The HempList #41: Transitioning From Tobacco to Hemp Production Ft. Red House Manufacturing

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In Summary

Tony Nasca of Red House Manufacturing joins us on the HempList this week, hosted By Chase Nobles, Founder of

Tony goes into the challenging transition from producing traditional Tobacco cigarettes, to ‘hemp sticks’ and Hemp Prerolls. From modifying the existing technology, to building out a supply chain and distribution from scratch! Tony is also located in New York, and with cannabis legalization looming they talk about how that will change the market and how it’s going in New York pre-legalization.

We have a lot to learn from other large scale manufacturing, and tobacco might be a great space to start! Lean all about Tony’s transition into Hemp in this episode.

Transcript (Auto-Generated)

and we’re live we’ve got tony nasca from
red house manufacturing on the show
today how are you tony
chase great to be here and i’m doing
great today
awesome good to hear now you’re located
up in new york and we’ve seen a fair
number of businesses pop
up and state how’s new york treating you
what’s what’s what’s the
what’s the information what’s the what’s
the latest updates for new york hemp
growers and hemp manufacturers
well yeah it’s kind of uh in a state of
flux right now
um they announced that cannabis is going
to be legal next year
and so you know there’s there’s
regulations on hemp
and and um that seems to be
you know a decent environment to work in
and then but we don’t we’re not sure
what the cannabis uh uh
you know legalization is going to do to
our business
right no i think it’s a lot of
volatility especially whenever market
goes recreational because
the two seem to kind of compete with
each other one has federal backing one
but one you know is so highly regulated
and the taxes are so good because the
way they write these laws
um state legislatures seem to support
one over the other
in the states that we’ve seen have both
what was this year like for you all as
far as getting up and operating i i see
that you have a long history in tobacco
and have expanded into the hip products
what was that like and how much work was
it to transition from one to the other
and do both
well i’ll tell you what it any as anyone
it is a difficult transition and
we i believe we had a well i know we had
a head start
you know from others just because we had
trained people on the equipment
and then uh uh you know full staff here
the ability to use different machinery
and we have we have great mechanics
and there was a lot of a lot of changes
that had to be made to the equipment
and a lot of adjustments and it’s
ongoing as we receive different have
we have to make adjustments to the
equipment but we have the staffing and
everything and we have a staffing with
long-term experience
that has the ability to do that so so
that that kind of give it
gave us a uh you know step up on
everybody else in the industry
and what kind of products are you guys
putting together out there uh as far i
see that you you make hemp sticks i
really don’t know what a hemp stick is
so i
i was sitting here wanting to ask you
what is a hemp stick and
what other products do you make and on
top of that
well i’ll tell you what our experience
is in
stick manufacturing so we make you know
we do make
a native brand cigarettes we also make
filtered cigars
nectar brand and warrior brand which are
sold nationally
and that was like that was a pretty much
a natural progression
into the hemp sticks so we we have our
own proprietary brand line we have the
rollies line
and then we have a naturals line now the
rollies line
we’re one of the few uh we’re we may be
the only one in the country
that does that offers a flavored stick
and it’s basically a cigarette we don’t
like to call the cigarette
because of the tax ramp cases related to
so we keep our hemp business totally
separate uh from
our our tobacco business so i think
that’s smart
so these are paroles that look very
similar to cigarettes would that be fair
that would be very fair yes that’s
that’s that’s what you could describe
yeah so we don’t have sticks yes i
understand now i understand and i think
a lot of people are probably unaware of
maybe any kind of tax implications of
callings on the cigarette
um but wouldn’t it be uh interesting to
uh uh spliffs which are incredibly
popular in europe
um hemp splits i just always thought
that would be interesting but it’s
pretty unfeasible right now
for people to be able to do that from a
regulatory standpoint correct
yes yes for sure and why is that
why don’t you see that on the market
uh i i don’t know i don’t know it’s it’s
you know i think in the us it’s just not
something that’s
you know viable at this point
got it uh yeah oh it’s always been one
of those questions in my head of
why you don’t see that kind of a product
i guess people are people are
really wanting a spliff would have to
roll their own at this point but moving
um your products you know you sell
um in the tobacco space what does the
expansion and the distribution look like
him products right now and how do you
plan on growing that
well it’s been you know it’s been
challenging it’s been difficult
uh simply because you have different
regulations in different states
so you have to be fully aware of that um
some of the big change it’s been
complicating getting in with them
um they’re not sure if they want to
carry it they’re not sure if they want
to regulate it
in between their stores and in between
the different states and everything
so basically we started out we have a
wholesale division of our own in new
and we have a 90 store
i would say group and they’re mainly
high volume tobacco stores
gas stores that we sell into and
not only was that our starting point but
that’s also where we test our products
to see what kind of
uh response we’re getting from the from
the brands and the things that we’re
so using the relationships that you have
and have built over the last 20 years
you’re able to get information
from the retail shop that uh about what
products are selling what their sell
through is like what kind of
demographics are
has that driven your product development
have you changed anything on your
packaging branding things like that yeah
it really hasn’t changed that much
it helped us develop uh which products
we want to go into flavors with and
which products we want to make changes
uh we came out we we did a lot of r d on
on our packaging and everything um so we
didn’t we didn’t make a lot of changes
but we just added a 10-pack
so we just added a 10-pack hard pack
just because
the demand was out there in our market
people were asking for it
you know something just a little bit
smaller a little bit a little bit uh
cheaper than that 20 stick pack
and when it comes to price and margin
and how you look at that
and compare it to the business that
you’ve been in what does the supply
chain look like what do the prices look
like it how much more is it to
to create you know a hint product versus
a tobacco product
and uh how has that impacted the
business model
yeah well the labor aspect of it is huge
um you’re working with um the things you
need to do the machinery
uh the changes that you need to make to
the machinery
adjustments everything in the hemp
makes it more costly to make than a pack
of cigarettes
so a pack of cigarettes using rag cut
and basically that is uniform strands of
where hemp you’re getting you’re getting
a supply of hemp and then you’re making
the sticks in the same high-speed
so you have a little bit more loss you
have a little a lot more time
and adjustments and in in the
manufacturing process so
it really has raised the it raised the
cost quite a bit
on hemp products but then on the other
end um
hemp is still more profitable as the
margins are higher across the board
for hemp than they are for cigarettes
you have in a cigarette market you have
your high-end stuff
and then you have your low-end stuff so
you have to compete
and when you look at the level of tax
the tax rate and things like that
that still makes uh hemp very viable in
the industry
got it and it’s good and it’s good for
and has the stickiness and the moisture
and kind of the true
not being stranded what is that what has
that process been like to
retrofit the machines or customize the
machines to be able to handle that
difference in material
well it’s it’s challenging because we
actually customize for every single run
uh um for every different company that
we work with
and there again i should i don’t think i
even explained this we do contract
as well as sell our own brands so we do
some of the
largest brands in the country right now
uh we make them
and yes it has been extremely
challenging just because
of the level of work that goes into it
and you know we have standards for
moisture level
we have standard particle size and
every customer we give that information
to uh we have them send us a sample
we you know then we evaluate that sample
and then we talk about you know what
next steps do we want to change it can
we use it
and then we go from there but yes
stickiness moisture
uh and and the particle size all are
major factors in developing the product
so are you making hemp sticks for other
you know primarily other brands that are
buying the flower or farmers reaching
out to you directly because there’s been
that over supply and they’re trying to
figure out what to do with it what
what’s what’s happening more in the
market right now is this has this been a
viable outlet for farmers that are
having issues with
with demand definitely definitely it’s
and it’s a combination to answer
questions it’s a combination of both
uh we’re we’re working with some as i
said some of the largest
uh um you know hemp stick uh
companies in the country but then we
also have
farmers and and different people coming
to us to try to use that hemp up now
best best usage or best blend is a
combination of small
flower and trim so so we’re we’re really
a good value for someone that has
leftover material
someone that’s selling the high end the
top flower you know and getting a high
price for that
they have they may have a need or use
for that small flower and trim and
that’s where we come and that’s when we
can uh
you know advise them on best usage and
you know uh what kind of yields and what
we could do for them to develop a packed
carton for them most farmers that i’ve
spoken with that are you know having
on the demand front on the distribution
side uh
they their primary means is to to
to alleviate that or at least to get
their storage cost down and the
longevity of the product
uh higher uh is to run it through
crude or to distill it to things like
that when it comes to
you know getting them actually turned
into a finished good getting that
product turned into a finished good
um what’s kind of the run time you know
if say they have
say they have a thousand pounds of flour
and trim what what does that take from a
company like yours
and how does that compare to the crude
versus you know in the distillate option
that they have
well and and i don’t have a lot of
experience in the crude
distillate side but what i can tell you
is is
you know we could get something done for
someone very quickly and get them
in directly in the market very quickly
uh the main hold up
would be the amount of time it takes for
them to get packaging printed
and we work with national printing
companies where we send people because
we use
there again we use our high speed
machinery for the packaging as well so
someone could come to us
with a thousand pounds or something like
that and we could get that all done
in in a couple days two and a half days
or three days at most
you know so we can get them and we can
get it ready and shift
yes i’m sure there’s a lot of warmers
listening to that this
considering this as a viable option
because that kind of scale and speed
uh hasn’t really been widely available
and uh you’re one of the first
first people to talk to that sound like
they could do this quickly
and efficiently and even help with the
branding and the packaging so
i’m sure there’s a lot of farmers out
there smiling thinking this might be a
option um or at least maybe take 50
percent of their harvest and
put it this way you said that you could
get it into stores quickly does that
mean for the
for the farms do you actually help them
sell their their finished goods or does
are you primarily sending that back to
the farm for them to distribute to their
own local
community in stores and sales
unfortunately unfortunately we don’t do
a lot on that side
um we may have some partners that we
could work with
in our wholesale division um we we
advise them on
you know developing you know wholesale
relationships before they get started
but we don’t have a lot of interaction
on that on that side
so our our expertise is in the
manufacturing of the sticks
the packaging and then getting it back
to them as quickly as possible for
beautiful beautiful well i think i know
a lot of farmers that would be really
interested in this type of a service and
it’s exciting to see that you’re out
there doing it what’s uh what’s what’s
next on the roadmap for y’all where do
you want to see this in
two years 18 months two years what’s the
plan wow
yeah that’s a good question um basically
in the rearview mirror we’re looking at
you know we’re looking at cannabis
we’re looking or you know i should say
front front
front view anyways but we’re we’re
trying to figure out where we’re going
you know we think we’re developing a
brand we have
we have a great brand so that
combination of being able to sell our
and and expand our business model has
very well for us and we’re looking for
new opportunities and
and we have a niche and we have a very
high quality
product and and the whole idea is just
to continue to expand that
and it could you know maybe there’s more
uh um as they’re being regulated with
products so maybe that’s some where we
can go but that may have
impact us as well but at least for the
short term that’s something we could
uh take advantage of so we’re looking
for new opportunities and we’re staying
within that field and
and just expanding our offerings and
and uh the unique of products that we
currently sell
so am i hearing that you’re considering
the recreational market as new york
comes online over there
i would say yes yes very very much so
all right there you have it everybody
we’ve got tony nasca from
red house manufacturing fast efficient
high quality
hemp pre-rolled cigarettes on the market
hip sticks i should re-clarify
similar to hip cigarettes uh but really
excited to
have you on the market to have you on
the platform wouldn’t be a
platform without people like you so
thank you so much for being a part of
that and for any farms out there that
want to get their products turned into
into pre-rolls hit up tony sounds like
you got it going on over there and i can
get a
really quick turnaround for for for any
farmers out there
sitting on some excess inventory
yeah chase thank you very much uh yeah
they can reach us
at they can reach us at red house
and we’d be more than happy to help
anyone and i appreciate
you having me on today all right
there you have it thank you tony we’ll
talk soon
all right have a great day

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