How Starting a Business with a Clear Mission Can Lead to Success
Updated: May 5
Interview with Craig Henderson from Extract Labs
Note: The transcript has been edited for a more pleasant reading experience.
Welcome to Smells Like Business, a podcast for anyone who wants to learn more about the current and future state of Cannabis in Europe. Every episode, we talk to different business owners and cannabis specialists, making it easier for you to enter and better understand the cannabis industry.
Today I'm happy to let you know that we have Craig Henderson, the CEO, and founder of Extract Labs, as our guest. Extract Labs is a Colorado-based company that produces a wide range of CBD products from hemp at the highest quality. Being a combat veteran, Craig started the company with the aim and purpose of helping fellow veterans, as well as anyone else with PTSD or other injuries, and giving them a safe and healthy alternative to conventional pharmaceutical treatment. So welcome Craig. How's it going?
Craig Henderson 0:57
Good. How are you doing?
Tom Pettit 1:01
Very well, thanks for asking! But yeah, could you tell us a bit about yourself and what you were doing before you actually started Extract Labs.
Who is Craig Henderson from Extract Labs?
Craig Henderson 1:08
My name is Craig Henderson, I'm a previous military veteran. Got out of the army, went to college for a Bachelor's and Master's degree in mechanical engineering. I was never really a pot smoker or a weed smoker growing up. But while in college after the military, I started doing my research and learning the things that Cannabis can help with. And, you know, I've got a little bit of an entrepreneurial spirit, and you're looking at how useful Cannabis was for people. My drive was to start my own business.
I really wanted to get in the cannabis industry somehow.
So I ended up calling 50 or 100 people and sending resumes, and I ended up getting a job with Apex supercritical Co2 extraction and Manufacturing company out of Ohio.
Tom Pettit 1:58
Were you also part of the sales team and also an instructor there as well?
Craig Henderson 2:03
Yep, I spent three years doing sales and teaching people how to turn, at the time, marijuana into oils using CO2 extraction.
Why Did Craig Start Exploring the Topic of Cannabis?
It looks like at Apex, you actually learned how to extract CBD from marijuana and also create oils, but then at university, that was actually your introduction into Cannabis, so that's where it all sort of began, I guess, right?
Craig Henderson 2:29
I was actually doing research to try to prove to my friend that he shouldn't be smoking pot, so I was trying to find some good data. And every time I dug deeper and deeper, I proved myself wrong.
Tom Pettit 2:41
So a bit of reverse psychology on yourself, basically. That's so funny. And now, of course, you've got a business out of it, so it's a complete 180. University was your introduction and then sort of what happened after that.
Craig Henderson 2:56
That's how I got into Cannabis, and then I grew a little bit in my house in Indiana and sold it to a few people. And at the time, back in 2008-2009, nicotine vaporizers were becoming popular. And I thought to myself, somehow we can get Cannabis in the oil. You know, we don't really do a lot of vape stuff today, but at the time, I thought that would be a huge market, and at the time, CBD wasn't a thing. It was all marijuana,
Tom Pettit 3:25
And then what actually made you decide to start Extract Labs?
Craig Henderson 3:29
While I was with Apex traveling the country and the world teaching people, I learned a lot. I worked with startups. Every day it was a guy with a dream, had the same dream I had years previous about taking marijuana, putting it into oil, and then putting it into products. I was working with the startups every day, probably two or three different startups a week. I learned a lot about how to start a company, the regulations, and the different processes, the refinement processes.
The stuff we know today no one knew back in 2012/2013/2014. I was training on marijuana, I kept hearing about CBD being popular. There's a big demand for it, but there wasn't a lot of CBD in marijuana. In 2014 people started growing hemp, and by 2015/2016, people realized there was CBD in there. I don't think that in 2014, people really knew there was CBD in hemp. So I kind of saw this opportunity. All these hemp farmers didn't know what to do with their crops. I knew there was a demand for CBD. I knew how to do extractions. I thought I could probably start a small extraction company. It was a really simple business model when I first started.
Tom Pettit 4:38
Okay, and it sounds like you learned a lot at Apex - not only about CO2 extraction and all these processes but also about meeting all these different entrepreneurs and startups. I mean, now you must have really gotten the wheels spinning in your head, so to speak.
Craig Henderson 4:55
Becoming a Cannabis Entrepreneur
Tom Pettit 4:58
And was it a difficult transition, changing from being a military man to being an entrepreneur?
Craig Henderson 5:03
Yeah, well, from military to entrepreneur was about, you know, eight, nine years.
Tom Pettit 5:09
That's quite a long time.
Craig Henderson 5:10
Yeah, so it was a long, long slow transition.
I'd say from having a job to being an entrepreneur was the hardest transition I've ever had in my life.
Tom Pettit 5:19
I guess because when you've got a nine to five job, the structure is already there laid out for you, and people are telling you what to do. Suddenly, if you're starting your own business, you know you have to create your own structure and make your own decisions for yourself.
Craig Henderson 5:34
Yeah, and you pay for your decisions. Every good decision you make, you're rewarded for it. With every single bad decision you make, or you get lazy or lackadaisical or comfortable. You pay dearly for it. And then once you start having employees. Now every decision you make, you're not just affecting yourself, you're affecting you know 20, 30, 40 other people.
Tom Pettit 5:53
Yeah, definitely. And I can also imagine your time in the military must have really helped you with decision making and also running a team, and being responsible for others. Do you think you've learnt a lot during our time and the service that has helped you be a better entrepreneur and a better CEO?
Craig Henderson 6:09
100%. I don't think if I was never in the service, I'd be as successful as I am today. The leadership skills in the army, especially the infantry, being in Iraq in 2004-2005, leadership skills are just immense. It's a lot of training, you know, the whole time you're in, and I find myself running this company, very much like you know I lead a team in the army.
Tom Pettit 6:34
I can imagine having that self-discipline, and those leadership skills must really come in handy when running a team. And is it true that you actually started Extract Labs in your garage?
The humble beginnings
Craig Henderson 6:45
I did, yeah. When I decided to start this company, it was a real small business model. I thought, "if I could just extract hemp for farmers, charge them a service, give them their oil back". So I underestimated what this industry would be.
I started with $5,000, and some five-gallon buckets and some real primitive equipment in my garage. And if it would have been enough to support me, you know, making $80,000 a year or $70,000 a year, I would have been happy. I just wanted a small thing in my garage and quit working for other people.
Tom Pettit 7:19
Yeah, and I think I read somewhere on your blog that at the beginning, didn't you have to shovel snow in a bucket and keep your condenser coils cool? I mean, it sounds like you definitely had your hands full from the start. That's correct.
Craig Henderson 7:32
That's correct. Yeah, the Rotovap is supposed to have a chiller to keep the condenser coils cool. Luckily it was wintertime when I started. So I got a fish pump and then filled a big tote full of water and snow and all day long we keep it cool, and on warm days I go to the grocery store and buy 20-pound bags of ice, it was quite miserable.
Tom Pettit 7:55
I can imagine the operation must be quite different now, but I sound like there's a bit of a MacGyver in you as well, though.
Craig Henderson 8:02
Whatever it takes.
Tom Pettit 8:04
So how did you actually produce CBD products out of your garage? I mean, you said you only had a few bits of equipment. That must have been quite tricky.
Craig Henderson 8:11
Yeah, so it was horrible. And there were no products. It was just the CBD oil and learning how to make oil and isolates. I put jars of paint in my freezer in my kitchen, which is extremely dangerous.
Oh God, I was just trying to figure it out, and I figured if I could figure this out, I could probably make enough money to maybe get a small building, maybe hire one or two people, and we could do this whole processing for farmers.
We finally got to that point, about six months later, and then I realized farmers didn't want their oil.
Farmers want to be farmers. They want to sell you plant material.
Sounds like, well, "I need to find buyers for this oil". I found a few buyers, and then I realized the real money was making products. So we decided to start making products, a lot of energy went into just making products that we really liked - the two or three of us in the building that we would use every day, and hope that people would buy it and as soon as we did a few Instagram posts with a product, no label, just a sharpie writing on it what it was, people were asking to buy it, so we started shipping it with Sharpie marker marking what it was.
And it just kept building from there.
Tom Pettit 9:18
It feels like it worked quite quickly. Within six months, you already had a couple of employees. How did it actually grow from a one-man show working from his garage into a multi-million dollar company with, what is it, over 40 employees now? And then all in the space of what, a couple years now?
Craig Henderson 9:36
Yep, we just hit our three-year mark not too long ago. It was just pure determination. I wasn't ready to start a business when I did. I had a job at Apex. I kept talking about wanting to start a business.
I was working my ass off at Apex, ended up working so hard that it affected our marriage, so we filed for divorce. The next day, Apex fired me. They were laying people off all the beginning of December. So then, the next day after that, I decided to work on my resume and get another engineering job or chase this dream that I've had for so many years, and then when I decided to start doing this, I just didn't want to fail. So it was 24 hours a day. I was, you know, 3 in the morning, crying and screaming into my pillow. We have two kids also so divorced with two kids, trying to start this company.
And it was horrible, but I also did not want to fail. So the reason we grew so fast is just never, never stopped, you know just work work work.
Tom Pettit 10:37
Perseverance and determination. And also, you were saying that you realized that actually the money was in the products, and I also noticed it stated on your website that you produce the purest and highest quality CBD products at the lowest price point. And I was about to ask how you do that, but I guess it's by keeping every step of the process in-house, right?
Craig Henderson 10:57
That's exactly right. Even a lot of our competitors out there, a lot of people you see, we make their products for them. So we really just cut out along the pricing. We've got great relationships with farmers, and we try to do everything ourselves. We try not to outsource really anything. And then by keeping it in-house, you can have really strict control over quality. So when you know oil is done, it comes to my desk. If I don't like it, it doesn't look right, we send it back.
Tom Pettit 11:25
It's got to go.
Craig Henderson 11:26
Looking Back at What It Took to Create a Multi-Million Dollar CBD Extraction Business
Tom Pettit 11:28
Okay, so of course keeping, like you said, every step of the production in-house enables you to have not only the purest and best quality, but also, yeah, if you're cutting out the middleman, that can definitely just bring down the prices as well. And it must be nice having control from sort of A to Z as well.
Craig Henderson 11:46
You know, if I were to start today and I knew what it took to get here, I probably would not have done it.
But I'm glad that we did it now that we've done it. This is really awesome. It’s pus in a position to be the company that we are today.
Tom Pettit 12:01
Had you known how big the mountain was you have to climb, you might have thought twice.
Craig Henderson 12:05
But ignorance was bliss.
Tom Pettit 12:07
Ignorance is bliss, exactly. I bet you're happy now you climbed it. It sounds like you've had quite a few challenges to overcome. Could you mention maybe a couple of those? Were there any that really sticks out for you?
Craig Henderson 12:21
The very beginning, just not knowing what I was doing, not having a website, just trying to do everything myself, and I assumed that hiring employees would be the hardest thing ever. And really I got lucky, I got great employees.
The reason we're so successful today is the passion from all of our employees.
So once I started finding more like-minded people with passion, things really did get easier. So I'd say the beginning was just the toughest, just because I was doing everything myself and learning as I went, and I've never, never run a business before. I never ran a business this big. You know, we have problems today. We still deal with struggles. Trying to figure out how to put a label on a bottle, I didn't know how to make a label, but those problems now, we keep having similar issues, it's growing pains, but it'll never be, I don't think I hope not, it'll never be as hard as it was in the very beginning.
Tom Pettit 13:13
But I guess it must have been just such a large learning curve. And like you said, something as simple as putting a label on the bottle, you probably don't think anything of it until the moment comes when "Oh, actually, I have to do this" and figure out how it's done.
Craig Henderson 13:28
So, what are the labeling requirements, what are the nutrition facts, where do I get a label made, how do I apply it on a bottle, just little simple things.
Tom Pettit 13:36
Once you scratch beneath the surface, you are like, "oh wow, okay, this little problem is actually quite a big one".
Craig Henderson 13:41
Starting a Cannabis Business with a Mission
Tom Pettit 13:42
And I also know that one of the main reasons you started this company was actually to help veterans with PTSD or any other injuries. Can you tell us a little bit about how important it has been for you to have a mission behind what you do and what role it has played in your success?
Craig Henderson 13:56
For sure, yeah. Like I mentioned earlier, I wasn't much of a weed smoker, ever. I did my research, and I learned that it can help with a lot of things. So I started consuming it, and it did help, but I also wasn't a person who loved THC. Some days it was okay, there's days that help.
A lot of times, THC, for me, really drives anxiety through the roof.
So when I heard about CBD, and I knew there were trace amounts of THC in it and other cannabinoids, I was like, wait, there's a solution that can actually help, and you don't have to have the high?! Not that the high is bad, people love getting high. I'm just not one of those people. And I assumed there's probably people like me that wanted help but didn't enjoy the high, and I didn't realize how many people there were.
Tom Pettit 14:51
And even if you do want to get high, you might not always want to be high. You might still want to actually reap the benefits of what CBD can do, all the other health applications of Cannabis. How important do you think it is actually to have a mission behind your company?
Craig Henderson 14:58
Looking back, I realized it's extremely important.
You know, we offer a lifetime veteran's discount or low-income discount, healthcare worker discount, a teacher discount. You think by discounting things 50% for a lifetime, how can you possibly be profitable? But we try to help, especially someone in need, it's not always about making money.
And at first, that was just something we did, and then now you get the feedback that we've received, it's like wow, this really is helping our business too.
We never gave free stuff away or deep discounts to people with the intention of profiting off of it, but it really does seem to help the business as a whole.
Tom Pettit 15:41
Yeah, so it's almost been a byproduct of actually helping people to actually grow your business which is, I think, probably a good message to sort of sending out there as well, so if you actually have a good ethos and a good meaning behind it, it can actually even pay off financially as well. So, yeah, that's, that's really, really good. Do you feel your CBD products have helped these veterans?
Craig Henderson 16:02
Definitely, you know, there's not as many veterans as there are other people. Veterans are usually pretty healthy people. Some suffer from PTSD, knee injuries, back injuries. I for sure think it helps them, and maybe they're just not as willing to tell us their story, the stories we hear the most are people with sick children. Epilepsy, pain, there's one instance I'm thinking of where this child had spinal surgery. And these parents just call in, or they email us their story. And it makes you cry.
So those are the ones that stand out more in my mind, even though we are getting a lot of feedback from veterans, just not as much as we are from other people.
How Much Should You Worry About Competition?
Tom Pettit 16:44
I guess some people will share these experiences more than others as well. Yeah, so I know that you have also taught numerous large and successful companies across the US how to extract their own oil and formulate their own product lines.
Are you not worried about losing customers and creating more competition, or is it important to you to share your knowledge and make sure people enter the CBD industry in the best and most responsible way possible?
Craig Henderson 17:10
The way I see that is if anyone's willing to do what I did to get where I'm at, I kind of want those people on my side.
I could teach, I could go out and teach 100 people a day, how to do extractions, how to make products. One in maybe 500 are going to have what it takes to really be a competitor of mine, and that one in 500 that's willing to be a competitor of mine, I hope I'm on good terms with that person. That's a good strong person. Maybe we can partner on a few things in the future.
Tom Pettit 17:40
Yeah, I've mentioned that before in a couple of my podcasts, but I feel like it's just, it makes so much more sense to make friends than enemies.
Craig Henderson 17:48
What is White Labeling?
Tom Pettit 17:53
I also know that Extract Labs provides white labeling.
Craig Henderson 17:57
Tom Pettit 17:58
For those of our listeners who don't know what white labeling is, could you just give us a brief explanation?
Craig Henderson 18:03
Yeah, it goes back to what I was saying earlier.
If I knew what white labeling was when I started this company, maybe I wouldn't have tried to do everything myself.
If I just wanted to start my own, let's call it, body cream company. I can pay another company to formulate my recipe, put CBD in it, put my label on it, and then I can sell that product, and I don't have to do all the manufacturing formulations in production. I can, you know, focus on sales, website.
So we do that for a lot of companies, we make our same products or variations of it, they have a special request, like a different flavor, a secret ingredient. We do that for them. We make their products for them, put their labels on, ship for them. That way, they can focus on building their company and let us do the back-end stuff like product formulations and manufacturing.
Tom Pettit 18:56
Makes sense. I mean, I feel like this is a good way of maybe getting into the industry or testing the waters, right?
Craig Henderson 19:01
Yep, you know someone at home might have a really awesome idea or a really awesome special set of ingredients that they know works, they've got friends and family that swear by it, but maybe they don't have the ability to buy a building, buy the equipment, hire six employees. So they pay us to do it. And then they can work on selling their product.
Tom Pettit 19:21
Yeah, sort of build it up from there. Yeah, so what different products do you actually have?
Craig Henderson 19:29
We have creams like body creams, muscle creams, topicals tinctures, which is just CBD oil mixed with a little bit of coconut oil as a carrier for people to ingest. We do have eight products now. And then we have dabbled with concentrates that are all CBD or broad-spectrum CBD.
What Is Broad-Spectrum CBD?
Tom Pettit 19:51
So what's broad-spectrum CBD?
Craig Henderson 19:54
Full-spectrum CBD would have trace amounts of THC, broad-spectrum CBD would have other cannabinoids, along with CBD just zero percent THC, and then you have CBD isolate, which is just CBD. On the marijuana side, dabs were very popular. When I was traveling around the country, California, Oregon, Washington, concentrates were really popular on the marijuana side. So I started this company, which was one of the first products I created, which was a CBD dabable product.
Tom Pettit 20:28
Interesting. I mean I've never heard of a CBD dab, actually. Was there anyone else doing it at the time?
Craig Henderson 20:33
At the time, I don't think so. If there were, I didn't know about them. I kind of feel like we definitely started the CBD dab. Or if we didn't start it, we were there around the same time that someone else had started to.
Tom Pettit 20:45
So you've got quite a large production line and a few different products actually to sell.
Craig Henderson 20:49
Working With CBD Companies in Europe
Tom Pettit 20:51
Yes, and well, we met at a CBD Expo in London last year, which was a pleasure.
Craig Henderson 20:57
Tom Pettit 21:00
Which also means you were doing business in Europe. So, why did you decide to actually enter the European market?
Craig Henderson 21:06
It kind of found us. We started shipping packages to London, and then we picked up a couple big wholesale clients there. And so we just decided... I think there's a lot of potential here, so we want to make sure we get to London, for wanting to meet some of our wholesale customers, and then to attend the trade show and hopefully pick up more wholesale customers.
Tom Pettit 21:25
Has it been difficult entering the European market, or did it happen quite easily?
Craig Henderson 21:30
It happened quite easily.
Tom Pettit 21:31
Yeah, it sounds like it was quite natural the whole process.
Craig Henderson 21:35
It was. Shipping internationally is always a little bit of a pain. It's just, each country is a little bit different. So it's a learning curve, learning what each country needs, what they want, what documentation they want. It's tricky, but we're learning.
Tom Pettit 21:49
I mean, I've heard it from a few different people in the industry that it would be nice to have some sort of EU standard right, I'm sure that will make a few people's lives just a little bit easier. Have you noticed any differences in the CBD markets in Europe compared to North America?
Craig Henderson 22:09
Yeah. I mentioned earlier full-spectrum, broad-spectrum, isolate. Most countries do not like full spectrum, or it's not allowed. They want zero percent THC.
We were all about the full spectrum products. We think that all the cannabinoids work best together. But if countries aren't going to allow them, we'll give them the next best thing.
That's why we've got the broad-spectrum products, and then some people just want CBD isolates. Of course, we make isolates.
Advice for CBD Entrepreneurs in Europe
Tom Pettit 22:37
Okay, so I have a general question for you. Being an American and seeing how everything sorts of unraveled in the US, how would you like to see the cannabis industry enter Europe?
Craig Henderson 22:49
I haven't really thought about it. I think it's moving along slowly, just like it was here. I think we started moving on it a little sooner than Europe, so I think Europe is gonna find what works best for Europe.
Things are great here in the US now, but 5 years ago or 10 years ago, you'd be arrested for what we're doing today, so it just takes time.
Tom Pettit 23:09
And are there any lessons we could learn from you guys?
Craig Henderson 23:13
I don't know if I want to share them all. I mean.
You need to push the limits. The hardest part about starting, at least here in the US, was trying to find a bank and then every other day get these letters.
You think the DA is gonna come shut you down. You hear that laws are changing in three months, you're not going to go to have a business. And so all these things were happening in my first two or three years.
We always thought, "in three months, we were going to be shut down". And I think a lot of people think that that fear gets to them, it's like, "you know what? I am tired of dealing with this. I'll wait for this industry to change, and then I'll get involved". I think being in it during the risky times helped us a lot. We kept driving forward. When they want to shut us down, they'll shut us down, but until then, it's business as usual. And I think that really gave us a leg up on everyone.
And of course, regulations keep on changing, so you are sort of, you are trying to set up a business, you got to be prepared to pivot or change your strategy.
Pivot quickly, very quickly, and always be ready for your bank account to get shut down.
I've had three bank accounts shut down. All my personal bank accounts, personal credit cards have been shut down.
But you just gotta try not to let it bother you.
I mean, you can keep moving forward.
Tom Pettit 24:23
Yeah. Keep on persevering and being determined. It sounds like that's what you were, even if you need to cry into your pillow at night.
Craig Henderson 24:31
Tom Pettit 24:34
Well, I have one last question which I asked all my guests. If you could go back in time, is there anything you would do differently?
Craig Henderson 24:44
I don't know. Yeah, you know, I tried taking partners early on to try to make things easier. And I'm thankful that that didn't work out. Maybe I would have just... if I could go back in time and do what I do today, maybe I wouldn't be so scared. I would know that just keep driving forward, keep driving forward. If this works, if people want it, you will get there.
I think I was just terrified for so long. It would have been nice to not be that terrified.
Tom Pettit 25:12
I feel like the big thing to take from this is just self-belief and determination.
Craig Henderson 25:16
Yeah. And not confuse that with overconfidence because I've had that happen to me before, too so.
Tom Pettit 25:22
Okay, great. And where can our listeners find out more about you and Extract Labs?
Craig Henderson 25:29
extractlabs.com, or on our Facebook or Instagram, or YouTube. There's a great video, and it's really kind of shows some inside looks behind the walls.
Tom Pettit 25:40
Behind the scenes, nice. Yeah. Okay, I'll make sure to check that out as well. That's good. Well, thank you so much for having this chat with me Craig, I've really enjoyed it, and it has been very insightful. I hope you enjoyed it too.
Craig Henderson 25:52
Thank you. Yeah, I really appreciate it. It is an honor being on this.
Tom Pettit 25:55
Great, well, you take care, Craig.
Craig Henderson 25:57
Tom Pettit 25:58
Cheers. Bye, bye!
So, that was Craig, the CEO, and founder of Extract Labs, as our guest. If you want to find out more about what they do and what products they have, make sure to visit their Extract Labs website. I've been your host Tom, have a great day, everybody.
Listen to the full interview with Craig Henderson here