Written by Kelly Nottermann, Communications Director, Vermont Sustainable Jobs Fund | Photo by Erica Houskeeper, courtesy of the VSJF
When Rebecca and Joe Pimentel moved to Vermont, they envisioned a life of organic farming and raising their family close to the land. “We’ve always been passionate about the food movement and about what we put into our bodies,” said Joe, who began farming commercially in 2010 from his Massachusetts homestead, “and Vermont had so much access to organic food.”
The pair began growing organic produce and trucking the fruits and vegetables to Massachusetts. They thought one day they might set up a teepee village and offer yoga on the farm.
Then Will Raap called.
The founder of Gardener’s Supply and a partner in Evergreen Capital Management along with Alan Newman, a Vermont entrepreneur who co-founded Gardener’s Supply, Seventh Generation, and Magic Hat Brewing, Raap had an eye on the growing interest for CBD products. He wanted to know if the Pimentels would consider growing hemp. “Will and Alan are two of the greatest entrepreneurs in Vermont,” said Joe. “We knew they were at the forefront of something big.”
That was 2016, the start of the CBD wave in Vermont. The Pimentels agreed to do a test crop of 150 plants, which they would split with Evergreen, and Luce Farm Wellness was born. At the time, they were one of 14 other hemp growers in Vermont, a number that would surge to over 600 by 2019.
Joe and Rebecca took a deep dive into CBD oil production, and settled on supercritical CO2 extraction. They began selling a few products to friends and family, and were blown away by the response. “We had neighbors sitting at our kitchen table telling us they could ride a bike again after years of knee pain,” said Joe. “We knew we had a product.”
Sticklers for quality and consistency, especially in a nascent market rife with hype and false marketing claims, the Pimentels contracted a professional chemist to ensure accuracy and transparency in their labeling. In addition to knowing the exact amount of CBD in each batch of oil, the lab also ensured that total THC—the component of hemp that contains psychoactive properties—was consistently under .3 percent. “We wanted to know exactly what was in each jar, so that our customers could know what they were buying,” said Joe. “It was the only way we wanted to do business.”
Using their farming model for sales, the Pimentels began selling CBD products at farmer’s markets, only now they were selling $50 bottles of CBD infused honey next to the eggs and lettuce.
That’s when they got the second call that would change the trajectory of their business. This one from a group of local investors. To keep tight control over quality and consistency of the product—the bedrock of their value proposition-—the Pimentels wanted to move the extraction process in-house. “We wanted our finger on every step—from growing the hemp right through to the final product,” said Joe. Additional investment offered a path to that next step.
Riding the CBD wave.
By 2017, the Pimentels moved production out of their kitchen and into a small manufacturing facility in Bethel, Vermont. The market for CBD products was rising steadily with seemingly limitless opportunity for growth. A global report released in October of that year projected the CBD oil market to grow at a compound annual growth rate (CAGR) of 39 percent between 2017-2021.
But being a start-up in the early days of CBD was not without its challenges. “No one knew what to do with us,” said Joe. “The credit card companies cancelled our card, traditional lenders like banks wouldn’t touch us—even the Vermont Department of Health wasn’t sure how to inspect our facility.”
With investors on board, the Pimentels brought on David Barash, who has since passed, as interim CEO. Barash brought deep experience as a former executive with Burton Snowboards, Shelburne Farms, and Ben & Jerry’s, and began positioning the company for a significant fundraise and expansion. “He was incredible,” said Joe, “one of the smartest guys I’ve ever met.”
Luce Farm Wellness surged forward, growing from three to 26 employees, purchasing hemp from other small growers in Vermont, and planning their fund raise. “It could have all worked,” said Joe. “But it didn’t.”
Back to basics.
“We were organic farmers sitting in board rooms pitching investors,” said Joe. “It was completely uncharted waters and not at all what we wanted to do.” The Pimentels were on the cusp of losing a majority share of the company in exchange for big investment dollars, which they needed to pay off debt. Janice St. Onge, president of the Flexible Capital Fund, who was on Luce Farm’s advisory board, pulled Joe and Rebecca aside. “You need a business coach,” she told them.
St. Onge recommended Lawrence Miller, a consultant with the Vermont Sustainable Jobs Fund’s business management coaching program that offers professional support to Vermont companies navigating critical transitions through a network of entrepreneurial coaches. Miller also owns Five Vine Consulting, and is the former Secretary of Commerce and Community Development in Vermont. As Joe tells it, the company was in big enough trouble that Lawrence agreed to help. “He told us ‘you have a big hill to climb,’” recalls Joe. “‘I like challenges,’ I told him. ‘Let’s do it.’”
“There were a lot of smart people thinking about how to move the company forward,” said Miller, “but Joe and Rebecca were not on their authentic path and there was a lot of anger and frustration building from a lack of communication.”
Miller’s first step was damage control. “The financial plan was disconnected from the life Joe and Rebecca wanted for their family,” said Miller, who facilitated conversations with investors and creditors to align expectations. “These were tense and high-stakes conversations,” he recalls, “but most stakeholders were flexible when the true conditions of the company were communicated with transparency.”
From there, Miller coached the Pimentels on getting back to basics. “Sometimes you have to go slow to go fast,” said Miller, who helped the company reorganize liabilities and create a plan to pay everyone slowly. Though Joe says the company is still in repair mode, they are “three-quarters of the way up Everest.” The company has paid back the farmers they contracted to grow hemp and reduced staff from its high of 26 to back to six.
Perhaps most importantly, Miller has helped the Pimentels re-envision a future version of Luce Farm Wellness aligned to their core values and lifestyle. “They have a lot of it right,” said Miller. “They have the right seed, the right growers, the right extraction process, and the brand resonates with people. They just weren’t ready to grow at that pace.”
Miller worked with the Pimentels on getting the fundamentals in place—everything from accounting and order management systems to a full understanding of manufacturing costs that account for labor and rent. He also helped them separate their passion for farming from the CBD business. “The farm is a hobby now,” said Joe. “Wellness is our business.”
With their feet back under them, the company plans to grow slowly and organically. They continue to maintain a laser focus on quality and consistency with new plans to bring extraction in-house, and have started to invest in marketing.
Though it was a tough couple of years, Joe doesn’t regret the ride. “We’re super thankful,” he said. “Harvard Business School could not compete with this education.” His advice to other entrepreneurs, “Don’t be afraid to let your priorities change and don’t wait to ask for help from someone who has been there before.”
Miller agrees. “Personal growth is one of the biggest limiting factors for many entrepreneurs,” he said. “Joe and Rebecca were open to change, and able to take in new information to make better decisions.” His advice to start-up companies: take a pause. “Whether it’s a few minutes to gather your thoughts before an important phone call, or a weekend of reflection to think about what you want from your life, that pause can help you pull back to see the full picture.”
About VSJF Business Management Coaching Program
The Vermont Sustainable Jobs Fund provides tailored, high-touch planning, coaching, and advising for business owners and their management teams to advance profitability, job creation, and sustainable job development. For more information about business management coaching, visit www.vsjf.org.
Story originally appeared on the Vermont Sustainable Jobs Fund’s website: https://www.vsjf.org/2021/09/27/slowing-down-to-go-fast-luce-farm-wellness-rides-the-cbd-wave/