How Hemp Beverage Emulsions Work and Why Regulation Is the Real Product | Alexander Choi, Perfectly Dosed

Alexander Choi, Co-Founder and CEO of Perfectly Dosed, joins Nate Fochtman on the Ready To Drink Podcast to break down the ingredient infrastructure powering the hemp beverage industry. From a class project at the University of Chicago to supplying emulsions for hundreds of breweries across the US, Choi walks through the full origin story of Perfectly Dosed, the science of cannabinoid emulsification, and why getting regulation right matters more than any single product launch.

Topics covered in this episode include how emulsions work and why they determine onset, peak and offset of effects, the founding story behind Perfectly Dosed and its pivot from edibles to beverage ingredients, the role craft breweries are playing in scaling the hemp beverage category, why co-founder Glenn spent years testifying across 28 states to shape legislation, the federal regulatory landscape and how operators should think about the current uncertainty, and what authentic brand building actually looks like in an emerging category.

Perfectly Dosed has supported production of over half a billion hemp products and continues to work across the supply chain with breweries, distributors and retailers.

If you are a founder, operator or investor watching the hemp beverage space, this episode covers the full stack from molecule to market.

Find Alexander Choi in Linkedin | Check out PefectlyDosed.com 

Follow Ready To Drink Podcast: Spotify | Apple Podcasts | YouTube | ReadyToDrinkPodcast.com

Ready To Drink Podcast is hosted by Nate Fochtman, founder of The FreeMind Group, a strategic advisory firm serving beverage brands since 2008.

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Transcript

SPEAKER_00 0:00

My name is Alexander Troy. I'm one of the co-founders and the CEO of Perfectly Dosed. Awesome. Let's give me a cloud level overview as far as uh what it is at Perfectly Dosed that you guys do.

SPEAKER_01 0:10

Yeah, so we are one of the uh primary providers of the emulsion ingredients to the hemp beverage sector. Um emulsions are the means by which we're able to get cannabinoids from the hemp plant, like CBD and THC, into beverages. So we do the specialized manufacturing that takes those um cannabinoids, which are oils and not compatible with beverages, and turn them into an ingredient format that works in beverages.

SPEAKER_00 0:30

Excellent. Now, talk a little bit about because I I I want before we jump into your story, I want to jump jump in a little bit about the evolution of those raw materials over the past few years and kind of talk a little bit about what it is you guys do and maybe some unique points that maybe might differentiate you from other people.

SPEAKER_01 0:46

Yeah, so we were the first company to focus uh the production of these emulsion ingredients solely on the hemp sector. Uh we started this company um back at the University of Chicago. They were actually our first investor and we came out of the incubator uh system. Um and I think what kind of you know continues to differentiate us is not only the sole focus on the hemp sector and the hemp beverage industry, but also uh the scale and expertise that we're able to provide, given that we built infrastructure so early and continue to expand it as the industry has grown, and really have seen and developed a lot of relationships that are mutually beneficial, um, not just to our clients, but also to other value players within the supply chain, whether that's distributors or retailers. And so to kind of like you know put a finer point in it, I think when people come to us and stick with us and work with us over you know the span of multiple years, uh it does come down to yes, we're providing an ingredient that absolutely worked. And we've done you know over uh half a billion products, I think, since we launched. So uh there's a there's quite a few you know uh points that we've been able to kind of like draw different samples from and make sure that things are working properly. Um but also it's just that we try we try to operate at the intersection of not just what our clients need, but also what they need to continue to grow and what they will need to continue to grow. So providing that level of scale, the guidance, the research, the the new product development, all that kind of good stuff uh is really where we try and you know differentiate ourselves.

SPEAKER_00 2:06

So, really, for anybody, a lot of our about 60% of our audience is all B2B, it's founders, owners, senior leaders, and things like that in other businesses and this sector as well as others. Um, let's talk a little bit about like from a consumer that might be listening to this. Explain a little bit about what your product and what role it plays in, let's say, a 12-ounce can if they grab it off the shelf.

SPEAKER_01 2:27

Yeah, so I think if you want to zoom out at the highest level, um you can think about salad dressing for this analogy. Uh, salad dressing will like separate over time. You're gonna have like your oil at the top and your water at the bottom. Uh, and that's because they're not compatible. Uh, oil and water do not like to mix. Um, THC, TBD, other cannabinoids from the hemp plant are also oils, and your drinks are mostly water, the ones that you're pulling off the shelf. And so if we didn't do something to mix it up, right, to shake it super thoroughly, that oil would separate on top and it would just sit there like a little film, and then the rest of your drink would be a drink with no cannabinoids in it. Um, what we do is we essentially take those oils and we turn them into something that stays within the drink. It's like a mixed-up salad dressing, but it can stay as like a mixed-up salad dressing. I've never said that word so many times consecutively, um, for up to a year. And so the processing that we do, and this can get a little bit more technical now, and obviously the consumer is never going to really think about this, but might maybe it's interesting to just kind of know is we're taking those, you know, for example, THC, breaking it down into really, really tiny little droplets, right? Nanometers in in diameter, smaller than the pores in your skin, and we're taking each of those droplets and we're wrapping them in a carbohydrate. So that carbohydrate's forming a shell around each of these little droplets. And the inside of the carbohydrate shell really loves oil. So it's attached to that on the inside. And then on the outside of it, it really loves water. So it shields the oil from the water. And so, because of the way that we've engineered it, so that the particle sizes are very similar and they have, you know, uh, I'm trying not to use super technical terms, but they repel each other uh with equal forces, it means that all these little droplets of THC are spread evenly throughout the beverage and they don't separate, right? They don't go up to the top, they actually stay distributed. So that means when the consumer actually has the can that they're having an equal amount of these microscopic drops in every single sip. So you're having that's why you know when you have a 10 milligram can, by the time you get to the bottom, it's 10 milligrams, but you're not having all 10 at the beginning or all 10 at the end, it's it's spread evenly throughout. The other side of what we do from the processing side is because of the ingredients that we do and the particle size that these little droplets are, um, because of all that, you can also expect a very similar onset, peak, and offset of the effects that sort of mimics alcohol in terms of when you sort of perceive that you know you're getting a little bit, um, you're feeling things a little bit, and when you kind of are the most high and then when it wears off. That's a byproduct of also the way that we created the ingredients. So again, you know, you're getting that absorption faster, you're you're getting it into your bloodstream faster, and it's sort of going, it's making its way through your system. Looking about bodily functions in like non-scientific ways is such a weird exercise. Um, but yeah, I think when you kind of back it up to the highest level, what we're doing is we're taking these oils, we're making them super small, we're making sure that they're dispersed throughout the beverage so that way when you drink it, because of all the science we've done on the back end, um, when you enjoy it, it just kind of feels like that experience that you kind of know and and love to have.

SPEAKER_00 5:24

I want to say I've been working in this industry for years representing brands, and I felt like I've I've done the certifications and everything. Your metaphor was the best metaphor I've ever heard, and the way you just broke it down was perfect to where I actually understood something I didn't really always understand as well. So I I I thank you for that. Well, thank you. Let's talk a little bit about like uh entrepreneurship. So I saw your you have co-founders, what how you said. So where where are who's the other who are the other founders? And then take me literally to the bar stool or the couch, or where was the idea worth for what you guys are doing today?

SPEAKER_01 5:57

So I think what's funny about the way the perfectly dose is structured is yes, I have two co-founders, uh, Glenn and Liam, and neither of them were actually there for the metaphorical couch that we started this company in. Um, this actually started as a joke for a class project, my senior year of college. Um, and the reason that it was a joke was one, because I didn't think that you could seriously do THC for school. Like there was no way that in my mind that computed. And the second part was that I had a full-time job that I accepted and I already spent a signing bonus, and I was not in a position to pay that signing bonus back. Um, so you know, we're taking this class, it's senior year, it's me and a bunch of friends. We, you know, have to do a group of five of us, and we're like, okay, we have to come up with this fake company and defend it, and we're gonna get a grade based on how well we defend the company. And I will let you know that I got a B in that class. I did not get, I did not get an A on it. Uh, but clearly they thought that the concept was good enough for us to progress into the school's venture competition or venture competition. But the original premise of the company was actually it's tangentially related to what we do now, but it's a different version of it. So the ethos has always stayed the same, but the the way that we deployed the product into the market has evolved. The first iteration was to make granola bites out of granola bites that had 2.5 milligrams of THC that were fast acting, because we're like, we're sitting there and we're like, let's make edibles for the people who are not going to dispensaries, but should be going to dispensaries. So all of this is being contemplated from the perspective of the rec market, um, from a marijuana perspective. And what ended up happening was we went into the schools venture competition. Um, and and this is a it's it's a very intense competition. Um, you know, it's still technically a class project, but the class projects that have come out of it have since turned into like Grubhub and Fenmo, Foxtrot, that retailer that's kind of dotted across the Midwest and Eastern Seaboard, Simple Mills. I think they just sold for like 800 million or something like that. So this is a relatively serious course. And so we ended up making to the finals. Also, I don't think I got an A in the class, weirdly, um, but we did we did get our first penny, our first um investment from the school. And we then became, from at least my knowledge, the first cannabis company backed by university. At which point I said, shoot, I'm gonna need to figure out how to pay my signing bonus back. Um, and the the company at that point kind of evolved after you know graduated. Uh most of the founders decided, or co-founders in the class project decided that they would rather take their investment banking or consulting or or accounting jobs uh instead of kind of going into this entrepreneurial world where you have no dollars whatsoever coming in. Um and I was pretty much the only one left. And so went through this whole process of again trying to get these granules into the market and then really quickly realized that there were two just massive problems. The the consumer issue that we were trying to solve hadn't changed, that you know, consumers didn't want the high potency, long onset stuff that was in dispensaries, especially if they were like a canicurious consumer. But they didn't want to go to dispensaries at all whatsoever, um, because they're like it's inaccessible and it's not part of my daily routine. Um, they didn't want something that would be in like an edible form. Uh, there was just this, there they were like, I would prefer to drink it if I could do anything, because people are just so used to, and maybe this is specific to America, maybe not, they're used to drinking things for effects, um alcohol, electrolytes, um, you name it, people will have made a drink out of it. Uh, and then the third thing being that um dispensaries just didn't want to carry anything that was low dose or a beverage whatsoever. So we had a retail channel problem, and we had a consumer getting to that retail channel problem as well. So that was kind of the dual-sided component where we were sitting there, and I was like, I don't think this is gonna work. Like we have this product, but there's got to be a different way to get this product to the market. And that's when I kind of met my co-founder, Glenn. Um, and then my co-founder, uh, now co-founder Liam was my buddy from undergrad. He had gone back to Colorado a year after he had graduated and then kind of resurfaced around the same time that I had connected with Glenn. And it was kind of this perfect storm of things where I'm talking to Glenn. Glenn has identified that there's this awesome opportunity that's emerging in Minnesota, and he's really confident he can protect that market over there. Um, and Liam is a person who's willing to take that crazy leap and join the team and work these 18-hour days in a lab coat in a warehouse, trying to figure out how to make this ingredient. And so at the at the time, this this sounds so silly because we're like two teeny tiny companies that are barely, you know, generating revenue and we decide to merge. But I actually decided to acquire Glenn's company called Perfectly Dosed that was making these emulsions, um, but wasn't focused on the rec market, was solely focused on the hemp market. And so I know this is like very nebulous and then kind of winding, but basically what happens is all of this stuff happens, right? I'm having a terrible time trying to figure out how to get the product into the market, and all of a sudden there's a person who wants to help and join the team, and there's a person who's developed a route to the market that I hadn't previously thought was a viable one, which is this hemp, and specifically through Minnesota. So what happens is then I agree to merge our two very small non-revenue generating startups, rename it perfectly DOS, uh, which I will now admit is a better name than my company's original name. Um, you know, kind of go forward with this concept of it's all or nothing. If we can build something uh fast enough that there's adoption in the brewing industry, in the Minnesota market and what have you, then we have a real shot at actually, and this is gonna sound kind of crazy, but asking for forgiveness and not permission to legalize THC as quickly as possible across the US in the format of drinks. So we merge. Glenn decides to spend most of his life in Minnesota testifying in front of this the state house and and uh and and Senate. And I think he testified like 23, 24 times. He he lived in the Capitol. Yeah, no, it helped to create that first iteration of the comprehensive legislation that allowed for THC beverages to be sold wherever liquor was sold or alcohol was licensed to be sold in the state of Minnesota, developed a regulatory framework, licensure, all of these things. And he used to be the chief compliance officer of a publicly traded uh marijuana company, so brought all that experience with him. And we're like, okay, I think this can, I think we can do this again in multiple states. Since that point, you know, that was two and a half, three years ago, maybe approaching four years ago now. Jesus. Um and you know, Glenn has been able to work in 28 states across the US influencing legislation, either blocking bans or implementing regulations or actually installing comprehensive um regulations and frameworks in place. And throughout that period, what we've always been focused on is how do we get THC products that are accessible into consumers' hands in a way that they find comfortable, whether that's a format that they consume it, the retail channel that they buy it in, that's always been the holistic vision of the business, which is let's get the THC out there in the form of hemp products based on what we kind of beta tested in Minnesota and bring that nationwide. Obviously, it's not without setbacks, right? We're we're in the middle of something federally, which is not the most awesome position to be in. There's a lot of states that have patchwork regulations, but I would like to think that you know a lot of what we've been able to do is influence the way that people approach THC, approach low-dose products, don't think it needs to be super high dose and can see it, or not condition, but like, you know, are literally comfortable, I guess, seeing it in a traditional retail channel and not in its own, you know, alien form of a dispensary, which most everyday American consumers still for whatever reason find a little bit scary. Um, so I think that kind of answers the question.

SPEAKER_00 13:28

That was a little bit, yeah, of how we are. No, that that was perfect. And and and honestly, I you couldn't have gone a better direction in it because I want to talk, I wanted to talk, and you already just did, about how important the regulation is and having proper legislation for even existing in the industry and being able to scale and invest and not wake up every morning wondering if your bank account's gonna get seized up. And I think like that's where people don't re I think the regular day consumer doesn't think about that factor. And you know, for for me and this show, a lot of people have heard me talk about the craft beer boom from 2008, 2010, up to like 2016. And everybody's like, yeah, it was so big, it was so scaled. I said, Imagine if there was no bank funding or insurance, great insurance opportunities for you. Imagine what that industry would would be able to do. And everybody's like, well, we wouldn't be able to do anything. And I'm like, that's the potential. You're already seeing a bigger swell like by hemp hemp beverages across the country than we did in craft beer, yet there is not a like a good pathway for that for a lot of people. And I think that's what's getting the consumers to wake up, yeah, and to hear your to hear your passion. And one of the biggest things I talk about is you know, working 21 years in the alcohol industry, this product, these hemp beverages, when done properly under the guidance of the associations and self-regulation, are the most transparent adult beverage on the shelf. So if we want to live in a world where we want to question everybody and we want to know what's going into our body, which is a world we're going into and we already are in, this is the avenue. And I'm speaking as somebody who represents alcohol brands and and has spent my life in this career. It's not a bash of one's better than the other, one's not, that's not what this is. But if your goal is to know everything that's going into your body, this is your pathway immediately.

SPEAKER_01 15:09

Absolutely. And I think you bring up an important point too, because you know, a lot of people in the earlier stages of this sector growing were concerned that uh, and and I say this in the perspective of someone who worked with a lot of breweries uh very early on, trying to convince them to launch these products. We've never viewed this as a competitive product category to alcohol. Uh we've never wanted that you know, this category to um to take away shelf space or to drive consumers away from purchasing alcohol. Uh the the ethos behind why we wanted breweries to start, well, obviously they're politically important, but they're also seasoned operators. They understand how to make beverages quickly, they know how to do them safely, and they know how to reach consumers with the branding and marketing. But I think that the final point that we kind of really landed on is that brewing is in decline. You know, you can't deny the numbers, seeing that craft beer is especially being one of the hardest hit sectors right now in terms of decreasing alcohol consumption, and whether or not it's cyclical or this sort of downward trend is to stay. What we wanted to give them is an option to develop another revenue stream so they can do what they want to do, which is to continue to make really good beer. They have the talent and they have the equipment and they have the know-how. And so we wanted our ingredient that we're making this emulsion to be excessively priced, relatively easy to use, to have really favorable unit economics for them, uh, and also to resonate with consumers with the level of consistency and trust that they can build these products, not just like a quick cash grab, but like this can be a mainstay, you know, LTO of some kind that I don't know, just I guess once it becomes popular, sticks in the menu for a while. And that's really always been, again, what we focused on from how we've helped to enable a lot of breweries, um literally hundreds across the US at this point, to launch into the space, which is this is not to, you know, get people to stop coming into your breweries and staying for more pores at the tap. It's to, you know, get those consumers that you used to have coming in on Tuesday to buy a six-pack, but have since kind of stopped. And now they only buy that six-pack on Fridays. And instead of twice a week, it's once a week. Get them back in on Tuesday buying a different six-pack. So you're still getting that revenue.

SPEAKER_00 17:11

That's um, I was recently on a podcast in Philadelphia called Brewed At. And uh it's a beer podcast, and they invited me on specifically to talk about hemp beverages, and um, it was amazing. Like the whole reason that I got invited on was because of a LinkedIn post that I did, which is like a big aggressive rant, as I do a lot of times, and uh that's what I'm known for. I uh you know, I'm a polarizing person when it comes to it. Either love me or you or you're very uncomfortable around me. And uh, and what one of the things is he said, he's like, you know, I I've been against hemp beverages this whole time. And he goes, and then I saw your post, and then three days later I'm driving and I'm thinking about your post, and then I sent you an Instagram message and I never met you before, and then I spent five minutes on the phone with you, and then I invited you on my show because I needed the world to know that the myth is there and it's not competition, it is a revenue stream, and his his exact words is like we're getting we're getting a gift. It's like it's a golden gift.

SPEAKER_01 18:02

Absolutely. It's it's in you know, a gift is a I mean that's a very wonderful way to put it. In my mind, it's it's it is it has to be what are the tools in your tool belt to meet today's consumer where they are. Um, you know, businesses have to pivot all the time. Uh, and I can go on and on about how um, you know, there are there are potentially benefits to consumers um, you know, consuming less alcohol or or more alcohol or more THC or whatever you want to call it for various reasons. But I think at the baseline, what we're doing is not focused on whether or not we can try and get as many people high or anything like that. We're we're talking about just continuing to assist in product innovation within the greater bever sector. That that's what we set out to do, and that's what we hope that all of our customers are kind of looking at, looking at this uh as as well.

SPEAKER_00 18:45

No, that's well said. All right, um, as we kind of close out, is there anything you guys want to talk about as far as this year? Or is it really, you know, maybe telling the public uh, you know, as far as uh you know contacting their elected officials and things like that? Is that kind of something there?

SPEAKER_01 19:00

Yeah, so you know, I think I think the biggest thing probably for in in part breweries and alcohol companies, but also for folks that are in the industry, there is a lot of consternation and stress um that comes along with things that we can try to control and a lot of things that we can't also. Um and so our team has been steadfast in the position that what's happening federally is in a net, you know, not the current way that it's drafted, but as a net, it's it's a benefit to the industry. It's a legitimization, it's installed regulations, and it's a way for us to say we have a rule book to follow. We don't just have our own rules that we drafted for ourselves. What happens and now and what matters the most is figuring out how do we successfully negotiate. Um, so those rules are not too prohibitive for people to operate, but rather create a framework that promotes a safe and responsible industry. We do host a weekly uh uh government affairs update. Essentially, it's a webinar, um, which I can send you the link for if you want to put that out there. Um but I also just generally encourage folks to get involved, whether that's with their craft brewers guilds or with their you know, distribution guilds, retailer guilds and alliances, um, or the Head Beverage Alliance, which is it's um it's a lot of opinions, but it's good resources, uh, as many of these trade associations are, just to stay up to date on what to do. Because right now there's over a dozen bills that are active, contemplating different ways to either extend the implementation of this ban or to uh reconstruct it in its entirety in the middle of a midterm year, which is a very tall order. Um, and so it's just mainly staying on top of it, right? Making sure that you're not letting it fall by the wayside, you're not letting it um, you know, letting it or letting yourself think that someone else is handling it so you have to worry about it. Just making sure that you're staying informed. Um, but the bigger thing to remember while you're doing that too is also to watch the roller coaster and to not ride it, because uh it can be very stressful if you take every up and down that comes in this sort of bumpy ride as the new normal. Um, just kind of take information, make sure that you're steadfast. And then when there's a call to action that comes from an alliance or you know, a group of companies that operate within the space um that are known to be reputable players, ask how you can help.

SPEAKER_00 21:11

No, that's perfect. And and the last thing we want to ask you is um, you know, just like we saw with craft beer surging, we're gonna see a lot of new brands coming out once all this stuff, and I say once, not if everything kind of settles in, regulations get set in place. You know, what is some some advice? And and actually, you know, I used to be able to say, what's some advice from young up-and-comers? And that's not really the case because we're gonna see people that are 60 that are gonna start a hemp beverage brand, we're gonna see people that are 40 starting brands. Any age, what's some advice that you might tell them as they're watching all this and seeing an opportunity for something that they're passionate about? And especially hearing founders like yourself on this show speaking from the heart, telling your story and really connecting to these consumers, you're gonna be you guys are all inspiring people to want to be a part of this industry. So give a little tidbit of advice or anything like that for somebody with that in their mind this weekend or anytime.

SPEAKER_01 21:55

Yeah, so I'm I I guess I'll give I guess two different pieces of advice here. Um, so I also I teach entrepreneurship um or rather guest lecture, I guess, uh at my old alma mater and it's business school. And what I always tell people, um, at least a lot of the students who are developing companies, is it it prepare for your job to be pretty boring. Um, if you're doing it properly, there's gonna be a ton of administrative work and there's gonna be a lot of paperwork, and you're gonna sit there pouring through your spreadsheets and your balance sheets and reconciling your transactions, and you're gonna go, I did not think entrepreneurship was this. I thought it was exciting and it was like the movie, like the social network or something like that. Um, but if you're doing it properly, build a clean operation where you have visibility and everything's well documented. That's like a practical piece of information for if you're thinking about entrepreneurship and you haven't done it before. For getting into this category, I think the biggest thing is to make a product that resonates with something that's personal to you. And I know that's a bit of a you know a cliche piece of advice, but what you see out there with so many brands, even now today, is that there's a lot that are not taking advantage of the fact that it's sort of greener pastures right now and people don't really know what sells and doesn't sell. And so there's a lot of different products making its way into a set. But consumers never underestimate the consumer in whether or not they will actually care about your brand ethos and the taste of the product, the colors of it, the logos, all the merch and the lifestyle that you sort of build around the product that you're making. And so you can't do that if you're not authentic to a vision that only you think is unique to yourself that you want to share with other people. And so when you're building the brand, don't try and think of like the perfect person out there and what you would try and make for them to sell the most product. Think about what's most authentic to yourself and ask yourself if that will resonate with other people. And if it does, then you probably have a really good product.

SPEAKER_00 23:43

Perfect. Well, Alexander, I really appreciate you taking the time. And I uh I have to close out every episode with this and publicly thank you for coming on a show with no questions, no prep. Everybody to remind everybody this is two strangers connecting. We've never shaken hands or or went to a coffee shop together. And I want I want to thank you for that because there's a courage in that. And um, you spoke from the heart about authenticity, and that's exactly what you showed us today in action. And uh, you know, you didn't you didn't ask for questions and you didn't ask for prep and you didn't ask for anything leading to understand topics, and uh and the courage is is very is very well known right now. So I appreciate that. And I want to close out um reminding everybody that uh this world is a beautifully destructive place, and we are all in this together. And when you're walking down the street, when you look strangers in the eye, smile at somebody, when you're filling up coffee at the gas station, ask the person how they're doing at this at the station next to you, and actually pause and wait for them and understand and and really care about what they say. And uh I I wanna again thank you, Alexander, for your time today. I really appreciate it. Thank you, Nate. I appreciate it too. Thank you, man.

SPEAKER_01 24:45

Well, have a good one.

SPEAKER_00 24:46

Enjoy the weekend.