Empire of Oil: It’s Good to be Organa Brands

Empire of Oil: It’s Good to be Organa Brands

Organa Brands
Chris McElvany, Ralph Morgan, Chris Driessen, Jermy Heidl

Built on a foundation of oil, guided by a fixed moral compass, dedicated to wellness, Organa Brands is on its way to becoming one of the largest cannabis consumer brands in the world.

Think of Organa Brands as the Procter & Gamble of cannabis: a market leading parent company whose dominant management chops enable its consumer-facing brands—O.penVAPE, Bakked, and Magic Buzz—to flourish into sector leaders, with more brands to come and no end to growth in sight. Because cannabis is an emerging industry composed mostly of private companies that keep their numbers private, assessing the scale of a company can be difficult. That is not the case with Organa Brands, however. Privately held, it declines to discuss revenue but freely shares a laundry list of data points that position the company as one of the largest, if not the largest, consumer cannabis brand in the nation. Two such data points provide striking context: The company’s network produces about one million grams of refined oil every year, and in 2016, it processed 6.5 tons of cannabis.

The number of products produced from its oil also is staggering, as is the sheer level of planning and organization that goes into managing businesses and partnerships across ten states and eleven countries, conducting sophisticated research and development, and delivering products to more than 1,200 dispensaries. One imagines an uptight corporate culture undergirding an operation of this scale, and instead one finds the antithesis of uptight. With many entrepreneurial years under their collective belts, the four principals of Organa Brands—President Chris Driessen, Chief Technology Officer Chris McElvany, Chief Operating Officer Jeremy Heidl, and Chief Executive Officer Ralph Morgan—have managed to remain fast friends while honing their individual talents into an effective whole.

“I joke that we know more about one another than the wives would ever be comfortable with,” Heidl said, chuckling. Then he added, cryptically, “You can imagine the personalities it takes to do something that’s federally illegal.”

Organa Brands, marijuana, o.pen vape, products, businessThe origin of Organa

Organa Brands developed organically, like the plant that supports its business model. First came Organa Labs, which was founded by Morgan in 2010, one year after he and his wife, Heidi, had opened a dispensary called Evergreen Apothecary. According to his bio, the couple “quickly noticed an unmet demand in the market for consistent, safe, and organic products that served as healthier alternatives to smoking cannabis.”

Botanicare

Organa Labs was born, taking a unique approach to the industry that set the company apart right away. “Ralph was one of the first to use supercritical extraction for cannabis,” explained Heidl. “He did it as a healthy alternative, believing you should not give butane to a cancer patient. People looked at him like he was crazy, because at the time butane extraction was much cheaper, and supercritical was not as efficient as it is now.”

But Morgan stuck with his original choice, and today the company uses Waters extraction machines in wholly owned labs like Organa Labs in Colorado, as well as in labs operated by licensees. “In each state, there is an analog company to Organa Labs that, in many cases, we own a part of,” explained Driessen. Whether owned outright or operated as a joint venture, the same standards are required of every facility, courtesy of standard operating procedures (SOP) maintained across the company’s network.

McElvany, who oversees all current oil offerings as well as the R&D lab where fifteen PhDs produce the next generation of oil and oil-based products, explained, “Operating labs in multiple states requires a thorough set of SOPs that are rigorously enforced across the entire network, and the training to support the SOPs. We create the exact same product in Colorado that we do in Maine or anywhere else because of our standards and the training. We have a team of trainers based in Colorado who do nothing but travel from state to state to ensure that licensees are following all our processes.” A horticulture expert with eighteen years of experience, McElvany is the original owner of Bakked.

Organa, O.pen Vape, marijuanaO.penVAPE

Organa Brands’ premier brand is O.penVAPE, which was co-founded by Morgan,  McElvany, and Heidl in 2012. After partnering to marry Organa Labs’ “beautiful oil” with newly designed hardware, they locked themselves in a room “for about four months and knocked out the O.penVAPE brand with the goal of making the best customer experience in multiple states,” recalled Heidl. “It was a great hit and quickly became 50 to 60 percent of sales in certain retail stores.”

The term “great hit” is an understatement. When asked what the company’s current top-seller is, Driessen exclaimed, “Believe it or not, it’s the O.penVAPE original 250mg cartridge! The reason I say ‘believe it or not’ is because that was literally the first thing [we] ever made, and to this day it is the number-one-selling product by unit by a pretty sizeable distance. It’s not even close.”

Driessen, a native of Texas who’s known McElvany for “years and years,” joined Organa Brands in early 2014. In short order, his revenue-generating and organizational skills led to him being given ever more responsibility. As Heidl put it, “COO is my official title, but for all intents and purposes Chris Driessen is president and COO. He’s got it all going on.”

What Driessen really has “going on” is clarity of purpose. When asked what is foremost on his plate, he responded without hesitation in the way people do when they live the answer. “For me personally, it’s market expansion, as always,” he said. “It’s getting leaner and meaner at the mother ship in Denver as we expand into new markets and verticals. It’s making sure we’re on top of our game in the way we’re distributing to our licensees and messaging to our consumers. We anticipate six new labs in the next twelve months. In fact, Vermont goes live on April 6. We’re going to welcome our second international licensee in Puerto Rico. Then we have a sixth brand coming out, a wellness line under the Organa Labs brand. Did I mention market expansion?”

Organa Brands, marijuana,A House of Brands

Organa Labs is more than one big brand, of course. Consistent with the Procter & Gamble model, it sees itself as a brand generator and curator, a “house of brands,” as Driessen put it. “It’s not just O.penVAPE,” he explained. “That’s one of the brands, albeit the dominant brand that paved the way and built this platform for us to be able to begin stapling on other products.”

The company’s multistate distribution platform is also what Driessen referred to as “the real attraction. The number of people plugged into our distribution network allows us to have a pipeline that others covet. It lets us constantly be in either acquisition mode or reinventing ourselves.”

A house of brands built on a platform of fine oil, strategically poised to produce “all the limitless things you can make with oil. And why shouldn’t we be producing these things?” asked Driessen, rhetorically. “We’re good at brand building, we’re good at brand development, and we’re good at marketing. We want to create new brands that will continue to diversify our company and increase its valuation.”

Diversification has been the company’s strategy from the beginning. “When we first started, we had one product, the O.penVAPE original cartridge and a battery, which is what we used to open up as many markets as possible,” said Driessen. “That did a few things for us. It grew our reputation far beyond our own borders in Colorado, and it gave us the cream of the crop in terms of picking licensees in other states, because no one else was doing it. We were able to partner with top-notch operators across the country, which has obviously served us very well.”

In addition to O.penVAPE, several other brands are marketed by Organa Brands: Magic Buzz, with its infused line of drinks; Bakked, whose line of products includes three distillates, a soon-to-be-released cartridge, and the Daburatus, an “all-in-one” dabbing tool sold in Colorado currently and going national in April; Organa Labs, which will house a new wellness line that initially will include five SKUs; and District Edibles, a new joint venture currently underway in Colorado with planned expansion into three additional states, including California, in about four months. District Edibles’ product line includes gummies, chocolate, and suckers, among other items.

Organa Brands has spent millions of dollars on R&D over the years, sometimes in areas that do not represent the core of its current business but which could become very relevant in the future. Genetics is one example. The company recently entered its first round of fundraising. “The primary use of the funds will be for state expansion and acquisitions,” said Heidl. “For years, we thought acquisitions were off the table because people were so proud of what they were doing, but we’re starting to see that change.”

Organa, marijuanaThe good brands that are available in one or two states give Organa Brands a decided advantage, given its reach, said Heidl. “With some of the brands, even ones with a high asking price, [the deals] make more sense for us because in short order we can plug them into 1,200 stores in multiple states,” he explained. “Those brands become much more valuable for us.”

Not surprisingly, the company has “an intense focus” on California. “We’ve already introduced our Bakked brand, and District Edibles will be introduced in 120 days, give or take,” said Driessen. “We’re bringing sales, marketing, and distribution to bear in a big way. We don’t want to do it once the moment is here. We need to be prepared once the moment comes.”

The company has a history in the Golden State, where a few years ago it experienced one of its rare bumps in the road. “We were [in California] with the O.penVAPE line and had a disagreement with the license holder,” explained Driessen. “Rather than risk brand integrity, we decided to part ways. It was a financially painful experience for us, because at the time he was doing well in the California market. But it just speaks to the integrity and credibility that we put into the brand. It was better for us to reset and start over.”

A similar challenge arose more recently in Washington State. “Our partners there weren’t producing at the level we expected of them, so we pulled the plug,” said Heidl “We’re currently not in that market, but we’re working to re-engage with a range of possible partners and will be [in the market] very shortly.”

The pace of expansion seems dizzying, but the company’s chief executive put Organa Brands’ potential into perspective. “It’s in its infancy,” said Morgan. “There is a lot of room in this space, because there is so much work to do and so much acceptance still to happen. Cannabis is still so misunderstood, and one of the things I’m most passionate about is the potential for wellness. There is so much this plant is capable of. It will be really exciting to see where that evolves.”

Who are we as people? What are our core values? What does our company represent? If you are a part of our brand what is that all about? – Ralph Morgan, CEO

Moral Compass

Scaling up is the greatest challenge for any company, and when they are successful at it there usually is an explanation closely aligned with corporate culture, the fragile dynamic all good executives know defines the company’s core identity. If that sense of identity is not shared by every employee, partner, and associate across the network, issues related to quality and consistency are inevitable. Organa Brands’ culture is inextricably rooted in ethics.

“As a company, what makes us unique and helps us tremendously is that we have a sound moral compass,” said Morgan. “It’s not just an entrepreneurial opportunity for us, but a chance to be part of history. I think that has served us well as we’ve grown and been challenged. This industry is new and very dynamic. Policymakers sometimes look for problems to the solutions they created, and in some cases, it’s just growing pains. What endures through it all—what helps us get to work early, put in the time, and have the dedication—is knowing what’s important.”

Knowing what’s important is indistinguishable from the way in which business is done.

“For us, it’s important to focus on SOPs to maintain brand consistency, but equally important has been the consistency of our messaging,” explained Morgan. “Who are we as people? What are our core values? What does our company represent? If you are a part of our brand, what is that all about?”

The questions are answered via deeds. “One of my most important tasks right now is a responsible-use campaign, which involves most of the usual suspects in Colorado,” said Morgan. “As an industry, we are celebrating the Colorado Department of Health and Environment’s ‘Good to Know’ campaign and coordinating with the city to add our reach within dispensaries. We’re doing it to show that even though we’re a new industry, we don’t have to wait to use [the issue] as a bargaining chip, but can get out in front of it to teach responsible use [to consumers] and educate budtenders.”

For years, we thought acquisitions were off the table because people were so proud of wha they were doing, but we’re starting to see that change. – Jeremy Heidl, COO

But his greatest passion now is the planned wellness line. “We’ve got a tremendous amount of time and effort invested in that project, and I’m looking forward to launching it. The plan is to have ‘a mirror cousin’ without THC, hopefully with CBD. In the mainstream, we’ll have all those same products with THC distributed through dispensaries. It’s a mission I am very excited about.

“Our roots,” he added, “are with the medical side, providing the constancy, safety, and efficacy of a product that’s repeatable, and on the recreational side that is reliable and safe. Our moral compass is simply a desire to offer products that really help people.”

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