannabis licenses across the supply chain.
Backbone is a fully customizable supply-chain management platform, tracking production, compliance, COGS, yields, and audit reporting data in real time. With Backbone, all of your important supply chain data is aggregated in one easy-to-use dashboard. This live data empowers producers to immediately course correct, ensuring the delivery of consistent products from a business-wide playbook. Backbone also provides deep data-driven insights into reducing production costs, improving quality, and increasing yields as producers scale their businesses and grow their teams. Since 2017, Backbone has been leading the way in supply chain management software for cannabis and hemp producers. The Backbone team consists of engineers and product managers from NetSuite, Sage Intacct, and Intuit, as well as seasoned Humboldt County cannabis operators with decades of experience.
RJ: Hey everybody. Welcome to the TRICHOMES Hash it Out podcast. I am your host RJ Balde. On this show we feature conversations about trending cannabis topics. We also bring in industry insiders and influencers to discuss their point of view. In this episode, I'll be talking to Dr. Peter Huson about providing innovative business solutions for cannabis companies. We’ll also talk about his event company and how they're handling the pandemic and more. Without further ado, it's time to Hash it Out. My guest today is the Chief of Operations at Backbone, a supply chain management platform for cannabis businesses. Welcome to the show Peter Huson.
Dr. Huson: What’s up? I appreciate it, thank you for having me.
RJ: Yeah, no worries. Now I was going to say thank you for sitting down with me today but I understand you're standing up. You got the blood moving, I appreciate that. I like a mobile atmosphere. Yeah, you gotta keep it loose. Got to keep it Loose. That's what's up. Up. Now, where are you joining us virtually from today?
Dr. Huson: Petaluma, California little south of Santa Rosa, little North San Francisco, two hours from the Emerald Triangle.
RJ: Okay, I dig it. And are you originally from there? Is that your home base?
Dr. Huson: I'm originally from this area. I have I would say that a lot of whyI'm here today involves Emerald Triangle a and learning the biz and Kind of getting things under way for folks up there.
RJ: I dig it. I dig it and how has your year been overall man? I know that's a loaded question, usually that's kind of a throwaway, but this year it's got a little more weight to it.
Dr. Huson: Yeah, man, I put it this way. I had my wife was four months pregnant when COVID hit so I've been under like extreme super extra lockdown, for a lot of that time. Yeah, so ultimately just been you know getting through a fortunate enough to be working in technology and be working remote from the get-go got a lot of friends. I got a lot of this came from being in the music industry and so I got a lot of folks in the entertainment industry have been hit the hardest by COVID I would say. So it's been it's been a roller coaster again blessed and grateful for being able to continue the work that we've been doing. And also, that you know cannabis has been declared an essential business and has been able to rocket through it. So, you know lots of thanks to give there and you know, a lot of people haven't had it that way. So just continue to push along and see where we can help folks out.
RJ: What was that process for you like back in I guess it was March, all the months blend together. Imagine March is already like three already like three four months away again. But anyway...
Dr Huson: I said to myself yesterday, I was like when they said summer for vaccines for folks. I was like, whoa, like we're halfway there. I was like, wait a minute. No, we're like nine months almost nine months in. Like yeah holy, like this, I don't know in the transition right from like I remember those first few days almost like, you know almost getting gloves on like a hazmat suit going outside. Now, it's like, all right I got my mask, got my sanitizer like we're good.
RJ: Yeah, totally totally and what was it like that like that there was that weird period where you know when lockdowns first started ramping up and and like we were in the process of declaring which businesses were essential and which businesses had to close and cannabis was really like on that gray area where you know some places where a little early to declare it essential there were places like Colorado where like they did that thing where like all cannabis businesses had to close at a certain time and then everyone complained about it and they were like, okay, just kidding, you can get your cannabis and your alcohol like it's all good. What was that like early day of the pandemic that early age of the pandemic for you? What was that like?
Dr. Huson: Well, I got an interesting story on that. I was actually very early it was end of February. I was actually presenting Backbone to the Prime Minister of Antigua and Barbuda. Literally a bumping elbows at that time because people had just started. I don't know if there's some videos on there were actually people in the Caribbean they're just touching feet. Right. It was like the beginning, I just remember, you know, my wife is pregnant the times of she laced me up with some masks and and some sanitizer all her mom friends were already getting ready for this and kind of you know, especially people pregnant like we're very very like early on I remember getting into Miami kind of leaving the island because they had the first case there and I left the island, got to Miami and I was like, I was looking and you know, the I was thinking of the dirtiest places in the world and you know, where all people is the passport where your scan your passport and every single person in the country is going through there. There's no wipes, no nothing, right? It was very early on and people were just touching over and over again. I was like one of the only people in a mask in that line in Miami. It was kind of, I just remember that kind of feeling like whoa, I'm the like outcasts like here. And then yeah, I mean, here's the thing right if you think like we're really focused on everything up to retail here at Backbone. And so the essential business was really the supply chain and if you kind of like, I've we've been in part of this kind of transition to legalization here in California the entire time. We talked to the California Department of Public Health to really do a lot of manufacturing and if you really look at what people are doing now in cannabis facilities, they're wearing gloves everywhere, they're wearing masks especially making you're making things like ingestibles and edibles and things like that. It's almost like COVID actually enforced the things that people were already supposed to be doing for cleanly behaviors in creating cannabis. So put it this way. There's all of a sudden there's a lot of beard nets and PPE on the inventory items in our system.
RJ: Yeah. Yeah, which I am not complaining about, you know, as someone who enjoys a good facial hair grow like, I love it, I love the expression, but I would appreciate it if you know, we lessen the chance of getting those beard hairs in my flower. That would be great.
Dr. Huson: And that's the thing right. Again not trying to be a positivity bully here, but if you wanted to kind of look at that and perspective, like it has cleaned up the cannabis industry in the sense of just making sure everyone recognizing because look all of this has been made in garages and over the time and history, right and getting used to legalization was also getting used to sanitation right when you're creating these items. So I think there's been a big shift in a positive direction for cannabis and that everyone, yes in general we all are clean. We wash our hands more often, but I think specifically because cannabis is kind of evolved and has is not coming from classic pharma and all of these places where one food industry where you have to be that clean, I think CDPH and a lot of these industries have been, they haven't come down as hard as they had to and this is kind of aloud naturally almost for folks to just I don't know be a little more sanitary in their facility.
RJ: Yeah, totally totally it. I think it has, I appreciate you looking on the bright side of it because I think there are, you know as we hopefully see the light at the end of the tunnel when it comes to this pandemic. I hope that there are like certain things that we can like sort of continue in terms of hygiene. Like when the CDC was recommending, you know, make sure you wash your hands for 20 seconds. Make sure you know, get under your fingernails and all that and people were like damn like that seems like like that seems so extra to like 20 seconds washing your hands like paying so much attention and I was kind of like wow. I mean, like don't you wash your hands anyway, like didn't you
Dr. Huson: I remember wife my wife was like I told you so..
RJ: Yeah. Yeah, like under the fingernails like that. That was something that like my mom would tell me about that like back in the day or even like even like like washing like produce or like sanitizing produce. Like that was something my parents would always try to get us to do and I would just kind of like skimp on it because I would like I would be like that's like 15 seconds of my time that I could spend eating the apple.
Dr. Huson: Right, I mean God if from you know, you think about to right even on the on the business side, right how much business was done on, you know just handshakes right even handshakes like you know, how many handshakes did you give a day that you had no idea and if everyone, who is watching their hands on that side, and if you know what I did to kind of answer the other big thing that I've really noticed especially as people have shifted to remote during COVID. The one thing that I got to say that's really kind of I think affected has been the ability to whiteboards sessions right like solve problems together room together, right because right now when yes, you can kind of do it with some things but I really miss that too because now it feels like yes, you're solving it with you on the other side of the camera, but still when I kind of leave that I'm still trying to write it down and kind of a lot of people are solving problems by themselves in a way. So that's one thing in a team environment I really miss is just that ability to say look we to stand in the same room. We're going to draw this out and we're going to figure this out together. Something it’s small thing but I feel that's been a big one that I've noticed we don't have the ability to do.
RJ: Totally totally. Yeah that you know, the just the feeling of just having other people in the room with you in a collaborative process. Like there is certainly something that gets lost in the digital translation, you know, you can't really you can't really convert that mixture of energy and that mixture of aura and perspectives, you know. Oh that gets lost in the ones and zeros for sure.
Dr. Hudson: So yeah, I mean that's but you know like you said as we move forward, I think it'll be you know, look at the positives will see you you know, what the repercussions of I don't know kids not getting exposed to, you know, germs more often, you know. Maybe maybe we've eradicated. I don't know. What do they call it? Some of these I'm driving to get into I'm not going to go into kids stuff.
RJ: I feel you. I feel you now. If I have this right Physician and Entrepreneur and investor you have over 20 years of experience in healthcare related businesses. And you said you're originally from California. So, how did you get your start? And how did it lead you to where you are today with Backbone.
Dr. Huson: Yeah, it's actually I would say I'm people misconstrue sometimes I'm not a medical doctor. I'm actually a PhD in Structural Engineering. I got my PhD in 2012, I was a structural engineer or focus on the effects of bombs on buildings and structures. And so we're doing something called finite element analysis. Which is kind of the typical what we do for all structural analysis these days we model things in the computer. We do things to them, see how they what what might happen to them in real life. Go out, test some in real life, come back, revise the model. And so yeah, we're working on kind of a lot of defensive work there. I spent a lot of time in Los Alamos lab working on some of our nuclear arsenal from the cold war and it was great for to get paid for school. I learned a lot, guess who paid for and the government is fantastic, but I would say by the first year of my postdoc, I was definitely, it's not pleasant dinner conversations, I guess and during that time. We also throw a lot of parties. I was a promoter I guess is the word you could say at the same time. And so we used to go to an event called Reggae on the River up in..
RJ: Dude, I love Reggae on the River!
Dr. Hudson: Yeah, so that was that home base growing up. Like we were like dance with like Slamming Sizzla in the dorms in Santa Barbara and see screaming at everybody. While we were going so yeah, that was our kind of home base in so 2009/2010. They had some kind of community problems, a lot of greed because it was doing so well and festival shut down and is was pretty big as like 25,000 people in a small little area. And so that was our home base and when the party wasn't happen anymore, it was kind of like man are that was that's our jam. And so we had been doing parties and said, look, let's try it and see if we can revive something up there. And so we went up as my partner Andrew would say why not knocking on doors, which is something I highly recommend you don't do in Humboldt County is go around knocking on doors.
RJ: Why they weren't stoked about it.
Dr. Huson: I was just saying Humboldt County. You don't just go down at people's driveways, especially in that hole of cannabis industry.
RJ: Okay, all right, I feel ya
Dr. Huson: Found the property owner and Keith. We talked to him and he's like, okay, you guys know what you're getting yourselves into and so we applied for a permit and you know it was actually ended up being a very controversial. I think reggae there's a lot they called him the Reggae Wars. There's a lot of people who had a lot of heart and soul in building that event and so to come into that kind of the Lion’s Den if you will with a lot of history, we really kind of needed to prove ourselves. And so it was you know, they need it's you know up there, it's a small community in the tourism money was a big thing for them for those events. And so we really try to demonstrate that we can really bring a lot of revenue from tourism in there. And you know got that first year permit, I'd say as any promoter first year festival, we got our asses kicked a little bit that year. But we had a good, very intimate 600 person event that year and it's just beautiful up their man. And so we started to scale that, we partnered with Red Light Management, Coran Capshaw and the guys who do they all support the Emerald Cup and a lot of other major events across the country, very supportive on the Cannabis front. And essentially started to kind of a lot of the local lot of the local folks up there like those events, especially when you were kind of in the shadows, right? You didn't necessarily talk about in public what you did, you couldn't, and so how kind of identified yourself in the community up there is hey ,I am the vendor coordinator of Reggae on the River. I am the fence crew right now. It's who you were that was your persona? And so I think it was year two year three a couple of folks, there they say they're like Peter you need some help signing some fence posts here. And so they there they were stoked right for a ticket.They come down hang out two weeks help us get the festival ready. We bring a bunch of from the city and you know, it's a good time. And so we got to know each other really well and ultimately at that time. They just kind of started with this 215 zones right, half of his medical and have your rec’s and we kind of we played we played lightly with that a little bit the first couple of years and that's when legalization really started to kind of become apparent 2015, or look there's this happening Humble County had to apply early to say you're an existing grow. And so, you know, they said hey Peter you're getting these permits for this event in both its we straddle the county line. So I have to get permits in both counties. And so they're like a Peter you can do these permits. Can you help us get our weed permit? So kind of started said sure that sounds like an interesting project. Like I'll help you get your weed permits, so started digging in and as a lot of Consultants will tell you in the cannabis industry when you're trying to consult for a permit you end up consulting for the business and then you get into the consultant every single part of it because you're really standing up a business for the first time. I can't remember can't I won't the one of the funniest moments my buddy Ian and I were up there somehow he got in the mix and where we were sitting there like shit, how are we going to know what the inventory is? All right, let's run around and count all the plants and our buddy Mac comes back and he's like, “Peter what the hell are you guys doing?” “We're counting or counting all the plants dude. Like we're trying to figure out what we're going to do” here is like, “dude, like that's not like half of those are going to go away like what are you guys doing?” So it's kind of like so like that was little but it's like kind of learning to understand right how this all works. Fast forward a little bit right started to get more and more permits. I did about 54 estate licenses across the state for folks up and down the supply chain, you know, then kind of more a lot of people starting the tech industry and a lot of people started to get interested in the hype. And so you got to understand that there is a been a lot of people in this industry for a long time who have been doing this for a very long time. And so first and foremost, I think anybody especially myself and others who have kind of been able to be in positions like we are today working in cannabis as it expands, right. We really comes from the lot of people who made a lot of sacrifices to get here. And so part of kind of the assisting those folks get their business standing up was things like inventory being able to kind of provide some projections understanding what's coming down the pipe a lot of this was in folks heads. And so he's kind of trying to wrap our heads around it and as kind of legalization here in California started to come down the pipe. One of the kind of big things that we notice really early on was once the weed leaves the farm outside of a price point and maybe someone telling you your weed is fire there wasn't much more information that you'd get it back where it went. What kind of products were created from it etc. And so, you know, if you think about the standpoint of you know today in today's age If you know someone's someone grew some in a specific Appalachian and that product and that strain and in that region really grows does well, for example in the CO2 extraction. Well, no one was giving that information back to the farmer saying hey your specific way of growing and the strains that you have do really well downstream and these particular methods of creating different cannabis products. And so we just identified there was kind of this gap in the center of the supply. And in terms of traceability and that really kind of stems also from the kind of doing splits with manufacturers back in the day. Anyone listening is you know, you'd go ahead and you've got a bunch of trim which you know was waste for a long time and you'd go ahead and say well I want I would like to produce some product out of this if cash is not there. It's early in the season then you do a split. So you drop off your trim come back,you know few weeks later you'd get a jarback and a handshake promising you that that was 50% and that kind of started to kind of light bulb came on to say huh? Like how do I know that's 50% I'm taking this guy's word for it. That's great. But kind of a little bit more performance kind of understanding how we could kinda maybe potentially see if we can assist manufacturers processors and some of these downstream producers and being able to kind of track some of this information. And so that's really where Backbones kind of our origin started was identifying a whole. A lot of the software's that are out there today are really cultivation oriented because back in the day. What was the really fundamental was you had a medical license yet a dispensary and slowly someone would say. “Okay. Well, I'll allow you to grow in the back of your Warehouseas long as you count as long as he tagged all the plants.” No one really cared at that point what happened from harvest to final package good. And so that's really where as you know, you have multiple and more and more people within the supply chain. We thought okay, well, this could be a really good place to not only start investing. But also protect those investments and so that's where Backbone is really born. We partnered with our CEO Rajesh. Rajesh, he was head of analytics at a company called NetSuite. NetSuite of course is now Oracle's ERP solution. So he had wanted to do this 20 years ago and NetSuite as you know, the live data capture kind of more manufacturing and processing oriented systems to kind of get more rich data sets and you know, they said no we're going to do that third-party. So this really peaked his interest in something that he had always wanted to do anyway, and so we started down the path and so for the past two and a half years we've been working with, you know, I have the luxury of saying some of Silicon Valley's finest on development of this product. But, also the same time having to teach all of them what a batter, shatter, butter and all the cool things that we develop in this industry. So that's really where it started. And today we've been really just kind of word of mouth spreading around really Northern California As well as a lot of the industrial places Adelanto, Desert Palm, Desert Hot Springs and all the places where people are doing a lot of heavy duty extraction manufacturing, but at the same time doing it for big brands because they've got capacity. It's being done in the right area and been exciting. We've really kind of hit a niche and now we're kind of ramping up marketing and really gotten her name out there and both cannabis and hemp.
RJ: So Backbone is a supply chain management platform that works with companies such as Cookies, Humboldt and Life Elevated.Tell me more about what exactly Backbone does and what you specialize in.
Dr. Huson: There's kind of two strategies in software right, which is I got an idea, let me go ahead and market this idea. See how many people liked it and then I'm going to build it you I think people would call that vaporware. We did the reverse where we just started building and so we've been building working with operators and operator who's ever talked to a technologist I think you'll find that it's kind of like therapy is really what they're doing right product folks and today they really want to understand the problem. And as we always say the operator is the master of the problem. They are the expert of the problem. So rather than kind of coming in and saying well, what's the solution. It’s no, like understand the problem and the use cases and so that's been the theme in a lot of ways and I think a lot of people who are using Backbone. It's not just the software, its having a team to kind of hear you if you will has been kind of our stance and so it's really resonated. We really end up really working our Professional Services team and you know everyone on the front of house side we'v e all been in the industry. We've all been operators, We've been compliance people and just kind of getting in there and you know, that's been another big thing is we used to touch and go into every single facility and kind of understand what's going on there. So they can touch, feel and say look. These are my physical problems and a lot of people don't do that. It's a lot of overhead to do that and we just kind of take that little more seriously.
RJ: So I understand that you co-founded the Northern Lights Music Festival, which takes place up in NorCal every year in the summer since 2013 now. The event is unique in that it was the first festival ever to allow legal cannabis sales. So tell me about the journey to authoring the California Bill AB 2020 and getting it approved and what that whole experience was like for you.
Dr.Huson: Yeah. Yeah. I was right, like I was saying earlier right on the border Mendo, Humboldt on the old grounds of Reggae on the River. And our so we obviously last year. We obviously didn't have our event but the year before 2019 we had been working I've been working with With Martin Kaufman and Saleh Ibrahim.They were the founders of Bloom dispensary in Oakland they've been around for just as long as a lot of folks in the Emerald Triangle in this industry put in their neck out there and both Saleh, Martin and myself. I'd really wanted to see if we could do cannabis events outside of Fairgrounds when the regulations first came out here in California.They had this concept of cannabis temporary events, but they were only limited It to Fairgrounds because those were owned by the state. And so I figured the state was like well, we're not going to push this on the local jurisdiction. So we co-wrote AB 2020 which was the bill that was passed that allowed cannabis events to go to private land as long as the local jurisdiction was ready to go. So we I was working on Humboldt at the time. So I was working on City of San Francisco. And so the summer of 2019 that got passed and so at Northern Nights we threw the very first cannabis event on California outside of a Fairground which was which was a trip. We called it the Tree Lounge and it's a very, you know you it's your kind, of your secluded to one little area. We tried to kind of make it very welcoming and you know, a festival is a festival so things are happening all over the place but to be able to have kind of retail sales of cannabis at a festival is very cool. Our event was only 8,000 people and then two weeks later we went ahead and did the same thing at Outside Lands for Grasslands for 80,000 people. So it was both were very very cool. I think we really set a really amazing precedent to folks to be able to kind of continue to do that. There's a lot of nuances in Canada just because the regulations not just like selling beers and it's just it's funny when you're talking to Regulators too on that sense because it's kind of no one knows what to do or like well, you're selling alcohol over here selling weed or here and what's going on in between and it's like it's a festival like, well don’t worry about it. I really hope that continues and I think it will right like Hall of Flowers and that team is Ramo has been doing a really good job. There's a lot of things going on there. And so I really do think that mainstream and not in a bad way mainstream but really bringing cannabis in and you know, it's also interesting right people try to compare the sales and it's like you're not, think about beer at an event, right? You're not necessarily restricted to one little area to buy beer. There's beer stands everywhere, right and beer gardens around the event. And so I think that normalization of cannabis, especially in the event world as you well know cannabis and music have been intertwined since you know, however long you want to call those two the history of everything and so really it's been, I'm really excited to see the next kind of iteration of that especially when events are allowed to come back on, people can start gathering again and seeing as you know, how the rest of the country also adapts. We were talking to the folks out and the governor not the head of the Cannabis Commission out in Maryland and Massachusetts. They were also trying, they were looking at I think a couple of them came out to Grasslands to kind of check out what we're doing out here and I think in California going to set a precedent for cannabis events across the country.
RJ: Now I'll ask you one more question before I let you go here man. What do you have or rather, what are you looking forward to the most to not only close out the year closeout 2020 but looking forward into 2021.
Dr Huson: I think going in 2021. I'm looking forward to potentially setting 2021 up for success. Everyone being able to look back at 2020. It was very difficult for most but I think everyone's got a little bit perspective. So I'm hoping that everyone can take the perspective and the lessons learned of the hamster wheel of all of these and take 2020 as a big learning lesson, so that 2021 we can kind of reset and get out there and do it in a way and a little bit more meaningful present and sanitary way. Thanks for everyone out there listening. Enjoy the holidays and Happy early New Year.
RJ: My thanks again to Dr. Peter Huson for joining me. If you are a member of the Cannabis community and have a story you want to share with us. We would love to hear from you. You can reach the show at hashitout@TRICHOMES.com. You can help others find the show by taking a moment to subscribe to the podcast and write a review. You can also join the discussion with industry insiders and get your voice heard by joining the community at TRICHOMES.com and following us on all social media. Hash it Out is produced by David Fortin and presented by TRICHOMES.com. I'm RJ Balde, thanks for listening.