How It Started: Navigating New York with Nicolas Guarino, CEO and founder of Naturae

As part of our “How It Started” interview series, we had the pleasure of chatting with Nicolas Guarino, CEO and founder of Naturae, the largest producer of CO2-extracted cannabis oils in NY and one of the state’s leading companies licensed for all adult-use cannabis supply chain activities outside of retail, including cultivation, processing, manufacturing, and distribution. Their brand Jaunty is NY’s #1 selling cannabis vape brand and the only to use CO2-extracted cannabis oil in all its products.
Thanks for joining us! What was it about cannabis that first piqued your interest, and when did that happen? How did Naturae come to life?

Naturae dates back to when New York expanded its hemp program in 2017 to include commercial businesses and established industrial hemp as an agricultural commodity. At the time, some of my relatives had a small plot of land upstate and I had a roommate with connections to additional infrastructure. Soon we applied for a license and began fundraising for a vertically integrated CBD project.

Being avid consumers at the time, this seemed like the perfect opportunity to get a foot into the cannabis industry. To learn more about the industry, we apprenticed at farms in Oregon and Colorado. Those experiences led us to focus Naturae on CBD hemp cultivation and processing. We received a hemp cultivation and processing license, which was a ton of work. Once we got it done, we pitched dozens of investors to raise financing for Naturae’s processing and manufacturing infrastructure.

The Naturae team and I spent a total of five years in the hemp industry. As the challenges of that market grew, we turned our attention toward transitioning to the adult-use THC cannabis market. Supply was not regulated in the CBD/Hemp market, and since interstate commerce was allowed we were hit with hyper-speed commoditization and price drops of more than 99 percent across the wholesale side of the industry. That experience in hemp proved to be the best training ground for our current vertically integrated operations in the THC sector.

What is it about the company that makes it stand out?

At Naturae, we believe in high-value products at an affordable price point. So being quick, smart, and nimble all while being super lean is critical for us. To achieve these characteristics, Naturae now focuses solely on production and sale of extract-based products. This means we only participate in 50% of the market, but by focusing exclusively on our strengths, we can direct all of our attention towards creating high-value and quality products for our consumers, while still maintaining sustainable margin-creation. We have launched multiple new products in our portfolio, which has increased from 6 SKUs to 30 SKUs this year. These include several variants of vapes, gummies, tinctures, and our new concentrates product that is about to hit the market.

Our experience in the CBD market forced us to focus on low-cost production, so we put a lot of research and thought into the price point at which we sell our products. Taking into account our larger strategy of competing with unlicensed markets has also been a crucial factor in our pricing. From the start, we have been able to offer our dispensary partners products that can sell and deliver value to the New York consumer at a price that is competitive with both the unlicensed market as well as more mature markets. By maintaining an absolute commitment to product quality, variety, price point and delivery time, Naturae stands out as a premier cannabis distributor to the New York market.

What does your typical day look like and what do you enjoy most about your work?

The cannabis rollout in New York has been a rollercoaster. Lately my typical work day starts with checking on our finances, and going through my emails to set the tone for what needs to be accomplished the rest of the day. It’s important for me to check in with each department and ask about their progress on weekly objectives for their respective department; for us that includes finance, sales/marketing, distribution, factory operations, agriculture operations, and human resources—and usually in that order unless it is planting or harvest time in which case, ag would be a priority. Typically around mid-morning, I then dive into one of those departments to work closely on a new initiative, such as a new account outreach with sales, a monthly budget review with finance, a ride-along for new store delivery with distribution, etc. Finally, I will attend meetings with outside parties as required throughout the day, such as suppliers, partner cultivators, regulators, media, and anyone else who requires my attention.

Since I’m lucky enough to work in cannabis, my favorite part is the product development and testing. Having the chance as a team to turn product ideas that we have into reality and then (hopefully) receiving positive feedback from stores and consumers is my favorite part!

What has been the highlight of your cannabis career to date?

We are very early into adult-use cannabis in New York, but after spending five years in the CBD/non-psychoactive cannabinoid market, we felt so lucky when it all culminated in receiving licensure to be one of the first companies to transition from hemp into the New York adult-use market. At this time, that is the highlight of my career: authoring and receiving approval for our adult-use cultivation, processing, manufacturing, and distribution licenses, which allowed us to launch the Jaunty brand as the third vape brand in the New York market (and now currently the number one selling vape brand in the state).

Can you give us one cannabis trend that excites you?

We see that a lot of existing consumers in New York are trending towards vape consumption (I have a bias as that has been my preferred method of consumption for over ten years now) and a lot of new consumers are trending toward edibles consumption as well. Seeing the market finally start to get educated on the convenience and health benefits of consuming extract-based products is exciting because that has been a bet we have made as a company since our inception six years ago. As a sub-trend of this, solventless products are becoming more and more popular and that excites us as well because it is the most rewarding form of harvesting and extracting the plant.

Is there a product or service you hope someone creates to serve the cannabis community?

On a national level, we need a properly regulated and uniform genetics program for Cannabis. Just like we have for every other commodity crop, where stable genetics could be registered and protected. It would do a lot to help legitimize the strain-specific claims and marketing that the industry attempts and that nobody really takes seriously. More importantly, it would go a long way for cultivation planning. Every season, cultivators go through the anxiety of having no real idea or reference as to what they are planting into their fields, where often millions of dollars are lost due to poor feminization rates of unstable genetics, or inappropriate genetics for the local climate.

What is the biggest change you want to see in the sector?

Firstly, in my own little world, I'd like to see things in New York be a bit more structured, especially in terms of the timeline with its retail rollout. Generally, one of the great challenges is the lack of federal legalization and how it affects stakeholders at every level and from every angle, from gas cards for distribution drivers, to banking, to 280E tax implications. If we could see a full de-scheduling (not re-scheduling, which benefits big pharma) that would wipe out most of the complications and allow cannabis markets to flourish on a state-by-state basis. I'd also like to see more transparency and consistency in marketing and packaging for products. Testing and dosage are important and should be meaningful to the consumer in some way. Right now, it’s a bit of a free-for-all.

Any advice you would give to someone looking to enter the cannabis industry?

Don’t fundraise from your friends for a cannabis business, fundraise from your enemies, because it is statistically very likely to fail! Ha-ha…that’s a joke, but I would say most importantly start small and focus on a very narrow product or service offering, and ensure that you have a margin at the scale you are starting with round A fundraising. In today’s cannabis industry, do not count on round B, C, D… Z fundraising to eventually reach profitability. The business should be very profitable from the get-go in your Excel models if you hope to just break even in the Cannabis industry. If it is not, it will be extremely challenging as the market continues to progress to reach that magical break-even point.

What’s next for you? What should we be on the lookout for?

Product development and process development is what we are focused on to constantly improve and build our extract-based portfolio and build efficiency for the operations of the company – there is so much you can pull from other industries to create new products, market products in different ways and deliver them faster to our customers. We are about to launch a brand-new product under the brand Critical. We recently partnered with award-winning California brand, Critical Concentrates, and their President Alex Queupumil–who was named High Times 100 Most Influential People in Cannabis for his contributions to the industry. At Naturae, you can always count on us to drop new, top-quality, progressive products to keep up with what consumers are looking for in cannabis.