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Interview, Part 2: Pacific Stone CEO Skip Motsenbocker

January 4, 2022

In the second part of our interview, Skip Motsenbocker, chief executive of California flower player Pacific Stone, discusses sustainability in cannabis cultivation, how regulatory changes could transform the industry, and the company’s latest product release.

SNDC: What are your expectations for legislative progress on cannabis in the new year?

Motsenbocker: Starting in the industry back in 2013, I would have expected something on the federal level by now, whether it’s decriminalization or descheduling or something like the SAFE Banking Act. When that happens it will be a gamechanger and a big shift for the industry, because it will allow more capital to come in. There’s a lot of capital sitting on the sidelines that would very much like to make an investment into the space. They see it as this burgeoning industry that already exists, but it still is just going through this slow and arduous conversion from the illicit market to a more regulated and taxed market.

SNDC: What would be the effect of freeing that kind of capital to enter the sector?

Motsenbocker: If there’s better access to capital, that probably means the cost of capital is effectively going to go down. So now you’re going to have lower costs of capital to effectively go and expand your business. That’s going to be a huge benefit, because it is currently very cash constrained, and cannabis in general is a very taxed business. That’s very clear in the taxation structure that’s in place, but other costs on the business are less transparent. When a piece of equipment, for example, is sold in the non-cannabis market, there’s a high likelihood it’s at a lower cost than if it gets sold to the cannabis industry, because there’s a perception that anyone selling cannabis has to be making tons and tons of money. And yet it’s so restricted, it’s so regulated, and it’s so highly taxed. It’s very difficult at the moment. But if SAFE Banking comes with a change to the 280e tax guidelines, then all of a sudden you’re actually dealing with an industry that works a lot like every other CPG-style retail industry, an industry that has the ability to effectively make a profit and be more sustainable.

SNDC: How do you approach sustainability within the company?

Motsenbocker: We talk all the time about the lack of water available in California and the perpetual wildfires that come every single season. We use hydroponic-style farming so that we can ensure that the water and the nutrients are being used by the plant. And then we effectively recapture everything—so as plants are being watered, we have recapture systems that allow us to collect it. If it’s not getting used by the plant or perspired out by the plant, it’s being recaptured, sterilized, renutrified, and then regenerated to be put back out into the farm. We’re in a greenhouse, so for the most part everything is solar-driven, versus indoor, lamp-driven growing. As time goes on there’s been more demand for sustainability in everything, and cannabis is no exception. It’s an important issue for both consumers and the industry and something we should all be thinking about.

SNDC: What new products are coming from Pacific Stone?

Motsenbocker: One of the hot new items that’s out on the market is an infused pre-roll where you’re in a sense taking that standard pre-roll, but you’re just increasing its THC percentage and just allowing it to have a little more pop, if you will. That’s the very next product that we’re dropping as we roll into 2022.

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