#040 - Expansion Strategies for Cannabis and Hemp Brands w/ Colin Keeler of Kiva

Ben Larson, Vertosa: 0:00

Hey everybody, we're back. Welcome to High Spirits. It's episode 4040. And we're recording Thursday, april 25th 2024. I'm Ben Larson and with me, as always, is Anna Rae Grabstein. We have an incredible show for you today. Colin Keeler from Kiva is on and we're going to be talking about brand expansion from regulated cannabis in California to many other states and hemp and beyond. It's going to be an exciting conversation, a lot of growth happening in the market right now and we'll dig into all of it. But before we get there, let me check in with Anna Rae. Anna Rae, how are you doing today?

AnnaRae Grabstein, Wolf Meyer: 0:40

Always, always good. It was actually great to have a little vacation from recording last week, but I missed you, Ben.

Ben Larson, Vertosa: 0:47

I missed you as well.

AnnaRae Grabstein, Wolf Meyer: 0:49

Yeah, but it was a good week. I went to a Bicycle Day event in San Francisco on 4-19, the Discovery Sessions what kind of bike did you ride? Discovery sessions. And what kind of bike did you ride? I it was. I did not ride a bike. Bicycle day is actually a psychedelic holiday celebrating the first acid trip. Um, that happened when Albert Hoffman was riding his bicycle, so that's why it's called bicycle day Psychedelic. Yeah, is that?

Ben Larson, Vertosa: 1:20

a dad joke.

AnnaRae Grabstein, Wolf Meyer: 1:22

No, that's cool, I don't mind it. I saw Mike Torrey from your team there who said he took a PTO day to explore some personal interests, so that was cool. Yeah, but on the cannabis side, my work this week has been really good A lot of forward thinking from operators that I'm working with planning and pivoting and their growth strategies, people talking about raising new rounds for really focused opportunities ahead. I'm having fun. It is feeling optimistic and hopeful and I'm excited also to learn from our guests today. So, yeah, really good, tell me what's going on with you to learn from our guest today.

AnnaRae Grabstein, Wolf Meyer: 2:02

So, yeah, really good, tell me what's going on with you.

Ben Larson, Vertosa: 2:05

Well, I just want to note that it's April 25th and I believe when we first kicked off the year, I was telling you that I was feeling hopeful and optimistic and that it felt like for the first time this might be the theme of the year. So happy to hear that you're still feeling that way. I also am feeling that way, despite being completely burnt out. Last week it was all from like a good place, like at the Benzinga conference. I think spirits seem generally very high. You know, there's there's mixed reviews coming out of it.

Ben Larson, Vertosa: 2:38

You know, I think I read Mitchell Osok's takeaway and he's like don't expect any policy change this year and MSOs, what are you going to do if that happens? And so that was kind of like the negative aspect. The positive, from my lens, is that I asked a lot of fund managers who do seem to be having funds these days what their near-term thesis is, and a lot of it was beverage in Europe. So I don't mind the beverage category taking 50% of the mind share of people managing hundreds of millions of dollars. So that was a very positive outcome of the week, not to mention just being able to see all the different leaders in the space not all of them, but many of them in just a beautiful location. The weather was beautiful this year. Yeah, I just came out of it, tired but excited.

AnnaRae Grabstein, Wolf Meyer: 3:29

Yeah, and good call out about predictions at the beginning of the year. I think a lot of folks have thought that there was going to be some big announcements about policy change. That happened on 420.

Ben Larson, Vertosa: 3:43

I don't think the DEA is fans of 420. That seemed a little bit of a pipe dream.

AnnaRae Grabstein, Wolf Meyer: 3:48

You know, we saw, I think, some rose-colored window dressing type tweets from people like our president and vice president, but not a lot of action. So I think the cannabis industry had an overall pretty decent 420. I've looked at some numbers up in some states, down in others. You know these, these cannabis holidays. For me, my big concern is always that you get a bunch of increased spending on one or two days, but then that ends up being a decrease of the following month because consumers load up, increase spending for anyone that wasn't on the Dutchie platform, yeah, yeah.

AnnaRae Grabstein, Wolf Meyer: 4:29

Let's not talk about technology platforms today. If anyone wants to hear about POS failures. They can go on LinkedIn.

Ben Larson, Vertosa: 4:38

And it was like all I read for two days is like oh shit, that was bad.

AnnaRae Grabstein, Wolf Meyer: 4:42

Yeah, enough already.

AnnaRae Grabstein, Wolf Meyer: 4:44

Well, so you know, I think that today's topic about expansion is really top of mind for really any cannabis company, because one of the wild things about regulated cannabis at least in the medical and the adult use space is that every state is like its own country.

AnnaRae Grabstein, Wolf Meyer: 5:03

It's its own market, it's its own regulatory environment and, as a result, when a company is looking at expanding their market share, they're doing so in a very different way than we might see if you were a salad dressing company or a t-shirt company that is able to have a broad interstate and even like global reach with a lot more simplicity. And so expansion strategies in cannabis have become something that is really important for companies that are trying to grow, but also something that is highly complicated, and one of the companies that anyone who's been watching the industry for a long time has most likely admired in their approach to this has been Kiva. Kiva is one of the largest and most recognized and longest standing house of brands in cannabis, and at this point, they're in over 12 states and have recently launched their hemp direct to consumer platform. So it's a great opportunity for us to get to bring someone on today to learn about how Kiva is looking at this, so with that I want to invite Colin Keeler, head of business development. I'm on to the podcast today.

Ben Larson, Vertosa: 6:22

Hey Colin, hey, how's it going Good.

AnnaRae Grabstein, Wolf Meyer: 6:25

Good, I'm just going to tell the audience a little about you. You have the role of head of business development at Kiva. Prior to joining Kiva, you were at a Thai, life Sciences, which is a publicly traded psychedelic company. You've got a long history of both investing and working in cannabis and healthcare and you are a graduate of Notre Dame and of Wharton School of Business. So, super smart guy, super excited to have you. Welcome to the show.

Colin Keeler, Kiva: 6:58

Thank you for having me Exciting.

AnnaRae Grabstein, Wolf Meyer: 7:00

Yeah.

Colin Keeler, Kiva: 7:01

Long time listener, first time caller, as they say.

AnnaRae Grabstein, Wolf Meyer: 7:04

I love it.

Ben Larson, Vertosa: 7:05

Well, long time consumer of Kiva chocolates. Quick anecdote I remember my wife and I it was my earlier days in cannabis, like 2015. And we got one of those beautiful, you know craft wrapped chocolate bars and I snuck it into my carry on bag and we flew off to Hawaii and we were meeting my family out there and you know I hadn't really like dialed in my dosing yet and I remember I cracked one of the squares in half and gave, you know, some of it to my wife and some of it myself, and we were waiting for my family to arrive and by the time they arrived we were having the best giggle fest, like on a beach and like trying to give my family directions of where to come pick us up and like it was still like one of the best memories of of our lives or like one of the one of the positive stories of getting accidentally a little too high, um, but just excellent. Ever since then, kiva has just had a special place in our hearts and I've loved seeing the evolution of the brand, because I do remember you know we worked with a lot of startups in the space and it's like, okay, it's good chocolate, you know, beautiful branding and you guys were kind of the hallmark of what the future of cannabis looked like Like.

Ben Larson, Vertosa: 8:19

Just this beautiful packaging, beautiful product. It's like how do you continue to grow that beyond just that? And seeing what you guys like the lost farm line with, like just like the true to the plant ingredients and like partnering with different farms Like you know, we had Sonoma Hills Farm on Joyce last week or two weeks ago and just like how you kind of continue to grow, going multi-state, which was again you know just in the evolution of cannabis. You know trying to go beyond state borders was a big deal. Like 12 states, that's a huge deal. And now hemp. So kudos to you guys for just continuing to push the envelope.

Colin Keeler, Kiva: 8:58

I appreciate it. I love stories like that. It's that you know talking to folks from different states, that you know when we're trying to grow into new places, like it's just a constant theme of. Kiva was the first you know edible product I tried when I visited California. Or you know I've loved your terabytes or your Camino gummies. I mean it's sort of a thing that's sort of consistently here, which obviously I love because it makes my job a little bit easier when I'm trying to expand into new states. But B reflects the brand that Scott and Christy, our founders, have built from day one, you know, delivering quality products across different categories. So it's each each story is a little different, but they're all pretty special when you hear them.

AnnaRae Grabstein, Wolf Meyer: 9:42

So, Colin, I think you have one of the coolest jobs in cannabis getting to focus on expansion specifically for one of the hottest brands in the space. Tell us what it means to be leading expansion and how you see the space. What does that look like in your day-to-day?

Colin Keeler, Kiva: 9:59

Yeah, so I mean traditionally it's challenging, right? I mean yeah, so I mean traditionally it's challenging, right? I mean the MSO model sort of represents the fragmentation and how hard it can be to expand because you have to rebuild everything on a state by state basis. Like that's the fundamental anti-scale you face with a cannabis brand is you can't go across state lines Like it's truly, as you alluded to earlier, across state lines, like it's truly, as you alluded to earlier, it's similar to going to different countries. So the good news is that's occurred before. You had, you know, different brands have scaled to different countries before, successfully or unsuccessfully. So there are historical models of expansion that you know we've either recreated by accident or, you know by accident or, you know, ingested.

Colin Keeler, Kiva: 10:48

But for us you know we look at, our initial expansion of Kiva was under my predecessor, you know was a licensing model. That was the way you initially did it. If you weren't going to go and buy licenses and assets, you'd find partners who are willing to take your brand under their MSO as multi-state operator. So we are not a multi-state operator in the traditional sense. We're a multi-state brand because we only have infrastructure and manufacturing assets in California. We're the largest edibles brand in California. We have our own manufacturing there and we're also the largest full-service distributor there as well. So that's where we started. That's our core as well.

Colin Keeler, Kiva: 11:26

So that's where we started, that's our core. And then from there we've licensed in with other partners who have the right to operate in different states. The initial model again was working with them, teaching them the brand, giving them the assets, the packaging, etc. And letting them include that as part of their wholesale portfolio. But the models have evolved and today what we do is try to goal seek against our objective, which is to be the number one edible brand in any state we go into or country or geography of any sort, and do that as effectively and profitably as possible with for us and our partners. So we're doing a variety of models across different states that we think match the markets as they exist. So it's fun. You nailed it. I'm very happy and fortunate to have this job because it is a lot of strategic thinking, it is a lot of talking to as many people as possible, and then it's going and trying and structuring and execute the deals to grow the pie for us and the people we get to work with. So that's fun.

Ben Larson, Vertosa: 12:29

So you mentioned kind of evaluating each marketplace as you're going into it and maybe this kind of influences. The question that started popping up in my head is do you have, like kind of of, because you have so many products and product lines or brands, is there a suite of products that you prioritize, kind of launching a new market with and I guess the extension of that question for me again going back to like lost farms, where you have these kind of more nuanced products that are, I guess, more regional, specific when it comes like to various cultivars and whatnot, like yeah, how do you think about that when you're entering a specific market?

Colin Keeler, Kiva: 13:10

no, it's a good question for every market that we're looking at. We're trying to. In an ideal world, we're bringing our full portfolio because we think it adds value. The more things you have to sell, the more ways you can serve customers needs and each of these, you, each of our products, whether it's gummies or mints or chocolates, or we have our Starburst-style shoes. That's only in California today, but we're going to be bringing out to a number of states this year and into next year. We think those are additive to the whole value proposition to a potential partner.

Colin Keeler, Kiva: 13:42

But you're totally right that there's CapEx, there's manufacturing complexity, so of course there's an order of operations and how we like to bring things into market and grow and expand, keep the growth going for us and partners by bringing those things in over time, bringing the best in class innovation that we have in California over into geographies bit by bit, but for some states, yeah, it may not make sense to have a full chocolate sweet if it's super duper hot right, or just bring the best and sort of the best in class SKUs of that line as opposed to every innovation we might do. So it's a conversation with partners who know the market best and know their consumers best. Conversation with partners who know the market best and know their consumers best, and then thinking through how we adjust what we know is successful and a beloved consumer product if we need to.

AnnaRae Grabstein, Wolf Meyer: 14:32

And so, within the context of growth into new states, you talked about how, in California, you are a full-scale operator, you control your manufacturing and your distribution. Why not do that in other places as one of the options for expansion?

Colin Keeler, Kiva: 14:50

First is opportunity right. These are licensed markets that sort of dictate what you can and can't do. So when we're looking at this again, I mentioned our objective. I think any brand who's thinking about expansion needs to start first with why they're doing what they're doing. Really understand that, because a lot of brands do things without thinking about it, like well, we should be doing this because we've always done it. That doesn't necessarily make sense. Know your capabilities and what drives your right to win and what drives your success and then optimize against that Right.

Colin Keeler, Kiva: 15:17

So for us, we think we understand the three things that need to be done in any geography with the product portfolio, we have to go and drive into that share position that I mentioned, which is I want to be number one. I can't be for structural reasons. Then I'll take them like top three. Right, that's our goal. When we enter a market Other brands that's different. Other brands it might be hey, I want to enter because this will help build awareness, or I like the ancillary revenue I can do just from letting somebody else do the work and I'm happy to be just in the market earning some money. That's not. If we're not chasing that, that shared goal together, then we'll leave a market.

Colin Keeler, Kiva: 15:54

We've done that before right, and that's okay, that's just real partnerships, like a, like a marriage. You, you need that alignment from the get-go to chase the things you want together or nobody will end up happy, right? So you know, for us, as we look at markets, the jobs to be done from our perspective is can you, you know, do you have the resources, people, space, expertise to make product to meet unconstrained demand, and can you sell effectively, sell and market effectively against that right? Those are all jobs to be done and we always participate in the least some of those, even if we're licensing.

Colin Keeler, Kiva: 16:33

This isn't Disney for us. We're not just set it and forget it. Good, good, good luck, it's, we're always participating on, you know, marketing. We almost always put bodies in the market that we go to to support our partners and then look at okay, does your sales team optimize for this? Do you want to be doing the selling, or should we be doing that? And that's why we've moved in some geographies to co-manufacturing. We do what we call hybrid, which is licensing, but with us doing sales. We've looked at subleasing, which some of our competitors do exclusively.

AnnaRae Grabstein, Wolf Meyer: 17:06

None of it's off the table, but it has to match what we think will drive success in the market, and that's dictated by the size, that's dictated by the number of doors, the maturity, so follow-up question there when you're trying to decide what to do in the market and you have talked, we've brought up your partners a few times navigating how to find the right partner I think is something that a lot of brands that are looking at expansion are thinking about, and there's what I would call independent operators, which are maybe just only exist in that state that you're looking at, and then there's the multi-state operator that might be able to scale you into multiple markets, but there is upsides and downsides to those relationships as well.

AnnaRae Grabstein, Wolf Meyer: 17:52

And then, within that context, some of those operators, whether they're independent or MSOs, might be vertical or might not, and I'd love if you could share with even some examples with the state market of how you've chosen a partner, what makes the right type of partner and how that might differ across regions or markets that you're looking at.

Colin Keeler, Kiva: 18:17

Yeah, no, it's a phenomenal question. So what I was alluding to in the last question was like the strategy of it, like looking at the market, trying your best to understand structurally what may or may not beget success and why you should be there as possible in a given state to actually understand the opportunity set of potential partners versus what I think would drive success, because I can think that we could do a command and be the most successful in a given market. If nobody's willing to do that with us, then you can't contemplate that. So you have to go out and meet all these folks. The trade-offs are are meaningful between different partners. Again, I think it's really identifying what you're asking to be done from each other, right, like that you have to go in with a shared expectation of the jobs to be done and the trade-offs in terms of royalty or the economic split or otherwise. So you know for us, as for example, like we're moving to, we're launching New Jersey very imminently, right, and we're working with phenomenal operator we knew from California.

AnnaRae Grabstein, Wolf Meyer: 19:26

Aaron.

Colin Keeler, Kiva: 19:26

Gore, the garden society. She understands the co-manufacturing model. She'd been doing it for the largest brands in California for a long period of time. She didn't have an operation set up at the point. We'd be on discussions but like the confidence, knowing what she'd done in california, what she'd done in ohio, builds confidence. Her ability to execute on that co-manufacturing in new jersey right and we're super excited about that relationship because in terms of the jobs to be done, like she's gonna do it right and that's a market where we feel like we feel that we can sell our brand best. There isn't some incumbency advantage or portfolio benefit where being part of another sales portfolio might be better.

Colin Keeler, Kiva: 20:06

Because, sometimes you want to be sitting next. To take Ohio, for example, where we work with Clutch Unbelievable operators as well, that's a licensing deal. They're doing the selling and they do that really well because Kiva fits their portfolio to a t right. Like we fill a gap in edibles. We always fill a gap in sort of like a premium, well-known brand that can even complement folks that have their own edibles. But it's great when we're the only edible right. Um, but they have flour, which was really important part of that market.

Colin Keeler, Kiva: 20:33

So selling both next to each other creates again more ways to serve customers. So those so you don't know those things always. But the things I would say for brands that are contemplating this is like how do you build into the right kind of partner? Conversations is like go and do one state. Well, you have to go and demonstrate the value of your brand to somebody and that becomes a reference point that cascades into other states. Because just winning in your own state under your own operations doesn't necessarily prove to somebody the reasons that you should work with them. Because, especially in new markets, well, I can do it all. I can build all my own brands, I don't need anybody else. I've seen this in a few states recently, and that's true for a while, because what's on shelves will sell. But as markets mature and brands do enter, the value of assortment, whether in a wholesale portfolio or in retail, becomes really important so like those are the expansion stuff does not start overnight and it but it does compound does that make sense?

AnnaRae Grabstein, Wolf Meyer: 21:38

absolutely, absolutely.

Colin Keeler, Kiva: 21:38

Yeah.

Ben Larson, Vertosa: 21:39

Yeah, one of the um, one of the challenges, as we all know, in cannabis has largely been marketing Um, but the appeal of being a multi-state brand is having some economies of scale in your branding and marketing and I'm curious as to how that's evolved over time for you guys and how you think about it. And, you know, are there economies of scale that you guys have built in being able to market the brand across all these different states from, kind of you know, the headquarters, while allowing the boots on the ground from an operations and sales perspective? Kind of you know persist under underneath it To an extent?

Colin Keeler, Kiva: 22:20

I wish I could say absolutely, but there's both benefits and anti-scale benefits. Right, like redesigning my packaging for every state, right, like that is just it's is a huge, is it's actually a huge drag because, like, maintain that brand integrity. Also, can you know, matching in against a variety of different, wildly different packaging needs drives like, uh, it was challenging, um, but yeah, people do. People will experience your brand in one state and they'll carry to another state.

Colin Keeler, Kiva: 22:52

And the strategies you build in one state can cascade into the next state and, of course, the online presence, or more national level marketing, into the next state. And of course, the online presence or more national level marketing that some of the stuff you are allowed to do does slowly, slowly start unlocking. And then now, with some of the hemp things, there's real ability to engage with consumers on a national level in things that were completely unheard of in the cannabis architecture that should reverberate across the ecosystem that our products are touching. So has all great answers like yes and no to your question? It depends.

Colin Keeler, Kiva: 23:26

I guess, is the answer, but yeah.

Ben Larson, Vertosa: 23:29

Yeah, well, the hemp conversation is interesting. We probably spend the rest of the hour talking on that. There's a lot of excitement about hemp for economies of scale, especially from a manufacturing standpoint, but as this category evolves I'm starting to see a lot more fragmentation serving sizes and packaging limits and all this kind of stuff and the more fragmented that becomes it starts to feel a lot like cannabis again. This is a very nuanced way to kind of segue into that side of the conversation. But you mentioned being in 22 states plus DC with the hemp offering. How has that kind of changed your perspective on everything? And I guess we could start, you know, just a very high level. How was that transition for the brand itself historically being, you know, in regulated cannabis and that just kind of the the, the conversation that exists between hemp and cannabis.

Colin Keeler, Kiva: 24:27

Yeah, I mean, look, it's a, it's a great question. I. My funny anecdote about hemp is I was actually my.

Colin Keeler, Kiva: 24:34

My in-laws live in Minnesota and two ago I was up at their cabin in the you know three hours north of the Twin Cities, and my mother-in-law, she just reaffirmed to me one day she's like, hey, like totally respect what you're doing. She's the nicest, nicest woman. She's totally respect what you're doing, but please, like, don't bring cannabis to here until you know, until it legalizes. And then the next day they did the sort of accidental legalization. I said, hey, Patsy, like it's legalized, we're good.

Colin Keeler, Kiva: 25:04

That's what really entered my radar. I'd been following the Delta eight, delta 10, some of the more um, true, true hemp compounds, right, the original sort of um. But you know, it became important to me and when I came back for Christmas I saw brands on the boutique store shelves, right Like sitting at the counter, and I realized this was an entirely new class of trade right, or multiple classes of trade that these products never had reached but we'd always dreamed about them reaching. And for me that became important, just to make sure to really explore whether we can, you know, enter in a way that maintained everything that was important, just to really explore whether we can enter in a way that maintained everything that was important to us, like whether or not that's required but you know, child resistant packaging and the testing standards we've had in cannabis and even down to I know this is like somewhat of a controversial, but even down to extracted D9 versus converted like things like that, to maintain the safety standards and the brand integrity that we could bring over some of our best-in-class products in a way that it was the same product right and like the education that that took took like two years, I mean a year and a half which is you know we could have moved quicker, but for us it was super important to really try and understand what it was, how we could have moved quicker, but for us it was super important to really try and understand what it was, how we want could move into it and really again

Colin Keeler, Kiva: 26:25

maintaining what makes us special, like again, like to get back to it, like what makes your company special. Every company is the best and worst of its founders. Our founders care deeply about product, our products that lead our, our north star so like we would never for us. We always want to maintain and bring over the things that If there's a new channel to reach and if there's a new store we can sell in, we're going to look at it. But if it's a dispensary or a bodega in Minnesota, is that the right?

Colin Keeler, Kiva: 26:53

place for our product to be Is the fundamental question. So it was always super exciting, but for us it was really a methodical process in making the decision to jump over. Now it's been great Like. The direct-to-consumer launch has been phenomenal. For us, it turns out selling things to your customers you get to know acutely and with a ton of data and a lot of ability to do a lot of things on the marketing side that I mentioned, you can't do in cannabis. Like is effective and, make no mistake, it's also a different consumer than you see or that we've seen in the traditional dispensary market. The mix is different. The demographics are different. They're buying at a price that's substantially more expensive than anything you'd see in most cannabis markets. So, um, for us it's just a super exciting way to expand the brand.

AnnaRae Grabstein, Wolf Meyer: 27:45

I would say that I I I'm going to just use it. I think the word brave is um applicable for what Kiva has done by jumping into the space, because I'm not seeing a lot of the other largest brands in cannabis do this. Um, one of your competitors, wild, has has been on the hemp side for some time, but there are not a lot of brands that I talked to and fears around cannibalizing the existing market that they have or pissing off their customers. And I'm wondering what are some of those biggest challenges that you guys identified and how you worked through them to get to the place where you felt ready to launch and specifically how you chose which of those states you were going to launch in and how that relates to your existing geography for your medical and adult use cannabis states, if there's, if there's overlap yeah, we don't have meaningful overlap today.

Colin Keeler, Kiva: 28:59

Um, that was, that was a decision from our point because, again, these are things we want to fill that figure out methodically as we think about look channel conflict is not a new thing. That's existed across industries like look at wine. When they started going direct to consumer, there was uproar within the wholesale layer historically so like this gets back to something I mentioned earlier. Like none of this is that new. We just don't know history as well as we think we do.

Colin Keeler, Kiva: 29:24

Right, like these, all these problems have existed in a similar but different format Like history doesn't I forget the phrase history doesn't whatever, but it rhymes right, like that's sort of what we experience here today. So for us, like, managing our existing business and our existing partners customers, manufacturers, et cetera is the first priority. They're the core of who we are and how we've gotten to where we are today. But we'd be foolish not to look at Minnesota, where hemp is part of the adult use architecture, it's part of cannabis. It's not hemp versus cannabis, it's all part of the same program up there and that's where edibles you're going to see meaningful edible success because they're just in other places. So for us, we had to move into hemp, at least in that capacity. And if I can reach consumers in places that are never going to legalize in the foreseeable future, right Like some of the states in the South that have no real roadmap to a meaningful you know, traditional, regulated cannabis program, but I can reach them with hemp and those states are performing incredibly on direct to consumer right now, it. That is that's that's important for me as a brand, like we have to. That's something we have to do to reach those consumers and continue to build on the trust and awareness that we have because, you're right, other people, new entrants, will take that opportunity if we don't capitalize in terms of other brands that aren't moving on it.

Colin Keeler, Kiva: 30:52

I, I don't know there's. There's a lot right, you know like there's more than maybe some haven't been as public about it. For us, being forthright about what we are and aren't doing was the most important, you know, sort of the most important thing. But there's msos who've crossed over. Cure leaf is doing a, gti is doing it, like there's there's uh, you know stizzy's, this is crossed over.

Colin Keeler, Kiva: 31:13

Yeah, jeter, like most, a lot of the biggest brands are doing it. I would say you know, one of those names you mentioned may be crossing over pretty soon here. Pretty too, but when I hear is correct. So, like, I think most people are understanding the opportunity, um, and realizing that there's going to be have to be conscious conversations with folks about and I've had those about, I'm not trying to eat or infringe on your business right, like I'm priced right now twice as expensive.

Colin Keeler, Kiva: 31:44

I'm not in those states, but right now I'm twice as expensive as most states. My product is in most dispensaries in most states. Right, that is not non-competitive. My goal is to drive across all channels, so it's not going to be an easy thing to figure out, but you got to embrace the hard things, I think in order for us all to drive towards success. We're all doing that anyway. We're in cannabis.

AnnaRae Grabstein, Wolf Meyer: 32:09

Absolutely Mic drop there.

Ben Larson, Vertosa: 32:12

It's been such a, it's been such an interesting conversation lately, and what you were mentioning about being in Minnesota and just seeing a completely different reality compared to that in Colorado, where you're sitting, or California, where we are and for me it's, you know, it's like doing that every day, constantly, like as we engage with people, whether it's online or in person, you know where they're sitting, what their perspective is, it is. It is exhausting, but the exciting thing that we're that we're experiencing right now is the just very obvious convergence of the hemp and the cannabis marketplace, and there's a lot of hard conversations to be had. Um, you know, I, I know I've been engaged in a lot of them this very recently. I feel like I'm walking around stepping in hornet's nests, uh, on purpose, um, but it's uh, you live on both sides, but you do for sure I know well, and so do you now too.

Ben Larson, Vertosa: 33:10

So congratulations. Yeah, I mean look I don't think.

Colin Keeler, Kiva: 33:13

I think we've. We've mentioned this in an earlier conversation, but like the fundamental thing is that this these are, this is intoxicating cannabinoids right, full, stop, right. And anybody who's like my way is the best is probably living or talking their own book, because nothing is perfect about how cannabis is done today and nothing about hemp is perfect is how it's done today but there's somewhere in the middle that this probably evolves to over who knows?

Colin Keeler, Kiva: 33:40

decades, or the same way alcohol has over time into something that makes much more sense that we all believe it should. But folks who are like I got to kill hemp. And the folks who are like, oh screw you cannabis operators, you're monopolists, you need to come over and do it my way. They're just talking. They're talking their own book, right.

AnnaRae Grabstein, Wolf Meyer: 34:01

And that to me, that's.

Colin Keeler, Kiva: 34:03

I'm disinterested in that.

Ben Larson, Vertosa: 34:04

I think we should be doing the way things should be and then chasing I do want to take a moment just to say, like I I heard recently, it's or you, you hear it right it's from the hemp side. Some people will say it's like oh the, that's the marijuana industry. You guys are federally illegal, we're doing it the right way, and it's like it is all one plant and there wouldn't be an acceptance of intoxicating hemp cannabinoids if the regulated market hadn't done so much work to become socially acceptable. And I could say I could argue the exact same from the other side. So it's like we all need to come to center a little bit more. And I want to give a shout out to David Valancourt, because I saw him say recently can we finally just start talking about cannabinoids instead of hemp versus cannabis? And I'm just super excited for us to get to that place, and I don't know if we're ready today, but six months, 12 months, hopefully. This activity really helps with that convergence.

AnnaRae Grabstein, Wolf Meyer: 35:02

I hope so too activity really helps with that convergence? I hope so too, but I love you know, in in almost all 12 and almost, I think, all 12 step programs, uh, the first step is to get out of denial and accept what what is happening in reality. And I think that, um, in in the cannabis side, that that is what is needed for those that are really pushing up against what's happening in hemp is that we just need to accept what's going on here and and get out of denial that it's that it's going away, and figure out how to make it manageable. And I think within, within the manageable category, there's a ton of opportunity, and it's not just about financial opportunity. It's also what you mentioned earlier, colin, about direct communication with consumers, different access to marketing pathways, and there's just there's a lot to be learned there. So, yeah, it's a fun time to be navigating complexities.

AnnaRae Grabstein, Wolf Meyer: 36:04

I want to hear a little bit about the supply chain that you guys are managing on the hemp side, in that you've been talking about DTC, as Ben and I have talked to other hemp operators. People are looking at DTC, but they're also looking at a ground game with wholesale, and a lot of folks on the beverage side are using traditional and existing beverage distributors. Are you guys looking at wholesale on the hemp side and are you thinking about beverage distribution or other pathways? What's the best way for wholesale to roll out and hemp at a time when it's it's kind of a greenfield, of what it becomes?

Colin Keeler, Kiva: 36:47

Yeah, no, this is a great question. I'd say it's a multi-million dollar question. So we are launching Minnesota wholesale here shortly. We have made our first hire there. We are in conversation with different partners in Minnesota and we would selectively look at other geographies again, targeting those states that the biggest opportunity, places we couldn't reach otherwise, et cetera. Beverage is easy as it stands right now. It's not perfect, but a beverage beer distributor sort of understands it, can right they're doing edibles to an extent. We found some that we think are really invested and understand the opportunity edibles represent within that. But they're not going to be optimized for every class of trade Because we're not here.

Colin Keeler, Kiva: 37:31

The big thing here, the big paradigm shift, is there are the types of customers. You're dealing with the expectations. The one thing that's nice about cannabis is that within dispensaries there's different types, but generally speaking, you know most are going to keystone. You know most are going to be thinking about things in a similar way. You know how bartenders will operate. This is going to be fundamentally different across different classes of trade.

Colin Keeler, Kiva: 37:55

Convenience hemp dispensaries, true smoke shops, liquor stores, grocery stores. There's a ton of different points of distribution, right and um. Some brands are going to succeed in in some of those and less so in others. Right, the best brands will succeed in all over time. But even so, if you look at monster versus Red Bull and compare like on-prem versusprem versus convenience versus grocery store, you're going to see meaningfully different patterns for them on how they go to market and how they succeed. So there's no given answer. I think there's actually opportunity for folks to create help on the distribution side or help on the broker side in terms of meeting customers and solving these kinds of problems. It's an unsolved problem at this point because it is really novel, but we're building that out now. We're going to have some direct level of sales where we can fulfill directly with customers.

Colin Keeler, Kiva: 38:55

We're going to be working with distributor partners that make sense in getting into those kind of end points of sale that matter most for us. But uh, it is not as straightforward as cannabis and I don't think cannabis is super straightforward on the go-to market either.

AnnaRae Grabstein, Wolf Meyer: 39:12

Follow up on that. Within the hemp distribution it's been easy to see how you can switch out a can for a can, and so it's clear where those products belong on the shelf, and so it's been easy to for for Total Wine to create that end cap, or for a liquor store to put a shelf in their cooler to have the hemp beverages. I think on the on the non-inhalable hemp edibles, like like what Kiva is bringing to market. I've been a little bit more cloudy over where do those belong on a shelf in, because I'm used to it at a dispensary, and so when you're in a more traditional retail environment, be it a grocery store, a liquor store um, not a hemp focused dispensary or a smoke shop where, where do edibles go on the shelf? Where do you place them in the store?

Colin Keeler, Kiva: 40:03

it'll depend. I think minnesota did themselves a disservice with how they constructed the um, the legislation there that dictates edibles behind, you know, in under lock, seal and whatever else, and I get that. Maybe there's some like theft issues or otherwise, but to me that's a that's like a that's sort of an imaginary problem. And you're not necessarily the only reason you see that mirrored in other states is because they're emulating Minnesota which may happen right and in which case the choice is forced.

Colin Keeler, Kiva: 40:35

It's got to sit at the counter in some capacity where it is under lock or behind something, and lock and seal for edibles. I don't think it has to be that way.

AnnaRae Grabstein, Wolf Meyer: 40:43

And I don't think it will over time Do?

Colin Keeler, Kiva: 40:51

I think it makes a lot of sense in a convenience store for them to be sitting up at the large counters they have, where they're already merchandising tons of products that shouldn't be in reach of children and otherwise. Sure, but I think that's. That's something that will be sorted over time. I don't think the Minnesota model there is perfect and I think you can create space. I'm not particularly worried about people you know jacking like six bags of gummies and running off in a liquor store.

Ben Larson, Vertosa: 41:14

I think the most important part actually is just effective age gating. And it's interesting, you know, I was, I was in Hawaii and was at this, was at this grocery store and I saw some empty nine gummies there and I just grabbed a pack, threw it in my basket, took the basket to the checkout and it just got wrung right through like really quickly by the checker and the register. You know, like if you do that with alcohol, the register will like pop up a notice so say check ID, and like you can't go on until you punch in a birthday, like that didn't even happen with that product. But it seems like a super easy thing to implement with these products. So there just needs to be some sort of I don't know step education that's happening between the distributor and the brands and the retailer just to implement that one little simple step of stop a process, ask for an ID.

Colin Keeler, Kiva: 42:05

And they were before they put the rules as they are today, when they first sort of accidentally legalized, like there wasn't this behind lock and seal for edibles no, it was sort of wild west for that first, you know, first year and when I went to the patina, which is a boutique up there, like it was at the counter, but it was in front next to all the other candies but did they ask me?

Colin Keeler, Kiva: 42:23

did they know to ask me for my id when I bought one For sure? Right, that was already sort of been viewed, Totally agree, I mean. I get back to the regulatory side of cannabis. We got to take some of the best of that, and one of the best things, one of the best things that occurred I think I think it was the California ecosystem was they did a sting into dispensaries where they sent kids in trying to you know, trying to buy products underage. How trying to buy products underage? How many kids?

AnnaRae Grabstein, Wolf Meyer: 42:49

got product Zero, zero, yeah, zero. You did that with a liquor store. I can tell you from when I was a teenager.

Colin Keeler, Kiva: 42:56

That's not the case. I'm not saying that that's a pretty high standard and we want to try and reach for it as much as possible to begin to more places. That won't necessarily be as, because, again, most dispensaries are like Fort Knox, right, but I do think that that's something that means critical critical for the success of this industry and anybody this really grinds my gears. Anybody who is fighting legislation on child resistant packaging, anybody who's fighting ID checks or age requirements on intoxicating products should not be in this industry. Full stop. That is super important and if, again, you were just self-interested, I have no tolerance for that Full stop.

AnnaRae Grabstein, Wolf Meyer: 43:38

Well, so zooming out a bit as we're getting towards the last quarter of the hour, what do you think are the hottest state markets and you can talk about both cannabis and hump, you know. Whatever you want to see, like today, what are the markets that you like the best? And then I want to hear about what you're excited about for the next 18 months and the ones you're watching.

Colin Keeler, Kiva: 44:00

Yeah, I'm like, I'm from outside Philly originally, so the Northeast has been really exciting for me. You know we're number one in Massachusetts originally, so the Northeast has been really exciting for me. You know, we're number one in Massachusetts, we're number one or number two in New York. We're launching New Jersey not really part of the Northeast but it's pretty close. Ohio, we're sitting at number one. So clearly the brand has resonance across the Northeast.

Colin Keeler, Kiva: 44:20

So for me, effectively building the strategy to maintain that momentum across the Northeast, which remains super important from a cultural perspective, I think New York is inflecting. I think the troubles will come to an end at a certain point and we're going to see that market really attain the potential it deserves. New Jersey is silently crushing it and just desperately wants more products. So, again, super excited to launch there in a few weeks. And, um, you know, I think Pennsylvania, everybody's, everybody knows this right, when Pennsylvania flips into adult use, that's going to be a colossal market. It's already a colossal market, um, and their edible sales are phenomenal. Even they don't really permit edibles. So, uh, there's a ton of opportunity there. Um, within, look, I'm probably going to move to Minnesota at some point. You know, family, et cetera. Hope we get that one going great and Texas looks just like that is obviously just has done really interesting things. They're still figuring out a ton of brands doing huge things down there.

Colin Keeler, Kiva: 45:34

So I think that that'll be a hotbed for this thing, like california is a cradle of innovation for, for uh, cannabis in so many ways, like I think you're going to see that similar phenomenon, similar phenomenon out of tex Texas in terms of some of the most successful brands that build there will probably carry into a broader national market. I'm looking to our future competitors, make no mistake.

Ben Larson, Vertosa: 45:58

I'm curious if the California branding for you guys, being born out of the California market, how that might influence your brand or your success. Or is it beyond that now? I'm just curious.

Colin Keeler, Kiva: 46:11

I think when I say cradle of innovation, I think as a freer market, as one where you've had to learn through every hard lesson, and truly competitive market. There's no shortage of brands in California that it hones the knife right, so less than being like look, we came from California, which of course is part of our heritage.

Colin Keeler, Kiva: 46:35

But more so building a brand effectively, a truly competitive environment, I think has knock on benefits right. The OG status is you know, scott and Christy doing this for over a decade like, of course, is a huge part of it, but within that it's just all the lessons learned and trust built over that time.

Ben Larson, Vertosa: 46:56

Yeah, speaking of Scott and Christy, just seeing the journey has been really incredible. You know, seeing the early, you know investor pitches and being just beautiful cannabis to now being such a force in the industry. And I had no idea that you guys were. I mean, I knew you were expanding to different markets, but just really being at the top of the heap in so many critical markets, it's a huge, huge kudos to the team.

Colin Keeler, Kiva: 47:25

They built something special. No question, Huge kudos to the team.

Ben Larson, Vertosa: 47:27

They built something special, no question yeah, I mean to Anna Rae's point any predictions that you have for the next 18 months, as you kind of continue to lean into to kind of the hemp and cannabis expansion?

Colin Keeler, Kiva: 47:41

So we're going to get rescheduled. I believe that firmly. I think that it's hard to argue against. I'm not going to prognosticate about specifically when or otherwise, but I don't think that'll be the end of the world. I'm really against this whole mindset that pharma is going to come in. I worked in a biotech before this. We looked at cannabinoids. Schedule one is not the reason that cannabinoids were not something we pursued, even as exciting as the potential therapeutic benefits are, reason that cannabinoids were not something we pursued, even as exciting as the potential therapeutic benefits are. And it's not going to upend state like the state markets we see today. I just think that is people who don't know what they're talking about or willfully trying to fear monger, and it's just not. It's going to be a nice tax benefit that people are already taking because they're following the Trulia strategies, right, right, so that's one sort of unrelated thing. Beyond that, I think we see amp get kicked another year. I don't think that that we're going to see any meaningful change come this year. There's too much dysfunction. So that certainly would be nice from a certainty perspective, although them actually doing something that gives us like clear guidelines to work with between that and cannabis, I think would be even more exciting I wish I could say that they're just going to

Colin Keeler, Kiva: 48:52

legalize, but we all know that that's yeah.

Ben Larson, Vertosa: 48:55

No, I think I.

AnnaRae Grabstein, Wolf Meyer: 48:56

I think I'm on board with both of us I mean it's still optimistic that you're that you're calling rescheduling in the next 18 months. So, uh, I, I hope I hope we'll talk about it.

Colin Keeler, Kiva: 49:07

You know we, we'll see, yeah, yeah.

AnnaRae Grabstein, Wolf Meyer: 49:10

And and I'm with you on thinking that we're not going to see anything too substantive in the farm bill I've got I've got some bets going with some other friends in the industry and basically we're we're betting avocados. So it's not like super high stakes but depending on the way those prices can vary.

Ben Larson, Vertosa: 49:32

I don't know if you're on Anna Rae's holiday mailing list, but she has access to the best avocados.

AnnaRae Grabstein, Wolf Meyer: 49:38

I mean, it's just a local avocado farm, but I do love to send avocados around, I know you're on this list.

Colin Keeler, Kiva: 49:45

My wife's a huge fan. I love avocados too.

AnnaRae Grabstein, Wolf Meyer: 49:47

I'll make sure to get your address. Well, colin, this has been super fun. I love where you sit in the industry and the perspective that you've been able to share with us today, so I really appreciate it. It's time for our last call, and so this is where we give you an opportunity to leave a lasting impression on our guests. So, colin, what's your last call?

Colin Keeler, Kiva: 50:08

Oh boy, bye Kiva, I don't know. Thank you all for listening to those that did, and we're appreciative of the folks who've supported the brand today and looking forward to being the edible brand of the country in the future.

AnnaRae Grabstein, Wolf Meyer: 50:21

So big dreams.

Ben Larson, Vertosa: 50:23

Amazing. Well, colin, thank you so much for joining us and sharing some intel and just being so open. I know a lot of people in the industry have their eyes on Kiva and emulate a lot of what you do. Keep leading the way, keep fighting the good fight.

Colin Keeler, Kiva: 50:38

Hey, they want to ever talk. That's my job Dream of ways we can work together. So give me a call.

Ben Larson, Vertosa: 50:43

All right, yeah, we'll post this contact. Get in touch with Colin. Thanks, colin. All right, Anna Rae Another one in the bag and it's good to be back. I'm glad we took the week off. A week felt like a long time After doing this, week after week for almost 40 weeks.

Ben Larson, Vertosa: 51:03

I come back refreshed next week it's just you and me, but we have an exciting announcement we're finally fulfilling our promise of a little bit of a rebrand. So if we look a little bit different not us around us don't be surprised. Still same old us, still same conversations. But until then, we're wrapping up. So remember, dialogue doesn't have to end here and we invite you to continue these conversations and we'd love to hear your thoughts. Who would you like to see on the show? What topics would you like to have us cover? We're immensely grateful for you. Your engagement encourages us to keep bringing you these thought-provoking conversations. So if you've enjoyed this episode, please like, subscribe and share High Spirits with your colleagues, your friends, heck, your family. Thank you to our teams at Virtosa and Wolfmeyer for your continuous support in our spirited journey. Yeah, we couldn't do it without you, guys. Until next time, stay curious, stay informed and, most importantly, keep your spirits high. That's the show.