High Spirits

#012 - Cannabis Beverage and the Legacy Consumer with Ave Miller from Uncle Arnie's

October 05, 2023 AnnaRae Grabstein and Ben Larson Episode 12
High Spirits
#012 - Cannabis Beverage and the Legacy Consumer with Ave Miller from Uncle Arnie's
Show Notes Transcript Chapter Markers

Get ready for a spirited discussion with Ave Miller from Uncle Arnie's as we navigate the fascinating universe of cannabis beverages and the legacy consumer. We'll take you on a journey through the expansion of Uncle Arnie's into multiple markets, building a unique brand that defies the norm, and the keys to success in launching and growing a beverage brand. 

Ave shares his wealth of knowledge on cannabis beverages, discussing everything from product types to flavors and availability across the U.S. You'll hear first-hand stories about the challenges faced when launching a product, the importance of customer engagement, and the adjustments Uncle Arnie's made based on consumer feedback. Ave emphasizes the importance of investing in real data and consistent growth, sharing his unique perspective on navigating this dynamic industry.

Join us as we continue the conversation, diving deep into the cannabis beverage industry with one of its most passionate advocates, Ave Miller from Uncle Arnie's. This is an episode you don't want to miss!

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Speaker 1:

Hi everybody. Hey everybody, welcome to High Spirits. I'm Ben Larson, and with me, as always, is my partner in crime, anna Rae Grabstein. Hey, anna Rae, how are you?

Speaker 2:

Hey Ben, I'm doing really well. Super glad to be back after a week off. How you doing?

Speaker 1:

I'm good, I'm super pumped on today's show. We're going right in my wheelhouse. We're going to be talking about cannabis beverage. We have one of our longtime partners on Uncle Arnie's Ave from Uncle Arnie's Just an incredible person, incredible company. We're going to be talking about man, heavy dose, consumer, the multi-market expansion, just what it is to build a brand. That's kind of contraflow to what a lot of the trends in the beverage space are. But we'll get to that in a bit. I'm just happy to be here. We took a last week off. That was my fault. I needed a little time with my family, went out to Hawaii after hanging up the last call. I was literally packing up my suitcase leaving DC and then was in Hawaii two days later. My biological clock was all messed up.

Speaker 2:

I don't feel that.

Speaker 1:

Yeah, I'm excited to hear about your last week. You were on the conference tour last week.

Speaker 2:

I was. I went out to Chicago to Benzinga and had a really great trip. I would say that it was a useful and worthwhile conference to go to. For folks that haven't been, it brings together a lot of executives and operators, investors, ancillary service providers. They have been having the conference in Miami and Chicago. This one in Chicago I just saw a lot of people that was really great to see say that there was a much more hopeful feel, especially from investors. At the same time, I heard a lot of people talking about gearing up to raise a fund. They weren't necessarily deploying checks. The optimism was higher. I think that we'll see what happens. The event took place the first day, kicked off just as the Senate Banking Committee had passed Safer out of committee, which was a pretty big deal In the history of cannabis policy. That was the first time that any substantive cannabis policy had passed through a Senate committee. I think it was a great way to kick off the conference and that everybody had a sense of excitement and curiosity about what federal policy could do to change the trajectory of the industry. On the flip side, I will say that noticeably, there was a lot less operators there. I think that that just shows that operators are being smarter, more responsible with their cash and not spending to go to conferences. The whole industry is more focused on cash flow and profitability than any time in history. Since I've been paying attention, I saw that loud and clear there. There certainly were some operators there and people had some great presentations on stage. I really enjoyed hearing from Christine Smith from Gron, founder from Portland, who I thought was really impressive, learning about their reverse licensing strategy in other states. I liked her a lot. She seemed like a total badass not someone that I know yet, so someone. Really fun to get to meet some new people. There was an incredible women's executive dinner that happened the first night. That brought together a whole bunch of total badasses. Got to hang with Crystal who runs marketing and retail at Cookies. She was a great person to meet. Kate Miller was there from Ms Grass, krista Raymer, who runs some retail consulting firm out of Canada. She's incredible. I think that coming together in the conference setting is really important. Facetime matters and we'll see what happens, but I stay hopeful. Hopefully people will start to write and checks back into our industry soon.

Speaker 1:

Yeah, interesting Hopes are looking up, but operators weren't there. So just indicative of where we're at in this space. Maybe next time Benzinga rolls around, maybe Miami, Some people will have some checks to write, so maybe we'll see some operators start coming out for it. That's hopeful, though I don't know. Everything I've heard from the economists is that 2024, I'm like what year is it? 2024 is going to look a lot similar to where we're at right now.

Speaker 2:

Yeah, I mean conference aside. Just this week we've seen massive tumult in the House of Representatives, with Kevin McCarthy being ousted by his own party.

Speaker 1:

At least the government's still operating, though, for the next 40 days or so.

Speaker 2:

Yeah, exactly, they negotiated 45 days, so I think we've got 40 more days at this point, but I think that that is going to affect the whole economy and certainly the cannabis economy. We've spent a lot of time talking about the Farm Bill and Safer. None of those things are going to move through the House of Representatives without a Speaker of the House, along with everything else that has nothing to do with our industry. Yeah, I think that it's very hard to predict what's going to come next. The Fed's economic policies have certainly slowed down the economy. The cannabis consumer has spent less money this year. To know if it's going to turn around or if they're going to stay on that trajectory in 2024 is anyone's guess.

Speaker 1:

One thing we can be certain about is that people will continue to drink or consume cannabis and, in my case, hopefully drink it in our guest case. Let's get into the show. What do we have on the docket for today?

Speaker 2:

I am so excited to dive into your category and our guest's category. We're talking about beverage today the legacy cannabis, consumer high-dose beverages and a really awesome wild journey in entrepreneurship from Uncle Arnie's. Why don't you introduce us to Abe and let's bring him on?

Speaker 1:

Yeah, there he is. There's the man, abe Miller, co-founder of Uncle Arnie's, vp of Sales. Abe is a one-man show when it comes to being the face of Uncle Arnie's. He is traveling three, four days a week, every week like clock and some serious mileage. Uncle Arnie's is a top three selling, or has the top three selling, beverage skews across America in 2024, 2023. There I go, getting my years mixed up again. Also, the third largest growing brand grew at 443% in the last year. They're the number one beverage in California via headset, again across 2023. It's just been an awesome team to work with. If I can say so, we've been working with them for the last. What's it been like three years, abe, since you guys launched?

Speaker 3:

Almost yeah, coming on four years here this May. We could say four years coming into January, because it's been a larger development even outside, just Uncle Arnie's prior to the brand launch and working with the manufacturing business well beforehand. We can say well over four years at this point now.

Speaker 1:

That's true. Everything blossomed out of what was Space Station in the early days. Absolutely man, that was crazy times. The first beverage co-packer in California, really just learning it as we go we learned a lot.

Speaker 3:

We won't rehash it all, but we learned a lot in those early days, oh yeah, that was my first time ever stepping into the edible space period because I came from flower brokerage and doing more brokerage and sales operational strategies with other brands Before I got looped into actually the craziness of Space Station and the wild success that they've had and working with the pleasure of working with Matt and Brad and all those guys over there and helping start in this brand. It's been a crazy ride, just even learning about nano-emulsions and working closely with Harold Him and I spent a lot of time diving deep into what is nano-emulsion, what will be in the future, how can we innovate beyond past that with what you guys already currently have to make things even better in looking towards the future, like live resin and the impact that that could potentially make in the market and how that interacts from a nano-molecular perspective. It's been a fun four years. I'm excited to continue to do it more too. This has been my life since I was 15 years old.

Speaker 2:

Well, eve, it just sounds like a rocket ship. Those data points that Ben said about where Uncle Arnie's is are just incredible. I would love for anyone if there is anyone out there that doesn't know about your products if you could just break down what the products are that are in market so that we could set the stage for the rest of the conversation. I think everybody would love to hear it.

Speaker 3:

Yeah, we have a. Well, we have 12 different product types. We have three, essentially like three different category types. We have eight ounce hundred milligram high dose beverages. We have two ounce hundred milligram high dose shots, and then we have seven point fluid, seven point five fluid ounce ten milligram single dose beverages, essentially, like you know, eating one, gummy and ready to go drinks. All of them are all different flavors. Besides one of the ten milligram skews we have on our eight ounce side, we have an iced tea lemonade, we have a sweet peach iced tea smack, an apple pineapple fruit punch. On our two ounce we have magic mango, two functional ones. Which ones caffeine energy shot with 150 Mexican caffeine If you're an organ that is not an organ just based off the laws and then we also have a 20 to 1 ratio CBN shot and then a strawberry kiwi and then on our 10 milligram, we reintroduced the, the classic iced tea lemonade, which was our first skew that we ever launched in 2020. So we just reimagined that into a lower dose beverage for consumers that have always been curious about our product but have been a little bit too weary or shy to pick up a higher dose beverage and just being nervous to pick up the product that is packed with so much THC. And then we also did a Watermelon flavor, a cherry lime, a very classic to the sonic drink. And then we we did a more innovative Beverage for us, which was a zero calorie, zero sugar green green tea which, haha, I knew it's coming, I just pulled it out of the fridge like this so those are the, those are all the product types and and you can find us all over California. We're active in Nevada. We just launched our eight ounces into nectar With buddies in an organ, so you can find us there. We're in around a hundred dispensaries in Oregon currently right now, with two ounces and eight ounces. And then you know, we got a lot more states coming online here soon. We'll be launching in Michigan in the next two months and we got Arizona and Illinois and a couple other cool states coming online.

Speaker 2:

So Amazing, and while you've recently launched these more low dose that the 10 milligram, seven and a half ounces, really, what where uncle Arnie's launched and a huge part of your story and entrance into the market is about High dose beverages, right.

Speaker 3:

Yeah guys. Yeah, you know, when we, when we first launched a drink it was May 4 2020 I was working really closely with mountain again and Jeff bull, our creative, our chief creative officer, and they had this concept of the beverage idea and we did a lot of market research just on what was going to be successful for a beverage brand in the space, because we had already been selling a lower dose product for Four months prior to that and it was quite unsuccessful, to be completely transparent, and it was really just because the attraction towards low dose wasn't really there. It was more about addressing, you know, the legacy consumer that just wasn't chopping into the store. Yet you know a lot of a lot of my homies aren't going into the store and paying $60 for an eighth period like they. My boy wreck doesn't do that. You know a lot of the times he's getting grams of hash rosin given to him for free. Or you know he's going and buying a pound from his buddy because he smoked so much weed. Or a lot of my other friends are even like that. They still go to Seth shows in Sacramento, they head to 11th Street, do all those different kind of things, and it was really about trying to just help innovate a segment that hadn't really had a brand to make an impact yet. And what all the dispensaries told us then was just make the drink smack, make sure it tastes good and make sure it's 10 bucks because, working with space station and working with the manufacturing facility since they were the first ones kind of coming up into space you know they were producing for brands and coming out with brands like popsuit, ribbon and St I'd they were coming out with. Can you know the lot, one of the largest beverages in the nation right now alongside with us, except for low dose and Ideally. You know we went to all these retailers and just kind of ask them flat out like, hey, you know we are producing beverages ourselves, but more so than that we're having you'll probably have a hundred different brands in the next three years come into the space. So whether you guys like beverages or not or think that they will work in your retail dispensary, you don't have a choice like you will have to embrace this category because there's going to be dozens of dozens of dozens of companies that are going to be at the fate of your hands for either success or for failure, and If we aren't embracing that it's going to be really bad for the industry as a whole. So, after that feedback and seeing the market, and just seeing where the market was positioned at, I think every hundred milligram beverage Average Lee in 2019 was around 17 to 18 dollars, with promos and discounts and you know, fast forward to today, we've been able to compress it down to to nine dollars. But there was only around 750,000 units sold the year prior to us coming into market and it was because of those those high prices and Nobody was really purchasing beverages at scale because they were buying gummies for eight, nine, twelve dollars. And and that was during the time of 2018 to 2019, when the beverage it wouldn't a gummy category just exploded and that's where all the attention was. So you know we just put that action in a play. We we decided to Not make them, not make a massive margin, but really to drive affordability and to drive the success of for beverage and get it as close to consumer goods as possible, to where we felt like we weren't being financially irresponsible from from a cog standpoint for business and and really just gave it back to the customer. And you know it's led us to where we're at today, where Essentially, the price of a hundred milligrams has been completely reset, and that was our entire. Goal was to get it down to a Price where now we're selling upwards to five million units a year and I mean beverage as a whole, as a category, and if you look at 2019, prior to that it was not the case. So that's really where our claim to fame has kind of come to be.

Speaker 1:

I Remember that that time period, that in 2019 2020 time period, there was a a lot of Excitement about the beverage category, a lot of investors like circling around putting money in, but all the attention was going towards the new consumer, like the soccer mom. It was like, and, to your point, a lot of it was low dose. What gave you the confidence and actually I'm gonna I'm just gonna fast forward ahead. It went from that to probably people like turn their nose up to you guys in the early days to now where you are one of the Few brands that actually have some big Bev investment into you. I saw online that that you received An investment from the founders of Boston beer, which is a huge accomplishment, especially in today's like capital market, as we were kind of talking about at the beginning of the show. So, like, just talk about that, that capital, like perspective and like how you've been able to a Focus on it, on it on a segment that was being underserved, but then change the perspective and the conversation around it From that angle.

Speaker 3:

Yeah, you know, in the beginning for, from an investment standpoint, we for sure got laughed at quite a lot. You know, thankfully, we had our initial seed investors, which are now, you know, the managing owners and operators of of uncle Arnie's, and our my right hand, are my partners and and we work closely together to build this brand. If it, if it wasn't for for them coming in and and Purchasing the company in 2021. I mean, I don't know where uncle Arnie's would be at today, but them seeing the vision and and really being behind is what's really taken us.

Speaker 1:

But yeah, shout out. To shout out to Alberto and Theo. You guys are, you're awesome, theo.

Speaker 3:

Jimmy Asaf, all those guys, man, those are, those are my brothers. But Before that, prior coming out, you know a lot of people just thought it was a joke, just because Can was so hyped up and the low-dose segment and the new consumer segment was really where beverage led a lot too, because everybody saw the amazing growth for Can and saw all the dollars being thrown towards Luke and Ishan. They really built, honestly, the last four years they've built an amazing business and they've also built a huge consumer segment that I think will succeed and thrive, especially in the D9 market. It opened up a lot of the idea that beverage can work and for us, I just didn't really think that it was addressing the market of today. After being in the space, I got into legal cannabis in 2017 with Cameron Forney, the founder of Select. I got here in California in pre-Med days and this was Prop 215. I was going to the random warehouses on Watch Street in Sacramento where there was nobody outside, just a security officer. Then you walk in and there's people with totes and fucking five-pound bags of flour and they were just flipping QPs and PEs the whole time. That was the California culture that I was introduced to and even prior to that, the first time I ever came out to California, I was 18 and I drove up to Santa Cruz Mountains and bought 10 pounds of weed, a quarter-pound of hash and a quarter-pound of hash oil and drove that back. That's what I love about California cannabis culture for After separating myself from Select in 2019, I got more into brokering and just really saw where a lot of the space was today and a lot of it was still just addressing the culture of the market and uplifting that and getting people from not supporting seshes and getting them to support legal stores, I think in every category. I think that's where a lot of the mindset needs to be driven first is let's build a base and then innovate based on that and address the audience now and build that audience and that segment and that base and then innovate based on that and pull more people into the category. When we came out with the idea of the 100 milligrams for $10, people just didn't think that anybody was going to drink that much cannabis all in one sitting. The only thing that I thought and just really kept silent about, and Matt and myself kept silent about, was you just never walked in. Nobody's walked into a store and actually talked to a blood thinner, because half the time that blood thinner is just buying a tincture and drinking a 500 milligram tincture because that's the only way that they can consume cannabis. Because for the last five years prior they were buying shit that probably hadn't been tested, that said that it was 200 milligrams but it was actually 750 milligrams syrup and who knows what's in that concoction that somebody just made in their backyard. A lot of these people's tolerances were all over the place. We found it as the competitive edge to just address that first and unfortunately that came with a lot of laughs and that came with a lot of non-support. We just had to get really creative on where we raised capital and how we did that and focus just more on friends and family and trying to pull in investments from that way. When Theo and Alberto, asaf and Jimmy really came on board, that's where a lot of the more professional side of our business has really changed. When it comes to roping and Harry and Lorenzo and the guys of Samuel Adams, that was a lot of hard work that had been put in by everybody at the company by running and pushing sales and marketing, but more so a lot of work done with Theo and coming from a professional standpoint, keeping positive and really just pushing a backing division on what we had going and pushing the numbers. I think throughout the last four years, the bet that we were really pulling was at some point that consumers are going to choose and I've said this in previous interviews well before. That is at some point the headlines aren't going to match what's actually happening on a real level. Here we are four years later is the headlines don't match what's actually happening from a data perspective, because now more people are supporting cannabis, beverages are becoming more affordable and people are choosing high dose, because that's the market that's been needing to be addressed today and we need to build for today and then create for tomorrow. I think now, because of where this space has been and a lot of these dollars that have been thrown in, people want to throw money and invest in money on businesses that are focusing on cash profitability, businesses that actually have real numbers backing behind them and have consistent growth sales or have consistent growth sales. There may be some humps and some hurdles that you have to go through as a business, but the constant growth year over year and continue to eat more category space and improving that proof of concept in new states. I think that's what led the Boston Beer Group coming in and investing in us is seeing that we actually played this the right way on what consumers actually want and not just trying to push the theory.

Speaker 2:

I love what you said about spending time at dispensaries and talking to bud tenders. It's the core behind what design thinking is all about and actually focusing on the consumer and building products that the consumer wants, as opposed to spending time focusing on a spreadsheet and reading all of the data and trying to ideate. That way, it's clear that it has paid off for Uncle Arnie's, I have to say, and I think, for someone live on LinkedIn that's asking the same question as an entrepreneur who's building through all of this and you have all these detractors. You're the face of the company. You're out there driving sales as people are laughing and questioning the viability of these high-dose products and market. What's keeping you going through that and keeping your focus and strategy the same instead of wavering and thinking about changing?

Speaker 3:

Consumer credibility. We don't need PR, we don't need investors validating us. We have a plan and we're sticking to that plan, and the people buying the products is what drives us today.

Speaker 1:

You know when you made that transition, because you said you had started with a product that was low dose and it just was dismal and then you launched on Clarnes. Was it like an immediate uptick, or was there like, did something happen in the early days where you got that kind of early validation, or like, all right, we're onto something here, like we're gonna keep pushing on this.

Speaker 3:

Yeah, I mean we couldn't keep product in stock. I mean there would be my sales team At this point. I'm surprised there's not blood and scars on my face because of the amount of times that we would stock out a product and be three weeks away from a production batch. Oh, also, after like a full year of having both products and selling both products, you know the low dose was 3% of our entire business, the first that we launched like the first full physical year and I think, like with that low ever percentage, that kind of just proves to us like what actually will work. And we made tons of pivots with the low dose beverage brand too, from upping the milligrams to a single dose perspective. And I just think at that time it wasn't like it wasn't like it just wasn't what the market really wanted, like the market wanted just products that could innovate based on the products that were already out in the market, cause cannabis quintures has been around and Kenny does has done a phenomenal job building CQ and holding a name for beverage, because that was what I mean there had been, even with us being so cheap like and so affordable from a wholesale perspective, like there were a lot of dispensaries that still want to pick us up just cause CQ, like even though that they were $17 to $18, like that's what people bought and a lot of buyers were weary to purchase anything else outside of that because they didn't want to deter that customer from ever coming back in and picking up a beverage from their dispensary specifically. So you know, I think, like between the team and between customer validation, that's what keeps you going. Like as an entrepreneur too, you know I'm sure we know this just as well as anybody else like that's just, that's just being a business owner. Like there are ups and flows in business. There's really great times and there's also really scary and bad times and the as long as you're doing something that fulfills your soul and your passion, you know that's the thing that keeps you flowing. Like it's not about anything else, not about making a million bucks at the end of the day. For me, owning a business has been something that's been my dream since I was a kid. My mom was a restauranteer entrepreneur and owned three restaurants. Growing up, that's the vision that I saw for myself and the vision and the role model that I had for myself growing up. And I always loved weed, been in trouble with weed a lot and I got into brands through Zoomies and through ActionSports retail and learned about brand development and brand passion and culture and building real brand loyalty. And then, when the cannabis came into the opportunity and there was an opportunity to seize on being a part of a business that's. You know, that was my dream. It wasn't about making a million dollars, it was like I wanna have something of my own good or bad because at some point you realize that failures always happen and those failures make or break you, and you can either choose to continue to move forward and be positive or you can just arp in it and not progress any more forward in life, and that's it's always an ups and flows, you know so yeah, I wanna pull on two of the threads if I can really quick.

Speaker 1:

So you mentioned like the challenges and the blood and scars and all that and, but then you ended talking about the brand and really like finding your consumer and so with a little bit of inside knowledge I'm gonna, I wanna take the conversation a little bit of a direction of some of those challenges, as you've tried to expand your brand upon, you know, beyond California, and you guys are now operating in how many states? Is it four states? We're operating in three.

Speaker 3:

Three in total. We expanded to we're in two other markets outside of California right now.

Speaker 1:

Yeah, and this is a relatively new concept in cannabis, as we all know as business owners in the cannabis space. Like you know, state by state is a big challenge. It seems that the beverage category in particular has this proclivity to kind of go to new markets. It's probably the small market size. There's this kind of natural co-packer framework. You know there's a number of reasons, but we'd just love to kind of dive in and start talking about you know what is your experience in kind of jumping off and going state to state? You know, I know you mentioned Kenny. He's another brand that has started to do it. But, yeah, what should people know when they're looking at going into a new market and how has your brand kind of helped with that progression?

Speaker 3:

Well, it's extremely challenging, that's for sure, like there's. You know I'm not gonna sit here and sugarcoat it. I think you gotta know what product type you wanna launch with and you need to do your market research, based on who's the best co-packer in the state and also looking at the opportunity and the size and understanding where the dispensaries lie at and the actual economic side of the market and how well it, how well or how bad it's been doing years prior or coming into that year. So, trying to think about how to answer that question because it was a little open, it's been challenging. You know, oregon has been a challenging state and I think that I think a lot of that has led into the market. Per capita is, I mean, every dispensary that you walk to. It's a pretty common thing that you hear a lot from a lot of dispensaries. It's hyper competitive. It's really small state but it has the same amount of dispensaries as California, which is pretty silly. But they have the most dispensaries per capita, like they do in a couple other categories outside of cannabis. And you know, for there, a lot of the struggle for us was just not launching with the right product. Syrup's lead, the category we launched with our two ounce beverage and not our eight ounce, and a lot of that was based on manufacturing capabilities and we thought we would be successful and we were not. And a lot of that was due to confusion on the product type and placement on the shelf. And, as well, like those people there, I mean God, they eat so much THC like they eat and drink an enormous amount of THC, which is also a huge upside in opportunity for high-dose products, right, and they're also extremely loyal to their, extremely loyal to their local companies. So that's been a challenge for us leading into that market, and I think that was where it was not a wake up call, but it was like, okay, like let's evaluate and make sure that we have the right partners with us, let's transition our strategy a little bit. And we worked extremely hard Jimmy and Alberto did, and Maddie at Roe City Confection to get our eight ounce production going, cause we had an investment equipment and which was is outside of our not our realm, but it's not usually what we sign up to do. So now, over the last like three and a half months, we've launched our eight ounces in the market. We started a new business partnership with buddies, with Colin and Michael and the team out there. They've been known for being the number one sales team in the state of Oregon. We have a great relationship with Wild and also Groon. I heard you mentioned Groon. Those are phenomenal people. It's a phenomenal company too as well. I don't know the founder, I just know Sam, the CRO, and he's a stellar guy. I love that guy and I think a lot of the networking is a huge piece on what you need to do also to be successful in a lot of these markets. So now coming into the flip side, we launched in Nevada and it's been a wild success and but it was a completely opposite strategy on what we did in Oregon, which is interesting to have those two different kinds of perspectives. So you know, launched with our eight ounce, we launched with a better selection of SKUs, so we had two, both of our product types, the eight ounce and also the two ounce. We have a great partnership with Silver State Wellness out there, who is our manufacturer, and we also had a rock star sales director, casey Thompson, who's really led a lot of the help for store introductions, because the approach I try to take when I'm going into a new state is my mindset always is no one gives a hoot about Uncle Arnie's, no one cares about AVE. I'm brand. This is a brand new brand in a brand new state. Like it doesn't matter what your title is in the state that you're at. That is not relevant in any state that you go to, and if you try to hold onto that you just look like a dickhead and you don't want to be that person. So it's always more of a humbling approach. So we did this more internal this time to see how that would play out. Plus, there's a lot more MSO operators there that we operated with in California. So that led to some of that success too. It's just working on those more mature partnerships from MSOs. And we were able to launch in I wanna say it was like 15 dispensaries. The first month we did around $30,000 wholesale, which was super great. And then in the first 90 days our goal was to try to be in around 50% of the market and market share within 90 days and I just networked. I took a little bit of a backseat off of Oregon. We were still producing and getting our eight ounces ramping up, kept those relationships alive out there, but really just like dialed in and focused on. Okay, like how can we do this market different? So built great relationships with the guys over at Cannelly and Kenny and Chris, and just really started to step outside. I guess my boundary a little bit. I had the last couple of years I haven't been taking a lot of an investment in trying to be not out in the field but doing more networking within smaller communities. I guess since we grew so much in California I really try to take a lot of that focus off and drive that towards the team, to elevate our team, to be more known for Arne's and to uplift and push the company. So I just tried to reintroduce myself to that and get more comfortable networking and having really great partnerships with our current co-packers and we let our sales ourselves and within the first 90 days we were able to penetrate around. We're in around 60 dispensaries now. We're the number three selling brand and the market's right there. I mean there's one company, sips, that's owned 60% of the market share, which is absolutely bonkers and they do a phenomenal job. I've met the owner of the company, a really great guy, and we hired Mark, which is our new account executive there, and we've kept a lot of things in-house and we've been able to grow around 12% month over month and taking it in-house and challenging ourselves to network more within the community and to build an established name for ourselves within the actual cannabis community. I think that's something that a lot of people should be doing every time that they're stepping into the market. It's not about knowing the CEO. It's not about shaking hands with the student tides. It's about meeting these smaller companies and trying to leverage and uplift them to help you and, while keeping it authentic and authentic to yourself, and leveraging those partnerships to expand your network within each new state and keeping it really simple and building relationships with those bud tenders, spending a lot of time with the stores, spending a lot of time with those buyers and asking more questions versus telling.

Speaker 2:

I like hearing about your market expansion and how it is regional on the West Coast, mostly with Nevada and Oregon, but I'm sure that that isn't where you're stopping and I'm curious of how you're approaching looking at new markets. Ben and I both have talked with a lot of entrepreneurs that are going into new markets and a lot of like Flower and Vape and Edible's brands are focusing on the brand new emerging markets because there are less brands in market at that time and they seem to get these huge pops. But it seems that you're taking a slightly different approach in your growth with the states that you're choosing and I'd love to just hear about how you're looking at the market overall, how fast you're hoping to grow into these different markets and maybe even toss in there a little bit. If you're looking at the non-licensed cannabis side and looking at some of the Delta 9 hemp side that we're seeing a lot of Beverage to touch on.

Speaker 3:

Yeah, we will be expanding to three new markets, probably within the next call it six months. Illinois is a one that we're looking at A lot of the way that we're so a lot of the market expansion and a lot of the way that it's evaluated. I mean we do it collectively as an executive team but I gotta be honest, theo leads a lot of that that market expansion and at least when it comes from like a biz-death perspective and evaluating every market. You know we utilize our data partners, like headset and stuff like that, to look at the market size and look at the beverage competition there and seeing if it's completely saturated or not. And then the next big thing is like, is there somebody that can produce bottles? Like that's really where a lot of it lies down to, can you produce an eight inch bottle? If you can't, how quick can you build a facility? Or how quick can you build a bottling line to produce one? Because that's a lot of the space you see leads into cans and that's not where we are. Like we don't necessarily believe in putting 100 milligrams in a can just yet, just because there's a lot of integrity from the nano emulsion side of things and a lot of benefits that glass play into the integrity, into the nano emulsion, and that's something that we really tried to hold strong to, because we've seen other brands and nano emulsions, degradation over time and other canned containers if they aren't sold quickly, and that's something that is a part of our ethos and creating a quality beverage and ensuring that everything is staying intact and if you bought it, you know, six months ago and you haven't opened it, and if you open it, shake it up and open it up after six months, it's still the same thing that you bought six months ago. So if they don't have a bottling line like that's, you know, a lot of times for us it's like it's a no go. We'll keep the relationship alive but at the same time too, you know, that means that we need to continue to look at other avenues and also, I guess, like the amount of infrastructure that we'll have to invest into each state. You know we're a pretty lean team. There's only, I think, 13 of us now, or 14 of us. We just hired two new people so and there's only just me that's leading all the sales efforts going outside of that, besides the software CRO, he helps me a lot from, like a data side of things and helps me bring all my crazy ideas into one consistent thought stream, to where it makes sense, because my brain thinks like this and spinning all the pages and Same, yeah, he does, he does. And so you know if it's gonna be really costly or over exhausting for myself, like we tried to find other alternatives to help supplement that. So there's a lot of factors that come into how we're approaching this out of state kind of stuff and evaluating each one of those markets and we're also trying different things. You know, like we're launching in Michigan with Highway Horticulture. Here really soon we're literally like fingers crossing on Monday gonna get the production date on lock and I just had a sales meeting with the sales team and that's a licensing deal which is something that we've never done before. So we're taking a lot of different approaches on our business and how we can be leading this national expansion and what will be the most successful model for us without investing too much money or resources, cause right now we're our only focus right now is to run lean and become cash profitable, and I mean we are. I know we said this a couple months prior and it's still continuing to transpire, but I mean we're so close it's like it could be a month away. It could be three months away, depending on what market pops higher or if California continues to just grow and we continue to just pop there. But we're scraping. We're scraping almost to the point of being just flat and being profitable on our first dollar, and a lot of that also plays into how we're doing national expansion. And then I know that you mentioned the D-9.

Speaker 1:

Can I ask a quick question, just because you mentioned licensing me the first time you did it in Michigan. What drove that? Was it something with the regulations? Was it just wanting to try something new with the business model? Like, how did you come to that decision of doing a licensing deal versus however you've done it in the other markets?

Speaker 3:

Well, you know we have an intimate partner. We have an intimate, had an intimate relationship or still have. I'm not sure where my partners stand with it or how that communication goes, cause I'm not in that conversation, but I know that we had a pretty intimate relationship with Keef and that's. You know, that's a lot of what Keef's strategy is is licensing. I'm sure there's. I can't speak on their business, but I just know that that has been a big piece of their business model and we see how successful that is for them and it's like a role model to us. You know Keef has been. I think that was like the first beverage I ever had, probably back in 2014. I was 21 years old. I remember stopping in Colorado and buying this like silver 16 ounce can. That was blue raspberry and I believe it was Keef. It was the first time I ever bought recreational cannabis when I was moving out to Portland and you know that's been like a big like looking out for that company. Yeah, so what's in that can? There was a silver like 12 ounce looking bottle.

Speaker 1:

That's oh yeah, I remember those. Yeah, those are.

Speaker 3:

And looking at that and seeing how successful they've been with that strategy has led us a lot to just trying it out. You know, like we don't have money to just be, I wish we had $20 million sitting in the bank to just be like, yeah sure, we have a million dollars that we can just fucking waste and not worry about. You know, and try out this strategy. Like you know, we have to be really smart about it and it's a way for us to be lean and it's something that we've never tried. And why not?

Speaker 1:

Yeah, sorry, I jumped in there An array. There was something else you wanted to ask, right?

Speaker 2:

Well, on this topic, on the licensing. So you're trying it out. How will you know if it's successful? How will you measure that for yourself and for the company?

Speaker 3:

Revenue growth. I mean making sure that we have good KPIs set for month over month growth and store penetration and market penetration. So it's all about sales numbers. You know, gotta make sure we grow a month over month. If we're not growing, then we're not doing it right. Amen, yeah.

Speaker 2:

Yeah, incredible.

Speaker 3:

And there you go the D9 stuff too as well. We're definitely gonna be. I know we're in the works right now and solidifying some stuff like that for the D9 market. That's a lot of where the 10 milligram line has led us into and why we did the single dose, as we're continuing to look at market expansion. As you guys know and Ben, you were just you know in Washington DC a lot of the regulations is around milligram caps and not allowing, you know, multiple high dose beverages into each state, and something that we had to really make a decision on over the last year is like how are we gonna expand into Canada, where they have a 10 milligram in a single can limit, you know? Or these other countries and these other states where you can only have five milligrams of THC or 10 milligrams of THC and for high dose and being stuck to a high dose brand label. I think that people just labeled us as that and that's not. You know we led with. That's what our focus was, but ultimately the brand of Uncle Arnie's is a brand 10 body the legacy consumer and be a voice for the legacy consumer that lives in the space today. That's, that is the core ethos in like who Arnie's represents. It's not about only high dose and leading in high dose, and when we launched our 10 milligram line, our goal was to help reshape the idea around low dose, because sometimes there can be a negative stigma that's attached to that, and our goal was to really just continue to dive in more on, like, what is legacy, because we have done so well in our space. A lot of people have attached legacy to high dose and legacy is defined on the amount of THC that you consume. That you consume. You know I have been smoking weed and using weed at this point longer than I've been sober, you know, and I still can't drink 100 milligrams of THC. I mean, it gets me on a psychedelic level like where I feel like I'm on mushrooms, but that wouldn't just because of that. Does that make me not legacy, you know, like because I can't consume a ton of THC. Would you define me as not a legacy consumer when I've been smoking weed longer than I've been sober, you know? Like legacy is defined by time and somebody that's been smoking weed since the 70s and maybe they're 80 years old and they smoke a joint, but the way that the chemical conversion and the way that THC interacts with your blood, your linering in your stomach and your liver and your enzymes and all that different kind of stuff like would that person not be defined as legacy, you know, because they can't eat 100 milligrams Like no, that's not what defines that. What defines legacy is somebody that's been advocating for this for a long time. You know, I've gone to jail for this for on three separate occasions, and for somebody to not say I'm legacy would definitely hurt my ego for sure, which is irrelevant to any case, but it would definitely be something that is like I'm not sure where you get, I'm not sure what's happening in your brain, but it just doesn't make sense to me. So you know, the goal for the single dose was to create the narrative around single dose. Legacy Like let's not always tie this into, it has to be a beer alternative. Like we're only going after the alcohol surveys. Like this is your new alcohol replacement. It's just like no, this is a new innovative category. Like yes, it opens up for more social consumption and it opens up a new way of consuming cannabis, but at the same time, too, as well, like let's not box uncle Arnie's into only being high dose. And as well, it allows us to open up a lot of these new states and bringing that legacy fund brand that we try to be into these new states and allowing people to enjoy the uncle Arnie experience.

Speaker 2:

It's so cool because I think that California in many ways has been and I see it in New York too but really trying to own the legacy consumer. But I think what you're reminding me in this conversation is that that legacy consumer exists all over the US all over the world. You know, people have been consuming and loving weed for thousands of years and there's a lot of people that are just ready to be out and open about it, and uncle Arnie's is such a good fit for those folks. So it's cool to see that your brand is growing and I think it's gonna be really well received. So we'll have to keep following up as time goes on and hear about the journey some more. Absolutely yeah, we could talk all day. I wanna hear more about your entrepreneurial journey yourself, all the things, but I think that's gonna be part two. We're coming to the part in the show it's our last call. That means that this is where we give you an opportunity to make a plug, to a call to action, whatever you want our audience to be left with. So, yeah, take it away. What's your last call?

Speaker 3:

If you're in California, you know, go check out our new single dose line. Our team's been working really hard to get it out as affordable as possible. You know you can find it for around $4 after tax at most places. We made some really great flavors and put a lot of love into those skews. So we hope that you guys go out and seek those and enjoy them and still enjoy your classic high dose beverages too as well. If you're in Nevada, you know, and if you're popping around on the weekend for Vegas, make sure you pull up to Rise Thrive, zen Leaf, planet 13, any of those suspensories, cookies, any of those guys, and pick up an Elk Arnie's while you're out in Nevada and support us out there. And if you're in Portland, you know, make sure you swing by Chalice Nectar and go support any of those small local mom and pop shops and buy some Elk Arnie's and enjoy the beverages. And you know, I think that's my major plug, you know, just thanks for the continued support and we look forward to continuing to bring you guys and good, tasty, unique and quality beverages and offering them at accessible prices that we can and just continuing to grow our brand and to grow our name. So, you know, a lot of this over the last four years has not been able to. It hasn't been able to be as successful it has excuse me, it has been so successful and we wouldn't have been able to do that without the support of our partners, like Virtosa and the partnership that we've done over the national space. Like I think that we're gonna do some amazing things together and also innovate a lot of really amazing things together, and you know, thanks to all of our partners Silver State Wellness, rosed City Confections, buddies you know, shout out to Mark, shout out to Gabby DJ, everybody on the team and everybody's working really, really hard right now, and shout out to my partners too. So Amazing.

Speaker 1:

Thank you, Abe. Like this has been an incredible conversation. I there's, as Anna Rae said, I think we could go for hours just like digging into the journey and you, yeah, just really appreciate you taking the time today.

Speaker 3:

Absolutely. Yeah, thanks for you know it's been a long time coming, man. I've been asking you to be a part of this for a while.

Speaker 1:

We wanted to make sure the show was in tip top shape for you. Absolutely, and we're getting there.

Speaker 3:

Yeah, I think I appreciate you guys taking the time and I always love having good conversations around cannabis and trying to help uplift the space and grow our category together. So cheers to cannabis beverage and cheers to the show.

Speaker 1:

So All right, there we go. And yeah, cheers, there you go. Got some green tea here, nice. All right, man, we'll catch you soon. Take it easy. Anna Rae, that was such a cool conversation. I honestly truly do feel like we could just keep going and going and going. What really struck me was just how positive Abe and Uncle Arnie's brand is like giving shout outs to Kenny at CQ and to the Keef team I know, like Juan Matt Blake, those guys are crushing it as well. Shout outs to Highway of Horticulture, silver State Wellness. It's just really awesome to see that kind of like rising tide mentality.

Speaker 2:

It's about the people. Time and time again, that's what proves it out, and Abe knows that and Uncle Arnie is leading it into the consumer as the people, the humans that he works with across the supply chain, and it's gonna make a difference. People want their people to win, so I see a really exciting path ahead for those guys.

Speaker 1:

Absolutely All right. Well, everyone, we hope you enjoy the show. We know you enjoy the show. Let's be real. But as we wrap up, we want you to remember that this dialogue can continue. Please leave comments on our LinkedIn thread. Go to our podcast, subscribe, like, spread the word If you want to see other people on the show. The show's here for you. We have people engaging, dropping their questions live, as we record this on LinkedIn Live, but, like I said, you can catch it on the podcast if audio is easier. So do all the things, help us, support us. We're just getting started, but we're loving the direction that it's going. What else, anne Rae, what else am I missing? Sorry, it's been a long week.

Speaker 2:

Yeah, go to the website. Like us on Spotify and Apple. It makes a big difference.

Speaker 1:

Yeah, and as always, stay curious, stay informed and keep your spirits high Until next time. That's the show.

Welcome to the show!
Cannabis Beverage Evolution
Expanding a Cannabis Beverage Brand
Marketing Strategies for New Market Expansion
Market Expansion Strategy and Licensing Deals
Expanding Uncle Arnie's Legacy Cannabis Brand
Continuing the Dialogue