In the midst of John’s drama, 530 Collective was becoming more successful, with increased customer traffic and subsequently increased revenue. To support its continued growth, the store needed quality products, and from an operational perspective, I needed sustainability and consistency in the supply chain. Checking those three boxes for every product was challenging on the best of days in the preregulated California market, which brings me back to those dirty fingernails.
The absurd closed-loop model of distribution applied to cannabis edible products as well. As someone who used edible products exclusively and being someone with a very low tolerance, finding suitable products for myself was difficult. In the first weeks and months, I was the store’s chef. My culinary skills are not great, but I could make cannabis butter and infuse a batch of brownies or Rice Krispies Treats at home in the evenings and wrap them prettily for the store shelves before heading in the next morning.
I found a recipe for the cannabis butter online, and I always made sure to make it with the same proportions of butter to cannabis. Even so, the effects of the edibles varied drastically as a result of the different potencies in the base cannabis that I was using, compounded by the effect of activating cannabis through the heating process, a concept of which I was completely ignorant in the first several years.
In 2009, there were no labs in the area to provide potency analytics, and mailing them samples was risky due to federal postal regulations and restrictions. The labs operating in the early years were fraught with challenges of their own, the largest being the lack of established baseline thresholds for contaminants like pesticides, molds, fungus, and heavy metals. To complicate matters further, different labs used different processes for determining potency, often yielding slightly different numbers.
Furthermore, none of the producers felt they should be responsible for testing their own products, regardless of the lack of baseline thresholds. In the preregulation era, the general expectation was that testing should fall to retailers, a completely ass-backward approach. I tried to encourage cultivators to do their own testing in exchange for fast-tracking to the top of the store’s vending list, but they weren’t having it. I tried the logical approach, explaining how it’s not the grocery store’s responsibility to test the alcohol content of the beer it sells; that responsibility falls to the brewery, winery, or distillery. Regardless of the product, all alcoholic beverages are required to be tested prior to arriving at the retailer. (Few of the producers with whom I spoke in that preregulation market felt that the alcohol model should be used for cannabis. California, however, would eventually follow the precedent set by its other industries and make testing the responsibility of the distributor in cooperation with the producer.)
With edibles, cleanliness was also an issue. For the edibles that were produced in a patient’s home kitchen, I had to ask myself a couple of questions: How clean was that kitchen, and did the person preparing them have a food handler certification? In most cases the answers that I was forced to come up with were “not very” and “no way.” In 2009, the local health departments had taken the stance that once a food item was infused with cannabis it became medicine and was consequently out of the scope of their jurisdiction. As such, cannabis edibles were treated more like a cottage-food item in that they could be prepared in home kitchens; the discretion as to the cleanliness of a particular kitchen was therefore left to my opinion of the vendor’s fingernails.
When a patient came in with an edible product they wanted me to carry, I would always ask them how strong it was. The answers I received were varied; some were disconcerting; and all were completely subjective. I would be told anything from “Oh man, one bite of that cookie knocked me out for ten hours” to something like “Well, we used an ounce of pot in a pound of butter,” which was a bit more informative, but still not helpful. There was simply no thought being given to dosage or consistency from batch to batch.
Consistency, or lack thereof, also applied to product availability. Occasionally, I would take a chance on a product and it would be a huge hit with the patients, as was the case with the homemade caramels produced by two lovely ladies who passed my visual hygiene inspection. Their caramels were individually wrapped in old-fashioned wax papers and came in cute little packages of five. They were delicious.
I did business with those ladies for several months until the day came that they stopped answering their phone. Customers who had been buying their product had gotten used to having them available. They were disappointed I was no longer carrying them, even when I explained that I was trying. This wasn’t the only time something like this had happened.
As I sat in the back office one day in 2012, after making yet another unsuccessful call to the caramel ladies, I looked across the room and saw the adjacent kitchenette with new eyes.
Problems are easy to see and easy to complain about, but achieving success sometimes requires more than just overcoming a problem; sometimes success requires creating a solution. A simple solution to my caramel shortage would have been to source another caramel vendor. But that wasn’t good enough for me. I wanted a bigger, stronger solution, a solution that had not existed before. I wanted to look beyond the obvious and innovate a viable, long-term solution to the problem.
The kitchenette had a utility sink and a counter. It needed a new stove and a bigger refrigerator. 530 Edibles was born. It was time to find a real chef.
I tapped one of our customers, and we got to work.
First, I developed a clear vision for what I wanted, based on what was lacking in the existing marketplace. I knew I had to look beyond my simple cannabis butter creations, as cooking with cannabis butter was a complete pain in the ass. It was smelly, messy, and it tasted terrible. Furthermore, infusing cannabis into butter meant limiting the range of products to those recipes that called for butter. My vision for 530 Edibles was different, bigger. I wanted products that tasted great and featured a diverse range of flavors and forms. To accomplish both goals, I looked into using concentrates, something few edibles producers were doing at the time.
Of the types of concentrates available to me in 2012, I chose kief, the dry, powdery substance that is derived from the cannabis trichomes, or resin glands, separated from the plant matter through agitation. It was easy to work with, and it was affordable. Once we’d found a source, my next goal was to establish consistent potency levels for every package the kitchen produced. This meant assuming the risk of sending kief samples to a lab for potency analysis.
Once I established the specific cannabis potency level I wanted per package—100 mg, for example—and once I knew the degree of potency of the kief, it was easy to figure out the number of pieces the recipe would yield and apply some good ol’ high school algebra to calculate how much kief to add to each recipe. This was the one and only time in my adult life that I have ever used that high school algebra.
The 530 Edibles line was a huge success. The customers loved that they could get a bag of hard candy one week and when they returned the following, it was still available and the potency was the same. Customers could, for possibly the first time, buy edibles with confidence.
The products we started with were simple and ones we knew were already popular with the customer: hard candies, peanut butter cups, snickerdoodles, and the quintessential pot brownies. Rather quickly, the chef started to expand his repertoire into things like infused marinara sauce, ice cream, taffy, and even take-’n’-bake pizzas. I purchased a commercial refrigerator with a glass door, just like those in convenience stores, so that we were able to showcase the products in a way that kept them fresh. We used clear deli-container packaging as much as possible so that customers could see the products they were buying. Every container had a printed label with the product name, the ingredients, and the potency of the contents.
As the chef came up with more ideas about new products to try, my message to him (or her eventually) was always the same: You can make whatever you want. Once. The customers will determine if you can make it a second time.
The customers were always the gauge as to what items stayed in production as well as the items’ production levels. Even knowing it was the most popular flavor and even with the chef cranking out batches nearly every day, it was difficult to keep the watermelon hard candy in stock. That was the store’s all-time bestseller.
The products were incredibly popular. I knew going into this project that consistent availability and consistent potency were going to be game changers in the edibles department, but I had not expected the demand to double, jumping from 5 percent to 10 percent of revenue, and that the percentage would continue to climb over the subsequent years. As word of mouth about 530 Edibles spread, the store started to pull customers from the other cannabis store down the road.
One unexpected trend was the increased demand for edibles around various holidays. The hard candies in particular proved to be a popular and, most important, discreet, way to de-stress during the frenzy of family holiday gatherings. Interestingly and yet not surprisingly, this same trend played out in 2020 during the COVID pandemic. Sales on edibles skyrocketed, and on several Monday mornings, the shelves were stripped bare of products. For those suddenly trapped at home with spouses and kids, gummies provided a convenient way to take the edge off and survive an incredibly stressful time.
Even with paying for the ingredients, the cannabis, the chef, and the packaging, the profit margins made sense. So much sense that I decided to take them to the next level.
In 2014, with a new chef who was fresh out of a renowned French culinary institute, 530 Edibles made its wholesale debut at HempCon, a two-day industry event at the Cow Palace in San Francisco. The edibles were all artisanal, and I’d invested in professionally designed packaging and a gorgeous website. I was ready for prime time, and I was rewarded for my efforts. The attendees of HempCon went wild for the products. No one had yet put a gourmet spin on their edibles line the way we had, and the raspberry bonbons and s’mores bars with dark chocolate ganache were in their own class. In the wake of the event, I promoted an existing employee to the newly created position of wholesale rep and deployed him to leave product samples with prospective accounts in the field as well as hand-deliver orders, a tried-and-true sales approach that was all but unheard-of in the industry in 2014. We were off and running!
Two of 530 Edibles’ most popular products came about through employee innovation, albeit one of them by accident. Throughout its operation, the hard candies were without question the bestsellers. Very early on, the chef made the standard hard-candy flavors like watermelon, apple, cinnamon, and root beer. One afternoon, however, the chef came to me distraught, telling me that he thought the watermelon batch was ruined. Frustrated that our most popular flavor wouldn’t hit the shelves that day, I asked why.
He told me that, being in a hurry, he had whipped out a batch of cinnamon hard candy and then immediately reused that same mold for a batch of watermelon. When he started to package the watermelon candies, he realized he could still smell cinnamon. Fearing the worst, he sampled a piece. Sure enough, the strong cinnamon essence had infused the watermelon candies.
“How bad is it?” I asked.
“Well,” he replied, “it tastes like both cinnamon and watermelon.”
I made that face.
He said, “Yeah, I know it doesn’t sound good, but it’s actually not bad.”
I popped a piece in my mouth (of course, spitting it out immediately, not because of the taste, however, but because of my professional featherweight status).
It was delicious! Knowing that it would ultimately be up to the customers to determine the success or failure of a product, I told the chef to package it up and we would see what they thought. It flew off the shelves, and the flavor CinnaMelon was born. It was so popular in-house that it was one of the four flavors that we selected to roll out as part of the wholesale lineup. And all because of a glorious mistake.
The other bestselling item was the result of an employee’s stroke of genius. Making hard candy by hand generates scrap product; the edges of the mold overflow a bit, and when the pretty pieces are popped out, there are shards left over. The shards, or scrap, are still delicious, of course, and, in the case of cannabis hard candy, still of value. The scraps were always saved, and the employees were allowed to take them home.
One day, one of my veteran employees, Mariah Johnson (née Henderson), came to me and asked if I’d ever heard of Belly Flops, the flawed Jelly Bellies that you can buy at a discount from their factory store.
“Sure,” I told her.
She suggested we do something similar with the hard-candy scrap. She even had a name picked out for them: 53-Uh-Ohs.
“Brilliant!” I said.
It was a simple matter to weigh out the shards and format a new label. For the kitchen’s convenience, we mixed up the flavor shards and sold the packages at half price.
They were an overnight success, and they were consistently a bestseller every week. When an individual feels part of the company—not just someone who works for the company—and when a team is empowered to offer solutions, the results can be brilliant.
During its peak, 530 Edibles had an extensive in-house portfolio of products and as many as a dozen wholesale accounts throughout the region. Our production was streamlined, efficient, and impressive, especially considering the small workspace. However, operating out of a one-hundred-square-foot kitchenette was viable only because of the lack of state or local regulation. Prior to the passage of the state regulatory legislation in 2015, the health department, the agency that generally oversees commercial kitchens, was hands-off with regard to cannabis operations. They took the stance that because the food items containing cannabis were considered medicine, production facilities and the items they produced were therefore out of their scope of jurisdiction.
With our professionally trained chefs and internal policies requiring anyone working in the kitchen to have their food handler certificate, impeccable cleaning standards, and following first in, first out (FIFO) inventory management, I was confident that our kitchen was cleaner than some restaurants I’d worked in. But it wasn’t the same as a real commercial kitchen. I knew that the convenient loophole that allowed us to operate would eventually be closed by the coming regulation.
To keep 530 Edibles alive, I would have had to find a proper commercial space and outfit it with proper commercial equipment. With the increased traffic in the store itself and with the regulatory retail impacts that I knew were coming, I simply didn’t have the bandwidth or the capital to move the kitchen and take it to the next level. Unfortunately, the edibles line would not survive regulation.
When I finally shuttered the kitchen doors in 2016, the chef was the first person in seven years whom I had laid off.