For the past 12 months, the editorial staff at Marijuana Venture has compiled a list of candidates for our third annual 40 Under 40 feature. This year, we narrowed our list down from hundreds of worthy candidates to come up with a cross-section of personalities across the U.S. and Canada, from salt-of-the-earth farmers to tech savants. All of them have unique stories, successes and ambitions and all represent the excitement and promise of the cannabis business. We feel honored to share their stories and look forward to watching them push forward in our ever-evolving industry.
Kelly Ogilvie describes himself as an “armchair scientist” — a fitting label for someone who might have the best seat at the table as cannabis legalization spreads across North America.
Ogilvie is the CEO of DeepCell, a technology company focused on mining the cannabis industry’s fertile grounds for the latest innovations. DeepCell invents new products and technologies — such as its process for cannabis-infused sugar — and licenses them to other companies for manufacturing and distribution. The illegality of marijuana keeps federally funded research companies away from cannabis, creating an opportunity for smaller companies to fill the gap.
While only a fraction of DeepCell’s inventions might be a commercial success, the company is well-positioned in the burgeoning legal cannabis space because it doesn’t have significant overhead or capital expenses. With just four employees, DeepCell takes on the business risk of research and development. Its licensing partners take on risk in manufacturing and distribution. This royalty and streaming model allows the company to work with state-licensed partners in its home state of Washington, but it can also go national or international.
That’s by design, Ogilvie says. He compares companies with one asset — such as a large-scale grow operation or an extraction facility — as having purchased a lottery ticket for the future.
“I believe a lot of those bets are going to pay off, but it’s just one ticket,” he says. “We don’t own one ticket. We own lots of pieces of tickets.”
DeepCell has had success with its Ruby Cannabis Sugar, which in Washington is manufactured and distributed by Evergreen Herbal (“It’s not just weed sugar, man,” Ogilvie says, intoning a Cheech & Chong lilt on the end of his sentence. “It’s literally infused cannabinoids in crystals.). However, other inventions may show promise, but never come to commercial fruition. Dozens of concepts go into the hopper, “and what comes out the back end is like the Hunger Games,” Ogilvie jokes. “Only one can make it out alive. You’ve got to go through a lot of candidates to find out which one is going to be the best performer.”
One DeepCell idea that survived “the Hunger Games” and made it to the prototype stage was a terpene bitters product for the alcohol market, but even that didn’t guarantee commercial success.
“We thought it was going to be a huge product, and literally no one bought it,” Ogilvie says.
That’s just the nature of creating new — and as of yet, unproven — technology.
“Sometimes they turn into tech,” Ogilvie says, “and other times they just end up as a really cool science project.”
The company already has one patent on the preservation of cannabinoids via crystallization, with three more patents filed in microfluidics, prebiotics and terpene content. Ogilvie’s goal is to file 20 patent applications every six months or so.
“We like being right ahead of the curve,” he says, but acknowledges there’s a fine art to existing on the bleeding edge of cannabis innovation. Educating the consumer is crucial when it comes to previously unseen cannabis products. And that starts with educating the salespeople and budtenders. Ogilvie sees that responsibility being split 80-20 between DeepCell and its licensee partners, but it’s an evolving process as scientific research continually unlocks more insight into how cannabis affects the human brain.
“A lot of the myths that have been surrounding this space for a long time are going to get dispelled and I’m really excited about that,” Ogilvie says, pointing to the classic example of the indica-sativa nomenclature.
“People still talk about it like it’s gospel,” he says. “But it’s fiction, it’s flat Earth.”
It’s also imperative that DeepCell finds the right partners with which to license its inventions.
“We’ve learned a couple things: Growing the plant and having a master grower on staff means very little,” he says. “What really matters is the sophistication of the management team in taking products to market, understanding distribution channels and understanding costs of good sold. That sounds pretty obvious, but it’s just not for some reason. There isn’t the relentless focus on lowering costs of goods sold and focusing on margin as there is in other industries.”
Other red flags for Ogilvie’s team include lack of transparency or companies with a single-minded focus on a specific product or category.
“There’s a lot of that in this industry,” Ogilvie says of the latter. “A lot of cannabis companies are reluctant to make other people’s products because there’s an emotional connection to the brand. That emotional connection might not allow people to see what makes the most sense for their business.”
For obvious reasons, Ogilvie is always on the lookout for open-minded companies. DeepCell has dozens of potential products on the horizon, including a variety of topical innovations, but the consumer market — and the appetite of manufacturers — will ultimately select the winners.