Businesses pursue a different kind of high at Michigan cannabis expo

FRANKENMUTH, Mich. (FOX 2) - It felt like wine tasting at the Extract Consultants table during the 2019 Cannabis Expo.

Laid out on a table was a series of stemless wine glasses turned upside down. Filling the air with sweet scents were containers of oil-infused liquid with exotic fruit flavors. Picking up one of the glasses, Bill Filter, an employee with the company extends the cup to visitors, who take in the scent.

“This one is Cantaloupe Haze,” he said. “And over here, you have Super Lemon Haze.”

There's only four available flavors, but the company's website offers dozens of varieties that can be mixed and matched to create the perfect combination. Kurt Metros, also of Extract, described their role in the cannabis industry as an enhancer.

“We're more or less an ingredient in a finished product,” said Metros.

After producers sell the flower of the plant and any pre-rolled joints made up of the material afterwards, they're left with a substance they will strip the remaining THC from. Known as distillate, it's a tasteless and odorless - but very concentrated - form of THC. That's where Extract Consulting's flavors get mixed in.

"The concept is you would take our Turpene Blends, add them back to that distillate,” Metros said. “You take that one product and turn it into four different flavors.

Among a sea of other vendors, demonstrations like Extract Consultants hoped to attract anyone looking to to enhance their product. Despite their sales pitch being used to showcase their enhancement capabilities, they aren't a wholesaler of marijuana. Ironically, of the estimated 140 vendors showcased Tuesday at the expo, only a few directly touched the substance.

That came as no surprise to the Michigan Cannabis Industry Association communications director.

“Not a lot of businesses are interested in touching THC,” said Josh Hovey. “But they see an economic opportunity to service this industry.”

Instead, what prospective buyers found during the two-day expo at the Frankenmuth Credit Union Event Center was a diversity of different business ventures. On one side of the show floor were sellers showing off grow lights and harvest tools. In another section, booths offering legal and security advice were present. There were also large displays of packaging available. One company builds the machines that helps producers bottle their products, while another offered software that regulated warehouse energy input.

“It's a completely new growth opportunity for a lot of existing businesses previously in different industries,” Hovey said. “This isn't just for the state in terms of the tax revenue and the direct jobs, but there area a lot of spin-off economic benefits because of all the needs this new industry will have.”

For more than two decades, Knight Watch Inc. had it's hands in other security and healthcare. But strong winds behind the legalize movement in 2018 pushed them into the industry.

“We've been in business for 25 years, starting with security,” said Hunter Zuk of Knight Watch Inc. “It was only the past year that we entered the cannabis industry.”

With clients also in the education and manufacturing fields, it's little surprise that cannabis is next on the market for them.

“With our web-based platform, basically you control the whole thing,” he said. “For cannabis, it's special because you can pinpoint HVAC and lighting down to what you need it. Growing cannabis uses a lot of energy, and what we can do is pinpoint where you're using the most energy and how much it's costing you.”

Those costs aren't small either. The Lawrence Berkeley National Laboratory estimated in 2016 growing marijuana indoors adds up to 1 percent of electricity use nationwide. It's the price to pay for the booming profits the industry is reaping however.

In 2016, recreational and medical sales totaled $6.56 billion. That number is estimated to more than double by the end of 2019, and quadruple by 2025. With such lucrative numbers, the industry suppliers have moved beyond just perfecting the growing process and into brand awareness. Hoping to fill that vacuum is Diz Pot, a company that specializes in packaging for producers.

“We work with hundreds of companies all over the United States,” said John Hartsell, owner of Diz Pot. “We do boxes, bags, jars, hardware, batteries and cartridges.”

Hartsell said that brand awareness is everything for those getting into the game. And emphasizing any company's signature is key to being successful. His expectation when starting out was that consumers would cater to generic brands. However, that's not been the case.

“You wouldn't buy an ivory soap bar in a boring box or Colgate toothpaste in a plain tube,” Hartsell said. “Frankly we thought it would be a lot of generic stuff, but it's not. It's just like walking into your local convenient store. It's a way for people to differentiate your products.”

Beyond the show floor were several seminars put on in adjacent rooms. Throughout the two days were presentations on the changing regulations of the marijuana industry, best practices for growing the plant and methods for branding and market expansion.

“The exhibit is about helping industrial suppliers get into the market and (gain) a little more education about what's happening with it,” said Jen Wynn, vice president of the company that organized the expo.

Many of these vendors won't see any return on investment in Michigan anytime soon. The state is still finalizing its rule-making process. Hovey estimates that'll be finished and businesses could apply for licenses by the end of the year; in two to three years, the state will reach a level of maturity emulated in Colorado and Washington.

As the first state to legalize cannabis in the midwest, Hovey said Michigan has the unique opportunity to avoid pitfalls that other states have fallen into, but also be a model for neighboring states interested in the same venture.

“I think Michigan will demonstrate it's possible to learn the lessons of the states out west and take their best practices and apply them to the local needs of your own state in a way that's responsible and allows businesses to succeed.”