Ceres infusion kitchen manager Amy Bacon puts the finishing touches on strawberry gummies bound for the organization’s stores. Courtesy photo.
by Bruce Edwards, Vermont Business Magazine Shayne Lynn is at the forefront of one of the most sought after medicinal products to come along in quite a while: CBD.
That’s short for cannabidiol – a non-intoxicating cannabis extract made from hemp used to treat a variety of medical issues.
Lynn is executive director of Ceres Natural Remedies, which sells 50 brands of CBD products, including its own brand, at its stores in Burlington, Middlebury and at a drive-through location in Brattleboro.
Photo: Ceres products. Courtesy photo.
There are people who swear by the relief CBD products offer for various ailments. But Lynn said more importantly the store allows him and his staff to talk to people.
“For us Ceres Natural Remedies was a real opportunity to be in our community with an open door and to be able to talk to people about … what’s the difference between cannabis and hemp,” he said. “What’s the difference between THC and CBD?”
Lynn said part of the company’s brand and mission is “really to educate people and kind of share the knowledge we’ve gained over the past six years. How do we give that back to the community?”
With the 2018 Farm Bill, labeling requirements are of paramount importance so consumers know exactly what they’re buying and “not making claims that are medical in nature,” he said.
CBD is made from hemp which comes from the marijuana plant. While marijuana contains the psychoactive component, THC, the hemp used in CBD must have a federal THC level at or below 0.3 percent.
The company is expanding into the CBD-infused beverage market with the recent acquisition of Tretap, a maker of organic maple sugar water.
The 2018 Farm Bill delisted hemp as a controlled substance. It follows a pilot program in the 2014 Farm Bill that allows states to regulate hemp cultivation and sales provided certain rules were followed. Federal and state rules covering the 2018 bill have yet to be written.
“We’re just very mindful and hoping that the Ag Department comes out with rules and regulations to govern the growing, processing and selling of hemp in Vermont because that’s going to be required by the USDA and the FDA,” Lynn said.
He said it’s in the state’s best interest to come up with regulations that protect the Vermont brand.
Ceres is a vertically integrated CBD company, cultivating, processing, extracting, manufacturing and selling its own products.
The company sells CBD products that are completely THC-free while its other products contain trace amounts but below the 0.3 percent level, Lynn said.
That’s where the accuracy of labeling comes in. Lynn said someone taking CBD with trace amounts of THC (classified as hemp) and is drug tested at work would test positive and lose their job.
People are using CBD for a variety of health issues from epileptic seizures and arthritis to anxiety and sleeplessness.
There are several consumption methods including topical, transdermal patches, tincture, edibles, beverage and vape pens.
Many CBD customers swear by the effectiveness of the product. But Lynn said it doesn’t work for everyone.
Competition is becoming more intense as players rush to get a slice of the market. Lynn said it’s not only domestic producers with an eye on the CBD market but foreign competition.
“China is starting to ramp up in the hemp world,” he said.
The stores in Burlington and Brattleboro are dealing with a different kind of competition: home grown marijuana that was legalized in July of last year.
Staring in the fall, Lynn said sales declined upwards of 20 percent.
The Brattleboro and Middlebury Ceres locations have adjacent medical cannabis dispensaries. The Burlington Ceres store is located at 190 College Street and has no dispensary nearby. The Burlington dispensary is located across town on Steele Street.
“I spoke to the state Department of Public Safety probably about a month ago and we had a high of about 5,600 patients on the registry. We’re down to 5,300,” he said.
He said it’s the first year the number of medical marijuana patients on the state registry had declined. Ceres is a standalone CBD store and not licensed under the medical program.
Lynn pointed out it is less expensive to grow your own than buy from a dispensary.
If the state moves forward with a tax and regulate marijuana market, Lynn said their plan is to enter the retail marijuana trade, which would be more cost effective.
“We’re hopeful that we’ll have that opportunity because it will really allow us to work on a scale that is different then we currently operate on,” he said.
Financing a cannabis or hemp business isn’t easy. Traditional loans are impossible to come by.
Just opening a bank account can be challenging, according to Lynn.
The company shopped around for a financial institution that wouldn’t get cold feet and found VSECU.
“They’ve been really great,” he said. “They continue to offer us services but they recently upped our fee to 2 percent whatever goes through our account.”
The fee can take its toll as does an audit every other year “that runs tens of thousands of dollars as well,” he said. The 2 percent fee on their account is a maximum fee. The fee is incremental.
Even with a checking account, Lynn said loans are still off limits because of the business he’s engaged in.
“Any small business needs access to capital,” he said. “It’s been our hardest mountain to climb is to find capital at a reasonable rate.”
Lynn said it’s meant raising money from about 30 family and friends.
“At this point we’ve been strategically trying to find the right partner to get us through this next growth phase,” he said.
Bruce Edwards is a freelance writer from Rutland.