On the Burner: In-Depth Interview with Derek Du Chesne, President of Exactus Hemp
During his first foray into the the cannabinoid industry, Du Chesne found it difficult to get a reliable supplier and manufacturer of CBD which is what led him to EcoGen Laboratories. After being a faithful CBD client, he eventually met the company’s Co-Founder Joseph Nunez and was invited in 2018 to join as their Chief Growth Officer. (ECOGEN)
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AUTHOR: Heather Allman
PUBLISHER: CANNABIS LAW REPORT
ON THE BURNER
with Derek Du Chesne, President and Chief Growth Officer of Exactus Hemp
“WHEN YOU KNOW BETTER, DO BETTER.”
Derek Du Chesne, a Wisconsin native, ventured into the hemp space via the world of film and television where he worked as an actor, producer, stunt performer, and writer. (IMDB)
Chesne then transitioned into the tech industry as a Partner & CMO of KLIQUE, an app created to combat sexual harassment on college campuses.
After Klique, Du Chesne, always the plant-based medicine advocate who was focused on cannabinoid education, eventually moved home to take care of his mother with Multiple Sclerosis, severe fibromyalgia and chronic pain.
After witnessing the effects of CBD for his mother’s conditions, Derek jumped headfirst into a new endeavor, founding Healing Ventures, a cannabis product development and marketing company.
During this first foray into the the cannabinoid industry, Du Chesne found it difficult to get a reliable supplier and manufacturer of CBD which is what led him to EcoGen Laboratories. After being a faithful CBD client, he eventually met the company’s Co-Founder Joseph Nunez and was invited in 2018 to join as their Chief Growth Officer. (ECOGEN)
With his move to Exactus, Du Chesne has seemingly finally found the perfect partnership as the newly-appointed President of Exactus Hemp. On May 11, 2020: Globe Newswire announced exciting news for you:
“In less than 3 months with Exactus and various accolades, the Company has promoted Derek Du Chesne to President and appointed him to the Board of Directors. Derek was initially brought on as Chief Growth Officer, where he implemented internal infrastructure systems designed to scale while developing additional income streams for Exactus. He is a thought leader in the industry and has the expertise, vision and ability to create change.” (Exactus MANAGEMENT TEAM, Exactus NEWS)
In mid-April, Florida received good news as well, learning that the USDA formally approved the state’s hemp program, clearing the way for Florida growers to begin cultivating hemp.
Agriculture Commissioner Nikki Fried oversees Florida’s state hemp program through the Florida Department of Agriculture and Consumer Services (FDACS) as reported by Brian Sparks in USDA Approves Florida Hemp Program and by Jett Baumann on April 27, 2020 in Florida to Begin Issuing Hemp Cultivation Licenses. (Appendixes 2-3)
I caught up to Mr. Du Chesne on May 21, 2020— a mere ten days after he was appointed President of Exactus Hemp, which is headquartered in Delray Beach, Florida.
Let’s begin with the observation that the other industries you’ve been involved in— such as film, tech, and marketing— are not recognized by nature for their altogether transparent behavior or culture. When and why did you make the official transition or abrupt jump to the hemp and cannabis space, not synonymous with transparency either?
DD: “I didn’t discover CBD till 2016 in Huntington Beach at palliative care, which led me down the rabbithole of ALL the amazing possibilities of the hemp plant – and how it can make the world a better place.
I cannot legally make claims on what specifically it helped, I just know what my personal experience was with my mother, which sparked curiosity and passion towards the CBD space.”
I feel like the more people that are exposed to this knowledge the better and I’m grateful to be at the forefront of the industry as it evolves and being able to share what I learn and my experiences. Whether it’s in the cannabinoid/terpene world, or textiles/construction, or biofuels, this industry is at its infancy— and I’m very excited to see where it takes us.”
In a 2019 HEMP AND CBD EXPO press release, you are listed as being “accountable for growth, expansion, product development, sales operations, strategy, new revenue.”
That’s a tall order, yet to date, you seem to have risen to the challenge as witnesses in your new Exactus promotion to President and Board of Directors. Give me some examples of how you managed all to juggle all of these responsibilities at once?
DD: “Between living in hotels/airports for tradeshows/talk shows/panels —in addition to building the sales/marketing collateral, team, etc.— it has been quite the task. But if you’re passionate about what you do, you’ll be amazed at what you can accomplish in a day. Look at it step by step.”
FLORIDA HEMP —4/16/2020 USDA-Approved Hemp Program
Mainly, there area two distinct kinds of hemp/cannabis: compassionate or patient-centric and capitalistic or profit-centric. How do you reconcile the two in order to maintain a balance?
DD: “You can be both – finding balance. There’s room to be successful bringing real value. The pricing has dramatically compressed on the B2B side, which needs to be carried on to the consumer. We’re working to change that.”
A fair assessment of your patient–profit balance is that you increase potential for overall corporate profitability by ensuring safe, consistent consumer accessibility while driving prices down for affordability.
Is that an accurate description?
DD: “Yes. We want to see the brands under the Exactus umbrella provide the best high quality product for the best price for better accessibility all the way around.
We have successfully worked to see a price collapse in the price of CBG for example. Just a few years ago the price was $50,000 kilogram. Two years ago, the price was $20,000 for CBG Isolate; CBD isolate had an even more dramatic price compression – one year ago, the price was $8,000. Now the price has dropped from $8,000 to $800 per kilogram, but look at the industry growth!
The price collapse of raw materials and manufacturing serve to bring consumer prices down. Affordability for the company, the farmer, and the consumer.”
According to the Exactus website, “Our mission is to lead the hemp industry into mainstream consumer markets. We are fully invested in the hemp industry and have established practices that are market-tested in order to produce the highest quality hemp-derived specialty ingredients (CBD/CBG/CBN/CBC) and finished products.
We have dedicated our efforts to building and refining our ethics and compliance as it is more than a selling point, it’s a federal requirement that is vital in contributing to the legitimacy of this industry.
At Exactus, we are committed to excellence and it is our goal to standardize the industry with consistency, quality, and transparency.”
How does Exactus align with your personal values and professional mission?
DD: “I am a lifelong firm believer in transparency, education, quality over quantity, and leveling the playing field for all hemp farmers/ businesses. Like me, Exactus stands for ethical and transparent actions in all aspects of the fledgling U.S. hemp industry, such as the supply chain. “
How does Exactus maintain transparency beyond state regulations, both internally and externally?
DD: “Due to the current lack of regulations – internally we hold ourselves accountable to the highest standards – certified seeds with feminization/germination reports from Eurofins – GMP manufacturing and processing facilities – internal and third-party testing – traceability from the genetics to harvest to processing to finished product – documented SOP’s along the way – and we are welcoming regulations since it will advance the industry as a whole.”
Recently, a lawsuit was filed concerning a CBD retailer who falsely claimed oils were heavy-metal-free.
What areas of improvement would you like to see occur in Florida’s current hemp program? Pesticides and/or heavy metal regulations? Cross pollination concerns?
DD: “Currently, I feel as if there are gaps in the current FL system, such as heavy metal testing regulations because hemp is a sponge and leeches contaminants (heavy metals and pesticides). Cross pollination will continue to be a problem, and more information is needed. Farmers lot specific for soil quality / testing, what was planted previously, etc.
There’s a significant amount of quality produce that comes out of Florida, so the opportunity to produce quality product is there. I’m excited to be a part of this growth. “
How are you meeting scalability needs in Florida new program? what can you disclose about cultivation locations, acreage, space?
DD: “Primarily, we’re fielding a lot of interested parties. COVID has hindered a lot of businesses capex and expansion plans and sparked other projects, including our hemp seed buyback program.”
TRANSPARENCY & REPUTATION
Hemp seeds built on reputation. How did you earn your reputation of trustworthiness, as seen in your record seed sales?
DD: “It all starts with having the conversations with the farmers. What were their concerns? Had they grown hemp prior (most haven’t) Genetics are a “trust buy” – different from raw materials. I saw the issues in the supply chain for genetics and we knew there had to be a better way to service the farmers.
Growing up in Wisconsin, in the middle of farmland USA and understanding the importance of the right genetics per region was key for me. Learning the proper farming methodology firsthand, from spacing to irrigation to drying and storing was invaluable.”
Exactus Sets Higher Standards For Consistency, Quality, Transparency, and USDA Compliant GENETICS:
“USDA COMPLIANT FEMINIZED CBD AND CBG HEMP SEEDS. EXACTUS WANTS YOU TO KNOW YOUR HEMP. With over 20 years of experience in agriculture, Exactus is equipped to advise farmers, helping them determine which genetics in the Exactus seed catalog will be superior for each region and farming methodology they are growing in.”
What is the primary area of focus for Exactus?
DD: “Genetics is the current phase. Once this season is over, we will focus on growing our global distribution of raw materials. We have a lot of exciting things that we want to do, but right now we are focusing on genetics and seeds.”
You stressed the vital importance of the “right genetics” in an October 2019 interview with Cannabis Business Times. On May 11, 2020, a Globe Newswire press release announced:
DD: “Exactus is passionate about being a trustworthy hemp supplier and providing farmers and brands with quality hemp to ensure that safe CBD products get in the hands of consumers.”
What steps do you currently take to maintain internal Exactus genetic quality and consistency?
DD: “I have been quoted as saying vertical integration does not make sense in every industry; however, it does make sense in the hemp and cannabis industry because of the dire need for accountability and transparency because our products are internally ingested, applied, sprayed, etc. Our CEO and farmers are multigenerational farmers with a track record of success.
We have strict SOP’s to ensure quality, and we undergo vigorous internal testing. Plus lots of love, along with sustainable farming practices.”
During a November 2019 Call Me Cannabinoids podcast, you talk at length about the “5 buckets/17 steps” that a company uses from seed to sale, including:
- genetics/ seeds
- farming/ agricultural/ growing/ drying & storage techniques
- processing/ extraction, distillation differs for each product
- formulation/ science & labwork
- finished product/ sale
In the same November podcast episode, you also stress the importance of transparency throughout the supply chain for quality control consistency and scalability —which equals a brand’s success. Why?
DD: “You can verify your supply chain partner. Having transparency in the industry concerning all regulatory aspects from seed to sale is vital to thriving. You must be purposeful, intentional in each step of supply chain so that you are able to control as much as possible and solve problems that arise.
This transparency also serves to earn consumer trust, and consequently, brands buy US raw materials and value U.S. high-standard testing. For individual consumers, that transparency equals all-natural product, no synthetics. For farmers, all parts from seed to sale are positively affected.”
In a more recent April 2020 Exactus press release, the importance of “20 years of agricultural experience perfecting which genetics are superior for each region and each farming method“ is highlighted and noted as your main company focus.
Where does the hemp and cannabinoid “mainstream dream” start? Or which bucket do you dip into the most or holds the most appeal for you, and why?
DD: “Genetics – it all starts there; not all CBD is created equal. Secondly would be product development/tie-ins with supply chain. Thirdly would be working with X company to see how exciting, new X cannabinoids react to X in body.”
Of those those three, what is the “best” bucket to focus on if you had to choose only one bucket, like in a horizontally integrated industry, for example?
DD: “Supplier/Distributor because it allows me to service my clients with the highest quality products from the companies that are making a difference.”
SUPPLY & DEMAND TRENDS:
This is an industry that has grown primarily off consumer demand and consumer results. What consumer demand do you see trending in Florida? Supply chain/ company demand?
DD: “With COVID, consumers are focusing a lot more on their health and wellness both physically and mentally. People are more conscious about what they put in their bodies, and the interest and conversations around CBD continue to grow, as a direct result.”
What supply chain results and behaviors has Exactus experienced, focusing on results here in Florida?
DD: “We are quite new to the Florida market, but there are incredible co-backers and manufacturers of finished products in the state that I’ve been working with for years. I’m excited to see what develops as the Florida program expands and solidifies.
As for progress, the farming aspect was recently introduced and in its early stages. Exactus will have more real data after this planting/harvest season.”
SUSTAINABILITY & RENEWABILITY
I am particularly interested in any sustainability aspects, issues, projects, ideas, solutions pertaining to Florida hemp and cannabis programs. In my opinion, a regulatory precedent in this regard could lead the US Cannabis green/sustainability movement.
Do you think hemp/Cannabis Recycling/renewability should be a required component of any state’s hemp/cannabis regulatory framework?
DD: “On the marijuana side – there’s a ton of compliance and packaging waste – sustainable packaging should be the standard. In the CPG world, packaging and plastics are incredibly excessive – I think we’re a ways away from that but hemp packaging could help tremendously.”
How does Exactus stress the importance of sustainability and renewability practices?
DD: “Hemp is a unique crop that can help shape a better future for family farms for generations to come. It can be cultivated in practically every environment, coast to coast, and hemp is pest-resistant. It matures within months, produces additional crops, from seeds to fibers to feed to bioplastics, fuel, and textiles.
There’s also a long list of ways that hemp can help the planet. Because hemp can be grown locally, there’s less of a need to import it from far distances. Seeds are a nutrient-rich source of food, high-quality plant-based protein, essential omega-3 fatty acids. In addition, fibers of this versatile crop used to make sustainable materials from biodegradable plastics to building materials.
Hemp serves to combat climate change and is ideal for crop rotation. Hemp also nourishes nutrient-depleted soil and reverses the effects of erosion.”
Give me examples of one renewability solution for (a) vertically integrated companies? one renewability solution for (b) end user consumers?
DD: “We have a multifaceted corporate approach to combat climate change. We even have hemp business cards because hemp helps the planet in so many ways. It can revitalize communities. We have built our hemp ecosystem to fuel itself, from genetics to finished products.
Exactus uses hemp to remediate soil and uses the fibers/stalks for packaging. Seeds are renewable for the coming year’s harvest, and hemp oil/terpenes are renewed through pharmacological applications, etc.”
BDS ANALYTICS’ Top Ten Cannabis Market Trends for 2019 published in September notes:
“Consistency and trust matter; consumers want a good experience.” Customers are willing to spend more on quality, keep up with the latest technology, and care that products are locally grown. Consumers prefer local, natural, organic socially-interested brands.
Discerning consumers are influencers, early adopters, and lead indicators. Consumers are most likely to be influenced by processing method, terpenes, additional cannabinoids, growing method, grow location and packaging.“
Suffice it to say, consumer education is needed concerning the effects of CBD and THC and hemp, as well as the effects. What is a short term goals at Exactus?
DD: “To fill big gaps in education from farming to genetics to drying and storing, the whole picture. Growing our genetics program and growing raw materials. Combine all knowledge so that cannabis and hemp can be consumed safely, manufactured, branded, and supplied.”
Give me one specific example of a future Exactus goal to show leadership in the fledgling US and FL hemp industry?
DD: “There is a lack of education in all aspects, from genetics to farming to which raw materials are best to make which products to dosage, and more. Without the multimillion dollar marketing and consumer education campaigns, there’s a huge gap of knowledge that Exactus feels a responsibility to fill. Widespread education is our aim.”
RESEARCH & DEVELOPMENT
What are your long term goals for Exactus pertaining to your overall R&D focus, and specifically, your international genetic, manufacturing, and distribution focus?
DD: “Exactus is watching the Philippines and South America. Australia is definitely on the radar as well. Pertaining to the global hemp industry, we want to start with the seeds, working from the ground up to allow raw materials and allow manufacturing on a widespread scale. This will help lower price points for farmers and trickle down to individuals which equals affordability in addition to accessibility.
Access is key and true open access needs to exist in these areas before Exactus can become involved on a larger scale in any country beyond the U.S. Of course, we want to supply the world with the best hemp genetics and CBD/CBG/CBC/CBN isolates, distillates, and water-soluble raw materials.
More importantly, Exactus wants to be used as an information resource. To share our experiences and the experiences of other companies to help advance the industry as a whole in our long-term focus.”
Talk about your desire to see hemp merged with a wide array of industries.
DD: “Someday, I want to walk into CVS or Walgreens and be able to get quality hemp and CBD and CBG and CBN and all the cannabinoids on the counter at the checkout for $5 bottle. I want it to be mainstream and I want all parties involved, from the farmers to the public, to be educated about quality product.”
What one thing in your line of work do you feel is the very most important, that makes the most impact and why?
DD: “As I stated earlier, education! I didn’t discover CBD and all the amazing possibilities of the hemp plant until 2016 when I discovered how it can make the world a better place. I feel like the more people that are exposed to this knowledge, the better. I’m grateful and blessed to be at the forefront of the industry as it evolves by being able to share what I learn in my own experiences.
Access to info online is greater than ever before but there are huge gaps in the current knowledge. However, mass education is possible and within reach. My goal as a whole is this education and awareness, from genetics to raw materials to how to use them, from dosage to delivery methods.”
VERTICAL INTEGRATION INSIGHT
Explain any Exactus ties between Florida’s cannabis and fledgling hemp program? Working in both spaces, what are Similarities beyond vertical integration?
DD: “Providing genetics of the highest quality at the lowest price. Genetics are key and cannot be overlooked. But drying and storing must also be perfected. It is the whole package.“
In consulting, we want to prevent costly easily preventable mistakes from years of farming experience.
Investments are also needed as part of the package, in addition to genetics and infrastructure; investments are vital post-harvest as well.”
Tell me exactly how vertical integration helps Exactus achieve and maintain high Quality Control and ensure consumer safety. Or conversely, how it hinders in any way?
DD: “I think 2016-2019 vertical integration was a necessity, now after the exponential growth and interest in the industry as a whole, their are incredible companies that are honest, effective, and reliable in other parts of the supply chain.
Prior you had to control each aspect of the supply chain – couldn’t get quality genetics, hemp, processing, etc., as the industry evolves it’s becoming increasingly like a conventional industry – master one part and work with great partners.“
WORDS OF WISDOM
What advice can you offer to other individuals and companies in the Florida hemp space?
DD: “INDIVIDUALS: MAKE SURE YOU KNOW WHERE YOUR CBD IS COMING FROM! There are huge brands out there that use foreign cbd and synthetic, dangerous products. Understand the supply chain in full and demand COA.
FARMERS: Make the investment in the right genetics/drying/storing. Know and be well-versed in all parts [buckets] of the supply chain. Our main goal at Exactus is helping and providing higher quality cannabinoid seeds in order to grow the best plants. Making these seeds globally accessible and affordable is the next phase.
BRANDS: ONLY BUY U.S. HEMP RAW MATERIALS with full-panel tests and be sure to batch test every product. Subsequently, include QR codes to purchasing individuals or farmers.”