Marijuana Business Magazine July 2018

“What licensing a brand does is bring instant expertise to a manufacturer,” said Patrick Devlin, co-founder and president of Natural Extractions. “A state manufacturer can be well situated and well financed to be able to get a license, but then they need prod- ucts, so by licensing they don’t have to do all the product development it’s going to take. They can come to Zoots, and we can give them a full package to be able to manufacture and get to market quickly.” Big Plans Natural Extractions has enjoyed notable growth, and the Devlin broth- ers have set their sights on trans- forming the company into an edibles powerhouse. The co-founders initially gained attention in the summer of 2014, when their firm, Db3, became the first manufacturer in Washington state licensed to produce edible forms of marijuana. The brothers still own Db3, but today the Seattle-based manufac- turer operates as another licensee of Natural Extractions and is responsible for manufacturing and marketing Zoots in Washington. The brothers then turned to other companies to expand the brand. In the spring of 2016, Natural Extrac- tions signed a license agreement with Denver-based Bronnor Corp. to get Zoots into Colorado. The follow- ing spring, the company announced a partnership with Cambridge, Massa- chusetts-based Sira Naturals (formerly known as Sage Cannabis) to expand Zoots into the Bay State. Another partnership is close to being announced in Southern California – although Patrick Devlin declined to dis- close the licensee. And Natural Extrac- tions is tentatively eyeing four other states to enter in 2018 or 2019, Devlin said, although he declined to be specific. “Our licensing revenue grew approximately 45% from 2016 to 2017,” Devlin said, although he declined to specify a number for last year. “I hate to make a projection on near-term growth, because it depends on our licensees – when they open and the regulations they operate under. Our long-term goal is to have total sales in excess of $300 million by 2024.” Replicating the Success Natural Extractions employs 34 peo- ple and temporarily sends its staff to states where it’s expanding the Zoots brand. Members of the team, includ- ing engineers, system operators and manufacturers, typically arrive after the licensee has selected a location for its manufacturing plant and received the necessary regulatory approval to make cannabis products. Staffers consult with the licensee on various stages of the manufacturing process, from set- ting up a facility to packaging products. “We give them our standard operat- ing procedures,” Devlin said. “We give them extraction equipment, we show them how to run the extraction equip- ment, and we show them how to make our products with the same consist- ency that we do in Washington.” Licensees are provided with the Nat- ural Extractions’ proprietary Cypress Extraction System, which utilizes a cryogenic, alcohol-based method to distill cannabis oil for use in edibles products. Partner companies are also set up with a bottling line for Zoot- Drops concentrates and a packaging line for a wide array of products. “It’s basically a turnkey system. We call it ‘MIPs in the box,’” Devlin said, referring to marijuana-infused products. Sharing the Knowledge Not every MIP facility that pro- duces Zoots has the same layout. The manufacturing facilities in Seattle and Denver – owned by Db3 and Bronnor, respectively – are about 25,000 square feet. Sira Naturals’ facility in Massachu- setts is much smaller, closer to 3,000 square feet. “That’s a problem with being a legacy brand,” Devlin said. “You make a lot of mistakes as you go along, but you learn from the mistakes, which is good and a benefit to the licensee.” Sira Naturals’ smaller Massachusetts facility is a case in point. Devlin said newer facilities can consolidate, cutting down on build- ing and maintenance costs, because Natural Extractions has learned to be more efficient. For example, instead of keeping extra space for dry ingredi- ents such as flour and chocolate as Natural Extractions teaches licensees how to package its products.  Photo courtesy of Natural Extractions 100 • Marijuana Business Magazine • July 2018