[Jessica Lukas]
Hello, everyone. Thank you for joining us today for our first of three webinars this holiday season to eat, drink and be merry with BDSA. We’re going to cover some interesting insights into the edibles market and then I’m going to be joined by three guests. We have Cam from thunderstorm, Steve from Coda and Ryan from MeriMed. We’ll be jumping through a few different slides and data points on the marketplace what’s going on with edibles.
Then we’ll jump into a very lively conversation. I will call out within your GoToWebinar platform, there is an area in which you can ask questions. So feel free to type in questions if we get to them that I will try to address. Otherwise, hopefully you enjoy the conversation. I do want to give a heads up that the recording and the deck will be available for download after the session. So don’t feel like you have to screenshot. Also, we’re dealing with a few technical difficulties. So the panelists will not be on webcam today. But again, I promise it will still be a lively conversation. So with that, we’re going to go ahead and get started.
So as we think about the edibles market, I just want to cover a few things. Prior to the conversation, I really want to talk about where the markets been and where is it today and some interesting nuggets of what we’re seeing across the different states on the system. The session today is really going to focus on the US edibles market. In our next session on December 8, we’re going to focus on beverages, we are going to have participants from Cann, Trulieve as well as Lagunitas join us and a lot of that conversation is going to focus on the US but also Canada. So for those of you on here from Canada, we will be providing quite a bit of context around Canadian cannabinoid beverages in the next session. As a quick introduction, I don’t want to go into too much detail here we want to get to the topic at hand, but just want to refresh everyone on BDSA. We are the go to for all things market research analysts, analytics and data covering the holistic cannabinoid market. We are tracking everything from what is selling where when, at what price point who are consumers or non consumers the evolution of the market. And we’re constantly predicting where the market will be over the next five years. We do this in the US state by state, in Canada, province, by province and in 38 countries globally.
Today, as we’re going through some of these slides, you’re going to see data points from a lot of different sets. The first thing which we’re most well known for is retail sales tracking. So tracking exactly what is happening in the dispensary channel across states. BDSA is now fully launched in eight US states to Canadian provinces and more to come into this year and beginning of next year. This is going to tell you what is selling where when at what price point, we then overlay that with consumer and shopper insights, tracking who are consumers and non consumers? What’s the evolution of the market? What are specific consumer segments having conducted a true consumer segmentation breaking the market into six mutually exclusive consumer segments? And then assessing kind of what are people doing? How are they consuming? What drives them to purchase what they do, again, you’re going to see a lot of different data points coming from these different data sets. And the last piece, as I mentioned, is really thinking about total addressable market sizing. Where have the markets been? Where are they today? And where do we anticipate them to be over the next five years in terms of legalization regulatory framework, category sales, elicit versus medical channels, as well as adult use channels. So again, providing a full view of the marketplace, where we are, where we’ve been and where we’ll be over the next five years, by tracking market size by province by state consumer and non-consumer segments by province by state, as well as down to granular tracking of sku level data, again across eight US states and two Canadian provinces. So with that, let’s go ahead and jump into edibles. So first, I’m going to cover just market sizing a quick update of where we are. What we’re looking at here is our prediction for us legal cannabis spending over the next five years, as you can see, and we’re just showing us here but if we pulled in our global numbers, us is the largest global legal cannabinoid marketplace, driven by adult use, which is driven by California. So very interesting to think about the opportunity over the next five years building to a US legal cannabis market of 30, almost 35 billion by 2025. And you can see outlined here the top five markets we predict number one, California so California today already the largest global legal cannabis market, and we’re expecting it to maintain that status second, Colorado.
Followed by Florida, Illinois, Arizona. What’s interesting here is if we layered in different countries, California would still be number one, Canada would come into play. But again, really important to think about the size of the marketplace, driven again by adult use, and in the US still today and expected over the next five years for California to still be the world’s largest legal cannabis marketplace.
As we go further and think about the edibles marketplace and where we are today versus where we’ll be over the next five years. edibles account for about 15% of dollar sales in 2020. And as you can see here, we do anticipate edibles to grow at a faster rate than the total marketplace. So if we compare 2025 to 2020. Again, we anticipate dollar sales for edibles to be 2.4x. Whereas the total market to grow at 2.1. So again, edibles are 15% of the market, and we do anticipate growth to outpaced the total legal cannabis sales across all categories. So really important to consider where we are today and where we anticipate that growth to come from.
And we can’t talk about legal cannabinoid products without considering all cannabinoid products, whether those are hemp or marijuana derived. And so as we think about the next five years in the growth of this market, yes, we have regulated dispensary channel in the US. We also have pharmaceutical application, such as epidiolex, the FDA approved CBD prescription medication, we also have the emergence of mainstream retailers beginning to sell hemp derived CBD products, really kicking off with some specialty retailers and e commerce in evolving with time, obviously, as we all anticipate the FDA coming down with regulations for how they’re going to regulate hemp derived CBD as part of the food or ingestible. So as you can see here, as we think about not just the dispensary channel, which is what we were covering on the last two slides but also considering other channels of distribution again, mainstream retail so e-commerce, Food, Drug mass, convenience, natural grocers, vape and smoke shops, you name it that is covered here, specialty beauty. You have your dispensary channel, and you also have prescriptions. You can see the build here to 2025 of BDSA predicting a $50 billion US total cannabinoid market built in large part still coming from the dispensary channel. But then you have this entry of about 13 billion we’re anticipating coming from general retail, really those hemp derived cannabinoid products, and then prescription as well. So really important to think about the sheer size of the marketplace, as we anticipate the growth and getting to a $50 billion US market for many obviously in the industry but also outside the industry, too big to ignore as we think about the evolution. And further if we just narrow into the subset that is mainstream retail channels, so again, general market, mass merchandisers, grocery drug, mass stores like Target and Walmart, C stores and so on. e commerce is even included here. And we narrow this down to edibles again the topic for today. So including food beverages, confections. 2020, we’re anticipating about 15% of CBD dollars and mainstream retail to come from these three food beverages and confections and anticipating that number to almost reach 30% of CBD dollar sales in mainstream retail by 2025. So again, edibles very important component of the dispensary channel, also expecting to drive significant growth as mainstream retail pickup hemp derived CBD products.
So we’re going to jump into edibles specifically and some key topics here. This isn’t going to be typical of my type of presentation, which is walking through a story and kind of unpacking, really what I what I wanted to do today was to provide a lot of Quick Hits, interesting nuggets of information for you all to consider, and for us to discuss with the panelists as we introduce them. So really quickly, I’m going to cover as I mentioned before, a few points from everything BDSA does what does a cannabis consumer who consumes edible book like today? What percent of the population is that? What type of needs or functional benefits are they seeking?
Where are we seeing some interesting plays? What are product attributes within edibles that are driving purchasing? So we’ll run through quite a few different things. And then again, as I mentioned, we’ll introduce our panelists. So jumping right in, as we think about the population consuming cannabis, so in fully legal states, so these are going to be your adult use go states in which we have a retail landscape.
We’re out about 35 to 45% of adults in fully legal US states being cannabis consumers. And of those cannabis consumers, over 70% consume edibles. And further, almost a third of those cannabis consumers prefer edibles. There’s a lot of interesting things we can unpack here, but a couple of quick call outs. One which I’ll say, I’ll say we talk about debunking myths a lot. There’s this perception out there that if it is an edible product, or a premium priced edible, it’s a female consumer. Actually, when we look at those people who prefer edibles, it is about a 50/50 male female split.
Also, as many of you know, especially if you are a consumer, or you’re part of this industry, there is a significant amount of cross consumption. So yes, 71% of consumers consume edibles, and 33% prefer edibles. But even among those who prefer edibles, almost 50% also consume and edibles. Further, almost 40% of consumers who prefer edibles also consumed topicals. So what’s really interesting as you consider consumer targets, consumer segments is also this need to assess functional benefits and needs states, because depending on what consumers are seeking, determines what type of product format best suits that need. Further, probably not surprising, because you’re going to see it in the sales, but gummies are the number one preferred and used edible format among these consumers. The last thing I want to call out, which honestly is very interesting, I’m not sure if we have any beverage alcohol companies on this webinar, but one thing that tends to be surprising is when we talk about cannabis consumers, and we talk about their frequency of consumption. Oftentimes, it surprises people who have worked within CPG or beverage alcohol. So for example, amongst consumers who prefer edibles over 40% consume edibles at least daily. There is a large portion of this population again consuming edibles at least daily. To compare that though, when we look at consumers who prefer inhale levels 67% of consumers who prefer inhalable is consumed inhalable daily. So yes, there is a heavy consumer within edibles. But it’s not not surprising, not to the same degree that we see within inhale levels.
So as I mentioned, by product format, different use cases or need states or functional benefits consumers are seeking. And if we break that down and just look at those consumers consuming edibles on top three reasons for consuming sleep better, relax or be mellow, so kind of that unwind occasion and to relieve pain. So quite a bit here, as we think about the different use cases. So we’ve probably many of you have seen us talk to this before. But there are consumers who exclusively are kind of medical health and wellness consumers then you have your recreational and social and then a large percent of cannabis consumers now are consuming for many different reasons for cross functional benefits whether it’s truly medical health or wellness or social recreational and you kind of see that pop here in terms of relax and be mellow being the number two kind of use case or driver of consuming edibles.
Further, when we think about actually what influences a dispensary shopper so as we narrow the subset of cannabis consumers down to dispensary shoppers who prefer edibles, what are they seeking what drives their purchase, what influences them to pick up the brands and the products that they do? For those of you who are mainstream food and beverage people not surprising to see taste and flavor as number one that’s fairly consistent in all industries, not just cannabinoids price. Also another one that always pops. And the last one is a brand I’ve used before. So trust familiarity, something that people have had a good experience it’s kind of that third driver again this is among dispensary shoppers who prefer edibles. As we think about the next, you know five or six drivers. You have bud tender recommendations, recommendations from a friend or family member again, familiarity trust, a good experience. We continue to see consumers come back to that as we think about cannabinoid infused products. We also have quite a few people telling us high THC content that it is easy to understand the mood or the effect they will get from the product, obviously driving a lot of brands to introduce mood and effect branded products. That it is a convenient format that it has high THC. So again, as you think about those top 10 drivers of purchase influence among dispensary, shoppers preferring edibles, it’s not too surprising.
The really interesting pieces to look more towards the bottom of the list what’s trending and growing in terms of consumer drivers of purchasing, things like growing methods, which actually tend to matter more for your heavy flower, consumers or your cannabis connoisseurs, terpene content packaging, secondary cannabinoids. Again, smaller drivers of purchasing today, but dependent on the consumer segment could be really important to a smaller group of consumers.
As we think about the marketplace for edibles, as we all likely know, not surprising, edibles still dominated by candy, truly driven by gummies. And we see this in the aggregate. So what you’re looking at here is across all the US markets that we track at BDSA, again, tracking down to this level, what is selling where when what price point, the markets we cover, Arizona, California, Colorado, Oregon, Nevada, Massachusetts, Maryland and Illinois, Michigan, ramping up very quickly to be our next us marketplace.
Again, not surprising gummy candy popping on top fairly consistently across markets.
And as we think about that growth year over year, narrowing this down to states that have been legal over the last year, or two years, apologies 2020 versus 2019, seeing edible growth rate and dollar sales, plus almost 25% year over year. So definitely seeing a lot of growth here as we consider new markets coming online, but even mature markets and kind of the growth of edibles year over year. I’m really excited to open up the panel conversation in a couple of minutes. To hear from some of the top brands and some of the top players across the US a lot of interesting perspective. We constantly are talking about the sheer size of gummies and the fact that gummies are still king within edibles. But you know, let’s consider, is there more to edibles than just gummies as we think about this cannabinoid landscape. Ryan, I’m very excited to hear from you shortly but want to just do a quick call out for Betty’s Edie’s specifically in a single state of Maryland. We’re 25 or 29% of candy dollars in Maryland come from taffy. That’s very different than other US states. And guess what Betty Eddie’s makes up 100% of that. So again, very interesting dynamics to unpack as you think about medical markets versus fully adult use legal markets, market maturity, evolution, brands and where they play and where they come from, and their sheer strength market by market. Another great example of this, which we talk about often and will likely come up in the beverage segment coming up. But ripple in Colorado 32% of beverage dollars in Colorado come from powder. In all other states as we think about the aggregate powder only makes up 11% of beverages across markets. So again, really interesting to unpack unique market dynamics state by state, format by format and segments as well as attributes of these products as we break down the CBD market. Another really interesting place to look as we think about the edibles marketplace today across US states as well as into Canada by province. A couple of quick points I want to call out as we think about CBD adjustables or edible products. On average, they command about a 10% higher average retail price for edibles with CBD versus those without, also just met tracking the number of brands as I mentioned, BDSA is tracking each U.S. market. So in those markets 421 of 669 edible brands offer at least one CBD sku in their lineup or portfolio. And the last piece I’ll call out across the markets we track outlining the top five edibles brands. The three highlighted in purple are a top five brand for all edibles products across BDSA track states, but also within the CBD lens specifically, so Wyld, Guana and Kiva popping in the top five for both all edibles products, but also CBD edible products specifically.
Another attribute worth calling out, thinking about low dose micro dosing. So where’s that growth coming from? The preference amongst edible consumers looking for lower dose products, you can see the breakdown here of less than two and a half milligrams two and a half to five milligrams, as well as five to 10 milligrams, and then looking at unit sale share by dosage. So thinking about THC per items per pack in California. You can see the share shift from products offering lower dose per individual unit within a product pack versus those having higher dosages.
You can see that trend line kind of switched over time to be more skewed to those lower dose products, five milligrams or less. So a lot of interesting drivers is kind of what we unpack the edibles market as it is today and where it is going and where we anticipate it to go next.
The last thing, which is always a really good reminder is as we think about where we are today in the market, so let’s use Colorado as an example. Having legalized at the beginning of adult use legal kind of enacted and opened up beginning or January of 2014. We’re now almost seven full years, kind of entering into seven years of legalization. And the evolution is really interesting to consider. So we’ve gone from, let’s say, the beginning of 2017, with about 20 to 25%, of adult consuming to now closer to 40 to 45% of adults consuming cannabis in Colorado. What that means is we’ve had an evolution of consumer segments. So yes, you have your heavy consumers. You have your connoisseurs, you have your all-day everyday consumers, you also have, you know, more recent adopters who consume different formats for different reasons, on a different frequency. And so, as we continue to track these different consumer segments and breaking them down specifically, it’s really important to think about the current consumer base, but also these people who don’t currently consume and BDSA looks at this group of the population who we call cannabis acceptors. They don’t currently consume but they’re open to it amongst this group, and it’s a fairly sizable group, state by state and province by province. These are oftentimes the people who are growing the percent of the population consuming as they evolve with, you know, product availability, De-stigmatization education, more conversations, becoming more accepting of trying cannabinoid infused products, and interesting to think about these non-consumers as entering the marketplace. And what does that path to purchase look like? As you can see here, 50% of current consumers who don’t consume but are open to it would consider an edible format. It is familiar, it is easy for them to understand it’s uncomplicated, kind of in the dynamics that are inhalable, you also see a significant portion of these people considering topicals. So as we consider the edibles landscape, we cannot forget the value and the power that these non-consumers could have in the marketplace in terms of thriving where we’ll be off for the next five years.
So as I mentioned, just wanted to run through some quick hits a quick summary of where we are in the marketplace, how it’s been evolving, and some quick hits on kind of consumer trends as well as attribute product trends we’re seeing across some of the different markets we track. So with that, I’m going to pull up and again, apologies again for the technical difficulties, but want to introduce three special guests today. First up we have Steve Johnson from Coda, we have Cam Clarke from Sunder storm, and Ryan Crandall from MeriMed.
Please come off mute you guys and tell everyone Hello.
Everybody, this we’ve had a few free calls, it wouldn’t be a lot more fun on video, but we’ll have to kind of everyone will have to bear with us as we go through this conversation.
To kick us off, and maybe we start with Steve. And then we go to Cam and then Ryan, want to give us a quick update name. Obviously name enroller is on the slide but maybe a little bit of background on you, what you’ve done, kind of where you are.
Kind of location, kind of where you’re based. Just give us a quick introduction. So Steve, I’ll kick it over to you first.
[Steve Johnson]
Well, okay, thanks, Jess. I am Steve Johnson. And I’m coming from to cannabis, I guess from 30 years in sales and marketing in what I would call traditional CPG or FMCG businesses.
Both kind of personal care and candy.
The last thing that I used to work on was Mars and the Wrigley gum business. And
I am well, my office is in Denver. My house is in Chicago and my markets are Colorado and California.
[Jessica Lukas]
That’s great.
[Cameron Clarke]
Cam quick introduction. Yeah, so I’m the CEO and Founder and co-founder of thunderstorm. thunderstorm is owner of the iconic gummy brand in California. We are a top 10 brand in California overall and one of the top edibles brands in California. We sell throughout the state.
We have licenses in Northern California, Los Angeles. I operate out of Los Angeles and we are now expanding into Colorado as well as Massachusetts. And we, in addition, to our kind of Lana gummies we have our nano five sublinguals and our wind vapes that we sell.
[Jessica Lukas]
Ryan last but not least, did you like the slide I have for you?
[Ryan Crandall]
I love it. I love it. No thank you and I’m I’m thrilled to be on with Steven Cameron. You know, so Ryan Crandall, the founder of Betty’s Eddie’s, a couple other founders as well, but you know, they’re not here. So a couple other founders, we sold Betty’s to MariMed and I am now I run product and sales for MeriMed.
We all operate multiple brands, Betty’s certainly being the most marquee brand. But um, you know, I’m pretty excited about some of the stuff we have up and coming, running parallel to Betty’s and can talk about that shortly. Thank you.
[Jessica Lukas]
Yeah, no, thank you guys so much for being on. Before we jump in. As I typically like to do in these sessions. I’m going to put you guys into a rapid fire of questions. So hopefully, you’re not too embarrassed to answer some of these. The first one which might be a little bit controversial given the topic of this conversation, but do you prefer to inhale or ingest cannabinoids, we’ll start Ryan with you.
[Ryan Crandall]
Man you put me on the spot my answers yes.
No, so I you know, I do both. You know, it depends for me, it depends on what I’m trying to achieve. You know, I’ve been using more and more edibles to kind of try and cut down on the amount that I’m an alien. So that’s been you know, my trend lately. Awesome.
[Cameron Clarke]
So this is Cameron so my Yeah, my I I’m really just an edible person. You know, I tend to be kind of a health nut and so smoking hasn’t been a big part of my life. So I do enjoy our edibles and particularly our, our nanofiber sublinguals worked really, really well for me because I like I like the fast onset. Awesome.
Steve laughs Yeah.
[Steve Johnson]
I’m with Cameron though I quit smoking 17 years ago. So I’m edibles all the way.
[Jessica Lukas]
Awesome. All right. So Steve, I’m going to kick this one off to you given you came from Mars Wrigley. If you could have one mainstream confection brand or format that doesn’t currently exist within the world of cannabinoid infused products what would it be?
[Steve Johnson]
Well, you know, your give me a layup. I was the global guy for Skittles for six years. So I would take Skittles into cannabinoids in a second.
[Jessica Lukas]
Love that. Cameron or Ryan? What one mainstream confection brand or format. Would you love to see infused?
[Ryan Crandall]
I mean, I hate to be. I hate to repeat, Steve. But you know, I’ve been saying Skittles is Skittles and m&ms are two of the biggest opportunities in cannabis. Just because of the dosing and, you know, labeling each each dose I think it’s a homerun for both of those products.
[Jessica Lukas]
Awesome.
Cameron. Yeah.
[Cameron Clarke]
You know, that. Honestly, I’ve seen every different brands, every different format in the book over the last five years, so yeah, I don’t really have a good answer to that question. To be honest.
[Jessica Lukas]
No, you’re good. Um, you know, it’s we’ve had some interesting pre-conversations about the all of the different product formats that are infused across ingestibles and edibles. I think we even had one conversation with this group into the world of bath bombs, thanks to Steven. As well as suppositories came up, which, you know, some people are surprised to hear that those are also infused. Um, last question, but then we’ve seen all of those. We’ve seen all of those products in California. So completely the last question before we actually get to the real content here. And I’m only doing this for the benefit of my BDSA commercial development team. We have a bit of a battle underway on our team’s channel regarding holiday movies, and so we’d love your guys’s thought on whether or not Diehard is a Christmas movie.
[Cameron Clarke]
No, I would say no, it’s not a Christmas movie. But we got
[Ryan Crandall]
I gotta go absolutely. Because, you know, it can’t be Christmas without that.
[Steve Johnson]
Yeah, that’s, I don’t see that as a Christmas movie personally, but
[Jessica Lukas]
I love it. You guys just broke the tie in two to one. It is not a Christmas movie. So I am with the two of you. Alright, so let’s get going and actually talking about the topic of at-hand. thanks for bearing with me. Um, you know, one thing I want to do I want to start with you, Steve as the newest member of the industry. I think it would be interesting to hear from you, you know
What was the factor for you to jump off the mainstream confection world cliff Into the Wild World of cannabis, you know, and why was right now the right time. And then the last thing I want you to address is reminding those of us who have been in it for some time, how not normal some of what we deal with is. So we’d love to just hear a little bit of perspective again, why you jumped in, why was now the right time. And what’s kind of been that biggest eye-opening experience thus far.
[Steve Johnson]
That’s a pretty good order.
So I started looking at this business actually a while ago. And the thing that was interesting is with cannabis is similar to what’s going on with the microbrew industry and things like that, in that it is such a new industry or such new category, that a lot of it is being invented as people go along. And that’s just hugely attractive to me. And I think it’s a ton of fun for a lot of the people that are engaged in this business. And because you truly are creating something kind of from nothing, and which is just a fun thing to go do it work every day.
When you ask me about you know what’s different, I will honestly say that there’s something weird that happens basically every day that I didn’t expect. Some of them are happy surprises, some of them aren’t. And I think it’s really interesting when you start looking at the category and you look at the perception versus the reality once you kind of peek behind the curtain. And I think one of the best examples of that, for me is when you look at the the retail structure, and or the entire retail environment, I guess within cannabis. And as you as you look at kind of how the dispensaries are laid out in the market, it basically from a CPG perspective reminds me a great deal of what you look at from for example, a convenience class and trade. And so you know, there’s mom and pops or big chains, there’s everything in between with different levels of sophistication and expertise within those retail environments. And then you go into dispensary and as you mentioned earlier, the role of the bud tender in how people decide things and personal selling to me is so different. The the personal selling level is closer to what I would consider more of a, like a high end cosmetics counter versus a convenience store. And so those kind of that kind of dichotomy that kind of shift between kind of what it looks like from the outside and what it’s like on the inside, I think are some of the things that really continue to surprise me on a daily basis. That’s really helpful to hear.
[Jessica Lukas]
I know you’re What are you? Are you six weeks in?
[Steve Johnson]
Oh, no, I’m eight now
[Jessica Lukas]
Oh, eight you’re you’re a veteran now. Um, it’s Yeah, clearly cannabis yours. So, Cameron and Ryan, you know, being two people who have been quote unquote, in it for some time. You know, what’s, what’s your response and your thoughts, as this industry becomes more and more attractive. And as we’ve seen an evolution, I would say, really over the last few years of kind of an industry that’s now attractive to CPG, beverage, alcohol, tobacco companies, but also, you know, leaders coming from mainstream CPG companies and moving over like Steve said,
[Steve Johnson]
Yeah, I would say that, you know, we’ve seen this trickle start a few years ago, you know, we’ve been approached over time by a number of folks that were kind of, you know, tired of the CPG thing and felt like they had a lot of expertise and wanted to create some excitement in their life. So they came to the challenge of cannabis cannabis.
You know, I honestly, I personally welcome it, I think there’s, there’s a lot of value that, that this industry can can gain from from traditional CPG. But I do have to warn that what we have seen is that a lot of times that CPG experience doesn’t translate directly into into the cannabis industry, right. And the cannabis industry in comes from, you know, an industry of revolutionaries, right. And there is a lot of people that have a lot of folks have been fighting in the trenches for years. You know, particularly here in California, where we are aware, you know, they have been having new numerous challenges, you know, with the, with the regulations and with the feds and all kinds of things. So, you know, that that mentality still carries through very deeply and into our industry here. And that is quite different than CPG at the same time, you know, CPG You know, it is a CPG product, right? I mean, this is something that consumers are are buying, as you know, that looks like you know has a lot of CPG aspects to it. Is highly regulated. So you have to pay close attention to that. So we’re in this very strange confluence of an industry full of revolutionaries with, you know, these these folks from, you know, traditional, traditional industries. And we’re all learning from each other, and building something which is which is not CPG but is CPG highly CPG sort of trending, I would say or will be influenced either by CPG. So, it is, it is an interesting dynamic that will that were, that were experience experiencing.
[Jessica Lukas]
Yeah, no, I completely agree. I mean, I spent most of my background within kind of market research CPG beverage, alcohol, so completely understand how different it is, and what I actually has been really interesting. Being with BDSA now for three and a half years, just kind of watching the evolution of the market. You know, three and a half years, when I first started BDSA, we had to convince people of why they needed data to make decisions, you know, and now, as the market has become more sophisticated, more more mature, you know, the conversations within this space are no different than what you know, I used to have with, you know, a Miller Corps and Abi, Nestle or, or a Pepsi CO, for example. And so, really exciting to see the evolution of the market. But to your point, it is super complex. And, you know, Steve can attest to this, him and I had quite a few conversations, just talking about all of the challenges. And you know, it’s amazing, the industry has been able to build what it has, given everything that it’s been up against. Cameron, I’m actually going to keep this on you, if you don’t mind.
You mentioned at the beginning, you know, obviously top brand top player, not just in California, but the sheer size of California makes you a top brand across the country. As you think about moving from West Coast to East Coast, What What was that process? How do you think about expanding a brand across the U.S. as you go from California to Colorado to Massachusetts? And, you know, thinking about it in terms of branding, messaging, but also kind of scaling and expansion?
[Cameron Clarke]
Yeah, I think that’s a very, very interesting question.
And salient today, because you have a number of brands, which I legit, you know, which I call a, which I call the other big West Coast brands that are really starting to pay close attention is starting to move east. Right. And I include Colorado brands and kind of this West Coast brand concept. You know, we hadn’t you had a number of brands early on that did that did licensing deals and other states. Meanwhile, you had the big MSOs, starting mostly in the in the in on the East Coast, where they were able to raise a bunch of capital because of the limited licenses and they moved, they moved west. And so now what we’re having what we’re finding is that, you know, the lead those licensing deals from other brands, you know, they’re still out there. But what’s really happening is that is that the brands on the west coast, that have been, you know, fighting the fight for, you know, four or five, six years, or longer now have enough market share and enough size and enough sophistication and enough technology tools available to them to really have a proper go in other states. And so what you’re seeing is, you know, brands moving into other states, and using a lot of the techniques that they’ve learned in the trenches, for example, here in California, or let’s say, or even Oregon, right, where they have their, their marketing in order they have their strategies in order they have they have enough resources and capital that’s been built up, because there many of them, most of them are profitable now are starting to be that they can actually go into these other states. And, and make a real effort and make a real effort there and have a go at it. The truth is that, you know, you’re seeing this kind of conflict, another confluence of, you know, the MSO strategy versus individual brand MSO strategies, right. And so that’s going to be kind of one of the bigger battles of the, of the next year or two, I think, is it How is how brands really positioned themselves in these other markets. And I would say one of the things that’s it’s crucially important is that, you know, this we take from CPG is it it’s a marketing game, right? And you have to have the resources to properly market your products. You have to have your positioning appropriately lined up. You have to have, you have to build trust with your consumers because that’s all a brand is within your within your market and then you need to you expand that trust into these other markets as well. And, you know, there’s a variety of ways that you do that. But most importantly is that your messaging has to be on point. And your and you have to be consistent. I mean, having a really good, reliable, consistent product is the starting point. But really, the game is about being able to appropriately build your brand in these other in these other states. And that takes capital, and there’s a dearth of capital in the industry right now. So, you know, for a variety of reasons. So, you know, the brands are doing a lot of self-funding of this expansion strategy. So it’ll be interesting to see how it all plays out.
[Jessica Lukas]
Yeah, really helpful. And, Ryan, kind of put you on the spot here a little bit to what about the flip? So being an East Coast based business moving west? You know, how do you think about moving into, you know, markets that have kind of these, this brand history and a large number of brands across categories? We’d love to hear kind of the East West movement as well.
[Ryan Crandall]
Sure, yeah. I mean, I so I largely agree with a lot of what Cameron saying there is, there is a major shift happening, and, you know, brands that are on their own birth brands that are owned by MSOs, first, you know, licensing agreements versus, you know, owning their own licenses. So, there is there is a lot of a lot of things happening at that layer right now, that are, you know, both historical current and future. Right, and so, understanding, you know, what each market, you know, brings, and really kind of offers in terms of the way that you can go about tackling it, you know, we, you know, truthfully, we had a really bad experience early on moving out west. So we didn’t start in East, we, we were based in Massachusetts, but we started out in Colorado, back in 2014, and had a really bad partnership. And, you know, not every partnership is great. So, you know, we learned a lot in that time, and it costs us a lot of money and energy and, you know, growth that we could have had, you know, but it really kind of made us open our eyes, like, hey, we’ve got to really have a lot of control over the quality, the consistency, the production of the products, to be able to grow this thing the right way. And so, you know, we, you know, we see a lot of brands exploding, and, and really, you know, adding more states on very, very quickly, you know, we feel pressure from that. And, you know, we’re absolutely adding more states, but we’re doing it with a consistent and conservative approach. And really making sure that our partners, if they’re our partners are fully vetted, that there are really good solid contracts in place, and that it’s a win win for both sides. You know, our ultimate goal is to become a category leader in every state that we participate, we don’t really want to participate in a state unless we think we can be a category leader. You know, without being too long winded on the point, right, like we’ve entered some markets that are fully medical, and we you know, we do really well, in Maryland, we do really well in Rhode Island, we do really well in Massachusetts, you know, we just launched Puerto Rico, which is a medical market, a unique market, and we just launched in Vegas. So you know, all different types of competition spectrums. And each one of those markets, the interesting thing is that the feedback around our product has been very similar across markets. And so even though we see different levels of competition, you know, it really does boil down to having a quality product with different differentiated capabilities, and a brand that people trust. So I you know, I think east west or West east, they’re both challenging, they both have their own unique circumstances and things to consider. But, you know, I, I feel like it’s a great trip to go east to west and it’s a great trip to go east west East right now. Just understanding what the what the challenges are.
[Jessica Lukas]
Yeah, and actually, bad slash good segue to my next question, um, for all of you, you know, speaking sorry, of a trip going east to west or West east, not a lot of us are traveling right now. So as we’re entering kind of COVID, shutdown 2.0 any major concerns? Um, you know, coming from the three of you guys, are you kind of feeling like, you know, we made it through the first which was, you know, dispensary shutting down reopening, the allowance of curbside and states that didn’t have it before the allowance of delivery, obviously, the Massachusetts and Nevada shutdowns being a big impact, as we kind of enter this next stage, kind of what’s your initial thought and these could be Quick Hits quick answers, but we’d love to hear from you kind of given where we are today.
[Steve Johnson]
I hope it’s short term pain. You know, I don’t hope for short term pain but I hope that it’s short term in nature and that, you know, we get out of this quickly. I’ve you know, I don’t think it’s impacted the cannabis business dramatically overall, although we have had some shutdowns here and there, the business probably would have grown a little bit more than it than it did. You know, wasn’t the case. But I don’t believe it’s going to play a major factor in the business. The next six to 12 months.
Yeah, I would add to that, that, you know, this industry is constantly been barrage by headwinds, right it is it has been the most complicated and complex matrix to navigate that I’ve ever seen in any of my business experience. Right. So, and everybody that I meet in this industry is just used to pivoting, they haven’t, they’re incredibly dynamic. And, you know, one thing that is that is, is, you know, fundamental is that cannabis is here to stay, it’s growing every single day, people love the product. And, you know, we just have to navigate, you know, attack our, our boats here and there to be able to get through whatever challenges, you know, will continually be the approach with.
Perfect, you’re just gonna he’s gonna chime in on that though.
[Steve Johnson]
The one thing that I think is really interesting about this one is it I think it almost kind of advantages edibles to begin with. Because people are sitting at home, it’s an easy way to participate in the category. Particularly if you’ve got a brand or something that you already know and love and have had a good experience with. The other thing I think is gonna be really interesting was this is how this impacts delivery. As you said, just there’s, there’s you know, we already saw it kind of changed curbside and some of the other things that took place with the previous round of this, and now that delivery is starting to legalize in multiple markets, I think that it may accelerate that and potentially open up a whole new group of the folks that are that are, I guess, Canna curious, and not participating yet, because you can just have stuff sent to your house. You don’t even have to go to a dispensary.
[Jessica Lukas]
Yeah, completely. We’ve talked a lot about that, too. We were doing weekly COVID webinars, March through June, I think. And we did discuss that a lot of like, what is the new requirements or expectations of businesses across all industries. And delivery is a big factor there, you know, whether it is delivery of cannabis or doordash, grubhub groceries, you name it, like this new expectation of of what is normal. So, really glad you call that out. Steve, now that I have you, one interesting question for you to consider, you know, coming from CPG, and specifically me coming from a innovation market research background. You know, one question I constantly have is, how do we in this industry of void, kind of a one size fits all innovation strategy? How do we ensure you know, we maintain like niche products and upscale premium and regional players? And, you know, all of the assortment that we have today, any thoughts on kind of how do we better kind of push innovation and not stifle it as kind of quote unquote, mainstreaming happens?
[Steve Johnson]
That’s a really good question. I think it’s interesting because we look at it’s similar to I think, what what you’d pull in from CPG? I mean, you’re looking at your consumer base, what are the needs they have? What are the jobs that need to be done by your products? And what’s the best way for you to deliver that based on what your company focuses you know, what you stand for? You know, in Coda, we make really delicious chocolate and and jellies right now, and they’re really consistent in their delivery and everything like that. And how do you then spread those products against the different needs that your consumer base is looking for? I think it’s also very similar to I guess, general market, because a lot of the things that I see happening in the in general market confections, for example, are kind of the same behaviors and things that are taking place in cannabis edibles, and or infused edibles. And so I would guess that over time, it’s our job as manufacturers to continue pushing into those areas, using the innovation using the technologies that are available, the things that are coming online, or just freely, stealing and plagiarizing from general market as we bring that stuff over into, into the cannabis category, to continue to delight consumers and make sure that we’re meeting what their needs are, and inviting and making it accessible making the category accessible for the people that are open but aren’t participating yet.
[Jessica Lukas]
Great, um, Cameron or Ryan, anything to add to that kind of idea of ensuring that, you know, we don’t end up in this one size fits all. mainstreaming and no innovation and assortment. Any additional thoughts there?
[Cameron Clarke]
Yeah, I’ll address that. I think it’s a bit it’s a it’s a big challenge. I’m very much in favor of big brands. I think that boutique brands offer a lot of interesting diversity or variety for the consumers. I think it’s hard, you know, because there’s just a certain way level of a certain size that you have to be to be able to afford regulatory costs and being able to, to compete in the end what I call trench before I’m trench warfare that that we have to compete in every day. So I do think it’s something that the industry should should do when they can to help support the, the smaller growers and the boutique folks that are there. They’re being innovative, actually, innovations, a very important part of our company, I have a science background. So we’ve been innovating from the very beginning, we’re the very first company to launch a nanotechnology product five years ago. And, you know, we believe very heartily in innovation, and I think it’s gonna, it is super, it’s very, very important. But, you know, it’s interesting, you also have to pay attention to the consumer. So when we started here in California, there was a cannabis and almost everything you can imagine except shampoo, right? There was, you know, we had chips and hot sauce and pot, you know, pasta and salsa, and all kinds of stuff. But the consumers voted with their pocketbooks. And, you know, really, to my surprise, I mean, gummy, the gummy category, you know, where it’s gone. And last five years, it’s just been mind blowing to, to us as a brand. We never really expected it to be as big as big categories it is and so you do have to pay attention to what the consumers want as well. And, you know, some things will be attractive and other things won’t know
[Jessica Lukas]
Really helpful. Alright, last question for all three of you. Um, I’m going to start with Ryan. So I hit on a couple of points. I’m not going to say they were mind blowing and insights but around, you know, this evolution of kind of CBD introduction and its power and ingeststables. You know, a little bit on low dose micro dosing, we’re constantly seeing faster onset. If you can make one prediction, Ryan like, what’s next? What’s the form the technology, the innovation that’s going to change the game and potentially drive edibles to continue to steal share from inhalable?
[Ryan Crandall]
Yeah, so great question. And, you know, this truly, the reason why I got into cannabis is to answer this question. You know, I feel like all of the exciting things to happen in cannabis are still ahead of us. Right and and it’s not necessarily dependent on legalization, it’s more for me personally dependent on research, right. So when we start to isolate all the cannabinoids, do research on each individual cannabinoid, each individual terpene each flavonoid, then start to, you know, compound these things and create combinations, and then do real medical research around them. The products and capabilities that come out of that research are going to be, you know, the next big wave of, of greatness to come out of cannabis, in my opinion. So, you know, in our different labs and research places, you know, we can, we can go out and do our study groups and believe that we have the best sleep product or the best anxiety product and, and we may for a time, right, but I truly believe until the real medical research has been done and can point us down a path of, you know, what are some of these combined affects of these of these cannabinoids and compounds? You know, that’s what excites me the most. And I think that’s going to drive the most amount of innovation in cannabis.
[Jessica Lukas]
That’s great. Um, Cameron, anything to add on kind of what’s what, from your perspective is the next thing?
[Cameron Clarke]
Yeah, I would, you know, I would just layer it on on top of that a little bit. And to be frank, I, you know, I like the concept that cannabis is personal. My business partner and I have very, very different experiences on cannabis. A lot of it has to do with with our genomes, right. And so we’re working with a company to test the genome and to try to personalize a cannabis for, for the differences between you know, human beings and, and what works best in our in our system. So part of it is being able to compound products that are that are that are unique and different and very consistent. But other part of it is also understanding why some people consume a little bit of cannabis and go sit in the corner and why other people can go and socialize and party right. So I think that’s going to be one of the one of the big innovations. And personally I know I personally like the beverage market, I think, I think it’s going to take a big bet beverages are gonna are going to take a chunk out of the Alcohol Beverage market, and as consumers realize they can wake up without a hangover in the morning.
[Jessica Lukas]
I love the unprompted segue to our next webinar in a couple of weeks that’s going to focus on beverages both in the US and Canada. Um, anything to add there as you think about kind of your bets on you Know what comes next? And kind of what are we what are we chasing in terms of innovation?
{Ryan Crandall]
Well, I personally go back to some of that you said just I think one of the things that’s interesting, cuz you’re talking about stealing share from from kind of the other side of the business. And I don’t know that we need to steal. Sure, I think it’s more about building the entire business. And I kind of lean in with Ryan, a little bit on sort of the purpose-based products, because I think that that gives us an opportunity to invite consumers again, that you’ve got folks that are already participating in edibles, they already know what they like they they know what the impact is on themselves, and how they drive that forward. But how do we bring some more folks in and make it easy for them to understand the benefits of the cannabis category? Even before the research that is done that, you know, Ryan’s talking about? How do we start to bring some of that to life for people so that they can understand that, you know, further in their morning, I want this in the afternoon, this probably makes sense if I have anxiety if I have pain, if I have this, and just make it really, really simple for them to navigate what is arguably an insanely complex category. I mean, to Cameron’s point, there’s, there’s any kind of product under the sun has got cannabis in it now. I just saw some really good recipes for butter. It’s apparently make Thanksgiving better for everyone. But so how do you start to cut through some of that complexity for folks that, you know, a third of the country that’s still interested, but hasn’t come to play with us yet? No, I
think that’s a really great point. And you’re you’re absolutely right. And we talked about all the time is like the sheer number of different product formats. You know, people constantly ask like, what’s, what’s the surrogate market for this and mainstream and there isn’t one. You could argue like, is it gluten free? Is it protein and like nothing fits? Nothing is a good surrogate. Um, you know, I agree with your your comment, Steve about C store convenience channel being like the most similar in terms of very sophisticated retailers and kind of more independent retailers and everything across the board. But again, you think about the number of product formats, and then the use cases. So it’s not just what all products are infused, but you think about all the needs dates and occasions, again, from a 100% medical use case, you know, going through chemotherapy and using cannabis to get through to, you know, health and wellness driven to using it before, during and after a long run to relaxing and winding to just wanting to get high. I mean, you name it, and it’s there. And it is very complicated. So you know, I definitely love the idea of thinking about, you know, consumer segments and need states have occasions in the product formats that fit the right need.
[Jessica Lukas]
Alright, so with that, we’re at time. Thank you guys so much for joining us today. As I mentioned, the next session is on Tuesday, December 8. Again, at 1 PM mountain time, we’ll be focusing again, eat, drink and be merry. So next up is drink. So we’ll be talking about cannabinoid beverages both in the US and Canada. Special guests, Luke from can we also have guests from Lagunitas and Trust joining us so it will be another lively conversation. On Steve, Ryan, Cameron. Thank you guys again for joining us. For those of you still on the line on the recording as well as the deck will be available to attendees.