Publicly traded cannabis pharmaceutical preparations company The need for cannabis companies to become more specialized continues to increase as the industry evolves. Kyle Detwiler, Clever Leaves CEO is back to update Dan Humiston on their growing global enterprise and to explain why their focus on cannabis pharmaceutical preparations positions them for future pharmaceutical partnerships. Produced By podCONX
Publicly traded cannabis pharmaceutical preparations company
The need for cannabis companies to become more specialized continues to increase as the industry evolves. Kyle Detwiler, Clever Leaves CEO is back to update Dan Humiston on their growing global enterprise and to explain why their focus on cannabis pharmaceutical preparations positions them for future pharmaceutical partnerships.
Dan Humiston: [00:00:00] Today and raising cannabis capital. We are joined by Kyle that Weiler, the CEO of clever leaves. Kyle, welcome back to the show. Yeah, it's great to have you back for our listeners. You'll remember Kyle was on the show.
It was almost exactly a year ago that I interviewed you and we covered a lot of things that we're not going to have time to talk about today. So I recommend everyone go back and re-listen to episode one 72, just to give everybody kind of a quick recap. Clever Leafs is publicly traded under ticker, C L V R withholdings.
All over the world and that's where I want to start today. Kyle, can you give us a quick overview of your company's geographic scope?
Kyle Detwiler: Sure. Yeah. So I think cleverly is probably best recognized for what we've done in Columbia. There were one of the largest producers I can circle back to that in a bit. But we also have an active license in the country of Portugal. So there's, a handful really of sizable operations in continental [00:01:00] Europe.
So we're one of those. We also have some investments in Germany where domestic production hasn't come online yet and may never come on. So everything has to be important and there's a special set of businesses. That import controlled narcotics, including cannabis. So we have some investments in there.
And then we have a us nutraceutical operation based in Tempe, Arizona which manufacturers, non cannabinoid products, it's basically cleanses and some detox products. And so that's really really the scope of the operation so far in, in one day that Arizona operations should hopefully turn out cannabinoid products, but we're waiting for, the laws to change and make sure it's fully compliant.
Dan Humiston: Yeah, you're really a global company. And in the last time we spent a lot of time talking about your Columbia operations. Are you still exam expanding in that country?
Kyle Detwiler: Oh for the time being capacity is sufficient. We have 1.8 million square feet of capacity down there. And I think maybe when the last time we spoke, I'm not sure if we had received or EU GMP certification, but we received that [00:02:00] in in this summer. So yeah, I think that would be a new development.
So those were the big construction or licensing objectives. Everything that we're focusing on in Columbia right now is developing new products to suit our customers and, creating those supply chains. It takes a lot of work. To get a controlled substance from Bogota to Frankfurt or to Sydney or to Tel Aviv.
And so just getting , the procedures down the logistics and, the certificates and the quotas and the import permits, we were just getting that all harmonized has taken us a bit of time.
Dan Humiston: It's so hard not to make a joke about it. Saying it's so hard to get logistically drugs out of Columbia to the rest of the world. When you know, it's been illegally done for so long, but it's also refreshing that we're actually now moving towards doing it legally you mentioned that you've just got a certification.
Can you define that a little more for us?
Kyle Detwiler: Yeah. And so in, I think it was July of this year, our Colombian operations received something called the E U [00:03:00] GMP certification. And I've seen a lot of companies pursue this. And I think by our measures, there are only about four companies in the world. That are vertically integrated. So I either have both cultivation and extraction and those are both certified, so a freer Aurora till right.
And Cleverleys, and actually that list of four will become three because, until Ryan and a freer now combining, so one of three potential companies which have this certification. What does it mean? By the way, I think if you're trying to sell a pharmaceutical drug let's assume it's not even cannabis you're trying to sell.
It's like a heart medication in Berlin. There's a very strict standard by which that heart medication needs to do. And in Germany, those cannabis products. You aren't treated any differently, just because you're cannabis, you don't get a free pass because, just because it's a new industry, you have to conform to those same pharmaceutical standards.
And that is that you GMP certification. And that's why it's so difficult to get it took us four years really to get that certification.
Dan Humiston: But now one of three in the [00:04:00] world, so that put me right there, it puts you in a really strong position. I read on a perspective someplace it said that the primary business that you guys were in was pharmaceutical preparation. What does that exactly mean?
Kyle Detwiler: Well, a lot of our products are ingredients or, semi-finished or actually finished pharmaceutical goods. I think a lot of people in the cannabis industry, interchange the word medical and pharmaceutical and as I've learned the hard way, they're very different, medical might be, you can grow it in a greenhouse.
In California, you can sell them dispensary, it's not FDA inspected. You don't have, fancy ingredient lists. You're not liable in case there's a misrepresentation either intentionally or accidentally, and what that product is.
Pharmaceutical means. You're going to produce the product the same way every time, with less than a certain percent deviation, you're held accountable to what is in those products. You have proven to people in different types of temperatures or humidity environments, how long that product will remain [00:05:00] stable.
It's a much different standards. So that's why, a pharmaceutical preparations is probably a more accurate word for a lot of the products that we make.
Dan Humiston: I would say just based on everything that you've said so far, the sheer size of you, just your cultivation and your holdings positions you to really impact the entire supply chain. And I see in your website that you're both a B2B companies and consumer brand divisions. Can you tell us a little bit about your holdings in each of those verticals?
Kyle Detwiler: Oh, sure. On the cannabis side, we're really trying to be focused as a B2B provider. You're Merck or Pfizer, you're just getting into the sector and you're looking for one of the best companies in the world to work with the best quality. Who can scale with you?
We want that to be unquestionably, right. Phone call that you make to Cleverleys. So yeah, that's been our focus on the cannabis side is it's very hard to cultivate. It's very hard to extract. It's very hard to do both of those together in a pharmaceutical environment.
And, if it was Pfizer or Merck wanted to get into that space. It might [00:06:00] take them four years because that's how long it took us. And it's not just a question of how much money you're going to throw at the problem. There's just a lot of licenses, processes, validations certificates that need to get obtained.
So that's really our hopeful value add. And, we'd like to think that we've even had cannabis companies recognize that, can it be growth is one of the largest cannabis companies in the world. And they actually had their own Colombian production operation. That was getting constructed.
And when David Klein, the new CEO of canopy took over one of the first things he actually did was he shut down that Colombian operation and began to outsource through their needs for Latin America from Cleverleys. So that's a really good example of, three or four years ago that would have never happened because there was never a company in Columbia that could, meet the quality standards that a canopy would.
Would demand. But now that there is, I think companies are starting to rethink, wait, do we really need to put a PowerPoint pin in every country, in every part of the world? Or, why don't we just care about the bottom line? Let's focus on what we're good at, which are brands, [00:07:00] distribution, maybe getting clinical trials done.
And what we're good at is, farming extraction and sort of the pharmaceutical kind of rapping that comes to all of that. And those , two business models fit very well together.
Dan Humiston: I think it's the natural evolution of any industry is initially everyone's everything. And then they start finding a, these guys are really good at this. We're really good at this. Let's work together with them. And I think that's just the natural evolution of most industries, it's this maybe taking this industry a little bit longer to catch on.
I noticed on your website that you also mentioned that you are doing some growth through acquisition. , are you still participating in acquisitions?
Kyle Detwiler: we were always opportunistic. Spent most of my career. Conducting investments or acquisitions, at the Blackstone group in KKR. So it's it's definitely part of our DNA and it's something that we're always looking out for the right partners.
Dan Humiston: And what sectors of particularly, are you more interested in than others?
Kyle Detwiler: Yeah, no we seem to have a very good, farming operation in both Columbia and in Portugal. [00:08:00] You have a good extraction operation in Colombia. Our main focus right now is how do we best, monetize what we've already built or how do we distribute more of our product. So I think,any partner out there yeah.
That has, the ability to take our products and deliver to a federally legal market. We can't touch the U S just yet because our business model is to be fully federally compliant. And that's why we're publicly traded on the NASDAQ. Imagine there's a new distribution company opening up in South Africa or the United Kingdom or Germany or Australia or Brazil, somebody who would be a lot more successful at doing what they do.
If they're linked up. With a large scale kind of ingredient provider. That ingredient just happens to be a controlled substance called cannabis, somebody who could benefit from that I think that's a pretty acute focus for us. I'd say the second thing that probably comes to mind is, we love looking at companies that could have their growth profile augmented by linking up with a cannabis company.
So in 2019 I mentioned a nutraceutical operation [00:09:00] we had in Arizona. The company doesn't sell cannabinoids. It was a 30 year old family run company that sells cleanses and detox products. And we dreamed one day of putting CBD or potentially THC into those products weren't allowed. And in the meantime, we got a nice business that generates cashflow.
It's got a product development team. We've got a manufacturing facility in Phoenix, Arizona. All of those things could eventually be valuable to us and could accelerate through growth, but even on a standalone basis, it's just a nice investment. And, they've been able to add value to other parts of our business, even if they're not actually able to sell a cannabinoid products just yet.
Dan Humiston: Yeah, that makes sense. Especially in the United States, there's going to be , a lot of companies that will easily transition into cannabis and, they should be positioning themselves now because we're not that far away. Speaking of in the future look down the road a couple of years down in there, where with what's opportunities or places where you'd like to take.
Clever leaves.
Kyle Detwiler: Yeah . I'm a bit of a dreamer I have to admit, and I think that [00:10:00] in the next two to four years, you could see federally legal. Cannabis products either medically or recreationally available in the United States. And one of those outcomes is unquestionably good for Cleverleys almost immediately, which would be.
Federally legal medical cannabis in the United States, it may not be sold at dispensary's, imagine it sold at a CVS or a Walgreens. And,those companies are going to want to work with somebody who's got EU GMP certification or an NVMe, a GMP certification. And we have a really large scale.
And by the way, we have all these fancy drug dossiers and, stability tests. And, that could be really interesting because Cleverleys. Could sell medical cannabis produced in Columbia, in the United States without touching a cannabis dispensary three without a California brand touching it, it's our own product or something, partnered up with a pharmaceutical company.
So that's pretty neat. There could of course be various shades of that where, there's legalization of certain products, but also internationally, I get pretty excited because one of the [00:11:00] first things that happened after Biden won the election was in Israel. And Israel about a week or two after Biden was declared president elect.
They announced plans to legalize recreational cannabis within nine months. And so that's an importantreminder that the U S does set the tone for the rest of the world, our allies, or, countries that. That maybe even aren't even as close to the United States
still care. A great deal about, how is the U S going to enforce drug policy globally? And if they feel that the us is moving in a positive direction, they'll feel more conviction and that they can go that direction too.
Dan Humiston: Man. I hope you're right. I hope you're right. This is exciting times to be in and we'll have all of clever leaves. Information in the show notes, including their stock symbol. And if you're a cannabis company out there, or maybe not even a cannabis company, but a company in the United States that is thinking about transitioning eventually into cannabis, you may want to give clever leaves a call.
I'm sure somebody on Kyle's team will be happy to talk to you, Kyle, always great to speak with you. Thanks again. We'll do this again a year from now.
Kyle Detwiler: all right. Sounds [00:12:00] great, Dan. Thanks for having me.