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California-based Fig Farms is a legacy cultivator and breeder that has successfully expanded its genetics and flower throughout the state and into other states. Defined by a fierce and unwavering dedication to genetic and product excellence established and maintained by founders Keith and Chloe Healy, Fig Farms produces flower and edibles for distribution to 300 or so dispensaries throughout California, deploying a two-part market strategy that builds on the company’s well-established and estimable strengths. Beyond the Golden State, its products can be found in about 100 stores in Illinois, and around 25 stores in Arizona, courtesy of partnerships Fig Farms has entered into with licensed growers in those markets.
The first part of the company’s market strategy is to grow Fig Farms’ market cap in California for each of its product categories, which include jarred eighths of premium flower, eighth smalls, half-gram and one-gram prerolls, and a line of edibles with three chocolate SKUs and sour watermelon gummies. Once the estimated market caps are reached, the second phase of Fig Farms’s market strategy will kick in and spur the development of a family of complementary and competitive ancillary brands. Examples provided by Fig Farms include a Mylar hype brand (ala TenCo Zushi); a cost leader premium indoor brand (ala Daze Off); an infused half gram (ala Jeeter); and a sub-premium half-ounce in a roll-your-own pouch (ala Old Pal).
Cannabis Business Executive spoke recently with Keith Healy and Mike Doten, Chief Sales Officer at Fig Farms, to dig deeper into the inner-workings and outer ambitions of a legacy brand I first encountered years ago at a California cannabis event where Fig Farms was but one small booth nestled among several others, selling its artisanal cannabis to a line of patient customers that included me. Notably, years later, Fig Farms is still excelling, having won top awards at the Emerald Cup two years in a row.
“Fig Farms took home nine trophies, including 1st place Indoor Flower and Best in Show for their in-house bred cultivar Blue Face,” stated a Fig Farms press release. “The winning strain belongs to the OG’s and Gas classification, with fifteen detectible terpenes and a complex profile of acetone, tree bark and pickled ginger. 2023 marks the second year in a row that Fig Farms has received 1st place in the Emerald Cup’s Indoor Flower category, having won with their popular Animal Face in 2022.”
The following conversation with Keith Healy and Mike Doten has been edited for clarity, not brevity.
CBE
How did Fig Farms get from the family farm to moving into different states?
Mike Doten
The process of scaling up really went from husband and wife – Keith and Chloe – living at the grow, which was at a house in Sebastopol, and then taking over a friend’s property that was not performing up to expectations for that person. Keith was able to come in and optimize the entire operation and turn it into something profitable, and not only profitable, but enough to split with the owner of the property as well. Keith is always going to have that specialty of being able to identify things that aren’t working on other people’s systems and be able to fix them. That was something that helped us scale a bit first, and then once we started developing more of the commercial side, Keith also rented out a small warehouse in Petaluma, and eventually bought a restaurant, where he could express himself more creatively. The grow had turned into creating the same exact plants over and over and over again in the market, which at that time only wanted Sour Diesel and OG Kush. Growing it the first couple of times might be fun, but when you grow it every single year over and over and over again throughout the year, it becomes a little tedious.
CBE
When was this?
Keith Healy
Around 2011-2012.
Mike
A few years on we started doing some breeding. It moved from, ‘Let’s try to make our own strains here’ all the way to that’s what we’re known for as a company, and that’s what we’re winning awards for. I bring that up as far as scaling because it’s something that stays constant and has kept us unique this entire time, that we are known for our own strains, which has been an aid for us on the scale-up.
As far as scaling up from house operations and very small manage-it-yourself operations – the kind of thing where you can call a friend to take care of it for a couple of days – all the way up to where we are now, with around 37 people working here, in 2017 we rented a 20,000 square foot warehouse, which was gigantic compared to anything we’d ever done before. We had been growing things in our garage, and now we have a huge warehouse that is collecting rent, you keep paying rent, $50,000 a month, for an empty warehouse. It took a long time to start growing and getting things moving in there. We scaled up real slow building out the smaller office rooms in the warehouse, knocking down walls and creating bigger rooms out of them. But very modest, still being managed by Keith, Chloe, myself, and the post-production team, the trimmers.
While the permitting and licensing was going on, while we’re starting to get early construction underway, we were really living harvest-to-harvest, and every dollar that would come in would already be spoken for, either for future expenses or payroll for the previous periods. I lived at Keith’s house during that period of time. Everybody was really tight. One room at a time, one light at a time, we got the facility operational. It’s now 100 percent operational and we are also taking over the neighbor’s space. We leased it out about a year ago, finishing the permitting right now, and we already have construction going on early-permit. It’s exciting. We’re expanding within our own footprint, adding about 35 percent capacity to our grow.
Keith
There’s also been a heavy focus on efficiency and operating procedures and developing a process that’s repeatable. We have had as many as 60 employees, and to get it down to 37 is a sign of our efficiency. Our goals should be efficiency and to have a really strong team with a very strong plan and process so that we when we do expand even further from the seats that we’re currently in, we already have the systems; a repeatable box, a grow room that we would like to build all over the world; that we know exactly what HVAC we want to use, what light we want to use, all the way down to what testing equipment we use to verify that all of our sensors are working correctly. We’ve got it down so that every little detail is figured out at this point, so moving to these new places is a much easier opportunity today than it would have been five years ago.
CBE
What metrics do you use to gauge your progress?
Keith
The markets have been up and down at different times, and there have always been fluctuations in the marketplace. We don’t look at the metric of how to produce the cheapest product; the focus is 100 percent on how to produce the best product even if that means sacrificing yield. We look at how strains are selling versus how much of a strain is yielding. For example, yields half as much as another strain, and super demand and everybody wants it, that I need to build more growth space and be able to grow more of that strain. That’s my thought process. It’s more about meeting the market demands with the best product possible.
CBE
Does Fig Farms do limited drops?
Mike
We have played with that concept quite a bit, but in a few different ways, and I think differently than other people, and here’s how. When we create our own strains, we are creating a product that no one else has, and there is nothing else that is substitutable. So, when we have a drop, not only are we dropping something that is unique and limited and only around for that amount of time, but we’re also dropping something that you’re never going to see from somebody else. So, it really adds to the limitedness of it.
Now, how much do you put out to be able to call something limited or not limited? I mean, obviously nothing in life really is unlimited. There might be some examples, but for the most part it has some limitations. So, determining what the maximum limitation is on some of these strains and how much we can put out without it getting over-saturated or stale on a menu and no longer having that limited feel – like a very tight shoe drop that disappears same day with a line down the block. What is the number of shoes you can make in that scenario. In this case, how many pounds of flower to grow for the state of California and still considered it to be limited? Is it the number of cases allowed per store, or is it just total flower output, and then do you want to go regional and maybe do a little here, a little there, to make it seem a little bit more limited?
For us, we really don’t play the where-it’s-going-to-go game, because the flower actually is very limited. We don’t have to spread it around to make it look thinner, because it is already very thin. So, when we have 20-pound bags or so for California, that’s something that’s going to be gone when it hits the menu, possibly before it hits the menu. And so, why can’t everyone do that type of a drop? Wouldn’t everyone do that? Well, the thing is, you have to have something interesting that the consumer wants to buy, and if you already have 10 strains, how are you going a limited drop every week fifty-two weeks out of the year if you only have 10 strains? You’re going to have to have a whole lot of strains if you want to drop them. So, for us, making these new ones finding a phenotype, allows us to have unlimited drops because we are constantly creating new things.
Keith
We pop 500 seeds and find new strains every two-and-a-half to three months, so there’s a constant flow of new strains and constant flow of things coming in and out of the menu. As for Mike’s point about limited availability, we sell out sometimes weeks in advance, and this week is a record; we sold the most jars that we’ve ever sold as a company this week.
CBE
I read the story in the High Times about how you lost your plants and that kind of put you on this reset path, where in the past you were growing the same strains to meet the demands of the market, and your perspective shifted away from growing to meet the demand to creating demand and bringing the market where you want it to go. Is that accurate?
Keith
Yes, I used to find creativity in the restaurant. Then I started breeding and making my own crosses with cannabis, and I sold the restaurant, and now my creativity is breeding and having fun in the seed room, where we’re popping seeds and breeding. We now have a team of people helping us achieve that. At some point, we will release seeds, but I’m an extreme perfectionist and will not do a seed release until I can be as proud of it as I possibly can be.
CBE
What percentage of the 500 seeds you pop a year do you put into production?
Keith
We probably end up with 10 to 20 strains that we test again, and from that point, we end up with maybe three, maybe five that end up in production, and that’s an extremely limited production, where there’s maybe five to 10 pounds of it on the first drop. If it’s successful, we ramp it up from there. Every year has multiple strains., and we match sell-through and demand to production.
CBE
Do you sell wholesale as well as retail?
Mike
That is part of the progression of the company. The quality side as it relates to wholesale and retail, and as an indicator, is when we look at whether or not it’s good enough quality to be in our packaging, and that factor we call jarable. Is the flower jarable? If it is jarable, it’s good enough to go into a Fig Farms package and sold on the market as Fig Farms. If it’s not jarable, we have to find an alternative home for that flower, and in those cases, it would be wholesale. Now, that lifecycle of our company has moved completely into everything being jarable, and not because we’ve lowered our standards, but because we have increased our ability to grow A+ flower,
Everything Keith’s talking about as far as efficiency is about cleaning machines, what pumps you need, things like that. The other side of the efficiencies are how we lay out the pots when we’re transplanting and where we put the cocoa and what person number one does when they’re holding the cocoa and passing it to the next person who’s transplanting the plant, and making sure that we’re reducing the number of steps that each person has, making it what we call paint-by-numbers. I don’t like to say idiot proof, because that would imply that we have idiots working here, and that’s not the case. Everyone that works here is really smart, but we have more of a paint-by-numbers system to make it very easy for people to follow instructions throughout the day. They don’t have to think about complicated thoughts about what they should do next when our SOPs have a very clear outline, and the more we refine those SOPs, the more efficient the process is going to become, the smaller number of employees we’re going to need, hence the reduction of employee count that Keith mentioned. And to clarify, we’ve never had any layoffs. The employee changes and efficiencies we had were very natural.
CBE
Tell me about California and how you have survived that difficult market.
Mike Doten
As far as survival, you see other companies folding or getting sold, or some of the same people that were our peer group before legalization, hosting booths right next to us at the same type of events that you mentioned. We watched those same people drop year after year, and one thing that has helped us stay afloat is we’ve found ways to increase our profitability while still maintaining our morals as a company. Let’s say you want to make a preroll with really low-grade material and sell it to the public and put your name on it. That might work for a while, but it’s not going to be longevity, and it’s not going to build that generational wealth that Keith is trying to build. We have to have very strong standards about what can go into our product, so in the early years, we didn’t want to sell anything other than our nugs in an eighth jar, our very premium product, and anything that wasn’t that specifically would get sold to other folks in the wholesale market.
We’ve now expanded and grown as a company into some more product lines, so we’ll get more readings at the register. We’ve got now a one-gram preroll, we have a half-gram preroll, we have a smalls package, we have a edibles line, and we’re just continuing to build more things. And so, breaking out and creating these new SKUs gives us a little bit more profitability, so instead of selling our trim to somebody on the wholesale market, we can now create edibles out of it, and be able to turn that trim from what would have been $5 on the wholesale market into more like $350 in the edibles market, and just find ways to be more efficient with the things that come out of this facility. That’s helped us stay strong when we see other people failing, and honestly, the plant provides if you provide for the plant. It seems to have looked out for us at different times throughout the company’s life.
Keith
There’s a lot of magic involved. I’ve been around the plant since I was 16., and it’s just always provided for me, and in a lot of different ways. Needing funding to be able to pay a month’s rent at $50,000, not knowing how I’m going to do it, I ended up with a C Diff crop, really upset about the seeds and the seeds and the being incredible, I sold them at the Emerald Cup and made the month rent that I needed to make. It’s just always like that. I found these magical ways to provide for me, and we have not seen the huge dip that other people have seen because our product has always been consistently at the top of the market. We haven’t really changed much of anything. We just work out what we’re doing and try and do it a little bit better every day. But as far as the market dip, we did bring our price down at some point to get the consumers out the door at a healthier price point, and we did have one year which was a little bit better than the rest, but ever since we’ve been at full production, our revenue stream has been very consistent. There haven’t really been any huge ups or downs since we have gone into full production in 2020.
CBE
What about getting paid. Any issues there?
Keith
We have such a high quality that we have a COD relationship with our distributor.
Mike
What he means by that is that typically when a grower works with a distributor, which you have to in the state of California, the distributor will take the flower from the grower, go out into the marketplace, and sell it, and then pay the grower once they’ve got it all sold. And sometimes it could be never, or it’s just the horror stories begin with those type of agreements. For us, we are paid when the flower passes the state testing. So, we get a check as soon as that comes through, which is unheard of. And whenever we’re trying to get poached by another distributor, they say, ‘Well, we’ll give you this deal,’ and we just kind of laugh at whatever they tell us, not in the face or anything, and they’re like, ‘What do you guys really need,’ and we tell them what we get. And they’re just, ‘Wow, that’s incredible. We’ve never heard of a deal like that, and we wouldn’t be able to offer that to you off the bat.’ So, we got a really good deal. We’ve got a good relationship, we’re instant sellouts for them, they know what they’re getting into when they carry our products.
Keith
We’ve developed a very good relationship with them.
CBE
Who is your distributor?
Keith
We work with UpNorth Humboldt. We’ve only worked with them, and we have developed an extremely good relationship with extremely good communications. We are on the phone with them at least once a day talking through every kind of thing that could possibly come up.
CBE
That has to have been a great relief and source of security for you to have had that long-standing relationship with them.
Keith
Yes. I also think that we’re resilient enough that we will do whatever it takes to survive at any moment, even if it meant that I was in there growing by myself. Because we literally have done everything. We’ve jumped in and driven across California selling flower, acted as security when a crop was being harvested, absolutely any little thing that has ever been needed, we’ve just kind of put our backs to the wall and done it.
Mike Doten
That’s also part of the scaling up story. We couldn’t afford to hire anyone until we really, really needed them, until every one of us – Keith, Chloe, and I, and the trimmers – had worked seven days in a row for a year-plus, and we needed somebody to help us – that’s when we hired. We hired in the ultimate times of need, and that really helped us scale up effectively. It’s not like we just came to town with a bunch of money and got bloated really fast. Every single employee had a real purpose and was hired to fill a role.
CBE
Do you share sales and marketing duties with them or keep it in-house?
Mike
We have a lot of inquiries that have come in and folks that want to carry our products, and we’re able to pass that along to our distributor and give them some benefits that open up new doors for them. And in turn, they of course will make sure to lead with us first when they’re creating new relationships. So, we have a really good foothold in any given 60-day period, we’re in about 300 different stores throughout California, and a lot of that has to do with relationships created before legalization. As Keith mentioned, we were driving up and down California. We knew the buyers before legalization, so we’re already on store shelves.
So, all of a sudden, January 1 comes around, and ‘Hey, you got to be illegal brand to be on the shelves now.’ Since we had our license, it was just a matter of store buyers refilling their shelf space. We were already out there, and we already had made a really big geographical footprint, thanks to Keith’s foresight on how to distribute. He didn’t want to sell all of our gross flower, all of our harvest, in one neighborhood, It cost a lot more time, but it meant we would drive to Sacramento, San Francisco, San Jose, and Humboldt and really get Fig’s brand up and down California. And even though we only had 24 lights, we were able to develop our name. So yeah, we’ve always kind of led that retailer relationship even from afar. Now we don’t check in with retailers the way we used to, but we established those relationships so long ago that somebody’s boss’s boss knows us personally at the retailer from before legalization, So, it’s pretty special.
CBE
Part 2 of your strategy is about the development of a family of complementary and competitive ancillary brands. Can you talk about that a little?
Mike
The first part of the plan is to maximize everything we can do with the Fig Farms brand until we can’t stuff another eighth in a jar. Until the market says it can’t take any more Fig Farms stock this week, we’re going to keep putting it in jars. So, for us right now, when the truck comes from the distributor, all the pounds we produce a week basically go into our jars. The only reason it’s not a bigger number is because we don’t have more production output, which we will have when we take over the neighbor’s space. Once we’ve reached those higher levels and the distributor says, ‘I have enough, it’s not selling out every single week, and even starting to slow down a bit,’ that’s when we’re going to find alternative uses for that same flower, start talking to fresh-frozen hash producers, things like that.
And that’s when the development of the family of complementary and competing brands are going to start to come into play. Our flower is good enough that we have other folks with their own brands that come to us and say, ‘Hey, will you sell us your flower and we’ll put it in our Mylar bags,’ and the only reason we say no is of course, we don’t want to create too much competition with our own flower against ourselves, but also because we haven’t reached the maximum amount we can put in our jars. Once we have reached that, that’s when we’re going to develop each family of brands.
So, we have these really good ideas, put them up on the whiteboard, draw cool little logos, whatever. Great, we can make that, but it’s taking away from what we’re putting into the Fig Farms brand. So all these really cool ideas we’ve been coming up with over the years are going to start rolling out when we reach that market capacity, once we move out of this facility and into the Sonoma county facility and use this one exclusively just to grow these other brands and for the wholesale market, it’s going to really open up that second phase of the company’s life where we’re now producing things for other people intentionally. In the past, we were producing for other people if it wasn’t good enough for our brands. Those were our leftovers. Now we want to grow something with intention for somebody.
CBE
You are going to make an infused half-gram preroll, like Jeter. Are their days numbered?
Mike
People ask who’s our biggest competition and laugh when we say Jeter. I don’t know what their numbers are, but they’re big, and so they expect me to say Alien Labs or something like that, but we say Jeter, because that’s the type of market share we’re eventually going to be going for; those are the people we’re watching. That’s where we’re trying to grow to.
CBE
Old Pal is another one. It’s a great model to go after.
Keith
We agree. I don’t find myself in competition with anybody, I’m in competition it’s with myself, and I’m just trying to make the best product, and when Fig Farms reaches at that market cap. I’ll make the best product for a different market audience if that makes sense.
CBE
Do you have plans to make infused products?
Mike Doten
We’re working towards that. Yeah, it’s on our list of new products, we want to roll out, it wasn’t immediate for us, because we don’t do any of the manufacturing of hash here on site, and so it would be a third-party process. We’re doing as much as we can with what we have here to begin with, but the next evolution is certainly moving into that type of product that doesn’t fit our company culture quite the same as it may for other companies. Fig Farms really has flower focus.
Keith
The value of the flower is so high in its current form for us, and in such demand, that to create a product worthy of our brand standards, we would have to then steal from the much-needed production to make fresh frozen, and to me, it’s not as important right now. Once we hit that market cap on flowering and we actually have excess flower, that’s when we could make a hash product we would be proud of.
CBE
Let’s talk about Illinois and Arizona and how you’re doing whatever it is you’re doing there. But you already said you’re in 100 stores in Illinois. So, what’s in 100 stores, who’s growing it, and how are you maintaining the quality?
Keith
We developed a strong relationship with a cultivator in Illinois back in 2018, and they are entering the California market. They’re friends and we are happy with their cultivation style. Our focus in Illinois isn’t so much on cultivating it as much as it is on bringing unique or exciting genetics to Illinois. So, our job in that relationship is to continually develop new and exciting things, and they cultivate differently than us. Some strains that work for us don’t work for them, and some strains that work for them don’t work for us. So, this is much more of a focus on breeding and creating things that will sell well in their program. And honestly, the program in Illinois is doing four to five times what we expected. It’s been a pretty incredible journey to work on this with them. As far as quality standards go, Mike and I have both made multiple trips to check and the plants and had multiple zooms and as many phone calls, to be as supportive of our partners as we possibly can.
What keeps us relevant in California is our proprietary genetics and our ability to grow high quality. So, the focus is heavily on providing Illinois and Arizona with incredible genetics, and we can’t control the way they cultivate it. It’s not reality, and it’s not how the relationship is built.
We can create is making sure that they have incredible genetics that are very unique terpene profiles to their marketplace, and we can keep the quality, check the quality control, and make sure that if it doesn’t meet our standards in the parameters of what we expect the flower to look like, they do something else with it. They’re a very robust operation that has the ability to make an edible in-house, do extraction in-house, so if the product doesn’t meet the standard, it doesn’t end up in Fig Farms packaging.
Mike
In Illinois and Arizona, we knew because of the length of the contract that we had with those folks that we wouldn’t have time to develop our own cultivation in those particular areas. Illinois was just a little bit farther away, and by the time that we built something out, you’d be missing out on some of the things that are happening in the market. So having a license type agreement in that particular state made a lot of sense, whereas some of the closer states are things that are a little bit more attainable could be something where we might actually be able to grow our own facility there at some point. So, for us, it made sense to do it in this fashion instead of having a cultivation team built out in those particular areas. Arizona made a lot of sense for that same logic, because although it is a lot closer to California, the total market share and market demand for top-shelf cannabis there doesn’t warrant us having our own factory. To be able to maintain it with the grower relationship has been something that allowed us to expand into these other states without having that create that whole footprint ourselves.
CBE
Are you proactively looking at certain markets that you like?
Keith
We are proactively looking, but the only way that we would move forward is with non-dilutive financing. We will not be bringing on any partners or moving to New Jersey or New York unless we have a partner that is going to offer non-dilutive financing for Fig Farms. We are ready to go wherever, and like Mike said, with Illinois and Arizona, there was no way that we would be able to build into those spaces in the timeframe of the length of our agreement and contract. Whereas, if I’d had the right financing. I would love to be on the East Coast. I have lived in California my whole life, but my parents grew up in New Jersey and moved to California, where I was born. But it’s a huge goal of mine to go over to the East Coast and have our own facility.
Mike
Owned and operated by Keith and Chloe, who are still 100 percent owners of Fig Farms.
Keith
Something’s going to present itself to me. I’ve stepped into so many messed-up cultivations in my life and fixed them. I’m just waiting for that opportunity where somebody’s reaching out about a facility that they have that’s failing and needs us to come in and fix it and take over operations, and it just hasn’t presented itself to me yet.
CBE
We could use you here in Connecticut. There are only three or four licensed growers, one is apparently in trouble, and the market needs to diversify its offerings. I think there’s tremendous opportunity even though it’s a small state.
Mike Doten
I’m ready to get on a plane.
CBE
Listen, guys, I really appreciate your time. Is there anything you want to add? What’s keeping you up at night these days? What gets you up in the morning fired up and eager to seize the day?
Keith
It all goes back to that seed room, popping seeds and breeding, creating something new and exciting. You imagine what’s going to happen when you put up male and female together, but you never know, and it’s just that constant access to magic and that constant access to creating new life and new and exciting things. It’s like having kids. I’ve got three kids and each one of them is so unique and so different. I get to do that 500 times every 75 days. The things that keep me up at night are silly; an HVAC going out or something related to security, things that are mechanical, and not anything to do with where I’m at with life or cannabis, or where our business is at. It’s the things that we can’t control.
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