Two of our favorite things taste (and feel) great together: CBD and chocolate.
In this episode of the Ministry of Hemp podcast, our host Matt sits down with David Little, CEO of Incentive Gourmet. Matt and David talk about the CBD chocolate business, the right way to do it, the future of CBD regulation and why he’s not scared of Hershey’s and Mars.
Don’t miss our new CBD Valentine’s Day Guide, with a great deal on David’s chocolate!
Joy Organics sponsored this episode of the Ministry of Hemp Podcast.
Joy Organics gummies are a convenient, fun way to get broad spectrum hemp extract. We love their new strawberry lemonade flavor, and the BPA-free jar is an easy way to take your infused treats anywhere. With 10mg of CBD, you can use these gummies to easily supplement your routine in a tasty way.
Use coupon code MOH20 for a 20% discount at Joy Organics.
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Incentive Gourmet combines quality full spectrum hemp extract with top quality chocolate to make their unique and delicious CBD chocolates. (Photo: Incentive Gourmet)
Below you will find the full written transcript of this episode:
Matt Baum: The Ministry of Hemp Podcast is proud to partner with Joy Organics. Head to joyorganics.com and check out their full line of premium THC-free broad spectrum CBD products. And be sure to check out their new line of 10 mg CBD gummies. Joy Organics is a proud sponsor of The Ministry of Hemp Podcast, and wants to help you add CBD to your daily regimen. Joy Organics, spread the joy.
Matt Baum: I’m Matt Baum, and this is The Ministry of Hemp Podcast. Brought to you by ministryofhemp.com, America’s leading advocate for hemp and hemp education.
Matt Baum: Valentine’s Day is right around the corner. So, today on the show, we are talking chocolate. But, of course, chocolate with a hemp twist. CBD-infused chocolate, to be precise. Today on the show I’m going to talk to David Little of Incentive Gourmet about CBD-infused chocolate, the CBD chocolate business, and as it turns out, the chocolate CBD business can be just as frustrating and ill-informed as the rest of the CBD business. Luckily, there’s guys like David, who understand that doing it the right way means doing it the hard way sometimes.
Matt Baum: Now, CBD chocolates can sound like a joke, or a clever shtick to charge you way too much for chocolate. And some companies are certainly doing just that. Not Incentive Gourmet. They put a very large dosage in their chocolates, their packaging is very upfront about the dosage in each chocolate, and like any good and reputable CBD company, they use independent third-party labs to actually verify how much CBD is in the chocolates that you are getting.
Matt Baum: Of course, that’s going to make for a more expensive product. But David’s not afraid of that, and he doesn’t shy away from that, either. He believes in quality, he believes in ethicacy. He’s an old school guy, and I got to say, I really like talking with him. Here is my conversation with David Little of Incentive Gourmet.
David Little: You know, I mean, everybody in the chocolate business knows everybody. Most of the people in the chocolate business have different aspects. You’ve got your small chocolatier kind of person, that has a shop, that makes stuff.
Matt Baum: Right.
David Little: And has happy business in the retail. And then you get the guys like me, that work B to B with companies. We specialize in coming up with unique items and supporting big purchases. We’re a midsize company.
Matt Baum: Sure.
David Little: Then, of course, you have the big, big guys who make the retail brands.
Matt Baum: The Hershey’s, The Mars, stuff like that.
David Little: They’re willing to play the retail game.
Matt Baum: Right.
David Little: They’re fully automated houses, whether you’re talking about Mars, or Hershey’s, or See’s Candy, or Ethel M, or whoever.
Matt Baum: Sure.
David Little: Those are that level. We’re sort of an anomaly. Because we do B to B, but we have no retail. We do some online, but we have no retail. If you’re a retailer, and I get a lot of calls from chocolate retail guys that are afraid to get into CBD.
Matt Baum: Sure.
David Little: Because they’re like, “Well, what would my customers say?” I said, “They’d probably freak.”
Matt Baum: Yeah, they’d probably love it.
David Little: I don’t have fear of that, because I operate out of a 10000 square foot factory, and nobody comes visit me.
Matt Baum: Fair enough. When you say B to B, what does that mean?
David Little: That means selling business to business.
Matt Baum: Business to business.
David Little: In other words, I work with companies that do marketing and promotion in used chocolate as a way to get the word out and promote their brand.
Matt Baum: Gotcha.
David Little: We work for everybody from Christian Dior to Bacardi, to Revlon, to Diageo. To many others. I mean, hell, I’ve been in business now since 1992. That’s a lot of customers.
Matt Baum: Yeah, I’m sure.
David Little: We got into CBD because we were asked by a friend in Ohio, who was asked by a THC company to make chocolate for them.
Matt Baum: Okay.
David Little: He couldn’t make it in Ohio. So, they came to us, we cut our teeth. We learned something from these guys. They learned something from us. Even though they had a chocolate background, they didn’t know everything. They learned systems from me, I learned infusing CBD with them.
Matt Baum: Fair enough.
David Little: And we decided to take the road less traveled in the CBD world, which is what I call the A road. 99% of the companies are on the B road, whether they’re manufacturing products, or vape shops, or retailers. They’re all in it for the short run, they’re selling dubious products. And I shouldn’t say everybody, but a large majority.
Matt Baum: Sure.
David Little: They’re using isolate.
Matt Baum: There’s plenty out there that are doing it wrong.
David Little: They’re not going to be around in a few years. Really, use full spectrum.
Matt Baum: Right.
David Little: Or, as we correctly say, phytocannabinoid hemp oil. To be totally politically correct. So, we decided-
Matt Baum: Can I ask, where do you guys get your hemp oil from? Where is that coming from?
David Little: Well, it depends.
Matt Baum: Yeah?
David Little: When we do private label it gets supplied to us by our partners.
Matt Baum: Okay.
David Little: We don’t care. You know? I shouldn’t say we don’t care, we go through a lot of steps to make sure it’s legit.
Matt Baum: Right.
David Little: Because a lot of it isn’t.
Matt Baum: Yeah, that’s true.
David Little: We know where to buy it from, we can buy it from Europe. The price keeps dropping on both isolate and full spectrum hemp. It’s dropped 60%, 70% in the last month.
Matt Baum: Wow. Why is that?
David Little: Oversupply. More people making it and less people buying it, actually.
Matt Baum: Oh, gotcha. Really? So, basically, you’re looking and you are saying, “All right. We know we want to do full spectrum and we know we have buyers. And we know what we want to do with it in our chocolates.” And you basically go, “Who can offer me the best price?” At that point.
David Little: No, it’s more than that. It’s, “Who can offer me the best product?”
Matt Baum: Okay.
David Little: I’ll pay more. I’ll pay more for… I can buy CBD from Europe.
Matt Baum: Sure.
David Little: For $12000 a kilo, which is four times what it is in the U.S. But there’s situations where my buyer requires all that European kosher certification, blah, blah, blah, blah, blah.
Matt Baum: Right, right.
David Little: We’ve never used isolate. Isolate has been deemed to be illegal by certain people, certain lawyers. 80% of the companies use isolate because it’s both tasteless, it’s cheap, and it’s easy to use.
Matt Baum: Yeah.
David Little: We will use isolate as long as we, A, know the customer, B, they supply it, C, they sign all the releases. But we try not to, because again, we want to be on the A road. We know there’s only going to be a few people left about a year from now. And quality trumps price in the longterm.
Matt Baum: Absolutely.
David Little: There’s a lot of people on the low road, and they’re getting sued by lawyers, by the FDA. I mean, I can’t tell you how many people come up to me and say, “We’d really like you to make us a chocolate bar, because we want our own brand.” So, I’m like, “Well, what are you doing now?”, “Well, we’re buying this chocolate bar for $3, and it’s got 300 mg in it.”
David Little: I said, “No, it doesn’t.”
Matt Baum: No.
David Little: “Because it doesn’t have 300 mg, it has 30, 40, or 50.”
Matt Baum: Right.
David Little: “Well, we don’t care.” Well, I said, “Well, you’re not buying from me, because I’m not going to charge you what he’s charging you. If you’re going to buy it from me, you’re going to do it right. Because I’m not going to put my name on it, or even be on the stream of consciousness, even if it is your name.”
Matt Baum: Right.
David Little: So, we will test it, make sure it comes out right. And if they want to say it’s 300 mg, and they say it’s 600, that’s their problem. But we won’t encourage that. So, we’ve avoided making chocolate for many people. Because there’s a lot of get rich quick in this industry.
Matt Baum: Of course, of course.
David Little: And they’re all being sued and going out of business.
Matt Baum: So, how does it work in a situation? Let’s say I am a customer, and I come to you. And from what you sent me, it sounds like you have one plant that is doing CBD, and one that is not. Is that right? Or is it the same building, just separate?
David Little: Same building, separate setups.
Matt Baum: Okay.
David Little: Separate facilities. But we also will work with other suppliers, too. I put together a consortium of food people that I’ve known over the years, that are interested in getting into CBD.
Matt Baum: Right.
David Little: Don’t have the time or expertise. So, they know me, I know them, we trust each other. So, I have an affiliated baker that I work with. I have an affiliated hard candy manufacturer that does it the right way, not like everybody else does it. Because he’s been doing it for over a hundred years.
Matt Baum: Wow.
David Little: These guys are all FDA approved.
Matt Baum: Yeah.
David Little: They’ve been doing their thing. So, I go to them, I say, “You want to make CBD?” They say, “Sure, show us how.” And we’ve done that. Now, we are really the chocolate guys, and we’re the packaging, and everything else. You know, we’re not trying to be everything to everybody. But we know who can make baked goods.
Matt Baum: Right.
David Little: We know who can make hard candy. So, we’re sort of backtracked a little bit, and want to stay in the chocolate. So, people come to me, and they ask me to make private label chocolate. I evaluate if they’re our kind of client, and what they want.
Matt Baum: And this private label, that would be just for them? You would say, “I’m not going to sell that to anybody else, it’s just for you, Christian Dior.” For example?
David Little: Yeah, it’s Bound’s CBD. I can’t sell it to anybody else. It’s Bound’s brand.
Matt Baum: Fair enough.
David Little: We do make our own brand, but we don’t really push it. Because I’m not anxious to push it. I’d rather be private label. We also work with infusing non-CBD. We took our CBD knowledge and said, “Heck, we can infuse chocolate with anything. We understand how to do it now.” We actually have culinary trained chefs on staff. We also have culinary chefs in Belgium that work with us, come over here periodically, and vice versa.
Matt Baum: Wow.
David Little: We have a culinary chef who is a professor at a leading culinary school, that wants to be of council, I would say. So, we have enough resources to draw on, but we’re not going to make a three hour candy bar with that kind of pedigree. For a lack of better term.
Matt Baum: Right. And anybody who knows what they’re looking for is going to say that’s entirely too cheap to be what it says it is, anyway. I mean, you’re just going to shoot yourself in the foot.
David Little: Well, there’s a lot of people that want cheap. There’s a lot of get rich quicks out there.
Matt Baum: Right.
David Little: I mean, I have people that call me and then disappear, and then call me again, and then disappear. It becomes like a game.
Matt Baum: Yeah.
David Little: You know, we’re ready to go, “Well, you know.” And then they disappear. And then they come back, we’re ready to go, and then they disappear. I’m like, “Don’t call me again. These are the rules.”
Matt Baum: Yeah.
David Little: You know? But a lot of them are in the vape CBD business. Look, there’s a lot of people making money selling questionable products. We just don’t want to be on that road, because we think it’s a short road. I’d rather be on the interstate.
Matt Baum: Right, exactly. How shifty is this? Is there just… Are you constantly being contacted by people that are working below your levels, or standards, or reputation?
David Little: Yes. We get contact all the time, because people say, “Oh, I’d like to make a candy bar.” We don’t like to make candy bars, anybody can make a candy bar. You could make a candy bar in your house.
Matt Baum: Right.
David Little: Can you make it right? No. So, we don’t like to make candy bars. We make them for some of our better clients, because we use their molds. If you really want to make a candy bar with a logo correctly, it’s thousands of dollars.
Matt Baum: I’m sure.
David Little: To get molds that are professional molds, that are used to reproduce correctly. A lot of these people don’t want to spend $3000 up front.
Matt Baum: Of course.
David Little: They say, “Oh, I just want 500 candy bars.” Or, “I only want a thousand candy bars.”
Matt Baum: Right.
David Little: “Can you make it?” And we’re like, “No, but other people will make it for you. Go call your local candy shop.”
Matt Baum: Sure.
David Little: Let them mix in the CBD by hand. Then wait until you get a knock from an attorney, who sent it for testing, and you don’t test out.
Matt Baum: Right.
David Little: And you’ll go, “Why?” You know, sometimes to do things right requires procedures, and patterns, and experience.
Matt Baum: Do you have a full crew of people that are there, that just do testing and stuff? Like when you make a batch… I’ve requested a batch, and I’ve said I want it to be, you know, I want CBD-infused. You have like a group of people that are testing each batch as it comes out?
David Little: No. We end up sending a certain batch out to an… You have to have an independent lab, first of all.
Matt Baum: Right, okay.
David Little: That’s one of the other games. A lot of people here say they have independent labs, but they don’t. It’s really caveat emptor, as they say.
Matt Baum: Yeah.
David Little: And I just had a conversation with a guy, and I think he’s knows what he’s doing. But I said to him, “You know, I read your independent test lab results. But why are they on your letterhead? That’s not independent.” You know?
Matt Baum: Not exactly, is it?
David Little: I see that all the time. I see that all the time. If you picked up 20 websites, they would all say the same thing, “We believe in the highest quality, and we test, and we this, and we that.”
Matt Baum: Sure.
David Little: Now, I can read through the lines and know what’s going on, most people can’t.
Matt Baum: Right.
David Little: They just assume that, “Oh, well, it’s tested.” What does that mean, you know? And the big guys do it right. But most of the other guys don’t. Most of the stuff you see for sale doesn’t even have the results online.
Matt Baum: Of course.
David Little: Because they don’t test out, it’s very simple.
Matt Baum: And you’re not so much worried about, like, when you say testing out, it’s not so much making sure that the CBD is what it is. Because you know who you’re buying from. It’s making sure that the amount that you’re saying is in it, is actually in the candy bar, or the chocolate.
David Little: Yeah. There’s two parts to doing it right. You get heavy metals, pesticides, and other. A full lab test of the CBD you’re using, number one. Somebody says, “I’m going to supply you with his CBD.” How do you know it’s not arsonic?
Matt Baum: Right.
David Little: So, they give you their results for an independent lab. Unless you really know them, you test it anyway. So, you test it that way to make sure it’s legit.
Matt Baum: Of course.
David Little: Then you do what’s called a COA, a certificate of authenticity, which says that you have correctly dosed it. If you’re saying there’s 20 mg in a piece, you better be between 20 and 25.
Matt Baum: Right.
David Little: Most people don’t have either of those. Some will not have the second, will have only the first, which doesn’t mean anything. Some will have the second, but it won’t be an independent lab. And most don’t have either. The guys who are in the vape shops are selling the stuff made by the guys that don’t have either.
Matt Baum: Yeah.
David Little: These are also, by the way, the guys that are facing multiple class action lawsuits in the state of California. Because some lawyers finally said, “We’ll spend $80 and get a test.” And under California, we don’t have to even buy the product.
Matt Baum: Yeah.
David Little: We’ll just sue the sucker because he says it’s got 300 mg, and it’s only got 25.
Matt Baum: Right.
David Little: We’ll just sue him. And they’re suing everybody they get their hands on in Cali.
Matt Baum: I will say that one of the major differences I’ve seen between your chocolates, and some of the ones that you’re talking about, is the packaging. And your packaging is very plain and very upfront, “This has been tested. This contains this. This is exactly what you’re getting.” I thought that was really impressive, honestly.
David Little: Well, I mean, we… I wouldn’t say it’s my packaging, it’s correct packaging.
Matt Baum: Sure.
David Little: We know what has to be disclosed. That’s another problem. Most of the guys in this industry don’t understand the packaging and labeling laws. I mean, I have a whole closet here, stuff that’s just horrendous. It would never pass the FDA. But it’s selling. It’s selling. So, who am I to tell them what to do?
Matt Baum: Sure.
David Little: But the point I’m getting at is we have experience, we know what to do. A lot of people don’t, but they’re making money, and they’re in it, and they don’t care.
Matt Baum: I would think, though, being ahead of the game like you are, when the FDA does get involved in this, and they’re going to, you’re already ahead of the game. You’re done. You’ve got your stuff right there.
David Little: Yeah, I already have the FDA inspect my plant.
Matt Baum: Right.
David Little: They’ve been in here for 20 years. Now, there’s other certifications that, depending on who you’re selling, is required. For example, if you’re selling vape shops, and CBD shops, they don’t care about certifications. If you’re selling Walmart, Target, and large chains, they expect certifications that nobody has in this industry. Including me.
Matt Baum: Absolutely, absolutely.
David Little: They expect certain certifications for them to carry your product. Nobody has those certifications, I don’t care what people tell you.
Matt Baum: Right.
David Little: Some of them are looking the other way.
Matt Baum: Let me ask you on the chocolate and CBD business itself, how does it work? Obviously you get the CBD, you’ve been making chocolate for more than 25 years. How did you learn the to combine the two? What is the actual process?
David Little: What is the process? Well, you have to mix it. It depends how it comes in, oil or powder.
Matt Baum: Yeah.
David Little: You have to mix it and you have to have expensive equipment, because you cannot mix it by hand. Most of these people are mixing it by hand, I might add.
Matt Baum: Like literally just stirring it in?
David Little: Well, imagine CBD the size of a quart of milk.
Matt Baum: Okay.
David Little: Okay, imagine that.
Matt Baum: Right.
David Little: Then imagine 100 pounds of chocolate.
Matt Baum: Okay.
David Little: Now, that CBD, let’s say, equates to 10 mg a piece.
Matt Baum: Okay.
David Little: So, it’s math. Based on a hundred pounds of chocolate and the size of your chocolate, whether it’s a bar or a piece, you’ll know what your yield is. But picture a hundred pounds of chocolate, and a milk carton of CBD. That milk carton of CBD has to be mixed ratably to get down to 10 mg.
Matt Baum: Right.
David Little: So, let’s say that milk carton weighs a pound. Okay, so a pound is 453 grams.
Matt Baum: Right.
David Little: Okay. 453 grams, times a thousand, is milligrams. You’ve got to get 10 into that piece. Do you think you can mix that by hand?
Matt Baum: I would assume no.
David Little: Impossible.
Matt Baum: I would assume absolutely not.
David Little: No. You have to mix it by machines, expensive machinery that’s required to work. That allows you to ratably mix the solutions and produce the piece. So that when you send it out to a lab, it tests positively.
Matt Baum: Right.
David Little: It tests correctly, that’s the best word.
Matt Baum: Yeah, correct is what you’re looking for.
David Little: You can’t do it by hand. There’s no way you’d do it by hand. We have pastry and chocolate chefs, they can’t do it by hand.
Matt Baum: No, I’m sure.
David Little: That doesn’t mean we don’t make small batches of infused items. But you can’t do it by hand, it’s impossible.
Matt Baum: Of course.
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Matt Baum: So, from there it’s poured into a mold, cooled, and you have CBD chocolates.
David Little: More or less, more or less.
Matt Baum: Okay. And different clients can contact like you? Like you said, you’ve worked with Christian Dior and stuff, and they say, “Well, we want it to have our signature on it.” Or something like that. And if you say, “Yeah.”
David Little: Well, them, I mean, those clients I’m talking about are not in the CBD world. They’re in the B to B world.
Matt Baum: Oh, gotcha.
David Little: Yeah.
Matt Baum: They’re just buying chocolate.
David Little: Yeah, they have custom packaging. We use European techniques for printing the chocolate.
Matt Baum: Sure.
David Little: Everybody has different packaging requirement. You know, if you’re Christian Dior, or you’re Bacardi, or Diageo, you have certain requirements of what you want it to look like.
Matt Baum: Of course. So, who are your customers that are buying the CBD? Who are you marketing that to?
David Little: Well, we usually do a lot of private label.
Matt Baum: Okay.
David Little: I can’t really tell you who my clients are, I’m not allowed to.
Matt Baum: Right. No, but I mean like generically speaking, I guess.
David Little: But they’re in the marketplace.
Matt Baum: Okay.
David Little: And they wanted a professionally product to their specs, to their packaging. Whether I designed the pack or they design the packaging, it doesn’t matter. It still has to be approved by them.
Matt Baum: Sure.
David Little: You know? And then they go to market with the… Now, a lot of the companies that we deal with are in the THC chocolate world.
Matt Baum: Okay.
David Little: So, they’re smart enough to know that they can’t manufacture CBD and THC in the same facility. It’s the same as baking bread and gluten-free bread in the same facility.
Matt Baum: Right.
David Little: There’s too much of a risk of cross-contamination. So, they know that if they have us do their CBD, they don’t have any chance. Because we don’t have any THC.
Matt Baum: That’s perfect, yeah.
David Little: So, yeah. It’s a safety measure. You know, they come, they visit us. It depends who the client is.
Matt Baum: And this is like a health food store or a CBD shop, these are the kind of clients you’re dealing with?
David Little: Well, no. We’re dealing more with brands that are in these places.
Matt Baum: Oh, gotcha. Okay.
David Little: Now, we are working on a program. One thing we can do is we can take our CBD chocolate, which you tasted the smaller piece.
Matt Baum: Mm-hmm (affirmative).
David Little: And we already know how to package it. I mean, we already know all the requirement of the packaging. So, we’re working on a program that can be sort of interesting, which would allow any CBD retailer, vape shop or others, to have their personalized chocolate. What’s going on in this industry over the last couple years is, people can get oils. Oils are very popular. Oils are, whatever, 60% of the market tinctures.
Matt Baum: You’re right.
David Little: And people making oils have developed custom programs. In other words, for only a couple thousand dollars you can make your own oils, and have your label on it.
Matt Baum: Right.
David Little: They’re still pouring the oil into the bottle for you, and for Jim, and for Jane, and for Jack. But they’re then printing up a label, and applying it to the bottle in the dropper.
Matt Baum: Just like a white label service you’re talking about, basically.
David Little: Yes, it’s white label.
Matt Baum: Okay.
David Little: That’s the word for it. It’s not private label, it’s white label.
Matt Baum: Right.
David Little: But they’re doing it for 20 different people with the same batch. Now, we can do it with chocolate, but we can do it for probably as small a run as a couple hundred pieces. And all we have to do… And we have written software that allows people to upload their images online, on a different part of our business. So, you could have Bounds CBD. You could upload your name and location, and we could turn around make you as small a run as 200 pieces, 100 milk, 100 dark. And you could have Bounds. Just like you’re trying to do.
David Little: Because all these stores are trying to extend their brand.
Matt Baum: Right.
David Little: And they can do it with oils. Like, 7-Eleven doesn’t have 7-Eleven hotdogs, 7-Eleven coffee.
Matt Baum: Right, right.
David Little: They have everyone else’s brand.
Matt Baum: Right.
David Little: But if 7-Eleven could have 7-Eleven coffee, they would do it.
Matt Baum: Sure.
David Little: Now, all these CBD stores have the ability to have their own tinctures. It’s no big deal, [inaudible 00:26:22]. We’re going to do that in edibles. And, you know, for $500 you can have your own brand.
Matt Baum: And what’s the turnaround on that? If I call you tomorrow, and I’m like, “I need 200 Bonds. I want 100 milk chocolate, 100 dark.” What’s my turnaround time?
David Little: Probably a week, not even.
Matt Baum: That’s amazing.
David Little: Well, we have the product.
Matt Baum: Okay.
David Little: What we would have to do is we would have to… You know, the packaging would be pretty much a foil bag with stickers on the front and back.
Matt Baum: Right.
David Little: But, you know, that’s all you can do. I mean, if you want to be professional, then we’d get into like multiple thousands of pieces that we do for other companies. Then they do the whole packaging your way, that’s private label.
Matt Baum: Sure, sure.
David Little: But I think there’s a big opportunity for guys who want to have white-label, and have their own brand.
Matt Baum: Yeah. That’s pretty cool.
David Little: Yeah. We haven’t fleshed that out yet, but it’s no big deal. We’re already doing it on another side of our business. I just have to figure out how to get the word out. Because, God knows, there’s a zillion vape, and CBD stores, and health food stores that would love to have…
Matt Baum: Popping up every day, too.
David Little: Step into the CBD market for $499, you know?
Matt Baum: Yeah, that’s not unreasonable at all. That’s pretty cool.
David Little: Right.
Matt Baum: Can I ask you, are you-
David Little: And it’s [inaudible 00:27:39] quality, and it’s got all the tests. It’s got all the right stuff, not like a lot of that other stuff out there.
Matt Baum: Right. Are you worried at all about the future of this? Once the FDA does get involved and says, “All right. We have FDA recommendations now.” What happens when like Mars, or Hershey’s moves into the market? Are you worried about that at all?
David Little: No. I think that actually might be good. First of all, it’d knock out all the crappy products that are made incorrectly or mislabeled.
Matt Baum: Right.
David Little: I think that right now, the low quality that’s out there is hurting the industry.
Matt Baum: I totally agree.
David Little: The oversupply of core products.
Matt Baum: Totally agree.
David Little: If everybody had bad coffee, then all the sudden Starbucks came along.
Matt Baum: Yeah.
David Little: Then everybody upgraded their coffee.
Matt Baum: Absolutely.
David Little: You know?
Matt Baum: Absolutely.
David Little: I already know how to make good coffee. I mean, just for the analogy. But there’s always going to be a place for quality. Starbucks, or in your case, Mars, they don’t want to be… I’m not looking to be in every retail spot. God knows how many places carry M&M’s. Okay?
Matt Baum: Right, they’re trying to be in 7-Eleven, like you said.
David Little: So, they came out with CBD M&M’s, hey, that’s great. That’ll help spread the word. But I make a more upscale product than an M&M. And I like M&M’s, don’t get me wrong. But the point I’m getting at is that will draw attention, that will get rid of a lot of the low quality stuff.
Matt Baum: Definitely.
David Little: There will be a place for somebody like me, for people who want private label who are legit. So, I don’t see that. The only bad part of the FDA getting involved is they come in and say, “Okay, you have to be pharmaceutical company.” That’ll knock the whole industry out.
Matt Baum: Yeah. Yeah, definitely.
David Little: Because nobody wants to afford that testing. But if they set up reasonable rules under nutraceutical, and they allow people to still do the business without hampering it or going over the extreme, I’m more than happy. Because people are going to want legitimate manufacturers. There’s private label out there for every product you see in the supermarket.
Matt Baum: Sure.
David Little: Someone’s making it, okay?
Matt Baum: Sure.
David Little: And someone’s making it who’s got a legitimate operation. You know? I can’t say the same about every CBD product out there.
Matt Baum: Right. I hadn’t thought of that, though, you’re absolutely right. Let me ask you, no hard numbers. So, obviously the bulk of your business is baked goods and chocolates. What level do you think the CBD business is right now compared to the rest of your business?
David Little: Oh, it’s probably 25%, 30%.
Matt Baum: Okay.
David Little: We haven’t really pushed it as much as I could, because I’m busy on the other sides of our business.
Matt Baum: Sure.
David Little: And I’m also trying to weigh out. I’ve been very picky. Look, if I was only living off the CBD business, I’d be on the B road, too.
Matt Baum: Yeah.
David Little: I’d make as much money as I can and get out.
Matt Baum: Right.
David Little: But that’s not… I’ve been in business too long to do that, you know? So, I’m just as happy to hone my skills, come up with new products, come up with new packaging, new designs, all that stuff.
Matt Baum: Right.
David Little: That’s allowed me to offer more to my clients, than it is for me to just keep making candy bars, or whatever.
Matt Baum: Sure. Are you seeing growth in that 25% or 30%? Is that up or is that down from when you started?
David Little: It’s hard to tell. We don’t have a long track record. CBD’s only been around a couple years, practically.
Matt Baum: I suppose that’s true, yeah. How long have you guys been doing CBD for exactly?
David Little: I think the future of CBD and edibles, a lot of that stuff, people are doing some infusions. It’s as if you just came out with white bread. Everyone’s making white bread, that’s CBD.
Matt Baum: Right.
David Little: Everything in white bread.
Matt Baum: Right.
David Little: Some are making it into sandwiches, some are selling it as packages of white bread that you can take home. Then a couple people came along and said, “Oh, we can make sourdough. Oh, we can make raisin. Oh, we can make rye.”
Matt Baum: Right.
David Little: Same analogy, that’s what’s going on in CBD.
Matt Baum: Fair enough.
David Little: You can only have so much white bread, you know?
Matt Baum: Yeah, that’s true. How long have you guys been putting CBD in chocolate?
David Little: Couple years, which is like a lifetime in this industry.
Matt Baum: Right. And what do you see the future here? What do you think, five years from now, what are you going to be saying about CBD and your chocolate? What do you think?
David Little: I still think there’s going to be a demand for people. In other words, M&M Mars, that was the name you came up with.
Matt Baum: Right.
David Little: Whether it’s them or the liquor company, they’re all looking to go everywhere.
Matt Baum: Oh, absolutely.
David Little: You know? But not everybody wants to carry M&M’s. Some people want to carry Godiva.
Matt Baum: Right.
David Little: Some people want to carry fancy Swiss chocolates. When you’re a midsize manufacturer, you have to pick your battles, and pick your places.
Matt Baum: Absolutely.
David Little: You don’t want to be everywhere, because you can’t compete with M&M’s, Mars or any of these companies. But there’s enough other places. You know? There’s a supermarket and then there’s a delicatessen.
Matt Baum: Right.
David Little: And there’s an upscale market. So, there’s plenty of places for you to go, make your return, have loyal customers, and just not get into the price game.
Matt Baum: Sure.
David Little: Get into the quality game.
Matt Baum: Are you seeing like chocolate shops reaching out and asking you? Like chocolatiers, high end chocolate shops and stuff? Do they reach out to you about this stuff?
David Little: Periodically. I even have some who wanted to rent my spot, because I have a more or less CBD facility.
Matt Baum: Right.
David Little: I’ve had people ask me to rent out my facility, oddly enough. You know, chefs. Those kind of people have full-time jobs.
Matt Baum: Right.
David Little: And they want to dabble, but they don’t want to give up their full-time job. You’ve either got to be in it, or you’re not. You know what I mean?
Matt Baum: Of course, yeah.
David Little: These other people, you know, I have consultants who are full-time chefs. I don’t think anybody’s going to leave what they’re doing just to get into CBD. And you don’t have to be a chef, we have chefs, but you don’t have to be a truffle chef to make a good product.
Matt Baum: Of course.
David Little: You can make good product without all that. And those guys, a lot of those chef are already working at very upscale restaurants, or food chains, and this and that. So, they’re eyeing CBD, and trying to figure out how to get it in their menu.
Matt Baum: Right.
David Little: But I don’t think they’re ready to leave their nine to five job, to put it all one the line to open up a CBD chocolate business, or food business.
Matt Baum: Yeah. Have you heard any criticism from some of these people about you moving into CBD?
David Little: Criticism?
Matt Baum: Criticism as far as like, “Oh, well, they’re just trying to find some new twist on it, or whatever. It’s not real chocolate.” Or something like that. Anything like that?
David Little: No. If anything, people I know are sort of like, “Okay, you can be the pioneer. Let us know how it goes.”
Matt Baum: Gotcha.
David Little: I get calls from other chocolate companies all the time, asking me for information. And I work with them. I give them some information. At the end of the day, they know how to make chocolate almost as well, or even better than me in some cases. But what they’re afraid of is they don’t know their state laws.
Matt Baum: Yeah, the legal side.
David Little: And they don’t know how it will effect their retail business.
Matt Baum: Definitely. And none of them want someone to come in and say, “All right, throw this entire warehouse away. You did it wrong.” Or, “You’re not supposed to be doing it this way.”
David Little: Right. They’re afraid. I mean, I’ve got calls from guys I know that do a lot of work for other people, and they’re really worried that God forbid the FDA writes them up, and says, “Oh.” You know. Or the State of Ohio says, “We have an action against XYZ.” Then everyone’s like, “Oh, shit. We bought our Easter Bunnies there. We’re not going there.”
Matt Baum: Yeah.
David Little: I’m an older guy, I’ve made my stuff. I’ve made my name, my reputation. I’m not milking Hershey by any stretch.
Matt Baum: Sure.
David Little: So, I don’t mind helping people, working with people. I mean, I know that some people have bought CBD from me and swear by it, other people have bought it and it hasn’t worked for them. You have to be realistic. Not all medicine works.
Matt Baum: Yeah, exactly.
David Little: But I have a loyal following of friends and associates that want to buy my CBD. I can’t go to play golf without guys coming up to me at the golf club, saying, “I need to get more CBD from you.” And it’s like really funny, it really is.
Matt Baum: That’s great.
David Little: I say, “Well, you know where my factory is. You’ve been there.” So, in a way it’s nice to help people. I mean, obviously we have to pay the bills.
Matt Baum: Of course.
David Little: People say to me, “Oh, CBD doesn’t work. Blah, blah, blah.” Well, they’re right. Some people it doesn’t work on, but some it does.
Matt Baum: Absolutely.
David Little: So, if you can help half the population and make some money out of it, and be creative. I, myself, am more of a marketing entrepreneur. A lot of entrepreneurs tell you it’s not about the money, it’s about the challenge and the fun. I believe in that.
Matt Baum: Fair enough.
David Little: Yeah. Sure, would I like to make a lot of money? Without a doubt. But, it’s the wild West. A lot of people have compared CBD to the rise of the technology. A lot of people got into it.
Matt Baum: Absolutely.
David Little: A lot of people went out of business, a lot of people made a lot of money. I see a lot of companies going public and not having enough earnings to sustain that, going out of business.
Matt Baum: Yeah. Just like any other business though, it’s a bubble right now. And it is going to burst. And the people that are doing it right will survive.
David Little: It is a bubble, and it’s going to burst on the people that don’t have legitimate businesses.
Matt Baum: Yeah.
David Little: So, in a sense, I’m sort of happy if the FDA comes in and throws out… What I don’t understand is how many people swear by CBD, and they’re buying products that are suspect. So, maybe if they’re buying good products, how much better it would work.
Matt Baum: Absolutely.
David Little: You don’t want to lose all these people because they tried an underdosed CBD edible or tincture, and never came back.
Matt Baum: Yeah.
David Little: You know, it’s like, well, if you try Asprin and it doesn’t work, you don’t come back to Asprin.
Matt Baum: Right, you’re going to switch to Advil or whatever.
David Little: I think a lot of the population it’s not working for, because they’re not buying the real thing.
Matt Baum: Yeah.
David Little: But there is a significant amount, whether it’s placebo or otherwise, that swears by CBD. I hear a lot of stories.
Matt Baum: Well, I mean, that same works for anything, though. I mean, there’s a lot of placebo effect in just about anything. The good news is with CBD, when it’s done right, and it’s done by reputable people and you know what you’re getting, it actually works. It’s not just placebo effect. You know?
David Little: Well, it also depends. If you have a lot of medicine in your body, it won’t work.
Matt Baum: Right.
David Little: It won’t overcome that.
Matt Baum: Right.
David Little: I have people who have a lot of medicines, and they want me to… You know, they want to know why it doesn’t work. Well, if you’re on painkillers, you know, if you’re on deathbed, CBD isn’t going to bring you back to life.
Matt Baum: Probably not, no. And anyone who tells you differently is lying.
David Little: But it does work, I’ve got people who swear by it. I actually like the fun of developing. What I like to do is I like to stay away from major retailers, because they’re difficult to work with.
Matt Baum: Sure.
David Little: In any product. And I look for alternative markets. So, I look at people, who is CBD helping? I look at those people, and say, “How do I get to that market?” It’s alternative marketing. Some people call it guerrilla marketing.
Matt Baum: Right.
David Little: It opens up a lot of things, there’s still a lot of buzz about CBD, no matter what the FDA writes. There’s still people that want to try it. And it works for some people.
Matt Baum: Absolutely.
David Little: So, edibles, you know, everybody likes chocolate. So, we have a big advantage over everybody else.
Matt Baum: Oh, and that’s one of the things I wanted to bring up. My grandmother, she is in some pain, and she’s older. And she wants to try CBD. But she does not like the flavor of any of the tinctures, or the oils, or some of the edibles she’s tried. So, I’m going to take her some of your chocolates, and I want to see what she thinks of it. Because I think that is an idea, especially for the elderly.
David Little: Well, the elderly have pill fatigue.
Matt Baum: Yeah.
David Little: So, one thing we’re working on are edibles for the elderly. They don’t mind taking them, they’re not worried about their figure.
Matt Baum: Right.
David Little: They don’t mind taking a chocolate. We also have sugar-free, which is unheard of in this industry. So, an elderly person will take a chocolate and say, “Yeah, I’ll try a chocolate.”
Matt Baum: Totally.
David Little: They might not even know. The one problem, when you say she didn’t like edibles, what didn’t she like about it?
Matt Baum: She didn’t like some of the flavor and whatnot. She thought it was like too grassy, or it was too that kind of earthy, hemp flavor. And I think she loves dark chocolate.
David Little: Well, she’s going to have that. I don’t know what brand you got her, it’s not important. Real CBD in edibles is going to have that, that’s another one of the problems.
Matt Baum: Yeah.
David Little: A lot of the CBD stuff made out there is made with isolate, which has none of that earthy taste.
Matt Baum: Right.
David Little: You might as well give somebody… You know, they might as well eat a solid Hershey bar. They don’t know they’re getting it. If you don’t have any difference in taste, how do you know you’re really getting something?
Matt Baum: I totally agree. That’s why I like the full spectrum idea.
David Little: Now, I agree. Now, we use really upscale chocolate. We use Belgian chocolate. But we have to mask it. But you can still taste from my chocolate, and you did.
Matt Baum: Oh yeah. It’s there.
David Little: There’s something. And we actually dosed it heavy. Nobody doses it heavy as we do. We have 33 mg, and we’ll probably cut that back in the future. Because most of the retailers put out 10 mg in their stuff.
Matt Baum: Right.
David Little: In their edibles, or their gummies, or whatever. Because 10 is about as low as you can go. But our belief has been, “If we can make you an edible that works for you, you’re going to come back.” Doesn’t do me any good to sell you one box.
David Little: So, you’re going to have that earthy taste. The question is, how good of chocolate did they use?
Matt Baum: Yes.
David Little: And did they really use trial and error to try and mask some of that chocolate? We’ve masked CBDA with orange, dark cherry. I mean, we do that all the time. We mask, we have a caramel chocolate. So, it really depends. Your grandmother should overcome her dislike for earthy, because hopefully it’ll work for her.
Matt Baum: I think so, too.
David Little: At the end of the day, if it works for her, because nobody likes taking pills.
Matt Baum: Right. It’s not like you have a bunch of delicious medication.
David Little: At the end of the day, your grandmother starts playing ice hockey, you know she’ll take more chocolate.
Matt Baum: Fair enough. Yeah.
David Little: And if she’s playing Drake basketball, she’ll come right back for some more chocolate.
Matt Baum: There you go. Depending on her jump shot.
David Little: [inaudible 00:42:01] grandma.
Matt Baum: You can find links to Incentive Gourmet and their full line of CBD chocolates, including their Valentine’s Day package, in the notes for this episode over at ministryofhemp.com.
Matt Baum: That about does it for this episode, but be sure to check out the show notes for more on Incentive Gourmet and this weeks sponsor, Joy Organics. You can also find a full written transcript of this episode in the show notes, because at Ministry of Hemp we believe an accessible word is a better world for everybody. If you have questions about this episode or any hemp questions, really, you can call me at 402-819-6417 and leave a message on the Ministry of Hemp phone line.
Matt Baum: Now, keep in mind, this is for questions. So, if you’re looking for sponsorship info or anything else, shoot us an email to [email protected]. You can also send me questions directly to [email protected], or hit us up on any of our social media platforms, Twitter, Facebook, Instagram. Just search, “Ministry of Health.” And you’ll find us. We love to hear from you, and like I said, if you’ve got questions, we will answer them live on the show.
Matt Baum: Be sure to head to ministryofhemp.com and sign up for our newsletter so you can be the first to hear about all the cool stories we’re putting up. Like our very own Drew Delos Santos, who just wrote a story about the 11 best CBD skincare and hemp beauty products on the market right now, made by reputable companies that we not only trust, but use ourselves. Not me, I’m naturally beautiful so I don’t need that stuff. Kidding.
Matt Baum: Next time on the show we are going to be talking about a new powdered CBD product, and how it works. I’m excited for this one and I hope you come by and check it out. Well, it’s time for me to get out of here. This is your host, Matt Baum, reminding you take care of yourself, take care of others, and make good decisions, will you? This is The Ministry of Hemp Podcast signing off.
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