In this episode of the Goldenhour Podcast, CEO David Spradlin reveals how the dispensary defies industry trends by partnering directly with Northern California's legacy cannabis farmers. Unlike competitors chasing scale, Goldenhour Collective has created an "asset-light" business model that cuts out middlemen, delivers superior products, and achieves impressive margins. Spradlin explains how their approach honors cannabis heritage while meeting modern consumer desires for craft quality and variety. The episode offers valuable insights into sustainable cannabis retail strategy and the importance of preserving Northern California's cannabis agricultural legacy in an increasingly corporate market.
Laura
[00.00.05]
Welcome to another episode of The Goldenhour podcast with David Spradlin, CEO of the Goldenhour Collective, a family owned cannabis dispensary in weed, California. With California's legal cannabis market facing multiple extinction events. How does Goldenhour's business model defy the odds to build sustainability and profitability? Let's dive in. What sets you all apart from other cannabis retailers in California?
David
[00.00.31]
I mean, it's really simple. Our goal is to uplift, promote, highlight, fan boy and girl out for the best farmers in the world. And those are the ones located in Northern California, particularly in the heart of the Emerald Triangle. That's where the cannabis quote unquote industry started. That's, in our opinion, the tip of the spear and the decades and decades and generations of genetics that have been bred in those hills and go across the spectrum of the layers that have created this industry. And it all starts right here in Northern California with the annual triangle. And it's not to say that there aren't incredibly important regions across the country and across the world, but I don't think you could argue that Northern California is the epicenter of what we now call the cannabis industry. And unfortunately, as things have evolved, particularly in the regulated environment in California, many of those farmers are finding themselves left out of the industry, that they build an hour specifically to support those farms and bring those products to market. Uh, and not just to highlight the plight. It's not some campaign just to save family farms, although it is part of that. It's also to highlight this incredible work, because if you smoke that wheat, you just gotta you gotta just smoke. It wants to know what we're talking about. It's the best weed in the world, and it's just being left out of the supply chain. And I think it's a detriment to the consumer. So there's a lot of reasons why this makes sense. And that's what Goldenhour is in a nutshell.
Laura
[00.02.02]
How does this approach give you a competitive advantage. Right. Both in your focus sort of north of Sacramento but also working directly with these family owned legacy cannabis farms.
David
[00.02.14]
Our thesis and the feedback we've been getting so far, um, is that we're we're providing the best cannabis in the world. People that are used to going to more to more traditional dispensaries, um, sourcing more of the large scale, easier to find corporate brands, doing a side by side taste test with the small family farm produce cannabis that we're providing the taste test is is clear, and it's a 100% in favor of small batch craft cannabis. Any product grown with care and love, whether it be tomatoes or bananas or anything else. It's going to taste better than mass produced product. It just it's the nature of the piece. You can't put enough care and effort into the right inputs, the right conditions. At scale, then you can when you're actually working on the land, I mean, and really paying attention to it in a day to day basis and in a single plant by single plant effort in many cases. So, um, so there's that. It's just better product. So it gives a strategic advantage, but also from like a more business and economic function, I mean, we're getting the product at a better price than most people can produce it even at scale. You hear these massive greenhouses in the Central Valley, millions of square feet. And yeah, they can crank out product that are really, really cheap price. But there's a lot of overhead that goes with that. Um, so when we kind of rolled out the golden, our model, our again, our thesis was that we could compete with those brands and those farms, um, by pooling together a good, talented group of small family farms who don't have that overhead. These people are working on their land. I mean, and largely it's been land that's been in the family for generations. Um, the labor obviously is significantly less, not in actual workload because these people are out there working day and night, but from a cost. I'm talking about like a balance sheet standpoint. Uh, we can compete on any level. And that's a hard thing for even the farmers to understand, because the nature of the industry is closed, so many out, they just assume that it's cost prohibitive. They just assume that they are doing something wrong, and that's just not the case. Um, it's more about navigating a really complicated system. And fortunately, my wife and I have been in this industry on the retail side, on the cultivation side, on the distribution side, on the manufacturing side, we really touched every side of it, uh, for the better part of nearly 20 years. So we understand that infrastructure, we've seen it evolve. We played a part in it evolving. I was very active in the prop 215 days and pushing for legalization, um, both at a state level and locally in the cities and towns that we were working in at the time under prop 215. So I think that we bring a fairly unique skill set to the table and can kind of bridge that gap between a lot of these farms that have been relatively isolated in Northern California and then the broader supply chain, um, and finding ways to, uh, fit, fit, fit what may be a mismatch into, into a whole that that makes sense if that if that, if that's translating. Right.
Laura
[00.05.20]
Yeah. No, it is. I mean, let's talk a little bit more about that, because I think it seems like so many cannabis retailers are just chasing scale. Right. And California's market has seen so much consolidation and price compression. So how does your model how does it succeed despite that?
David
[00.05.37]
Well I don't think it competes I guess at this point with what were the cards that we're working with now. It's competing. But it's really it's correct. And you're starting to see it across the spectrum, in particular on the retail side where vertical integration just makes sense, right? If you have control of your supply chain, if you're producing your own product, you're essentially cutting out the middleman, right? So rather than. Buying from a broker or buying from a manufacturer that's only producing X, you can produce your own X, and you're cutting out that third party profit margin and dropping it to your balance sheet. Right. So so the whole thesis that changed in from prop 215 to legalization in California was really driven by the investor class. And there's a lot of capital deployed into cannabis, the quote unquote green rush. And with that came a lot of knowledge. And obviously, as things have shaken out, a lot of misinformation and lack of knowledge, but the knowledge that to maximize profit, you want to be vertical, I think that holds true. But what is vertically integrated, right. In my former life as a CEO of a very large cannabis company, we raised millions, tens of millions of dollars to build out grows and to buy complementary business assets and plug them in to to our retail infrastructure, right. Which was our which was our main business. Right. Retail. I've been a retailer since 2009. So blocking in all these all these complementary assets into the retail ecosystem to maximize profit at the retail level. So that still holds true. What we're finding out now that the dust is settling a little bit. And now that we're taking a step back and looking at it through a different lens, primarily to support small mom and pop farms, is it does it absolutely makes no sense to spend millions of dollars to build out our grow or build out a manufacturing lab when there's such a glut of talent and product on the market that can be accessed for better than I could pay a team of of contractors to build my grow, and then subsequently pay a team of talented growers to work in my grow. Why would that make sense? When I have small family farms with products sitting in tubs in the barn waiting to be taken to market, and they just need to find a buyer and a retailer that's willing to take a chance in bringing that to market. Right. Um, so it's saving us money. It's saving us the hassle of depending on raising capital, um, by just creating relationships, you know, I mean, it's that simple. And that's really how this, this business, quote unquote, business was started was community, right? Um, and so anchoring into what made us successful in the first place and somehow got lost in translation of legalization is really what we're doing. It's not some secret sauce. It's really just going back to the roots of what really this plant facilitates, which is community.
Laura
[00.08.46]
Yeah. And that's a really important part about the relationship building, because there are pluses and minuses to the North State being so isolated as it is. Right. And I know you personally have gotten in your car and driven to these farms. Met with these folks in their homes and on their land. And that's not something that's easily, easily replicable.
David
[00.09.06]
Yeah, it's legwork. Right. And I tell people all the time. The very thing that made these farms in this region so special in the early days with its isolation and these folks could grow in relative safety. I mean, there was no shortage of helicopters flying over and harassing people and raids and all that stuff. But, I mean, compared to trying to grow at that same scale in an urban environment in 1998, you could you could, you could flourish, you could breed, you could create all the magic that these farms and region are known for now. But now that legalization has happened, being that far north and that isolated down some three miles of dirt road behind several locked gates is a major barrier of entry to the larger industry, because it just doesn't make sense for a large retailer with a 15 store chain to go source. That way, our strength and our secret weapon is the fact that we are able to be as nimble and as flexible as to go out and source these products at really, really fair prices. But still better prices than these farmers are used to getting from brokers who have to tack on their commission and their middleman fees and XYZ to go out there, secure these products, build these relationships, and create the supply chains in these hills to bring the product to market. And we're getting ready to open up our second location. I imagine we'll have 3 to 4 if everything goes right based on our pipeline by the end of 2025, and we're going to keep going from there. So what we're proving in real time that you can scale using this method. It just is very labor intensive, and you're not going to really hire some corporate resume type of characters to go out and do this work. You have to be from the community. You have to be willing to deep dive deeper into the community to to do this. And to us that's that's the secret weapon. And in our entire model that we are fully taking advantage of and enjoy doing, frankly.
Laura
[00.11.03]
Yeah, well, and just your ability to even create relationships, right. Like you, you couldn't send somebody out there with like a branded golf shirt and clipboard and like, hey, yeah, right. Because you have to have for communications to be for relationships and communications to be successful. They say the secret sauce of having the right message, the right messenger and the right delivery, and it feels like you fit all three because of just your background. Right? You've grown, you've been a patient advocate, you've been in corporate cannabis, right. And so you sort of you've got like a 360 view of it, which I have to imagine helps when you're starting a relationship with these folks, particularly the folks who have been burned, right, by all of the craziness that's occurred since legalization. Right?
David
[00.11.47]
Well, that's part of the problem, right? Because to your to your earlier point, there was not a standoffish mentality with these small mom and pop farms. Um, when legalization first passed, everybody was. Like willing and open arms to learn and to and to participate with the Patagonia vested cats coming up there with clipboards and promising everybody the world and generational wealth. Right. But the problem is they've got burned and they've gotten burned over and over and over again, because those same cats with their Ivy League degrees really didn't know what they were doing, because this is a complicated space and a lot of that just it's not ill, ill intended. It's just the way things have evolved. It's really hard to take a renegade industry and fit it into a corporate bubble or whatever. You a box, whatever you want to call it. And that's what was essentially being tried to do. Let's take this amazing weed and let's package it and bottle it and stick it on a shelf and make it, make it the Coca-Cola. And it's just like, that takes time. And that we're not we're not there yet. It's starting to get there in some parts of the country to some degree. But I mean, it's not there yet. There's just so much going on still that it has to be flushed out. So and I think that's an opportunity rather than a hindrance. A lot of people would look at that and view it as a hindrance, like, oh man, you can't really scale this. There's no opportunity to really go public. And there's nothing from a typical corporate lens. But to us that's a benefit, especially for these small farms that we're working with. Um, it gives us a chance to incubate our business and let it get its legs under it. And then I think timing in the second or third wave of opportunity will come, and we hope to be able to take advantage of that and, and make all this hard work for everyone pay off and allow them to live sustainably and continue on their land and and make of it what they want. But all, all anybody really wants is a true opportunity. And that's what's lacking right now with the way the regulations and the infrastructure set up. So that's what we're trying to bridge.
Laura
[00.13.45]
Yeah. Well so talk to me a little bit about supply chain resilience and product consistency, particularly as you all expand and add more dispensaries.
David
[00.13.54]
Right. Well that that's part of the problem. I like my former company. We have 1415 stores across the state of California. We had several out of state assets, and if you're looking at it through a supply chain lens in that realm, it is really challenging to do what we're doing now with Goldenhour, right? Like you do. You can't have one harvest a year and have that be like a meaningful part of your shelf space, because it's going to run out at that scale really, really quickly. Right? So to try to put this homogenized product line out is challenging, right? To say, okay, I'm going to have this strain all the time and people can hang the hat on it, just like they can go to Starbucks and get the same Frappuccino all the time. It's just not it's not there at that level. But frankly, in my opinion, and what's bearing out in actual fact is cannabis consumers want change. They want new stuff all the time. Yeah. So there's some strains that people want every year, all the time. People hang their hat on it, they smoke it. But most people get burned out and the cannabinoid system gets saturated by the same terpene profile. So you start. Losing effect as well. So change as long as it's from a trusted farm and from a trusted producer. What we find is people are really excited to try new products all the time, and turnover of the menu is really, really important. If you have the same crap on your menu all the time, people are going to start shopping elsewhere to find something different, right? So we are leaning into what we believe is a strength, where in many companies and in my past life, we looked at it as a hindrance to working with small family farms because, oh, there's no consistency, there's no replicability. We can't scale this. We have to just build our own, grow and crank out our own strains all the time. And it's like clockwork, right? And that is a way of looking at it. But I don't think that it's borne out to, to be effective. I think that you were starting to see even at the larger corporate level, people are starting to realize now we need we need some we need some unique strains. We need change. We need things to be cycling through on a regular basis, even if it's seasonal. We're going to grow these strains and harvest them in the spring. We're going to grow these strains. So I think people are starting to understand that what we've known for a while at Goldenhour is that, yeah, variety is the spice of life, and we need to keep it moving. And yeah, these farmers grew these three strains this year and everybody loved it. But guess what? They're growing these strains next year. And it gives us an opportunity to hype it up, get people excited. And that's what we do. So again it's taking what was previously and often enough still viewed as a hindrance and making it our strength, which is what makes us unique and different from everything else in the market. Yeah, it also seems to tie in well to just sort of the course correction. You're starting to see where it's less about how much THC right. Or yes, and really more. And I know we hate comparing it to alcohol because it's not appropriate, but it is sort of similar to wine where it's like the year and the, the, the weather, like everything matters to it. Yes. Bottle
Laura
[00.16.56]
versus like a bottle of Smirnoff vodka. It's going to be the same thing every single time, right? Like, and people actually caring about the soil and the weather and the climate and everything that went into that particular batch. So that's really interesting. I hadn't really thought about it that way, but that makes a lot of sense.
David
[00.17.12]
Yeah, it's absolutely the case. And I think that's a natural part of the evolutionary process. Right. There was a long time where Folgers was the standard for coffee and it was the best. And then all of a sudden you started getting these craft roasters, making these incredible coffees and sourcing their beans from unique farms and Central America or Africa. And all of a sudden you taste a cup of coffee like that and you're like, oh, wow, there's a lot more to this than just trying to get my caffeine right. And same thing with wine for a long time. There's always a craft because the wine's been around for so long at a commercial level, but there's a long time where it's kind of like, okay, I'll just take I'll take a Zinfandel or I'll, I'll take a pino. But nobody really paid attention. There was no, like, tasting industry, right? So it takes time to evolve. And I think to your. We are getting to that place where for the longest time, all there really was is a barometer. Was the THC content from a testing standpoint because and that's the psychoactive compound. So that's what everybody wants to get high. But now we're starting to understand terpenes. We're starting to understand all the other cannabinoids and how those affect the THC through the entourage effects and all the various interplay with your biology. And it's just it takes time to evolve these things. And thankfully, we're starting to see it turn because there's just so much more to this plant than THC.
Laura
[00.18.30]
Yeah. Well, and it strikes me that the genetic profile of what your farmers are growing versus the stuff that's going to come out of a large scale operation, does tie in really nicely to this sort of larger narrative conversation that's happening around the nation, maybe even the world of just wanting better. Right? We want the toxins out of our soil. We want the toxins out of our food, out of our water. For folks who just don't quite understand the difference between these small batch growers, what are they growing that that is not just different, but just better for the consumer. We could we
David
[00.19.04]
could we could do a 30 hour podcast about all the different avenues. Why this is a competitive advantage, especially in this day and age. Um, but really just to simplify it, just the quality of the product, um, and the cost effectiveness of growing it to, to going back to what I was talking about earlier, about the price advantages in our sourcing is you're growing under the sun, where these plants were evolved over thousands of years and oftentimes more recently bred with this specific light spectrum on these specific appellations in these specific regions of Northern California, right, in this specific soil with generations of of biodiversity in the soil. That's a big push for living soil, where you have active organisms, um, and funguses and different things in the soil. And again, this is not my specialty, but I hope that we have a podcast soon with some with some, some growers that can speak to this type of stuff, but the soil and the inputs and the different teas and and things that they're feeding this plant with under the natural sunlight, which is where it would evolve, just creates a healthier, happier plant. And that is expressed in all the different effects of the product that you consume, whether it be the cannabinoids, the terpenes, everything about it is just it feels cleaner. And it's one of those kind of a little bit intangible things to discuss, because unless you've tried it and experienced it, but you can you can almost you can almost feel it when you open the bag like, oh, this is a different plant. Like, this is a different animal, like it has a different essence to it. And I'm trying to find people that can articulate this better than I can, but it's definitely a tangible experience. But it's intangible to describe. I mean, it's like some I was talking to a friend yesterday. It's like some some quarterbacks, you just know in the fourth quarter down by a couple points. That's the quarterback that's going to get it done. And then the other one might not. And it's an intangible. Thing of how living creatures perform in certain environments, and the cannabis is grown in the Emerald Triangle. It just has a different thing to it, right? And it's absolutely tangible when you experience it, but it's really hard to articulate and put it into words and describe to people that haven't had a similar experience. I mean, so from a competitive advantage, the product, again, is just it's different and it hits different. It affects you different. And the cost to produce it again from a business standpoint is extremely competitive, if not lower cost than anything else. We're not paying for electricity. We're not draining our resources through the electricity. I have multiple friends that have indoor grows and there's a place for indoor cultivation. I mean, I'm not a big all all indoor is garbage. No, there's some really good growers out there growing incredibly high quality indoor cannabis. Right. And there's a market for that. But, uh, no matter how you slice it, it costs a lot. No matter where you are, no matter how cheap your power source is, it costs a lot. Even if you go solar, it costs a lot for those upfront build outs, right? So and that's a drain. You're you're there's manufacturing and shipping that goes into those solar panels. There's shipping and manufacturing that goes into those batteries. There's uh, if you're just pulling straight into or off the grid, you're, you're you're draining resources there. And you don't have that same problem with sun grown cannabis. And then again, with your input, good quality living soil requires a lot less feeding. So you're not having to pay for a ton of nutrients, right? Like most indoor grows at scale and a lot of indoor and a lot of outdoor grows at scale or pump in a relatively inert, growing medium full of these synthetic salt fertilizers with varying degrees of of impacts to wastewater management to the soil that they're actually being grown in. There's all these factors that come into play that you just don't see when you're using organic inputs. Um, and that goes back to, again, the motivation of a small homestead grower in Bridgeville, Humboldt County. They're living on that land. They're not going to poison it because their kids play in that soil. You know, I mean, the kids are often out there and playing with the dogs while they're harvesting. It's not the same as some big cultivation facility with a bunch of employees that really don't give a crap about what's going on, and they're just going by their SOPs that they were given from some guy in an office 100 miles away. You know, and so the just the, the, the inputs and everything that goes into creating this product that eventually goes into a consumer's hands and a consumer's lungs or, or stomach edible or whatever, is more ethically produced. And I think that that is just a huge, huge, huge competitive advantage across the board, no matter how you slice it, especially in this day and age. Yeah,
Laura
[00.23.53]
I hear that if you had an investor sitting in front of you right now and you only had like three minutes to pitch them on the stuff, they truly. We care about to invest. What would you what would you want to tell them? Yeah.
David
[00.24.04]
Well, I mean, with investors, it's about the bottom line, right? People aren't giving you their money out of the goodness of their heart. They're giving you in their money for a return and hopefully a big one. And it's your job as the invested party to maximize that profitability for those investors because they're trusting you with their hard earned money. You know, you have angel investors, maybe small funds coming into the play, coming into the space. There's no institutional capital. There's not really a meaningful amount of even family office capital coming into the space. It's usually angel investors, successful individuals that want to invest in a cool, burgeoning industry and get the upside that's usually associated with that. If you bet on a winner, if you're going to take capital, you got to lay out a plan that you can actually believe in and execute against to give that return or scale your business to a point where you have a successful exit or whatever. So from just that standpoint, going back to what I just said a minute ago about consumer habits and carving out our lane in that ethical consumer niche, which is probably more prevalent in cannabis than a lot of other segments and consumer segments. But it's still relatively small because everybody's really, like, desperate to just make money. So they're going to do what they know best. And oftentimes that's fast and cheap and cutting corners and making it happen. But so from that standpoint, yeah, in every consumer category, ethical companies are seeing more significant growth than not. Right. In almost I don't want to paint too broad of a brush, but it's obviously a huge growth category across the board. So that's one. So that to me that checks the box of an investable company. Then your cost of goods. Right? I mean your business plan, our business plan is to bring these small farmers back into the ecosystem in a more magnified way and promote them. Okay, so why? What makes that a good idea? Well, we checked the box on ethical consumerism that that's inarguable. Every data point you you can find shows that that is a good path. Right? Okay. Next what's the competitive advantage from a monetary standpoint. Right. So obviously our procurement costs right. We're not technically vertically integrated. So how are we going to compete with one of these retail chains that has 20 stores and their own grow and their own manufacturing? Okay. Well how are we going to do that. We're going to go to this farm. There's essentially no labor costs. These farm this is a husband wife team up in Willow Creek in Humboldt County. And there's no labor. They don't pay trimmers. They trim their own cannabis. They might have their uncle and their cousin come in and help help trim, but they're trimming it as needed. So they're going to hang it and store it until an order comes in. And then they're going to trim it for that order. Right. So it's really. To our need, right? And I would just dare any investor to bring me a balance sheet of any company that they want to invest in and compare it to ours. As far as our cost of goods go, and I can absolutely guarantee that we're going to beat them, because that's just how that's just how we're operating or lean or a small company. We don't have the efficiencies of scale in many cases from we have 15 stores, right? We have one store right now. We're about to open our second again. We're going to have a couple more of this coming year. But we have to be sharp. We have to keep our margin tight and our margin strong, and we're our margin is as good as. And I've seen a lot of balance sheets. I've invested in other cannabis companies I've ran, like I said, several large cannabis companies, and our margins are as good as any that I've ever seen because we are sourcing directly. We're cutting out the middleman. We're going straight to the farm. So in essence, we are vertically integrated. I just don't have the burden of ownership. I don't have to insure these farms. I don't have to pay labor on these farms. I don't have to deal with the the headaches of the the staffing and payroll of these farms. I'm just buying for a fair price. And because I'm working with farms that also don't have all of these burdens and capital expenditures, I can get it for a really fair price. I mean, and so that's it's just a nuts and bolts business model standpoint. You have what you have. We're light. I mean there's a big there's a big push for asset light business in cannabis, right, where you're essentially a brand. And we're kind of threading that or treading that fence a little bit on both sides where we don't have a ton of hard assets. We have our store, we own our building, we have our store. We are opening our more stores. The rents are super cheap. So yeah, there's some there's some assets there. But really we're just our assets are our relationships and our willingness to go above and beyond in our procurement to make sure that we get the right product at the right price. That also fits with our ethos, which is benefiting the farmer. Right. So that's really it. It's a it's a quasi asset light retail model.
Laura
[00.29.01]
I love it I think that's a great I think that's a great way to to phrase it,
David
[00.29.04]
because I want people to copy us the more Goldenhour models that are out there, the better it is for our community, our farmers and our industry as a whole and the state of California. And my belief is I've touched on another podcast. I mean, it would be an absolute tragedy for cannabis generally if there was no Emerald Triangle. And we're getting really close to that. That is what Goldenhour is. It's not a dispensary. It's promoting small family farms in Northern California. And to do that, you have to spread the word and you have to give people the recipe. And I've learned a long time ago, unfortunately, in this situation, you can give people the book. Nine times out of ten, they're not going to read it. I mean,
Laura
[00.29.42]
that's right. Well, an idea is one thing. The execution is entirely different, right? That's the
David
[00.29.46]
hard part. That's the hard part.
Laura
[00.29.49]
Well, David, as always, thank you for your time. I learned so much. I hope our listeners did too. For folks who want to experience the Goldenhour Collective difference, check us out on Main Street in Weed, California, online at goldenhourcollective.org and connect with us on Instagram.