This transcript was generated from the episode audio and may contain minor errors.
[Music]
Hello, what's up? Welcome to Side Hustle School. My name is Chris Guillebeau. Hey, today let's talk about the legalization of marijuana, in particular in the state of California. It's actually happening in lots of different places quite rapidly across the United States and elsewhere.
But today we're gonna talk about it in the context of two California moms who get high and get well. They saw the legalization of cannabis as an opportunity to help people while also helping themselves. It is of course a Side Hustle School story. You can do good for others and do well for yourself. And maybe you can even feel really good while you're doing it.
I'll tell you how these two moms created their own brand of organic CBD products, as well as some of the challenges they're facing in taking payment, which is a huge problem for anyone who operates in this industry, at least in most places. Stay tuned, I'm gonna say a quick thank you to our sponsor today, and then I will bring you their story. [Music]
In late 2016, Shelly Fegley and Desi McKinnon predicted a change in California's political landscape that would open up a whole new world of side hustles. The state was about to vote on cannabis laws, which would eventually lead to legal recreational use of marijuana. It was then that Shelly and Desi noticed a group of people they believed were being underserved.
At one end of the spectrum, brands were campaigning for votes and marketing marijuana-based products to what you might call the stoner crowd. No disrespect to any stoners out there. At the other end, the products were being targeted to the medical industry, which to them felt a little sterile. You see, there was an entire group of people, including moms like Shelly and Desi, who could benefit from the use of the herb, but weren't included in the conversation. They wanted to use marijuana and its extracts for everyday benefits, not just to cure an illness or relieve a sudden craving for Doritos.
So the pair decided that they would create the products they'd like to see in the market. They invested some cash into their own plants and began to extract the THC compound to make their own products under the banner Cordial Organics. These were drops in balms and oils that came with natural health benefits. They then shared their product with people in their network to see if they had a market. The response was positive, especially from other moms, so they decided to proceed.
Once they knew they had an audience, Shelly and Desi began pitching their product to dispensaries. Dispensaries are places where people can legally purchase marijuana products as long as the purchaser has permission to buy it. These shops also sell accessories and other products. But they weren't met with the response they expected. Although the dispensary owners liked their products, they kept asking about CBD.
Don't you have anything for CBD users? Shelly and Desi had never heard much about CBD, so they took a step back from pitching to learn more. The official name is Cannabidiol. It's a part of the plant that has been research proven to aid in pain management, as well as to reduce the symptoms of illnesses such as Parkinson's without being psychoactive. In other words, you can use CBD without getting high.
And the more that Shelly and Desi researched it, they realized CBD was the product their audience needed. It also came with an extra bonus. CBD, at least in California, is completely legal, thanks to something called the Farm Bill, which allowed independent farmers to grow weed and extract elements of the plant, which include that cannabidiol they needed. This meant that Shelly and Desi could stop growing their own plants and get it directly from these farmers and their suppliers who would extract the molecule for them. It's basically pot-based outsourcing.
In order to find a farm to work with, it began cold calling to see who would be open to a partnership. This was a long process which involved ordering lots of samples for testing to ensure the product was the quality they wanted, and also to see how quick the turnaround was. Shelly and Desi also had to be careful of cost. They're committed to delivering low prices to customers while still making a profit. So here's how they calculate the rates they can pay for their wholesale goods.
Wholesale products are typically two times the cost of making those products, and then retail prices are two times the cost of wholesale. If the math works out where they'll need to price the product too high for their customers, they'll look to either reduce the cost of goods or reduce the cost of wholesale. Eventually, the pair found a willing partner in a farm and they set to work creating their new CBD-based products. They also took their business online and created a website through Squarespace. And here's where they encountered that big challenge.
They loved the service, but they quickly had to move away from it because of a lack of payment options. They then recreated the website through WordPress with WooCommerce. But why was the lack of payment options a problem in the first place? It's because marijuana products still operate in a bit of a gray area, even in cities and states where they're legal. The US federal system doesn't recognize the legality of the drug, so a lot of payment services refuse to work with anyone associated with it.
In fact, as we were putting together this episode, Shelly wrote us to say they'd been removed from yet another payment service, and they're now back to just taking cash and checks. It is a big challenge, especially for an online business, but despite this, they continue to market their brand. The majority of new customers come from word of mouth, but they also use Instagram to connect with their audience. There they post beautiful, peaceful-looking images with short pieces of information and stories about the business. They've also tried influencer marketing, where they pay someone to talk about their product, but they found that somebody organically sharing their product, having bought it, works far better than a paid influencer sharing their review.
Shelly and Desi have lots of success stories from this new hustle. They've received countless letters from people who've experienced benefits, but their favorite by far is the thank you note they received from someone who had used their products to successfully manage the side effects from chemotherapy. To be blunt, setting up a business like this doesn't come cheap. Despite generating income of up to $7,000 a month, their profit margins are still low. But thanks to their marketing efforts, they're expecting that to change in the next few months.
Because this joint operation is not just blowing smoke, it's high time they got their reward. [Music]
All right, whatever your beliefs may be or your practices regarding marijuana or any other substance. I hope you'll agree that it's fascinating to see how this whole new industry is essentially cropped up, at least the legal industry, I mean. And obviously it's been in the works for a long time and people have been advocating for it. But it really does seem that over the past five years, more and more states and jurisdictions have come around to a position where they realize this is an industry they should actually try to regulate and profit from, receive taxation, provide a market and then enforcement for that market, not just prosecution for anybody who ever wants to use marijuana at all.
And whenever anything like this happens, whenever there is something that's fast moving or social, political, cultural change of any kind, there are often ways to profit from it. We've had a couple of different stories on the show about people creating CBD or THC based products, as well as people who are kind of on the periphery of that industry. Like I think in the early days of the show, we had a guy in Colorado who's a bartender who wrote a tourist guide for all the visitors who are coming to Colorado after the state legalized recreational cannabis. Anyway, like I said, regardless of what you believe about it or whether you use it or not, I think this principle holds true in other industries and markets as well. There's always ways to make money.
I hope that you will find your way or your ways to make money without quitting your job by using the skills you already have and by not going into debt. Those are core principles outside of school. And that's why I make the show for you every day, to show you all these different stories of people doing that in different ways, different approaches. Thank you so much for listening today. Don't forget, inspiration is good, but inspiration with action is better.
The show notes for today's episode are at www.sidehustleschool.com/434. If you've got a comment or question for the show, give me a call on the Hustle Highline. That number is 8449 Hustle or 844-948-7853. I'm not blowing smoke either, you guys. All these stories really are true and I will bring you another one soon.
Stay tuned, keep listening. I'm Chris Guillebeau for Side Hustle School.
