ABKO LABS LLC: Amy Brown, founder and CEO of the cannabis testing and safety compliance company and a Birmingham native, crossed over from the financial services sector to the marijuana industry before Michigan legalized recreational use. As consolidation continues in the cannabis industry, Warren-based ABKO has agreed to be purchased by Madison, Wis.-based Premium CBD Labs, which was looking to expand into Michigan, to form a larger company testing cannabis and hemp.
How did you get into the cannabis business?
So I had spent almost 30 years in financial services and have a law degree. I really was just ready for a new chapter. The (2016 medical marijuana law) had just passed in Michigan. My boyfriend was a caregiver under the (previous rules from 2008) and my dad was a chemist. So the three of us, over a beer, discussed, well, maybe we should do a lab. So we started looking into it. At the time there were very few labs and being that it’s focused on the safety and health issues, it was very appealing to me. So at that point I kind of started a whole new education.
Where were you in the financial services industry, what were you doing?
I did financial planning for high-net-worth and ultra-high net-worth families. So a lot of estate planning, a lot of corporate benefit reviews and things like that. I did that in Cleveland and then also in Chicago.
What did ABKO look like when it started out, and can you talk about the transition to recreational?
The story of getting it going, there’s a few complex pieces to it. The way Michigan works is that the state approves you, but you also have to have a municipality approve you. As a lab, one of my challenges was the buffer zones to residential (areas). Because a lab property isn’t an industrial property, those are definitely different needs for the real estate. So I worked with the city of Warren and we were able to get the buffer zone removed.
In the beginning, we had a team of employees, I had some setbacks when I first started. You’re drinking from a fire hose. I had to at one point voluntarily stop taking in samples and retool my team and retool my operations, which was rough, and it actually happened just as COVID started. When I was bringing in samples again, the adult use (approval) happened so much quicker than initially anticipated and my city had not yet opted in. It took another 14 months for me to get my adult-use license.
What has it been like adding adult use? Has it changed how you operate at all?
What it did is it allowed me to reach out to some clients that had primarily switched. It’s exactly the same testing with some minor differences. For example, you can have more total yeast and mold in recreational product than in medical … Operationally, for us it really didn’t change.
Can you talk about how the business has grown?
We definitely were the most busy when we very first opened because we were the first lab (licensed under the 2016 medical marijuana law). … At that point, caregivers were still allowed to sell into the licensed market so that was a whole other revenue stream and whole other group of people to serve. Since then, a lot more labs have opened so the growth has been very sporadic. When I couldn’t do adult use I had some very lean times. Now … we’re ramping back up and one of the things I ran into where I was spread too thin and the problem is the stuff I needed help with, none of it was a full-time job. So I talked to my lawyer and he was working with a group (Premium CBD Labs) looking to start a lab in Michigan. We met each other, clicked and decided that we’re just going to work together. They’re going to come on board as part owners of ABKO. So it did not go the way I expected at any point in time. But no, it’s great, they’re a fantastic group …
Can you talk about what that will look like for you moving forward?
The pros are that we have access to the lab director from Wisconsin. He brings a deep knowledge base. So it really allowed us to kind of elevate what we’re able to do in the lab. And on the other side of things, (Premium CEO) Jeff Hagen is another one of the partners and he’s going to be able to take a lot of the CEO-type responsibilities off my plate so I’ll be able to focus more on continuing to grow the business and it frees me up to do some of the other things I like to do. For example, the sales side of it, I enjoy that, meeting the cultivators and seeing what they’re doing. And we really want to try to have a more robust role in the business cycle (between growers and retailers).
Anything else about your experience in cannabis you want to share?
I think the biggest thing to understand about starting a business in cannabis is that you literally don’t have a rule book. There’s no easy way. (In other industries) there are approved methods out there you can look up that you can find, there’s a manual. In cannabis, you have to build it from scratch.
If you could go back, would you still build the plane while you’re flying?
If I had to do it over again I would have found a lab director and just given them ownership. Somebody that had some cannabis experience. I see the value of that. In my mind I envisioned it as a role somebody could grow into. It’s just that growth takes a long time. So I would do that differently. I would have a lab director as a partner from day one. I was stubborn about taking investor money because I felt like it was critical for me to be the first lab approved (under the 2016 law) and for that, I felt that any investors would be an anchor holding me back on that. I would do that differently; I would get investors.