Power Players: Peak Extracts CEO Katie Stem on Oregon’s “Cleanest Possible Product”
This week for our Power Players interview series, we spoke to Katie Stem, CEO of Peak Extracts in Portland. We discussed the Oregon market, her science background and the climate for LGBTQ-owned companies.
This interview has been edited for length and clarity.
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WeedWeek: First of all, tell us a bit about your business. How did you get started? How’s it going?
Katie Stem: It’s going well. We started in 2014 in Oregon’s MED market. I’d been a patient for almost ten years, and had been making my own edibles and topicals. As a Chinese herbalist, I started making topicals for my medical practice in 2010 and then integrated cannabis several years later.
We entered the REC market in 2016. We were the first edibles producer licensed in Oregon. [Peak] makes chocolates, tinctures, vape cartridges, and topicals. We’ve also started a hemp company selling topicals.
WW: The market is so competitive. And with all due respect to your products, there are a lot of high quality products out there that are quite similar. How do you distinguish yourself?
KS: We have always used strain-specific when it comes to anything ingestible. It’s not as important with the topicals. But my experience as a patient was that there were a lot of different effects based on different cultivars.
We maintain differentiation through all of our product (except topicals), and we do all of our extraction in-house. I have a background in laboratory science and chemistry, and so I developed our protocols and our way of extracting cannabis over a couple of years.
We preserve the terpenes, the flavonoids, everything that makes each strain unique. And then, we are able to put that into the product to create a unique experience based on what the consumer wants to have.
WW: A lot of companies say they’re doing that. But, the data is pretty thin. Do customers still seem to recognize the value?
KS: Oh yeah, absolutely. Some [companies] say they’re doing it, but I don’t see that they are. Most of our competitors that claim they’re infusing with sativa or indica are actually using distillate. And so, there’s no chance that any of the constituents that we preserve are actually ending up in the final product. We retain about 95% of the terpenes that were present.
Yes, the science is mixed, so we have to rely on subjective effects and the subjective effects are profound. We just do our best to make sure that we preserve everything that we can, and that involves a lot of extra work. But, I don’t know of another company that’s actually doing it.
Oregon: Model market?
WW: We ran the story the other day saying that Oregon, after a couple of years of really struggling, is emerging as a model market. Is that your experience?
KS: It’s a model market in so far as it’s, perhaps, the most competitive.
We have a long and rich culture of cannabis in Oregon. There is just an enormous amount of competition, and there has been no cap put on licenses. So it’s a saturated market.
What I’ve heard is if you can make it an Oregon, you can make it anywhere. The regulatory environment is kind of unpredictable and ever-changing, and also there’s just so many people trying to do it. Plus, the population of this state is not huge, just a handful of million people.
Geographically, it’s pretty challenging. Most of the population centers are on the West Coast, but if you want to have actual penetration into the Oregon market, you end up having to drive five hours for one account.
WW: Do you do that?
KS: Oh yeah, of course. And we can’t ship. It’s sort of, it’s ridiculous really to say to a company, “All right, if you want to sell your product everywhere you’re allowed to sell it, you’re going to have to use one person and a 14-hour day in order to get into that shop.” They have to physically take the product there.
WW: Interesting. I think the person we quoted on Oregon being a model market was talking about that the taxes and regulations, at least being structured in a reasonable way, especially when compared to other markets. In California, for example, taxes are far higher.
KS: From what I’ve heard, California’s taxes are kind of nightmarish. We only tax at retail. I mean, obviously we pay federal and state taxes on all of our income, but we don’t have have to take a chunk out for the regulatory body in the middle, which I think is pretty sensible.
The other thing I think Oregon has done well is testing. After some pretty serious bumps in the road, we now have a really rigorous testing protocol. The things that we test for, I totally approve of. There’s nothing on the list that I think shouldn’t be on the list. And there’s also not really anything that isn’t on the list that I think should be, based on my background in chemistry.
There was some serious backlash at the beginning when the new limits and new lists of forbidden pesticides came out. But now we’re getting the cleanest possible product.
“Not the most welcoming industry”
WW: All month, we’re going to see a lot of brands reaching out to LGBTQ consumers and patients. What’s the atmosphere like for you as a queer entrepreneur?
KS: It’s been sort of neutral. We’ve, found some allies. Cannabis on one hand is a little bit more liberal because it’s fringe. On the other hand, it’s extremely entrenched in male culture from its past as a criminal enterprise. That aspect of it is extremely homophobic, and we’ve certainly run into problems.
WW: Like what?
KS: Just people think that we can’t do it. Some people don’t wanting to work with us because we’re female.
Both myself and my partner can pass fairly well. That’s helped. In Oregon we’ve got a blue dot in Portland and the rest of the state is really red. I grew up in Eastern Washington. It’s a college town, but the surrounding area was really hostile towards homosexuality.
I’m super familiar with the Oregon and Eastern Washington aesthetic of homophobia. There’s definitely been some judgments and some lack of support in the cannabis community. It’s not the most welcoming industry I’ve ever worked in. Let’s just say that.
WW: We have a story this week about the delivery app, Eaze, did a pitch day for minority entrepreneurs. Eaze said there’s a real eagerness among consumers to support these businesses and that makes them a good investment. Is that something that you’ve found carries over, or something you see the potential for, as an LGBTQ owned company?
Speaker 2: Not particularly, honestly, I think that most people don’t realize we’re woman owned, even though we certainly talk about it. And most people don’t realize that we’re queer owned. In Oregon, I would worry about that hurting our business [more than it would help] in Oregon.
We’ve deliberately made our branding really neutral, even though we do use a rainbow in order to color code the different strains. But, I would be nervous in focusing our branding efforts towards some sort of queer messaging, because we are a really mainstream brand.