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James & Kevin

6.25.20

Colin Keeler - Payments Design Manager, Leaf Trade

357 Hemp Logistics – Partnership Spotlight Interview

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Our partnership: 357 Hemp Logistics has over 50 years of collective logistics experience and experts in the heavily regulated medical cannabis industry. They provide a private logistic service for high value and expedited shipments. Leaf Trade is the leading online ordering & fulfillment platform to manage and market wholesale cannabis & hemp. Together, we service the entire supply chain from seed-to-store.

 

To level-set our readers, can you provide your background and how you started 357 Hemp Logistics?

Prior to starting 357, I owned a medical device distribution company and then held various leadership roles at multi-state cannabis operators, PharmaCann and Verano. Both companies were vertically integrated operating in highly regulated markets which gave me a deep appreciation for compliance. Specifically – transporting traceable products on manifests from our cultivation centers to our retail partners locations. These skill sets allowed me to identify a huge hole in the logistics component of the hemp supply chain. 

 

My business partner and I met through our wives — his wife was my daughter’s preschool teacher at the time — and quickly recognized our complementary backgrounds. We were both ready to start our own company, but also saw a variety of issues we and our future customers would face. How should we handle the complexities of interstate distribution? Could we get a guarantee for our partners in hemp cargo insurance? We ultimately wanted to be in this not to just move freight, but to be a true partner to companies looking to transport hemp. 

 

Now we’re executing on that vision. We’ve got hemp cargo insurance covering up to $1 million with no underwriting. You name it, we touch those components up and down the supply chain. 

 

What was that “Aha!” moment when you saw your future customers’ needs and felt compelled to execute on them?

Again and again, I saw folks not worrying about their logistics until the last moment — really, until it was too late. Companies were running substantial tabs to ship cross country. Others really didn’t know the rules, so they were in the grey part of the law, where they thought they were legit, but might be at risk.

 

The industry needed a trusted partner to move their freight — someone who knew the complexities and regulations of the market to tell them the whole story, not just what they wanted to hear in the moment.

 

Tell us more about how 357 Hemp Logistics operates. What does a partnership with a customer look like? 

When we first started, everything was very immediate. Our customer would have something to ship and it would be ready at that moment. Things would be a fire drill — was the certificate of analysis compliant? How was the hemp stored? What do all the logistical components look like?

 

Now, those relationships are starting to develop earlier on. We’re not someone you just call at the last minute to ship a load — although we do still do some of that! We’re dialoguing with customers to get them into our system and quoting phantom loads to give them an understanding of our rates. This allows them to start to understand the logistics costs to structure their deals appropriately. 

 

“When we say partners, we mean it we’re almost consultants in how we help customers. Whether mapping out their shipping or connecting them to other vendors, like Leaf Trade or a drying company, we’re trying to really solve their other needs.”

 

Is the hemp marketplace typically fairly regional, or truly interstate? How do the varying legal and regulatory rules affect that?

There’s a significant amount of hemp that travels at the local level. To those farmers, we might be less of interest — they typically have a few trucks for things going out locally. At a national level, you really see the usual suspect states — Florida, Tennessee, Kentucky, North Carolina, Oregon, California, Colorado. If you’re going out-of-state, we’ve built a great competency — we’ve transported in all parts of the country through at least 25 states in the past year. 

 

There’s still so many challenges farmers and companies are facing. “Hot” product that’s over the THC limit might need to sit while rules are being clarified. Buyers can be inconsistent, especially for biomass — I think 30-40% of crops planted sit out in the field, never harvested.

 

For 357, we’re trying to get ahead of these things by meeting with the states on an individual level. So many states are flying blind trying to come up with policies — given that we’ve worked with all these other states, we can be an ally to bounce things off as they’re developing their policies. 

 

To have a sustainable and scalable industry, you need to play by the rules. Set your drivers up for success by making sure they understand the rules of the state and have the proper documentation and QR codes. You will be pulled over, so you better have your ducks in a row — on the first load we ever moved, the driver was pulled over! It’s no laughing matter — innocently believing your shipment was compliant won’t stop you from waking up with drug trafficking charges if you haven’t confirmed.

 

What are some of the greatest opportunities and challenges for businesses such as yours (and Leaf Trade) in this space? 

There’s huge bottlenecks in the industry. One of the bigger issues, for example, is remediation — how to get a product back below the THC content threshold through further processing. Right now, it’s really unclear when you can ship to another processor to lower THC content, even if it’s another licensed processor. If it’s going across state lines, it’s a total no-go for 357. These issues around remediation are a huge bottleneck to the growth of an industry that’s supposed to be federally legal.

 

“Some farmers are chasing the shiny ball, thinking they could pay off all their debt growing CBD. It’s folks who built their business blocking and tackling, but saw CBD and decided to run the spread offense.”

 

We are ready for what’s coming, but it’s partially a question of who we’ll be working with. The landscape of buyers and sellers is always shifting. Last year was tough for a lot of farmers and processors, so the question becomes, “Who is going to come back this year?” 

 

COVID-19 has only complicated things more on that front. So, we expect 2021 to be the first year that’s really consistent and sorted out. In the meantime, we’ve launched a new distribution division called 357 Marketplace that offers commercial disinfectants and other products like bulk bags for farmers to help navigate the crisis and help our partners with procurement.

 

What are you most excited about with your partnership with Leaf Trade?

In an industry like hemp, it’s always people that are the basis for a great partnership. I like having good people around me, both in my personal and business life. In today’s hemp market, you want to align with companies that are going to perform and last.

 

I know the Leaf Trade team are not only people of integrity, but also experts in what they do. We want to be known as the transportation experts. Whomever we partner with or refer our customers to need to live up to that expert designation as well. 

 

Past all these factors, it just made sense to team up. Together, we can tackle all aspects of transacting and moving hemp — Leaf Trade covers ordering, fulfillment, and payment, while we actually get the product where it needs to go. I’m hopeful we can really simplify things for our customers and help the industry get out of its own way!