223 Claire Crunk - Why the regenerative revolution starts with a hemp based tampon

A conversation with Claire Crunk, health nurse practitioner, founder, and CEO of Trace. As a pioneer 5years in the US hemp fiber agricultural movement, she joins together exciting new practices in healing the earth through hemp and regenerative farming techniques with her knowledge of menstrual healthcare. We talk about fossil fuel-based products, natural fibres, cotton, hemp and maybe the biggest overlooked industry in regeneration: tampons!
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Transcript

SPEAKER_00 0:00

Why are fibers so incredibly overlooked when it comes to regenerative agriculture? We talk a lot about food and sometimes vegetable oils, but hardly ever about fibers. While conventional cotton has an enormously negative impact on the world, look at water, slavery, chemicals, and more. And let's not talk about the fossil fuel-based products that turn into fibers, mainly plastics. We wear them, and when it comes to hygiene products, we actually put them in our bodies. Join me today to learn more about natural fibers, cotton and hemp, and maybe the biggest overlooked industry in regeneration, tampons. This is the Investing in Regenerative Agriculture and Food podcast, investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear and consume. And it's time Thank you. If our work created value for you, and if you have the means, and only if you have the means, consider joining us. Find out more on gumroad.com slash investing in RegenAg. That is gumroad.com slash investing in RegenAg. Or find the link below. Welcome to another episode. Today with Claire was a women's health nurse practitioner, founder and CEO of Trace. As a pioneer, more than five years experience, we're going to definitely unpack that, in the US hemp fiber agriculture movement. She joins together exciting new practices in healing earth through hemp and regenerative pharma techniques with her knowledge of menstrual health care. Welcome, Claire.

SPEAKER_02 2:02

Thank you. Thank you so much for having me.

Why are you doing what you are doing? Why Soil?

SPEAKER_00 2:05

And let's start at the beginning. I mean, not the beginning, beginning, but let's start at, of all the career choices and all the different journeys you could have chosen, or maybe you didn't choose and you were forced of nudge into this. Why did you end up in health regenerative, or hemp, sorry, regenerative agriculture and farming techniques? How did you end up focusing on soil? And of course, human health?

SPEAKER_02 2:31

Sure. Well, at some point in my life, I will write a book about this. There's been many twists and turns, but it really starts all the way back to when I was 18 years old. And I was pregnant with my first child. I was a single mom and knew as a first-generation college student, too, that I needed to enter into a professional field that would give me a certificate at the end of the day with a guaranteed salary, and I gravitated towards nursing. I've always identified as a healer, have always identified as a caretaker, and that was a natural entry point for me and chose women's health because of my experience as an 18-year-old single mom and saw some things that needed to change in the system. And I just wanted to help other young women who might be in that situation as well. So I went to nursing school and became a women's health nurse practitioner and practiced for about 10 years. At one point, I had my own clinical practice, and that was my first dip into entrepreneurship and really enjoyed that and found within me skills and natural talents that I didn't know existed that I really didn't have the privilege of exploring back when I was just trying to put food on the table. However, as with many healthcare providers, especially nowadays, face some pretty significant burnout in my early 30s, and so stepped away from practice, and that was an, oh my gosh, what am I going to do with my life? I just paid off my student loans three years ago. I love my patients, but I can't do this anymore. And so I did a lot of soul searching and exploration. And during that time is when I accidentally learned about hemp. That was in 2018, right when that most recent farm bill had come to pass. And in Tennessee, it became legal to grow hemp for really any purpose, even commercial purposes, which was pretty rare from a state regulatory standpoint in that day. So my science brain just started doing deep digging on what this weird plant was. was that, you know, I've seen hippies talk about and people wear hemp rope necklaces when I was in middle school and learned about hemp fiber, which I'd never heard of before and learned that sometimes it can be as soft as cotton and sometimes can be more absorbent than cotton, but that there was some questions about its potential on a healing impact on the earth. And so that healer aspect of hemp really resonated. I connected with that on a personal level. And then the technical aspects of it, of course, just dinged in my women's health brain that that would make a wonderful tampon. And so I saw this opportunity to bring a new material to menstrual products that I'd never seen, but also to create menstrual products in a way that would help clinicians like me to help women like me and my three daughters have a product that they could relate to. rely on to be healthy, that they could know exactly what was going into it and exactly the impact that it would have on the environment. So that started this crazy journey. And right off the bat, I realized that, oh, yeah, there's no hemp fiber in the United States. And maybe that's why there was no such thing as a hemp tampon at the time. So I had to learn how to make that fiber first.

SPEAKER_00 6:09

You stumbled upon hemp as a plant first. And then the product came sort of naturally second, like emerged, like, of course, this makes a lot of sense. But do you remember why hemp? Because some people, let's say, fall in love with chestnuts or other like very interesting plants, less trees that have all the, or perennial rice or something like, you remember why you stumbled upon hemp or was it because of the Farm Bill passed and somehow that was in the news that suddenly it was possible?

SPEAKER_02 6:39

Yeah, yeah, the latter. So just being in the news, in conversation it wasn't like I was actively seeking a new material at the time I really count it as kismet and the universe bringing it to me knowing that there was something important that needed to come forward from that so that's how I met this plant hemp and I'll

SPEAKER_00 7:04

also say I mean then you said nobody's growing this actually for fiber and how do Where do you start? What's the first thing you

SPEAKER_02 7:16

do? Well, I had a blessing of naivete, which I continue to be naive about many things. And I really cherish that as a blessing. And so I didn't really know where to start, but knew that I had a lot to learn. And so really the first six months to a year of this curiosity just started showing up to trade group meetings in the textile industry to learn about fibers. I enrolled in NC State's Textiles 101 to just learn the science of what fiber means and how a fiber goes from something that's grown in a field to a garment that we wear or to another product that we use like a tampon. I signed up to go to a conference called Hygienics, which is the North American trade groups conference on all things absorbent hygiene I took an add-on course on how to make a baby diaper so just really spent a lot of time and invested a lot of money and energy into learning and came at it with a healthy sense of humility that I was a newbie but wanted to bring some energy here and understand what barriers were there and what the market drivers were and could this even be a profitable business.

SPEAKER_00 8:44

And you came out of that with at least some answers saying yes. And so then what is next? Because it's a completely new approach to a tampon, completely with fibers that have never been used, or at least not in modern history. Right. Or that we know of, maybe. And so how do you even start to approach that and not be put aside as, okay, that sounds really funny and hippie, but why would we do this?

Why hemp?

SPEAKER_02 9:11

Sure. So it became immediately apparent to me two things. The first is that there was a really high interest in demand for using hemp fiber in various textile and non-woven applications. And the way that was evidenced is, you know, I just showed up to these conferences. I literally printed a business card the day before my first one, just made up a name on the fly before I'd even incorporated. And from that moment on, I was like, with each of these big groups, I never once had to request a meeting. All of these manufacturers, mills, yarn spinners, nonwovens, converters flocked to me and asked me for a meeting saying, hey, we've been wanting to do product development in this space. We cannot find the hemp fiber we need. I said, okay, cool, me too. That was happening in my brain. And then the other thing that I learned very quickly was the reason why a product like tampons has not had any new material innovation since I've been alive. And that's because tampons are class two medical devices. And so the product development and hurdles to get to market are much more expensive and more difficult. And just the attitude of the industry. The menstrual products industry is global. It's complex. But frankly, it's kind of dinosaur because of is an essential product that women have to keep buying whether or not they're happy with it. There's been very little motivation to change this commodity structure of product. And I had many manufacturers hang up on me in that first year saying, women don't care what's in their menstrual products. This is a pipe dream. It'll never happen. Call me back when you have$2 million in your bank account and then we'll have a conversation. So I saw why there was a disconnect between what consumers my age were wanting and the products on the shelf. And also that there was this huge gap between what brands were trying to create, what farmers were trying to grow. And it was that big gap in supply chain on the technology and also just the execution of that production. So I started this journey in 2018 to do that. So focusing on supply chain, both to serve my own purpose, but also to get some traction in this value stream for everybody.

SPEAKER_00 11:51

And just to paint the picture, why do we want new materials or different materials in tampons? What's the issue? Why is it interesting for the dinosaurs? Why are you even working on this? I mean, for the hemp side, I understand soil story. I think for hemp is very clear. If you're not familiar with that, go and Google. But why does it make sense to put it in this specific product? And so what's wrong with the current offering?

Why the current tampons are not good enough

SPEAKER_02 12:17

Sure. Well, there's really two things. One is material and one is process. So on the material side, like I said, the last time a new material was introduced into tampons was in the 70s before I was born. That was with organic cotton. But we all here know that between the 70s and today, there have been vast improvements in agricultural technologies and fibers. can be produced now that function better than cotton and have, I'll say this with an asterisk, potentially a better, more positive impact on the environment than particularly conventional cotton, but even in some cases, organic cotton.

SPEAKER_00 13:01

Because the issues with cotton, especially conventional, it's a very extractive crop. Let's put it that way. The chemical use, the inputs are enormous and You end up wearing that or using that, which is obviously not something you want. Plus, the whole environmental impact is enormous, but bringing that to your body is an issue. And then we came in the 70s, so 50 years ago. Okay, organic cotton is going to change all of that, but it hasn't delivered on the function, but also hasn't always delivered on the environmental outcome. And we've came a long way in terms of other fibers. It might be way better even just simply in the function, but nobody bothered to look.

SPEAKER_02 13:41

Right, exactly. And then on the process side, something that's really interesting and worrisome to me is this complete disconnect between brands selling a product, trying to meet a customer's desires and needs for something healthy, transparent and functional and what happens on farm and how it gets there. Manufacturers of tampons don't know where their cotton comes from. And anyone who's listening that has experience in the cotton industry, industry, it's rife with many problems, and it's more than just yield, more than just soil health, pesticides, etc., water use, but it's a social issue as well. So, cotton has known issues with slave and exploited labor, and there's no traceability in our industry for cotton origin. This is getting more traction in apparel and other textiles, but the absorbent hygiene industry is still in the that. And

SPEAKER_00 14:43

just to understand like on the fiber side, is like the fibers you used, we use as a global society to make the hygiene side, is that the same type of fiber or is it like, does it exist next to the fabric industry? Is it a different type of fiber? Is it a leftover product or does it compete with the fibers we use for the things we wear? Or is it just you harvest cotton and then you choose, it goes left and right, or left or right, or both?

SPEAKER_02 15:14

It really depends. So, of course, everything needs a particular specification. For absorbent hygiene, cotton is purified, whereas in a spun yarn, it's not typically purified. There might be some finish added to it to make it more spinnable. And then, of course... Purified science chemical. Exactly, yeah. And with anything, there are certain specifications of yarns that need a longer, more finer cotton fiber. But in general, we can source from the same farms that are going into apparel value streams. We just purify it to remove all the oils and waxes and optimize its absorbency. Now, there are other natural man-made fibers that go into both absorbent hygiene and apparel, like viscose rayon from trees and now sometimes bamboo. And in and so on and so forth. I will say though, that still today, the majority of absorbent hygiene products, including menstrual products are made from polyesters. So pretty much any household disinfecting wipe you'll use, yeah, is a plastic. Many of the components and pads are still plastic. The absorbent portion of pads are super absorbent polymers that are petroleum derived or wood pulp from trees. So again, the room for innovation to bring more environmentally impactful materials into menstrual hygiene is totally wide open. And the focus of the industry has been less plastic, less plastic. But I mean, it's 2023, y'all. We're beyond less plastic. We've figured out that. Now it's time to move forward and repair some of the damage that we've done to our soil and environment over the past 50 years.

SPEAKER_00 17:09

So now fast forward, I mean, not fast forward, because it's a long journey, but where are you now with Trace? And so what did you develop or did you come up with that does answer those different needs, both on the healthcare side of things, of course, and on the health, let's say, for the planet side and also the function, let's not forget.

SPEAKER_02 17:31

Well, what's really interesting to me about this, and I would love to have this conversation with you, is that so much of what we do is not rocket science. This is, you know, going back to the roots, going back to ancient wisdom, really recognizing and properly stewarding gifts that Mother Nature has already given us and learning how to steward those things in more efficient and more direct, practical ways. So, you know, starting in 2018, going from what genetics of seed work to develop a high performance fiber? What is our seed spacing that needs to happen. You know, harvest the

SPEAKER_00 18:14

full agronomical. Super practical questions. Yes,

SPEAKER_02 18:17

super practical, super baseline things that have been studied and perfected in the cotton industry for 100 years. That's where we started in 2018. Now where we are today is we have a commercial production of U.S. grown and processed hemp fiber that makes a high performing, high quality tampon that is ready to use in a consumer good. So really grew at a super high velocity on that development and learning and collaborative work across the value chain to get from a seed in the ground to mechanically processed fiber to a chemically purified fiber to a finished good that works better and that has this holistic impact on environment. So where we are at this moment in time We have our first 6,500 boxes of commercial tampons ready to sell. And

SPEAKER_00 19:18

you're allowed to sell it because you mentioned before, it's not that easy to be.

SPEAKER_02 19:22

That's right. That's right. So we're a class two medical device with FDA, which requires a pretty intensive process. Our final filing on that happens in the next eight weeks. So we're really excited about that. We've been working with FDA since last year and have all of our testing our safety and performance testing. We're passing with flying colors. But there's been a lot of education needed and some additional experimentation and data reporting to them that they've asked for just because they're unfamiliar with hemp fiber as a whole. So those are some really, really huge historic milestones. And we expect to be on market this summer.

SPEAKER_00 20:38

And how difficult was the process to create it? Because you said it has to, I mean, it's not rocket science, but still you're dealing with a new fiber that very few people, if not, nobody has turned into a tampon. So, and how difficult do you have to retool? Do you have to build your own factory? You work with, with someone, but of course they say, come back when you have$2 million in the bank account. Like how, how do you get to 6,500 boxes?

SPEAKER_02 21:04

Oh gosh, a lot of blood, sweat and tears. That's for sure.

SPEAKER_00 21:07

Not in your garage, I can imagine. Yeah.

SPEAKER_02 21:09

Yeah. Yeah. So everybody was in the same boat, right? In 2018, we were all just little teeny tiny babies not knowing anything about hemp fiber and across the nation having to learn together. And people just kind of fell into the buckets that they were most drawn to, whether it was seed genetics, on-farm, mechanical processing, chemical processing, and product. And the hardest, there were two really difficult parts to this. The first was in a very unique way, we had to bring everybody across the value chain to the same table at the same time, even though we all had our own individual business interests, our own individual motivations as companies, and none of us were funded. So that brings the second difficulty is that yes, this takes, you know, capital intensive factory equipment to do right. This takes significant investment and risk taking on farm to experiment with a new crop and divert acres away from a subsidized crop. And it takes a lot of time to validate that through. So this is, you know, a natural plant that we're beholden to a crop cycle on. And so we have just, you know, a set window of time year over year to experiment with different acreages and follow that through to a final product performance and learn and get feedback on that. At the We were going to pitch these investors, then understanding, well, why isn't there a proof of concept completed? Why don't you have any commercial traction? And the reason is, well, you know, we could do a pretend run on a little hand fed mechanical processing system. That's really not valuable to inform how this value chain is going to function on a commercial scale and in a sophisticated piece of equipment in a commercial farming operation. So there was just, you know, so classic chicken and egg scenario. So those were the two hardest things. And so to get where we are today, it took groups of farmers, groups of entrepreneurs, groups of brands, putting everything on the line and subsidizing this process with bootstrap money to discover the technology and discover the sequence of things that needed to happen in order to produce a particular grade of fiber for a particular purpose. And I'll add that was another challenge and an ongoing challenge that we have in hemp fiber right now is that this plant is beautiful and can be a whole plant utilization and create all of these portfolio of products. But for each product, it has a different sequence of agronomy practices and processing practices to get that target. And there's no standardization of fibers. So that is one thing that our company has developed is analytical methods and standards that we need for our quality control, but also that support and inform our colleagues across the nation in creating a consistent product that can be reliable on market and give investors more confidence that we have some data-driven decision-making.

SPEAKER_00 24:43

And is it... you're saying that it depends how you grow the hemp on what you can actually use it for.

SPEAKER_02 24:49

That's correct.

SPEAKER_00 24:50

And so to have it used as an absorbent or to have the best possible function there, you need to do X, Y, Z in the field properly, depending even on genetics, obviously, and then process it well. But if you don't do X, Y, Z properly, then it's going to be less functioning or not relevant for this. It might be good for other types of fiber products, but not what you want to use it for. And you have to discover that basically from zero.

SPEAKER_02 25:13

Yeah, that is exactly right and this is where as any consumer product brand we have had to do about a thousand times more work than any consumer product brand let alone an organic cotton tampon brand is because for each vendor of hemp fiber that we work with we are collaborating all the way down to seed selection and validating that through and giving them feedback. And so that requires a lot of high touch. But the blessing of that is that it has positioned our team as having the highest expertise and being authority in the hemp fiber space that now has set the foundation for our traceability value proposition that puts us light years ahead of our competitors and has also opened these major broader doors to B2B business for five production, even outside of our brand, even outside of our industry. So all of that hard work serves us well and positions us well as a brand and for our product, but also for a longer term, broader scope business.

SPEAKER_00 26:30

And are you still as excited about hemp as you were five years ago or more or less?

SPEAKER_02 26:38

So I'll just be honest. When I first started five years ago, I really looked at this as a business opportunity and had some judgment around hemp and really just was very practical about it. Now I am in love with this plant, you know, full line and sinker and just connect with it on a much more spiritual level and emotional level. And part of the reason for that is hemp is a unifier and Hemp has in my experience and in this journey, hemp is bringing the most diverse group of people to the same table, working on common goals at the same time, more than any other thing I've ever seen in my life. So even in, I mean, in our actual real life business practice, we have, um, conservatives, liberals, farmers, investors, business people, consumers, marketers, um, You know, the hippies and the squares, pharmaceuticals and herbologists all at the same table at the same time, not arguing, but excited to bring this plant to a consumer product. And that's very beautiful to me and is something that is creating a legacy impact, even more deeper than environmental impact and more deeper than a healthy product.

SPEAKER_00 28:30

What has been the response? I mean, for the consumer response, obviously it's difficult to say because you're not on the market, but have you, what is your sense there? Because for sure you've talked to many potential customers. Like what has been the, are the dinosaurs right as people don't care about it, but organic cotton is good enough and we just get a bit of plastic out of it. Or is there that blue ocean opportunity that your hunch was focused on or is

SPEAKER_02 29:00

focused on? Yeah. I'm very grateful to say the hunch is all arrows are pointing towards yes. We are having people begging to buy our product. And

SPEAKER_00 29:14

is it for the environmental reason? What's the main reason? Sorry, it must be different for different people. Is it the function, the health side?

SPEAKER_02 29:20

Yeah. So today's customer and today's menstruator understands that their physical health is interconnected with the health of the planet. So this is not mutually exclusive. It's not choose one or the other. It is intertwined. So these younger consumers have a wisdom and there is a wave of activism around that and pursuit of that and where they put their dollars in the market. So it's really a both and where when they hear hemp and tampon, they hear finally a product that's good for them. for me that I can trust and a product that I can trust is good for the environment all wrapped into one. And we've seen a desire in this space tangibly by a shift to reusable methods away from organic cotton tampons, even though reusable methods still have their own issues and require people to work harder to use them. So there is enough dissatisfaction with what's on market today that people with periods are willing to do more laundry, to sanitize more products, to spend more money upfront, to be inconvenienced because these generations of buyers are willing to do that in order to live within their values and live with an integrity. And so Trace answers that in a convenient way without them having to change anything or work any harder. And so we get resounding yes, we get repeated questions When can I buy? Where can I buy? Can you just go ahead and send me some now? And even beyond individual customers already having increased white label for other brands to distribute wholesale. So, you know, everybody sees the vision. Everybody knows that this product has been needed for a long time. And truly now the two missing pieces to get us there are completion of FDA and RMA funding.

SPEAKER_00 31:32

And what about the dinosaurs? Are they still stuck in the bit less plastic is okay? Or are they starting to wake up and knock on the door? What's the industry, the industry? I have a

SPEAKER_02 31:44

slide deck and one of the slides says innovate or die. And that first manufacturer that said women don't care, call me back when you have$2 million is now closed. Okay. So an unwillingness to have forward thinking these days you're not going to survive. The second manufacturer that we worked with that was going great, and this is a really heartbreaking story to me, but in the nth hour, their global head of procurement decided that they didn't want to use our cotton. So we haven't even talked about that. And besides our hemp development, our product is a blend with climate beneficial cotton. And we're involved in that project all the way farm forward and come with our own raw materials to manufacture comprehensively. And that global organization decided that it was too much work for them to walk alongside us to validate that supply chain. And we're worried that it would upset their existing supply chain. And so, you know, we played nice. We felt good about these partners and said, you know, we've invested a lot of money and time into this cotton. We have it in hand. But in an effort to move this forward to Tell us more about your cotton. We're willing to hear it. Can it meet our requirements for traceability and impact? And they didn't know where their cotton came from. And this is a global organization that has multiple brands on shelf in the US and around the world right now. They didn't know where their cotton came from. We pushed and said, well, this is baseline information that we need to know. We need farm level. The best they could do was country level. And that took three months to get that answer. And it was coming from a country with notorious child exploited labor in their cotton production. And I mean, honestly, they had me and had an in-country audit for like three years because the government wasn't allowing third party audits of their cotton. And so we had to walk away from that manufacturer and it delayed our development for a year. So that was a really bold choice, but it was one that we just had to make. And so they lost our business with that. So all that to say the folks who are still in some dinosaur mindset, which I don't want to dog them because they're doing their best right now, but they could do better. And they're just not going to continue to earn the business of brands like ours that are growing 50% year over year and taking market share away from the big guys who are still using outdated materials and value chains.

SPEAKER_00 34:30

And so So let's touch upon the cotton side. Why do you blend? Is it needed? Is it what? Yeah, so a few different

SPEAKER_02 34:38

reasons. A few different reasons. The first is we do have a limiting factor on hemp fiber supply right now. So as a business strategy, we want to be very careful and allow ourselves to grow as fast and as far as we would like to and as we can and not have raw materials hold us up. So that did inform this decision to blend down. The second is just from a design and engineering standpoint. So we have very specific window of absorbency and safety profile that we need to hit. And since this was a new material introduced, we didn't want to take too much risk from an investment and time standpoint on nailing a product that could fall within those ranges. And then the third thing is that we felt like we could take these skill sets and driving forces that were bringing hemp to market and hemp's healing impact, that we could overlay that work into cotton and make a difference in the cotton industry as well, which I feel like we've contributed to. And

SPEAKER_00 35:53

should I imagine, is it like 50-50, 80-20? And are you planning to increase that to 100%? hundred or not? What's the blending strategy?

SPEAKER_02 36:04

Yeah, so right now it's 20% hemp, 80% cotton, and that's on our product pipeline is to experiment with different ratios of blends and to see how that shakes out. Even with the 20% addition, we've noticed some unexpected benefits, which I can speak to some of our tests, but we need additional data collection before we can officially make any claims. But one of the safety issues in tampons is something called fiber shedding, where when you have the device inside and when you remove it, some of those natural fibers can remain in the vagina. And with our testing, we've had zero fiber shedding, which is very interesting. And then in our absorbency, one of the major issues in organic cotton tampons is that, and this is really getting technical and in the weeds, but because of cotton fibers and because of how tampons are constructed, almost every single cotton fiber or tampon has an over wrap around it. Some are made with cotton and they don't function very well. And it prevents a very uniform absorbent of menstrual fluid, which causes more leakage, which causes an uncomfortable wear experience.

SPEAKER_00 37:22

So basically the organic cotton versions function less in many cases.

SPEAKER_02 37:27

Correct. They function less and they're less comfortable in some regards. They do help decrease menstrual cramps over conventional. But there are still tampons on market that use organic cotton, but still have a polypropylene overwrap, which that polypropylene overwrap functions very well. But people don't want plastic in their vaginas anymore. So part of our design and our fiber decision making, even down to our cotton quality and our cotton links, which, you know, pins us into certain varieties and certain farms in the US, is that we wanted to design a product that did not require an overwrap and we've achieved that. And that's part of why our absorbency profile and function of our product is so high quality and competitive. So, you know, we've noticed that this addition of hemp has all of these benefits and we see where with some more research and feedback that we're able, I think, able to make some official claims in the future on why we're a better tampon.

SPEAKER_00 38:32

And an interesting future of increasing that 20% to more and see what happens. Yeah, we'll see what

SPEAKER_02 38:39

happens. You know, there are just so many variables that go into play with that. And like I said at the beginning, capacity is a huge one. And also, like I said, we're still the authority in bringing that kind of fiber through the value chain. So to answer this question and to open the door for that sort of product development, we've actually started work already on building our own fiber processing facility, which for fiber purification and hemp doesn't exist in the United States. So, you know, that's an 18, 24 month project. So we're starting that now based on the response we're getting in market and where we see our growth happening. And in order to even create an opportunity to answer that question that you have, do we add more hemp to the tampon or not?

SPEAKER_00 39:32

And on the farming level, I I don't know the crops well enough, but is it like, are you working with ex-cotton farmers that grow hemp or cotton farmers that include hemp in their rotation or on their farms? Or is it a completely different climate where hemp flourishes? And then what does it mean for, what does the typical hemp farm now looks like that you work with?

SPEAKER_02 39:54

Sure. So yes, and. So on the latter part of your question on climate, this is part of what we're still trying to learn as an industry in some of these agronomical questions. We tend to try and stay on the same latitude as where this is grown in China. Our company's headquartered in Tennessee. And right now, the highest quality fiber that we've seen and that we use is in the North Carolina, Tennessee, Virginia region. We do source some of our hemp from the Montana region, and we are validating fibers from all over the country. But we're not Right now, that latitude of North Carolina is really the only one that's hitting it for our grade of fiber that we need, knowing the genetics that we typically use. And what was the first part of your question?

SPEAKER_00 40:48

Like, what does it mean for a farmer to growing hemp versus whatever it was he was, she was growing before or still is growing side by side, of course. Okay. So I can totally get on

SPEAKER_02 40:58

the soapbox about this, but it is so critical to understand that hemp fiber production is completely different from all other forms of hemp production. It is not even in the same like building as cannabinoid production, which we had to like really go to school with the FDA about that. And so fiber for hemp is grown as row crop. It looks like tall, skinny bamboo. It's planted with a seed drill. We've got to plant it in a crosshatch pattern to get the seed density that we need. So the growers that are succeeding right now in fiber grows are the ones that have row crop acreage, who have access to that sort of row crop equipment and harvesting equipment and who have experience there. So yes, cotton farmers are participating in hemp fiber grows, but still cotton's different than hemp too, right? And the harvesting is much different. So typically our cotton growers that we work with also have other food crops in their business. And so our primary farmer right now, his name is Rick Brown out of North Carolina. He does grow cotton. He grows other food row crops. He also does specialty in horticulture as well so he's pretty diverse in his business offerings but has dedicated a large portion of his business to reaching a high level of excellence and consistency in the crop that he's producing

SPEAKER_00 42:32

and for him it makes sense as it's a restoring crop as let's say profit per acre is interesting or why is he as a farmer interested in this crop

What about the investment journey?

SPEAKER_02 42:46

yeah Well, I don't want to speak for him directly. My observations of his character, of his story and how he operates his business, a lot of that is rooted in reconnecting with land and understanding that land is our greatest asset in humanity, our greatest tangible asset for humanity and committing himself and his life to making that legacy investment in our future. The other side of it is from an economic standpoint is same thing. So investing in soil, investing in land and using hemp as a tool to do that and restore soil is a financial investment that has a better value proposition than the year over year extractive and input purchasing and costs associated with that. so the ones that are doing really well in hemp fiber from an economic and profitability perspective understand that business on making investments here are saving our costs on our water use on our inputs are improving the yield of our food crops and looking at the long game of return on that that said it's still expensive to grow hemp and it's still risky to grow hemp so you know, there's not a subsidy program out there. There's not a safety net program. There aren't, you know, FSA, local, you know, local FSA who can give you a playbook on agronomy. There aren't merchants there to help sell your product right now. So there is significant personal investment from the farmer standpoint. And right now there's not a guarantee on that acreage return. So it's It's still pretty risky for farmers, but that's why I feel like a really, really deep sense of duty and urgency as a brand to pull through hemp fiber, through our product, through consumer purchasing.

SPEAKER_00 44:59

And you mentioned, let's switch gears a bit to the funding side, that there was a lot of education needed on the FDA. I can imagine on the investor side, probably equally or more, how has been the funding journey for this company? I mean, it's been five years the product is not out there yet so it must be a long one but how how did that develop and how do you get something like this funded

What should smart investors, who want to invest in regenerative agriculture and food look out for?

SPEAKER_02 45:29

um Well, Lord, that has been a journey. So, you know, I had this idea for tampon, which is a consumer product and a medical device in the beginning, but for the first two, two and a half years was solely focused on supply chain and fiber production. And so the fundraising efforts at that time were large scale manufacturing and it just wasn't the right time. Hemp was new. There was a CBD craze. There was a lot of irresponsible use of funds by companies that have been overcapitalized in the hemp space that really gave hemp investing a black eye. And at the same time, there just wasn't enough knowledge, experience, and follow through on the hemp fiber traction side. After we got, you know, the confidence that we were ready to move forward with actual device development in 2020, that introduced a whole new challenge of fundraising because now all of the sudden, our public-facing identity is a consumer product. And consumer product investing, I have learned, is very narrow. There aren't a lot of investors out there. It's super capital-intensive. There's a lot of working capital for inventory. And while health tech, while conventional tech, SaaS, investment, real estate, those are kind of slam dunks in some cases, this takes a really perceptive type of investment. who has their finger on the pulse of market. And there just aren't a lot of investors with experience there. So our fundraising so far has been bootstrap, friends and family round, some key angels. And then we recently closed a crowdfunding, a regulation CF round. However, the blessing of this taking five years is that what we envisioned five years ago now is coming to fruition in the minds of the everyday consumer and investors are understanding that. Now also that we've reached this milestone of product development, ready to go to market, we need operating cash to give us the runway there. But now that we're beginning this work to build our own factory, now everything's starting to click into place. With the way the economy's going, there's some fear around certain types of investing, looking toward where can we invest in hard assets? Where can we invest in those legacy impact tangibles like land? So now our pitches, while we do have our brand and understanding that the success of farm, the success of manufacturing depends on the success of the product. So you can't invest in one without the other. Communicating to investors that, hey, this is a systems investment. This is a manufacturing play This is an agronomical play. The tampon is the physical manifestation of that and what's going to make it sustainable over time and prop up everything else over time. That's starting to hit great. The other note about our funding journey is that this is my first time to be a startup founder. And I typically am very conservative financially and know where every single penny needs to come and go in And so I learned very quickly that it's much, much harder to raise a million dollars than it is to raise 10,$15 million. So now in the factory context and expanding acreage context, our raise is in that 10 to$15 million range, and it just attracts a different kind of investor that's looking for a different kind of return. So those have been my two big learning lessons in our funding journey, and hopefully I have to tell it some skillset now to where it's not so painful.

SPEAKER_00 49:35

Absolutely. And what would you tell to investors that are starting to hopefully be much more interested in the space and listen to the podcast and they read the reports, et cetera? What would you, of course, without giving investment advice, what would you tell them as the main lesson learned or the main message for them on the sector you've been working on or on the journey you've been on?

What would you do if you were in charge of a 1B investment portfolio tomorrow morning?

SPEAKER_02 50:00

Both ends of the spectrum are propped up. Consumers primed and ready and asking for it. Brands have products that they've done development on are ready and waiting for it. Farmers have figured it out. They, you know, there is a set and we still have a lot of learning and expansion to do there over time, but we've nailed it. The one missing piece in the middle is the supply chain manufacturing capacity. Now that is an investment that has liquidity value. That is an investment that has additional revenues from ancillary business to where it's not all in or nothing on hemp fiber. So really thinking about this as a system, this is the one missing link that can connect it all. And it's like, dude, we've already done a lot of the work for you. We just need you to come in and and walk with us for, you know, five to 10 years. And then this is not a flash in the pan. This is something that will be happening a hundred years from now. So it's a long-term investment, but a legacy impact that, you know, your great, great grandchildren are going to benefit from.

SPEAKER_00 51:15

And flipping the conversation to what would you do if you would be an investor right now? And we usually ask this question, like, what would you do with a billion dollars if you had to put that to work? It could be Owen Hemp, but it could also be something completely different. But what would you do if you weren't running Trace, but if you were on the investor side, looking at the space, the general food and agriculture space where, and of course the fiber space, where would you focus?

SPEAKER_02 51:45

Obviously, I'm biased, but hands down regionalized supply chain in the United States of manufacturing value added agricultural products. So, of course, my lane is natural fibers, hemp and cotton. We have got to end our dependency on global supply chain and really, really, really hurt because of that in COVID-19. And now is a really good time to do it because governments are offering a lot of a lot of matching money to do that. And regionalized supply chain is what we need in order to support regenerative transition and in order to meet consumer desires for lower carbon footprint and traceability and social accountability and logistics to combat some of our rising logistics costs. So I would invest in regional clusters of supply chain manufacturing And then the other thing, and specifically in hemp and cotton, by the way, because if we improve our fiber systems, we improve our food systems as well. They're interconnected. And then the other thing that I would do is put some funding behind systems to get foods grown regeneratively in our schools. So I have three daughters, ages six to 19, and the food in our public school system is is really doing our children and society a disservice. And yes- That's a very nice way of saying

SPEAKER_00 53:21

that, yeah.

If you could wave a magic wand and change one thing overnight

SPEAKER_02 53:23

Yeah, are you based in the United States?

SPEAKER_00 53:25

No, I'm not, I'm not, but I can imagine.

SPEAKER_02 53:28

Okay, yeah, it's real sad, real, real sad what the food is like in our schools. And from an economical perspective, we just, you probably know this, we spend so much money, ineffective money, inefficient money on trying to get people unsick. And really it starts with the food that we put in our bodies. And if we can create a system that purchases that good, healthy food, that good, healthy fiber from farmers, that's what we need in order to support transition and expansion to healthier agricultural practices.

SPEAKER_00 54:09

It's a nice bridge to, so sorry, we take your fund away, but we do give you a magic wand and a magic power to change one thing in all the food and agriculture and the land use sector let's say but only one so what would that be?

SPEAKER_02 54:26

That would be removing the onus on farmers to fix everything for everybody. So, you know, we have this problem that we like to romanticize farmers and we, I mean, you know, this, we talk a lot about how we're going to save the world together, but we still put a lot on the shoulders of farmers and they are taking the highest risk right now. And it's time to stratify that risk. across society because it affects every single one of us

SPEAKER_00 55:00

very very good answer and I think it's a quote of Abby Rose who we had on the show like farmers are not not in the podcast we did with her but in general I've heard her say farmers are the key decision makers of our time and it's time we allow them to take decisions because if they go left we go left if they go right we go right and if they go under we go under and so it's how do we empower them to do that and I think it's a go ahead

SPEAKER_02 55:25

To connect it back to investing that in a challenge, our company believes in that very, very deeply and are very committed to putting farmer first and paying prices that support and acknowledge that risk that they're taking and encourages them to continue to take those risks. And we purchase our own raw materials and have that carrying cost on our books. And so from some investors who are not used to seeing that full value chain collaboration to stratify that risk. It can look scary and for some people irresponsible, but that's really what it takes in order to listen to farmers and to support them. I

SPEAKER_00 56:13

think it's a perfect end to this interview. I want to thank you so much, first of all, for the work you do and second, for showing up here and share about it and giving us a look into the world of fibers and the gigantic challenges and opportunities and what it takes to get something to to market which are almost there so fingers crossed there will be before the summer it's almost summer it feels like sometimes almost summer so let's hope that all the people that have been knocking on your door asking for this can be shipped something soon and and then the story continues

SPEAKER_02 56:48

awesome well thank you so much for giving our story a voice and for doing what you do to push forward regenerative healing

SPEAKER_00 56:55

Thanks again, and see you next time.