In episode 31 of Investing in Cannabis, Brandon David interviews Mark Englestead, founder of Pot~O~Coffee, which offers infused cannabis & hemp CBD beverage blends. The company offers a range of products, including coffee, tea and cocoa, with THC dosing of 10mg, 50mg and 100mg. The product is sold in Keurig-compatible cups as well as pods. Pot~O~Coffee also offers a line of products with CBD from industrial hemp, supplied by CV Sciences (OTC: CANV).
According to Englestead, who has his products in 50 dispensaries, the beverages don’t have a cannabis flavor, which was confirmed by David. The company’s extracts, which are tested by SC Labs, test out at 84-87% THC. He explains the technical process, which is CO2-based, leaving few terpenes behind. The oil, from LoudPack Extracts, is already decarboxylate, with an emulsifier added, creating, ultimately, a powder, which is mixed into the single servings.
The company, as it has scaled, has lowered production costs to about $1 all-in, while the wholesale price is about $2-2.50 for 10mg products. The 50mg sells for $3.75, while the 100mg wholesales for $5. Englestead discusses the two pieces of equipment used in the manufacturing process, which is very manual. The company can make 70 k-cups per hour.
Protecting the product through patents will likely prove challenging, but the company has invested heavily in its brand. Pot~O~Coffee will be introducing decaffeinated products shortly. Its current sales are 60% coffee, 30% tea and 10% cocoa. The company is moving into Colorado with a partner, Evolab, this month and expects to sign a partner for Washington and Oregon in May. Additionally, it expects to move into Nevada.
The company raised money from friends and family through convertible debt. Englestead expects to prove out the product and brand further before seeking additional capital.
