Kevin Nafte, Co-founder, YVY - Medical Cannabis Uruguay
Kevin is the Cofounder of YVY, a medical cannabis brand based in Uruguay. He started the company together with his wife, Andrea Kruchik in June 2018. Prior to moving to Uruguay, Kevin lived in California where he was introduced to the cannabis industry and subsequently became head of operations at Flow Kana and later moved to Humboldt where he lived and worked at Alpenglow Farms. Kevin has also lived in South Africa, Australia and Israel. Prior to cannabis, he worked in various positions with tech startups, governments and NGO's
Kevin is passionate about creating sustainable and scalable agricultural models and making sure patients around the world have access to natural and science backed medicine.
[00:00:01] You're listening to Thinking Outside the Bud where we speak with entrepreneurs investors thought leaders researchers advocates and policymakers who are finding new and exciting ways for cannabis to positively impact business society and culture. And now here is your host Business Coach Bruce Eckfeldt.
[00:00:30] Welcome everyone. This is Thinking Outside the Bud. I'm Bruce. I'm your host and our guest today is Kevin Nafte and Kevin is co-founder of YVY which is a medical cannabis company based in Uruguay. So we're gonna talk a little bit about what it's like to deal with cannabis on an international basis and obviously Uruguay has a lot of interesting facets to it being one of the first if not the first country to legalize cannabis so we can talk to him about that. We're going to talk about his history as someone involved cannabis and as an entrepreneur. So with that Kevin welcome to the program.
[00:01:00] Thanks Bruce. Appreciate the opportunity to be on your show.
[00:01:03] Yeah. So let's start with just kind of the backstory. Like what was what was your professional background. How did you get. How did you get to being a cannabis entrepreneur or a production company in Uruguay. What's the what's the background.
[00:01:14] Yes sure. I might just take it a couple of steps backwards Jurgensen. I'll text to the listener asks I'm sure they're wondering what what this accent so about. Yeah yeah. So I was born in South Africa and lived there and tells about 16 and my family decided my parents decided back then that we needed to kind of leave. Times were a bit uncertain over there and we all move together to Australia where I finished my schooling studied my first degree there and then got really interested in Israel. But I kind of learnt about it my whole life. I visited a few times actually decided to get over there and volunteer in the Army for a bit. I also went to study my master's degree over there which I studied in counter-terrorism and conflict resolution and started sort of a profession in Israel in government working for both the Australian and British governments and also had my first taste of entrepreneurship where I started my own my own platform I guess you like my own initiative helping new immigrants and new residents to Tel Aviv like myself that I was. And after being there for about ten years I actually met my wife there. We got married in Israel. She is originally from Uruguay Andrea. And she's also my co-founder now at Edi and she was working in the tech space in Israel for a while and got an opportunity to go set up operations for her startup in California in San Francisco. And you know she is super ambitious. She was always saying that you know that's that's where we need to be that's the next step. California and so we went over there and that's when I kind of got my taste my first taste of of cannabis quality cannabis.
[00:02:36] I mean I'd kind of consumed cannabis since I was probably 18 or 19 and you know tried the different varieties and different countries that I've lived and travelled but really it was California that kind of blew my mind literally it would just be that the quality of cannabis there. I also when we moved over I was kind of in a bit of a tough spot health wise so I have psoriasis and arthritis and wasn't being able to access my pharmaceutical medication when we first arrived to San Francisco because of insurance sort of challenges. So you know having that amazing cannabis surrounds in California was super helpful for me just kind of you know easing the stress and kind of easing some of my symptoms. And what I was out in California I met a cousin of my own my wife who also a Uruguayan and he had just joined a small little startup by the name of Flo academy as one of the co-founders. And at that time I think there were about four or five people just Leary the founding team and started to learn a lot more about what they were doing working with the small farms up in Northern California in the Emerald Triangle and you know I was kind of like wow this is this is amazing. This is what I want to do and kept in touch with them for a while and I think it was only maybe a year later that I'd kind of worked in a couple of other things in San Francisco in online health telehealth a couple of other things and got an opportunity at a later stage to join Flo Kenner as head of operations.
[00:03:51] I think we were about seven people at the time and that really started off my cannabis journey working in cannabis. So I think when he joined when I joined like at the time they were they were mostly focused as a retail delivery service of buying flowers from the farms up in the Emerald Triangle and sending it directly to patients in the Bay Area and then they added on a B2B components so buying in bulk and then setting it to two dispensaries and kind of starting with their own branded products and then building their sort of centralized facility up in Northern California. And I think I just you know that was that was a couple of years ago and they were scaling hard. Mean we would be built a really good reputation for ourselves. I mean it was a great company it still is great group of guys really good values and they're really sticking to their values and helping the small farmer ecosystem in Northern California that is really behind most this industry. So I think you probably would've been in the.
[00:04:41] Yeah that's great we actually had Amanda was on the program. It was it was several episodes ago. So but if people want to know what I want to get more insight on Look on others there's an episode you can go back and check out but yeah fascinating. I think both from a business point of view as well as from any kind of industry and understanding really how the how the Northern California cannabis community and cannabis history is fascinating to give a lot of really good insight on that. So yes. So you really were well steeped I mean you were involved in a company that was you know early in this sort of green rush in California. What were your takeaways. I mean I guess you know that I'm sure that was a very influential experience for you as a both and as an entrepreneur and as someone involved in the cannabis industry. What were your takeaways.
[00:05:23] Yeah yeah for sure it was it was completely mind opening. For me and you know kind of realize that really that's that's what I wanted to do for the rest of my life and you know after I finished up the flow counter I had my wife and I got an amazing opportunity to go live and work on one of the farmers up in Humboldt County and really kind of learn the cultivation side of things while helping a group of farmers with the legalization and compliance process it was sort of just before it became recreational legal in California. So they were dealing with a whole lot of complexities and challenges to kind of you know get legal quickly. So we learned a ton from that side and you know realize that you know learn the stories and the culture surrounding the Emerald Triangle and the small farms and know kind of how they've been living off the grid over the last 20 or 30 years and living living and farming sustainably and really taking care of the earth and you know that really inspired us to start our own thing. You know we kind of I realize now that I've obviously learned a ton about the industry and my wife and I had always always wanted to start something together. It was a bit trickier in the United States just because of visa issues. I mean you're not being citizens there and trying to get something up and going so yeah we decided at some point to come to Uruguay to check it out see what was happening there. My wife is somebody from Uruguay. She left when she was 18. And you know I always wanted to come over and get to know her family learn Spanish you know and just kind of experience life in Latin America and educate the audience and if you're a little bit on when did we go legal.
[00:06:47] What was the. There was a history there.
[00:06:49] Yeah I think it was 2012 or 2013. If I'm not mistaken. So they had quite a progressive government at the time. The president here was closer picked them up and he's quite famous in Uruguay. As you know he was actually an ex sort of guerrilla leader or you know some people were referred to as a terrorist. Then Wednesday he was in prison and then came out and kind of led the country and he basically implemented a bunch of really progressive laws including legalizing recreational cannabis legalizing abortion legalizing gay marriage sort of all at the same time. And yeah. So you know Uruguay's decision to legalize cannabis was was more sort of from a security and public health perspective.
[00:07:29] They wanted to try and figure out how they could stop the sort of narco trafficking in the illegal black market here and also how to help the sort of younger generation get off the kind of harder drugs that were going around in the streets. And so they figured by increasing access and providing you know sort of decent quality and really affordable medical cannabis that kind of figured out a way to really reduce the black markets and you know kind of improve the public health.
[00:07:52] And what just do what's the what's the result. Did it work. And what is what has been the general kind of consensus on things.
[00:07:59] I think I guess yeah. So it's it's five years later now and I think there still obviously gathering a lot of data. But no they're recreational industry that they implemented was quite unique. You know very different to California for example where there are only the three channels basically for selling to mean cannabis.
[00:08:13] The first one is Uruguayans or residents are allowed to buy just to drive flowers from the pharmacies. You can drug you can buy a little bags of five grams for six dollars and you can get up to 40 grams a month. The other way is through clubs. So there are a bunch of clubs around the country that can have up to 100 plants and also a bunch of members that pay a lot of its monthly fee and each member is entitled to 40 grams a month. And then there is the home growers home growers are allowed to grow up to six plants six flowering plants at a time. So those are really the only three ways that people can buy legal cannabis sharing in your line. I saw an article actually today or yesterday saying how it ready Uruguay succeeded in kind of diverting 22 million dollars away from the black market as a result of their recreational legalization. So I think they've done pretty well. I guess the one pot that sort of needs a lot more development really is on the medical side. You know it's it's quite interesting in that most countries and states start on the medical side and go into the recreational whereas Uruguay is kind of the opposite. They started with the recreational and now sort of developing the medical side. And I think on the recreational side just to kind of step aside I think that they're missing out a bit on the tourism. Tourists. They've had a whole lot of tourists come to Uruguay because you know that they found out that cannabis was legal. But in reality it's illegal to sell cannabis to non Uruguayan residents of tourists.
[00:09:32] So you have to be a grand resident and to be able to legally purchase right cannabis. And it's mostly flour. I mean they're not doing any extraction things like that right at the moment it's just flour. Good to know. I think that gives a more specific grounding into the situation too. Now let's talk about you and how you chose to participate the industry. So you were looking at the production side side. How did things kind of get set up and where are you now.
[00:09:55] Yeah sure. So my wife and I probably arrived just over a year ago to Uruguay and literally spent the first I'd say six to eight months really just scoping out the ecosystem meeting with a whole lot of different stakeholders ranging from government officials to entrepreneurs to doctors academics anyone that was kind of interested in the industry to understand what is actually going on you know and also looking at other business ideas we're looking at potentially importing a testing device from Israel. But in the end we decided that you know we wanted to start our own brand and create a production company having Nigeria. Having branded consumer products based on a natural whole plan flower and science backed remedies. So I think it was about May last year we decided okay this is this is the time the right time. I think the industry the medical side here is starting to gain momentum. So we registered the company back then I had to learn a whole lot of new things about business student business in Uruguay. Obviously for me the language was a huge obstacle at the beginning. I would go to all these meetings and not understand a word and just hope that my life kind of understood everything and she would give me a good nice little summary after each meeting. You know we really complement each other well with that. And yeah where we basically now at the phase where we have a license to produce non psychoactive cannabis which basically means hemp or anything that's less than 1 percent THC. And so we just ordered our pilot cultivation a couple of months ago that's growing really well pretty small and around 300 square meters and we're going to harvest that in a few weeks.
[00:11:23] And we're currently looking for potential buyers international buyers. We're actually speaking to someone in Mexico at the moment but really just to do a kind of a symbolic or trial exploitation you know it's it's such a complicated process and with all the different regulations and on this side and in the importing countries that really just just trying to figure out how to do it is is the way to go a lot of companies are sort of going down that route just to show that they've done a trial exportation they know how to do it. They've sent a sample and then the next year will be a lot bigger. And what we're really focusing on here and it was really inspired by the model that I worked in in California and with the small farm ecosystem was also in building a brand of medical cannabis products using a sustainable agricultural model that comprises of small standardised and sustainable farms. So we're currently building the model farm or the pilot farm and we are testing a lot of assumptions building our process and systems we've got a great team we have a chief agronomist who's who's currently doing his master's in agronomy or life he's been growing cannabis for the last few years. He actually wanted to do his thesis in cannabis but unfortunately couldn't get scholarship funding if he was going to do cannabis tomatoes. Amazing amazing tomatoes I'm sure. And we have another. Yeah. So you know it's still it's it's still a stigma and we're still fighting that battle. There is quite a conservative country and you know not everyone sort of fully on board just yet.
[00:12:48] And yeah we've got a head of operations another scientist soil scientist choose a Ph.D. in soil file that's focused on our enriching our soils where we're gonna try and grow everything naturally organically just using only natural inputs from Uruguay. No pesticides diversified farming. Uruguay is traditionally a agricultural rich country there are tons of small farmers you know just trying to kind of survive but not a lot of cannabis growing experience. So our idea really is to build this network of small farms. We're doing the pilot farm now. Next year we're gonna replicate that with probably a couple of more farms and we'll we'll help these farmers by consulting helping them getting the licenses well we'll help them we'll provide the genetics and provide the cannabis consulting with obviously some advisors and team members from California that I've been going for a long time and then we will buy back their raw material send that off to a centralized processing facility where we will store it there you know as you get tested. Not sure if we're going to be doing the manufacturing ourselves so we'll be working with a third party.
[00:13:49] Those licences are pretty tough to get and take a while so it might just make sense to partner with someone who already has their licence in the short term and then kind of elaborate or create the sort of consumer consumer products you know a different variety of of CBD and THC formulations for a variety of different conditions and personal wellness. At the moment with the cultivation licence that we have we're permitted to export dried flower. So that's that's the first stage that's kind of the go to market. And at the moment most companies medical cannabis companies in Uruguay are only permitted to export the raw material. We're still kind of waiting on the licenses for the manufacturing licenses and and from the Ministry of Health. So yeah that's kind of where we are now and we're also about to apply for an already licence which will basically help us kind of grow. We've got a myriad of different genetics that we've collected from different parts of the world. We want to grow those here analyse them and basically choose the genetics that will be the basis of our future products.
[00:14:44] Got it. And so while a bunch of different questions makers want to give us a sense of the actual licence procurement process I mean what what does it look like there. How does you know.
[00:14:54] What are the applications like Who are you applying to. What do you have to actually demonstrate to the authorities to be able to get a licence.
[00:15:02] Yeah sure. So there are a number of different licenses that you can obtain. So as I mentioned we decided to go first with the cultivation licence of non psychoactive cannabis so hemp which is initially done here through the ministry of agriculture we decided to go down that road just because it was a far easier application process probably most complicated part is showing a providing proof or origin of funds. So every license. That is applied for and even for the big big projects that are that are out here that have you know big foreign investment. You've got to basically provide documentation from those from those investors showing exactly where that money comes from. Because of the narco trafficking problems that exist throughout Latin America they just want to make sure that it's not.
[00:15:44] This is an illicit drug money being felt right to the money.
[00:15:49] Exactly. So that's that's one of the sort of tougher parts you actually kind of you start your licensing process until you have all that documentation now and then yes so for the for the non psychoactive license you know we just have to show them that we had a location the location can't be within a certain distance from any schools or also of cultural centers. We have to have already defined our genetics which is a bit complicated because with this license you can only use genetics that are obtained illegally or import illegally and are currently registered on the set of the National Institute of seeds. That's a tough one.
[00:16:22] Explain that one a little bit more. So this is basically that you have to show that I mean guess what. What are they looking out for here that you're you're not importing some strain that is not appropriate or something and what are they.
[00:16:32] Right. Right. And if this is where there is actually quite a contrast or sort of inconsistency here in Uruguay because there is for the other cultivation license which is to cultivate THC cannabis you can actually use genetics that were donated by a recreational grower you know quote unquote great.
[00:16:54] That's really one of the biggest inconsistency here and it's a huge obstacle a huge problem that we're kind of faced with. I mean we you know we have genetics from all over the world but we're not able to use them for this license one because they all have THC that's higher than 1 percent now too because we weren't they weren't obtained legally because we can't provide a certificate of origin of phytosanitary certificate and a certificate of analysis from an approved lab. So that's that's one of the challenges there. I think the cultivation license the THC cultivation license that actually you go through a separate government organization which is called Eureka that's the organization that's actually responsible for the whole to the control of cannabis in Uruguay both in the recreational and medical side and the Ministry of Health is also sort of involved in that process as well. That's how a lot of the longer process a lot more expensive. Also because of the security requirements that that license has.
[00:17:40] Yes so what are your requirements are when in terms of security mean by physical security of the location and the growers. What are your requirements. Do you have to.
[00:17:47] So we we were actually really lucky our pilot cultivation is sort of in a really good spot. It's kind of got this thick bush surrounding the entire perimeter you know so it wasn't on any main roads it couldn't be seen from anywhere so there wasn't really that much we needed to do from the license perspective. Got it. You just want to make sure we have some cameras set up there you know just checking to see what's going on. You know it's pretty laps but you know in different areas and with THC production you're going to have to put up security. You know we were even thinking about putting up a sign that just says you know this is this is already cannabis it's a hemp it doesn't make you high so don't bother stealing it. Yeah yeah. And then the other licenses that already license which you can also get basically which we we're applying for now and then there's the manufacturing license which is all stuff through the Ministry of Health. And that's kind of where there's been the biggest obstacle the biggest kind of challenge I think any one company to date in Uruguay has got their manufacturing license and this has been quite a political issue it seems that there are certain people within the Uruguayan government that are quite high up that don't necessarily agree with medical cannabis. And so yeah it's. Which is interesting because they you know I guess the the hard part was that they the government that introduced the law five years ago obviously went to finish out their term shortly afterwards in a new government came in. That was a lot more conservative. They couldn't redo or undo everything that was done but they couldn't.
[00:19:03] You know they didn't necessarily advance things or put their foot down you know kind of frozen was faster. I mean I think that you know the US is in this kind of weird political science experiment. The state to state legalization and federal illegality. So you know so I think it sounds like it's somewhat the same drama that we have here.
[00:19:22] And I definitely think every every country is really going through their own challenges and difficulties as they kind of legalize and try and set up a structure to kind of control the consumption sale of cattle too.
[00:19:34] But you have your license your or you're working on the you've got your non psychoactive license you're working on the to see license. Yes. So the model for you ultimately is to be the creator of the organization that's going to help all these local farms smaller farms basically collect market produce process brand the raw material they're producing. I mean what's the end game look like for you. What do you what are you trying to build and what is what is success look like once you've achieved your rules.
[00:20:02] Yeah sure I mean ultimately we're trying to create a brand you know as a sort of consumer branded products here in Uruguay that can be used and exported around the world. People that need it like people like myself that has arthritis. I mean that's probably my biggest motivation that I have here is to really try and find a product or a strain that that really helps me with my condition and will help millions of other people around the world. You know I think that the movements within the international medical. The space you're seeing a lot of company is just trying to produce as much as possible for as cheap as possible just because there is such a huge demand. But I think ultimately the future of the medical cannabis industry just like the recreational will be brands. It'll be the brands that can that can distinguish themselves from the others and really produce high quality cannabis know for us we're going to be focusing on a segment that's more like the conscious consumer that really wants to know who grew their product where it comes from. I know that actually giving back to the environment as opposed taking away from it you know like I said our farm is all going to be sustainable farms really focusing on building the soils on sequestering carbon and creating a real positive environmental and social impact. You know we're really excited about the potential for Uruguay and what this industry can do for the Uruguay economy and Uruguay as a whole.
[00:21:10] You know currently They're their main industry is agriculture. And I think meat is their biggest exports. They actually have a population of 3 1/2 million people and 12 million cows. So it's a tough place to visit or live if you're a vegetarian. It's like New Zealand. And by the way. Right. Right exactly. Yeah. You know so Uruguay has had a huge opportunity. It's a very you know it's not a long or a big window of opportunity they've really got to act now to become one of the global players. They're one of the few countries in the world that have a black and export medical cannabis. So where are we really at. While we're obviously committed to building our own products and helping a lot of people both in Uruguay and around the world such as myself that has these different medical conditions that cannabis can can help. We're also very passionate about helping these small farms participate in this industry. You know young people get out of the city live on their own farms and have an economic way to kind of make a living out their high value crop that they can grow in and contribute. Like I said contribute positively to the environment and society as a whole its it gives us more.
[00:22:09] I mean I definitely get a sense it's more than just kind of a business success. I mean you're looking at really kind of establishing a whole kind of industry and a whole way of a way of doing business there. How many farms. I mean if you set a bee had a big hairy audacious goal on the number of farms and the number of people you want involved in this. What does that look like for you.
[00:22:29] You know Uruguay is a pretty small country. I envision to have farms literally all over the country. You know we can have hundreds of farms you know and once we've really perfected the model you know we'd love to take that model and replicated in other places potentially in Africa. Looking at South Africa and a city couple of countries that are kind of on their way to legalizing but really finding places around the world that have you know rich histories and producing cannabis you know it's in the black market and where a lot of strains kind of originate from you know even India Afghanistan those kind of places that might be a while down the track but you really look at where we can replicate this model in different countries. I think we're looking at a couple of places in Latin America and maybe Argentina Peru Colombia Colombia is going to very big rich history of small growers. Mexico for example at you know that's that's kind of down the track but you know for the moment just focusing on what we're doing right now and getting this pilot done and then you know just kind of expanding it testing the our assumptions next year or far and then hopefully scaling up what.
[00:23:27] And big challenges of farm or biggest big challenges that you're grappling with now that you're anticipating in the coming months.
[00:23:33] Yes. So we're we've actually just disclosed a an equity around investment from an Australian investor. They're actually going to be also act as a distributor to Australia New Zealand and Asia. And that's that's pretty much always done. Now we're dealing with the challenge of how do we get the money. Because here in Uruguay we have the same banking issues as the United States has. So that's that's one of the challenges we're dealing with. You know Uruguay there is I mean there's there's some very talented workforce but there's not a lot of Canada's talent if you like. So you're bringing in there's gonna be a big shortage of talent a lot of the companies are gonna be competing for the same the same Telstra foresee that as being a bit of a challenge there is you know there's one certified lab for testing here in Uruguay and they currently only test for THC and CBD which is you know it's not a lot more than that there's a whole lot more cannabinoids turbine noise and lights to test for it could be going to get really serious.
[00:24:21] So and then just you know kind of working with the government that Daphne also has its challenges just to kind of you know together with companies with entrepreneurs with industry really help create an ecosystem and develop the industry for Uruguay to succeed out there. So those are a few of the challenges you can imagine.
[00:24:39] And tell me I always love to kind of find out how how would the business kind of operation side I mean you have a particular interesting situation is that your business partner is also your your wife.
[00:24:52] Do you guys split up the business.
[00:24:54] How do you maintain or do you maintain a separation between kind of married life and a business partner life right.
[00:25:02] Right. No I mean it's it's all mixed to be honest here. You know we kind of we were obviously living together we just had a little baby together trying to manage that together with the business thank you is definitely got its challenges. But yeah I mean we love it you know we were I think we were good friends before we sort of were together so I think that kind of helped us a lot in terms of where we are today. We've been together for a long time now we would know each other very well. We know each other's stress strengths and. Witnesses on an operational level. My wife Andrea you know she deals just with a lot of operational stuff because of the language barrier that I have. No it's just it's just too difficult for me to get my points across in Spanish. You know I like working with different employees so I'll kind of act more as the kind of strategic advisor on the back and working together with her know making things happen. Kind of activating my contact base around the world but yeah we know we're still ready defining those kind of the roles and separation of roles that we have in the business. But we do complement each other very well. I think that's that's the most important thing. We have really good communication skills. We speak a bunch of different languages to each other also Hebrew English Spanish. So you know we're obviously always focusing on improving that and but up till now it's worked really well. And yeah we're you know we're really excited about building this next few years here in Uruguay.
[00:26:14] It's exciting. Exercising. I coach a lot of partnerships and several of them are husband wife partnerships and it goes both ways. You know it's really incredible strength because you have such a deep connection that it can also you can get muddled. and I think it's that just being being really open and talking about it and making sure that you're you're aware aware of what relationship are you in and the conversation is about the right relationship to be focused on. But you know that's a that's a it's a big challenge to start a business. And kudos to getting this launch.
[00:26:45] We're going to hit time here if people want to find out more about evey about you about the work you're doing an autograph. What's the best way to get that information.
[00:26:52] Yes sure. Probably social media in the best part first of all you know connect me on LinkedIn active there. We have a Facebook page basically EDI y v y dash medical cannabis your way. We're also on Instagram. I think it's easy or we are even if I'm not mistaken we're actually about to hire a marketing person to help us kind of get more content out there and help us develop our brand create more brand awareness. Yes. We're pretty active on those and we'd be happy to have a chat to anyone that's interested and go and I'll make sure that.
[00:27:20] Those those links and those handles are in the show now it's here so people can click through and get that and contact you. Kevin this has been a pleasure. Thank you so much for taking the time. Thanks very. Appreciate it.
[00:27:31] You've been listening to Thinking Outside the Bud with Business Coach Bruce Eckfeldt to find a full list of podcast episodes. Download the tools and worksheets and access other great content. Visit the Web site at thinkingoutsidethebud.com. And don't forget to sign up for the free newsletter at thinkingoutsidethebud.com/newsletter.