Why RTD turned to a hemp company when its suppliers fell short

When the Regional Transportation District needed hand sanitizer for its 3,060 employees, and its regular suppliers couldn’t come through, the agency turned to an unexpected source: Hemp Depot.

RTD ordered 2,000 2-ounce spray bottles of hand sanitizer from the Denver-based hemp grower and CBD manufacturer last Thursday, March 26. By Monday, the transportation administrator had received 1,000 of them. The rest is on the way, along with 100 1-gallon bulk refill containers. Fifty-five-gallon drums may be next.

“Obviously right now we’re dealing with a pandemic, and getting PPE [personal protective equipment] is very, very hard right now,” RTD spokesperson Laurie Huff told Denver Business Journal. “My colleagues tell me they contacted dozens of companies, and of those dozens, they have successfully been able to get product from six. … It’s hard because everybody obviously wants this stuff right now.”

Hemp Depot’s pivot to manufacturing hand sanitizer in addition to its bread-and-butter products like CBD capsules, gummies and drinks may seem out of character, and it did require some adjusting of logistics, according to co-founder and CEO Andy Rodosevich. But now, during a time of wary consumer sentiment and slowing wholesale orders, hand sanitizer is making up 20% of the company’s revenue.

“We were able to go from an idea to a product ready for retail sell in seven days,” Rodosevich told DBJ. That meant turning to the company’s in-house scientist to whip up a recipe, designing and attaining packaging, and making adjustments on the production floor.

Extracting CBD from hemp requires isopropyl alcohol, the same active ingredient in hand sanitizer, so the company already had an in with a supplier where other businesses have struggled to gain a foothold, Rodosevich said. Because of alcohol’s extremely flammable nature, the adjustments mostly involved upgrading and changing pumping equipment so as not to spark a fire.

Looking to help

Hemp Depot, which ranked No. 1 in the “Small” category in DBJ’s Fast 50, wanted to do something to help as the nation faces shortages of PPE due to the coronavirus pandemic, but it wasn’t well situated to manufacture things like face masks or ventilators. Hand sanitizer, however, is something Rodosevich saw as a natural fit.

“We are a liquids-filling company,” he said. “Pretty much everything we do is filling stuff with liquids.”

An added bonus: The company hasn’t had to lay any workers off or implement furloughs.

“There’s millions getting laid off across the country, and the CBD industry has not come to a grinding halt, but it definitely has slowed,” Rodosevich said. “When you have an economic situation like this, with people out of work, they immediately eliminate the things they don’t need.”

That could mean multivitamins, he said, or CBD products.

“Our online retail web sales are probably only down maybe 10%,” Rodosevich explained, adding that wholesale orders are down as much as 40%. Some of that downturn is attributable to the mangled supply chain out of China which was the first nation hit with COVID-19, the respiratory disease caused by coronavirus. One $500,000 order Hemp Depot received, he said, is contingent upon vending machines being shipped from the Asian giant.

The Hemp Depot-made hand sanitizer made under its Tru Organics brand, however, is highly successful. Its high-end packaging is not only in the pockets of a third of RTD’s employees — it’s also featured prominently on Hemp Depot’s homepage, where Rodosevich says it’s sold more than 10,000 units at a retail price of $3.99 (wholesale is $2 per unit). He said he’s shipping outside Colorado’s borders and is fulfilling a sizeable shipment to Nevada.

The sanitizer contains vitamin E and aloe, but it does not contain CBD itself.

“It’s a great product, but not as conducive to CBD,” Rodosevich said. “And we didn’t want to make it gimmicky.”

RTD looks to nontraditional partners

“We didn’t have a need for something like this until three weeks ago,” RTD’s Huff said, explaining that they would purchase small amounts of hand sanitizer for events. “… We’re not in the habit of buying mass quantities of stuff like this.”

But it’s not just hand sanitizer the agency needs — like most frontline agencies, it’s also looking for sanitizing wipes and N95 respirators, or face masks, which have been tested and recommended by Centers for Disease Control and Prevention’s National Institute for Occupational Safety and Health.

“Getting this stuff in the hands of the employees at our company who need it is a priority, ” Huff said.

Workers like bus operators and and cleaners are considered frontline employees, she said, and most exposed to public areas and interactions. RTD has distributed more than 1,000 N95 masks to its workers, who are allowed (but not mandated) to wear them. 5,000 more have been ordered but aren’t scheduled to arrive until the end of April. RTD also provides gloves, bleach and disinfectant spray to its employees, who are cleaning and sanitizing vehicles between trips and at end-of-line stations.

“There are essential employees who are working very hard every day to deliver a service to the public that has never been more important,” Huff said.

And if it takes an unorthodox partner like Hemp Depot to make sure it can safely fulfill its mission, RTD seems ready to embrace it.

“We are used to, as an agency, getting creative and thinking about potentially nontraditional ways of finding solutions to the issues in front of us,” Huff said.

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Article: Why RTD turned to a hemp company when its suppliers fell short, Denver Business Journal

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