EXCLUSIVE: 'It's All About Relationships' Say Marijuana Industry Experts Sharing Strategies For Entering New Markets

"What we learned in Washington was that it really starts with the product. So you need to have a phenomenal product," said Eli Korer, CEO of DABSTRACT, an award winning cannabis concentrate brand founded in the Pacific Northwest and now operating in several US markets.

He told the crowd gathered last week at the Benzinga Cannabis Capital Conference in Chicago that his company chose an asset-light business model because it allows it to expand to become a national brand without incurring the capital expenditures and operating expenses. This means the company finds a partner in a state with strong cultivation, manufacturing, and distribution, and DABSTRACT provides significant support on the processing, branding, and marketing side. "So, we essentially complement where they may be lacking in their businesses."

Korer alongside four other industry experts, participated in the conference panel, "Cultivating Success in the Heartland: Midwest vs. West Coast Dynamics," moderated by Annie Davis, VP of marketing at Airo Brands, a multi-state cannabis company focused on proprietary, cutting-edge vapor delivery platforms and high-quality oils. Other industry professionals on this panel were Chris Dynan, CFO of the Philadelphia-based vertically integrated operator Ethos Cannabis; Bradon Noonan, CEO of the multi-state cannabis brand Ogeez!; and Nick Rinella, CEO of the Missouri-based vertically integrated cannabis company Hippos Cannabis.

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Asset-Heavy Approach

Noonan’s brand OGeez! chose another strategy – asset-heavy. “Because we are masochistic and want to own everything. And I'm a control freak,” he remarked humorously. In Arizona, the company operated under another person's license, which, according to Noonan, always felt somewhat insecure. So when the brand went into New Jersey, Illinois and Massachusetts they decided to become license holders. "Um, not a recommended route," Noonan said, adding "it is painful to be a license holder."

Noonan explained that it’s very important to have control over your own manufacturing. "I mean, as a gummy company, I always say it’s, it’s easy to make a gummy. It’s really hard to make a very good gummy. And so quality control for us is really important." He added that it’s equally important to be able to differentiate your product and brand, especially when you enter into crowded markets.

Dynan, CFO of Ethos Cannabis that started in the East Coast markets stresses that "it's difficult to be the best at everything all the time." He pointed out that even though limited licensed states allow you to be best at first, those market are getting more mature quickly. According to him, the first mover advantage that was once so critical in the cannabis, is now shrinking.

"You really need to have good solid operations when you’re entering new markets within a few months because the market maturity is happening so much quicker than it was early on in the industry, " Dynan said.

He also highlighted the importance of understanding the regulatory environment that you're going into and does your business model work within that regulatory environment.

‘It's All About Relationships'

While working in the beverage industry, Rinella said they could see a trend on the West coast long before it hit the Midwest. And the same seems applicable to cannabis.

For Rinella, “it's all about relationships." When looking for someone to white label your products, he advised to make sure that their facilities are up to snuff, but beyond that also make sure they have relationships with the retail outlet and bud tenders – the people who are actually selling their products.

Noonan noted that some markets lack education and that consumers are often confused and afraid to go to dispensaries. That's why his brand is participating in the community, trying to improve normalization and help de-stigmatize cannabis. One of the ways to do that is to find other outlets in outside of cannabis, such as farmer's markets for example.

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Photo by Wendy Davis