Founders of Sonoma County’s Hip Chick Farms start Oregon CBD snacks venture
After rocketing to national recognition with their health- and ethics-minded take on nuggets and other frozen chicken items, the founders of Hip Chick Farms have moved out of California and into hemp-infused snacks and a new state of mind.
Jennifer Johnson, 53, and Serafina Palandech, 45, about a year ago sold their controlling interests in the Sebastopol-based company they launched in 2011–2013, and venture capital owners later sold the business to an undisclosed buyer, according to Palandech.
Already having turned over the CEO role to an outside professional hired in May 2018 and moved her family to Oregon, she wrapped her role as president of Hip Chick Farms in February.
Hip Chick Farms was set up as a capital-intensive business because of the certified organic and humanely raised chicken that went into it, Palandech said. That led to over $8 million raised via crowdfunding, small-business loans, microloans, angel investments and two rounds of venture capital, according to her LinkedIn profile.
“I wanted to grow very quickly,” Palandech said. “And we did that, but along with that came the need for to raise a lot of capital to support that very rapid growth.”
Before she left, Hip Chick Farms had grown to be distributed to 18,000 locations in every state, with the biggest sales coming from Kroger stores as well as from the QVC television network, Walmart, Whole Foods Market and Safeway.
Nearly a year ago, after the CEO was hired and a second round of funding was in progress, Johnson, Palandech and their daughter, now 9, moved to a lavender farm they purchased in Boring, Oregon, a southeast suburb of Portland. They went there to be closer to family, especially, Palandech's mother, she said.
Then came the sale of Hip Chick Farms.
“That wasn't expected, but that's what happened,” Palandech said, declining to elaborate because of a nondisclosure agreement. “And so then I was like, ‘What do we do now?'”
Their new home provided fertile soil for the couple's new venture: A Boring Life, which in July launched its first snacks.
Each is infused with with 25 milligrams of hemp extract per pack and a peppermint-flavored tincture with 1,000 milligrams per dose. The first three snacks are sweet and spicy walnuts, dark chocolate and sea salt almonds, and roasted almonds with lavender. The packs retail for $7.99 each, and the tincture $50.
The key component of the hemp extract is cannabidol, or CBD, a nonhallucinogenic compound from cannabis plants such as hemp and marijuana that has become a popular product additive for medicinal purposes.
Hemp is high in CBD and has negligible THC, the main cannabis compound sought for its psychoactive qualities. Marijuana commonly is high in THC.
The brand name plays on the town's oft-self-mocked moniker and on their desire to downshift from the anxiety of the last venture.
“I was honestly bored,” Palandech said. “I'm at heart an entrepreneur, and I really didn't know what to do with myself.”
She began to explore the reasons why she couldn't enjoy the quiet, and that led her to read articles on the connection between boredom and inspiration, between monotony and innovation.
“It happens when I'm washing the dishes,” Palandech said.
Johnson and Palandech had been using CBD medicinals to manage anxiety, but Palandech hadn't thought of starting a cannabis-related business, as she didn't grow up in a family that used it.
“I think that it can heal our psyches and heal our bodies and heal this environment that we've destroyed,” she said, pointing to ongoing research on how industrial hemp plantings can pull toxins out of the soil.
But while Hip Chick Farms was a trail-blazer for locavore frozen meat, A Boring Life has presented entrepreneurial challenges that are anything but snooze-worthy. The business processes, legitimization of a venture and industry professionalism in the emerging legal cannabis industry aren't as developed as Palandech has been used to.
Uncertainty for the federally regulated financial institutions while marijuana remains a tightly controlled substance under U.S. policy left the couple's company at the outset without a bank, and they later moved it to a credit union that would handle the accounts. Then merchant transactions processor Elavon dropped A Boring Life along with other cannabis companies, but then it got into Square's pilot CBD program, announced earlier this year in a reversal of its position.
And the network of distributors Johnson and Palandech worked to bring the chicken into so many stores is not helpful for the moment, because many are awaiting new rules from the U.S. Food and Drug Administration on CBD products. Legislation late last year removed some hemp-derived CBD from the controlled-substances list, but the FDA hasn't issued regulations allowing products to list the compound as a dietary supplement or ingredient in food and beverages. The agency held public hearings earlier this year.
So for the moment, that leaves direct-to-consumer sales as the main route to market for the five-woman A Boring Life.
They are self-producing and –fulfilling orders currently.
But Johnson and Palandech are planning gradual growth for this venture, to avoid the quest for capital that can with their chicken venture. The five-woman business is self-producing and self-fulfilling orders currently. They received a $130,000 investment from the Canopy Boulder Accelerator Program, a cannabis-focused venture organization in Colorado.
“We just launched three months ago, so we're still very small,” Palandech said. “We're able to handle the volume at this point. Eventually, we will move to a co-packing environment.”
The hemp for the products comes from a certified organic farm in Colorado. Testing happens at the farm at harvest. After carbon dioxide extraction, the hemp oil is tested. The distilled extract is mixed with organic coconut oil and sent to the company for inclusion in the product recipes, Palandech said.
The products are sold in about 70 grocery stores today, in addition to DTC via Amazon. According to its crowdfunding campaign documents through MicroVentures, the company is approved to sell the items in about 80,000 convenience stores nationwide through the Asian American Trade Associations Council. Palandech said that could move forward in a few months.
As of Sept. 6, the company had raised over $48,000 of the $25,000 originally sought in the crowdfunding offer, which is set to close Oct. 14, according to the crowdfunding site and documents.
Jeff Quackenbush covers wine, construction and real estate. Contact him at firstname.lastname@example.org or 707-521-4256.