Caleb Counts Details Connected's $3.5 Million R&D Breeding Program and Best-in-Class Genetics

Caleb Counts Details Connected's $3.5 Million R&D Breeding Program and Best-in-Class Genetics That Continues to Deliver Hitters

Caleb Counts: We had the benefit of the doubt from the consumer base, but now it's a totally different landscape. It's insanely competitive. Everyone's breeding, everyone's crossing, there's amazing genetics all over the place. But it's what do you do with them, how do you pick them out, and then how do you think about the next evolution of what the market might want. Bryan Fields: What's up guys, welcome back to another episode of The Dime. I'm Bryan Fields, with me as always is Kellan Finney, and this week we've got a very special guest, Caleb Counts of Connected Cannabis. Caleb, thanks for taking the time, how are you doing today? Caleb Counts: I'm excellent, and I really appreciate the opportunity to be here. Thanks for having me on. Bryan Fields: Excited to have you here. Kellan, how are you doing? Kellan Finney: I'm doing really well, really excited to talk to Caleb and dive into West Coast cannabis. I think that kind of speaks in terms of his loyalty, West versus East Coast. I know there's some bleeding of West Coast brands into the East Coast that we're going to talk about, but we'll leave that for later in the conversation. How are you doing, Bryan? Bryan Fields: Yeah, I'm stoked. I think there's a lot of information we're going to learn today — maybe some history we can quickly touch on and then dive into some of the fun aspects of Connected, and probably a lot of other brands are chasing to figure out how they can associate themselves in that same upper tier that Connected is in. So Caleb, quickly, can we get a little background about yourself and then Connected? Caleb Counts: Yeah, so born and raised in California. I sold my first bag of weed when I was 12, and really didn't stop all the way through college until I took a job in another industry, in real estate, to see what legitimate money looks like. That was 2003, fresh out of college. Did that for five years. After the market crashed, I saw an opportunity to get into the legal cannabis market. After going into my first dispensary in Sacramento and seeing all the ways they weren't running a business but were still cranking through patients — I call them patients because it was medical at that time — within six months of that first experience in Sacramento, I opened up my first shop, Fruitridge Health and Wellness Collective. Bryan Fields: I love it. So we'll dive quickly through some of the history and then come to the current cookies, Berner, biscotti — can you take us through how that relationship started and how it led to Biscotti? Caleb Counts: So it was late 2013. Me and my partners were at a High Times event in San Bernardino, and Berner had a booth at the back — one of the small booths at the back of the High Times event. My partner said, "Hey, let's go talk to him, let's see what's up, see if he'd be willing to license the name Cookies." Berner was like, "Let's crack it off." The first day we launched, Berner made a post online and our sales doubled, and our sales essentially doubled for the next 17 days — it was insane, just boom, boom, boom. We went from decent revenue at the time to unbelievable traffic through our doors. It was at that time we truly realized the power of branding flower, because there wasn't a lot of branded flower at that time, hardly any. That's really where the magic began. Fast forward through that relationship, Berner connected us with the creators of Girl Scout Cookies, and then Sunset Sherbet and the Gelatos — we licensed those. Working through those and seeing that success, we realized we were fully immersed in what we'd refer to as a hype market, and when you're hype, you've got to have that next hype thing. So we embarked on our first breeding mission. We went through the breeding process with Gelato and some other various crosses to cross with, and out came RC 11, 14, 25, 27, and 28 — RC standing for "red cup," because back then you used to plant seeds, nothing too crazy there. We realized we had something unique, so we reached out to Berner and said, "We don't have the credibility to launch something like this, but we think we have something special here." Berner helped us select those four phenos, and we needed a name. He had it ready — he said, "Biscotti, man, Biscotti." I said, "I don't know, I'm just not a personal fan of the dry, flavorless cookie — no disrespect to the Italians, it just sucks all the moisture out of your mouth." But who was I to say, I'm not the marketing expert, I run the business behind the scenes. Come to find out, it rhymes really well, and that was part of how he came up with it. He's the master, the original OG cannabis marketer, so we let him run with it. We paid him a hefty fee to claim he created it, which in hindsight — was that the right move? We gave the credit for one of the most legendary strains to ever hit the market to Berner, but to this day, my understanding is Biscotti has more mentions in music than any other strain, and it's still getting mentioned today, so I think we made the right move. It's taken years to clear up and get the story straight, but it was all worth it. Bryan Fields: Was there any other names considered internally, and how quickly after you heard that name did it pop off? Was it instant, or a couple weeks later — was there a moment where you thought, "You know what, we're not going with that"? Caleb Counts: I'm the business guy — it was my partner who was heavy on the marketing side, and of course we were working with Berner, so I wasn't about to throw any strain names in the ring, that's not my specialty, especially since I was questioning the name Biscotti to begin with, and clearly I was completely off base, look at the history. So I don't remember any other names at this point — Berner had clearly already come up with it, worked with it, put it into rhymes, and he had such confidence when he delivered it that there wasn't much discussion beyond that, and it continued along the line of the Italian dessert theme from the Cookies family. So it worked, though it didn't roll out as fast as I expected. I'm the impatient business-operations guy — I'm like, come on guys, we're growing a lot of it, you put something in rotation at the grow, you're making cuts, and you don't bring it to market for five months later. It slowly started, people were trying it out, but when I got a call from our delivery service — this was about three months into the market — the delivery guy, one of our smaller accounts but a cool dude, Metro Blooming, still cranking to this day, called and said, "I need everything you have of Biscotti." I said, "Whoa, you don't just jump from three to fifteen or twenty pounds." He said, "The Migos." I said, "Dem Migos?" He said, "They're buying everything they can get, four grand a pop." I told my partners, they said, "Hell yes, send him everything." That resulted in me meeting with them, they put it in songs, and it was a surreal experience — Biscotti has taken on a life of its own since then. Kellan Finney: So you guys were responsible for a lot of the R&D and breeding that led to Biscotti — that must have hyped up your whole R&D team about the next phase of your breeding program. Did you guys just light that thing on fire and start pouring gasoline on it? Caleb Counts: I appreciate the fact that you think we had an R&D team — our R&D team at that time was one of the growers who spent a lot of time on the forums and knew how to do the pollen thing, so yes, he emerged as our breeder and our R&D team. What we're doing from an R&D perspective today compared to then is night and day, but R&D has been in our DNA since the first time we popped up a grow. I didn't know how to grow — I tapped one of the guys who'd been selling to me for years before I opened the dispensary, going back to 2001. I said, "You willing to teach us for a piece of the action?" We dedicated half the facility to his technique and half to R&D — I didn't tell anyone I was dedicating the other half to R&D, they were like, "What are you doing, we've got to make money here." I said, "I have to try everything I've seen." We tried deep water culture, giant trees, rock wool, and ironically the technique we use today — small pots, coco — is basically exactly what he taught us, with little tweaks along the way. After we bred Biscotti, we immediately launched into a full Gelato 41 breeding program and crossed it to everything we had that we thought was worthwhile. Beyond Biscotti and Gushers, our first launch was about 25 different crosses, and our R&D team of one, plus me and my partner looking through stuff, helped pick what launched Gelonade, Baklava, Area 41 on the Alien Labs side. We're still producing those strains today. It was a combination of luck, the emergence of our team as taste-makers, and really good genetics — Gelato 41 has been one of the best parents in the history of cannabis. We've never stopped. Today we have over 6,000 unique living plant genetics, over 150,000 seeds in our seed bank, and our R&D team has developed proprietary cultivation techniques that others have taken on into the industry, plus some secrets that haven't even been let out yet. Bryan Fields: Is that a deep-rooted understanding of experimentation? Take us through how a breeding program actually works and what you're really looking for. Caleb Counts: In our first breeding program, a lot of people, myself included, historically thought you needed a male and a female. It wasn't easy to get males — you could buy seeds, but how do you know what's a good male since it doesn't express much? The idea of reversing a female to cause herself to pollinate was getting popularized online, and that's the technique we've largely used for all our breeding. We have an intense pollen donor collection program — hundreds of genetic pollen varieties kept in a very specific type of storage, ready to be brushed onto females at any time. When you reverse a female to force male flowers and pollen, almost all the resulting seeds will be female, which cuts your work and space in half — a much more efficient way to breed. Some people argue breeding with true males is a whole other level, but our success has entirely been based on reversing females. You have to have vision — early on we didn't have a whole lot of it, we were like, "We've got something really good, let's spray this pollen on everything and see what comes out." We had a lot of brand credibility at that point, so we could launch a lot of things and had the benefit of the doubt from consumers. Now it's a totally different, insanely competitive landscape — everyone's breeding, everyone's crossing, there's amazing genetics everywhere, but it's about what you do with them, how you pick them out, and how you think about the next evolution of what the market wants. The Connected that got us to that first breeding program is not the Connected we are today — we're way past the construction guys turned growers. We have PhD scientists from Cornell, we have Ian Justice, our SVP of Cultivation, formerly from Driscoll's, whose genetics program is one of the most advanced and successful in the world. They bring their expertise, and Ted and I bring our understanding of the market, and that combination shapes what pollen and crosses we want to make and what we're looking for in the phenotypes — or chemotypes, I guess, still confusing to me. That combination is unique and hard to find, and then you need the platform to launch off of, which we've spent 15 years developing. We've put out a bunch of stuff that hasn't been successful, but you've got to be willing to take that risk, or you're just waiting for other people to create something cool and taking what they have, which means you're never unique. We're leading the pack, proud to do it, and there's no end in sight for us. Kellan Finney: And then you have to take a name to pair with all of that hard work, and that's what the consumer bases their purchasing decision on. Is naming one person's job, or a group effort — do you have a name bank of good characteristics, or is it custom each time? Caleb Counts: It's pretty custom each time. It's done similarly between Alien Labs and Connected, but I lead the Connected side. We'll have a naming session, a brainstorming session, people throw out names — it used to be everyone in the room was quiet and I was throwing out names, and people would say, "That's a good one." I said, "Guys, I don't want it to be just me, come to the table, throw stuff on the wall, we'll see what sticks." I like to Google it first to make sure no one else has taken it, but also to see what associations come up, do synonym searches, try to find innuendos in the names, or come up with something that sounds cool. Then there's a graphic element for the label design — it can be burdensome, but it's also one of the most fun parts of the product. Kellan Finney: I can see the origin from the first days when you split it 50/50 and had that experimentation mindset right away — pushing the envelope, putting yourself in uncomfortable positions. Caleb Counts: Look, there's a lot of people throughout the industry using a technique or genetic from someone else, and there's nothing wrong with that, that's a model that works — but you're subject to someone else's lunch, you're waiting for someone else to finish so you can come over. I'm not into that, I want to play a part in our own destiny. R&D is one of the most difficult, frustrating, expensive, and time-consuming parts of what we do — we spend over three and a half million dollars a year in R&D and breeding, and you're not expected to monetize it for several years. What's on the desk today won't have a chance at being a commercial product for up to two or three years. Our Sativa Revival program kicked off four and a half years ago, and we're just launching stuff from it today. That space could have gone into growing more Biscotti and making more money, but we're planning for the future. We think we have one of the most extensive and diversified genetic databases in cannabis — but is it proven, is it making money, is anyone rapping about it? You can say that about a lot of our work. Kellan Finney: Is it a difficult balance, understanding you've allocated resources, time, and capital for years, but it has to fit a specific vision and quality bar? Caleb Counts: Absolutely, and thank God for Ted — he has way more patience. He's willing to say no at the eleventh hour after all the work, and I'm learning that. Before I was CEO, I was just the business ops guy responsible for moving this giant train down the tracks while we're building the tracks, and sometimes I've been guilty of putting stuff out that wasn't ready for prime time, and the market responded. We've been working on the right OG for quite some time, launched some that just didn't hit, and the market responded. Ted has intense patience for that, and I'm chomping at the bit. OG is still one of my favorite strains and families, and it's one of the few that hasn't advanced in terms of what people expect in that jar since the late 1990s or early 2000s — it should smell like you spilled diesel on your hands. It's a challenge because OG likes a certain type of treatment in the room, and at the scale and volume we're growing, with the number of strains we have commercially available, we don't have the luxury of one room with a special treatment. OG is temperamental — you can get really good OG, but does it yield? No. So it has to have a decent yield and the smell has to bang through. We're really close — we're about to launch Ghost OG and we think it checks all the boxes. Kellan Finney: OG has such a unique nose you can pick it out of a dozen bags. How do you mitigate the brand association when a strain launch doesn't hit standards? Walk us through taking in consumer feedback. Caleb Counts: Consumer feedback is a super critical component of getting to where we are. Anytime we think we've made it, we're untouchable, we get a tap on the shoulder reminding us that's not the case. We've gotten so much better at listening — nowadays we sometimes put multiple unique phenotypes from a cross into a box and let the consumer decide between four, like we just did with the Jackbox, where we had four different Jack phenos, and the one that was my favorite didn't win, but the consumers speak and that's what matters. I want my vision expressed through the genetics, but I want consumers to get what they want. When something doesn't hit, we listen, we act quickly, discount it with the retailer to move it out or pull it off the shelf, and move on. We've built credibility, and the consumer base is extremely loyal and forgiving as long as we're responsive — they want to keep seeing us take chances, because they know for every one that doesn't hit, we've got five coming that are bangers. Bryan Fields: That trust and authenticity you've built with the consumer base — it's exciting for consumers to try something new. I don't know how many other CPG categories give people that experience. Caleb Counts: Cannabis is unlike any other business — trust me, I wish it were, because then there'd be a playbook, a roadmap, and people from other industries could hit the ground running. It's not like that in cannabis, but the good part is the culture has emerged so deeply that consumers have a real voice, and brands have chosen to listen to it — now we're taking it further and interacting with that voice directly. Our QR code program, our Phase One or Top Secret line on the Alien Labs side, is stuff that's made it far enough in our breeding program that it's time to see what the consumer thinks — we'll sell or give away a few hundred or a couple thousand jars of something we're considering commercializing and get great data. We've built what we call our Sensory Network — a variety of taste-makers we work closely with who see everything on the verge of coming out, and then a broader consumer group made up of bud tenders, buyers, and loyal customers. It's proven really beneficial — people have a say in what gets launched from their favorite brands, and the power behind that is unmatched. Kellan Finney: Is there a strain you recently launched, or one upcoming, that you're super excited about and confident is going to hit? Caleb Counts: Tropical Z is the first Sativa Revival strain that came out — bright, floral, like if you took only the orange Skittle out of a bag of Skittles and chewed it, that's what you taste and smell. I've got three kids, weekends aren't for sitting around and chilling, I'm moving from the time I get up to the time I go to bed. I can't do that on Biscotti and Gelato — that's my nighttime stuff now. I need the daytime Tropical Z. Then Silver Spoon came out right after — a Super Silver Haze hybrid with modern structure, light purple hues, but that punch-you-in-the-face Super Silver Haze flavor and smell. It lets you smoke all day without needing three cheeseburgers and two naps. Kellan Finney: Where did the idea for Sativa Revival originally stem from? Caleb Counts: It goes back to when I opened Fruitridge Health and Wellness in 2009 — I was bud tending, listening to everyone, and all these genetics were new to me even though I'd moved a lot of weed, just a narrow number of strains. I listened to why people liked things — Blue Dream blew up then, Jack Herer went crazy, Super Silver Haze was still having its heyday, before the purple, gelato-flavor phenomenon that we helped kick off with Cookies and then Connected. After years entrenched in that, I realized everyone had forgotten about sativas — they tended to yield well too, so everyone overgrew them and no one wanted them anymore. I thought, that's not right, you don't leave bell bottoms in the 70s forever, you bring them back, make them fashionable again with different fabric on a different model. That's what we're doing with sativas — breeding them with modern genetics to make them more commercially viable in the grow room and in the jar, while keeping the look, smell, and effects people remember, just in a more digestible modern form factor. Sativa is beautiful, cerebral, creative, uplifting, and there's a huge place for it in the market. Kellan Finney: So really it's 15 years of R&D and early consumer feedback, not just four and a half years. Caleb Counts: Right. I also did a segment with a friend, Olivia from Kush Queen, on sex and sativas — I'd noticed a trend of people choosing certain strains for certain activities long before that became common. A ton of women were asking for Blue Dream specifically, and a former employee told me it elevated her sexual experience in a way that was hard to reach otherwise. I started noticing my partner gravitating toward sativas too, and realized we'd historically targeted a hardcore male user, 18 to 35 — 18 was the legal medical age in California, still is — and I thought, we can't forget about the ladies, all our plants are ladies, we've got to do something for them too. There's a nod in there to my wife, who's from Costa Rica and knew nothing about sativas until I started bringing Jacks into the bedroom — now she only wants that. Bryan Fields: How do you balance brand identity for the consumer as you try to open up new pathways to new consumer segments? Caleb Counts: It's an extremely hard thing to do and painful when you start, because people expect a certain thing from you. I'm a big fan of Joe Rogan, and his advice was don't read the comments — when you put out something that's not traditionally expected from Connected, people say get off the stage, this is crap. It's hard to read, but you can't put weight behind the haters, you've got to go with your heart. Now the market's opening up, we're getting a ton of new consumers entering or re-entering the space — Baby Boomers are coming back, and sativa was pretty much all that was ever available when they smoked before, they just didn't know it. That consumer group isn't influenced by the old Prop 215 cannabis culture, they want what's right for them. Stepping out of the lane we were known for was brutal — I got questioned a ton internally, my partner said, "I don't know, man." You have to be willing to stand up to naysayers and take a risk. All my other risks in life involved life, death, or potential prison time — this is a business risk, and it's paying off. Bryan Fields: How important do you think brands are in the space moving forward? Caleb Counts: It's a dynamic topic — there are two main groups, those who believe in brands and those who believe brands aren't as important, and that second group is made up largely of some MSOs. I think time will tell, but there are a lot of indicators leaning toward brands mattering. Step outside cannabis and show me another industry where there's not a significant distinction between major brands commanding a premium price above the competition — it's in every CPG category. California cannabis culture has driven this entire industry — I get sent pictures from Manhattan and other spots with Alien Labs and Connected neon signs in pop-up shops that we had no part in opening, someone counterfeited our logo to put it on a sign. You mean to tell me brands don't matter, all the way across the country, in a place where I've never sold one gram of cannabis myself? I don't buy it. I can see how in limited-license markets, where people are selling out no matter what the product looks or smells like, brands might seem not to matter short-term, but I don't buy that they won't matter significantly in the long run — that's the bet we've made. Bryan Fields: Early on I ask friends who've only bought from a dealer before how they choose in a dispensary now that there's a bunch of choices — it's largely brand, packaging, name, or the bud tender's recommendation, and that's where your team has continued to deliver. Caleb Counts: You touched on a good point — new consumers who've never heard of any brands rely on packaging or the bud tender, and you don't become a bud tender without a little knowledge, it's a fun, cool job where you interact with great personalities. We actually did a little experiment where we sat outside our dispensary for about an hour and a half and watched people's body language and expressions coming in versus coming out — almost every time there was a shift, a frown turning into a smile, a different pep in their step. Being a bud tender is a critical role because new consumers trust them, and there's no school for it, so it comes from experience. They want to recommend something consistent, that'll be there tomorrow and a year from now, or they risk losing credibility with their customers. Being a brand a bud tender feels confident recommending is a big deal, so we spend a lot of time educating bud tenders, getting them to try our new flavors, and engaging with them to understand why they recommend what they recommend. The fact that we started in retail gave us a unique lens — I bud tended hundreds of hours, managed the store floor for hundreds if not thousands of hours, and that parlayed directly into the brand building we focus on today. Bryan Fields: There's also a macro wave of branding across all CPG — even lettuce and eggs now tell you the farm they came from. Cannabis is just one piece of that larger movement. Caleb Counts: That's a super interesting point — that's a relatively new thing in agriculture broadly. Tell me a high-end restaurant nowadays that doesn't tell you where the lettuce, pork, or eggs are from — it causes a reaction. I live in California, where Connected is based, and we're the farm-to-fork capital of the state, maybe the country, so I've drawn inspiration from that. I want to be known as the absolute best cannabis brand, not just because it gets you high or has cool labels, but because people know the story — I now know the story of some of those agricultural products because I paid attention, and I like the message they send. We are, and will continue to be, that brand for cannabis. Bryan Fields: Let's do a quick rapid fire. True or false: construction workers make great growers. Caleb Counts: True. Those guys get up early, work hard in challenging environments, and given the chance to use their hands in an indoor, controlled-climate environment, they're stoked and work their asses off — instead of picking up a sack on the way home, it's already plugged in. Very true. Bryan Fields: All-time favorite strain? Caleb Counts: Most underrated strain — Blue Dream. Bryan Fields: What does no one know about Caleb? Caleb Counts: I collect handmade kitchen knives. Bryan Fields: True or false, Taco Bell laid the groundwork for Connected. Caleb Counts: True — me and my partner both worked there at age 14. Bryan Fields: What's the most expensive lesson you've ever learned? Caleb Counts: Wow, not ready for that one. There's so many — I got in a fight in college that's on my record, and I've had to explain my way through everything since then. That was 2001, and I carry that with me today. Bryan Fields: Dream smoking session, three people, dead or alive? Caleb Counts: Louis Armstrong, Billie Holiday, and Jimi Hendrix. Bryan Fields: What question do you wish more people asked you? Caleb Counts: What do you do in your spare time? I love to cook, and I love to just chill hard with my three kids, I do my best. Bryan Fields: Last question, Caleb — biggest underrated challenge for brands to travel in cannabis? Caleb Counts: Quality assurance, 100%. You can get your product in front of people, but ensuring that quality three thousand miles away is extremely difficult — take it from people who've been working at it and are continually working at it today. Bryan Fields: Kellan, what do you think the hardest part is for a brand to travel? Kellan Finney: I'd say consistency. Growing in Nevada is much different than growing in Florida — even with environmental controls, your HVAC and dehumidifiers cost more in Florida, curing is affected, and all those nuances in your SOPs affect what the cannabis looks like on the shelf. If you can't mitigate all of that, it's really challenging to have the same bud in Nevada as in Florida when they're grown under different conditions in different facilities. What do you think, Bryan? Bryan Fields: I think going from small scale to large scale, people underappreciate the challenge — the plant is extremely difficult to grow in certain conditions, and extrapolating that across different locations makes it more complicated. The marketing aspect is even more challenging too — a lot of people are familiar with Connected but might get their first experience somewhere that isn't up to the same quality Caleb envisioned, and there's a lot of room for failure there. It's commendable what your team has been able to do, continuing to push the bar and let everyone else chase you, because not a lot of people are willing to put themselves on the line like that on a regular basis. So I tip my hat to you. Caleb Counts: Thanks, guys. Bryan Fields: Last question — where can people find you if they want to get in touch? Caleb Counts: My personal Instagram is Counts, and I also pay attention to the Connected.California Instagram. I don't live, eat, and breathe on social media, so it might take me a minute, but that's where I'm at. Bryan Fields: We'll link it all in the show notes. Thanks for taking the time, this was a lot of fun. Caleb Counts: Thanks, guys.