Market Entry Strategies for Cannabis CPG Brands

{}Introduction

Host: Hello, happy Thursday everyone, welcome to the MediaJel podcast, where we cover the latest in marketing trends and strategies that are most effective in growing your cannabis dispensary, delivery service, or brand. We help cannabis companies advertise through paid search, SEO, and programmatic advertising here at MediaJel, to increase foot traffic, awareness, and e-commerce sales. I'm your host, and today we'll be discussing cannabis brand market expansion. I'm super excited to introduce Joe Hodas, who's the CMO of Wana Brands, to today's podcast. Joe serves as the chief marketing officer for Wana, where he's responsible for generating revenue by creating innovative and refined marketing campaigns for the organization, as well as helping grow Wana's brand market share and customer loyalty. Joe's been in the business for a long time, an early professional and marketer in the cannabis industry, working with Dixie Elixirs as his first CMO role, helping build that into one of the most recognized national cannabis brands. Welcome to the show, Joe.

Joe Hodas: Thanks, appreciate it. You know, it's funny, I always feel like, when somebody reads a bio on me, I'm like, yeah, I gotta rework that thing, so I'll keep that note for this time.

Host: And just thinking back to my career in cannabis, you're one of the first people I met on the marketing front, back in like 2014, 2015, so it's nice, a familiar face that's been in the game for close to eight years now.

Joe Hodas: It's probably, I would think, it was when MJBiz was still at the Rio, that we probably first met in person, so it was a much smaller MJ.

Host: Indeed, indeed, times have changed. Well, excited to have you on and share with our audience different ways they can break into new markets.

Joe Hodas: Thanks, I'm excited to be here, and I appreciate the opportunity — this is one of the biggest challenges I think brands have, figuring this out, and, by the way, no matter what we talk about today, I can tell you it's not totally figured out, there's no secret sauce, no perfect model, I can always speak to experiences I've had, what does and doesn't work, but, at some point, hopefully there will be a day where we can expand the way all other brands in all other industries do.

Host: Yeah, we just need to be at the same level as everyone else, and given the same shot — 280E, and some of these other cannabis-related factors, like crossing state lines and all these other challenges we have to deal with that other industries don't, those need to be fixed before you really have a shot to compete at the same rate as other industries.

Joe Hodas: Yep, indeed.

Are You Really Ready to Expand?

Host: I guess, to get things started, how do you know you're truly ready to expand your brand into a new market?

Joe Hodas: It's a great question, and one that I think often doesn't get asked enough, or looked at enough, because brands will — I've seen it a million times — "okay, we got a product, we got a little traction, what's our next market, how's our growth," so people are looking at brand market expansion as a way to fuel growth, which certainly is a strategy, and not a bad one, but what happens is, because of the complexity of this industry, when you don't have, first of all, dedicated resources — critically important, you've got to have a team whose only job is to focus on market expansion. At Wana, for example, we have really two sides of that — we have a team focused operationally on that expansion, and I also have a brand expansion team, strictly focused on supporting that market expansion in each new market we go into, and then, collectively, supporting the expansion process as a whole. So having the right people in place is one thing. Two, having really strong and clear SOPs, not just the SOP, but a way to ensure your partners adhere to it, so that when they get the information and you do the training for them, they can follow it, and you can make sure, from a QA perspective, that they're following what you've asked, and then, lastly, that there's never a point where you have to worry about a deviation from an SOP because there wasn't information — the SOPs have to be as complete as possible, so really testing those, making sure they're pretty foolproof, is critically important. And then, lastly, I'd say, ensure that if you have limited resources, which most brands and most cannabis companies do, to a certain extent, that you fully utilize the resources in the existing market you're in before you say, "okay, we're going to the next market," because every time you do that, you're bifurcating those resources — so make sure you're mature enough in a given market that you're ready to take it to the next.

Host: Yeah, make sure that if you're owning your category, like edibles, make sure you're owning that category in that state, and you've done everything you can to get as much market share before you even consider moving on to another state, because then you have to find partners, there's a whole other level of complexity to that.

Joe Hodas: Absolutely.

Partner Models: Asset-Heavy vs. Asset-Light

Host: Can you walk us through high-level bullet points of what a brand needs to have in order before even considering expanding to a new market?

Joe Hodas: I think one thing, and you just said it, is partner — most brands currently, there's really two different models. One, you go into a new market, secure your own license, secure your own facilities, manage that entire end-to-end process, which is extremely capital intensive, and requires hiring people on the ground locally, and all those other parts and pieces that would maybe slow expansion for some brands — or you go more of an asset-light model, which is what Wana does, and you find a partner. But the challenge with that, of course, is finding the right partner — there's a whole qualification process, and, to use a fairy tale example, you gotta kiss a lot of frogs to find that right partner, that can be aligned with you philosophically, culturally, that knows how to produce, knows how to handle distribution and all the other intricacies of each individual market. So that's critically important, finding the right partner. Two, make sure you're resourced — sounds simple and obvious, but understand that whatever you think it's going to cost you to expand to a new market, double or triple that — and if you don't have that cash set aside, not being funded from your existing operations, going month to month, without that set aside to do the expansion, it's going to be challenging, you're going to run into issues. Three, and I generally don't promote lawyers, but you gotta have a strong contract, a legal team that can look at a contract and make sure every single question is answered — honestly, Wana didn't have that for a long time, we didn't have a really iron-clad contract with a lot of legal input, we've gotten there, but we've gotten there painfully, learning from the mistakes along the way. But if you start out with a really strong contract, and everyone's clear on the terms, what revenue shares look like, what production responsibilities they have, and it's all written down, you'll end up with a better result, and fewer situations with finger-pointing, where one partner says, "you were supposed to do this," "we were supposed to do that," and it doesn't happen.

Host: Yeah, finding that right partner is key, right, you're going to battle together, it's not easy in the cannabis industry, we know the challenges you have to deal with, so you want to make sure they're ready to go to war with you, whether it's the legal front, compliance, marketing, competing for the same market share against some of the other, high, well-funded companies — it's not, yeah, we're not printing money here, it's not like the green rush we used to see back like 10 years ago.

Joe Hodas: No, gosh, no, no.

Contracts, Compliance, and Market Research

Joe Hodas: You actually just mentioned something that circles back to the lawyer thing, but compliance — make sure your partner has compliance resources, because, truthfully, particularly in new markets, but even in mature markets, no one's going to know compliance as well as someone on the ground who holds the license and is responsible for that compliance locally, because things change, and sometimes it's a grapevine, "hey, I heard they're making a change to the regs, and we have to do X, Y, and Z" — if you or your partner aren't on top of that, you can waste a lot of time, get yourself in trouble, waste a lot of money. So that's another piece I should have mentioned. And then I did forget one more thing, which is, do your market analysis, understand what the market is — because, we like to say here, Eric Bakker, our chief revenue officer, it's his favorite saying, someone give him credit for it so when he listens to this he doesn't give me grief — every market is a market, and it's true, they're each unique and different, in terms of what the consumer demand is, what products do well, what distribution looks like — so really understand the market, and don't just say, "well, I've got a great brand here, I can just drop it in there, it'll be perfect," it doesn't work that way.

Host: Yeah, even consumer education, the cannabis-curious consumer on the East Coast is a lot different than the West Coast, how long has cannabis been around culturally in different regions, could be political values, all these different things have an impact on how they're going to engage with a cannabis brand. And I see it from some of the early markets, California, Colorado, maybe Oregon, where there's this belief, "we're OG, everyone wants our brand because it's Colorado, or it's California" — I see that more predominantly in California, frankly — but just because it's a California brand doesn't mean it's going to play in New York, or Missouri, for that matter.

Joe Hodas: Yeah, 100 percent.

Budgeting for Expansion

Host: As far as budget, what's a rough budget someone would need to even consider an expansion?

Joe Hodas: I wouldn't even begin to know how to calculate that, there are so many factors — what's the capex to start up a facility, what growth projections do you have for yourself — if you're a company that's small and looking to get into a new market, and you're like, "hey, we're in 10 stores by the end of the year, we're doing great," that's going to require a different budget than for us at Wana, where we want to be number one in every market we go into, and have a really broad, expansive footprint. So it's a really tough question to answer, it's an individual case basis, on the company.

Host: Yeah, it might be a percentage of revenue or something, but who knows, really make that case yourself to the CFO.

Joe Hodas: Yeah, and hopefully you're doing your analysis, saying, "okay, this is what it's going to cost us," whether you go the full model, or the asset-light model, "here's what it's going to cost us to go into each of these new markets" — some of that, if it's your first market, might be the startup cost, do I have the staff, the contracts, the lawyers, all that stuff in place, and then, in terms of being in the market, do I have all the displays I need, all the packaging ordered, all those parts and pieces you need to make sure you've forecasted for, and then, like I said earlier, two or three x that, and then you've got enough cash.

Host: Exactly, make sure your bank is full and you're ready for some unplanned expenses.

Obstacles: Packaging, Product Consistency, and Brand Voice

Host: What are some of the obstacles brands may face when considering an expansion?

Joe Hodas: I think a couple things — as a brand, one of the most obvious obstacles is that, because regulation is different by market, it's hard to have brand consistency. Our packaging in Florida is black and white, we're not allowed any branding on it, it says "Wana," luckily, but that's about it, and the gummies had to be formulated differently because we weren't allowed to have color in any of the gummies — and they're not called gummies, by the way, they're called "chews" in Florida. So that immediately poses challenges from a brand consistency standpoint. Now, not to pat ourselves on the back, but a brand like Wana has decent brand recognition within the cannabis industry, so most consumers coming across this aren't like, "I've never heard of that, what is that," a lot of them have at least heard of us or tried us in different states, so we have that added benefit — if you're a brand-new brand that's never been in market, and people aren't familiar with you, it's really challenging to create that brand consistency. So we benefit from being in enough states with enough brand recognition, that even in Florida, where we can't have the branding, we're still drawing from other experiences in other markets where people understand the brand — but if you're brand new, you might not have that. So that's one, straight up packaging and branding elements. Two, if you're challenged from a product standpoint, whether that's dosing, or, for example, most recent changes in Oregon with cannabinoids, CBN specifically — if your lead product is a sleep product, and you've launched in Oregon, and then you have to pull CBN out of that product to be able to sell it there, you create some product inconsistencies, and you may damage the effectiveness of the product. So that's a brand challenge. And I think, lastly, for the asset-light model we do — this is again learning from experience and pain — we now have brand ambassadors, field marketing managers in each market, so we can have a little more control of the brand voice, because, as much as you want your partner to live and breathe your brand, in some markets we were almost there where they might as well be Wana — it's a challenge to ensure your brand voice, what you represent as a brand, is communicated down to the bud tenders and the consumers in those markets, if you're not doing it yourself.

Brand Equity as Negotiating Power

Host: You touched on a few things — brand equity is huge, right, it's something that's established, how important is this when you're expanding into new markets, and does it give you negotiating power when you're trying to get on dispensary shelves and reach decision-makers?

Joe Hodas: Absolutely, right, and what was interesting, too, when you look at the pandemic, and the fact that brick-and-mortar became a little more challenging, many companies, dispensaries, the buyers, as well as the consumers, were defaulting to brands they were familiar with — "if I'm going to spend dollars, and I can't be in a dispensary, and can't talk to a bud tender about it at length, I'm just going to go to the tried and true," and, for us, that was a benefit, because people knew Wana, or we have enough scale that people had experience with us, they knew to go back to Wana because it was consistent — all the other great things we like to say about ourselves. If you're a brand-new product, you had a much harder time both getting on the shelf, and even the virtual shelf, and attracting the consumer, because you didn't have the ability to go through the normal process you might, bud tender education down to consumer — so I think that was a real challenge, and that's where brand equity makes a big difference. But, caveat that by saying, if you're in a market and have a really strong partner who has an existing portfolio of products, that can obviously benefit you, because it's all still about local relationships, no matter the size of the market, it's always about those local relationships with the buyers and the brands — so if you've got a partner with strong relationships, that can certainly benefit you as a new brand.

How to Get on the Shelf Without Existing Brand Equity

Host: What are some tips for people building their brand and their brand equity, what should they prioritize to really cement themselves in the industry?

Joe Hodas: I mean, are we talking from an expansion standpoint, or more broadly?

Host: Just broadly.

Joe Hodas: I know product consistency is huge, I can easily answer that, there are really only a handful of things I think are most critical. One, be different — have something unique and special, focus on innovation, bring something to market no one else has, or, at the very least, improve on what everyone else has, do something with your product set that's different, that draws in the consumer and says, "I want that product because it offers me something none of the other products do." Two, ensure quality consistency — and not just of the product, this is an industry rife with products that, because the science isn't fully there, are still inconsistent at times, and that's on the product side, but when you talk about everything from, is your sales team respectful, do you deliver when you say you're going to deliver, is your brand promise fulfilled at every single touchpoint with the consumer — all those things, when I say consistency, are really important for the brand, it starts with the product but emanates out from there, in terms of how you conduct yourself and what the business is. And I think, lastly, this is one I think is really interesting in this day and age, consumers want brands to stand for something — I don't mean to sound like that's not obvious, but they want brands to stand for something, and understand what they stand for, and even if it's not a social issue or something of that nature, be clear about who you are, and know that the best brands don't necessarily serve all consumers initially, they have a perspective on who they're serving, who their targets are, and what they're trying to do with their products and their brand. So I think it's important, particularly as we grow as an industry, to make sure, if you're a brand, that you know what you stand for.

Host: Yeah, be authentic.

Joe Hodas: Right, sorry, that's part of it, be authentic.

Host: So if I'm a brand and want to break into a new state, and I don't have the brand equity that Wana has, how do I get in front of decision-makers at a dispensary to get on those shelves?

Joe Hodas: Great question, and part A of that is, if you have a partner in the market, make sure you have one that first of all lives and breathes your product, and secondly has the deeper connections already — that's the easiest entrée. My partner is producing for us in a market where not a lot of people know us, which luckily doesn't happen as much anymore, but they can be that warm entrée, and then, as the company, I can back that up with our content, our information, our education, store visits, really reinforce that brand at the store level, that's a great way to do it. Now, if you're managing your own process in a given market, let's say you own the license, the facility, and your new brand is launching, I think traditional CPG marketers would probably think in terms of spending dollars on consumer campaigns, and reaching an unintroduced consumer, that's still a little elusive, and, of course, MediaJel is really helping to try to solve some of those problems, about how to reach that consumer and drive them into the store — but if you're a brand, in particular, that can be a little challenging, and extremely costly, getting to the end-user consumer and driving traffic that way can be tough. I think, back to the idea of being authentic, differentiated, if you understand the market itself, and where the gaps are, and can help fill those gaps, that's a big piece of getting on the shelf. And then, I think it's repetition — I see us and other companies constantly in market, in stores, reinforcing the brand, reinforcing our relationships, and that's kind of what you have to do, hit that wall multiple times before you break through, and that requires patience, and, back to the earlier point about cash, it requires a long fuse, to make sure it happens.

Host: Yeah, you need to invest in those vendor days, those relationships, the marketing materials for the bud tenders, they're on your front lines, really pushing your product, so you have to get them to be your advocates.

Setting Growth Goals and Milestones

Host: What type of growth goals or milestones should a brand set to keep them on track?

Joe Hodas: I think it's really an individualized question on a per-company basis, like I mentioned earlier, it depends on your goals — for us, we're in the process of developing some OKRs right now, objectives and key results, around what does that look like, what do we want out of each market, in some cases maybe it's top line, in other cases it's bottom line, profitability in a given market, and in some cases it's simply how many storefronts are we in — but setting that intention and saying, "this is our goal, did we reach it," is critically important for brands, because if you just go into a market and say, "well, we're in a new market now," how do you know if you're succeeding? It's not the same for everybody, depends on the company, I know a lot of companies are really focused on top line because they're publicly traded, or want to be acquired, and want to grow that top line, that's great, I'm not disparaging that. For Wana, it's about profitability, making sure we're using our dollars wisely and being profitable in a given market, and also a little bit about the impact we can have in the community, not just as it relates to cannabis, but more broadly — do we have opportunities to really support our partner in that community through our CSR efforts and other things we do in our markets.

Audience Q&A: Europe and South America

Host: Thank you for that, Joe, we have some questions from the audience — what's your thoughts on entering Europe and South American markets?

Joe Hodas: Great question, and really excited to be able to do that at some point — I'm hearing that potentially Colombia is looking, and I'm speaking about this from a Wana perspective, edibles are not, at this point, to my knowledge, allowed in any South American or European markets, but we're hearing Colombia is either in the process of, or has already put out, some regs relating to edibles, so that's potentially possible. As far as Europe goes, it's still a little off-limits for edibles companies, but I think that's a huge opportunity — where people sometimes get tripped up, I'll say, is that we still have so much to do here in the US, or North America at least, between Canada and the US, that you also need to look at that and say, "what's it going to cost me to figure out a completely different country, different regulations, different economics, different culture, versus what are my opportunities here in the states" — so it's a bright, shiny object, I think Europe and South America are wonderful opportunities down the road, but, for many companies, there's so much left to be done here, that it may not make financial sense yet.

Host: Yeah, just fun planning when the timing is right. Thank you, Aaron Gorman, for that question. I have another question from Brian —

Joe Hodas: I can't — no, no, all right, hopefully Brian was laughing with that, okay, go ahead.

The Discounting Problem

Host: What can, or should, marketing do for a cannabis brand to keep it moving off the shelves without heavily discounting during difficult times, when it seems like everyone is diminishing their brand value by offering steep and consistent discounts to move product?

Joe Hodas: Brian, I'll send you coffee for that softball, later — but discounting is a huge problem we're trying to figure out, we're scratching our heads on this, because discounting helps the consumer, okay, don't get me wrong, I'm not saying there's not a benefit to anybody, but it means lower top-line revenue for the dispensaries, pricing compression for the brands, and it's also like a disease, it's insidious — when the dispensary across the street starts discounting, the other dispensary has to start discounting, then they go to the brands and say, "you need to start discounting too," and it spreads like wildfire, and, all of a sudden, if everyone's leading with price, what are you going to do, you're going to train the consumer to think price only. I think, for most industries, most other CPG-type models and retail models, I can't think of another one that's entirely based on discounting — even clothing, you have certain retailers, like Ross, or Nordstrom Rack, focused on discounting, and the consumer knows that, that's where they go if they want something discounted, but in the normal retail environment, they get all kinds of cues, "I like the packaging, the design on that one, I'm willing to pay premium price," or "premium price means it's a better product," or "it has differentiated technology, so the price is different." We hear so often from dispensaries that they wanted, "oh, it's a gummy, so we're going to price all gummies at 15," that makes no sense in any other industry, so why do we do it in ours, and they may want to discount on top of that, driving traffic by offering two-for-ones left and right — that is going to be a significant problem for this industry, it's going to continue to be, it already is, and, for Wana, it's a real dance we have to do, because we're a premium brand and a premium product, we invest a ton of money and time into R&D, into the quality of ingredients, using organic tapioca, using our Azuca partners' technology for fast-acting formulation, so we have an actual fast-acting product versus just saying it's fast-acting, and I think we deserve, and want, a premium for that, because we're investing in it, and we want to pass that along to the consumer — and, by the way, guess what, there are consumers willing to pay for that, they want differentiated products. So it's a real mess we're in right now, and I think, particularly for the retail side, they don't always think about the fact that if you're always on sale, you become the discounter, you're not premium anymore, because that's what you do. So it's a real point of differentiation for us, but it's a never-ending battle to stay on top of.

Host: Can you establish an MSRP and enforce that across retail locations, is that possible?

Joe Hodas: No, it's not — everything, even the simplest thing of saying, "okay, if we're going to discount something, we're going to give you a dollar off wholesale, and, as a result, we expect you to pass it along to the consumer," I don't know the percentages, but I'll just guess, 50 percent of retailers just pocket that margin, because, between 280E and everything else, every dollar they can get to help the bottom line, they're going to take — so the consumer doesn't even sometimes see the discount when we do discount, that's even a different layer, but enforcing an MSRP is virtually impossible.

Co-Marketing and Choosing Retail Partners Wisely

Host: What about really choosing your partners wisely on the retail side, maybe a co-op with co-marketing campaigns, where you're splitting the marketing costs to get your brand into these stores, get on the shelf, supporting the education, putting your marketing dollars behind it, and expecting a certain level of price modeling in return?

Joe Hodas: Yeah, that's a great avenue, and, for us, we feel like we've built a pretty good brand, so co-marketing is a great way to introduce a partnership with a retail partner — some partners are up for that, some have the resources and can join you in that, others can't. And, in some markets, retail partners look only as far as slotting fees, "if you want to be on our shelf, here's the slotting fee," now, you can't do that so many times, you can't give five thousand dollars to every dispensary every month to be on their shelves, so there's a fine line between co-marketing and just paying to be on somebody's shelf, and sometimes those are the dances we have to have. Honestly, as a brand, you have to be willing to walk away — that's true for negotiations in general, if you're going to negotiate hard, you got to be able to walk away, and know that going into it. So there are some dispensaries where we just say, "we can't do that," we stay true to our brand and try to stay on top of that, but it's a challenge — marketing is a great tool, we use it quite a bit, but there are others where it just doesn't work.

Host: And Brian says, "stay true to your value prop," and it's the same thing for retailers — as a retailer, you should know where you stand in the market, are you a value retail shop, do you always need to offer discounts because that's what consumers expect, or are you differentiating yourselves, higher customer service, faster delivery times, exclusivity with some brands you can offer — there's different ways, do you focus on, we have a partner up in the Bay Area, they focus heavy on drinks, especially for summer, they have the biggest catalog of drinks, how do you optimize your catalog to be in line with consumer demand — all these things you can do to make sure you're not racing to the bottom, because then there's no margin for anyone. So all of those are good examples of value prop to the consumer that you, as the retailer, should expect a premium or a lift from. But the problem, I think, is that during good times, when people are buying, it's easier for a dispensary to say, "this is how we're going to treat the customer, this is how we're going to create our value proposition," but the second things get a little challenging, the easiest answer is to say, "we'll just cut pricing, drive more traffic," 99 times out of 100 that's what's going to happen — so, back to Brian's point about staying true to your value prop, that's where the rubber meets the road, do you stay true to that, or do you cave and cut prices?

Joe Hodas: Yeah, and, working with Washington state going on seven years now, this was the talk a long time ago, and now that market — I have some partners up there, it's like 30, 40 percent of their transactions have to have a discount, it's been decimated, we're not in Washington right now.

Host: Yeah, exactly, it's things to think about as a retailer, and really hold your brand strong and stay true to that value prop on the brand side, and have confidence that the consumer is smart enough to know what value you're offering, and willing to pay an extra dollar or two for it, here and there — not all consumers, but there's the consumer that wants to shop at Ross, and the consumer that wants to shop not at the rack but at Nordstrom, so just think about where you are.

Joe Hodas: Yeah, exactly, exactly.

Tailoring Marketing Messaging by Region

Host: Let's talk about the different markets — say you're a big brand in New York City and want to expand into Southern California, how should a brand go about tailoring the overall marketing messaging to fit the new market?

Joe Hodas: That's probably a culmination of a lot of things we've been talking about — first of all, study the market, understand what the market is, because, whether it's California to New York, or New York to California, East Coast West Coast, we know that's been a long-standing feud, they're not the same markets, they don't consume the same everything — flower being, New York being pre-roll flower heavy, delivery being entrenched in New York, and, although the size of the illicit market in New York, I don't know the exact size, but how have you tailored your processes to adapt to that in New York, and does that fit in California. In California, potentially you have direct-to-consumer opportunities you don't have in other markets, and certainly don't currently have in New York, so how can you leverage that to reach a different set of consumers, and what's appealing to that consumer in a direct-consumer model that isn't the same as maybe the retail model in New York. Two, think about the positioning we were just talking about, understand who you are as a brand, because when you go into Southern California, the competition is vast and heavy and everywhere, so you really have to be able to say to the consumer, whether shopping online or walking into a store, "who am I to you, why do I matter as a brand to you." Third, I think, for Southern California and Northern California, treat those as really separate — almost having one or two really key partners, I'm a big fan of starting small and growing little pockets of loyalty, versus going into Southern California saying, "we're going to cover everything," that's challenging, not just because of the geography, it takes two hours to get from point A to point B in LA, but also because they're so vastly different in their small communities — but if you can start with small ones, have successes, and grow them together, eventually you'll connect all the dots, so to speak, that's a good approach, at least from my perspective.

Host: Yeah, find those partners, and on the marketing side, I look at the "spray and pray" approach — you can do that, or you can choose specific markets, there's other markets outside LA, San Diego, Orange County, Inland Empire, Santa Cruz, that are smaller, less competitive, maybe more in line with your brand — like, if you have a canned drinks brand, okay, it should probably be near the beach, right.

Joe Hodas: Good point, right, exactly, and it goes back to setting your goals and intention when you go into a market — if you think you're going to go into Southern California and dominate and be everywhere, okay, sure, but you're going to spend a ton of money to do that, and probably not be successful for a while, so make sure you have those metrics set up, saying, "we're either hitting the goal or not, and we need to pivot if we're not."

Anticipating Changing Consumer Preferences

Host: You touched on this a little — how can a brand anticipate changing consumer preferences in a market, and what should you watch out for, is there a scenario where you've pulled out of a state completely?

Joe Hodas: So, I'm sorry, repeat that question.

Host: How can a cannabis brand anticipate changing consumer preferences in the market?

Joe Hodas: Yeah, well, the answer to that is, I don't know that you ever fully anticipate it, but I think having feet on the ground, or boots on the ground, I guess is the right expression — I do that all the time, mixing up my metaphors — so having boots on the ground, and also making sure you invest in data, making sure you know what's actually taking place, even if it's lagged, sales data through the Headsets, the BDSAs of the world, Alpine IQ, there's a number of really great platforms out there — if there's a little lag time in that, you can begin to analyze consumer trends and see, "oh, that's interesting, a flavor profile, blueberry, has just shot up over the last three months, we've seen 20 percent growth across all the brands that have a blueberry-flavored product" — well, maybe that's a preference change, or a certain subcategory, gummies have grown, or shrunk. So I think really being in tune with that data — when you and I first started on the adult-use side of things, that data didn't exist, so, for many years, we've had access to that data, who knew, right, but now we do, so you better avail yourself of it if you want to stay on top of those market trends, and you've got to be prepared to pivot, and, like you said earlier, make sure you've got a contingency plan, or dollars, to support that. If you're a chocolate company or gummy company, I'm not suggesting you watch those trends and say, "well, gummies went down 10 percent, let's get into chocolate, because it went up 2 percent," that goes back to being the brand that you are and being true to that — but flavor profiles, or, if you see live rosin — for example, that's partly why we launched a live rosin product here in Colorado, and planned to bring it to other markets, we knew that was an emerging trend and wanted to be in front of it. So watching those trends and taking advantage of the upside is really where I think the benefit is — on the downside, if you're a gummy company and see gummies plummeting by 40 percent, maybe it's not the market for you, and you should just cut your losses early and run.

Managing Packaging Across States

Host: We do have a question from the audience, from Kevin McHillroy — how do you manage packaging versions across SKUs and different state regulations, do you have a dynamic content creation tool to automate versioning?

Joe Hodas: That's more on the packaging side, Kevin — my guess is you've got involvement with that type of tool, and we don't use that currently, and I think it's potentially feasible, it's probably just my education level about how that dynamic versioning can work, but so many of these are so unique that we have in-house graphic design — most of our creative content is done in-house, which, back to the brand piece, I think is important too, we don't use a ton of agencies, we use agencies when there's particular expertise, video content or whatever, that we don't have in-house, but most of the brand stuff resides in-house, which, back to labeling, means, if we have to make a sudden change to packaging in a given market due to regulation, my team is the one doing that. We also have a great partner with Calyx, who supports us on that, we got to a point where it was so overwhelming, with so many markets, to make all these little minor tweaks — which, for graphic designers, I know, if you change a word, it can completely shift the entire die lines and everything else, it's not as easy as someone would think, just to change a word, and, usually, it's more than just a word — so Calyx helps us with a lot of that, we were able to offload on them as a partner, "can you help us redesign the language on the side panels," but for the primary, front-facing brand pieces, we have a team that does it, and it varies by market — black and white in Florida, no fruit in Nevada, cutting edge, latest and greatest here in Colorado, and we end up with 15 different products, across all SKUs, in however many markets, and it's challenging to stay on top of, and my team often pulls their hair out — results, I'm sure, would be the same.

Educating Consumers, Retailers, and Bud Tenders

Host: When Wana enters a market, what do you do to educate consumers, retailers, and bud tenders, so they understand the brand inside and out?

Joe Hodas: That's a great question, and Wana is really focused on that education piece, education as it relates to the products, but the brand and the education kind of are one and the same, that's a big cornerstone for us as a brand. So we focus heavily on bud tender training, we use a couple key partners, Zoltrain is a great one we use pretty regularly, and we're able to work with our partners in an expansion market and say, "Zoltrain is our platform, we'd like you to share this out with all the bud tenders and all the stores, here's how it works" — it's actually been pretty good for us to be able to do that, one of my goals when I started with Wana was to kind of standardize on some of this stuff, so when we go into a new market, we say, "this is our training platform." That's kind of the front line, that deeper education for bud tenders — we also use platforms like LeafVIP, in Michigan we're doing a pilot with them, to understand if we can get feedback from those bud tenders on the education, that kind of reinforces it as well. And then at the consumer level, everything from the education on our website to printed materials in the store — we just launched our live rosin gummies, as I mentioned earlier, here in Colorado, and we used a QR code linking to some AR content, so when you hover your phone over the QR code, I have one right here, it brings up a completely interactive experience on your phone, that provides a lot of education, it's fun, but it also provides a lot of education about the product. So every touchpoint we have with the consumer, the bud tender leads with education, that becomes part of the brand, as far as our brand positioning within a given market, education is important to us.

Host: Yeah, I'm going to post that here in the Zoom chat — Zoltrain, yeah, I've seen that a lot actually, it's been really helpful for some of our campaigns, increasing the conversion rate on some of those landing pages, ensuring education is there, and not sending people just to a shopping cart, just one paragraph about the product with one picture, there's a lot more to it than that.

Joe Hodas: Yeah, and it's a disservice to the consumer in some markets, because, going back to Florida, we're not even allowed to provide certain education, certain pieces, like this product is gluten-free, or this product is intended for sleep, there are markets where we're not allowed to say that — so it's really important that we're able to communicate the education, at least to the bud tenders, so they can get that down to the consumer in the store.

Investing in CSR and Community Initiatives

Host: I've heard you speak a lot about community initiatives — can you talk a little more about the importance of investing in CSR, community social responsibility initiatives, and how to incorporate them into your business model?

Joe Hodas: Yeah, I'd love to, and thank you for that, because CSR is really important for us — one of the things we did is hire a director of CSR, Carla, and she's awesome, has many years of experience with it, and she is a one-woman show, in terms of, in each of our markets, finding partners that align first of all with our mission, and we have cornerstones — we're still developing it a little, to be honest, because we've got a lot of exciting things coming up that I'll hopefully be able to share, like in August — but we're putting a big push behind our CSR initiative, she's leading that, but it requires us to find non-profit partners in each market, and make sure we're clear on what it is we're looking to support, because, you used the expression "spray and pray" earlier, it's kind of the same with CSR, you can just say, "well, we support all kinds of things," but you water down your message, lose a little of the value of the volume of work you can do within one or two particular categories. So establishing what you stand for on the CSR side, putting your money where your mouth is, putting your team behind it, giving your employees opportunities to engage in those initiatives, whether through volunteering, or even suggesting who we should be engaging with — that's equally important, and looking at our partners and saying, "what are you doing in the market, we'll help support that, but what are your goals from a CSR perspective in the market," and if you don't have them, we'd like you to, because that's what makes a good partner, in our opinion, a company that supports their communities. From a brand perspective, my goal for Wana on the CSR side is that we transcend cannabis — I'm so proud of some of the partnerships Carla has been able to develop for us, where we're the first, right, League of Women Voters, we did last year, we did a big push on vaccinations, which, by the way, back to something a brand stands for, was very controversial — I can't even believe the number of negative posts and things we got when we were posting about these vaccine clinics — right here, if you'd like one, as you're leaving, or going into a dispensary. But that aside, the negative feedback was such that we had to say, "okay, we hear you, we understand, if that alienates you from our brand, we're sorry, but this is what we stand for, this is what we believe in" — so that CSR work gives you an opportunity to also create that identity, and say, "this is what we stand for."

Host: Yeah, that's more important now than ever.

Joe Hodas: Yeah, whether it's in line with the brand values or the CEO behind it, whether it's someone very loud, like Elon Musk, or Bill Gates, or whoever else on the leader side — Nancy's not loud, but she's very specific about her intent to support our communities, and that top-to-bottom is kind of how we approach it, it's Nancy's vision and voice that we're supporting.

Marketing Priorities and the Swag Budget

Host: Yeah, and before we free up here, I want to spend some time on marketing — what do you prioritize on the marketing side, how are you ensuring consumers are aware of the brand in new markets, what type of marketing campaigns do you invest in?

Joe Hodas: This is a funny question, because you and MediaJel and I have been talking about some of the challenges with display and programmatic, in that we have a hard time, as a brand, being able to tie back to actual conversions — being able to track it from, "hey, I made this person aware of our product and our launch," to, "they bought the product in a store." For retailers it's a little easier, but for us as a brand it's challenging. So, a little bit of that, at least to create broad awareness, I look at programmatic as an awareness tool for us, I'd like it to become a conversion tool, but for now it's an awareness tool. Some programmatic, obviously social is a big part of our launches, however, within certain platforms — I'm not saying anything anyone doesn't know, Instagram, Facebook, very challenging to really get too much detail about where you buy the product, how much it costs, what's in it, you got to be a little vague, but at least be able to say, "hey, we're in Arkansas now, you can buy our products," just make the consumer broadly aware. I'd also say we do a lot of our work through our CSR initiatives, like we mentioned, we invest there. The biggest part of my budget, and I laugh at this sometimes, I tell people this regularly, it's swag — it is a never-ending beast, I mentioned Eric earlier, he calls me the "chief swag officer," because every market wants more, no matter how much we create, there's never enough, and that really helps cement your brand in the eyes of the bud tenders as well as the consumers. We do a lot of events, this summer we're doing our "Summer of Wana" tour, all in person, we have a van, we do games, all kinds of good stuff at the store level, swag a big part of that — so that really drives a lot of our marketing initiatives.

Host: Speaking of that, where's my swag, Joe?

Joe Hodas: Oh, you didn't get the box I sent you, I'll check the tracking number on that.

Host: Yeah, let me check my mailbox.

R&D and Marketing Collaboration

Host: I got a question from the audience here, from Rachel Smith — do your R&D and formulation teams work collaboratively with your marketing team to determine line extensions and new product offerings?

Joe Hodas: Great question, and, yes, everything — I think one of the strengths we have at Wana is that we do everything pretty collaboratively. Just before this call, we were looking at redoing some of our packaging, and there were multiple departments on that call, it's not just marketing making that decision, it's a lot of people in the company — one small example, but back to the R&D side, Mike Hennessey, our VP of innovation, our teams are in constant, regular contact, and Mike actually takes a big role in a lot of our video content, he's just such a great guy, so smart and knowledgeable, and comes across so well on video, that we did a whole series of educational videos with him. So there's a very good relationship between R&D and marketing — I don't think there's ever been a case where — well, that's not true, I was going to say there's never been a case where we've put our foot down on something in marketing, but, in conversations about new product lines, there may be an innovation or reason Mike and his team want to do R&D on something, but when we look at it as a marketing team, we might say, "okay, that's not really on brand, and here's why," that's the kind of dialogue we have. Conversely, if we see trends, things we think might be an opportunity, we can go to Mike's team and say, "can we do a little research on this, see the potential feasibility" — and the best time it happens is when he comes across a technology, or a new innovation, that they're really able to flesh out, and then we bring in marketing and say, "how do we communicate this, how do we productize and commercialize it," that's where the real coordination comes in.

Closing Remarks

Host: Thank you for that, Joe, any other questions from the audience before we wrap up here, I'll give it a few more minutes — but thank you again, Joe, for joining us and sharing your insights, I know our audience here on Zoom, and beyond, on LinkedIn, YouTube, and other social platforms, has enjoyed all the information. I'm going to post your LinkedIn here in the Zoom chat, so everyone has it, if you'd like to follow Joe on LinkedIn. Is there anything else you'd like to add, Joe, before we depart, about Wana, about yourself, the vision, the mission going forward?

Joe Hodas: Just, first of all, thank you very much for having me, I appreciate it, and I always enjoy talking to you, that's first and foremost — and I appreciate the questions and input from everybody. But, in terms of Wana, just remember that brands can be more than just a product on the shelf at a price point, continue to build your brands, but also respect other brands, because I don't think the industry is going to grow appropriately if we don't get a hold of this idea of discounting and just going willy-nilly wherever we can — we have to be more thoughtful, methodical about what we do, and think about our communities, that's part and parcel of who we are as Wana, and I'd encourage everyone to have that consideration as well.

Host: Yeah, there's a lot going on in the world right now, so make sure you're intentional with whatever you support.

Joe Hodas: Yeah, whatever's in line with your brand, and you stay true to that.

Host: Yep, exactly. Well, thank you again, Joe, and thank you everyone for watching, and, once again, this is the MediaJel podcast, we cover everything on the marketing tech and advertising front, and, on the MediaJel side, we have an ad network of compliant advertising publishers, over 75,000 meme sites, mainstream news sites, dating, gaming, music streaming apps, TV, podcasts — you can advertise cannabis on all these publishers, welcome it, so I want to make sure everyone's aware that there's more beyond billboards and Weedmaps nowadays. Have a wonderful evening, wonderful rest of the day, and happy Fourth of July weekend.

Joe Hodas: Thank you.

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