How Native Roots’ Vertically Integrated Business Model Helps It Stay Competitive and Compliant

How Native Roots’ Vertically Integrated Business Model Helps It Stay Competitive and Compliant

The team behind the Colorado-based company shares how its tagging process, testing standards, branding efforts and more come together to provide quality product for Colorado’s medical and adult-use markets.

December 11, 2017

Native Roots Dispensary launched into Colorado’s medical market in 2009 and expanded to serve the recreational market in 2014 when the state legalized adult-use. With three indoor grow facilities in the Denver area, and 20 medical and recreational dispensary locations across Colorado, being vertically integrated allows Native Roots to ensure compliance with the state’s seed-to-sale process and utilize the data collected during it, both of which have been integral to the company’s success.

Inventory Tracking

For example, Native Roots’ ability to track product is much more streamlined when product is moving from the company’s cultivation facilities to its dispensaries. The state uses the METRC inventory tracking system, which mandates that when a clone grows into a plant that the state considers mature, it is tagged with a METRC tag. 

“That tag becomes extremely important to us, all the way through the time that specific batch is completely sold through,” explains Native Roots’ director of retail, Grant Troeger.

The dispensaries place weekly orders from the grow facilities, or what Native Roots calls “post-harvest,” using an order form that allows them to request specific strains and quantities. Post-harvest then creates a delivery manifest using the barcodes from the METRC tags.

“Every day of the week, we have different stores set up on who gets delivered what, so they know when deliveries are coming in,” Troeger says. “It gets transported by our courier team, within our vans, [and] it’s registered in the state tracking system, so beforehand, our team can see what is coming to the store.”

Once the delivery arrives at a dispensary, Troeger says, the management team checks it in and verifies that it contains the correct strains and quantities. The team then accepts the delivery within the state tracking system, which confirms with the state that the facility sent the product to the retail location and it has been received. At that point, Troeger says, the inventory gets a barcode for use with the store’s point-of-sale-system, which is different than the original code on the METRC tag, but that incorporates the last four numbers on the tag, so the two codes can be matched together if necessary.

Native Roots’ team members can become specialists in their fields, Troeger says. Experts within the IT department, for example, lead data-collection efforts and push that data into an internal system that allows all employees to view sales information, such as how many units are being sold, which strains are popular and which stores are selling more than others—something Native Roots wouldn’t be able to do as easily without vertical integration.

Efficiency in Testing

Among the several other advantages to vertical integration, the team says managing the entire supply chain gives it more control over its brand.

Native Roots offers flower, concentrates, edibles, tinctures, beverages, topicals and vape products, all of which undergo testing, according to Head Grower Jason MacDonald.  Flower is tested for microbes and potency, edibles are held to food-grade standards, and extracts and tinctures are also tested separately, MacDonald says. Chief Compliance Officer Dave Cuesta adds that there can be up to three layers of testing, depending on the product.

“There [is a] singular round of testing [on the flower for] potency/microbial, and then those could go to the shelf,” Cuesta says. “But if that flower’s extracted, that oil’s then tested, and if that oil were to go into an edible, that edible would be tested.”

Colorado’s labs are state-certified, Cuesta says, and MacDonald adds that Native Roots uses two different labs, Agricor and Nordic, to test its products and compares results to confirm accuracy.

“We use both of these laboratories because we think they are the top laboratories in the state,” MacDonald says. “We did a whole round of interviews with all of the labs and landed on these two.”

“We have the ability to give feedback to each other and affect each other quicker in the most positive way,” he says of the team’s vertically integrated supply chain. “From a grower standpoint, being vertically integrated gives us more control of the product, and we have a better idea and less liability from another company messing a rule up or having contaminate in there that we’re not allowed,” says MacDonald. “Control of the product … [from] beginning to end [and] maintaining our brand image … is extremely important, especially since we’re so scrutinized. Any slip-ups in the brand are detrimental.”

Training Across the Supply Chain

Native Roots’ training program is one of the lengthiest and most intense in the industry, Communications Manager Kim Casey claims, and involves all of the company’s 650 employees, whether they are working within the cultivation facilities, infused product development or retail locations.

“We ensure that our staff are knowledgeable not only about our products, but about compliance requirements and are able to answer consumer cannabis questions, as well,” Casey says.

“We’ve been in the game for a while. We know how to operate within the industry,” Troeger adds. “We’ve learned from the changes that have come and gone on both sides of med and rec. We’re very heavily focused first and foremost on compliance and training of our employees.”

Another one of the company’s strengths, Troeger says, is Native Roots’ mindset that the next person to receive the product is always the customer, who should get the best product possible.

“When we’re actually selling the product to the customer, that’s retail to the customer, but [the dispensary is] actually the customer for the grow,” he says. “We need a good product for us to be able to sell to the customer.”

“[We make sure] that the actual flower product itself is grown with love and care, so it’s the best-quality product that people actually want to smoke or vape or ingest,” Troeger adds. “[The cultivators] need to give us that good product, the cure time, … the testing and the potency, making sure we have the best available selection of CBD or indica, hybrid or sativa—all very important to us to be able to provide the variety to our customer on the front end.”

Images courtesy of Native Roots