EXCLUSIVE: How To Retail Cannabis, Meet California Brand 'Gelato' With A Down-To-Earth Approach For Organic Growth

Getting lost in a swirl of information on how to run a cannabis business is to be expected. Whether you run a Deli, pharmacy or cannabis shop, there are factors to consider such as customer service and understanding their needs as well as educating staff, creating community and streamlining supply chains. These may sound simple but they're actually among the most difficult to accomplish on daily basis.

Gaining some distance from the hype of capital markers and talking to some of the industry veterans in retail cannabis can provide some of the clarity that time and hands-on experience provide.

“We started cultivating out of our garage and we built it from there,” George Sadler CEO of cannabis brand Gelato told Benzinga in an exclusive interview. One of the fastest-growing brands in the U.S., Gelato was founded by George and his son Cody in 2022 and is now available in 400 dispensaries across Michigan and California. “We built a garage company up to a $100 million company, and we sold it. We took a break and then we started Gelato,” George said.

Timing Is Everything

Gelato's fast-track expansion was not a coincidence. The team behind the brand launched Platinum Vape. From humble beginnings, George and Cody project a business model that, although receptive to market signals and trends, is wary of the hype.

“We were pushed into starting a delivery service because we were sitting on pounds of weed. We went from large-scale cultivation to focus on retail. We were having troubles with the vapes we were selling and we decided that we should just start our own,” George said.

“We sold all the stores and focused directly on extractions and in doing so the brand started. We were raided by the feds and after that, we came out with a different perspective on how this needed to be. We decided that we needed to brand, not just sell a product.”

George and Cody realized that it was branding, beyond having ‘fire’ weed that would give them an advantage in a crowded market.

Organic Growth And Rebranding

When they decided to launch their brand there were 400 vape companies in California, which made them ask: “What's going to set us apart from everybody? If there are brands for everything, why not for cannabis?”

Looking back, George sees that in addition to rebranding, there was another key to their success. They never took a loan. Branding made Gelato unique, but it was its organic growth that enabled the team to do what they love while keeping their customers happy and their offer consistent.

“A problem that we have now is that everybody immediately goes to get funding versus taking this time to grow. And that's great. But on a business level, I think we've accelerated so much that people have forgotten about the grassroots of growing a business. Everybody's in a mad rush to get to the top,” George said.

“Cody and I have funded this thing 100% with everything we've made in the company... we've never taken a loan. A lot of companies pay their way into the market. We started working with consumers in understanding what they needed,” George continued. “You need to pay attention to the store's needs. So we built in-store support; that's where we excel. It's so simple, yet nobody does it. ”

Tune In With Real Markets

A distinctive aspect of Gelato’s founders is that they followed and understood the simple laws of offer and demand. In the midst of the hype, even while they were succeeding in the vaping segment, they got into concentrates. Now, once again ahead of the curve in market trends, they circle back to the basics. They went into premium flowers, which, says George, "are not what they used to be."

“In 2019 when Alien Labs and all these guys were coming out with this amazing flower, we were selling a little bit of flower. A lot of companies were really heavy on throwing flowers on the line, but they weren't marketing it well. They were letting the product speak for itself and everybody was stumbling over each other,”  George said.

“We're probably one of the top flower brands now. We're not a flower brand, but we are. Some cultivators cultivate flower and that's their brand. We're selling so many SKUs of all these products, and we have our other brands. Bulk, for example, offering bulk baggie buds, to cover the different levels of a product on the shelf.”

From white-label products to top-label craft cannabis, George noted that consistency was another key ingredient in their success. “Consistency is huge, and the most important thing is to invest in yourself and your team. In terms of product consistency, we do whatever we have to do to make sure stores don’t ever come close to running out of products. If necessary, I will drive the product there myself.” 

4 Tips For New Cannabis Retailers

George shared a few tips on how to attract consumers and consolidate a client base. Here are some of the highlights:

• #1 Consumers should not walk in and out of the store: “Consumers need to talk to the salespeople.’Have you tried the gelato brand?’ ‘No? Oh, well, you should try it.’ Give this person one of our flowers and we'll pay for it. And if they tell you, ‘you know what? I like them but….’, they're being honest. Turn your switch off from being defensive to being proactive, and ask them if there's something they didn't like about the product. Be receptive and then move forward.”
• #2 Listen: “Front-of-the-house staff is more prone to paying attention to what the managers like, which is great. But when you have 15 to 20 people in each store that are standing behind that counter that make the decision, when somebody says, ‘hey, what do you recommend?’ Every time they say, ‘what do you recommend?’ you need to provide them with the understanding and the security of branding.”

• #3 Learn: “Another big key is giving people the knowledge to sell your brand when you know when you're not there and giving them the comfort and understanding that when they do sell something.”
• #4 Invest: “We don't use cheap technology. It costs us more money. But the long run, it's the long run. We're not here for a week to make money. We're here, we have commitments to 200 employees that have families.”

Branding Cannabis In 2023 And Beyond

Welcoming, fun and shareable, Gelato, born in 2022 might be seen as a Gen Z among other popular cannabis brands, making it part of a younger generation and positioning it for the future. “Welcoming and fun and shareable describes what a community is. And I think that's what we are striving for, to make Gelato a community,” George said.

“That's what we considered a big part of the branding. Retaining relationships and having brand awareness. We get into little niches that catch people's attention. That's why our products come with little collector pins. We found out these are being sold on eBay now. There's a guy that's made like $800 on these pins. That tells us we're offering a fun atmosphere for people that want to be a part of something.” 

Against Price Compression

While cannabis corporations seek to produce at scale for the lowest cost and focus on certain market segments, Gelato offers flowers, concentrates and edibles. But, how do they keep up with costs? According to George, “It is all about sourcing and how you source.”

“When it comes to the pricing factor, we're able to offer a superior product at a lower price. We don't want to be a part of the race to the bottom. Because we don't have any outside funding we do not have to show our margins to people or make payments to some sort of fund. We don't have to answer to a team of people. Everything we do here is in-house,” George explained, circling back to the importance of organic growth while pointing out that scale in purchases is also vital for success.

“We source in bulk, we buy about 800,000 pounds of flowers per week. That keeps our costs down. We manufacture everything except for flower in-house. When we source any of our products, we're able to do it at a much bigger volume, because we can pay for everything upfront,” George said. “We're not taking tens of millions of dollars and then having to set these margins because we owe a bunch of money to these investors. Our investors are me and my son. That's it.”

This Is California

Analysts and companies are signaling the East Coast as one of the highest growth markets in 2023. But is this an attractive market for a California brand like Gelato? George says they're in no rush.

“There's no reason. Everybody's in a rush to get into 25 or 30 states. And I don't understand why. And then, suddenly they pull out of three states? Why? We're in the Mecca of cannabis, the biggest market and people are struggling,” George said.

“The East Coast is doing well, but there's no anxiety about hurrying up and getting into other states. Honestly, there's no great thing about being first. It's costly and very few mistakes can be made. We can't manufacture in one state and ship it to other states. So when you do go to another state, you have to make sure that you are 100% quality controlled. And that includes products, personnel, and distribution.” George explained that they expand when they “build teams to be able to do that.”

So, are you expanding or not, Benzinga asks. “Yes, Yes, ultimately. But are we in a rush? No. I've got kids, I don't want to be spending time babysitting adults,” George replied. “People are getting a lot of money in this industry. At a certain point, investors always want to know where the return is. And 2 to 3 years is about the timeline before it starts to go wrong.”

How do they manage to stay grounded in the basics to achieve success? “Well, I owned a flooring company for 18 years. Maybe that’s why,” George concluded.
Photos: Courtesy of Gelato Cannabis.