Ata Gonzalez: Betting Everything on a Cannabis Start-Up
CATEGORIES: Cannabis Industry Interviews
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Ata Gonzalez is the founder of GFarmaLabs, a cannabis processor and infused product manufacturer based in California which has developed several hit products including Liquid Gold chocolate, which won the 2014 Cannabis Cup Best Edible award. We recently connected with Ata to learn about how he started his company from scratch and grew it into the massive success that it is, what he thinks the future of legal cannabis looks like, and what advice he has to offer to people who are considering starting a cannabis business of their own. Check out the full Q&A below!


 

Ganjapreneur: What was your career prior to entering the cannabis industry?

Ata Gonzalez: I have always been an entrepreneur. Around the year 2000 I became a student of the real estate investment world and I was hooked. I bought, fixed, sold and did new constructions throughout South Florida. I found my niche in low income neighborhoods. Whether building new constructions, or fixing and flipping older properties, I fell in love with investing in low income neighborhoods and beautifying them.

I was really good at finding and negotiating great deals. I ended my real estate investment days when I was just beginning to get the swing of the commercial side of the game. I also owned a small shopping center and fell in love with the difference between renting out a house vs. leasing a commercial property, the responsibility of everything falls on the tenant except the roof and walls of the building.

When 2007 came I felt the end of the boom was near. My partner and I sat and mapped out our exit strategy, cutting the fat from our portfolio and staying lean. We executed our plan to perfection and now that we had sold most of our portfolio we had money to do whatever we felt would be next. As any great chess player, I never looked at today, my eye was always on the horizon. Unfortunately, not everything good lasts forever…

All I knew was that I had a good lifestyle and all that cost money to maintain. The bills kept coming month in, and month out yet no income from anywhere. My partner and I decided to go into the music industry. We produced salsa music events and hip hop music. By 2009, I was hitting rock bottom, millions had been spent in the music industry with some minor success but no really substantial income coming in, yet the bills kept piling up. The Great Recession hit me hard, and homelessness wasn’t too far off in my mind if I didn’t turn things around. At the time that I located and finally rented a farm in Northern California, I literally took out my last seven thousand dollars for the deposit which was forty-five hundred dollars. I was left with twenty-five hundred dollars to my name and a pregnant wife with my second child. No pressure!

When did you first see cannabis as a career opportunity?

I went to pick up my wife’s best friend from the airport, she had been in LA for a modeling shoot. She gets in the car and says, “You have to go to LA, there’s a lot of weed out there! There are stores everywhere that sell it for medical purposes.” I couldn’t sleep that night! I knew I was spiraling down faster than a Mig after being shot down by enemy fire and I felt helpless. I was ready to go anywhere to make sure that I was able to provide food for my family. It wasn’t even about luxuries at the time, they meant so little after you have always been successful and had everything and now you see yourself like never ever before.

I spent much of 2009 getting to know California, from San Diego to San Francisco, and Mendocino to Humboldt county. I became part of a collective in NorCal who would be responsible for teaching me the basics in cannabis, before registering to attend Oaksterdam in 2010 to learn the particulars of cultivation, processing, growth, and farming in a more proper scholastic atmosphere. That experience is what really gave me my start, and as a result of my exploration, I had a chance to really see how huge this booming cannabis industry was going to be nationally. Once I finished my studies, I set out to get the ball rolling on establishing my own presence within the space.

When you were first starting out, how did you fund your initial investment in equipment and products?

As I mentioned above, after giving the deposit of forty-five hundred dollars to rent the seven acre farm, I had twenty-five hundred dollars to my name. I have been trained to never say we “can’t” do something, a person that is determined and never gives up will always find a way to…find the way. The farm itself was an entirely self-funded bootstrapping effort (and a bit of a gamble at the same time). When I called an electrician to wire up the barn, he assessed the property and suggested I start planting outside instead. Given the time of year (and learning that I was allowed to do so), that marked the first precursor seeds to be sowed in pursuit of the G FarmaLabs vision.

Given the relatively inexpensive nature of an outdoor grow – just needed ninety-nine clones and water (obviously there were most logistical components, but that’s the gist of it) – the approach made it feasible to seek out the help friends and family to ask for a small investment. My mother was the first to come through, offering up an additional $10,000 to help kickstart the outdoor grow. We finished planting the initial round of plants by mid-July of that year.

It was a rough road – after bringing my wife and child out to join me, we were forced to sleep on a mattress on the floor, using cardboard boxes as nightstands, and ate ham and cheese sandwiches daily until the harvest was ready in mid October. To put the pressure on even more, my wife had given birth to our second-born the month before.

This was just the beginning. Every dime made went back into the business to buy more equipment, rent other properties, build-out other cultivation sites as our Collective became bigger and bigger. By 2012, we were tired of just being farmers and we began investing into the retail dispensary side of things. By 2013, we created the Liquid Gold brand of product and went from simply operating G Farms and G Farmacy to G FarmaLabs. In 2016 after restructuring the company for future sustainable growth, we became G FarmaBrands. This parent company oversees all the different entities under its umbrella.

Back to 2013, after enough experience and studying industry trends to predict the market, we felt the right move was to go into producing a brand of vape oils, chocolates and pre-rolled cannabis. My wife’s family – specifically her grandfather, was a master tobacco blender – I used the concept to blend our line of twelve different proprietary blends of G Stiks, different blends of Liquid Gold Vape oil, etc…

While there were already companies that specialized in each of the product lines I mentioned above individually, we were the first to offer up a ‘one-stop’ solution, uniting everything under one banner. Today G FarmaLabs offers its accounts nearly 100 SKU’s. Till this day we continue leading the way in America in cannabis product infusion. We have edibles, drinkables, oils and pre-rolls… As well as our digital marketing arm who does not touch the leaf, www.GFarma.TV and GFarma.NEWS.

How long did it take until your business was fully self-supporting?

It’s still tough to grow because of the lack of financial institution-based support (due to federal prohibition), so depending on loans is essentially out of the question. All our growth and sustainability had to be organic. We have been entirely self-sufficient financially since we cropped the first harvest in 2010. That was the turning point, really when we saw how we needed to strategize for steady growth in the most independent way possible.

What was one of the largest obstacles you faced while growing the company?

THE single biggest obstacle to growth we’ve ever faced (and our still facing – thankfully to a lesser degree in California given recent legislation) has to be regulations. It’s extremely difficult to navigate the constantly changing legal national landscape. Since 2010, I have seen horror stories. Maintaining and keeping a brand in market, in the midst of all that is incredibly difficult and the leader must be filled with strategies. It’s so much easier when done as a team. Essentially, because of all the ‘grey-area’ in reference to federal vs state laws, causes setbacks resulting in slower growth but through our own strategies we continue growing at a sustainable pace.

I consult the G FarmaBrands C-Suite on my vision of the future and on the strategic moves I feel we should make. My advice at the moment is not to get caught up in all the press releases from other companies that are growing at lightning speed from state to state and country to country. It’s all nonsense and not sustainable, believe me. Slow and steady will always create a strong foundation and we will be here for the long run, not just for a press release but to win the race!

Where do you see your company in 5 years?

We are working on a ten year plan at G FarmaBrands. With the industry being so nascent, the sky is the limit–five years doesn’t seem like it is too much time. I can tell you that California and Washington will be well underway at that point. I wonder what other territories we will expand G FarmaBrands to next. We have not licensed any territory yet to outsiders and the next future territories will hopefully continue to be those fully controlled by G FarmaBrands.

At what point did you incorporate CO2 extraction into your business model?

As soon as we decided to create a brand in 2013, we began looking for the right equipment for extraction process. Because we were rookies at the time to extraction, and weren’t as well versed in the right machinery, we ended up buying the wrong equipment, an EmoTek butane close looped system, rather than a Co2 extractor. During the training was when we realized the huge mistake we had made. We have never used this machine to this day, even though it’s the Cadillac of closed loop butane extractors.

To remedy the situation, I did some research online, ordered our first Co2, 20 Liter, and brought in one of our existing collective members that had the correct scientific/operational drive to gain an expertise in the use and functionality of the machine, as well as figure out and understand the processes involved in our CO2 extraction methods – it was an excellent recommendation of an employee by our Chief Operating Officer. Today Luigi is G FarmaBrands Chief Technology Officer.

How much of your business is currently in extraction?

I would say that approximately 75% is extraction for oil, which is either used for vape oil or for the infusion of nearly one hundred different product offerings.

Extraction Q’s: What role do you think extraction will play in the future of the cannabis industry?
I believe extractions will continue to be the future of the cannabis industry. Science will become more and more involved to come out with different forms to cure certain ailments. Cannabinoids will be understood much more through science in the future.

What do you think would be the best approach for California to legalize recreational cannabis?

This is a bit of a tough question since I’m not really a policy expert, but from the entrepreneurial point of view, I think the path we’ve currently been set on is the best one to yield the results we need. Before Gov. Brown’s recent trio of bills, California’s entire MMJ market was the wild west, so to speak. Zero regulation and pretty much an open door for DEA raiding parties. Now that the medical component has been revamped, it’ll open the floodgates for voters and government officials to understand that this sort of stability on the medical front can be sustained recreationally – not to mention the huge influx of additional tax revenue a recreational market the size of CA can bring in for both, the local cities as well as the state.

Thing is, it’ll take money, the right sort of lobbying efforts, and a huge turnout by voters young and old alike. Thankfully, perceptions throughout the entire spectrum are changing, and I think we’ll see that when the vote comes up later this year. The best approach really is to remain steadfast in terms of regulation – tobacco and alcohol thrive because of it – and implementing the correct guidelines (age restrictions, QA testing, packaging warnings, advertising stipulations, etc) will allow cannabis the same shot. It’s time!

Do you think now that other states have legalized recreational cannabis, that voters in California will be more likely to support it?

I would hope that it does go recreational but you never know… We will continue to operate under our current guidelines and the future California regulations that were announced and if recreational comes, great! If not, we didn’t get our hopes up. I believe marijuana will become recreational in every state, eventually…

What advice would you give to an aspiring ganjapreneur?

I’ll refer to an example of something that was told to me when I was (ironically) in high school detention one time. My principal used to make me write one phrase over and over as punishment, and it was something that I never forgot: “Young Gentleman, Never Give Up, Never Give Up, Never Give Up,” which was one of Winston Churchill’s famous lines. I’ve taken that philosophy with me into the business world, as well as within my own home; we raise our kids with this same formula. You can’t say ‘NO’ and you can never give up!

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