Weeding Through the Red Tape

Polish law frowns upon the cultivation of hemp. However, the government is of the opposite view, giving incentives to people to get into this business. The Agriculture Ministry is very positive about this new industry, going so far as to give entrepreneurs money to help them get started. We spoke to Maciej Kowalski, an investor in the legal hemp business.

TVP Weekly: According to your research, more than 1.5 million Poles regularly use CBD oils [i.e. cannabidiol, a chemical compound found in cannabis, which has no psychoactive effect and is legal in Poland – ed.], and one in five Poles has had contact with them.

This shows two things. Firstly, this is already a big market. When I launched my first company in 2014, we had to explain to people what CBD was, what it was all about, and what it involved. The Polish state – which acted as a regulator – was very strict in assessing our business. It was forbidden to advertise and show products in terms of their benefits for the end user. And introducing a product that you can't say too much about is very difficult. I don't want to brag, but the changes that have taken place are the result of many years of my work. Ten years ago, no one knew about these products, and now 20 percent have some kind of contact with them. On the one hand, this is good news, but on the other hand, it shows how much more there is to do, because 80 percent have not come into contact with CBD.

I can't imagine my grandmother buying CBD oil. Cannabis doesn't sit well with a lot of people.

I would prefer to keep the demographics of the research under wraps, but believe me, it is very broad. Our clients are not all young people from the big cities, as you might expect, but in fact all age groups and all demographic groups, in terms of education, wealth, occupation, or where they live. So yes, your grandmother is also our customer. What's more, the loyalty and consistency of use are even higher in older people, because when we compared the answers to the questions 'have you tried' and 'do you use regularly', a lot of the younger generation have only tried once, often dried up to smoke, and do not use CBD regularly.

If they only used it once and gave up, maybe it's because it didn’t work? Perhaps it was harmful after all?

What most people see at CBD shops and vending machines are dried herbs to smoke. But in my opinion, this product is not the best that cannabis has to offer. People are supposed to use it to relieve stress, improve their mood, and ultimately live a healthier lifestyle. And smoking is not healthy, and everyone, even smokers are aware of that.
CBD Expo France in 2021 in Paris Photo: PAP/Abaca, Quentin Veuillet
Who buys it? Who is your average customer?

Let’s take the example of an educated 30-year-old girl from a [rural part of Poland]. No one expects this, because everyone assumes [the average users are] young guys from larger cities. Apart from them, our best customers are this woman’s mother and grandmother. That's what the research showed, and it was a surprise to me too. What could this be due to? Perhaps from the greater tradition of herbalism in rural areas. I'm not a charlatan, and I'm not claiming to cure cancer; I'm just talking about common sleep issues. Rural people are closer to nature, much more so than the 'farmers' of Warsaw. And it is these people from the Polish villages who believe in the power of herbs. Not some magical power, but their tangible effect on everyday problems. If they have a stomach ache, they try drinking mint or chamomile, and it passes. The other big reason could be reduced access to healthcare in rural areas. I don't know if this trend still holds in Europe, but some time ago the popularity of CBD was higher in Poland and Spain than in countries with a better standard of healthcare, such as Germany and the UK. When there is a good health service, you go to the doctor, whereas in our country you go to the doctor as a last resort. Often you can't get in. And if you do manage to get in, the doctor has four minutes to see you. For mental health, the situation is even worse, because in Poland, doctors prescribe psychoactive drugs for everything.

     The second part of the research showed that the main reason people purchased our products was to treat a wide range of mental health issues, which are poorly perceived in Poland. The thought immediately springs to mind: crazy. And we have all been in worse mental states. Some people have pre-depressive states or are already depressed, while others have periods of ‘poor wellbeing’, problems sleeping, or stress. One in three Poles complains about not being able to get enough sleep. These are the people who buy my products.

But do CBD oils really work? Maybe people are taken in by the legend of cannabis, and the product is a kind of placebo. A fake?

Indeed, a huge proportion of hemp products should not even be categorised as hemp. Companies order a container of powder from the People's Republic of China, which is an artificial CBD molecule, add the cheapest oil from the supermarket, and sell the finished product to the end customer. We prepare the oil, which is an extract from a plant we grow ourselves on 40 hectares near Elbląg [a town in northern Poland - ed.]. It contains hundreds of active compounds.

The label should say: 'full spectrum'. This means that it contains not only pure CBD, but also everything that nature has to offer. But manufacturers often cheat. The hemp market is a bit of a Wild West.

So is the market for cannabis products one big scam?

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Unfortunately, most companies approach it this way. They buy a powder and some oil, mix one with the other, and pour it into a bottle. The production cost is PLN 5 and the company lists the oil for PLN 120 on Allegro [Poland’s most popular online auction website]. From the point of view of the so-called businessman, it is a real windfall. From the customer's point of view – a real nightmare. He spends his hard-earned money and gets something that doesn't work.

​​When we go to buy vodka, we know it won't be methanol because the state oversees the sector. Unfortunately, this is not the case with CBD oils. At the moment, there are three ways to identify a product. The trial-and-error method, meaning you buy and test several products until you come across a good one. Unfortunately, this is an expensive and annoying option. The second is equally absurd: buy some and send it to a laboratory for testing yourself. Someone who works in the industry might do this, but the average person won't play along. So that leaves the reputation of the brand, and that is something to be guided by. If you go to an online auction and see CBD oil at a cool price, and has a cool description, it's worth spending three minutes checking out the manufacturer – whether it's a ‘fly-by-night company' or someone who has specialised in this product for years.

You talk about online shopping here, but CBD stalls are popping up in shopping malls and city centres around the country. These are places for spontaneous purchases, on the spur of the moment. There, the customer won't spend any time thinking about whether it is a trusted producer. This is all the more so because it is made credible by the prestigious place of sale.

If you ask the salesperson at these stores what he recommends, he will, of course, recommend the item with the highest profit margin. And on what? On what is produced cheaply and sold expensively.

Apart from people with a passion – that is, to a huge extent, herbalists who have been doing this for generations – everyone will count their profit. The Franciscan friars in Elblg recommend my products. The father herbalist does it from the heart because he has tested them himself. And yes, he will earn less on this one transaction, but he has regular customers who will return to him. They will buy a product that works. And the shopkeeper in the shopping mall, where foot traffic is so heavy that customers are unlikely to return, wants to make as much money as possible in a single transaction.

This is why I believe that we should not buy such items because of emotions. Do we choose medicines because they have nice packaging? Well no, we consult, we take our time. If someone wants to change their life, spending 15 minutes on a quick product review on the Internet is not too much to ask. Unfortunately, most people don't do this, and as a result, if, for example, three-quarters of the products don't work, that means three-quarters of the people trying CBD won't buy it again.
A Thai scientist presents CBD oil and powder. FPAP/EPA, Rungroj Yongrit
You sold your first company in 2018. The media wrote about the historic transaction. How much did you sell the business for?

The papers reported the value of the company at 100 million zlotys [about 24 million euros at 2018 rates], but in reality, it was closer to 20 million, and I used most of this money to develop my present business. I assume that if you want to make a good product, you have to grow these plants, know which ones to choose, and process them. This is what I did. I kept it for myself at first, but then I decided to share it and began selling it. So you can try growing hemp yourself. It is very easy. You can get half a kilo of dried hemp from each bush. Then you pour oil or alcohol – it depends on what you like – leave it for a while, filter it, and you have a product that you can be sure has not been tampered with. You can also be tempted to send it for a laboratory test. A test costs 100 zloty [21 euros] to know how it came out.

Does Polish law allow you to do this?

Legislation and its enforcement at the official level are two different things. The legislation we have is quite permissive. At the legislative, and state levels, there are even incentives to get into this sector. We have subsidies for hemp cultivation. The Agriculture Ministry speaks highly of hemp. I can't say anything bad about the legislation. But when we go down to the level of the inspectorate, the district epidemiological stations, which are under the Health Ministry, it is not so easy. I think their aim is to ban everything. Just in case.

In Poland, dietary supplements are regulated in a way that requires you to tell the government when you bring them into the country. You don't have to wait for approval, you just inform them so they can check. In the case of our product, it happened that after notification, companies got a letter from the Chief Sanitary Inspector [GIS] that they were not allowed to sell it under the threat of two years imprisonment. This letter is, of course, illegal, it has no legal force, but it came from an authority that has an ‘official stamp'. We challenged this procedure three years ago and only recently received a verdict from the Supreme Administrative Court – now indisputable and legally valid – saying that the GIS is acting wrongly because there is no basis for the ban.

In 2016, when we were still working for the previous company, we got an order to recall right away. Such decisions are only issued when they find arsenic or some other life-threatening substance. They compared our products to designer drugs. Today, the GIS has calmed down somewhat, but we still have to write absurdly low dosages on our products. And yet we are talking about natural products with a wealth of plant-based substances. Of course, the difference between a medicine and a poison is precisely the dosage. And I agree that dosages should be regulated, but sensibly.

I have colleagues who entered the industry a few years ago and are impatient that legislative changes are slow. I have been in the market for 20 years, and from this perspective, I have seen a lot of progress. Yes, it could be faster, but I remember when I ran for parliament a dozen or so years ago with the slogan 'Hemp will create jobs', people were shaking their heads and laughing at me. They said it would create jobs, yes – but in prisons. In the rural constituencies, I was chased away. And today, it is these same places that buy my products. As you can see, it takes patience.

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How did you start out in the industry?

I started out popularising the subject, writing articles about hemp. Later, the subject of its use in medicine and manufacturing caught my attention. At some point, I was researching a piece for Przekrój [a popular quarterly magazine in Poland] on the fact that it is impossible to grow hemp for such purposes in Poland, because there was an absurd regulation that you need to be listed on a register that did not exist. Out of journalistic integrity, I applied for and... received a permit to grow [...] The clerk simply asked the Agriculture Minister to clarify what she was supposed to do with an application from a person who wanted a permit that was impossible to comply with. The law had been in force since 1997, but by 2014, the register still did not exist. The Ministry responded that if no register exists, such a requirement cannot be imposed on an applicant. And that was that. The idea for the article was eventually put on the back burner, but I decided that since I had a permit to grow cannabis, I would try my hand at the business.

At around that time, CNN made a report that hemp extracts could diminish specific conditions. I set up a website with an offer. I'd operate on the basis of "I can supply anything in any quantity," and then worry about how to do it. There were calls from customers. I went from investor to investor to support my work. They laughed at me. But my wife knew how to extract [CBD], some friends lent me money, and it was only thanks to their help that my company took off in 2015. After three years, we reached the stage where I already had 100 employees. A Canadian stock holding company took an interest in the company, and that's how my business career got off the ground.
Maciej Kowalski ran unsuccessfully for the European Parliament in 2014 and toured Pomerania with his "Gandziobus" RV. A year later, he set up a company producing CBD oils. Photo by Łukasz Dejnarowicz / Forum
But you are a millionaire now.

Yes, although I try to live a normal life. I came to this interview on the subway. I have not changed my way of life. I have put most of my resources into further business development. I have been successful in the herbal sector, but there are other areas where I want to grow: textiles, and construction. The funniest thing is that when I sold the company to the Canadians, the same investors who refused to support me in 2014 started calling me and saying they wanted to work with me after all. So I told them that I don't need support anymore, at least in this sector. Let's go into other segments together. And it's the same again: when they hear about textiles, they laugh at me. So let's see.

Do you keep in touch with the people with whom you smoked weed in your youth?

Not very close, but I do keep in touch. Social media helps with that. Out of those 50 people from high school, six are my shareholders. And the funniest thing is that they're not the friends I used to hang out with, they're the people who have always said I'd end up a junkie at the train station. Meanwhile, they saw that a savvy guy made money once, he'll probably make money a second time too.

And were there cases of someone ending up at the station?

That didn’t happen to anyone from school. Perhaps some members of the Free Hemp movement fought to avoid becoming criminals. They got carried away by their imagination. But they were drawn to other substances rather than to cannabis itself. Studies have shown that millions of people in Poland use cannabis, but do not flaunt it. There is no need to go on marches. Cannabis would be just as acceptable as having a glass of wine after work or a beer while watching TV. After all, we don't think that if someone drinks a bit of alcohol, they are an alcoholic and degenerate. The world is not black and white.

– interview by Karol Wasilewski

TVP WEEKLY. Editorial team and journalists

– translated by Roberto Galea

Main photo: An educated 30-year-old woman from rural Poland is most likely to use CBD, according to research by Maciej Kowalski. Photo depicts a cannabis legalisation campaign in Warsaw in 2017. Photo by Aleksiej Witwicki / Forum
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