If You Like Flavors, Come to Traders ft. Founders of Trade Roots

If You Like Flavors, Come to Traders ft. Founders of Trade Roots

Founders of Trade Roots (Carl Giannone): You could be self-sustaining if you had to be, so you're not really relying on any one company or any one aspect of the industry in the supply chain to operate your company. If you're a standalone retailer, you need to buy product, so you're relying on the people who produce that product — you can't control the price of it. 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 — Carl Giannone and Jesse Pitts, founders of Trade Roots. Gentlemen, thanks for taking the time, how are you doing today? Founders of Trade Roots: Hey guys, great, thanks for having us. Bryan Fields: It's good to see you, Kellan — how are you doing? Kellan Finney: I'm doing really well, really excited to talk to both of these two and dive into the boutique operation they're running out in Massachusetts, and some of the strengths that come from how they're operating their business model out there. How are you doing, Bryan? Bryan Fields: Yeah, I'm stoked — I think this is another perspective from one of my favorite East Coast operators, one that gets a lot of love and one I think is going to be a lot more popular as time goes on. So gents, before we dive in, we've got a little East Coast/West Coast battle — I know I already put that on the map, but I had to hear it for the record: East or West? Founders of Trade Roots: I think you need both, honestly. There are tons of good strains out there, and that's something we actually want to talk about — how we're trying to integrate West Coast strains into our gardens because customers demand it. Once they go out West and try those candy strains, they demand them here too, so it's an interesting transition happening right now. When we first started we wanted to be very local — we brought in local strains and local breeders and wanted to give them credit. Now we're at the point of integrating the garden and pulling in West Coast genetics too, which is exciting for us. Bryan Fields: I love it. Let's take it backwards — how did you get into cannabis? Carl, you want to start, and then we'll dive into Jesse? Carl Giannone: I actually think it makes more sense chronologically for Jesse to start. Bryan Fields: My favorite question is always — what did you do before cannabis? Jesse Pitts: I think it was seventh grade — it's always been there. I was selling cannabis as a youth because I enjoyed it and couldn't afford it, so it was an easy way to get what I wanted, and it spiraled from there. At UMass Amherst I swore I wasn't going to keep doing it, I was going to study and get my degree — but college is expensive too, so I figured this was shooting fish in a barrel. I started with a group in my dorm and it snowballed into something much larger — we were bringing product in from Montreal, back in the BC days, and moving hundreds of pounds a week all over the East Coast while still in college. It continued after graduation because we'd built a real business, and for me there were rules and codes — I believed cannabis prohibition was a man-made law we'd eventually overcome. That path wound me up in jail — I got arrested with 70 pounds and about a quarter-million dollars in cash in Norton, did an 18-month sentence in Plymouth County, nine inside and nine out on a bracelet. I went on to start a medical company with college friends, which got swallowed by a larger company, and then the Department of Public Health announced that anyone with a cannabis record couldn't even be an employee at a medical company, let alone an owner — so I had to walk away and just wait for adult-use to open up. When the social equity program rolled out, it blew my mind — instead of being excluded, I actually had a leg up. We started building the business plan, doing test-kitchen extraction work outside — I took extraction courses with Havik Associates, which created the H-Booth in Colorado, came back east, ordered a closed-loop hydrocarbon extractor, turned my construction trailer into an extraction lab, and was toll-processing product for friends growing their twelve plants outdoors before anyone on the East Coast even knew that was a thing. That eventually led to meeting Carl — we ended up on a farm out in Oregon, and I looked at everything they'd built and said, why don't we just move this farm to Wareham? He said, what the hell is Wareham? That's how Trade Roots started. I approached my hometown first since I'm third-generation local there, laid out the plan, and they were into it. The Town of Wareham was fantastic throughout — we were learning the process together, and even though it was difficult with everyone wanting to weigh in, especially around conservation, the town was great. We started the company in the fall of '17 and were up and running by '21. Bryan Fields: Carl, what were you doing prior to cannabis, and how long had you known Jesse before deciding to link up and start Trade Roots? Carl Giannone: I'll fully admit, up until 2017 I thought this was a business for criminals and children. I was a buy-side trader in Manhattan — never sold anything, my job was making piles of money bigger, early Canadian RTO stuff back in 2013, a lot of nonsense. I also thought medical cannabis was just for glaucoma, intraocular pressure, nausea — but from a business standpoint I didn't get it. When we got back from Oregon, we learned my mom, who we thought had a shoulder injury, actually had a mass that had metastasized everywhere, and I was privileged to spend a lot of time with her in hospice. That's when I helped write the business plan. Talking to nurses in Fairfield County, Connecticut — good hospitals — the oncologist told me there was no medical value in a caregiver program, while the nurses behind him were shaking their heads. So while I never expected it — Jesse asking me to move to a town of 20,000 in Massachusetts while I was living on the Upper East Side — my guidance counselor never told me this was an option. But I've been really fortunate; the best thing about this industry is the people — creative, smart, resilient, kind people willing to extend a hand. I constantly say I'm the luckiest guy in the room. Bryan Fields: How long had you known each other when you decided to start the company? Jesse Pitts: In my mind the company was always a thing, but step by step — standing on that mountain talking to Carl, peppering him with a million questions, I realized why don't you just be my partner. I knew going in this was a daunting task, and doing it alone would be difficult. What I didn't bring to the table was the finance background and capital-raising — everything I'd done before was underground, a totally different world. Having someone from that other world to help merge the two was paramount. Spending five days that close to somebody, camping on a mountain in Oregon, you get to know them fast. We kept the conversation going once he got home. Cannabis is difficult because the cart is always before the horse — you need one thing to get another, but need that other thing first. One day at lunch I just started laughing and said we need to teach the horse to push the cart — no matter what, we just keep moving forward and eventually figure it out, and we always did, every step of the way. People were surprised we actually got to what we call the starting line — they'd say 'you did it, you got your license, you finished,' and I'd say no, this feels like a marathon where you finally reach the line and realize, it's just the start. It's been a hell of a journey, but this part is exciting because it's out in the open — we're integrating this into legitimate business, and seeing the people who took that leap of faith to bring the legacy market into the light really moves me. There aren't as many of them as you'd think, and a lot of talented people are still on the sidelines. Bryan Fields: So you two meet in Oregon, fall in love on this mountain, come back East to start a business — this is 2017. Walk us through those first four years: regulatory stuff, picking the property, choosing launch strains — what did most of that time go toward getting to the start line? Jesse Pitts: The application process was a lot of check-the-box — SOPs and so on — but putting together a genuinely good business plan meant finding the right people to teach us. I looked at lawyers and accountants as the new professors. Our law firm, Foley Hoag out of Boston, and attorney Kevin Conroy — by far one of the best lawyers in cannabis — took us under his wing for a fraction of what he should've charged, because he saw what we were building and wanted to see if we could get to the next step, and the next, and the next. At one point he called us 'the little engine that could.' Miti at Citrin Cooperman was another fantastic mentor working through the regulations. The construction phase was fascinating too — I had some construction background, but not building a full vertical cannabis facility. Carl Giannone: I'd never been involved in any construction project — I'd sit in the conference room with Jesse and the construction guys taking notes, researching to catch up. Someone mentioned 'change orders' once and everyone laughed, and that's when I learned what change orders meant in construction money. Jesse Pitts: Really, the goal was finding people to guide us through regulations, because the application itself was check-the-box, but actually getting the license meant knowing what you're doing and convincing people — and the hardest part is raising the funds. You're building a pro forma and a company at the same time you're applying for a license — building the rocket while flying it, while funding it, while fixing it. You have to be versatile and thick-skinned. I always tell people thinking about entering the industry: don't put your toe in, someone will bite it off — cannonball it, own it, or they'll eat you alive. It's cutthroat on the corporate side sometimes, which creates a culture clash between mainstream business norms and cannabis culture, but it takes give and take to get where we need to be. Bryan Fields: Let's talk vertical integration — what does that mean for your business, and how does it work running what amounts to six businesses simultaneously? Jesse Pitts: The first step was deciding whether to go full vertical at all — it was a real debate. Carl argued that successful companies specialize — look at the S&P, Apple, Netflix, Google. I countered that plenty of huge companies, like Walmart, are vertical too. For a small company like ours, being fully vertical means being self-sustaining — not relying on any one company or link in the supply chain. A standalone retailer has to buy product and can't control its cost. When you're producing the product yourself, the lower your cost per pound, the better your retail margin versus wholesale. It creates as many 'levers' as possible that you can pull up or down depending on conditions — a standalone retailer only has one lever: price. Full vertical gives you a manufacturing lever too — we sell a lot of bulk oil, and a lot of the largest vape sellers in Massachusetts don't actually make their own oil. MSOs have contracts across multiple states we don't have access to, so we never want to be held over the fire by anyone — we could be self-sufficient if we had to be, but we still carry other brands for variety. You can walk through our store and I can tell you why we carry anything on the shelf and who the owners are — it's all about relationships. But all those levers also require the ops resources and know-how to manage them, because if your cultivation costs run too high, your retail price has to inflate too — it's a constant balancing act on top of having raised the capital to build the vertical in the first place. Bryan Fields: Take us through some of those early growing pains — any stories where you blew through cost projections, or things that went really well or really badly? Jesse Pitts: In cultivation we call the first few batches the 'first pancakes' — never as good as you want. It took about 18 months to really dial in cultivation. The lab ramped up faster since that's straightforward science and chemistry. We started by processing a lot of biomass with our first real Massachusetts collaboration partner, High Plains Farms out in Western Mass — they needed our extraction, we needed their biomass, and we still work together today. But full vertical means many departments, and you need people you can trust to run each one without micromanaging. The facility itself is a beast — an extraction lab with chillers, a grow with CO2 systems and countless valves, a water treatment room. Our facilities manager, Dan O'Connor, who used to work on cranberry bogs, can fix almost anything — half of what breaks I never even hear about. Everyone has to row in the same direction, or you're just working hard to go in circles. That core team is vital, because if one department fails, the whole vertical falls apart. Bryan Fields: You also do tolling alongside your own brands — how do you balance a big toll order against your own production needs? Jesse Pitts: We manage it through production scheduling and staffing rather than hard lines — sometimes offering overtime for night shifts to get a big toll job done without sacrificing our own production. It comes down to only committing to what you can actually deliver on time, and if you don't deliver, you own it rather than just apologizing. Tolling is its own animal — it's a constant hunt for quality distillate biomass and quality fresh-frozen material, and you need people on the road who know what they're looking at. We always try to credit who grew the flower behind a concentrate — customers love that story. Bryan Fields: How do you manage expectations with a new toll partner who doesn't know how their material will perform in your process? Jesse Pitts: Our VP of production, Spencer, is very science- and data-driven. You can't just go off a flower COA if you're actually processing trim — expectations need to be talked through, sometimes with a retest, sometimes just an estimate based on experience, and often with a trial run of maybe 100 pounds before committing further. Spencer helps make sure we're not bringing in material we shouldn't, so we don't waste time or damage a relationship over something avoidable. Bryan Fields: Do you think strain or grower matters more in that outcome? Jesse Pitts: For distillate it barely matters — you're just isolating a molecule. But on the hydrocarbon side, strain and grower matter about equally, because the strain sets the terpene and minor-cannabinoid profile. We love single-source extracts for that reason. Hydrocarbon extraction is where the art meets the science; distillate is closer to pure science, and 90% of the industry runs on distillate, so both matter. We've also been making small-batch 'HTE' terpene applicators — like a paintbrush you use to add flavor to any joint. Massachusetts has a strict 12 PPM residual solvent limit, so producing a clean product without sacrificing quality takes real craftsmanship, and I'm always thrilled to see a non-detect result. For context, there's more hydrocarbon residue in a cheeseburger, or in cold medicine, than in an entire kilo of our concentrate — plenty of everyday foods, like peanut butter and potato chips, are also hexane-extracted. Bryan Fields: Carl, from a financial standpoint, was there a part of the vertical build-out you were most hesitant about, and did anything about the business surprise you? Carl Giannone: Our original pro forma actually excluded extracting anything beyond our own trim and failed product. A friend, Nicholas, who owns TerrAscend, a multi-state operator, connected us with someone who reviewed our pro forma — built with help from our former accountants — and told us it was wrong, that it would cost and take twice as long as projected. He was actually wrong — it ended up costing about four times as much and taking three times as long. We correctly predicted flower price compression, but it happened faster than expected. Using the Cannabis Control Commission's open data, I could see prices staying anomalously high because COVID stimulus and near-zero interest rates flooded the market with capital just as tier-relegation rules went unenforced, causing massive oversupply. I posted on LinkedIn asking if operators could survive in a $5-a-gram world — people started calling me 'Calamity Carl.' Our first distillate sale was $28,000 a kilo; it eventually dropped to around $3,000 before settling near $5.50–$6. We started with about 30 lights in a converted trailer and now run 254. Jesse Pitts: In the traditional market there were codes and etiquette; this legal industry is the Wild West — there's no 'nomenclature police' stopping companies from labeling ordinary distillate as 'live resin.' Upholding integrity is important to us, and I think a lot of the culture clash in this industry comes down to exactly that. It's disheartening to see good people turn down high-paying jobs to protect their integrity, and it's probably going to get harder once big pharma, tobacco, and alcohol fully enter the space — some of today's big cannabis companies may soon know what it feels like to be the little guy. Nobody can really predict where interstate commerce or federal policy is headed, which makes it tough to pitch investors on a long-term vision. Massachusetts has seen a lot of operators fall off this past year — it's been a bloodbath — but we think the market will stabilize, and the survivors will be positioned to rebuild. Bryan Fields: What tools help operators navigate these rough waters — expanding strains, reach, or something else? Jesse Pitts: It really comes down to relationships — building and maintaining them, supporting other operators, and knowing they'll do the same for you rather than dropping you for a better deal without at least a conversation. We're all trying to make money and deliver a quality, affordable product, but you also have to survive as a business. Bryan Fields: Do you think the industry should self-regulate on integrity and testing, or should regulators step in more? Jesse Pitts: Probably a combination. As operators we generally know who the bad actors are. Early on we had to carry big-brand product because smaller craft companies couldn't offer 30-day payment terms the way larger companies could, and those bigger brands sometimes maintain shelf space through 'marketing space' purchases — that's common practice in Massachusetts. The best defense is choosing who you support and maintaining strong relationships with them. Carl Giannone: On testing, there are two big issues. First, potency inflation — labs should be held to consistent standards, and COAs from the same lab shouldn't vary wildly beyond natural plant variance. Some results show suspiciously straight-line graphs, which don't happen in nature; the Cannabis Control Commission could address this by requiring labs to report their variance data. Independent people like Jeff Rosson have done a lot of unpaid work exposing this. Second is transparency around irradiation and remediation — if flower or oil is treated with ozone or radiation, I believe that should be disclosed to consumers, the same way some brands proudly label themselves 'radiation-free.' Treating material prophylactically after harvest is one thing, but treating it in-line before testing to pass a failed test, without disclosure, is a real integrity and public-health transparency issue — especially when Metrc won't even let you blend a remediated and non-remediated distillate kilo together, yet finished goods can reach consumers without disclosure either way. Bryan Fields: I saw you say 'craft cultivation is necessary for craft extraction — you cannot fake or CRC your way out of it.' What does that mean? Jesse Pitts: Fire in, fire out — you need great flower to get a great extract, with a strong terpene and cannabinoid profile. Once material starts to degrade, the extract suffers. Proper fresh-frozen harvesting matters enormously, and a lot of 'frozen' material out there isn't actually fresh — it's material that failed testing and got frozen afterward, not harvested fresh for that purpose. We do a lot of hydrocarbon extraction for United Cultivation, and we won first place at NECANN for a joint extract with them because of how carefully they harvest. If you extract degraded material, you can filter it with color-remediation columns (CRC) using clays, but you strip out a lot of the good terpenes along with the unwanted chlorophyll, which is why a lot of CRC hydrocarbon extracts from different strains end up tasting nearly identical. Capturing and preserving the full terpene fraction is critical, which is why we capture our own terpenes in-house and use them to flavor even our distillate vape carts. We've made 'Franken-dabs' by combining terpenes from one strain with cannabinoids from another, always telling customers exactly what they're getting. Bryan Fields: That's similar to the flash-freezing principle from food science — freezing tissue fast creates small ice crystals that preserve flavor, first discovered with fish in the early 1900s. Jesse Pitts: Exactly — it's about preserving the plant without bursting the cells open, which would invite unwanted compounds and destroy what you want to keep. Getting that right benefits everyone along the chain, and a collaboration like the one with United Cultivation benefits both companies' marketing — we may have been the first hydrocarbon collab extract in Massachusetts. Bryan Fields: Take us through bringing in West Coast genetics — was that something you needed, or wanted to try internally? Jesse Pitts: I can't tell customers what they want — they tell us. We didn't want to take a shot in the dark; we wanted a partner with real breeder connections, because that market is full of fakes and mislabeled genetics. Preserving integrity for breeders matters to us, so having a direct line to the actual breeders was essential. Our new cultivation director brought those relationships, and while we're excited to bring in new genetics, we're not abandoning our East Coast strains — it'll be a mesh of both. Carl Giannone: This is actually the third full turnover of our garden — none of the very first strains we brought in from the traditional market are still with us, because there was no way to confirm they truly were what we were told. Preserving breeder integrity matters because those genetics represent years of failed crosses to find one winner — breeders are doing incredible, underappreciated work for commercial producers like us. Bryan Fields: Is that the balance you mentioned — not dictating to customers what they should want? Jesse Pitts: Right, and we also want to keep honoring East Coast growers, since a lot of customers would be upset if we dropped those strains entirely. I'd rather let it stay organic and let the customer's preferences guide us naturally rather than force the pendulum too far toward West Coast genetics. Bryan Fields: Any West Coast strain you're especially excited about? Jesse Pitts: Can't give that away. I'm mostly excited to see what our facility — 'the machine' — can do with genetics I've seen shine elsewhere, as long as they're also commercially viable in terms of yield and demand. Sativas remain in huge demand even though most flower today is some hybrid blend; customers often insist on 'pure sativa' when what actually exists is a spectrum of phenotypes. We're shifting our retail approach to show customers where a strain falls on that spectrum — shorter, bushier plants lean indica, tall skinny ones lean sativa — rather than forcing a binary label. Rotating strains keeps customers engaged, but as a small facility, limited space for mother plants makes that a real challenge. Ultimately we balance cultivator preference, customer demand, and wholesale buyer demand together, because if you only grow what cultivators love, you'll miss a big segment of the market. Honestly, I don't get to do any of the hands-on work I used to enjoy anymore — I don't cultivate, I barely touch extraction equipment — now I mostly just manage and put out fires. Bryan Fields: Last question for each of you — what's one thing a first-time customer should know or look for at Trade Roots? Carl Giannone: Based on MCR Labs' published state averages, we test about 28% higher in THCA than the state average, even though we don't select purely for THC on flower. More excitingly, we test 57% higher in terpenes — our Gastro Pop came back around 58.9%, we thought that had to be wrong, retested it, and it came back around 61%. So if you like flavor, come to Trade Roots. I'd put us among the top 20 cultivators in the state at scale, and top two or three for live resin specifically, and we're still climbing. Jesse Pitts: I think our concentrates are really where we stand out. Our flower is excellent for the price point, but our HTE products, live resin, and dabbable concentrates are where we separate ourselves — often small-batch items only available in our own store. Bryan Fields: Where can listeners find you and try your products? Jesse Pitts: TradeRoots.buzz. Instagram: Trade Roots Buzz. We're on LinkedIn too — I'm Carl@TradeRoots.buzz, he's Jesse@TradeRoots.buzz. Reach out. Bryan Fields: Awesome, we'll link it all in the show notes. Thanks for taking the time, this was a lot of fun — appreciate you guys coming on.