Episode 34

The Pressure of the Market – THC

In the first episode of this three-part series, we’re looking at the pressures of the THC market. Companies like Budweiser are expanding into the infused drink market with their Beyond Beer product line. While THC has historically been associated with smoking, vaping, and edibles, we’re now seeing major labels expand the marketing into beverages. In this episode, we explore how this expansion will impact the cannabis market and what, if anything, smaller cannabis businesses can and need to do in order to remain competitive and relevant.

SPEAKERS

Jesse Larson, Taylor Evans, Anthony Adkins, Adam Kulbach

 

Adam Kulbach  00:10

Hello and welcome to the higher enlightenment podcast brought to you by higher yields cannabis consulting your seed to sale Business Solutions team. My name is Adam part of the creative team here at higher yields. And today we’ll be discussing THC, the pressure of the market with our guests, Anthony Atkins, Jesse Larson and Taylor Evans. In this first episode of a three part series, we’re looking at the pressures of the THC markets. Companies like Budweiser, are expanding into the infused drink market with their beyond beer product line. While THC has historically been associated with smoking, vaping and edibles, we’re now seeing major labels expand their marketing into beverages. In this episode, we explore how this expansion will impact the cannabis market. And what if anything, smaller cannabis businesses can and need to do in order to remain competitive and relevant. So let’s get on with the show. Well, let’s start by having you guys introduce yourselves. Let’s start with you, Anthony.

 

Anthony Adkins  01:21

I’m Anthony Adkins, Director of Business Development with higher yields. And my role responsibility within the organization is to connect the market to higher yields and connect higher yields to the market. A lot of you know ecosystem development, partnership development account client development, making sure the experience with higher yields is a great one, but also making sure and allocating the correct resources for our clients particular projects. So really excited to be here.

 

Adam Kulbach  01:50

Well, thanks for being here. Taylor, could you introduce yourself?

 

Taylor Evans  01:56

Yeah, my name is Taylor Evans. I am the client support Advocate here at higher yields. My role focuses on connecting with potential clients and partners really do ensure they’re directed to the correct resources on our team.

 

Adam Kulbach  02:09

Okay, thanks. How about you, Jesse?

 

Jesse Larson  02:12

I’m Jesse Larsen, under Director of Design Build and systems implementation here at higher yields consulting. My basic goal with the with firm is to bring the client’s vision to life, paint them the best picture possible, of what their facility is going to be, whether it be retail extraction, cultivation, processing, distribution, and make sure that that facility is not only compliant with the cannabis standard within its given municipality, but also that it’s going to be cost efficient and effective throughout the lifetime of that facility as well. And for the client.

 

Adam Kulbach  02:55

Okay, thanks. Well, onto the first question, what is currently going on in the THC market, and tell us about this new infused drink market?

 

Anthony Adkins  03:06

Well, that’s a it’s pretty interesting, because what we’re seeing is we’re definitely seeing as technology is advanced, and extraction and the creation of infused environments, the beverage industries are really taking note. Most notably, you know, rumor has it that Budweiser is has created a whole separate division, prepping and getting ready. From that standpoint, there are other opportunities that I’ve come across where there’s an infusion of coffee, prod products, whether it be cold brew elements or hot elements that have an infused nature to them. In addition, we’re seeing the concentrate environment where even drinks that are naturally infused with a bitter like a Manhattan old fashion, and a craft cocktail environment. They’re beginning to use infused bitters, with THC. So we’re seeing a wide variety of things that are coming that are coming forth, you know, both on a small scale, but a large scale that, you know, that are occurring, you know, in the marketplace and emerging in the like.

 

Jesse Larson  04:19

Yeah, and piggyback off of that something that we’ve seen throughout our time in the cannabis industry is that a majority of the users tend to prefer one or the other and there’s not a lot of mixing of course, you know, it is situation dependent. However, there’s in the world of vices, the the culture is starting to turn away from heavy indulgence and alcohol and to more into a better alternative that has less detrimental health effects than then booze does and something with the maturity of the industry and each and dividual shouldn’t say individual but each location where recreational cannabis has been allowed or adult use that the correlations between dropping alcohol use. And a rise in cannabis use can be directly tied to that, that that ability for adult use. And so really being in front of the customer trends that are going to be coming down the pipe with any type of mature market is going to be advisable. And that’s something that we’re starting to see a lot of companies not just within cannabis, but that surround cannabis in that might may want to have a piece of that pie, start creating those divisions start doing their exploitation exploration process, in how this can be profitable for them and how they can be there throughout the life of this industry.

 

Anthony Adkins  05:52

Yeah, because And to echo what Jesse’s saying, I mean, what we’re experiencing is almost a whole new product category in the beverage industry. It’s not an infusion of a seltzer. It’s not a, you know, a THC infused beer. It’s not, you know, a THC like I was mentioning before an additive or an A, or a bitter that’s being added to a alcoholic beverage. But we’re actually seeing most likely a whole new category emerge. That is that that is THC based and not added to, or enhanced, or enhancing another alcoholic type of beverage.

 

Adam Kulbach  06:34

So who was leading the way in the THC market?

 

Anthony Adkins  06:38

Who is leading the way? Well, I may, yeah, Jesse, because the initial thoughts I had were with regards to the really the, the emergence of the edible environment and 2021. And how that’s even evolving.

 

Jesse Larson  06:57

So yeah, there’s there’s a lot of different in each different state where adult use is, is legal and regulated. There, you’re going to have your standouts here in Colorado, I, myself in particular, to Keith Cola, I liked them for what they do. However, in each state, it’s going to be a different person leading the way. And that’s one of the biggest issues that we see with with a with cannabis being still labeled a schedule one, narcotic, there is a lot of pull back from the general community to do that research and development. And to get things going, there are companies that are taking the leap, because they see which way the winds blowing. And it from from all all perspectives, it looks like cannabis will will be federally decriminalized, at least here in the near future. And so there’s going to be a lot of opportunities opening up. But to narrow it down to one, one company that’s really leading the way. I really don’t think that there is one. We’re all pretty scattered still right now. But through through the maturity of this of this industry, we’re all going to start coming together. And so I think for that question, Adam, it’s it’s not I we could give you an answer, but it would be kind of disingenuous, because there are a lot of people working towards the same goal. And the more people that realize that the more collaboration can be had within the cannabis industry. And we can help push those people forward. However, right now, everybody is kind of doing their their own thing, which is not a bad thing. Not a bad thing at all. However, just we all have a shared goal, and a shared objectives to be working towards we might be able to help those people stand out a little bit more if that’s what they want.

 

Adam Kulbach  09:01

So what if anything should smaller cannabis businesses do to keep up

 

Jesse Larson  09:07

to diversify and ensure that you stand out with your compliance, your work ethic and your product? Anybody was in the cannabis who’s lasted this long within cannabis. It’s good to be here to stay. But that’s the barrier that smaller cannabis companies need to hop over. Is is that diversification how do they stand out amongst the crowd? What do you do differently because when we get to a mature market within cannabis, it its its similarities to the alcohol market are numerous. And especially when it comes into the type of product that that customer is going to be getting. It really becomes more about the presentation, the marketing the brand, and how that product sets itself apart from everything else on the shelves. And so, for my As the biggest things that smaller cannabis companies can do is diversify.

 

Anthony Adkins  10:05

Yeah, I think that, like we talked about in our last podcast with regards to branding how crucial brand really is. I mean, not only because everybody quote unquote, has the best, you know, raw products, everybody has the best infusion, everybody has the best formula. That may be true in some instances, but still, it’s about building trust in the marketplace, it’s by having having an established or establishing a brand that actually builds the story of why within those organizations, but, you know, I don’t I mean, I believe that, you know, smaller organizations or boutique environments are going to have a mainstay in the industry. Even though you have these multi state opera operators and these brands that seem to to jump, the boutique element is always going to be in play, and to really focus on craft are really focused on brand and really focus on the why. And establishing that trust with with the consumer is, is going to be key and allowing yourself allowing themselves the opportunity to expand, especially within the market that they originate or are operating it.

 

Adam Kulbach  11:20

So what about the importance of tastes and flavors in the THC market?

 

Taylor Evans  11:26

Yeah, I’d say the taste is you know, what a lot of consumers judge right off the bat. So we’re going to fuse out that cannabis taste as much as possible while still providing a mild to potent effect, and kind of diversity and drink flavors. You know, creating a drink that can be sold more than just dispensaries, like restaurants, airplanes.

 

Jesse Larson  11:54

Yeah, really balancing that a lot of people, especially with the younger generations noticed a drop off in stronger tasty drinks. And I and I keep coming back to the alcohol market, but it’s one of the best, it’s one of the best measuring sticks that we have right now to measure against cannabis. And the taste aspects. The amount of drinkers of hearts, whiskey, scotch vodkas. Any any type of alcohol that you would drink rate has gone down as well. And an increase in mixed cocktails, fruity things, it kind of starts hitting all over the place with the style. But what I’m what I’m getting that is that, that taste behind it, a lot of people want to want to have the effects without knowing what they’re happy with. And be able to drink that training or consume that product in a way in which they are not necessarily thinking that oh, this is cannabis, it’s gonna make my restful, it’s gonna make everything I’m not going to smell like eat all day. No, you’re going to be nobody’s going to notice and that type of you know, point hiding the case, I would like I agree with that. It’s a delicate balance between potency, and flavor. Because the more you get in there, the more can override that taste. And so being smart about that, and being able to diversify, and stand out amongst the crowd, that’s going to be the biggest thing was increased. competition comes increased opportunity, but you also have an increased increased chance of getting lost in the sauce with with everybody else. And so just ensuring that you stand out as good product good work as your relationships are good. And, and yeah, it’s, it’s not something that’s going to be easy in the interim, but it’s definitely something that’s going to be worth it in the long term.

 

Adam Kulbach  14:02

Do you think that there’s a major difference between male and females as far as what they prefer, in flavors and tastes?

 

Jesse Larson  14:13

Well, we can kind of put that up to Taylor and I right now, I mean, I prefer to smoke more flour, and do concentrates. Taylor’s tastes might be different than mine, but from a male’s perspective, I tend to like smoking more. That’s, that’s what I enjoy. Taylor Taylor, what do you enjoy?

 

Taylor Evans  14:37

I enjoy smoking flower. So maybe I don’t want to taste that. I don’t want to taste that while I’m taking a drink necessarily.

 

Jesse Larson  14:48

So maybe something we can say for that. It’s definitely comparable between males and females. But the vast majority of people don’t want to be overpowered by the two Taste the smell, or the smoke. And so really walking that fine line, like Taylor said between potency and effectiveness is what we have to is what we have to do. Because if we have too low of an amount in sight of a drink, then there’s really no point drinking, we have to have enough in there, that the customer is going to feel the effects of the THC, but not in to a point where it’s overwhelming. And now you’re couch locked. And you don’t know what dimension here. So it’s definitely a balance. However, I would leave that open to a little bit more of the customer’s preference, each person is different. So yeah, I think that would be kind of a, a customer by customer basis and a client’s profile that would be determinant on the location of where yourself.

 

Anthony Adkins  15:55

Yeah, I think that there’s a lot of new users, of course, getting into the market for the first time, whether it be in the last year or two. And then of course, the ones who are in consideration. That’s why we’re definitely seeing a increase in the edible market. Because there’s less, there’s less profile, lesser of a profile, like the smell, the taste, and those sorts of things, from edibles, moving into the market, to potentially fused beverages in the market that have that, that lesser of a taste and don’t have the the aroma of an alcohol or the aroma of a smokeable flower that can be more discreet in that nature. I think that there, you know, as more people come on board, with understanding and knowing not only the medicinal, the actual physical benefits and the health benefits to, you know, to the product, but you know, how they consume, it could definitely be, you know, a key driver. That was one of the things and my experience, of course, is definitely different than Taylor’s and, and Jesse’s. But I was relatively a new user a few years ago. And, you know, that was one of the my concerns. And that’s where I started out in the edible environment. And the also the ointment or lotion environment for you know, muscle aches, pains, old injuries and those sorts of things. So pretty interesting from that standpoint, but I definitely see an interest in more of a discrete product usage as it becomes more and more acceptable, you know, in our culture.

 

Adam Kulbach  17:39

So how can smaller cannabis businesses appeal to consumers and be chosen over the big brand labels?

 

Anthony Adkins  17:47

Well, again, back to me back to the branding methodologies and environments. Again, I think the story is very big, I think that paying attention to some of the market data from that standpoint, and ultimately, what what kind of what client consumer is, would they consider an ideal customer profile? I think that there should be a lot of time spent and who they’re trying to reach and why they’re trying to reach them. And is it new users? Is it emerging users is that, you know, you know, fundamentally old school users, you know, from that standpoint, we want to use that, you know, that terminology. But it’s really understanding and knowing what they want to accomplish, and making sure that they’re, you know, being true to the brand that they created. And, you know, moving forward and in making it happen, but I really think I call it diamonds in your in your backyard, make sure that you’re locked into community, make sure you’re locked locally, and where you’re, you know, presences if you’re a multi state operator, you know, operator, make sure you’re paying attention to that particular market. And, you know, work and expand out, as opposed to trying to take a look at a global environment, and trying to, you know, build in. It’s anchoring in and understanding and knowing your community anchoring and understanding expansion of those within proximity the community. And then of course, making sure that you have great brand awareness and are building trust in the market.

 

Jesse Larson  19:20

Yeah, yeah. Likewise, to piggyback off of Anthony, there’s a process that we use at higher yields that we found very beneficial and that’s that’s getting to the why Simon cynics Golden Circle role for entrepreneurship and inspiring leadership throughout a firm has really came, came in well in changing the way a lot of people look at entering the cannabis industry. This industry was built on the legality. I mean, at its base point, we’re still a federally illegal product. And so the relationship behind how you got to where you are, the journey that you had, and why you’re doing what you’re doing, really carries a lot of people over that finish line. And and like Anthony said, the brand awareness, or PDF, people are aware of your why and what you’re doing behind this, and what other what other initiatives that your firm is passionate about. That type of differentiate differentiation in the marketplace really carries people forward. And that’s something that we found is not only important, but it but it helps open up the amount of opportunities that are possible to accompany just understanding why they’re actually doing.

 

Adam Kulbach  20:45

Well, I think that’s about all the questions that we have for now. Does anybody have any final thoughts?

 

Anthony Adkins  20:51

My biggest thing is understanding always know that there are gaps and places and spaces for you to succeed. That’s one of the things higher yields really prides itself on in our eight years of experience of being in existence, is really helping organizations no matter how big or small, you know, in this journey, I look at it as this it’s not a it’s not a pie that you’re trying to get a piece of, it’s a bakery that you need to create, and create your own pies, as opposed to trying to think that there’s only a minimal amount of of slices in an existing pie. It’s like go out work, create, establish, anchor and build your own bakery. And so, you know, from that standpoint, the the opportunity is ripe, it’s real. The industry is growing. It’s becoming an essential industry. And it’s just really nice to see, you know, how these organizations can really, you know, make them play and make it make their mark in, in an emerging industry like this. And of course, higher yields can really help along that journey.

 

Jesse Larson  21:57

Yeah, Likewise, likewise, this is, it’s, I’m sure this has said a lot on these podcasts. But it’s an exciting time for cannabis. More government officials and people in power are starting to realize that there actually is something here. And it’s a burgeoning industry. And just like the beginning of the 1900s, getting in on on oil, as soon as those first cars were rolled off the assembly line is where we want to be and making just like Anthony said, it’s not about slices of a pie. It’s about making your own bakery. Because this is this is something that’s not going to go anywhere. And right now supply cannot keep up with demand, especially in new states. So I encourage anybody that is looking to get in. Yeah, yeah. Yeah, raise your expectations. Go a little go go bigger.

 

Adam Kulbach  22:51

Well, that sounds good. So, on that note, I’d like to thank you all for being on the podcast today. Absolutely. We’d like to thank everybody for tuning in today and listening to our podcast. For information on how to follow the higher end layman podcast. Please be sure to check out the description below. You’ll receive all the latest and greatest podcasts news and announcements. Also let you know when we release new episodes. If you’d like to be a guest on the higher enlightenment podcasts, or have ideas about upcoming episodes, please be sure to check out the description below. For information about sponsorship or advertising on the higher enlightenment podcast, please call us at 844 High yield. That’s 844 HHI why I ELD or visit our website at higher yields consulting.com. Thanks, have a great day, and we’ll talk to you soon