“While we’re producing the equipment — and we’re producing it as fast as we possibly can to keep up with demand — we’re also doing research on how to make it faster,” Joseph says.
He believes this will be key for Apeks to diversify back into other markets as the cannabis industry commoditizes over the next three to five years.
“We would like to get the equipment to the point where the return on investment for lower value, lower volume products are justified,” Joseph says. “Then we can get back into flavorings. We can get back into natural products, essential oils things like that.”
Two other side effects of that early commoditization are an industry that is becoming more mainstream and competitive. That also means Joseph faces less stigma for the work his company does — he was recently invited to speak at a Rotary Club and was pleased with the level of engagement and interest.
On the future of marijuana legalization in Ohio
Apeks Supercritical President Andy Joseph surprised some when he came out against Issue 3, the initiative to legalize marijuana in Ohio, in the November election.
His company’s biggest customer — by far — is the cannabis industry, after all.
But Joseph, like many others, had concerns about monopoly issues, investors that weren’t identified and regulation difficulty. He feels that if Issue 3 had passed, the federal government would have intervened at some point.
Issue 3 did, however, start a conversation across the state, and he says it opened the eyes of legislators when they realized the vast majority of Ohioans approve of medical marijuana.
“I believe there will be legalization of cannabis in Ohio in 2016. There’s no question in my mind that it’s going to happen. Exactly what it looks like, that’s kind of still up in the air,” Joseph says.
The challenge the legislative body has in front of them, he says, is that the program has to provide a certain degree of business opportunity to be successful.
This is something Minnesota, and to some degree Florida, has run into. The restrictive programs in those states squashed the market before it could get off the ground.
“If you don’t have a patient base, that is authorized or legal, to have access to medical marijuana, then you won’t have the business, the entrepreneurs to come in and start the businesses and operate the businesses,” he says. “There’s no return on investment.”
Joseph says the legislative body needs to realize that a number of debilitating conditions don’t necessarily have proven medical science that marijuana is a worthwhile treatment.
“If you want to do it, and you want to do it right, and you truly want to benefit from it and you truly want to tax and regulate marijuana, you have to open it up, probably beyond what I would suspect is their comfort zone,” he says.
On getting into business with the cannabis industry
Andy Joseph, president of Apeks Supercritical, runs a business whose main customer — the cannabis industry — is illegal in Ohio.
That means if Apeks wants to do a continuous improvement or make a change to its systems, the company can’t test it in its own factory because it cannot process cannabis. Apeks has to rely on customer feedback or test in its Denver sales office.
“That’s very cumbersome and sometimes ineffective,” Joseph says.
Several years ago he also had customers who were driving large sums of cash to his Ohio office, which created enough of a headache that he told his clients that he wouldn’t accept cash anymore.
Joseph even considered relocating the company.
“I seriously considered moving to Colorado. Colorado was in its infancy and it was starting to show signs of huge growth opportunities,” he says.
“But I grew up in Ohio. I’m from Ohio. I’ve got five little kids that go to school here,” Joseph says. “And I feel pretty strongly about keeping it on Ohio. And I’m glad I did. It’s worked out well.”
He wouldn’t recommend trying to stay in a state where it’s not legal and participating in the cannabis industry — it’s an additional challenge for startups that already face difficulties.
Joseph also wouldn’t recommend starting a cannabis-related business in Colorado.
“Most people tend to assume, because they’ve seen Colorado on TV the most, if they want to be in the cannabis industry that they should go to Colorado. I would recommend the complete opposite of that,” he says. “Go to Maryland. Go to Maine. Go to Arizona. There are 23 states that have legalized marijuana in some way, shape or another.”
The newsworthy states like Colorado, Washington, California and Oregon, have industries that are maturing rapidly.
“To enter the cannabis space without an existing product in the most mature market available is just not a good choice,” he says. “If you’re a startup and you want to get into the cannabis industry, go to someplace where the cannabis industry is just starting.”
