Former cannabis exec pivots to mushroom kits: Q&A with Wonderbags founder Zach Dorsett

(This story first appeared at reMind, a psychedelics business platform.)

Zach Dorsett launched Wonderbags in November 2022, immediately after the passage of Colorado’s Natural Medicine Health Act.

After spending the first year perfecting a mycelium substrate that could be pre-colonized in grow bags and sent successfully through the mail, Dorsett has built a growing and profitable customer base.

He recently spoke with reMind, sister brand of MJBizDaily, about the genesis of his idea for the company, the legal issues he had to overcome to launch it, and the results and feedback he’s been getting from customers.

The reMind Psychedelics Business Forum is returning to MJBizCon 2024 on Dec. 3.

What inspired you to start a mushroom grow-kit business?

I’ve worked in the health and fitness industry for most of my career.

About six years ago, I started a company in hemp and cannabis doing product-development manufacturing.

Then I had a life-changing experience with psychedelic medicine and saw for myself its huge potential for healing.

So, when Denver decriminalized psilocybin mushrooms (in 2019), I wanted to get involved somehow.

I had friends working in the space and started looking for ways to add value.

Initially, I thought I would just start cultivating mushrooms myself.

I ordered a bunch of DIY grow kits that you inoculate yourself with spores at home.

I was very excited about it but had a really hard time getting success.

Then I learned that most of these kinds of kits have an 80% failure rate.

So, I was talking to a friend who grows culinary mushrooms for Whole Foods (Market) and different restaurant groups, and he explained how he pre-colonizes his bags and then mails them to clients.

All the customer has to do is maybe give it some moisture or fresh air – but most of the time just leave it on a counter and let the mycelium do its thing.

I thought, “Why isn’t anybody doing this with other types of mushrooms?”

And of course, the first thing you come up against are the federal laws that regulate these types of products.

There’s obviously the federal Controlled Substances Act, which forbids producing any Schedule 1 substance.

With psilocybin, only the mushrooms themselves are illegal, not the spores or mycelium.

But then there’s Section 86e of the U.S. Code Title 21, which basically classifies anything that’s sold for the purpose of producing a Schedule 1 substance as “drug paraphernalia” and also illegal.

How did you navigate that challenge?

I had some talks with my attorney about ways we could sell pre-colonized bags and still stay in compliance with federal laws.

We decided essentially to offer a research-only product, and that’s how we market it.

The only true, intended purpose of our kits – the only authorized purpose – is to look at them under a microscope and observe the mycelium and its structure.

To make sure we’re in compliance with the Controlled Substances Act, we compliance-test our kits with a third party to ensure that they don’t contain any detectable psilocybin.

Then we ship them to the customer, and whatever the customer does with their kit after that is their own business.

We don’t authorize or encourage people to use them for cultivation.

We really abide by those two rules.

I’m a big believer in microscopic research of mycelium.

And our product, pre-colonized mycelium within a transparent bag, has legitimate advantages over other grow kits.

So, people who buy from us have an easier method of studying these life forms.

What’s the failure rate of pre-colonized bags?

Based on feedback we get from customers, our bags succeed over 95% of the time.

That’s with our current substrate of coco coir, which is super, super clean.

We use only OMRI-rated ingredients (Organic Materials Review Institute), which includes the minerals, vermiculite, activated charcoal, etc.

But it took us quite a long time to get there.

We experimented with a lot of different substrates in our early days and last year tried a food-grade, manure-based substrate, which was a real challenging process.

We saw a pretty big drop in performance into like the low-80% range.

But even our worst batches were still significantly outperforming the other types of injectable grow kits.

There’s just a major advantage to having a fully colonized kit: They’re much more resilient.

That said, we do have a blanket 100%-satisfaction guarantee, which basically means that if someone’s not happy with our product for any reason whatsoever, we are always willing to offer you a replacement or refund.

You sell a range of mycelium for culinary, gourmet and cubensis mushrooms. For those customers who go beyond research and actually grow mushrooms, how many flushes do the kits typically produce?

We always tell customers two to three flushes, and that’s what we base our yield expectations on.

It’s definitely possible to get many more; one customer saw a record nine flushes out of one kit, which is unbelievable.

But he lives in a great area for mushrooms, is very detail-oriented and super passionate about the medicine.

In fact, he and I talk all the time, sharing tips and feedback and things he’s learned.

I love those types of interactions; they enable us to be more successful with the work we’re doing.

You’ve been in market for about a year and a half. How’s business going? Are you profitable?

We bring in more each month than we spend, so in that respect, yes, we’re profitable.

But we’re putting everything back into growth and reinvestment.

We also don’t pay anyone on the team less than $25 an hour, which is important to me because that’s where the real, livable wage starts.

We also do things in the community that support the values we have as a company.

But I don’t pay myself a salary currently; I get my income from other work.

I do this because I’m very excited about it and passionate about this field.

Selling mycology supplies is not a huge industry; it’s a pretty small niche.

But for me, working in it is very, very enjoyable.

 Brad Dunn can be reached at brad.dunn@remindmedia.com.