June 27, 2024 • 48 mins
Unlock the secrets of effective THC distribution and brand presence in our latest episode! We start by breaking down the most recent developments in the cannabis industry, including a GOP congressional panel's controversial attempt to block marijuana rescheduling and Tennessee's strict ban on Delta-8. We'll also discuss Walgreens' bold decision to stock CBD products and the FDA's looming decision on Juul vaping products. Joining us is Scott O'Malley, CEO of the Clarity Company, who offers unparalleled insights into the burgeoning hemp-infused beverage market, sharing the company's growth story, distribution hurdles, and team-building strategies.
Discover the art of building a powerful brand presence through meticulous distribution strategies. Our discussion includes the importance of strong relationships with distribution managers and marketplace representatives and how consumer research fuels our marketing decisions. Learn about the pivotal role of educating retailers on product differentiation and implementing marketing programs designed to boost sales. We'll also delve into the collaborative planning needed to forge effective long-term strategies, ensuring success in a constantly evolving market.
Finally, we tackle the complexities of state-specific THC distribution strategies and the promising future of THC beverages as alcohol alternatives. Scott sheds light on navigating different distribution models, evaluating partners, and the medicinal benefits of THC drinks. Hear about the unique regulatory landscape, including Minnesota's proactive legislative fixes and Iowa's peculiar serving laws. Wrap up with an engaging Q&A session, where we express our gratitude for your continued support and share an exciting moment that underscores the growing influence of our show. Stay curious, stay informed, and keep your spirits high until the next episode!
--
High Spirits is brought to you by Vertosa and Wolf Meyer.
Your hosts are Ben Larson and AnnaRae Grabstein.
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THANK YOU to our audience. Your engagement encourages us to keep bringing you these thought-provoking conversations.
Remember to always stay curious, stay informed, and most importantly, keep your spirits high.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ben Larson (00:05):
Hey everybody, welcome to episode 49 of High
Spirits.
I'm Ben Larson and I'm flyingsolo today.
We're recording Thursday, june27th 2024, and we have a great
show talking about THCdistribution in the mainstream.
We got on my friend ScottO'Malley from the Clarity
(00:26):
Company and we're going to diveinto all things distribution in
the mainstream THC alcoholchannels.
But before we get there I'mgoing to do my little thing.
I don't fly solo too often butI thought I'd go through some
recent news just to kind of talkabout what's top of mind,
what's guiding the way I amthinking.
(00:48):
So let's bring up some newsarticles here.
We have Marijuana Momentreporting on a GOP congressional
panel that's moving to blockmarijuana rescheduling while
amending medical cannabis riderswith penalties for sales near
school.
Thank you, kyle Yeager, for theheadline there.
That's a little concerning.
It just goes to show thatrescheduling is not yet a done
(01:12):
deal.
There's a long way to go beforewe see that implemented.
The other concerning aspecthere is that without a coal memo
, this is kind of the first, ormaybe not the first, but another
step that we see in federaloverreach into the regulated
markets.
Hopefully this gets stoppeddead in its tracks, but we will
(01:33):
see Certainly something worthtracking.
In addition to that, newTennessee laws are tackling
regulations and banning Delta 8.
And I think this goes intoeffect July 1st.
Maybe we'll talk about this alittle bit with Scott.
So this is hemp-derived Delta-8, become famous a lot for its
(01:54):
chemical conversion.
But Delta-8 is a compound thatis naturally found in the plant
and so, without any definedlimits established in this
legislation in Tennessee, itleaves a lot of ambiguity what
that means for full plantextracts.
So again, just as we've beentalking about in the news, the
(02:17):
pendulum is swinging, and whenit's swinging fast and hard and
we don't have responsibleregulations going into place,
there are some very confusingambiguities that can be
implemented.
Moving a little bit away fromthe direct industry, there are
some things that are happeningkind of tangentially.
(02:38):
That, I think, is interestingsignals, and the first one that
came up for me and Anna Rae, whois sick today.
Sorry, I didn't acknowledgethat.
Anna Rae is out sick.
She wishes she could be here.
She's sorry she's not here.
This news article came from heras well as the insights.
But Walgreens is bringing CBDinto their main shelves, so
(03:00):
they're identifying space in thestore, they're pushing things
aside and placing it where theybelieve it belongs and in this
place, in this case topicals,pain relief and whatnot.
But interesting to see themtaking this move and what it
might mean for the future,future product line extensions,
cannabinoid extensions.
(03:20):
But does bring up aninteresting point about where do
hemp, cbd and other compoundsbelong in the source.
Watch that as it continues todevelop.
Similarly, we see the FDApotentially reversing their
order on Juul vaping products aswe start to see retailers
(03:42):
struggle about where and how tosell vape products, largely in
the hemp space.
Bringing nicotine vapes backinto vogue, we will see, but
again, maybe creating space fora future cannabis and or hemp
industry.
So that's my run of the news fortoday.
(04:03):
I won't bore you with itanymore.
It's just what's kind of top ofmind.
I'm going to jump right into itand get Scott on the line.
Scott again is the CEO of theClarity Company.
They're low dose THC hempinfused beverages.
Born out of the homeland ofMinnesota.
Scott is just outside the TwinCities of Minnesota.
(04:26):
Scott is just outside the TwinCities.
He's also a seasonedentrepreneur with over 25 years
of experience across variousindustries.
His expertise in strategy,sales and client relationships
has positioned him as avisionary leader, driving his
company to innovate in thisdynamic beverage space.
So, scott, welcome to the show.
Super excited to have you.
(04:46):
Thank you so much for takingthe time this morning.
How are you doing, man?
How's the week going?
The week's going well.
Scott O’Malley (04:53):
I appreciate you having me on here.
I'm excited to have aconversation.
See where it takes us today.
Ben Larson (04:59):
Absolutely, catch us up to speed, tell us a little
bit about the company.
How long have you guys beenoperating?
What was the genesis of youjumping into this wild wild west
of Hemp THC?
Scott O’Malley (05:10):
And, yeah, let us know a little bit about the
size of your team before we kindof jump into the strategy and
Delta eight business previously,and when we got word in the
middle of May of 2022, that thatthe law was going to change in
(05:30):
Minnesota we had beenexperimenting with a beverage
for CBD and potentially Deltaeight, we pivoted as fast as we
could and by August of 2022, wehad a better first skew ofU of
Seltzer in the marketplace.
We tried to self-distribute forabout a month, figured out
(05:53):
quickly that that was difficultand we weren't very good at it.
So we connected with adistributor network and started
putting that process together.
It took a little while.
It took a few months to get allof that done, but we've grown
quite fast, I mean it is a wildwild west, and it certainly was
the first year they put somefixes into the law that began in
(06:16):
July of 23, which made it alittle bit easier for us to
maneuver in, meaning that therewere some rules and regulations
that helped clear up some of theconfusion, particularly at
liquor store and on-premise barrestaurant levels.
Right now we've got six fullseven sorry full-time employees
(06:39):
and then about 14 part-timepeople that serve various
functions for us.
So as a startup you're alwaysabout two people behind, but you
kind of wear a lot of hats inthe beginning and then as you
grow you start to fill in withsome experts in different
(06:59):
categories.
As you're building your team.
Who are the?
Ben Larson (07:19):
kind of like profiles that you're looking for
?
Scott O’Malley (07:20):
Are you pulling in directly from beverage
categories?
Is it helpful to have peoplewith hemp and or cannabis
knowledge?
What are some of the kind ofprofiles of some people who've
been in the beverage industrytheir entire lives?
Um, and so you know, we've got25 35 year veterans of the
beverage business and I wouldsay that there's a vernacular to
the beverage business.
That's that's.
You don't find in some of theother industries a lot of
acronyms.
I'm often stoppingconversations saying, wait, wait
, what does that mean?
(07:40):
Um, so we have beverageindustry veterans.
That way we can speak thelanguage with our distributor
partners or with other brands.
And then, beyond that, we lookfor people who have retail
experience.
So building brands, creatives,copywriters, social media, all
(08:02):
of that kind of comes togetheras you try to build a brand and
you really have tworelationships.
You have a relationship withyour distribution partners and
then you have relationships atsome level with the consumer of
trying to help drive your brand.
And then you kind of get thatin-between stage where you're
dealing with retailers, whetherthat's on premise or off premise
, trying to put programstogether, all in the name of
(08:25):
building the brand andincreasing velocity in all of
those locations.
Ben Larson (08:30):
I've often said that the cannabis beverage or THC
beverage space is inherentlydifferent than all the other
form factors that you find in a,say, a dispensary, right, um,
and it's not necessarily a thcalternative, it's more of a
beverage alternative and so,like you know, focusing on
(08:51):
building teams that are thatreflect more of a classic
beverage company versus the, thediversity that you get in a in
a typical cannabis or hempcompany, um, earlier you were
mentioning, mentioning kind ofgoing from self-distribution
into a more traditionaldistribution network.
I'm curious actually.
(09:13):
What it made me think about waskind of the nature of
direct-to-consumer shipping,creating an online presence
versus doing all the groundworkto do distribution.
And I think there's a lot ofconversation lately, even in the
beverage category, whichshipping beverage all around the
(09:33):
United States is an interestingprospect of its own.
But how are you thinking aboutdirect-to-consumer online
presence versus building thebrand in the traditional retail
market?
Scott O’Malley (09:52):
You know, our focus has been and will be, you
know, sales in the distributionchannel.
So through liquor stores,through grocery stores, through
C stores.
That's been our focus so far,and I think that there are other
companies out there that aredoing it differently, right?
So you know, there arecompanies that start with
distributors, convert most oftheir sales to
direct-to-consumer and then theygo that route.
That's not the way that we'regoing to go.
(10:14):
We have an online presence, butwe don't push it very much.
In my mind, you know, if yourbest customers are your
retailers that are selling yourproduct, and then you go online
and you start selling it at adiscount lower than what they
could buy it for, or at the sameprice that they can buy it for.
Suddenly, they're starting tolook at you like, hey, are we
really partners in this?
And so for us it's been, youknow, trying to kind of walk
(10:38):
that fine line of making surethat we're not selling it at a
price less than what ourretailers can sell it for.
Otherwise, you know, they don'thave a lot of motivation to be
pushing your product, and weneed them pushing the product in
order to build a brand.
And so that's our strategy.
It's not everybody everybrand's strategy, but it's
certainly ours.
(10:59):
I think that building thisnetwork and kind of through this
three-tier system makes a lotof sense.
There's a lot of age gating insome of the rules and
regulations around it that makeus pretty comfortable and make
our distributor partners prettycomfortable.
Ben Larson (11:15):
I think you touched on something that's super
insightful.
When I worked with techcompanies, we talked a lot about
customer confusion and pushingfounders to truly understand who
their customer is versus whothe consumer is.
Can we dive into that a littlebit?
Can you talk about identifyingthe retailer as the customer and
(11:42):
what that means and how thatdrives your decision making, and
then we can kind of get intothe interplay of also
understanding who the consumeris but how that all relates back
to being a better product foryour customer who is the
retailer?
I think it's a reallyinteresting concept.
Scott O’Malley (11:59):
Yeah, so I think that we run parallel paths on
trying to talk and communicatewith our customer, who is really
the retailer as well as theconsumer itself, and so we spend
resources at the distributionlevel, having communication with
those area managers and thosereps.
We also spend resources andhave people in the marketplaces
(12:21):
talking to retailers, because,in the end, they're the ones
pushing your product and they'rehelping you build the brand.
Now, that doesn't mean that wedon't also spend resources on
the consumer, because we'retrying to do that at the same
time.
So, yeah, our client is theretailer, that's the person who
has our products out for sale,but we're also trying to
communicate with the consumer,really digging into who the
(12:43):
consumer is, why they buy ourstuff, why they might buy
someone else's products.
And we're in the middle whilewe're getting close to the end
of a research project on ourconsumers.
So who's buying it?
Who's buying other people'sproducts?
Why are they buying it, whenare they buying it, what are
they using it for, what's theoccasion.
And we're gathering all thatinformation which I think, for
the most part, we think we know,but we wanted to make sure that
(13:06):
we knew, and so some of thatconsumer insight will then help
us with retails will definitelyhelp us with distributors, and
then we'll kind of look at thatand start to weave some of that
information into our approachand our strategy when we talk
about whether we're marketing toconsumers or marketing to the
(13:27):
or having communication withthose retailers.
So it's intertwined and it'snot the same conversation.
It's a little bit different whenyou're talking to a retailer
than it is if you're trying totalk directly to a consumer and
you know we've got programs thatwe do for both areas and kind
of treat them both as clients.
Ben Larson (13:47):
What are some of the mechanisms that you're doing to
go out and get that data?
Because what we hear a lot inthe industry is that data is
hard to find.
Nielsen's isn't doing this,bdsa and Headset aren't doing it
, so are you out there likepounding the pavement and
gathering the data yourself, orare retailers helping you out
with some of this?
Scott O’Malley (14:05):
A little bit of both.
So we're all doing our ownsurveys on a price and who's in
the market and who's selling,and gathering information from
our retail partners.
We've done this researchproject into the consumer habits
so we're gaining some insightthere on you know kind of the
(14:26):
buying patterns and the buyinghabits, what's helping them make
the decision.
I don't know that in thisindustry yet that any particular
brand has risen to the top, oreven a group of brands that are
definitely defined in all of thedifferent states that people
are in as, hey, that's the topbrand or that's one of them.
We aspire to be there for sure,but I don't think it's there
(14:47):
yet and I think there's a lot ofcuriosity.
I think there's a lot oftesting and sampling and
experimentation within.
Ben Larson (14:53):
The industry.
Scott O’Malley (14:54):
So you know we're trying to stay in the
forefront, make sure that wehave as much data as possible.
But you're right, it's hard toget to right now, it's not
readily available.
But you're right, it's hard toget to right now, it's not
readily available and so there'sa little bit of guesswork to it
.
Frankly, in this business,because it's still the wild,
wild west, there's a lot ofguesswork into into this
(15:15):
category in general.
Ben Larson (15:16):
Yeah Well, with the, the interest and the momentum
that we see, I think it'll onlybe a matter of time before
people start really wrappingtheir arms around this.
I know there's been a lot ofconversations and the
associations and how do we, youknow, create category codes for
the products and get that intothe data collection engines?
But, speaking more tactically,when you're talking to a
(15:40):
retailer and you're starting toget to understand your consumer
better, what are some of thetalking points that are and
you're starting to get tounderstand your consumer better?
What are some of the talkingpoints that are helping you
frame up the pitch to theretailers and distributors that
are setting you apart?
What are they asking for?
What do they really want to see?
Scott O’Malley (15:57):
Well, I think it's a number of things.
One, it's education.
So how do you sell it to theconsumer?
What's your product?
How do you differentiateyourself from some of the other
brands that are out there?
And there's a lot of brandsright now a lot of SKUs, right.
So you know it's giving themthe education of hey look, you
know, our seltzers have zerocarbs, zero sugar, zero
sweeteners, zero calories, right?
Our cold brew coffee product isvery unique in that it has no
(16:20):
preservatives, in a shelf stable, doesn't need to be
refrigerated, and that it has nopreservatives and is shelf
stable, doesn't need to berefrigerated, and it's a really
tasty product.
So it's new and it's, yeah, youknow, and it's unique, right.
So I think they're looking forthings that they can communicate
to the customer that comes inon how to sell the product and
(16:41):
what the highlights are.
And then I think they'relooking for activity how do we
help them move more product morequickly?
So that's with programming andend caps and displays and stacks
and collateral and you know allthe different things that we
look at.
We do some giveaways once in awhile, we'll do some some
rebates, um, that kind of stuff.
(17:01):
So, um, you know, it's reallyjust working with them and they
know their customer way betterthan I do.
They know their clientele.
So we just have conversations,say, look, what do you think
about doing this?
What if we did this?
And then we try to put a plantogether with that retailer for
a length of time.
You know we often will do sixmonth, one year programs where
(17:24):
we're planning out that far andsaying, all right, look in this
month we're going to do this,we're going to take a little
break, we're going to come backwith this other product.
You know we're launching oursoda pot product next month, so
that'll be new.
We're launching some varietypacks.
Well, actually, some of themare today for the first day and
then there'll be some more inthe variety pack for for soda
(17:44):
pot.
So you know, you, you give thema little bit of lead time on on
some of the things that arecoming and they get excited
about it and then you can putprograms together.
But you know it's reallystrategic about look, we want to
be part of your display sixmonths out of 12.
It's not every other month,sometimes it's.
You know, there are certaintimes that we definitely want to
(18:05):
be the focus of someone whenthey walk into that store and
they see our stuff.
It's not necessarily always onsale, oftentimes it is, but
that's not necessarily alwaysthe driver and then doing some
interesting things that maybeare a little bit out of the box
(18:27):
to attract the consumer and givethe retailer something to talk
about.
Ben Larson (18:31):
I've always known that it takes more than a
product right and I'd neverunderstood that you can actually
come in with those six or 12month plans of like, really like
this is what you're gonnaexpect from us as a brand and
how we're gonna be a greatpartner.
I think that's super helpfulbecause I, you know, work with a
lot of startups.
They get super excited, pumpedabout their, their brand.
(18:53):
They get it into co packing,they get it.
You know they see it come offthe shelf and then you know I
don't hear this part of thebusiness all that often and you
know, hopefully, you know peoplepick up on this.
I will give you huge kudos.
I have a couple here in myfridge, like the Zero Cal
product is fantastic.
(19:14):
The flavors are there.
You know there's a lot of highsugary beverages on the market.
Um, some you know as high, ifnot higher, than you know a, a
standard.
You know Coca-Cola or somethinglike that.
Um, but your new products, thatthe coffee is my, my, I'm going
to, I'm going to out my wifelike this has become her
(19:35):
favorite way to kick off aweekend is uh, get, get the get
the energy and and therelaxation at the same time I
know I like your wife um, okay,so let's talk about, like the,
the, you know, putting this allinto action and and getting the
distribution you know.
Uh, I hope you don't mind mesaying clarity is not the
(19:58):
biggest name going out there,but, to your point, there is not
a biggest yet and there's alittle bit of.
We've talked offline.
There's a little bit of rhymeor reason to how fast to grow a
brand in the current state ofthe market, and a lot of that
has to do with distributionrelationships.
Distributional relationshipscan get you very quick access to
(20:23):
shelves and prominence, but italso could become a limiter at a
certain point.
So I want to kind of get intothe kind of strategy and the
dynamics about selecting yourdistributors and how fast is
fast enough for, at least inyour case, everyone's strategy
is different.
Not one is necessarily betterthan the other, but how are you
(20:47):
thinking about it?
Scott O’Malley (20:48):
You know it's actually changed a little bit,
even in just the last two years.
We were fortunate to connectwith the Anheuser-Busch Network
for Minnesota.
They've been a good partner forus Network for Minnesota.
They've been a good partner forus, and so you know we tend to
look at those more macro typedistributors.
Ben Larson (21:09):
But you know when you think about distribution in
a particular state.
Scott O’Malley (21:13):
We really take it on a state by state basis and
the team gets together and wetalk about it and I've got four
people that we all meet.
They are all industry veterans,they know the distributors and
that's the distributor you know.
You can look at distributionand say, look, we can go with a
macro distributor, we could gowith a wine and spirits
distributor, we could go with acraft distributor, we can go
(21:34):
with an independent distributor.
They all have their pluses andminuses.
So, and then there's even now afew distributors that are
popping up that are THC-centricdistributors.
So you know it can be adifferent strategy from state to
state.
It makes it a little bit moredifficult because if you become
used to sort of the template ofworking with a type of
(21:57):
distributor, it's a littleeasier to put the programs in.
You understand each other'sbusiness type of distributor.
It's a little easier to put theprograms in.
You understand each other'sbusiness.
When you switch back and forthfrom, let's say, an independent
distributor to a macrodistributor, the vernacular is
the same but the implementationcan be a little bit different.
So when we look at it, we do iton a state-by-state basis and we
(22:18):
have different strategiesdepending on the state and what
we think that state's potentialcan be.
So there are times when we lookat a state we're like, all
right, in that particular statewe want to be one of the first
five or six brands in that state, because it's important.
We may look at a differentstate and say, hey, you know, we
definitely want the rightpartner here and the right
(22:39):
partner isn't quite ready to goyet, so we're going to hold off
it's.
We have that discussion everyweek about particular states and
I will tell you that our teamis often split on which approach
to take.
We don't always have the sameopinion.
So we kind of go through it andwe and we look at all of the
(23:00):
options and there's some nuancesto to those different types of
distribution and then what theymight mean.
If you do something in thisstate, how does that transfer to
maybe an adjoining state oreven one that that isn't
adjoining?
So there's more thought thatgoes into it than just you know,
(23:20):
taking the first one that saysyes.
And so we've played it right afew times and we got it wrong a
few times.
And you just kind of learn alittle bit and try to make the
right decisions to make theright decisions, but in the end
sometimes I think that thatthere may not be a wrong
(23:44):
decision early on in thisindustry where we are now,
because we're really in theinfancy.
Maybe we're a toddler now, butyou know, it's the beginning of
an industry that is likely todisrupt the beverage industry on
some level.
In Minnesota the liquor storesales are now reaching 10 to 15
percent of total revenue withinthe liquor store.
(24:06):
It took craft beer 20 years toget there.
It took THC beverages less than18 months.
It's a fascinating number.
It gets everybody's attentionand there are still a lot of
distributors who are sitting onthe sidelines saying, hey, I'm
not sure about this, I'm notsure what this means from a
(24:28):
legality standpoint with theirfederal licenses, and so putting
that team together, puttingthat right partnership group
together in a particular state,at times can be kind of like
putting a puzzle together andtrying to make sure that you
know when you get to the end.
You don't have three piecesthat don't go anywhere.
Ben Larson (24:50):
I'm sure you've seen some of the commentary on those
numbers where people are saying, oh, this is.
You know this is a noveltyproject.
You know it's going to be aflash in the pan.
You know a lot of dissent outthere.
But sitting in Minnesota, nowthat you've had, you know, a
couple of years now of this kindof legalized market, what is
(25:10):
your feeling or response tocommentary like that?
Scott O’Malley (25:24):
it might have been maybe a knee-jerk reaction
to the industry in the beginning.
I think that there's probablysome validity to it in the
beginning, because there weresome bad actors within the space
that were producing productsthat weren't really very good or
didn't have the right potencyor maybe didn't have the correct
potency.
But I think that what we see isthat it's hitting the mark for
some consumers and it's areplacement for alcohol for some
(25:47):
people.
It's a complimentary productfor people who don't want to
drink quite as much as they usedto.
It fits with the lifestyle forcertain groups and, I think, the
medicinal properties of it,which will become more and more
relevant in the years to come.
As more and more research isdone and you can pinpoint, you
(26:09):
know, maladies for pain, sleep,anxiety, women's health, that
kind of thing.
You'll see products that arespecific to helping those.
So I have a hard time believingthis is a flash in the pan.
It doesn't have this crazyamount of growth in 18 months
and realistically it's really 12months of where sales have
(26:29):
really been booming.
I just think it's somethingthat the marketplace is looking
for.
It's a low dose product.
It's not.
You know someone who smokesevery day.
This is not their product.
They can drink four of ourdrinks and go work out and feel
fine.
But for a certain part of thepopulation and certain group of
(26:54):
consumers this product hasresonated and it's a void that
that was in in people's,people's lives.
Ben Larson (27:03):
Well, yeah, and you yourself entered the industry
because of the medical benefitsof the plant, and so that's an
interesting connection to seethat I um, you know I've found
myself in a lot of arguments,conversations, whatever you want
to call it, where people aresaying weed is not a replacement
for alcohol.
Look how it makes you feel sodifferently.
(27:23):
And I've thought about that alot over the years, and there's
two things that I've arrived at.
One society has been forcedinto using alcohol as a tool to
address various maladies, andoften it's not the right tool,
but it's the tool that you havein your toolbox that's legal.
(27:44):
And now we're finding that, oh,maybe I shouldn't have been
using alcohol for this, but aTHC drink is a perfectly good
tool and in fact, a better onethat I can be using in these
particular instances.
So that's one aspect.
So, like a alcohol replacement,I think people get hung up on
(28:04):
that, as it's an analog alcoholwhich maybe some formulator out
there creates a perfectly greatcombination of cannabinoids and
terpenes to actually achievethat.
I haven't seen it yet, but itis replacing where alcohol was
being misused in society.
But it is replacing wherealcohol was being misused in
(28:24):
society.
And then the other aspect isthat people are spending good
money at a bar or restaurant andthey want to feel something.
They don't want to just spendthat on a non-alcoholic drink no
offense to those drinkingnon-alcohol or on the total
sobriety chain.
I love you, but people wantsomething if they're spending
money in a social setting, andthis is again filling a void
that previously existed.
Scott O’Malley (28:47):
Yeah, I think it definitely is filling a void I
personally really enjoy usingthem together.
I like drinking our product or,frankly, somebody at one of our
competitors' products, alongwith an alcoholic drink or two.
But I can tell you that I drinka lot less alcohol and I've now
thrown a clarity in there, soit's really having a water and I
feel a lot better the next day.
Ben Larson (29:07):
And as I get older.
Scott O’Malley (29:09):
I do not like the hangover anymore and a lot
of my friends and the peoplethat I talk to, you know we used
to maybe use that hangover orwear that hangover as a badge of
honor, but I'm not interestedin that anymore and so you know
I can go out with my friends andthey may have you know, I'm not
(29:30):
going to put a number out there, but a number of of of beers.
I'll have, you know, one of ourdrinks and maybe one drink and
I'll feel the same as they do.
You know I'm going to wake upthe next morning feeling pretty
good and they're going to wakeup a little sluggish and it does
make a difference.
And I think that you know theseproducts, particularly right
(29:51):
now, are pretty easy for peopleto use for sleep.
They're pretty easy to use tohelp with anxiety and pretty
easy to use to mitigate somepain, without being specific
about making claims about it,but people are experimenting
with it and they're figuring outyou know how to use it and how
it works for them and the factthat it's fast acting, so it's
(30:13):
it's kicking in at about thesame time than an alcoholic
drink would You're not getting.
There's.
So many people have stories,including me.
You know, I tried a gummy and Iwaited 20 minutes.
And I tried another one and Iwaited 20 minutes and I took a
third one and then they allganged up and suddenly I was not
exactly feeling the way Iwanted to feel originally.
This is a much different dealnow with with nano emulsified
(30:36):
emulsion.
It's fast onset.
You're not getting what I callover the tips.
Um, you know you're.
You're getting to where youwant to be for whatever that's
for, uh, including if you wantto catch a little buzz on it,
but you can get to where youwant to be and you can maintain
that for as long as you want towithout, you know, continuing to
escalate, which typically, atleast for for me, can happen in
(30:58):
alcohol.
Ben Larson (31:00):
I'm glad you point out the interplay of THC and
alcohol.
I'm a fan of the classiccrossfade and it's been an
interesting relationship betweencannabis and alcohol and
regulations.
And I know Minnesota has goneon this journey themselves Like
and I know Minnesota has gone onthis journey themselves, like
(31:20):
you know.
I think there was a time wherethey said you couldn't serve a
patron a THC beverage if theyhad consumed an alcohol beverage
within like five hours.
It was something ridiculous.
That was you know, like youread it and like.
This is impossible to enforce.
How does this even get this far?
What is the current situationin Minnesota?
I think they've done away withthat.
Scott O’Malley (31:42):
Yeah, that law never went into effect.
I think, the legislators knewthat that was going to be a
problem.
They had told us early on thatthis will get fixed before it
goes into effect.
It was supposed to go intoeffect July 1st of this year.
They fixed it in this lastsession.
What I will say is they did apretty good job in.
(32:03):
Minnesota because there reallywere only three fixes that
needed to be taken care of inthe bill.
They took care of those.
That is not an issue anymore,mainly because it doesn't make
sense and enforcement would havebeen darn near impossible.
Ben Larson (32:19):
Man.
What is that like?
Living in a state where youidentify issues and then you
rectify them before it becomeslaw?
That must be.
It sounds like a dream.
Scott O’Malley (32:31):
It can be but you know it's always a process
right, and so you know you'vegot different factions that have
different ideas of what theywant to have happen.
So we do spend a decent amountof time with conversations with
our lawyers, conversations withlobbyists, conversations with
the legislature in a number ofdifferent states.
Now.
Ben Larson (32:50):
As they put this together.
I think that Minnesota did areally good job with this bill.
Scott O’Malley (32:57):
I wish other states would use it as a
template.
Some are, but then you get theoutliers who want to throw
something interesting in.
Like Iowa decided to make afour milligram per serving law
when everywhere else in thecountry it's five.
So that means everybody wouldhave to change their packaging
in order to be compliant withinIowa, but it also means you're
(33:18):
now out of compliance in otherstates if you try to put more
than two servings into a can.
So I think I understand whatthey were trying to do, which
was protect the smallerbusinesses and really the
breweries and producers in thestate of Iowa, but in the end
they're really just punishingthe consumer because a lot of
the bigger better brands are notgoing to go there.
(33:43):
It's going to change all theirpackaging.
They're selling all over thecountry for one state.
Ben Larson (33:48):
Well, not to mention that most small brands have
aspirations of growing intobigger brands.
And if you're an Iowa-basedcompany, sure, you might have a
leg up to get started, but theminute you want to scale beyond
Iowa then you're totallyhandcuffed For sure, or at least
as handcuffed as everyone elsetrying to get into the state.
So there's been a lot ofshifting legislation lately,
(34:12):
both at the various state levelsand at the federal level.
Bring it back to thedistributors a little bit.
How is that affecting sentimentthis year, or I said, well,
this part of this year, so callit Q2 compared to like the
beginning of the year.
Scott O’Malley (34:30):
I would say that it has changed somewhat
dramatically.
I think that the distributornetwork, and it doesn't matter
at what level, whether it's youknow the macro distributors,
wine and Spirits, you know thecraft or the independents, they
all at one time were looking atthis saying, hey look, am I
(34:51):
putting my federal license injeopardy here?
They've done their duediligence.
You know, the National BeerWholesalers Association came out
with some guidance against itand so it took people a while
and it took a number of thedistributors and their lawyers
to work through whether therereally is risk here or how much
(35:14):
risk.
And in the end distributorsstarted to feel like they had
the information they needed andthey were okay moving forward.
They were not putting theirnational license in jeopardy.
So that pace of acceptance anddistributors looking at getting
into the market in the last 45to 60 days has increased
(35:37):
dramatically.
And I think part of it is thatthere were a couple of really
big distributors throughout thecountry who looked at the
category and said we're gettinginto it, We've done our
diligence and we're comfortablewith where we're at and what the
risk is.
And when a big distributordecides that they've done their
diligence and they're okay,somebody that's maybe half that
(36:01):
size might go.
Well, geez, they sell a wholelot more than we do.
They don't think it's an issue,then why do we?
But there's also ownershipgroups who just are against the
category in general, and so youget a little bit of resistance
there.
And then some of thelegislatures in some of the
states have made some noise thatthey don't like it or they want
(36:25):
don't don't want it, or theywant to regulate it or they want
to tax it, and so there's anumber of factors that that that
can make people a little bitfearful.
But you're talking about a highmargin price item, margin, high
price item and I think in theend they look at it and then
they assess.
You know what the risktolerance is and for the most
(36:51):
part I think the distributorsare starting to say look, this
is a category that's not goingaway.
This is a category that's goodfor us to be in, and I think
that liquor store chain and thatage gating is the appropriate
place for these products to be.
They're used to checking ageverification and they're already
used to the way things aredelivered and the way things are
presented and how this wholeindustry works.
(37:12):
So to me it makes sense to bethere.
We're still going to be in vapeshops and tobacco shops and,
you know, c-stores and that sortof thing also, but I think the
majority of the of the sales,direct to consumer, direct from
the retailer to the consumer, isgoing to be where they already
go to buy beer, wine, spirits,that sort of thing.
Ben Larson (37:35):
Makes sense.
So you were talking earlierabout being in the AB InBev
distribution network and to myknowledge there's a lot of like
independently owned, ab approvedor relationship distributors,
depending on the regions thatyou're in.
What does it mean to be workingwith an AB distributor and are
(37:59):
there relationships that thatleads to like in other markets?
You know relationships, yeah, Iguess.
What's the dynamic once you'rein that relationship and how do
those networks you know I guessmaybe lean on each other, relate
to each other, if at all?
Scott O’Malley (38:16):
Well, there is some influence.
You know we can reach out toour distributors and say, hey,
we'd really like to work withthis distributor in the state.
Can you make an introduction?
We've got three people on ourteam who've dealt with
distributors throughout thecountry their entire career.
So those relationships alreadyexist.
And it's not just the ABnetwork, it's the Miller Coors,
(38:37):
molson Coors, it's the Wine andSpirits groups, there's a couple
of those that are pretty bigand have a lot of coverage.
So I think we look at all ofthose.
But that relationship really is.
You know, you kind of get itstarted and you gauge the
interest of them, you gauge thetiming of when they want to
enter this market.
(38:59):
A number of those distributorsare setting up their own LLCs to
handle this product, to givethem a little bit of a firewall
to you know, their maincorporation, which has this
federal license, and then it'sreally dialogue with these
distributors.
And we have every year we have,you know, these marketing
meetings or planning meetingsfor the next year where we go
(39:22):
through and we say, look, here'swhat happened this year, here's
what we're looking to havehappen next year, here's what we
want to do together, get theirinput, start putting in
implementing items and then putthose into place.
So we try to have a cadencewith our distributors on a
weekly basis at some level, andthat goes sometimes down to our
(39:47):
people going out and ridingaround for reps and meeting with
key accounts.
So it kind of is anall-encompassing effort together
to try to make this our brand,a winning brand, and to try to
support them in whatever waythat we can so that they're
getting us what we need.
Ben Larson (40:06):
Great, and earlier you were talking about some of
the pros and cons of workingwith certain distributors.
What are some of the say, thetop three things that you're
thinking about looking for whenyou're working through the
contracts and talking todifferent distributors?
What are some of those pros andcons that really stand out to
you?
Scott O’Malley (40:25):
Well, I think in the initial conversation what
we're concerned about is numberof reps, what kind of coverage
they have, how often they'reseeing accounts.
It's a little bit differentwhen you go from a beer
distributor to a spirits or winedistributor, to an independent
or a craft.
So cadence of communicationwith retail.
So that's one of the thingsthat we look at.
(40:47):
Where do they cover?
Oftentimes they'll have anexclusive territory that they
handle for certain products andthen they have an expanded
territory that they use for someof these other products.
And it's, like I said, piecingthat puzzle together to try to
figure out who makes sense.
Can they handle this entirearea or are they really good in
this footprint?
And now it's going to beanother one.
(41:09):
And then beyond that, it'sreally just some of the terms,
and there's about three or fourthings that I always look for in
a distributor and then really Ithink it's getting pretty
comfortable with our ability towork with them in a new category
and to maximize theircapabilities with what we can
bring to the table too.
Ben Larson (41:30):
Well, tell us a little bit about the future,
like what's the future hold forClarity, like what are you
hoping to achieve in the next 12, 24 months?
To the extent that you'rewilling to divulge?
Scott O’Malley (41:42):
Yeah, my team would say a lot, but I think you
know we're on a fairlyaggressive expansion program.
We are looking for partners instates where it's either
explicitly regulated or thatthey've said here's what our
parameters are.
There are a few states that weit's almost like we're going to
have a stoplight and you've gotgreen for go, you've got yellow
(42:04):
for probably pretty good, andwe've got some red that we're
like hey, I'm not really surethey're talking about maybe
regulating it or or putting itin a box and maybe we don't want
to go there because we don'twant to get started and then
have to pull out.
So expansion is definitely whatwe're into right now.
We've got a new line ofproducts, or soda pot product is
(42:26):
coming out next month, thevariety packs are coming out
next month.
We're going to add a pumpkinspice latte for our cold brew as
a specialty.
For that.
You know September, octobertimeframe, and then we've been
working on some other things.
I think that through ourresearch project that we've done
with the agency, a companycalled Broadhead in Minneapolis,
(42:49):
we've been able to kind of lookand say, hey, look, we think
between a certain timeframe thisbetter for you health products
are going to be really important.
It might be a little bit earlyright now, but I think we're
looking at adaptogens andnootropics and things that will
be specific to helping peoplewith certain certain maladies.
(43:10):
So I think that's part of it.
We've we've definitely lookedat other what I would call not
carbonated beverages, and thenreally looking at the
marketplace and trying to figureout when do those things fit in
or do they?
They?
may not, and so you know youwatch the market, you try to see
(43:30):
, and we're discovering a littlebit, that buying patterns in,
you know, the southern part ofthe United States may not be
exactly the same as they are,you know in the northern part of
the United States and then evena little bit from east to west.
So we try to keep track of thatand what we don't want to get is
(43:50):
skew happy and just startpushing a bunch of skews up,
thinking that that's going tomake it better.
Sometimes you can overwhelmyour, your distributor reps and
giving them way too many thingsto talk about.
We actually peeled some of oursmaller package items back from
the distributors and we'll usethem as an online item only, Um,
just because they didn't fitwith really the the the
(44:14):
capabilities of the distributor.
Um, they're used to sellingthings in cases that are
beverages and that makes a lotof sense to them.
So trying to sell them, youknow, um, a little shot that
comes in a 12 pack case that'sreally really small um is a
little bit foreign to them.
So, um, I think you know andit's hit and miss, those shots
that we produced, Um, I think,uh, we're really good product,
(44:37):
but we got them to market tooearly.
Um, shots really have startedto become popular in the last
two months.
Um, so we'll bring them backagain.
Um, we had put them outoriginally right away because we
thought it would be a greaton-premise play, but on-premise
had a problem because ofinsurance, that there were a lot
of on-premise bars andrestaurants that were taking
(44:58):
part.
They're getting better and nowthere is insurance and riders
endorsements that they canaccess to cover themselves, but
because of this insurance issue,there were a lot of these bars
and restaurants that justweren't taking the profits and
so sometimes you can be tooearly and I think it hurts.
It hurts you and I think partof that is trying to figure out
(45:21):
the right timing, which that'sno perfect science for sure.
Ben Larson (45:24):
Yeah, it might hurt, but if it doesn't kill you,
it's just a learning opportunity, right, sure?
Scott O’Malley (45:30):
plenty of us.
Ben Larson (45:32):
I also love how potentially bifurcating the
catalog also helps solve thatproblem of not competing with
your customer, the distributoror retailer.
So you have your onlineproducts and then you have your
core retail products.
So really cool.
Yeah, look, I I superappreciate you, kind of like
(45:53):
opening uh the or I shouldn't.
I don't think that thatstatement's actually uh pc
anymore.
So I appreciate you revealing,um, you know a lot of the
strategy uh that that you'reusing and and hopefully, uh, our
audience finds it helpful uh,in their journey.
As we approach the top of thehour, we like to give our guests
the opportunity to give ustheir last call.
This is their opportunity toshout out their brand, where to
(46:16):
contact them?
Pump of you know something thatthey're passionate about,
cannabis or otherwise.
So, yeah, this is your lastcall.
What would you like to tell theaudience, scott?
Scott O’Malley (46:27):
Yeah, I'm taking a little bit maybe a little bit
different twist than some ofthe other ones I've seen on your
shows for the last call.
But my last call is that thereare two million galaxies in the
universe.
Think about that.
It's a lot easier to comprehendwith a clarity and you can find
it at seekclaritycom.
Ben Larson (46:47):
I love that.
I love that you made me feelvery small, thank you.
Scott O’Malley (46:53):
I really enjoyed being on the show.
Thank you for having me.
Ben Larson (46:56):
It's always great talking to you.
It was awesome meeting you inperson up in Minnesota.
All the best to you, lookingforward to staying on this
journey with you and checking inand seeing how it's going.
Scott O’Malley (47:08):
Absolutely, we've really appreciated all of
your expertise and guidance.
Ben Larson (47:12):
So thank you.
Yeah, thanks, scott.
Talk to you soon.
What do you think everyone?
Another great one in the bag.
We miss my co-host, Anna Rae.
I hope you're feeling bettersoon.
I need you back.
I can't do this all by myself.
Thank you everyone, everyone foryour understanding with our
technical difficulties.
Today.
We didn't get to host a liveshow.
But if you have questions, dropthem in the comments.
(47:34):
We'll get to them.
I'm going to invite Scott toengage in the comments as well,
thank you, thank you.
Thank you for continuing tolike, share and subscribe to the
show.
It's growing week after weekand we are thrilled with the
reach that we're getting.
It's growing week after weekand we are thrilled with the
reach that we're getting.
Scott was mentioning to mebefore the show that he was
having people reach out to himsaying hey, I hear you're going
(47:55):
to be on High Spirits.
That's awesome and that isawesome.
I love it.
It makes us feel very special.
So thank you to our teams,vertosa and Wolfmeyer.
You guys are the best.
Thank you for letting us to dothis while you do all that.
And thank you folks.
Thank you to our audience.
Until next time.
Stay curious, stay informed andkeep your spirits high.
(48:20):
That's the show.
Hey everybody, welcome to episode 49 of High
Spirits.
I'm Ben Larson and I'm flyingsolo today.
We're recording Thursday, june27th 2024, and we have a great
show talking about THCdistribution in the mainstream.
We got on my friend ScottO'Malley from the Clarity
(00:26):
Company and we're going to diveinto all things distribution in
the mainstream THC alcoholchannels.
But before we get there I'mgoing to do my little thing.
I don't fly solo too often butI thought I'd go through some
recent news just to kind of talkabout what's top of mind,
what's guiding the way I amthinking.
(00:48):
So let's bring up some newsarticles here.
We have Marijuana Momentreporting on a GOP congressional
panel that's moving to blockmarijuana rescheduling while
amending medical cannabis riderswith penalties for sales near
school.
Thank you, kyle Yeager, for theheadline there.
That's a little concerning.
It just goes to show thatrescheduling is not yet a done
(01:12):
deal.
There's a long way to go beforewe see that implemented.
The other concerning aspecthere is that without a coal memo
, this is kind of the first, ormaybe not the first, but another
step that we see in federaloverreach into the regulated
markets.
Hopefully this gets stoppeddead in its tracks, but we will
(01:33):
see Certainly something worthtracking.
In addition to that, newTennessee laws are tackling
regulations and banning Delta 8.
And I think this goes intoeffect July 1st.
Maybe we'll talk about this alittle bit with Scott.
So this is hemp-derived Delta-8, become famous a lot for its
(01:54):
chemical conversion.
But Delta-8 is a compound thatis naturally found in the plant
and so, without any definedlimits established in this
legislation in Tennessee, itleaves a lot of ambiguity what
that means for full plantextracts.
So again, just as we've beentalking about in the news, the
(02:17):
pendulum is swinging, and whenit's swinging fast and hard and
we don't have responsibleregulations going into place,
there are some very confusingambiguities that can be
implemented.
Moving a little bit away fromthe direct industry, there are
some things that are happeningkind of tangentially.
(02:38):
That, I think, is interestingsignals, and the first one that
came up for me and Anna Rae, whois sick today.
Sorry, I didn't acknowledgethat.
Anna Rae is out sick.
She wishes she could be here.
She's sorry she's not here.
This news article came from heras well as the insights.
But Walgreens is bringing CBDinto their main shelves, so
(03:00):
they're identifying space in thestore, they're pushing things
aside and placing it where theybelieve it belongs and in this
place, in this case topicals,pain relief and whatnot.
But interesting to see themtaking this move and what it
might mean for the future,future product line extensions,
cannabinoid extensions.
(03:20):
But does bring up aninteresting point about where do
hemp, cbd and other compoundsbelong in the source.
Watch that as it continues todevelop.
Similarly, we see the FDApotentially reversing their
order on Juul vaping products aswe start to see retailers
(03:42):
struggle about where and how tosell vape products, largely in
the hemp space.
Bringing nicotine vapes backinto vogue, we will see, but
again, maybe creating space fora future cannabis and or hemp
industry.
So that's my run of the news fortoday.
(04:03):
I won't bore you with itanymore.
It's just what's kind of top ofmind.
I'm going to jump right into itand get Scott on the line.
Scott again is the CEO of theClarity Company.
They're low dose THC hempinfused beverages.
Born out of the homeland ofMinnesota.
Scott is just outside the TwinCities of Minnesota.
(04:26):
Scott is just outside the TwinCities.
He's also a seasonedentrepreneur with over 25 years
of experience across variousindustries.
His expertise in strategy,sales and client relationships
has positioned him as avisionary leader, driving his
company to innovate in thisdynamic beverage space.
So, scott, welcome to the show.
Super excited to have you.
(04:46):
Thank you so much for takingthe time this morning.
How are you doing, man?
How's the week going?
The week's going well.
Scott O’Malley (04:53):
I appreciate you having me on here.
I'm excited to have aconversation.
See where it takes us today.
Ben Larson (04:59):
Absolutely, catch us up to speed, tell us a little
bit about the company.
How long have you guys beenoperating?
What was the genesis of youjumping into this wild wild west
of Hemp THC?
Scott O’Malley (05:10):
And, yeah, let us know a little bit about the
size of your team before we kindof jump into the strategy and
Delta eight business previously,and when we got word in the
middle of May of 2022, that thatthe law was going to change in
(05:30):
Minnesota we had beenexperimenting with a beverage
for CBD and potentially Deltaeight, we pivoted as fast as we
could and by August of 2022, wehad a better first skew ofU of
Seltzer in the marketplace.
We tried to self-distribute forabout a month, figured out
(05:53):
quickly that that was difficultand we weren't very good at it.
So we connected with adistributor network and started
putting that process together.
It took a little while.
It took a few months to get allof that done, but we've grown
quite fast, I mean it is a wildwild west, and it certainly was
the first year they put somefixes into the law that began in
(06:16):
July of 23, which made it alittle bit easier for us to
maneuver in, meaning that therewere some rules and regulations
that helped clear up some of theconfusion, particularly at
liquor store and on-premise barrestaurant levels.
Right now we've got six fullseven sorry full-time employees
(06:39):
and then about 14 part-timepeople that serve various
functions for us.
So as a startup you're alwaysabout two people behind, but you
kind of wear a lot of hats inthe beginning and then as you
grow you start to fill in withsome experts in different
(06:59):
categories.
As you're building your team.
Who are the?
Ben Larson (07:19):
kind of like profiles that you're looking for
?
Scott O’Malley (07:20):
Are you pulling in directly from beverage
categories?
Is it helpful to have peoplewith hemp and or cannabis
knowledge?
What are some of the kind ofprofiles of some people who've
been in the beverage industrytheir entire lives?
Um, and so you know, we've got25 35 year veterans of the
beverage business and I wouldsay that there's a vernacular to
the beverage business.
That's that's.
You don't find in some of theother industries a lot of
acronyms.
I'm often stoppingconversations saying, wait, wait
, what does that mean?
(07:40):
Um, so we have beverageindustry veterans.
That way we can speak thelanguage with our distributor
partners or with other brands.
And then, beyond that, we lookfor people who have retail
experience.
So building brands, creatives,copywriters, social media, all
(08:02):
of that kind of comes togetheras you try to build a brand and
you really have tworelationships.
You have a relationship withyour distribution partners and
then you have relationships atsome level with the consumer of
trying to help drive your brand.
And then you kind of get thatin-between stage where you're
dealing with retailers, whetherthat's on premise or off premise
, trying to put programstogether, all in the name of
(08:25):
building the brand andincreasing velocity in all of
those locations.
Ben Larson (08:30):
I've often said that the cannabis beverage or THC
beverage space is inherentlydifferent than all the other
form factors that you find in a,say, a dispensary, right, um,
and it's not necessarily a thcalternative, it's more of a
beverage alternative and so,like you know, focusing on
(08:51):
building teams that are thatreflect more of a classic
beverage company versus the, thediversity that you get in a in
a typical cannabis or hempcompany, um, earlier you were
mentioning, mentioning kind ofgoing from self-distribution
into a more traditionaldistribution network.
I'm curious actually.
(09:13):
What it made me think about waskind of the nature of
direct-to-consumer shipping,creating an online presence
versus doing all the groundworkto do distribution.
And I think there's a lot ofconversation lately, even in the
beverage category, whichshipping beverage all around the
(09:33):
United States is an interestingprospect of its own.
But how are you thinking aboutdirect-to-consumer online
presence versus building thebrand in the traditional retail
market?
Scott O’Malley (09:52):
You know, our focus has been and will be, you
know, sales in the distributionchannel.
So through liquor stores,through grocery stores, through
C stores.
That's been our focus so far,and I think that there are other
companies out there that aredoing it differently, right?
So you know, there arecompanies that start with
distributors, convert most oftheir sales to
direct-to-consumer and then theygo that route.
That's not the way that we'regoing to go.
(10:14):
We have an online presence, butwe don't push it very much.
In my mind, you know, if yourbest customers are your
retailers that are selling yourproduct, and then you go online
and you start selling it at adiscount lower than what they
could buy it for, or at the sameprice that they can buy it for.
Suddenly, they're starting tolook at you like, hey, are we
really partners in this?
And so for us it's been, youknow, trying to kind of walk
(10:38):
that fine line of making surethat we're not selling it at a
price less than what ourretailers can sell it for.
Otherwise, you know, they don'thave a lot of motivation to be
pushing your product, and weneed them pushing the product in
order to build a brand.
And so that's our strategy.
It's not everybody everybrand's strategy, but it's
certainly ours.
(10:59):
I think that building thisnetwork and kind of through this
three-tier system makes a lotof sense.
There's a lot of age gating insome of the rules and
regulations around it that makeus pretty comfortable and make
our distributor partners prettycomfortable.
Ben Larson (11:15):
I think you touched on something that's super
insightful.
When I worked with techcompanies, we talked a lot about
customer confusion and pushingfounders to truly understand who
their customer is versus whothe consumer is.
Can we dive into that a littlebit?
Can you talk about identifyingthe retailer as the customer and
(11:42):
what that means and how thatdrives your decision making, and
then we can kind of get intothe interplay of also
understanding who the consumeris but how that all relates back
to being a better product foryour customer who is the
retailer?
I think it's a reallyinteresting concept.
Scott O’Malley (11:59):
Yeah, so I think that we run parallel paths on
trying to talk and communicatewith our customer, who is really
the retailer as well as theconsumer itself, and so we spend
resources at the distributionlevel, having communication with
those area managers and thosereps.
We also spend resources andhave people in the marketplaces
(12:21):
talking to retailers, because,in the end, they're the ones
pushing your product and they'rehelping you build the brand.
Now, that doesn't mean that wedon't also spend resources on
the consumer, because we'retrying to do that at the same
time.
So, yeah, our client is theretailer, that's the person who
has our products out for sale,but we're also trying to
communicate with the consumer,really digging into who the
(12:43):
consumer is, why they buy ourstuff, why they might buy
someone else's products.
And we're in the middle whilewe're getting close to the end
of a research project on ourconsumers.
So who's buying it?
Who's buying other people'sproducts?
Why are they buying it, whenare they buying it, what are
they using it for, what's theoccasion.
And we're gathering all thatinformation which I think, for
the most part, we think we know,but we wanted to make sure that
(13:06):
we knew, and so some of thatconsumer insight will then help
us with retails will definitelyhelp us with distributors, and
then we'll kind of look at thatand start to weave some of that
information into our approachand our strategy when we talk
about whether we're marketing toconsumers or marketing to the
(13:27):
or having communication withthose retailers.
So it's intertwined and it'snot the same conversation.
It's a little bit different whenyou're talking to a retailer
than it is if you're trying totalk directly to a consumer and
you know we've got programs thatwe do for both areas and kind
of treat them both as clients.
Ben Larson (13:47):
What are some of the mechanisms that you're doing to
go out and get that data?
Because what we hear a lot inthe industry is that data is
hard to find.
Nielsen's isn't doing this,bdsa and Headset aren't doing it
, so are you out there likepounding the pavement and
gathering the data yourself, orare retailers helping you out
with some of this?
Scott O’Malley (14:05):
A little bit of both.
So we're all doing our ownsurveys on a price and who's in
the market and who's selling,and gathering information from
our retail partners.
We've done this researchproject into the consumer habits
so we're gaining some insightthere on you know kind of the
(14:26):
buying patterns and the buyinghabits, what's helping them make
the decision.
I don't know that in thisindustry yet that any particular
brand has risen to the top, oreven a group of brands that are
definitely defined in all of thedifferent states that people
are in as, hey, that's the topbrand or that's one of them.
We aspire to be there for sure,but I don't think it's there
(14:47):
yet and I think there's a lot ofcuriosity.
I think there's a lot oftesting and sampling and
experimentation within.
Ben Larson (14:53):
The industry.
Scott O’Malley (14:54):
So you know we're trying to stay in the
forefront, make sure that wehave as much data as possible.
But you're right, it's hard toget to right now, it's not
readily available.
But you're right, it's hard toget to right now, it's not
readily available and so there'sa little bit of guesswork to it
.
Frankly, in this business,because it's still the wild,
wild west, there's a lot ofguesswork into into this
(15:15):
category in general.
Ben Larson (15:16):
Yeah Well, with the, the interest and the momentum
that we see, I think it'll onlybe a matter of time before
people start really wrappingtheir arms around this.
I know there's been a lot ofconversations and the
associations and how do we, youknow, create category codes for
the products and get that intothe data collection engines?
But, speaking more tactically,when you're talking to a
(15:40):
retailer and you're starting toget to understand your consumer
better, what are some of thetalking points that are and
you're starting to get tounderstand your consumer better?
What are some of the talkingpoints that are helping you
frame up the pitch to theretailers and distributors that
are setting you apart?
What are they asking for?
What do they really want to see?
Scott O’Malley (15:57):
Well, I think it's a number of things.
One, it's education.
So how do you sell it to theconsumer?
What's your product?
How do you differentiateyourself from some of the other
brands that are out there?
And there's a lot of brandsright now a lot of SKUs, right.
So you know it's giving themthe education of hey look, you
know, our seltzers have zerocarbs, zero sugar, zero
sweeteners, zero calories, right?
Our cold brew coffee product isvery unique in that it has no
(16:20):
preservatives, in a shelf stable, doesn't need to be
refrigerated, and that it has nopreservatives and is shelf
stable, doesn't need to berefrigerated, and it's a really
tasty product.
So it's new and it's, yeah, youknow, and it's unique, right.
So I think they're looking forthings that they can communicate
to the customer that comes inon how to sell the product and
(16:41):
what the highlights are.
And then I think they'relooking for activity how do we
help them move more product morequickly?
So that's with programming andend caps and displays and stacks
and collateral and you know allthe different things that we
look at.
We do some giveaways once in awhile, we'll do some some
rebates, um, that kind of stuff.
(17:01):
So, um, you know, it's reallyjust working with them and they
know their customer way betterthan I do.
They know their clientele.
So we just have conversations,say, look, what do you think
about doing this?
What if we did this?
And then we try to put a plantogether with that retailer for
a length of time.
You know we often will do sixmonth, one year programs where
(17:24):
we're planning out that far andsaying, all right, look in this
month we're going to do this,we're going to take a little
break, we're going to come backwith this other product.
You know we're launching oursoda pot product next month, so
that'll be new.
We're launching some varietypacks.
Well, actually, some of themare today for the first day and
then there'll be some more inthe variety pack for for soda
(17:44):
pot.
So you know, you, you give thema little bit of lead time on on
some of the things that arecoming and they get excited
about it and then you can putprograms together.
But you know it's reallystrategic about look, we want to
be part of your display sixmonths out of 12.
It's not every other month,sometimes it's.
You know, there are certaintimes that we definitely want to
(18:05):
be the focus of someone whenthey walk into that store and
they see our stuff.
It's not necessarily always onsale, oftentimes it is, but
that's not necessarily alwaysthe driver and then doing some
interesting things that maybeare a little bit out of the box
(18:27):
to attract the consumer and givethe retailer something to talk
about.
Ben Larson (18:31):
I've always known that it takes more than a
product right and I'd neverunderstood that you can actually
come in with those six or 12month plans of like, really like
this is what you're gonnaexpect from us as a brand and
how we're gonna be a greatpartner.
I think that's super helpfulbecause I, you know, work with a
lot of startups.
They get super excited, pumpedabout their, their brand.
(18:53):
They get it into co packing,they get it.
You know they see it come offthe shelf and then you know I
don't hear this part of thebusiness all that often and you
know, hopefully, you know peoplepick up on this.
I will give you huge kudos.
I have a couple here in myfridge, like the Zero Cal
product is fantastic.
(19:14):
The flavors are there.
You know there's a lot of highsugary beverages on the market.
Um, some you know as high, ifnot higher, than you know a, a
standard.
You know Coca-Cola or somethinglike that.
Um, but your new products, thatthe coffee is my, my, I'm going
to, I'm going to out my wifelike this has become her
(19:35):
favorite way to kick off aweekend is uh, get, get the get
the energy and and therelaxation at the same time I
know I like your wife um, okay,so let's talk about, like the,
the, you know, putting this allinto action and and getting the
distribution you know.
Uh, I hope you don't mind mesaying clarity is not the
(19:58):
biggest name going out there,but, to your point, there is not
a biggest yet and there's alittle bit of.
We've talked offline.
There's a little bit of rhymeor reason to how fast to grow a
brand in the current state ofthe market, and a lot of that
has to do with distributionrelationships.
Distributional relationshipscan get you very quick access to
(20:23):
shelves and prominence, but italso could become a limiter at a
certain point.
So I want to kind of get intothe kind of strategy and the
dynamics about selecting yourdistributors and how fast is
fast enough for, at least inyour case, everyone's strategy
is different.
Not one is necessarily betterthan the other, but how are you
(20:47):
thinking about it?
Scott O’Malley (20:48):
You know it's actually changed a little bit,
even in just the last two years.
We were fortunate to connectwith the Anheuser-Busch Network
for Minnesota.
They've been a good partner forus Network for Minnesota.
They've been a good partner forus, and so you know we tend to
look at those more macro typedistributors.
Ben Larson (21:09):
But you know when you think about distribution in
a particular state.
Scott O’Malley (21:13):
We really take it on a state by state basis and
the team gets together and wetalk about it and I've got four
people that we all meet.
They are all industry veterans,they know the distributors and
that's the distributor you know.
You can look at distributionand say, look, we can go with a
macro distributor, we could gowith a wine and spirits
distributor, we could go with acraft distributor, we can go
(21:34):
with an independent distributor.
They all have their pluses andminuses.
So, and then there's even now afew distributors that are
popping up that are THC-centricdistributors.
So you know it can be adifferent strategy from state to
state.
It makes it a little bit moredifficult because if you become
used to sort of the template ofworking with a type of
(21:57):
distributor, it's a littleeasier to put the programs in.
You understand each other'sbusiness type of distributor.
It's a little easier to put theprograms in.
You understand each other'sbusiness.
When you switch back and forthfrom, let's say, an independent
distributor to a macrodistributor, the vernacular is
the same but the implementationcan be a little bit different.
So when we look at it, we do iton a state-by-state basis and we
(22:18):
have different strategiesdepending on the state and what
we think that state's potentialcan be.
So there are times when we lookat a state we're like, all
right, in that particular statewe want to be one of the first
five or six brands in that state, because it's important.
We may look at a differentstate and say, hey, you know, we
definitely want the rightpartner here and the right
(22:39):
partner isn't quite ready to goyet, so we're going to hold off
it's.
We have that discussion everyweek about particular states and
I will tell you that our teamis often split on which approach
to take.
We don't always have the sameopinion.
So we kind of go through it andwe and we look at all of the
(23:00):
options and there's some nuancesto to those different types of
distribution and then what theymight mean.
If you do something in thisstate, how does that transfer to
maybe an adjoining state oreven one that that isn't
adjoining?
So there's more thought thatgoes into it than just you know,
(23:20):
taking the first one that saysyes.
And so we've played it right afew times and we got it wrong a
few times.
And you just kind of learn alittle bit and try to make the
right decisions to make theright decisions, but in the end
sometimes I think that thatthere may not be a wrong
(23:44):
decision early on in thisindustry where we are now,
because we're really in theinfancy.
Maybe we're a toddler now, butyou know, it's the beginning of
an industry that is likely todisrupt the beverage industry on
some level.
In Minnesota the liquor storesales are now reaching 10 to 15
percent of total revenue withinthe liquor store.
(24:06):
It took craft beer 20 years toget there.
It took THC beverages less than18 months.
It's a fascinating number.
It gets everybody's attentionand there are still a lot of
distributors who are sitting onthe sidelines saying, hey, I'm
not sure about this, I'm notsure what this means from a
(24:28):
legality standpoint with theirfederal licenses, and so putting
that team together, puttingthat right partnership group
together in a particular state,at times can be kind of like
putting a puzzle together andtrying to make sure that you
know when you get to the end.
You don't have three piecesthat don't go anywhere.
Ben Larson (24:50):
I'm sure you've seen some of the commentary on those
numbers where people are saying, oh, this is.
You know this is a noveltyproject.
You know it's going to be aflash in the pan.
You know a lot of dissent outthere.
But sitting in Minnesota, nowthat you've had, you know, a
couple of years now of this kindof legalized market, what is
(25:10):
your feeling or response tocommentary like that?
Scott O’Malley (25:24):
it might have been maybe a knee-jerk reaction
to the industry in the beginning.
I think that there's probablysome validity to it in the
beginning, because there weresome bad actors within the space
that were producing productsthat weren't really very good or
didn't have the right potencyor maybe didn't have the correct
potency.
But I think that what we see isthat it's hitting the mark for
some consumers and it's areplacement for alcohol for some
(25:47):
people.
It's a complimentary productfor people who don't want to
drink quite as much as they usedto.
It fits with the lifestyle forcertain groups and, I think, the
medicinal properties of it,which will become more and more
relevant in the years to come.
As more and more research isdone and you can pinpoint, you
(26:09):
know, maladies for pain, sleep,anxiety, women's health, that
kind of thing.
You'll see products that arespecific to helping those.
So I have a hard time believingthis is a flash in the pan.
It doesn't have this crazyamount of growth in 18 months
and realistically it's really 12months of where sales have
(26:29):
really been booming.
I just think it's somethingthat the marketplace is looking
for.
It's a low dose product.
It's not.
You know someone who smokesevery day.
This is not their product.
They can drink four of ourdrinks and go work out and feel
fine.
But for a certain part of thepopulation and certain group of
(26:54):
consumers this product hasresonated and it's a void that
that was in in people's,people's lives.
Ben Larson (27:03):
Well, yeah, and you yourself entered the industry
because of the medical benefitsof the plant, and so that's an
interesting connection to seethat I um, you know I've found
myself in a lot of arguments,conversations, whatever you want
to call it, where people aresaying weed is not a replacement
for alcohol.
Look how it makes you feel sodifferently.
(27:23):
And I've thought about that alot over the years, and there's
two things that I've arrived at.
One society has been forcedinto using alcohol as a tool to
address various maladies, andoften it's not the right tool,
but it's the tool that you havein your toolbox that's legal.
(27:44):
And now we're finding that, oh,maybe I shouldn't have been
using alcohol for this, but aTHC drink is a perfectly good
tool and in fact, a better onethat I can be using in these
particular instances.
So that's one aspect.
So, like a alcohol replacement,I think people get hung up on
(28:04):
that, as it's an analog alcoholwhich maybe some formulator out
there creates a perfectly greatcombination of cannabinoids and
terpenes to actually achievethat.
I haven't seen it yet, but itis replacing where alcohol was
being misused in society.
But it is replacing wherealcohol was being misused in
(28:24):
society.
And then the other aspect isthat people are spending good
money at a bar or restaurant andthey want to feel something.
They don't want to just spendthat on a non-alcoholic drink no
offense to those drinkingnon-alcohol or on the total
sobriety chain.
I love you, but people wantsomething if they're spending
money in a social setting, andthis is again filling a void
that previously existed.
Scott O’Malley (28:47):
Yeah, I think it definitely is filling a void I
personally really enjoy usingthem together.
I like drinking our product or,frankly, somebody at one of our
competitors' products, alongwith an alcoholic drink or two.
But I can tell you that I drinka lot less alcohol and I've now
thrown a clarity in there, soit's really having a water and I
feel a lot better the next day.
Ben Larson (29:07):
And as I get older.
Scott O’Malley (29:09):
I do not like the hangover anymore and a lot
of my friends and the peoplethat I talk to, you know we used
to maybe use that hangover orwear that hangover as a badge of
honor, but I'm not interestedin that anymore and so you know
I can go out with my friends andthey may have you know, I'm not
(29:30):
going to put a number out there, but a number of of of beers.
I'll have, you know, one of ourdrinks and maybe one drink and
I'll feel the same as they do.
You know I'm going to wake upthe next morning feeling pretty
good and they're going to wakeup a little sluggish and it does
make a difference.
And I think that you know theseproducts, particularly right
(29:51):
now, are pretty easy for peopleto use for sleep.
They're pretty easy to use tohelp with anxiety and pretty
easy to use to mitigate somepain, without being specific
about making claims about it,but people are experimenting
with it and they're figuring outyou know how to use it and how
it works for them and the factthat it's fast acting, so it's
(30:13):
it's kicking in at about thesame time than an alcoholic
drink would You're not getting.
There's.
So many people have stories,including me.
You know, I tried a gummy and Iwaited 20 minutes.
And I tried another one and Iwaited 20 minutes and I took a
third one and then they allganged up and suddenly I was not
exactly feeling the way Iwanted to feel originally.
This is a much different dealnow with with nano emulsified
(30:36):
emulsion.
It's fast onset.
You're not getting what I callover the tips.
Um, you know you're.
You're getting to where youwant to be for whatever that's
for, uh, including if you wantto catch a little buzz on it,
but you can get to where youwant to be and you can maintain
that for as long as you want towithout, you know, continuing to
escalate, which typically, atleast for for me, can happen in
(30:58):
alcohol.
Ben Larson (31:00):
I'm glad you point out the interplay of THC and
alcohol.
I'm a fan of the classiccrossfade and it's been an
interesting relationship betweencannabis and alcohol and
regulations.
And I know Minnesota has goneon this journey themselves Like
and I know Minnesota has gone onthis journey themselves, like
(31:20):
you know.
I think there was a time wherethey said you couldn't serve a
patron a THC beverage if theyhad consumed an alcohol beverage
within like five hours.
It was something ridiculous.
That was you know, like youread it and like.
This is impossible to enforce.
How does this even get this far?
What is the current situationin Minnesota?
I think they've done away withthat.
Scott O’Malley (31:42):
Yeah, that law never went into effect.
I think, the legislators knewthat that was going to be a
problem.
They had told us early on thatthis will get fixed before it
goes into effect.
It was supposed to go intoeffect July 1st of this year.
They fixed it in this lastsession.
What I will say is they did apretty good job in.
(32:03):
Minnesota because there reallywere only three fixes that
needed to be taken care of inthe bill.
They took care of those.
That is not an issue anymore,mainly because it doesn't make
sense and enforcement would havebeen darn near impossible.
Ben Larson (32:19):
Man.
What is that like?
Living in a state where youidentify issues and then you
rectify them before it becomeslaw?
That must be.
It sounds like a dream.
Scott O’Malley (32:31):
It can be but you know it's always a process
right, and so you know you'vegot different factions that have
different ideas of what theywant to have happen.
So we do spend a decent amountof time with conversations with
our lawyers, conversations withlobbyists, conversations with
the legislature in a number ofdifferent states.
Now.
Ben Larson (32:50):
As they put this together.
I think that Minnesota did areally good job with this bill.
Scott O’Malley (32:57):
I wish other states would use it as a
template.
Some are, but then you get theoutliers who want to throw
something interesting in.
Like Iowa decided to make afour milligram per serving law
when everywhere else in thecountry it's five.
So that means everybody wouldhave to change their packaging
in order to be compliant withinIowa, but it also means you're
(33:18):
now out of compliance in otherstates if you try to put more
than two servings into a can.
So I think I understand whatthey were trying to do, which
was protect the smallerbusinesses and really the
breweries and producers in thestate of Iowa, but in the end
they're really just punishingthe consumer because a lot of
the bigger better brands are notgoing to go there.
(33:43):
It's going to change all theirpackaging.
They're selling all over thecountry for one state.
Ben Larson (33:48):
Well, not to mention that most small brands have
aspirations of growing intobigger brands.
And if you're an Iowa-basedcompany, sure, you might have a
leg up to get started, but theminute you want to scale beyond
Iowa then you're totallyhandcuffed For sure, or at least
as handcuffed as everyone elsetrying to get into the state.
So there's been a lot ofshifting legislation lately,
(34:12):
both at the various state levelsand at the federal level.
Bring it back to thedistributors a little bit.
How is that affecting sentimentthis year, or I said, well,
this part of this year, so callit Q2 compared to like the
beginning of the year.
Scott O’Malley (34:30):
I would say that it has changed somewhat
dramatically.
I think that the distributornetwork, and it doesn't matter
at what level, whether it's youknow the macro distributors,
wine and Spirits, you know thecraft or the independents, they
all at one time were looking atthis saying, hey look, am I
(34:51):
putting my federal license injeopardy here?
They've done their duediligence.
You know, the National BeerWholesalers Association came out
with some guidance against itand so it took people a while
and it took a number of thedistributors and their lawyers
to work through whether therereally is risk here or how much
(35:14):
risk.
And in the end distributorsstarted to feel like they had
the information they needed andthey were okay moving forward.
They were not putting theirnational license in jeopardy.
So that pace of acceptance anddistributors looking at getting
into the market in the last 45to 60 days has increased
(35:37):
dramatically.
And I think part of it is thatthere were a couple of really
big distributors throughout thecountry who looked at the
category and said we're gettinginto it, We've done our
diligence and we're comfortablewith where we're at and what the
risk is.
And when a big distributordecides that they've done their
diligence and they're okay,somebody that's maybe half that
(36:01):
size might go.
Well, geez, they sell a wholelot more than we do.
They don't think it's an issue,then why do we?
But there's also ownershipgroups who just are against the
category in general, and so youget a little bit of resistance
there.
And then some of thelegislatures in some of the
states have made some noise thatthey don't like it or they want
(36:25):
don't don't want it, or theywant to regulate it or they want
to tax it, and so there's anumber of factors that that that
can make people a little bitfearful.
But you're talking about a highmargin price item, margin, high
price item and I think in theend they look at it and then
they assess.
You know what the risktolerance is and for the most
(36:51):
part I think the distributorsare starting to say look, this
is a category that's not goingaway.
This is a category that's goodfor us to be in, and I think
that liquor store chain and thatage gating is the appropriate
place for these products to be.
They're used to checking ageverification and they're already
used to the way things aredelivered and the way things are
presented and how this wholeindustry works.
(37:12):
So to me it makes sense to bethere.
We're still going to be in vapeshops and tobacco shops and,
you know, c-stores and that sortof thing also, but I think the
majority of the of the sales,direct to consumer, direct from
the retailer to the consumer, isgoing to be where they already
go to buy beer, wine, spirits,that sort of thing.
Ben Larson (37:35):
Makes sense.
So you were talking earlierabout being in the AB InBev
distribution network and to myknowledge there's a lot of like
independently owned, ab approvedor relationship distributors,
depending on the regions thatyou're in.
What does it mean to be workingwith an AB distributor and are
(37:59):
there relationships that thatleads to like in other markets?
You know relationships, yeah, Iguess.
What's the dynamic once you'rein that relationship and how do
those networks you know I guessmaybe lean on each other, relate
to each other, if at all?
Scott O’Malley (38:16):
Well, there is some influence.
You know we can reach out toour distributors and say, hey,
we'd really like to work withthis distributor in the state.
Can you make an introduction?
We've got three people on ourteam who've dealt with
distributors throughout thecountry their entire career.
So those relationships alreadyexist.
And it's not just the ABnetwork, it's the Miller Coors,
(38:37):
molson Coors, it's the Wine andSpirits groups, there's a couple
of those that are pretty bigand have a lot of coverage.
So I think we look at all ofthose.
But that relationship really is.
You know, you kind of get itstarted and you gauge the
interest of them, you gauge thetiming of when they want to
enter this market.
(38:59):
A number of those distributorsare setting up their own LLCs to
handle this product, to givethem a little bit of a firewall
to you know, their maincorporation, which has this
federal license, and then it'sreally dialogue with these
distributors.
And we have every year we have,you know, these marketing
meetings or planning meetingsfor the next year where we go
(39:22):
through and we say, look, here'swhat happened this year, here's
what we're looking to havehappen next year, here's what we
want to do together, get theirinput, start putting in
implementing items and then putthose into place.
So we try to have a cadencewith our distributors on a
weekly basis at some level, andthat goes sometimes down to our
(39:47):
people going out and ridingaround for reps and meeting with
key accounts.
So it kind of is anall-encompassing effort together
to try to make this our brand,a winning brand, and to try to
support them in whatever waythat we can so that they're
getting us what we need.
Ben Larson (40:06):
Great, and earlier you were talking about some of
the pros and cons of workingwith certain distributors.
What are some of the say, thetop three things that you're
thinking about looking for whenyou're working through the
contracts and talking todifferent distributors?
What are some of those pros andcons that really stand out to
you?
Scott O’Malley (40:25):
Well, I think in the initial conversation what
we're concerned about is numberof reps, what kind of coverage
they have, how often they'reseeing accounts.
It's a little bit differentwhen you go from a beer
distributor to a spirits or winedistributor, to an independent
or a craft.
So cadence of communicationwith retail.
So that's one of the thingsthat we look at.
(40:47):
Where do they cover?
Oftentimes they'll have anexclusive territory that they
handle for certain products andthen they have an expanded
territory that they use for someof these other products.
And it's, like I said, piecingthat puzzle together to try to
figure out who makes sense.
Can they handle this entirearea or are they really good in
this footprint?
And now it's going to beanother one.
(41:09):
And then beyond that, it'sreally just some of the terms,
and there's about three or fourthings that I always look for in
a distributor and then really Ithink it's getting pretty
comfortable with our ability towork with them in a new category
and to maximize theircapabilities with what we can
bring to the table too.
Ben Larson (41:30):
Well, tell us a little bit about the future,
like what's the future hold forClarity, like what are you
hoping to achieve in the next 12, 24 months?
To the extent that you'rewilling to divulge?
Scott O’Malley (41:42):
Yeah, my team would say a lot, but I think you
know we're on a fairlyaggressive expansion program.
We are looking for partners instates where it's either
explicitly regulated or thatthey've said here's what our
parameters are.
There are a few states that weit's almost like we're going to
have a stoplight and you've gotgreen for go, you've got yellow
(42:04):
for probably pretty good, andwe've got some red that we're
like hey, I'm not really surethey're talking about maybe
regulating it or or putting itin a box and maybe we don't want
to go there because we don'twant to get started and then
have to pull out.
So expansion is definitely whatwe're into right now.
We've got a new line ofproducts, or soda pot product is
(42:26):
coming out next month, thevariety packs are coming out
next month.
We're going to add a pumpkinspice latte for our cold brew as
a specialty.
For that.
You know September, octobertimeframe, and then we've been
working on some other things.
I think that through ourresearch project that we've done
with the agency, a companycalled Broadhead in Minneapolis,
(42:49):
we've been able to kind of lookand say, hey, look, we think
between a certain timeframe thisbetter for you health products
are going to be really important.
It might be a little bit earlyright now, but I think we're
looking at adaptogens andnootropics and things that will
be specific to helping peoplewith certain certain maladies.
(43:10):
So I think that's part of it.
We've we've definitely lookedat other what I would call not
carbonated beverages, and thenreally looking at the
marketplace and trying to figureout when do those things fit in
or do they?
They?
may not, and so you know youwatch the market, you try to see
(43:30):
, and we're discovering a littlebit, that buying patterns in,
you know, the southern part ofthe United States may not be
exactly the same as they are,you know in the northern part of
the United States and then evena little bit from east to west.
So we try to keep track of thatand what we don't want to get is
(43:50):
skew happy and just startpushing a bunch of skews up,
thinking that that's going tomake it better.
Sometimes you can overwhelmyour, your distributor reps and
giving them way too many thingsto talk about.
We actually peeled some of oursmaller package items back from
the distributors and we'll usethem as an online item only, Um,
just because they didn't fitwith really the the the
(44:14):
capabilities of the distributor.
Um, they're used to sellingthings in cases that are
beverages and that makes a lotof sense to them.
So trying to sell them, youknow, um, a little shot that
comes in a 12 pack case that'sreally really small um is a
little bit foreign to them.
So, um, I think you know andit's hit and miss, those shots
that we produced, Um, I think,uh, we're really good product,
(44:37):
but we got them to market tooearly.
Um, shots really have startedto become popular in the last
two months.
Um, so we'll bring them backagain.
Um, we had put them outoriginally right away because we
thought it would be a greaton-premise play, but on-premise
had a problem because ofinsurance, that there were a lot
of on-premise bars andrestaurants that were taking
(44:58):
part.
They're getting better and nowthere is insurance and riders
endorsements that they canaccess to cover themselves, but
because of this insurance issue,there were a lot of these bars
and restaurants that justweren't taking the profits and
so sometimes you can be tooearly and I think it hurts.
It hurts you and I think partof that is trying to figure out
(45:21):
the right timing, which that'sno perfect science for sure.
Ben Larson (45:24):
Yeah, it might hurt, but if it doesn't kill you,
it's just a learning opportunity, right, sure?
Scott O’Malley (45:30):
plenty of us.
Ben Larson (45:32):
I also love how potentially bifurcating the
catalog also helps solve thatproblem of not competing with
your customer, the distributoror retailer.
So you have your onlineproducts and then you have your
core retail products.
So really cool.
Yeah, look, I I superappreciate you, kind of like
(45:53):
opening uh the or I shouldn't.
I don't think that thatstatement's actually uh pc
anymore.
So I appreciate you revealing,um, you know a lot of the
strategy uh that that you'reusing and and hopefully, uh, our
audience finds it helpful uh,in their journey.
As we approach the top of thehour, we like to give our guests
the opportunity to give ustheir last call.
This is their opportunity toshout out their brand, where to
(46:16):
contact them?
Pump of you know something thatthey're passionate about,
cannabis or otherwise.
So, yeah, this is your lastcall.
What would you like to tell theaudience, scott?
Scott O’Malley (46:27):
Yeah, I'm taking a little bit maybe a little bit
different twist than some ofthe other ones I've seen on your
shows for the last call.
But my last call is that thereare two million galaxies in the
universe.
Think about that.
It's a lot easier to comprehendwith a clarity and you can find
it at seekclaritycom.
Ben Larson (46:47):
I love that.
I love that you made me feelvery small, thank you.
Scott O’Malley (46:53):
I really enjoyed being on the show.
Thank you for having me.
Ben Larson (46:56):
It's always great talking to you.
It was awesome meeting you inperson up in Minnesota.
All the best to you, lookingforward to staying on this
journey with you and checking inand seeing how it's going.
Scott O’Malley (47:08):
Absolutely, we've really appreciated all of
your expertise and guidance.
Ben Larson (47:12):
So thank you.
Yeah, thanks, scott.
Talk to you soon.
What do you think everyone?
Another great one in the bag.
We miss my co-host, Anna Rae.
I hope you're feeling bettersoon.
I need you back.
I can't do this all by myself.
Thank you everyone, everyone foryour understanding with our
technical difficulties.
Today.
We didn't get to host a liveshow.
But if you have questions, dropthem in the comments.
(47:34):
We'll get to them.
I'm going to invite Scott toengage in the comments as well,
thank you, thank you.
Thank you for continuing tolike, share and subscribe to the
show.
It's growing week after weekand we are thrilled with the
reach that we're getting.
It's growing week after weekand we are thrilled with the
reach that we're getting.
Scott was mentioning to mebefore the show that he was
having people reach out to himsaying hey, I hear you're going
(47:55):
to be on High Spirits.
That's awesome and that isawesome.
I love it.
It makes us feel very special.
So thank you to our teams,vertosa and Wolfmeyer.
You guys are the best.
Thank you for letting us to dothis while you do all that.
And thank you folks.
Thank you to our audience.
Until next time.
Stay curious, stay informed andkeep your spirits high.
(48:20):
That's the show.
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