In this episode, host Jonathan Havens, co-chair of Saul Ewing Arnstein & Lehr’s Food, Beverage and Agribusiness (FBA) Practice, speaks with Chris Hetherington, founder, chairman and CEO of Peels, a health and wellness company that markets CBD products from orange peels. Chris describes his career path from NFL player and hedge fund managing director to startup founder with a mission to make the holistic benefits of CBD available to more people. He discusses the company’s strategic choice of orange peels, rather than hemp, to source the CBD in the company’s products. Chris and Jonathan also consider the regulatory and advertising challenges of operating in the CBD space. Finally, Chris shares his plans for the future of the company.
Episode: A Look at Non-Cannabis Derived CBD Products
Jonathan Havens and Chris Hetherington June 2022
Jonathan Havens: Thank you so much for joining us on our food beverage and agribusiness podcast series, “Don't Miss a Beet.” My name is Jonathan Havens and I am the co-chair of Saul Ewing Arnstein and Lehr’s Food, Beverage and Agribusiness Practice as well as the firm's Cannabis Law Practice. And I'm based in our Baltimore and Washington, D.C. offices. Today, I'm thrilled to be joined by Chris Hetherington, who is founder, chairman and CEO of Peels. Peels is a very interesting and innovative CBD company in that the CBD in the company's products comes not from hemp, but rather from orange peels. Chris, thank you so much for joining us on today's episode. I've really enjoyed getting to know you. Your story's an interesting one and I've also enjoyed learning more about Peels. Can you share with our listeners a bit about your background and discussing what drew you to Peels in the first place?
Chris Hetherington: Yeah. Hey, Jonathan, pleasure to be here. I – my background – I grew up in Connecticut. I went to Yale for undergrad, ended up playing in the NFL for 11 years, and then worked for a hedge fund for 11 years. And then got involved in Peels about two years ago. Towards the end of my career at the hedge fund, I was more focused on the private equity venture capital side of our business. I had a couple CEO roles at companies we invested in, and one of which was a big health and wellness company out of Denver, Colorado called Resilience Code. And look, I've always been obsessed with optimizing my health and performance in the most safe, natural ways. And obviously, playing tackle football for 26 years and 11 in the NFL, I for sure have my fair share of pain, inflammation, and sleep issues. And so I was very intrigued by the cannabis space and the CBD space. I’m not a cannabis guy, so more intrigued by the CBD space. And I helped a couple of groups raise money. I studied the space for about a year and probably tried 50 different brands and their products and knew there needed to be something different. There needed to be some kind of innovation to make CBD accessible to more people. You know, 60% of the workforce has some kind of drug screening – can’t take CBD. There's a large percent of the population that has a negative sentiment of THC or even hemp, or even there's a large part of the population, I assume, that doesn't know the difference between marijuana, hemp, cannabis, CBD, et cetera. So, I serendipitously met some young founders that had this idea, and more specifically had a relationship with a biotech firm called PureForm Global and PureForm Global has this proprietary technology where they're deriving cannabinoids not from hemp or cannabis. And so their process is called cyclic terpene assembly and really amazing technology and amazing innovation.
And so I became the CEO of Peels about two years ago. And we've been at it roughly two
years. We officially came to market in August of 2021. And we've had a lot of great press
coverage on the back of that. And really, like I said, Jonathan, our mission is to make CBD
accessible to more people. You know? I'm sure you know there's a lot of amazing, holistic
benefits, but due to it being an unregulated space, there's a lot of risk with hemp and
cannabis-derived CBD, using class one or two solvents, pesticides and toxins present. And
so, we're going the opposite route. We're providing a molecule that is molecularly identical to
hemp or cannabis-derived CBD, but none of the “junk,” if you will. Right? And more
importantly, we consider ourselves the safe, natural, pure, consistent alternative to people's
Jonathan Havens: That's great. And so, look, I think a lot of our listeners probably
understand this, but just to level-set.
Chris Hetherington: Sure.
Jonathan Havens: The term – the letters CBD obviously stands for – I shouldn't say
obviously – stands for cannabidiol, right? That seems to suggest hemp or cannabis. You
talked about why orange peels versus hemp or cannabis, but what's the learning curve for
your customers? How do you educate them on the difference between your product and other CBD products on the market? You know, when you call yourself CBD, consumers might
rightly or wrongly expect something. And so how do you go about educating them? What is
that learning curve for them?
Chris Hetherington: Yeah, look, there's a lot of consumer education that is involved in this.
And like I said, our mission is to make the amazing holistic benefits of CBD accessible to
more people. Right? Including those who historically haven't felt like CBD was or could be
for them by – for us – creating a product that addresses the core issues of purity, safety, and
consistency, and as well sustainability, right? So, Jonathan, we sought out the purest form of
the molecule with superior consistency and scale and ironically found it or a biotech partner
found it in the terpenes of orange peels. And for us, using oranges – not hemp or cannabis –
allows us to guarantee that no THC is ever present as well as no toxic impurities or solvents
that are common to cannabis-derived CBD. Those were among our top priorities. We chose orange peels for two reasons: their ability to deliver an identical restructure of the
CBD molecule and their positive environmental impact because terpenes found in orange
peels are common biosynthetic building blocks. Through a proprietary process, we're able to
create pure bio-identical CBD. So, there's a lot of consumer education. We are very
committed to leading the space and consumer education, and there's a lot that goes into that.
Traditional marketing is tough in the CBD space. Advertising is tough. And so it's important
for us to bring on partners that have significant experience in CBD and have solved the pain
points of marketing and advertising. So, that's agencies, digital, SEO, social, et cetera. So,
there's a lot of consumer education. We plan on partnering with the best partners, using
influencer marketing by getting authentic influencers that have the same core brand values as
us and that actually use our product and can speak positively about the benefits of our
Jonathan Havens: Yeah, that makes a lot of sense. You and I have talked about the next
theme that I want to hit on. But for the benefit of our listeners, beyond consumer education, I
think one of the biggest challenges in the CBD space – and it's a space I spend at least some
time in every day – are the regulatory challenges. You mentioned kind of the grayness of the
regulatory picture. I think, as our listeners know, CBD kind of enjoys this tortured status.
Some states have different laws and rules. Others say nothing at all. Then, we know what the
FDA has said with regard to at least ingestible CBD products. Can you talk a little bit about
how you go about facing the regulatory challenges? On the one hand, you're not cannabis derived CBD. On the other hand, when regulators – uneducated regulators see CBD, whether
you're cannabis or not, they might jump to conclusions about your product. Talk to us a little
bit about how you've faced those regulatory hurdles.
Chris Hetherington: Yeah, it's a challenge, to be honest with you. And when we first started
the brand, we were like, “no association with hemp or cannabis whatsoever.” Obviously
we're still CBD because we're molecularly identical, but we were assuming we wouldn't have
the same regulatory restrictions, banking restrictions, marketing and advertising restrictions.
And, at the end of the day, that is not the case. But we're confident that with time and the
right partners and lobbyists, et cetera, that we can get over the goal line to really separate
ourselves from the rest of the space. And you do that through purity and consistency and
having third-party accredited labs produce COAs. There's a lot of ways you can do it and just
go about your business in a professional way, day in and day out, and try to make some
headway. You can't control the regulators, but you can, like I said, get lobbyists and the right
people in your corner to support you, to try to move the needle a little bit. So that's really
what we're focused on. And then our product quality and our transparency is extremely important to us. We only use the best ingredients in our products and we built the brand to stand out in retail. We have this very amazing packaging and this unique orange Pantone and then our products stand out as well from, like I said, a purity and consistency and quality standpoint. And ultimately we want to be the trusted brand in the market. And we want our products to sit next to your vitamin shelf there. And really make this a part of people's daily routine, their daily wellness routine. So look, it's a challenge, but we're up to the challenge. We're, like I said earlier, always trying to align with the best partners to help us. We're always trying to build brand awareness. And then we're really committed to consumer education through blogs, through getting press and media and really shining light on our uniqueness. Not only from a technology standpoint, but also the quality and consistency and safety of our products.
Jonathan Havens: Yeah. That makes a lot of sense. And I think – we talked about consumer
education. I think it's also regulator education, right?
Chris Hetherington: Yes.
Jonathan Havens: I think when regulators – regulators, I think, and it's not their fault, these
are new products and product development and technology have outpaced regulation and law and that's – look, that’s really always been the case. And so I think once regulators
understand what your product is and what it's not, it could be a different situation, but when
you're dealing with folks that you might not have gotten the opportunity to get out in front of
and educate, it can lead to challenges. So, as you said, it is a challenge, but hopefully with
education, both of the market and of the regulators, you can overcome those.
Chris Hetherington: Yeah. Look, we've been able to overcome it by talking to the decisionmakers, whether that's at the retail level, or the banking level, and really getting them
educated, one, and two, comfortable that look, there's no risk here. We're the purest form of
the molecule. We didn't use any, like I said earlier, class one or two solvents, no pesticides.
We were – through the Clean Label Project – we were awarded the Purity Award in 2021.
We're certified THC-free, certified pesticide-free. And so, you're right. It's just – it’s getting
people to have an open mind and really listen to our story and how we're different and why
these should be accepted. And ultimately, this process is very similar to how the best
vitamins in the world are made, you know? And so, again, it's getting these regulators to be
open to listening and understand the benefits versus risks, and from our standpoint, there's no risk. And so I think we're making a lot of headway. We participated in some clinical trials, which we were very happy with the results. And so, we're committed to keep testing our products, like I said, with third party accredited labs, by participating in clinical trials, going forward and, look, our goal is to really elevate the CBD space, not just our brand. We want to help the CBD space in general. And I think we're taking the necessary steps to do that.
Jonathan Havens: Great. Can you tell us a little bit about your plans for Peels? What do the
next couple years look like?
Chris Hetherington: Yeah, look, we have big plans. We have opportunities to enter
channels and markets that our competitors cannot because, like I said, we have no association
with hemp or cannabis and the purity, the safety, consistency, the sustainability. So, our
revenue KPI is 10 million in top line revenue in the next 12 months, which we think is very
attainable based on the sales opportunities. We plan to be in about 6,000 doors in the next 12
months, including specialty, mass, grocery, natural and convenience. And like I said, we not
only have opportunities here domestically, but there's a lot of opportunities internationally.
We filed trademarks in a bunch of countries and are in negotiations to formalize agreements,
to enter those countries. And really, to be honest with you, Jonathan, I mean, data will be the
driver behind every decision we make. And our priority will always be putting our consumers
first by continuously innovating and developing data-driven products to meet their needs.
Right? And we're paying close attention to the demographic of consumers searching for CBD
– what issues they're trying to address and not only what delivery method they prefer, but we
will make science-based decisions regarding what delivery methods are the most bioavailable.
And, like I said, because our CBD is made from orange peels, we have tremendous
opportunity to reach target audiences and potentially enter channels, markets and retailers our competitors cannot. And what that does is it expands the existing CBD market. It improves the lives of more people. So, we have big plans. We’ve got a great team. We have supportive investors, and we're in a good spot. And for all intensive purposes, we've been essentially pre-revenue up to this point. We're about to turn the marketing engine on and really blow it out here. So we're super excited, and, as you know, startups are all about team and capital. And so we're confident we have the right team and supportive investors. And we're excited about the future.
Jonathan Havens: Sounds very exciting. So Chris, look, I can't thank you enough for
coming on today. I learned a lot. I know our listeners learned a lot. Where can folks find
Peels products, and where can they learn more about the products?
Chris Hetherington: Yeah. So our website is www.peels.com. We have four products to
market right now. We have our oil. We have our night oil, which is essentially our original oil
formula plus melatonin. We have our CBD immunity shots. We have gummies in a 10-count
and a 30-count. So you can find all of those on our website, and then coming soon to retail
here in the next couple weeks. We're very active on social media @GetPeels on Twitter,
Instagram. We also have a LinkedIn. So, look, we're trying to build a community, trying to
improve the lives of as many people as we can. And not only former athletes that are
suffering, mentally and physically, but people that are suffering with addiction to prescription
meds and stuff. So, we're really focused on being a mission-driven business and aligning
ourselves with the right partners to really make an impact.
Jonathan Havens: Excellent. Well, Chris, thanks so much for your time. Learned a lot – I
always do when I talk to you, so appreciate your time and to our listeners, be sure to join us
next time on “Don’t Miss a Beet.”
Chris Hetherington: Thanks, Jonathan.