Having raised $46 million in a Series B round that ended last October and now trading on the Canadian Stock Exchange (CSE) under the symbol INDS, Indus Holdings Inc. generates big numbers on a daily basis. The revenues are fueling major expansion of the vertically integrated company’s cultivation, extraction, manufacturing/processing, sales and marketing, and distribution divisions, all of which are scaling rapidly thanks to partnerships and acquisitions. At its core, though, Indus is all about the brands.
It’s one thing to talk about large-scale cannabis cultivation in California and quite another to see it in action. Indus, with twenty-one provisional cultivation licenses held by its Cypress Manufacturing subsidiary, is in the final phase of building out 250,000 square feet of state-of-the-art, mixed-light cultivation and nursery facilities on ten acres just outside Salinas, California. Fifty years ago, the four 55,000-square-foot greenhouses were home to ivy grown for topiaries. Now, they’re under renovation one at a time, transforming into weed-generating machines that will grow cannabis at scale with automated systems controlling every facet of the environment. Already, the facility harvests about 3,500 plants a week.
Co-founder and Chief Executive Officer Robert Weakley walked the grounds of the facility early one July morning, energetically explaining every facet of an operation that distributes upwards of 10 million milligrams of cannabis product every month. A veteran restaurateur, Weakley founded Indus in 2014. In 2015, Los Angeles Magazine dubbed him the “Willy Wonka of Weed” based on the explosive success of the company’s Altai chocolate bonbons.
“Everything starts here,” he said. “My background is in culinary arts and hospitality. You can’t start with a crappy piece of fish or meat and make it great. You’ve got to start with a great product, and that’s what we’ve got to do here. We’ve got to make sure our manufacturing and operations teams have the best product to work with, [so] we broke [the greenhouses] down to the bare bones, down to the metal structure, and rebuilt them.”
The greenhouses
A rich, dank, clean smell envelopes one expansive growing room filled with tables covered by thick green plants over which lights, fans, and other devices hang. Weakley pointed to a smallish box hanging from the top of the infrastructure.
“That’s the Argus sensor,” he said. “It’ll open the vent in the roof automatically if it feels the humidity is too high or the airflow is off, and it turns on and shuts off the lights based on where everything’s at. So, typically somewhere between 10 a.m. and 11 a.m., depending on the day, the lights will shut off, and then we’ll use our natural resources until [the lights] click back on around four or five [o’clock p.m.].”
From cloning to harvest, the entire lifecycle of the plants takes place over about ten weeks. Each generation is arranged by height on massive pallets that move sideways so staff can tend to each plant. “We have about sixty different genetics in our portfolio,” said Weakley. “We’re taking all the clippings from the mom plants and then the clones go into what we call the Clone Dome, which can hold 60,000 clones at any one time. They will typically stay [under the dome] about two weeks” before graduating into larger and larger pots about every two weeks.
“This was all mom plants literally last week,” he said, pointing to an empty section of the massive greenhouse. “I walked in today, and I’m like, ‘Whoa, somebody robbed all our genetics.’ But they literally kill them every six months—literally kill all the moms because they can take only a certain number of clippings until they have to wipe them all out and start with all new ones. So, these [moms] are only two months old or so.”
He pointed to several LED grow lights hanging above a section of plants, a different brand (ALDGreen) from the Gavita Indus normally uses. “This is kind of interesting, what we’re doing here,” he said. “This company came to us and said, like every lighting company, ‘We’re going to increase your yield by 20 percent, and we’re going to increase your THC [content].’ I’m like, ‘Prove it. I’ll give you the space.’ So, we’ve got 120 of them in this room, and the room right next to it has the exact same genetics planted on the same day, same everything, but with Gavita lights versus these. We’re going to compare them side by side. I said, ‘Listen, you increase my yield and my THC by 20 percent, [and] I’ll buy your lights for the entire operation.’”
Weakley estimated the market value of the test lights at about $250,000. That’s the kind of clout Indus has earned.
The scale of the operation and the logistics required to run it are mind-boggling, but Weakley, who constantly exalts the individual contributions of team members, clearly is having the time of his life. “Right now, I have eight rooms in this building,” he said. “When fully renovated, we will have thirty-six of these rooms, producing about 250 pounds [of cannabis] every ten weeks.”
As impressive as that sounds, cultivation is but one part of a greater whole. “This is all great, but for us, we’re in the cultivation business—but not really,” he said. “For us, this is feedstock. This is creating the product to make sure we can control our destiny by creating our brands. I remember as I watched legalization get started in 2016, Dixie, a great brand, was off the shelves for six, eight, ten weeks because they couldn’t get clean feedstock trim, oil, whatever.
“Well, we wanted to make sure we never relied on anybody else to make sure that our brand stayed on shelves,” he continued. “That’s why we got into the cultivation business. We also wanted to make sure that every time you have our product, it’s the same experience. We want to make sure that when we tell you it’s Blue Dream, it’s Blue Dream. Even though there are 300 strains of Blue Dream out there, we can tell you [ours is] the same Blue Dream from the same genetics from the same mom plants. For us to be able to create national brands and trusted brands, we’ve got to make sure people have the exact same effect every time they experience our product.”
What about the idea differing seasons result in harvests of varying quality, as with wine? “It’s the same thing,” said Weakley, who believes the Salinas area will develop its own appellation. “We believe Monterey County is going to be one of the great cannabis growing regions. Just like Napa Valley and Monterey County are known for wine, Humboldt, Big Sur, and Monterey are known for growing cannabis.”
Feeding the beast
Big operations require copious resources no matter how efficient they are. To that end, Indus is meeting the challenge in traditional and innovative ways. “The two most expensive things for growing cannabis are water and electricity, but we also have our own well, so it’s pretty great,” said Weakley. “Our general manager, Feliciano, has been on this property for over twenty years. He knows the Salinas Valley and has had multiple properties out here, and he’ll tell you it’s one of the best wells.” The well water is tested every month, he added.
A concrete foundation in the ground outside one of the buildings sits ready to house a new, more powerful electrical system. “We’re in the middle of a million-dollar power upgrade to 4,000 amps to run all the lighting,” said Weakley. “We look at any way we can to save energy and resources. The team is even talking about capturing the rainwater and then recirculating it. Also, by August this entire property will be blacktop. It’ll be gorgeous—brand-new blacktop right from the front, with a little entryway. The whole idea is to start to make this look like a winery in Napa, with all the cleanliness and sense of hospitality.”
The company’s focus on water is not limited to having a good well. Indus also utilizes an innovative irrigation system by RootsTalk. “We met them at an ag-tech summit, not even for cannabis,” said Weakley. The system is “all about watering the roots. Typically, a cannabis company—and even us up until recently—will water the plants two or three times a day, soaking them. It’s not the best way. What this system does is spritz the roots about eighty times a day. It gets the roots to grow and fight for pot space, which is going to get you a much more robust plant.”
As with the lights, he gave RootsTalk a trial run to prove the system does what the company claims. It did. “We can control everything from my laptop anywhere in the world,” Weakley said. “These guys can dial in from Israel and see the plant twelve rows in needs something. The system monitors all the rooms.” The system also improved production. “I think it was improved by 16 or 17 percent,” Weakley said.
Indus employs about 330 people, up from four employees four years ago. “[We’re] a significant employer,” Weakley said. “Nobody makes below minimum wage. Everybody has health benefits, vision, dental, the whole thing. And then when you think about all this subsidiary labor we use—all the electric, the plumbers, computer companies, camera companies, security…”
The surrounding community has noticed the economic impact, but Weakley seems almost awed by the realization Indus is a giant in an area dominated by produce growers. “I just got notified that next Saturday is the Monterey County Business Council’s economic awards for the year, and we got ag company of the year. This is the home of big ag. I mean, this is Driscoll Strawberry, and we just got ag company of the year. Two years ago, we won Small Business of the Year for all of Monterey County. Did you know you can fit two Rhode Islands into Monterey County? It’s a big area, and not just cannabis.”
Distribution
In the heart of the small city of Salinas, Indus’s massive cavern of a warehouse is filled with ceiling-tall shelves awaiting goods. In June, the distribution arm resided in Los Angeles.
“Our trucks leave Los Angeles each day with any of the product that’s needed for NorCal,” said Weakley. “They come here, stage everything into the vehicles for Northern California, and then go out.”
Of course, cannabis comes with many unique requirements that add layers of logistical complexity to what otherwise would be straightforward tasks, including the rigorous job of applying post-testing labeling. Indus currently readies 10,000 products a day for shipment. That number surely will rise.
“People don’t realize distribution is the most complex area of this chain by far,” said Weakley. “In California, the distributor is responsible for all label compliance, even if it’s not our brand. So, if we ship somebody else’s brand to the dispensary and that package isn’t compliant, we’re the ones who get fined and tagged. We’re responsible for all lab testing, to make sure there are no pesticides and everything else passes. If a product fails, we’re responsible for destroying it on camera and reporting that to the [Bureau of Cannabis Control].
“We’re also responsible for removal of waste, and for all tax collection for cultivators and the excise tax for retailers, and then paying all the taxes to the state. So, distribution is very complex, and I think you’re going to see—just like in any other [consumer packaged goods] or any other industry—there are only going to be a few players that can handle the complexity and scale of distribution and what it takes to ramp up.”
Weakley clearly intends for Indus to be one of those distributors. To that end, he is building capacity in every conceivable way, including investing in robust enterprise-level software that will integrate with track-and-trace platform METRC as well as with every department within the company, including accounting. “MAX [a software solutions provider] is our major [enterprise resource planning] system,” he said. “Mark Ainsworth, my business partner, had it for his old company. He used to produce for Whole Foods and Costco nationally. We can do a recall in eleven minutes.” That will be equally possible, he added, when they are up and running with thousands of SKUs.
“We’re already going to the stores,” said Weakley. “We have the trucks, and we already supply about 84 percent of the licensed dispensaries [in California].”
The kitchen
In many ways, Indus comes into existence in its manufacturing facility, located in a business park in Salinas where the company’s original offices are still used. This is where Weakley turns into Willie Wonka, where a busy extraction facility produces shatter and other concentrates by the bucketful, the kitchen makes pastilles by the pile, and a real chocolate room churns out high-quality delicacies. More than 100 different SKUs are manufactured in the space, representing a laundry list of brands, each with its own recipes.
“Our extraction facility is massive,” Weakley said of the six reinforced rooms licensed for Type 7 volatile extraction. Each produces 225 pounds of concentrates a day. “Right now, we produce about 200 pounds of trim a week out of one of those rooms, so a lot of this was created for biomass to be able to make shatter and other concentrates,” he added. “We can do about 2,000 [vape] cartridges a shift, and we run multiple shifts depending on the days. We have our own brands, and then we [manufacture for] a few other brands, as well.”
In the kitchen, Weakley pointed to one machine after another. “This is a single press that makes the Beboe pastilles. It just came in from Japan and can make 30,000 of them an hour,” he said. “This is a machine that makes just mints and pills—up to 9,000 a day. Over here are two 600-pound chocolate melting machines that can make over 30,000 chocolate bonbons in a day.”
The numbers seem insane, especially considering these products can be sold only in licensed California dispensaries, but Weakley and his team insist the market is there. “We can’t produce it fast enough,” he said. “We try to keep an inventory, but with the shortage of flower now, we can’t keep [product] on the shelves.”
