An Interview with Jake Berry of Pyramid
Throughout the United States, vape cartridges have become an increasingly popular product. There are numerous companies in the space creating solventless cartridges and we had a chance to sit down with Jake Berry, the CEO of Pyramid, a cannabis extraction company that’s been using PurePressure equipment for a while now. In this discussion, Jake shares how he made his way into the thriving extract market as well as some of his strategic tips for success.
Jake founded Pyramid in 2015 after working in the retail space and noticing a glaring lack of quality and branding in the Vape/Concentrate category. He made his mark on the Colorado cannabis market and in 2018 made his first expansion into a new market, Michigan. Facing the unprecedented challenges of COVID-19's new normal, Jake finalized the launch of Pyramid's Michigan expansion in 2020. Jake has continued success launching other brands under the Loud Labs umbrella which include Pyramid, Doinks, and his most recent innovative edible brand, Zoobies. With the rapid growth in the cannabis space, Pyramid is poised to move into additional markets throughout the United States.
Questions and Answers
Q: How did Pyramid get started?Jake Berry:
My business partner Coley Walsh and I started the company in 2015. At the time, we were both working as budtenders together and we saw a large gap in the market for vape pens. There were very limited options, and it was hard to find strain specificity, variety, or quality. At the time, O.Pen was really one of the only options available. Other beginning struggles we had were keeping products on the shelf to maintain happy customers because the vape market was just getting started.
We also noticed a lack of professionalism, so we wanted to help legitimize the industry in Colorado and we have seen a great deal of brand recognition. We wanted to move from the retail side of things to bring more respectability and get involved with the R&D side of things to eventually introduce new products.
Q: What states do you operate in, and why?JB:
Coley is from Colorado and I moved from Texas. It was the epicenter of the market and there was no way to get into the industry without being in Colorado. When it became recreationally legal in 2014, many brands decided to move to Colorado for the new opportunities. However, with so much competition right out of the gate it quickly became a race to the bottom. We are thankful that we survived the slaughter that happened here and now we are a part of what is currently a thriving, stable market. Colorado’s demand is healthy for both vapes and concentrates. The pattern that happened in Colorado set us up to move into additional states and we took a lot of lessons away from our early experiences.
What we could see from the data is that on a yearly basis you have an intense up and down swing as the market starts to mature and what you can really see is that the legal markets are stable for about 2 years and then they have a massive dip when more people get to the market which lasts for about 1-2 years. Right now, Colorado has stabilized while Michigan is in that first beginning stage where it’s still a very healthy market that is continuing to grow, and we have not seen a plateau yet.
We chose Michigan because of the way it is modeled. If you look at the landscape of the US and the currently legal cannabis states, a lot of them are not very friendly to independently owned businesses. Big business has come in and taken a lot of the little guys out. They have lobbied to change laws so there will not be truly “free” markets. In these types of markets, someone like us, an independently owned company, can’t enter, at least not on a level that makes much sense.
When looking into new markets, Pyramid as a company must look at what laws surround that market as well as population. When we started investigating Michigan, it was still medically legal but on the verge of turning to recreational. Based on the way Michigan was structuring their laws, we knew that they were very open for new businesses. They wanted to keep the existing caregiver model that’s been around for a long time. Unfettered corporate greed hasn’t completely settled into Michigan which was a huge part of our decision. The population of Michigan was another reason. Colorado has 5 million people and Michigan has 9 million people. With the success we saw in Colorado, we decided that Michigan’s population and likely demand could support our business there. Also, the licensing model in Michigan was more inviting for a smaller, independently owned company.
When we opened in Michigan, it was important to us that we staffed people that we have cultivated from humble beginnings. The Michigan operation is run by people that started with Pyramid in Colorado. Michigan’s expansion wouldn’t be possible without the funding from our Colorado operation. There are a lot of angles to consider when trying to expand. If you aren’t backed by tons of capital like some of the other big companies, you must be very strategic about the decisions your business makes.
We would love to eventually have a big presence in the Midwest as well. When it comes to acquiring operations in new states, geography is something to look at. Texas and California are going to be the two largest markets when federal legalization happens. That being said, we want to win over Texas by stepping into the Oklahoma market, which we are currently looking into as a shorter-term goal. Our long-term goals are to open in Texas, and potentially enter the Massachusetts market, where there is a higher income per capita, and people are likely to be seeking solventless.
Q: What are some of the biggest challenges you've faced being an owner of a business in cannabis?JB:
2020 was a challenging year for a lot of businesses. Manufacturing the hardware used in vape cartridges in the US is not very common as China is the main source for manufacturing. With the pandemic and lockdowns in China, there was a major supply chain disruption where our normal two week time frames were taking two months, or more. This created quite a few challenges for us. Creating strategic relationships with vendors is important and it's been a cornerstone to success during this turbulent time.
One of the other big challenges is interacting with various municipalities, where there is a pretty complicated process to bring concentrates to the market. In order to do hydrocarbon extraction in Colorado, we had to go to a board meeting and present our case as to why we should be able to do this, for example. Solventless is quite a bit easier to get approval for, so that’s a big part of the reason we do it as well. For a lot of new brands, it’s a good entry point to get themselves off the ground.
Q: Can you talk a little bit about the taxation aspect here?
Dispensaries get the short end of the stick as they cannot take any deductions whatsoever, whereas manufacturing and cultivation facilities can take a few deductions which certainly helps. The big issue that really affects us is the banking side of things though. You need a bank account to do almost anything and what you are seeing slowly here in the Colorado market is people have been starting to get away from cash. I remember having to drive down with bags of cash to go pay our taxes, but things are finally starting to change. We are able to take some deductions but nowhere near what any other business is able to do.
Q: Tell us about your solventless SKUs - what does Pyramid offer?
We started out with just solventless PAX pods which have been a killer item for us. We’ve had many dispensaries pick us up, especially ones with regular PAX customers. Our newest solventless product, the solventless disposable pens, have been a huge hit. Customers look at this as an entry level item to the solventless market. In Colorado, the solventless scene is gaining a lot of traction. However, a lot of vape smokers are smoking distillate and do not know about these other options that are available. A solventless disposable provides an entry level option with less milligrams available to them and it is all in one piece. That way customers can purchase this and experience what solventless is all about. For these customers, there is no need to go out and buy a dab rig or PAX battery, the product, and the way to consume it are all-in-one.
The next product we are hoping to start producing is grams of rosin, specifically for the Colorado market. However, that is a bit of a more involved process to get off the ground. We have currently been pushing our business along and are on a hiring spree for the past two months to keep up with demand.
Q: Why disposable pens?
There is a time and place for disposables. We want everything to be as environmentally friendly as possible and that can be tough in this industry with all the different kinds of packaging requirements out there. One of the key innovations in the disposable side of things has been the rechargeable aspect of it. Many people wonder “why recharge a disposable battery?” Well, it allows people to reuse these products. We do have refillable options for people who don’t want to buy a standard cartridge. The other thing that we must consider here is affordability for people. There are certain customers who don’t have the funds to access certain types of products through no fault of their own. Solventless is inherently a high quality product that demands a higher price point. We thought the disposable option was a great way to allow solventless to be available to a wider market.
There aren’t many customers that are going to be buying disposables as their main source of consumption, but it does allow customers to experience something and get into a market that they normally wouldn’t. It also gives customers a chance to try solventless products without fully committing to a rig or a more expensive vaporizer. Another thing to consider is how many tourists Colorado sees in a year. Disposable vape pens are much easier for people to get on board with compared to buying a gram of concentrate or raw flower. Products like these get customers who would normally be skeptical of cannabis into the market, and I think that is what we need to be looking at. I believe those benefits outweigh the negatives that could be involved with disposable vape pens.
Q: You have a relationship with PAX, what drew you to their technology?
PAX produces an unrivaled experience in the vape and communication world. They were a technology company first before they were ever a cannabis company. Incorporating technology into cannabis is starting to become a hot trend. I love being able to take my PAX pod, plug it into my vape, pull up the app and explore what strain I am smoking. One of my biggest complaints with 510 threaded cartridges is the lack of technology. You buy a cartridge that will last you about a week or sometimes more and you won’t have any idea what strain you are smoking on once you throw the packaging away. I have a drawer at home that is full of cartridges, all different types, all different strains, and I have no way of knowing what they are.
My favorite part of PAX’s newer technology is that you will always know what strain you are smoking by plugging the pod into your vape and opening their app. The newer PAX pods allow processors like us to post the specific strain identity on that pod and be able to look at the strain details plus testing results directly from the app. No one else in the cannabis space is doing this besides PAX. The hardware is great, the convenience aspects are nice, and the battery lasts a long time but for me, the information it provides to the consumer is unrivaled.
Q: What advice do you have for new cannabis entrepreneurs?
Do your due diligence - seriously. Have conversations and do research on the area you want to be in. You can't be afraid to say that a market doesn’t make sense for your business. I also think it is important to familiarize with the three different sectors of the business. Any cannabis entrepreneur needs to have a clear idea of what they want. Do they want to be an ancillary business? Do they want to provide transportation for their product? Do they want security for their product? Or do they want to be one of the big three? A processor, a dispensary (retail), or a grow facility?
"Figuring out what your goal is and then finding out what you need to do to be successful in each space is key."
You can look at Pyramid’s partnership with the National Hispanic Cannabis Council. I am on the board there and Pyramid is one of the founding members of that. We are looking at helping Hispanic individuals who are either trying to find a job in the industry or start their own cannabis business. Groups like us are trying to establish grant and mentorship programs where we can help these individuals get in the space and be successful. At the end of the day, it can be a tough industry to get into, it’s very capital intensive and can be tough to figure out what you want to do.
"I think some of the equipment you guys are coming out with is making solventless a lot more attainable for people to look into. The Axis trichome separator and the additions you are making to the Bruteless system is what we need to be using. There are many people that think they want to make hash but they start with a paddle and quickly realize how physical it is. I think the Axis is a game changing piece of equipment for this aspect of business."
We want to thank Jake for taking the time to do this interview with us. If you would like to find out more about Pyramid and their products, go to the Pyramid website or find them on Instagram @pyramidpensusa.