#119 – From Boot-Strapped Startup to National CBD Brand with Ben Rippley from Sunny Skies CBD

#119 – From Boot-Strapped Startup to National CBD Brand with Ben Rippley from Sunny Skies CBD

Ben Rippley is CEO and head of sales at Sunny Skies CBD. In this episode, we chatted about the path from a boot-strapped CBD startup to a full-blown national CBD brand.
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Ben Rippley is CEO and head of sales at Sunny Skies CBD. Ben, graduated from the Leeds School of Business at University of Colorado at Boulder in 2017 and quickly got involved in the CBD industry, working for, and eventually owning half of a CBD product manufacturing company in the greater Denver area. Impressed with Ben’s company’s success, Ben's father, John, floated the idea of starting a new company in Wisconsin. Although Ben was happy in Colorado, he had his sights on something bigger: a vertically integrated CBD company that grew and processed its own hemp, manufactured products in a high-tech laboratory, and sold product with the help of an experienced staff.

Show Notes

In this episode we chatted about the path from boot strapped CBD start up to full blown national brand. Ben has included tons of show notes below. Get in touch with him and take a tour of their facility!

Highlights

  • How Ben got started in the CBD business
  • Building a vertically-integrated CBD company
  • Doing business in Wisconsin
  • What's next in cannabidiol product development?
  • CBD extraction methods
  • Building trust through radical transparency

Links of Interest

Sunny Skies lab results
Wholesale extracts
Drone footage of one of the 2019 hemp fields
Sunny Skies virtual lab tour
Benefits of being a white label partner with Sunny Skies CBD
Private Label design service video
Article about Bell's Palsy and CBD/CBG
Update on Requirements for Hemp-Derived CBD Products Sold in Denver 
Research report on neurogenesis study

Summary Keywords

cbd, tincture, people, distillate, product, lab, ethanol, processing, cbg, wisconsin, cannabinoids, colorado, hemp, sunny skies, grew, extract, thc, startup, ben rippley

Speakers

Vadim Fedorovsky, Host, CBD School Podcast
Ben Rippley, CEO, Sunny Skies CBD

Podcast Transcript

Introduction

Vadim  00:10

All right. And we are back in class. This is Vadim, the CBD professor from cbdschool.com, your school to learn all about cannabidiol. Hey, everyone, it's Vadim, the CBD professor, and our sponsor and guest for this episode of the CBD School Podcast is Sunny Skies CBD. Make sure to check them out at sunnyskiescbd.com. It's spelled SUNNYSKIESCBD.com. And I think you're really going to enjoy listening in on all of the insights from the field from our guest Ben at Sunny Skies. So they have also one of the coolest, most transparent aspects I've ever seen. You can visit their facility — if you're ever in Wisconsin — for a tour at any time and make sure to contact them with the information we're going to leave in the show notes for this episode. So if you ever want to tour their facility, whether you're a customer or looking into doing some wholesaling with them, you can visit their facility and just drop in and check out everything that's going on there without really making an appointment. I think you can just drop by and they'll give you a tour. So make sure to check out Sunny Skies CBD at sunnyskiescbd.com. Thanks for listening and enjoy the show.

We are back with another episode of the CBD School Podcast during these quarantine times, and I have a great guest today. I am on with Ben Rippley, the cofounder and CEO of Sunny Skies CBD. So Ben, welcome to the show.

Ben  02:01

Thanks, Vadim. As I was telling you before we hit record, I’ve been listening to you for a while and it's a great honor to be on. Thanks for having me.

Vadim  02:08

Well, yes, it's an honor to hear that. So you were telling me how you had found the podcast when you moved to Wisconsin? Is that where you're calling in from now?

Ben  02:16

Yep. Yep. So we're in Durand, Wisconsin. It's in West Central Wisconsin. About 60 miles southeast of St. Paul. And yes, it's a little town. 1900 people. My dad grew up here. My grandparents are still living here. So that's home.

Vadim  02:32

So where did you move there from? I understand you didn't stay there your whole life?

Ben  02:37

Correct. Yes. I grew up in Colorado. So my dad and I have six younger siblings. So we were all raised by my dad. We grew up in Colorado, but we would come out to Wisconsin to Durand every summer to visit his parents and his best friend, Pete Adler, who is now my business partner, and I'm sure I'll tell you that story.

Starting Up: From Colorado to Wisconsin

Vadim  02:55

Oh, cool. Okay. Did you move back to Wisconsin as a home base for the business? 

Ben  03:00

Yeah. So I guess taking a step back, I'm pretty young, 26. I graduated from the University of Colorado Boulder in 2017, studied business and foreign language, and Spanish and Portuguese. But right after I graduated, I had a sales job lined up for a third-party logistics company. And I had mostly taken that job because I had a girlfriend at the time. We'd broken up and I just thought, why the hell am I even getting in this corporate rat race? I needed a job in Denver, but now the world is sort of my oyster. 

So I went, I traveled the world for 18 months. About a year in, I got a call from a friend's brother. The friend's name is Chris, his younger brother, Andrew, had just started a CBD company. Chris and I are good friends. And he knew that I'd studied business and had all sorts of internships, you know, in supply chain management and finance and marketing and stuff. Andrew needed a business partner that understood the business world. But oh, actually, he didn't even hire me as a business partner. He hired me as a salesperson. 

The arrangement was I would work remotely from wherever I wanted. I started in Ghana in West Africa. But I would do commissioned sales and the plan was — there were two founders, both named Andrew, the plan was to work as a broker and buy cheap isolate and distillate from labs in Colorado and sell it to product manufacturers in states that didn't have as developed of an extract market solely for the purpose of raising enough money to launch our own product line. We started in an apartment formulating tinctures, which at the time wasn't even against the rules. And the company grew, you know, we started with absolutely zero sales besides, you know, we'd make a few hundred bucks here and there, flip some kilos of isolate, distillate, but then we quickly went away from that. We dedicated zero time to brokering as soon as we had the money to launch a product. We still had some residual broker deals that came in that floated some product expansion. But we specialized in tinctures and topicals. We did every single thing ourselves. 

Oh, and I actually take this step back too. So with the commission sales gig, I made a couple of sales, and my commission was 50% of the profit. And so the two business partners were then splitting the other 50%. So after a couple of sales, they just said, “Hey, you're the only one that's had any success selling the stuff. You've had a bunch of good ideas. Why don’t you come on as a partner?” So we scrapped the 50% commission contract and I became a one-third partner. They were really handling all the product formulation at that point. I was still living abroad. But eventually, after a few months, we got enough traction where we had steady money coming in, and it looked like we're trending towards becoming a real business. So I moved home. And we just started selling really and got tinctures into a few different retailers, got some white-label accounts, expanded into topicals. There's disagreement between the three of us at one point and one of the partners parted ways. And so now I was the 50% owner. And over the course of 14 months, we went from making stuff in an apartment to getting an office with a manufacturing space. It's really bare bones. We hired temporary workers. And over the course 14 months, we went from zero sales to the month I left we did 170,000. 

And then during that time, we were selling primarily locally, as one does as a new company. But as we got bigger, we started to call out of state. Colorado, of course, is kind of the mecca of CBD. California is incredibly upset about that comment.  So we started selling out of state and we were just blown away by the prices of some of these retailers in what we deemed as underserved markets. So like the South, Midwest, Appalachians, Northeast, Southeast, they were all paying — we would hit them up and offer 1000-milligram tincture for, you know, maybe $30 wholesale price only to find that these guys were paying 50 and then charging 100. And so we were able to offer them much better margins for a very similar product. We were sourcing from good labs and had good ingredients. And yes, it was when out-of-state sales grew. 

And it became plainly obvious to me. Imagine how easy it would be to sell to these guys if we weren't some random little company in Colorado that they'd never heard of. If we were based in the Midwest and we had brand recognition and even processing, imagine if we could get down the cost of this extract by processing. But Andrew and I did not want to take on any other partners. We loved being self-employed. We lived in the business, you know. We like to be 24-year old kids running our little company. Andrew did not want to leave Colorado. And so I was able to sell my half of that company with no non-compete agreement. You know, with the understanding that I would go out to the Midwest and start a company of my own. 

My dad actually floated the idea. Pete Adler is —  I mentioned — his best friend who’s now my business partner. He has been teaching his whole life. And he's just got a couple more years left until he gets his retirement benefits. And he had been talking to my dad about his dream of starting a small business and having something to work on with his sons and leave for his sons and his daughter. And it occurred to us, hey, what better business partner than Pete? And so that's when the idea was hatched. We bought the domain and registered the company in January of 2019. I helped the company in Colorado transition for a little while and then came out to Wisconsin in June, when we were transplanting seeds from the greenhouse to the field. So I basically got to Wisconsin where we're immediately on the field. Sorry, long start.

Vadim  09:11

No, it's alright. It's quite a startup story. A lot of the people that listen to the podcast are actually entrepreneurs, or they want to get into the space or they're on their path as you were when you started listening to it. And I think they're going to benefit from that because you went from just traveling the world as a commission-only salesman, which I've done that myself. And you just totally transition to, you know, having your own company with a legitimate brand and controlling the whole operation, as I understand.

Ben  09:43

Yeah, that one thing definitely led to another and we worked hard too.

Vadim  09:49

Oh, sure. I think this business is a lot of people think it's easy or they think it's going to just sell itself. It does not for sure. And you still have to do — like any other business, you know, it still involves a lot of steps and especially with the manufacturing. That’s a lot of work. So is Sunny Skies growing its own products like just doing everything vertical by yourself?

Vertically-Integrated CBD Company

Ben  10:13

Yep, yep. So we buy seeds and then from there, basically from soil, we're vertically integrated. We grew. We were 10 acres last year, got about 20,000 pounds of biomass from that. In the lab here, we do ethanol extraction, distillation, THC remediation to bring a full-spectrum distillate to a THC-free broad-spectrum distillate. And then we also do all the product manufacturing here in the lab. And not only the Sunny Skies CBD brand, but we do a lot of contract manufacturing as well for other brands.

Vadim  10:48

Oh, okay, okay. So you're doing like some private labeling, everything. 

Ben  10:52

Exactly. 

Vadim  10:54

Okay. So that's one thing I want to tell listeners. So if they want to contact you, they can get in touch for pricing and how that works.

Ben  11:00

Absolutely. My email address is ben@sunnyskiescbd.com. sales@sunnyskies.cbd.com will also go to me. And then if you do have any questions about private label design, or white label manufacturing, or custom formulation  manufacturing, all that information is available on our website. And then we also have a YouTube channel, just type in Sunny Skies CBD. There are a plethora of videos, one about each of our wholesale services and then some other ones.

Vadim  11:30

That's great. I will put that in the show notes too. It's nice that you have a YouTube channel. I really miss mine. I, unfortunately, had it ripped away from me by YouTube a number of times. They would take it away, then give it back, take it away, give it back. But this last time, they just took it and took it down. And that's it. I haven't been able to get it back up. 

Ben  11:49

Wow. Just what was the reason they decided?

Vadim  11:53

Well, they always say you violated their community guidelines. I guess because of a lot of my videos, although I never gave any kind of ever —  I explicitly told people it wasn't medical advice until we — I mean, every video was like, “This isn't medical advice. Talk to your doctor.” But, you know, as much as I tried to shy away from that, they still decided that it wasn't okay. So it's a good way. I mean, I still have all the videos backed up and I get emails all the time for people asking how they can access the videos. So I'll be uploading them soon, I think, to just a different platform, like Vimeo or something. There's another one. but it's something I missed for sure. I think it's okay though. It's happened to a lot of people, actually. But with Sunny Skies CBD, where did the name come from? I do like to name a lot. It rolls very well.

Building a CBD company in Wisconsin

Ben  12:45

We wanted something positive. And there were, you know, million names that we wrote down and floated. We crossed off probably three quarters of them when we went on GoDaddy to see if they were available. Someone's out there just buying up every single CBD company name you can think of but we're fortunate that Sunny Skies was available. And we liked it. As soon as it got thrown out, I can't remember who thought of it. But since it was thrown out there, it went right to the top of the list. We pretty much stopped our search.

Vadim  13:16

Yeah, I like it. It rolls well and it goes with the agriculture parts since you're doing the growing. In Wisconsin, I guess, it's a good season, right? Like because it's cold now probably still but it gets pretty hot and warm for — the summer is decently long, right?

Ben  13:34

Yeah. It's definitely colder than Colorado but the weather is more predictable, which is nice. For example, like in Colorado, I think most of the CBD or hemp is grown in Pueblo. 

Vadim  13:47

Yeah, I’ve been there.

Ben  13:34

My dad works there. But if you look at Pueblo’s average monthly temperatures, I'm sure it's 10, 15 degrees warmer than average temperature in Durand, maybe not in the summer, but the likelihood of an early frost in October in Colorado and Pueblo is much higher than it is here. So that's one benefit. And then another, Wisconsin was the premier hemp producer. I mean, I've heard people from all sorts of different states say that there's used to be the number one producer of hemp, but that is a commonly cited piece of information. I don't know if I want to call it a fact. But Wisconsin has historically been a big hemp producer. So we do have an advantageous climate for that.

Vadim  14:28

And the law there is being supportive, the government?

Ben  14:31

Extremely. So DATCP, the Department of Agriculture Trade and Consumer Protection, I think they are the regulatory agency that oversees CBD in Wisconsin, and they are very, very easy to work with. They are understaffed, but they're super responsive. We're going into the third year here in 2020 of the pilot program. So we came in at the beginning of the second year. But they've been great to work with. I’ve got no complaints.

Vadim  14:57

It's great. That's great. In Pennsylvania, that's where — I currently live in Mexico, but my dad, he grows hemp in Pennsylvania. And he had a really good experience with the program too. It was very easy to work with them and they were supportive and no issues. And we got a nice crop last year with about not 10 acres, much less than that, but it grew very well. And we got the super — I don't know why but we got some leaves in ours grew extremely tall, like they were —  I'm almost 6 foot and they were 9, 10 feet tall plants. And we couldn't tell why because it was, you know, it’s our first time but other growers were growing those like more of a short variety. And I forget why. Not sure. But do you grow just one kind of variety, that CBD rich, how do you pick that out?

Ben  15:49

Yes. We got a suggestion on a seed company to work with. And I'm going to keep that a secret because they have a limited supply.

Vadim  15:59

I understood. I get why you want to keep it secret.

Ben  16:02

So we reached out to them and said, “Hey, we really want to work with you guys. We've heard nothing but great things. Do you have any strains that have had successful growth in Wisconsin?” And they had three that have had successful growth and two of them are sold out. And so we were left with Hawaiian Haze. And so we went with the Hawaiian Haze. We grew all 10 acres of Hawaiian Haze last year and we had tremendous results. We've had material tests between 16% and 21% total cannabinoids, still way under the 0.3% Delta 9. Some of the best crops I've seen, and all the lab results are on our site. You can check out drone footage of our field on YouTube. But so, you know, this next year we're going with the whole philosophy of “If it ain’t broke, don’t fix it”. We're gonna grow, we're doing 17 acres this year. We're dedicating half to Hawaiian Haze and half to a CBG dominant strain.

What's Next in the Cannabinoid Industry?

Vadim  16:59

Oh, nice. Nice. So I just had someone on the podcast, they do CBG and CBN isolates. So, interesting. Do you think that those cannabinoids — well, what do you think's next in terms of cannabinoids? Do you think CBG is going to be the next big one?

Ben  17:13

I think CBG is the farthest along for sure. CBN, of course, is super promising for sleep. And that is an exciting one. But right now, I think all the different cannabinoids — after CBD, my prediction is that other minor cannabinoids will follow in a similar path becoming more available in genetics for seeds. And then therefore, you know, more to grow, more to process, the price will drop. You're seeing that already. Like when going back, you know, three years to when we were selling, isolate kilos were $5000 to $6000 a piece, and now you're seeing, you know, prices that are a third or lower than that. And you're seeing CBG now have prices in that neighborhood, in what where CBD was a few years ago. And I think it's going to keep going like that. And CBN is probably a step behind CBG, and in my opinion will kind of be third. I don't have a real good sense of what number four, what I would guess number four would be. But right now, CBN is prohibitively expensive, so you're not growing and processing it but CBG is less and less so every day.

Vadim  18:22

So, you know, you mentioned the kilos. So I always look at the kilo prices like the trajectory of where the industry is going. So when I got into it, in late 2016, I remember kilos were 10K — like a good price was 10K a kilo. What do they sell for now for just CBD?

Ben  18:38

So you can check out our pricing. My market guy will kill me if I just say the price right now because we move with the market. But if you go to our site right now and click on the wholesale extracts under the wholesale tab, it has current pricing for CBD isolate, full-spectrum distillate, broad-spectrum distillate, as well as CBG isolate and then a broad-spectrum CBG distillate that has no THC. But generally speaking, right now we're in the thick of the Corona, April 2020, I've seen CBD isolate prices consistent with supply from our actual lab being under $2,000.

Vadim  19:17

Wow, that is cheap. That would have been crazy if you said that when I first started. I mean, we thought back then 10K, like I'm saying, was a good price. So it just shows you how much things changed. And this brings me to a question I wanted to ask you. Where do you see this space going? I mean, it's moved so quickly since it got really — there was kind of the first wave in 2015 where no one really knew about it. It was more of in the… it was still part of just the marijuana world. And then the second wave was the hemp wave like in 2017-18. And we're still I think in that inning, but where do you see it going next?

Ben  19:55

Well, okay. From the grower processor side, I think right now the bottleneck is in processing, particularly farther down the chain, if you will. So, for example, right now, there's not enough people doing ethanol or CO2 extraction to make crude for how many people grew. Now, if you take all that crude, there's not enough people or companies processing that crude into distillate right now. And you know, you keep going down the chain, that a lot of companies that have a bunch of full-spectrum distillate, they can't figure out where to get that processed into a broad-spectrum distillate. So I think as time goes on, you'll see some of those bottlenecks in the industry, supply and demand will have its way and those will flatten out a bit. 

As far as the product side, I think the FDA is going to grant this giant caveat. I don't spend every day reading about what the FDA is going to do like some people I hear talking, because that’s all they can talk about. But I would imagine that the CBD is going to be designated as a dietary supplement at least ingestible products. And when that happens, there will be regulations around what kind of facilities and processes you need to have in place to legally manufacture an ingestible product. Certain municipalities like Denver, for example. They passed a law in, I think, like, 2018, that all ingestible CBD products that were made in Colorado and sold in Denver had to be manufactured in the licensed food processing plant. So that means that all these labs that’re making products, they have to go through their state's food processing plant application process. It's not very difficult. But in order to be certified, you have to follow GMP requirements for your facility processes, like record keeping and SOPs around everything you can imagine, sanitation. And we went that route. Wisconsin does not require it yet. But I think the pattern is going to be certain municipalities taking the lead and sort of legitimizing the manufacturing part of CBD and then other municipalities following suit. 

Vadim  22:06

Where are you seeing that that's required, in Colorado now?

Ben  22:09

I'm sure it's required in lots of other places. But for example, in Denver, I think it was in 2018, companies selling ingestible CBD products with edibles, drinks, tinctures, those had to be manufactured in a facility by a licensed food manufacturer, the licensed food manufacturing facility. And Wisconsin hasn't gone that route yet. But it was our belief that they will, A. B, If we get a contract to make an edible or a tincture from a company that has legislation such as Denver's in their area, in order for them to sell a product locally, they would need to be also getting their product from a licensed food manufacturer. So that's just one sort of regulation I could see as more control over what kind of environment these products are made in, and you know, the processes are going into that.

Vadim  23:03

I think, you know, what you said there is pretty likely to happen as well. And I think it'll be good. I think the more regulated it gets and the more safer it is for consumers and more standards there are, you know, it's going to be better. It's just going to be more organized. And consumers can choose instead of choosing like, hey, which one is safe, they can choose which one they like as far as like product features, pricing, branding, whatever they want, you know, but they don't have to worry that it's like — you know, when you go buy protein bars or something, you never think, was this made in someone's kitchen? You kind of already expected, you know. 

Ben  23:43

Yeah, yeah. 

Vadim  23:44

You know what I mean? So you pick more on like, I don't know, how many carbs that has, whatever you're looking for. But nowadays with CBD, it’s like, there's that additional element of people are still — I think a little bit, it's gotten better, but they're still a little skeptical probably because it's just a new industry. But it's definitely gotten better from where it used to be for sure.

Ben  24:05

From a consumer safety standpoint, it's obvious it needs to happen just from being, you know, like a selfish person in the industry. My career trajectory, I guess, and CBD would have been a lot different had these kinds of regulations already been in place. So I admitted we were making products in an apartment and it's not that we weren't the only people doing it, it's still going on. And you know, those barriers to entry, it's going to be tougher for the little guy and that's going to help out more established companies. But you're right. It needs to happen for consumer protection for just the legitimacy to get the kind of monkey off the back of the CBD industry that, you know, it is kind of a wild west.

How Did You First Get Into CBD?

Vadim  24:44

Yes, yes. So one thing I haven't asked yet. I'm surprised we've already been talking for quite a bit, I haven't asked. How did you first get into CBD? What made you — did you try it and how did you first hear about it?

Ben  24:56

So growing up in Colorado, I grew up around cannabis So CBD, for example, I knew that CBD was a cannabinoid and that it had certain medicinal properties, but I had never experimented with it ever. So, Andrew's older brother, my old partner back in Colorado, he was the first person who ever told me about it. He had been working as a master grower in Las Vegas, and these guys were growing a bunch of CBD. And he was fascinated with it. So he had some laying around at some point, I tried some but I was lucky I have no pain, very low anxiety. So I use it regularly for recovery from exercise, but it took me a long time… it took me, you know, months of owning a CBD company before I even started to use it regularly. But definitely, I was almost into the CBD industry working in it before I had used CBD, you know, more than a handful of times. Of course, I went online, read all about it. 

Vadim  25:59

It's cool. So where did you grow up in Colorado, in Boulder?

Ben  26:02

No, I grew up in a town called Monument. It's just north of Florida Springs.

Vadim  26:07

Oh, okay. Because I lived in Colorado for short periods of time. I lived in Boulder and Longmont.

Ben  26:14

Oh, nice.

Vadim  26:07

I mean, I remember cannabis has always been obviously popular there. But CBD wasn't even that popular. When I lived there in 2016, it wasn't as big as it is now because the whole hemp thing wasn't big yet. It seems like the hemp movement is really what pushed the CBD movement. 

Ben  26:33

I'll probably agree with you. But it is remarkable how quickly it emerged. 

Vadim  26:38

Yes, yes. You said you had traveled the world. Did you come to places that you saw that were also gaining in popularity from your travel?

Ben  26:46

Spain is the only spot that I saw CBD everywhere. I like to travel in the developing world, so lots of Latin America and Africa and Asia. And there you'll never find CBD. Eventually, hopefully, you will. But Spain, I saw a lot of it. And other than that, I do not remember CBD catching my eye.

Vadim  27:06

Yes, I agree with you. Every time I've been to Spain, it was everywhere, actually. And they have a long history of cannabis. And did you go to the museum there in Barcelona? 

Ben  27:18

Yeah, I did. I think it’s cool. 

Vadim  27:33

So that museum is a beautiful building too inside. And you can tell they've known about CBD for a long time just from the history going back, with Amsterdam and then just researching it for a while. It's funny how people are just learning about these cannabinoids, but they've been researched for quite a bit, you know, 50, 60 years. People have been researching these cannabinoids.

Ben  27:44

Do you know when the first time CBD use was recorded?

Vadim  27:48

I think in Israel. When they were researching THC, they would research the other ones as well. So when Mechoulam, the guy in Israel that synthesized THC, him and his team would, I think, experiment with the different cannabinoids. But CBD, the interesting thing, it was discovered in Minnesota, you know, your neighbor there, in way back. And it was the first cannabinoid. It was discovered before THC, actually, from hemp. It was isolated from hemp way back in, I think, the 1940s by scientists, I forget his name, who was studying hemp with just like a field hemp growing outside. And they found CBD but they didn't — I don't think they knew what to do with it, or it was not used for anything, really. But you know, going back to your question, when was it first used? I mean, thousands of years ago, because it's always been part of the plant. So a lot.

Ben  28:41

Right, right. 

Vadim  28:42

It’s just people didn't know what they were doing. And I think the history of the plant is really what's cool and that's always attracted me to it. 

Ben  28:48

I agree. 

CBD Extraction Methods: Ethanol vs CO2

Vadim  28:50

So what do you do — I know earlier you're in your lab, I guess your office, your lab right now. And you were saying… What kind of extraction methods do you use there in Sunny Skies?

Ben  29:01

So we use ethanol extraction and then the next step of the process. So with ethanol extraction, I should talk about that a little bit. We use a super cooled ethanol. It’s cooled, a negative 80 degrees Celsius. And the crude that we use in that process is fully winterized. Next to the process is alcohol evaporation. So you're going to have some residual ethanol in your rock crude. So we process the rock crude to a refined crude by evaporating off alcohol and water. So then you have a refined crude, typically in the neighborhood of 55% to 60%. So you can use that crude to formulate products. Lots of companies do. You hear it called like a fully or a truly full-spectrum product because as the full terpene profile. The Sunny Skies CBD product line uses distillate, though, for our tinctures and most of our white label accounts do too but we use crude in plenty of product formulation. 

So we use a wiped-film molecular still distillation system. That will bring your crude, it'll process it from that 55-60% up or over 80% CBD. And then obviously, that's a concentrated plant material. So that distillate will be up around 80% to 90%, CBD, and 1% to anywhere from, you know, 6% if you've got some bad ratios on your material, but for our material, we're up over 80% 1-3% THC. And then to get back under that 0.3% THC, you need to mix that extract into a carrier oil for a tincture or, you know. the rest of the makeup of an edible or a topical solution.

Vadim  30:42

Interesting. So you're not doing a CO2, it's all ethanol. It's all ethanol. 

Ben  30:46

It’s all ethanol.

Vadim  30:48

And what made you choose that?

Ben  30:48

Scalability. A, With the CO2 systems, at least based on the research I did, it is hard to compete with ethanol machines at a lower volume or lower extraction capacity. CO2 systems, they tend to be more advantageous for larger extractors as far as cost is concerned. However, at a large scale, CO2 is no more expensive than ethanol. So we could start relatively small and scale up with an ethanol extraction setup. That was the primary benefit. And then number two, as long as you are remediating the ethanol, or purging it rather, there is no difference in the quality between a CO2 extract and an ethanol extract. In fact, some CO2 extracts, you'll see some lipid contamination. Although most companies have figured that out. But the ethanol is that… those are the main reasons, I guess.

Vadim  31:45

Well, I've heard that in addition to what you were saying the benefits are also that it doesn't preserve the minor cannabinoids and terpenoids better than CO2. Is that accurate?

Ben  31:56

I'm not sure. Like I told you, my backgrounds in business and fortunately I have people on staff. That's how I handle all the processing stuff. But I do know that we are retaining all of the minor cannabinoids. We have the exact same cannabinoid ratios in our original hemp material that come out in our distillate. So we are not experiencing any minor cannabinoid loss.

Vadim  32:19

Okay, okay, great. That's good. And I'm not surprised if the business sales guy doesn't know that stuff. No worries. That's pretty normal. I hear that a lot. 

Ben  32:29

If I handle the processing, we'd be in trouble. 

Vadim  32:32

Yes, I know.

Ben  32:32

Same with a lot of aspects of the business.

Vadim  32:33

Yeah, that's fine. I completely understand that. And I think it's good if it's that way. So I know a lot of people are always wondering what's better with ethanol or CO2, but I keep hearing from a lot of people that ethanol is superior for just a number of reasons and one of them is scalability like you mentioned.

Ben  32:52

Actually, I think you hit the nail on the head. I was gonna add it too, but it's basically just repeating what you just said.

Product Recommendations: Tinctures & Topicals

Vadim  32:58

Cool. So we talked a good bit about the business side, I'd like to get more on to the retail side because half the people that listen are probably, you know, more the entrepreneurial type and the other half are CBD users. So for someone that's new to the brand Sunny Skies, if they've never heard of you, what products would you recommend that they check out? Or if they're just getting started, what product would you push them towards?

Ben  33:21

We're a believer in the tincture as a delivery mechanism. We specialize in tinctures, topicals, pet products and edibles, but we push almost everyone towards the tincture. The bioavailability is great. The dosing is extremely easy for self experimentation and is more affordable in most cases. And it's convenient, but however, we do really believe in topicals. We have three different topical formulas. I personally always push people towards our CBD Freeze, which is a Biofreeze or Icy Hot inspired topical, so it has the ingredients that give it that heating and cooling sensation. Menthol, tea tree oil, aloe vera. And that is by far our highest selling topical, however, some people don't love that heating and cooling sensation. 

We have two other topicals. Our CBD Salve, which has a beeswax, coconut oil and grapeseed oil base and a nice blend of essential oils. It’s a really good salve. That's, you know, obviously sort of the standard CBD topical format and we make a great one. The third is our CBD Moisturizing Cream that has a shea butter and cocoa butter base and has a subtle fragrance of cedarwood, lavender, tangerine. That one is amazing for anyone who wants to use CBD topically for pain or inflammation, but also would like to moisturize their skin. So we're seeing a lot of people using it for their face or sensitive areas. Those are the three topical options. 

As far as going back to tinctures, we have three different extract varieties available. We do a full-spectrum, a broad-spectrum and an isolate. The isolates are the most affordable. The broad-spectrum is the most expensive because our THC remediation process isn't cheap. We offer three different flavors currently: unflavored, peppermint and vanilla. But if you are a white label customer, of course we can add whatever flavor you want. We also have a pet tincture. It is an isolate tincture. Because we did some taste testing with various flavors and carrier oils and extracts and some dogs just hate that distillate taste. 

Vadim  35:38

Yeah, they don't like that. 

Ben  35:40

And the flavor that did the best in the taste test was bone broth collagen. 

Vadim  35:46

Yeah, that makes sense. 

Ben  35:47

And that product has been really popular. And then as far as we have three specialty tinctures too, which are sort of unique formulas. One is our CBD+CBG tincture. It's a one to one. That one, I've actually got a story about CBG, we can save if we have time, but we got that one. Then we have our two terpene-infused tinctures: the Morning Drops and the Sleep Drops. The Morning Drops are flavored with limonene terpene isolate and the Sleep Drops are flavored with a linalool and humulene terpene isolate.

 

CBG AND Bell’s Palsy

Vadim  36:18

Oh, nice. I like that. What's the story about the CBG?

Ben  36:21

So back in Colorado, we were making a broad-spectrum tincture that was had, you know, off the charts CBG for just a regular broad-spectrum CBD tincture, enough so that we could mark it as a CBD/CBG tincture, and we had a customer — do you know what Bell's palsy is? 

Vadim  36:43

Yes. 

Ben  36:43

So Bell's palsy is a nerve condition where the nerves typically just one side of your face stopped functioning for a time. 

Vadim  36:53

My friend had it 

Ben  36:56

That's common. It's often from a virus or brought on by a virus. I'm not sure exactly how. But we had a guy who's a — he's a Wall Street guy and he had Bell's palsy for a while. And he would get — sometimes some people will — it'll flare up sometimes, but the vast majority of people get Bell's palsy, I think it's 80%, the condition goes away after a month or so and typically never had any residual side effects or recurrence. But with this gentleman, it would flare up about a month every year. And you'd like to drink and when he would drink, it would get way worse. And he was in just a tailspin where it had gotten bad for a month and it was not getting any better. 

And a mutual friend of ours connected us and we sent him a tincture and he tried it. And again, this is completely anecdotal, but his Bell's palsy, the pain subsided almost immediately. He’s had 90% pain reduction within the first half hour, and then over the course of the next two weeks, the droopiness in his face got gradually better until it was almost gone completely and then after a month, it was gone completely. And then he's been on a steady regimen since. We asked him if it was okay to contact a news agency, a website about it. So we sent out a tweet kind of a little story about him, got it approved and sent it to some media outlets, got picked up by a few big ones like Fresh Toast, MSN, several. 

And from there on, about an order a day, we're getting for 1500-milligram broad-spectrum CBD+CBG tincture with varying degrees of success. I mean, we don't know how many of the people that ordered those bottles did have Bell's palsy but many of them would reach out and ask questions. And we tracked it. And you know, over the course, we had two or three dozen people with Bell's palsy ordering tinctures. Some people did absolutely nothing. Some people they had, you know, benefits with the pain. But there were several amazing stories from Bell's palsy patients with that. So I think CBG might have some interesting implications with nerve issues.

Vadim  39:10

Wow, that is cool. Can you link me to that article? I'd love to share that with people.

Ben  39:14

Absolutely. I’ll give those companies some extra viewership.

Vadim  39:19

Oh, that was before? I see. That was before Sunny Skies. Well, you don’t have to. 

Ben  39:23

I don't mind at all. But I'm still great friends with the guy. I would love to help them out. I’ll absolutely share that article with you.

Vadim  39:30

Okay, okay. Well, I mean, I think CBG, a lot of people wonder what it's good for. And I know it's shown to have some antibacterial properties and I don't know what else but I guess in this nerve condition, it was quite helpful.

Ben  39:44

And I remember where I read — I mean, this is, again, this is two years ago, and just something I read online, but there was a study that showed that it might cause neurogenesis in mice, which is the repair of damaged brain cells. So that was very specific, but it hinted that there could be, that CBG could help repair damaged nerves.

Vadim  40:06

That's cool. Wow, that's interesting. And was the product like a one to one, like a high, like almost even amount?

Ben  40:12

No, I think it was closer to like a four to one, CBD to CBG.

Vadim  40:17

Okay. And do you guys now make something like that similar for people? 

Ben  40:12

If they want, Sunny Skies CBD makes a one to one and then we're now getting into processing some CBG Biomass. We didn't grow any of it this year, like we will this upcoming year but we're purchasing CBG Biomass and processing and making CBG broad-spectrum distillate. The last CLA we sent into the last batch was 69% CBG, 28% CBD and 0.00 THC and pricing for that is also available on the website.

Vadim  40:56

But you have a one to one, is that a tincture then? 

Ben  40:59

Yep, yep. So we're just adding CBD isolate to bring up the CBD levels to be one to one.

Vadim  41:04

Okay. And you're making the product for people that can't use THC, right, the THC-free product?

Ben  41:11

Right. So the only product that we make that has trace amounts of THC is the full-spectrum tincture. Every single one of our other products are made with either a broad-spectrum THC for distillate or with isolate. 

Vadim  41:24

Okay. So has that been a challenge to get the THC out of there? Or is it pretty straightforward?

Ben  41:29

It has been a challenge and we've had the equipment in here for months and have been running through lots of hard, our distillate refining the process. But we just started doing runs for other companies here at the beginning of this month. We're already all booked out till mid-May. So it's going really well. I think I might have misjudged the markets or raised the price of that. But yeah, it's going great. We use reverse-phase flash chromatography to purge that THC and with very minimal cannabinoid loss too.

White Label CBD Edibles

Vadim  42:04

That’s good, that's good. So I know you guys said you're focused on right now pet products, topicals tinctures and edibles. What kind of edible can people get from you?

Ben  42:13

Oh, I should have mentioned that. We have gummies, 10-milligram gummies. We sell them in 12 packs and we also sell them in 50-count jars. We make those with isolate. However, we've made full-spectrum tinctures in the past, and we can make, you know, different milligram options and different extract options for white label as well. But the 10 milligrams are great with the gummies. There's small, which we wanted to make the gummies smaller rather than bigger because the harsh reality is that eating this sugary gummy isn't the healthiest way to take CBD. And so we loaded those also with as much CBD as we could — well, without affecting the taste profile.

Vadim  42:54

So they have sugar, but a small amount?

Ben  42:57

Yeah. 

Vadim  42:58

Well, the thing with sugar too is it's not the worst thing, it's just if it's not too much. So I don't understand this whole sugar fear. I eat sugar. I mean, just don't overdo it.

Ben  43:06

I personally get sad. I've cut it out of my diet completely. But my one cheat is my CBD gummies. And the reality is, if you've just eaten, you know, one, two, three gummies. So it's a lot different than busting into a bag of Skittles.

Vadim  43:19

Exactly. And you're using natural sugar, not like some — I'm assuming not like a corn syrup or something.

Ben  43:27

Nope. Yep, we're using just regular cane sugar.

Vadim  43:30

Yep. Okay. And you make those all in house as well?

 

Radical Transparency

Ben  43:32

Yep, absolutely. Everything is done in house. And like I said, we have this. We're a licensed food processing plant. We have a lab tour. The Coronavirus inspired us to do a virtual lab tour. We've got this policy, that's very, very important to us, that we refer to as radical transparency. So we have an open door policy at the lab. Anyone, whether you're a retail customer, or potential business partner, or you know, just someone who's curious that doesn't even want to buy CBD just wants to see what a CBD lab looks like. We are open under normal circumstances, from nine to six, Monday to Friday. And we do lab tours all the time. With this Corona thing, we did a virtual lab tour and put that up on YouTube. So you can see where everything's made and how it's made. 

Vadim  44:19

That is cool. So, people, when this is over, they can just drive up to your facility and come in?

Ben  44:24

Yep, anytime. Don't even have to set an appointment.

Vadim  44:27

You know, that is the first time I've ever heard of that in any industry. That is commendable. So people can just drive up from the labs and come in?

Ben  44:34

Correct. We've got, you know, give you a little booties for your shoes. But otherwise, that's as easy as that. And the reason we did that too is, you know, I've told my story in Colorado. We did not have a manufacturing facility that we were proud to show off to people. And when I was a broker selling extracts too, I've heard all of the bullshit basically about “Oh, we've got proprietary extraction techniques or we've got R&D going on” or all these different excuses to prevent people from coming in and seeing what your operation actually looks like. Fortunately, for us, we're well funded, we're a professional bunch, and we have absolutely nothing to hide. And, in my opinion, our strongest competitive advantage is that we are capable of being transparent.

Vadim  45:21

I think it's very smart. And like I said, I've never heard of that in any industry. Even like the hearse factory, you have to make an appointment to go see it. Or, you know, Coca Cola is not going to let you in without making an appointment. So that is commendable. I think you're going to get some visitors.

Ben  45:40

I hope so.

Vadim  45:41

So that's in Durand, Wisconsin?

Ben  45:44

Yep. D-U-R-A-N-D. Or you could just look us up, Sunny Skies CBD. Our lab's address is right on there. 

Vadim  45:52

Have people ever just shown up randomly? 

Ben  45:53

Yes. We probably do have just four lab tours a week, maybe even more two, if you count the retail customers. Like I said, Durand is a really small town. And we were a big curiosity when we came to town

Vadim  46:10

I'm sure. 

Ben  46:10

And my dad is the first state champion athlete in the town and my grandparents have an amazing reputation here. So everyone in town knows us and everyone's curious to see what it looks like. We've had different, you know, local papers come in and take pictures. And so we're not doing that just to show off our labs and sell products but we want to feel like a part of the community. And that has definitely helped.

Vadim  46:36

Oh, I'm sure, especially with just increasing the consumer confidence. They're just people coming in.  So do you have a store there too on site that people can make retail purchases right there?

Ben  46:46

Yep, we were originally planning to build a lab. And then there is a building in town that was historically a car dealership. It was purchased for one year by an architectural firm that designed all the quick trips, there’s been popular chain gas stations around here, so they've kind of beautified the place. So it had all really nice wood floors and big exposed wood beams and brick walls. But we had to turn that into a manufacturing facility. So we kept the reception area of that building. We kept and converted into a retail store. So you can still see, you know, the nice wood floors and everything. But then if you open the door, behind the reception desk, you see a big lab, and then my office is in the back. But as a long winded way to say yes, we have a retail store here in Durand.

Distribution: Online, Retail, Wholesale

Vadim  47:36

That is cool. And are you selling mostly online or through retail stores across the country?

Ben  47:43

Wholesale is by far the largest share of our revenue number. I can break it down a little bit for you. So currently, we are making about 50% of our revenue from wholesale. So we sell to pharmacies, CBD stores, organic grocery stores, the co-ops, and then vitamin supplement stores. Those are the shops that we go after. We also have products in lots of little random spots. But then about another 25% of our revenue comes from wholesale services, which, you know, include white label manufacturing, private label design. We do bulk solutions. So if you want a gallon of 1000-milligram per 30-milliliter solution, we do that. About another maybe 25% of the business, wholesale extracts make up the vast majority of the rest of the business, wholesale extract sales. Our retail sales are just a couple hundred, like a good day's maybe 300 or 400 bucks. We're a real small town. But our site is gaining momentum with Google. It takes a while for it to establish what we call domain authority. So we've gone from, you know, just a couple borders a week to now or maybe two three a day.

Vadim  49:03

It takes some time, it takes some time, but it's good that you've got that wholesale channel and I've seen your products in stores too. I knew — the logo, I had recognized it from some organic food stores. So that's a good market, you know.

Ben  49:18

Cool. And with organic foods, those co-ops too, they were some of the first places to carry CBD. And so a lot of them just went with the big brands, you know, the Charlotte's Web and the CV Sciences of the world. So those places — as a salesperson — are ripe for the taking because those big brands are charging outrageous wholesale prices and they have worked very hard to get the brand loyalty that they have. But in such a fractured industry, going into those places with those completely uncompetitive pricing, the bigger brands has been a very nice strategy for us.

Vadim  49:54

That's good. That's good. And for people that want to buy online, they can just hit up sunnyskiescbd.com and they've got your full product offering?

Ben  50:03

Free shipping on everything.

Vadim  50:04

Free shipping? And I know you have a great guarantee, right?

Ben  50:07

Yeah, yeah. If you're not satisfied with the product for any reason, we don't care if you use it at all, just let us know. We'll give you a full refund. No one has ever taken us up on that. Hopefully you don't have too many tricksters in your audience.

Vadim  50:22

No.

Ben  50:22

But yeah, we stand behind our products. And if it doesn't work for you, you know, we want to make it up to you, but we really feel constantly that it will.

Vadim  50:29

You know, between that and your open door lab policy, I think you're doing things right. You know, you that's very respectable.

Ben  50:36

Thanks. Appreciate that.

Lab Test Results

Vadim  50:38

The last thing I wanted to touch on with you, before we go here, was the labs. What are you guys doing for your labs? Are you using a Wisconsin lab? Or do you use one of the big labs across the country to check your products?

Ben  50:52

If you're interested in looking at our lab reports, you can click on the lab results link on our site. We also have QR codes on every single label. For white label customers too, we provide those at no additional cost. But we use Botanacor, the lab that was working with in Colorado. I would love for a Wisconsin lab to be able to compete, or even a Minnesota or Iowa, anywhere nearby to be able to compete with Botanacor on their lead times, their customer service, their consistency, but we have not found it. I've heard all sorts of nightmare stories, sent it in product to a lab in Wisconsin. You'll send in two samples who get the results back for one of them in a day and the next one, they get back a month later. Botanacor has been around a while. And they've already made their way through some of those obstacles starting a testing facility.

Vadim  51:44

Cool, cool. And did you guys have those up to date and everything by batch?

Ben  51:48

Yep. So each batch of products we make, we take a random sample from that batch, ship it off to Botanacor for a third-party test, and then the results from that test ends up both on our site and on the QR code.

Vadim  52:02

Okay. And one thing I think I want to touch on is are you testing —  because this is something that consumers are confused about. As a company, are you testing the raw product, or both the raw products and the bottled product? Are you testing in the bottle as well as, you know, the batch?

Ben  52:20

Good questions. So first, I know this isn't exactly what you asked. But with the contamination testing, we do all of that. The hemp material used in processing is tested for everything. So that'll be your heavy metals, your pesticides, your microbial contamination. Then further testing is done on extracts for potency, residual solvent. We don't retest for anything that didn't show up. So say your material had had zero heavy metal contamination like ours did, you wouldn't introduce heavy metals into that distillate unless you weren't cleaning your equipment between runs. But firstly, we only run one material. And when we start processing another company's material, we go through extensive cleaning procedures. 

So all the contamination is done on the plant and the extracts. As far as the batches, we have not reached a size like the Joy Organics, where they have a full panel done on a sample from every batch of product. And since there are no contaminants being introduced back into that product, we've found that to be satisfactory for every customer we've come in contact with. 

But then to answer your question, as far as when the product is tested, we bottle everything, we take a random sample from that bottle and send it off to the lab for testing. We use 15% extra distillate in each formula and 5% extra isolate in each formula to account for just natural variants, to make sure that all of our products are within an acceptable range of the reported milligram content.

Vadim  53:59

Oh, cool. So there are a lot of times people actually may be getting more probably.

Ben  54:02

Yeah, more times than not. But what we strive for is 95% of the samples that we send off for testing, 95% need to be within a range of negative 5% to plus 15%. If we cannot make that happen, we go back to the drawing board on improving the product formulation process or we don't sell that product.

Shout-out and Wrap-up

Vadim  54:27

Nice, nice. Again, between that and your open door policy and guarantee, that's great. You guys are certainly an example of what I think a good CBD company is, so very exciting to have learned more about you. And before we go here, do you have anything else you want to mention for either just new people listening or new private label customers or just anybody that wants to learn more? The floor is yours.

Ben  54:53

Well, first of all, let me give a shout out to different people here in Sunny Skies. This has been more about me and less about these awesome people that I work with than I would have liked it to be, but my partner Pete, he's the man, my dad's best friend. He treats me and all my siblings like his own kid. His wife, Terry, is our president. And she is, you know, she's the matriarch of the company. She runs the day to day operations of the lab and just so on top of it, keeps everyone organized and kind of the heart and soul of the company. Their two sons. Hunter is our lead processing engineer and Peter is a processing engineer as well. They're twins. And then we've got Tiffany in charge of the product. She's the production lead, got Matt doing sales, my brothers Jack and Max working at the lab, Coogan running the equipment, Scott running the equipment, Charlie, my little brother as well. Can't believe I almost forgot my little brother. 

Yeah, just an amazing bunch of people to work with. But then no one cares about that. So sorry for wasting your time. I had to do it. And then as far as if I had to speak to anyone in the CBD industry, it would be, you know, the guy that was in my shoes three years ago. And I would say just, you know, keep your head down, work hard, don't lie to people. You'll be amazed that who you bump into three years down the road and the way that they remember you. So just be honest, and eventually, you'll make it.

Vadim  56:20

Great. Well, thank you very much. It was a pleasure to have you on. I'm sure we'll have you on again. And stay on for a little bit. We'll talk a little more after recording.

Ben  56:29

One last thing. Rob, I can't believe I forgot you. Rob, you're the man.

Vadim  56:34

No worries. Rob, you're the man. Awesome.

Hey, everyone, that concludes our episode for today with Ben of Sunny Skies CBD. Make sure to visit them at sunnyskiescbd.com where you can get all the information you need about their brand and trying out their CBD products. If you want to get in touch, I'm going to leave everything you need in the show notes. So all the information is there. And also if you want to take them up on that free tour, make sure to get in contact with them and drop by their facility in Durand, Wisconsin. That's it for today. I hope you enjoyed this episode as much as I did. And until next time, this is Vadim, the CBD professor from cbdschool.com, signing off. Thanks for listening. Bye for now.

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