AnnaRae Grabstein: 0:05

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Ben Larson: 0:52

Hey everybody, Welcome to episode 76 of High Spirits. It's Thursday, February 20th 2025. I'm Ben Larson and, as always, I'm joined by my amazing co-host, Anna Rae Grabstein. I'm home, I'm standing, I'm happy, I'm a little tan for anyone watching the video. More importantly, Anna Rae, how are you doing when?

AnnaRae Grabstein: 1:14

are you?

Ben Larson: 1:15

I don't recognize this brick wall that's behind you.

AnnaRae Grabstein: 1:18

I know I'm in Arizona. I've been at a dude ranch all week.

Ben Larson: 1:23

Dude. I've been at a dude ranch all week outside.

AnnaRae Grabstein: 1:25

Tucson yeehaw. I've been riding horses through Saguaro National Park. I've been doing yoga, also surrounded by cacti, I know.

AnnaRae Grabstein: 1:36

But I've also been working, I've been living the best life, you guys, it's like I've been working for a couple hours, then going and living my best life. And Arizona in the winter, there's legal weed, there's sunshine, like I've been working for a couple hours, then going and living my best life. And Arizona in the winter, there's legal weed, there's sunshine. I've met people from Minnesota, new York, taiwan, new Mexico. It's really like very international. Everyone is seeking a little bit of a break from the snow or the rain. You know, it's been great All the snowbirds I know, yeah, it's been great All the snowbirds.

AnnaRae Grabstein: 2:08

I know, yeah, it's been really really awesome.

Ben Larson: 2:12

So, yeah, and, and you were in Hawaii, so we're both kind of soaking it up, yeah, yeah, I was there for the last eight days with the fam and it was just incredible time Got the paddleboard with the whales. I didn't get crushed, so my team is happy about that, but I did get out there and it was. It was the most, it was one of the most epic experiences ever. I just had this vision in my head. I'm like you know, because it was a very active whale season and I think it's like the most whales they've ever had in Maui, uh, which is one of their you know their breeding and birthing grounds. Um, and yeah, I was just like I'm going to rent a paddleboard in the morning and I'm just going to go out, and I did, and as soon as I get out as about as far as I'm comfortable going, there's these like two massive whales that just start breaching and then there's a little baby with them and there's all these people on the shore. They just saw me standing out there getting this like private show.

AnnaRae Grabstein: 3:02

And you were by yourself on the paddleboard.

Ben Larson: 3:06

Yeah, yeah, getting this like private show, and you were by yourself on the paddleboard. Yeah, yeah, I was out in the middle of the ocean, uh, on the paddleboard, and um, yeah, like it was, like when your vision just completely comes true. It was just the most magical thing. And and then I just turned around and paddleboarded in amazing.

AnnaRae Grabstein: 3:20

I love it so cool. Well, today on the podcast, we're going to be talking about retail and technology, automation and data and how all of those things are shaping the future of cannabis retail, Because one thing that we've learned from our audience is that you all who are listening really like tech-focused episodes. There's been really high engagement whenever we talk about technology and data and people just seem hungry for it.

Ben Larson: 3:51

All right you like data.

Ben Larson: 3:53

I do like data. After the last eight days it's a little hard to get back into that brain, but I'm sure our guests will catapult me there. I remember meeting Chris at Canadatacon two years ago and it was just a really awesome, really awesome experience to learn about how he sees the world and yeah, it's. You know, the cannabis retail is complex and we always talk about not knowing our customers and not having access to data, but I think that's becoming less of a challenge, I guess, as technology becomes more available.

AnnaRae Grabstein: 4:33

I think that the reason that we've had such high engagement around technology content is that it's kind of just become table stakes these days and there's no company that doesn't have a tech stack. It's like even if you're a laundromat, you probably have a tech stack and everybody has one, and navigating it is both complicated but also creates all kinds of unlocks. And yeah, I met Chris. It's been at least three years. One of his investors encouraged us to meet and introduced us and yeah, we've just been seeing each other around the scene for a while, so it's going to be exciting to dive in with him shortly. But before we do that, let's touch base on some key news updates.

Ben Larson: 5:17

Yeah, let's do it.

AnnaRae Grabstein: 5:19

All right. So first Wisconsin is discussing legalizing, and there are not a lot of states left anymore that don't have programs, and so it's exciting.

Ben Larson: 5:30

You've got a nice little hemp program going on.

AnnaRae Grabstein: 5:33

Yeah, hemp is very popular in Wisconsin, but you know their neighbors in Michigan, illinois and Minnesota all have adult use programs, so most likely Wisconsin is losing tax revenue. Their governor, tony Evers, estimated that 58.1 million in tax revenues could be generated in the 2026 to 2027 school year. He would like to regulate adult and medical and also add very specific rules for hemp, including Delta 8, delta 10. Currently, everything is illegal on the adult and rec marijuana side, and one of the things that's unique and interesting about Wisconsin that they have in common with many of the other states that don't have marijuana programs yet, is that they don't have a ballot initiative process. So in order for laws to change, the only way that happens is it moves through the legislature, and so whether or not the voters support marijuana matters less than if their elected representatives are interested in putting in the work to move it forward, yeah, interesting it's.

Ben Larson: 6:44

Also, you know, I think it's a neighbor to Minnesota it is, I said, minnesota?

AnnaRae Grabstein: 6:50

Yes, it is a neighbor to Minnesota.

Ben Larson: 6:52

Okay, good, I'm just you know my US geography is not the strongest, but if they do go the way of Minnesota and kind of model it after their regulations. So it'd be really interesting to kind of like start having these multi-states having hemp and cannabis regulations all under one regulatory body.

AnnaRae Grabstein: 7:17

Yeah, you know, I think the Midwest has been a really great incubator for the hemp space, and I think that the beer and drinking culture of the Midwest has translated really well into supporting the hemp beverage space, and so, yeah, I'm in it. Let's root for Wisconsin y'all. Yeah, less hopeful is Pennsylvania. Pennsylvania is still trying, though, so you got to give it to Governor Shapiro. He continues to include marijuana in his budget.

AnnaRae Grabstein: 7:48

Similarly to Wisconsin, pennsylvania needs to move it through the legislature as well, and, unfortunately for Governor Shapiro, the chair of the Appropriations Committee, who's a guy named Scott Marin, he's a Republican, he has opposing views to the governor, and his quote in the last couple of days was that he says I don't see any path forward whatsoever. So jury's still out on Pennsylvania. I think that there's an existing medical program there that's highly restrictive. There are dispensaries, and it is MSO country, unquestionably, and so the companies that exist in Pennsylvania are really banking on Pennsylvania, transitioning to adult use and opening up the market there, and have made big investments with hopes that those investments will pay off when the market expands.

Ben Larson: 8:49

But it's taken a long time. You know, politics is so confusing because in states like California, where you don't get what you want passing through the legislature, governors find a way to take executive action to make things happen in the negative direction, I guess, in this particular case and then you have the federal government where you have the president and Elon Musk doing whatever the hell they're doing and pushing things through. Why can't we make open for like to progress cannabis?

AnnaRae Grabstein: 9:15

it's just yeah yes, we'd like to move as fast. We just need to get elon musk on it, I guess. If we could somehow convince him to get in there and and help us figure out how to fix all these States and fix the federal government, maybe we'll get All.

Ben Larson: 9:31

I'm saying is it should not come down to one committee chair being like ah, this is, I don't see a path forward. It's like you're not the governor, but sorry.

AnnaRae Grabstein: 9:40

Now we're going to have an E on the episode.

Ben Larson: 9:44

My son's going to call me out for that one.

AnnaRae Grabstein: 9:47

Yes, our youngest listener. Well, so we've got Wisconsin and Pennsylvania. We'll see what happens, but I think that we move into this conversation with our guest. Let's queue him up.

Ben Larson: 9:58

All right.

AnnaRae Grabstein: 10:00

So our guest today is someone who has been shaping the cannabis retail technology space for years. Blaze was founded in 2016, and Chris Viola is the CEO and founder. It's a retail commerce technology company that provides POS, e-commerce, delivery and analytics solutions for cannabis businesses. Blaze works with dispensaries and brands across multiple markets, giving Chris a unique data-driven perspective on the trends driving the industry. Chris, welcome to High Spirits.

Chris Violas: 10:31

Awesome. Thank you guys so much for having me here. Ben and Aray it's been years since we got to know each other, but I'm so excited we're actually on this podcast. I'm excited you guys chose to do this. I'm super grateful to be here and just big shout out to you guys for making this happen. Quality production just everything's been super smooth. So great work and just lots of gratitude towards you guys.

Ben Larson: 10:53

Oh, thanks, chris. I should not act so surprised. I should have. I'm going to, I'm surprised, 2016. I had no idea that you've been at it this long. Like yeah. It makes me just want to start with the journey man. What a journey it's been, and your recent post on LinkedIn was about AI, and I'm just imagining back in 2016, you probably weren't thinking about AI what an evolution this must have been for you.

Chris Violas: 11:24

Yeah, 2016, I mean going way back right. That was when the idea um, you know, I had this, this concept for a point of sale in the space as a senior thesis coming out of college and finally was able to, like you know, 2016 I was moving jobs to, uh, amazon web services had about three month gap before I started. I was like you know what, I'm gonna spend some time working on this. And, sure enough, you know it continued to work on it through my time at Amazon and we can talk about AI machine learning back then, because I was helping sell some of those product lines and really getting ahead of what AI, frankly, is today when I was there.

AnnaRae Grabstein: 12:00

But yeah, it's been a journey, I would say.

Chris Violas: 12:02

Operationally, we really had our first customer on the platform in 2018 and got our seed round of funding in 2019. And I officially left Amazon to pursue this like full full time in April of 2019. So it's been a journey, really five years strong at this point and, yeah, really fun background and lots of problems to tackle. My view certainly has changed over the years from just make it work to how do we optimize every little piece along the supply chain, along the operations piece, at the dispensary level. So it's been a journey, it's been very fun and, if anyone knows me, I'm a huge fan of vertical SaaS and that general playbook.

Ben Larson: 12:39

So lots to talk about here and how big is the team now?

Chris Violas: 12:45

Yeah, team is about. We got about 75-time about another 25 contractors or so, so just about 100 at the moment and happy with that number. Like to stay there. It's already challenging to handle remote teams, but I think our team has a really great culture and want to continue to keep that as intact as possible culture and want to continue to keep that as intact as possible.

AnnaRae Grabstein: 13:07

And you talked about the journey and we love to talk about leadership stuff and we usually save it for the end. But I think that, because you brought it up, I would love to just learn about your personal leadership journey a little bit. I know that you're really into fitness, You've got a family, you're a CEO of a company. That whether it's a startup or just a scaling growth opportunity like what is your personal leadership approach to managing it all?

Chris Violas: 13:32

Yeah, look, I'm pretty young, started this, you know, right out of college, frankly, and really got into it, and leadership has been something that you know. I've learned a lot through playing soccer. I was a D1 soccer player. I spent a lot of my youth doing that and understanding how to lead both on the field and off the field. And, at the end of the day, one word I always go back to, or two words I should say, is ownership and accountability.

Chris Violas: 13:55

Lead from the front, lead with your heart on your sleeve, communicate high communication and make sure that we hold each other to high standards. And so I really, if you ask anyone at our company, I'm really happy that we have a very flat organization. We need good feedback loops and it's hard to lead if you're disconnected from what's going on in the day to day. Of course, as a CEO, your job is to look up strategically and look past two years, three years out, but I think a lot of CEOs and general leaders kind of lose that as they start to kind of get up through the organization. So, for me, I really love flat organizations. I like open discussions, I want to be challenged, I want to challenge others, but at the end of the day, a call needs to be made and we need to be very clear with that in that call if it comes down to that and really lead from the front. I think that's one of the big principles that I adhere to, but it just comes through accountability and ownership.

Ben Larson: 14:51

We're in this period of time where you have a lot of tech leaders calling back to office and there's people just saying that it's hard to get productivity and accountability out of remote work and hybrid work. What are your thoughts on that? I know you're managing a largely virtual team I am as well, and I push back on it a little bit or a lot bit, but yeah, what are some of the tactics that you use to make sure that you have that high level of engagement and accountability when working with a remote workforce?

Chris Violas: 15:27

Yeah, you know I, having worked at Amazon, I think there's a critical principle I try to like bring into the team, which is, I guess it's twofold. It's, you know, bias for action. Don't be afraid to make mistakes. A lot of these mistakes are two way doors, as Mr Bezos would put it. You can come back from these decisions Most all. There's certain decisions, you know, call it, one to 3% of decisions in business are totally one way and you can't come back. So I don't want to say, like you know, run fast, break things, but generally be smart in how you approach this, don't be afraid to make decisions, and let's talk about it afterwards. Some of the tactics beyond just calling out some of our leadership principles.

Chris Violas: 16:03

You know, like any management style, I choose to pick the objectives and key results so they okay our format. I think that's a really good way to waterfall down through an organization. We do that quarterly. And you know, one other thing that I see I think it's a really good tactic that I personally love to do it's really fun is the monthly town halls we run about. You know, every month we do maybe 60 to 75 minutes for the town hall and it goes from financial updates for the company through, you know, strategic items, obviously any HR stuff, and then each department gets up and talks and it's great because we've got the U? S and Canada.

Chris Violas: 16:38

Both have different, you know, sometimes different departments that will cover customer service. We get to see the pains on each side of the border um. But I think through that it's really clear what the teams are working on um for you know the the uh. For the rest of the employees of the organization, it's clear what our north star is day, day in and day out, where we're going in that month or we're going in that quarter. And I think once you have that, you establish a lot of trust because you're delivering on what you say you're going to do at least as close to as possible Right, and there's a real emphasis on showing the effort and progression towards that.

Chris Violas: 17:12

So I'd say those are some tactics that I use, other than you know. We use office hours, which I'm a huge fan of. If anyone doesn't know what that is, you know pretty much it's an open door policy. If anyone doesn't know what that is, pretty much it's an open door policy. We leave a Google Meet open at each exec and a lot of the department heads once a week or once every two weeks, and you know that's where we want to encourage BDRs and other folks that normally wouldn't talk to the CEO, like, come talk to me, let's talk about life, let's talk about cannabis.

Ben Larson: 17:38

So people actually use that where you say I have this open time on my calendar dropping at any point, and people do no-transcript.

Chris Violas: 18:23

Professional sports team high performance um, everyone's got to hold their own weight and, yeah, you got it. You got to hit a ball out of the park every now and then, um kind of thing. So I think those resonate well with our team and have helped us really continue to uh, to carry on into 2025 and beyond yeah, a couple just real quick.

Ben Larson: 18:39

A couple resources that that come to mind hearing what you're talking about. First, with the, the okrs, one of one of my favorite books was andy groves highput Management. It's a really good framework. You know, former CEO of Intel. And then, talking about a professional sports team versus a family, netflix had this infamous culture deck. I think it's probably about 15, 20 years old now, but yeah, it's like 120 pages of just talking about like the ruthlessness of building a high performing team.

Chris Violas: 19:13

It requires a lot right and you got to. It's hard to just do it by yourself, and that's why all the other leaders need to hold each other to a higher standard. You know, I'm really proud we just brought on a new senior leader at the company, shabazz I don't know if you know him. He's just bringing a ton of energy in and and really, after some of the execs have been here for a little bit, it's kind of like questioning why we do stuff right, and it's making us defend our position.

Chris Violas: 19:37

I think those are good conversations to have and naturally going to get some optimization through that, but it takes a team to hold that standard up right.

Chris Violas: 19:45

It can't just be left on one person, and so I really rely on my other teammates to help with that. And also, you know, if we produce bad tech, like our CS team yells at us, they're like why did you give this to us? Like what? And so like they're. You know, as a result of some of that cross pollination discussion, they're very involved as we release product. They're very involved in building the product and what it looks like. And so there's just. You know who are the stakeholders. They should have a voice. You should not be afraid to speak, and that's how we're going to get progress, at least I believe. But thanks for the resource on the higher output. I'm going to take a look at that one.

AnnaRae Grabstein: 20:17

Amazing. Some good tips there, folks. Well, so let's move into the meat of this conversation. You know your customers, by and large, are retailers, and so you sit in a unique place of learning about and watching, observing and interacting with the way that the retail environment in cannabis has been shifting. And I want to talk about consolidation. And I want to talk about two sides to consolidation. One and first is the consolidation of dispensaries retail in cannabis, and then also consolidation of tech, but we'll talk about that second, because I'd love to hear from you about what you're seeing. We hear in all the press releases that retailers are rolling up into larger groups and that they're becoming kind of overseen by parent companies with more arms. Is that the reality of what you're seeing in the market? Is consolidation changing the way dispensaries operate. What's out there? What's happening?

Chris Violas: 21:18

Big topic, fun topic to get after. So, yeah, look, at the end of the day, service providers like Blaze, like we rely on customers, right, and what are they doing? What's going on? And so I can absolutely say and some of this is market dependent. I'll call out right, but very much the the California is kind of the more mature markets. For sure we're seeing consolidation right and through that. That changes operationally sometimes how you, how you run the business, um, you know for example, let's say you roll up three or four different retail logos.

Chris Violas: 21:49

Do you consolidate those logos? Do you keep them running separate? How do you manage the inventory? A lot of these roll-ups are done to get economies of scale right and so through that that requires to do more of less, and so centralization becomes a huge topic, whether it be centralization of just product management, procurement, distribution, all the promotion management, customer management. Everything starts to centralize as they try to get more out of these resources. So these are some topics that definitely change, at least as it pertains to Blaze and how we offer this offer, what kind of interface that looks like, kind of power it needs to support these folks.

Chris Violas: 22:26

But we're seeing it across the board. You're seeing it both at the MSO level more consolidation happening there and I think you're going to see it both at the MSO level more consolidation happening there and I think you're going to see it more at the single state operated level or the you know someone that has maybe three shops in mass and maybe is launching now in New York kind of consolidation wrap up. So I think that's going to continue to happen. Resources are tight, capital's tight in this market, as we all know. Yeah, reasons and pressures to start to move towards this M&A.

AnnaRae Grabstein: 22:52

Well, so one of the things that I see in my work a lot is that roll-ups happen but that integration doesn't, because integration is actually more expensive and more complicated than people realize. And integration, really the core of it, the foundation of it is technology. And so, when you were talking about those three different logos rolling up, it's often that somebody might have two retail stores and then they're going to acquire two more and all of a sudden there might be three different POS systems at play within this one umbrella of ownership and that there's an intention to do an integration action. But what do you think is getting in the way of that? Why are people then continuing to maintain three different systems, different e-com platforms? What is the deal?

Chris Violas: 23:43

Yeah, I asked myself this question a lot, as we ask our customers and prospects this question a lot, as we, we ask our customers and prospects this question a lot why are you doing this? Um, I think the reality is, um, if it's not broken, you know, don't fix it kind of mentality, and I hate to say that, but like it really is, like, hey, we just acquired this business, maybe it's fresh, we need to stabilize, right, we need to understand the um incoming um or the acquired, the acquired business, right. So you might see this like six to eight month mold period after that acquisition, which is pretty traditional before any movement happens. But if it's like 12 months, 24 months after and we still don't see that movement, then we really start to ask questions like who's calling the shots in the brand, right? So at the end of the day, if we're going to roll three different logos, you know three different marketing assets, right that are needed.

Chris Violas: 24:29

It's just a lot more pressure on the teams to support these efforts, especially if you want to produce, you know, high quality in any domain on these things. So, look, I think the integration piece is really difficult and it goes for both the technology side, as we get to kind of talk about the M&A side in my house, right versus the retail M&A, but at the end of the day, those that are successful in these integration phases consolidate their core tech immediately. Like it's pretty quick, within, call it, six months. It's a pretty rip. The Band-Aid we need to see you know one plane of glass across what's going on, but that's not always the case, right, we tend to see these little periods and then, especially if there's any leadership mix ups, then moving tech is just hard. You don't have your champion and someone that's really internally driving this stuff, which you, which you really need to have good change management practice.

Ben Larson: 25:22

So can you talk a little bit about the pain of switching some of those, those platforms over? You know my business isn business isn't retail facing. So when I think about switching a software platform, I'm thinking like an ERP system, which is very painful because it's like all of your systems, all of your ingredients and it's the entire backbone of your business. Is it that extreme when you're talking about, you know, pos and and all the other integrated systems?

Chris Violas: 25:55

Yeah, technically, um, we're getting much better at moving data across and making the actual like system ready for the user to, to, to participate with. It's the training right. So change management at the at the but tender, mid, mid management level, procurement level that is where you you really hit challenges like we're. We're in the middle of moving a pretty large store right now, or multiple doors, it's like 18 or something.

Chris Violas: 26:17

Um, I mean, you know, hey, let's launch all of them at once, you can imagine it's going to be really difficult because now I need you know however many butt tenders, everyone on the same page and so really again, moving the data necessarily isn't a problem. Now we're very good with that. We actually help clean up and normalize a lot of data for folks as this progresses. But generally it just comes down to the people right and training, and that's where we've got a pretty big CS staff for that piece, like an onboarding team just dedicated to that, because it's a lot to get these guys on the same page so that they know consistently, you know as they move to a different platform. This is how you run the SOP or whatever you're doing, and there's consistency. So that's the biggest challenge, biggest hurdle.

Chris Violas: 26:59

Again, the best, most successful transitions we've seen is really high up aligned or aligned at the executive level, right Upper management, those guys pushing down, and are aligned with the middle management. That's when we see beautiful things happen. Things move quickly, people are trained. There may be a week or two of I don't know where this is or hey, we might be behind on delivery time because it's noon, maybe we didn't understand how to route or whatever. But generally, after that first week or two weeks, we're off to the races, things should be back on track and we should be moving um. At the end of the day. It's less complicated than what you're doing, ben, I would say at retail um, we don't have those formulations, we don't have those things. It's kind of like inputs, outputs from a you know, inventory coming in and inventory going out. That's that's kind of I think about it.

Ben Larson: 27:42

It's a more simplified uh catalog, if you will nice, yeah, um, I I don't know if we're ready to segue into AI, but I'm imagining, like this co-pilot system for onboarding and training, that could be really helpful as far as just that kind of natural language being able to ask questions.

Chris Violas: 28:01

Yeah, we actually are doing a lot of that right. So we partnered with a really cool company to help with our onboarding process and really making sure that we're keeping the user moving along their specific journey. Again, there's many people that use our system, from the exec team, accounting, front of house, middle management and so we really personalize those plans to that specific role and so that really helps with one getting up to speed customer satisfaction. Post-launch everyone knows what's going on. I mean, the worst thing is you launch with a new system, you're an employee and you want to do good, but you just don't know what to do right. That's a problem. So those are things we spend a lot of time on to try to mitigate that. But automation AI is definitely happening in the background, especially on cleaning up this data and normalizing the data, so that's a big part of it.

AnnaRae Grabstein: 28:48

Well, now that we broke the AI seal you guys yeah, you at AppPlace. You guys made a big announcement this week around data and and use of AI and what you're seeing in terms of recommendation engines, and I think it's super interesting. So why don't you just share with us a little bit about what you're seeing and where?

Chris Violas: 29:08

Yeah, so yeah, so obviously, we've had a mandate internally to really focus on automation. How do we help our retailers perform better, both on let's call it inventory optimization and then also driving top line, scott, who's our VP of e-commerce, former CEO of Timber, which is the e-commerce company we acquired. Really, I've been wanting to attack this problem for quite some time, and so we've actually. Every quarter, we do these hackathons, and this personalization engine has been in the hackathon for the last couple quarters. It's something that we've been playing with in different versions, whether it be an AI like a tender kind of chat bot, whether it be an actual recommendation engine. Finally, we picked it up, tuned it up, got it ready for production, and this was back in, I want to say, q3, we launched it end of Q3, early Q4. So right in time for the retail season, which is great. And so what this recommendation does? It lives on our e-commerce areas, mobile app areas, our kiosk areas, anything that's customer facing at this point and provides recommendations based off of purchase history, because we know in store, off and online what they're buying right. And then, once you're in the website, as you click around, we're taking into consideration where you're moving throughout that menu and the engagement on that menu and through that we serve up recommendations and so really exciting news.

Chris Violas: 30:25

We let that run in beta for Q, basically basically like October, november, and then we opened it up to quite a few folks in December and really exciting data points we got back as we looked at December 1, or first through, call it, end of January, so kind of a two-month period we saw some really cool numbers and a pretty even distribution which tells us it's working across a different scale of operators. So quick, I'll throw some numbers at you guys and then we can talk about them and break them down. Working across different scale of operators. So quick, I'll throw some numbers at you guys and then we can talk about them and break them down. So, of all the orders that went through e-comm for those that had the recommendation engine enabled, 32% of those were augmented by the engine right. So 32 orders out of 100 were being someone's using a recommendation or recommended product and through that we saw a 42 percent higher AOV for those particular orders, which is pretty meaningful, like that is pretty decent lift. And so on average retailers saw about 8 percent GMB increase, which equated to about 13K per month in additional sales or lift, which is pretty damn exciting, and so this is going to get better.

Chris Violas: 31:38

We're going to get better with our recommendation engines. We're kind of trying to stitch together better things or better data pieces like hey, if you buy this, you're likely to buy that, and really fine tuning that a bit more, and then we can talk about consolidation a little bit more and kind of weave in how I think those that are consolidating are winning A lot of it's through the house brands and vertical stuff, vertical products. So I think you know we're going to start to be able to support those more right in the recommendation engine than maybe a third party brand that you're bringing in and retailing. So there's a lot of opportunity here to keep going. But those are some of the early numbers we saw again over the last two months, and it didn't require our retailers to do anything. They just kept doing business.

AnnaRae Grabstein: 32:19

Yeah, it seems like it's just scratching the surface. I mean, I will tell you is like, if I tell myself, okay, anna Rae, you can have 45 minutes of Netflix and I sit down to watch Netflix. Their recommendation is so freaking powerful that I might get lost for three hours because they're like, actually, you would also like to watch this, and here it comes. How about this other thing? And this isn't new, it just hasn't really fully commercialized into a useful tool across cannabis retail, and so I think that this is really great, both for the consumer experience but also for retailers just to be better serving consumers and offering up e-commerce in a way that is more like an in-store retail experience, so that those basket sizes on e-com can be closer to the basket sizes that you see when you have a bud tender that says, hey, how about this other product? Also?

Chris Violas: 33:17

So much to unpack there.

Chris Violas: 33:18

I think you're getting a lot more user adoption and acceptance of this, because it's happening everywhere you're shopping today.

Chris Violas: 33:23

People are starting to get used to it and so you know, if you look at the e-commerce trends in 2024 and into 2025, ai power recommendations is absolutely at the top of the list, and then from there we can talk about other preferences and trends.

Chris Violas: 33:36

We're seeing on that layer but a lot moving towards mobile app shopping. And if you look at the carts we're seeing I've got to worry, I just had it written down it's like 3.2% higher cart size on mobile apps versus kind of going through the traditional like mobile website journey rather, and we're seeing a lot more engagement on mobile apps, like retail mobile apps, which is kind of interesting, right, because I'm not one to have a ton of apps on my phone, or at least I say that, but then I look at my phone and I've got apps everywhere. So it's really interesting to see this thing kind of take off. And I think through the acceptance we're building trust at the consumer level. And so now our job, if we can do it right, is can we build trust at the Buds Center level? Can we build trust along procurement for better automation and better recommendations there, and so that's where we're kind of to your point we're just getting started.

Chris Violas: 34:28

We're going to keep pushing this thing forward and so far, early results are fantastic. We want our retailers to make more money. That is the good thing, um, and so that's what we're set on.

Ben Larson: 34:38

So the, the bud tender interface is actually like an interesting aspect of ai. Right, because one of the questions that popped up in in our chat here is just, um, about the use of bots and AI agents to kind of whether it's like customer facing on the website or even on kind of like the, the, the backend side. Yeah, at what point does it become, you know, a tool for an employee versus replacing the employee?

Chris Violas: 35:10

Yeah, that's a. You know, this is a conversation that has been in my career for a long time, as I was at AWS. We're moving folks from data centers to the cloud and all these. You know database administrators were like what about my job? What am I going to do? So it's really similar in that respect, but I will say I don't think we're there yet. I think there's probably another two years where we're at least like we need the human interface today to make these decisions. Our data set is good but, comparative to other industries that have 20, 30, 40 years of data to feed these engines and power these things, I think we still have a bit of nuance we need to work through. I do strongly believe that AI is not going to replace humans. I think there are tools to be used. There's a lot of complexity and context that live with humans that we need. Folks like if you've got a GM that knows the area extremely well, they're going to say, hey, this product isn't going to fly there, why Well?

Chris Violas: 36:05

they are talking to all the consumers on the ground. We can't quite capture that information. So I think it's an interesting question. I think certain roles will move towards automation a bit more like procurement, you know, is going to be interesting, like we're definitely going to provide recommendations, but you've got to pull the trigger and you know what's in your bank account, what you guys can handle from a cashflow perspective. So I think there's some room to stitch the uh, stitch the context together and that's just going to take a few, a few more years, I think, um to really make this happen.

Ben Larson: 36:33

It's interesting what you say about like data sets, because you know I've been thinking about how do I get AI more incorporated into my business and, and you know it's like we collect a lot of data. We're trying to organize it and make it useful so that we can sometime at some point build a system around it. But, to your point, compared to other marketplaces, it's just so little data really to be kind of inferring a lot of information off of.

Chris Violas: 37:02

And again, you look at the context right, like the you know, anna and Ray, I think we're talking about this in our pre-prep session but, like you can look at different states, different markets, right have completely, you know, while the data set's the same, it's just there's so much more happening behind the scenes, internally, externally, that it's just it's really hard to kind of find that normal line and normalize across all these markets.

Chris Violas: 37:23

But it can be done for sure, and so we'll see where this goes, but I'm really excited about our launch Shout out to the team that did a great job on this stuff and that's one use of AI that we actively are obviously promoting and it's doing well for us. The other stuff behind the scenes is really interesting, so we're using it a lot, to your point, ben, internally to normalize data behind the scenes for us. Like you know, think about Square. If you're on a, like a small coffee shop, a lot of these folks don't know. Like you know, a Coke at that coffee shop is the same Coke in all these other coffee shops because each product catalog is per customer right.

Chris Violas: 37:58

We don't normalize those behind the scenes, so getting aggregate data is pretty tough. We've recently gone through that process. We now know brand from brand. We know, let's say, steezy's new launch, like STEEZY in California versus what's going on in New York. We've now normalized this across all of the platforms, so that's very recent for us. I'm really excited to see what kind of market understanding we get through that. But that's a great use case of automation right there and some intelligence, some LLM work happening Really cool.

AnnaRae Grabstein: 38:27

So you've brought up these other markets and I think it is really interesting to get to peek into consumer behavior across your data, because you get to see the POS data in places like Illinois and Missouri and New York and California and all these different states and there is distinct behavior in these markets. We see high-level market regulations that kind of dictate the way that a transaction can take place and how comfortable it might feel for a consumer. Like, what is driving these market differences and what are some of the ones that you could point out?

Chris Violas: 39:20

Yeah, I think you know classic is new market, mature market. So let's take California, let's take New York just as an example. Regulations have a huge influence on these buying trends. It's just. There's no doubt in my opinion. One example right, let's just take a normal KPI for a retailer AOV right? You look at AOV by channel. It's something that I spend a lot of time on in-store mobile app, e-com kiosk. What does that look like? We're seeing much larger online orders in New.

Chris Violas: 39:52

York than California. There's just no doubt. I think California we're running just around about 90 on the AOV right now. New York we're pushing about 100, 110 on an average order average order why I think over time the new market, people are really excited to shop a different way. I think there's some things going in there. But at the same time, New York is requiring for any online order, any delivery rather I should say prepayment, and so we're seeing delivery online orders even higher, like in the buck 30 range for AOV, versus a California market which doesn't require any prepayment.

Chris Violas: 40:28

You can pay upon delivery, right? It's a very basic use case that's been around for a long time and I think AOV differences are happening as a result. We know from our data set that if you have a payment outside of cash attached to the transaction, likely you're going to get a 20 to sometimes 35% increase in the cart value. So these kind of forcing functions of hey, this has got to be prepaid, you can't pay upon delivery these will change the buying habits for consumers and because they're buying more, they may come back less and so everything starts to shift and move around. Just a regulation like that.

Ben Larson: 41:03

That's such an interesting specific topic to think about, because I remember the early days of ordering from ease and they just didn't have payment processing, so it was purely based on cash because it had to be. And then I know that every time they implemented a new payment processing system, it was just a matter of time before it got shut down again and you got forced back into paying cash. So I'm elated to hear that there are markets where they absolutely rely on cashless payment. What a fantastic evolution.

Chris Violas: 41:36

Yeah, so it's interesting, right, and I think delivery too is going to be. New York has been known for its legacy delivery market. I mean it's kind of world-class.

AnnaRae Grabstein: 41:44

from what I've heard, I've not experienced it but you know we'll, we'll see on the regulations.

Chris Violas: 41:50

Yeah, I know We'll see on the regulations how this goes. I mean it's really interesting. You can have folks on a bike delivering product, right. Like you can't do that in California right, there's expense there's, there's regulatory frameworks around having a vehicle. Certain aspects of the vehicle got to be a certain way, right. So really interested to see how these things evolve over time. And then the other, you know pretty obvious one is just climate as well. Like you know, it's really cold. You're probably not going to want to smoke a joint in New York. You might want to smoke a vape pen, right. So, like, preferences on the consumer side change based on where they're at as well, and I think those are all really interesting things and we see them and it takes time to kind of comb through that data and again understand that context and apply that context, but once you do, it's pretty obvious to see these trends and what's going on.

Ben Larson: 42:33

Are there certain form factors that you see perhaps I guess converge more quickly across markets than others?

Chris Violas: 42:45

I that's a. I haven't looked at that data, so this is all speculation here and, like my gut instinct, um, I think the answer is yes. As you know, time has gone on. Cannabis is getting more in front of the mainstream consumer. They're seeing more, whether it be cannabis products, whether it be tobacco, like vapes, as an example, like people are just getting a lot more comfortable with these, these, this kind of category One. They're understanding the convenience of it. There's a social piece of it.

Chris Violas: 43:11

Right, there's a lot of different factors that go into it, but I think you know I was just listening to John T this morning, who's a, you know, a great vape brand in New York, and I mean they've really taken off. And I mean they've really taken off. And I think, again, new York is very different today than California was in 2018 when they went recreational right, and so you know, we saw the rise of flower. Flower is still very dominant and flower is kind of the king for the most part. But I think you're going to start to see these form factors shift and I think it's just people are getting more used to it, they're seeing it often and, as a result, they're accepting of it more.

AnnaRae Grabstein: 43:49

And once they get that convenience factor, I think it's going to start to move that way quite a bit. So you're touching on a lot of stuff as it relates to e-commerce and delivery and this kind of shift towards digital shopping that you guys are supporting on the technology side, and it kind of got me thinking as Ben was talking about form factors of if you see patterns when people are shopping online. Are they buying different things than they would in the store? Like, if the store compares their in-store orders to their online orders, is it the same amount of the certain flower brands or is it really that people are just purchasing from the first two, three rows of the carousel and so whatever is going to appear on the first three rows of the carousel is going to drive 80% of the revenue?

Ben Larson: 44:30

How does that shake?

AnnaRae Grabstein: 44:31

out, and how do then people choose how to manage that menu?

Chris Violas: 44:34

So much. I saw this merchandising one-on-one right, like where's the product hosted, you know, and this is where it goes back to the AI, goes back to a lot of the personalization efforts going on.

Chris Violas: 44:44

I think you can control the environment and you can have a more consistent environment when it comes to the digital world, the e-commerce, the mobile app, et cetera, versus in-store. You've got the physical merchandising. It's hard to know again if a certain brand of A-Pen was just better positioned on the store floor than another one. It's really hard to see. So I don't have any concrete data there. I will just say, like, at the end of the day, merchandising is a really difficult thing to do. I think you can get more consistent experiences with whatever strategy you're going to take on e-com, and I think consumers are going to continue to prefer that digital journey as time progresses. So I'm pretty bullish on that.

Chris Violas: 45:24

I'm seeing a lot of data that points that way, that people want to continue to shop and even explore like in the store with their phone. We launched this like scan to shop feature, which, if you've ever been to Home Depot, you've ever been to like Ikea. You can use your phone and scan an item and learn about it right and maybe even put it in your car and check out why you're in the store them and learn about it right and maybe even put it in your cart and check out why you're in the store. It's like in-store digital experience is actually happening. We obviously are ahead of that with Scandashop, but it's so hard when it comes to merchandising and creating this really consistent experience and personalized experience. I do think personalization we see the data day in, day out higher cart size, more frequent visit, more brand affinity over time Like it just starts to move that way quite a bit.

AnnaRae Grabstein: 46:07

Do you think that you need less SKUs when you're focused on digital shopping in this each product category, than what you're seeing in stores? Yeah, okay, straight up.

Chris Violas: 46:20

Andrew Watson and I. I mean, I don't know how many times you can scream it from the rooftop like less SK skews, please, less skews. Again, inventory is your balance sheet. It's really important. Less skews. Assortment matters, right, and so, generally speaking, yes, we want smaller assortments. Again, you go on.

Chris Violas: 46:40

Some of these folks have 1100 skews. How do you even show that properly on a digital environment? It's really difficult to do that, right. And so, hey, maybe they're just picking what's in the car to sell because it's easy, right, maybe there's a little bit of like filtering by category, because people are a little bit more loyal to a category than a brand today, but I think that will change over time. But that is, it's hard to merchandise that.

Chris Violas: 47:01

So less SKUs actually allow you to focus more, focus the consumer, and that's where the house brand private label stuff comes in, cause that's where I think you drive additional loyalty with just better packaging pricing. Whatever the strategy is for the private label, I mean, you can really start to put that front and center. You can win on COGS and the margin game there, and then you can win on loyalty as well. So that's where I'm really trying to point our operators is like please skim the SKUs down. Let's get a strategy for white label or private label, whatever it may be. Pick a category, pick two. I don't like we can talk about all the various strategies to come up with that assortment, but let's lower the assortment. Let's make this less complicated and more consistent.

Ben Larson: 47:47

I want to be cognizant of time, but cannabis is complex enough where I feel like we could just talk about hours of what's going on. But I have to believe, as a software company, you have aspirations beyond cannabis, and hemp is one of the most obvious conversations that have been spinning up over the last couple of years. How are you thinking about the world beyond cannabis?

Chris Violas: 48:07

Yeah, I think of the world as typically there's like vertical specific software, right. And then you got the horizontal software. As an example it'd be Blaze is vertical specific to kind of cannabis THC. Today you got Square. That's going horizontal and serving anybody, right. I think there's a world where those start to like merge a little bit and we start to see this high risk um merchant world happen, where we've got cannabis dispensaries, tt focus dispensaries, we've got maybe hemp and cbd, maybe liquor alcohol um start to emerge and so I really do think, um, there's quite a bit opportunity there.

Chris Violas: 48:44

It's quite enlightening to go to Candidate Econ you know what I guess earlier this month and just listen to numbers. Like that was my biggest takeaway. I finally got actual numbers on this industry. How many retailers have a hemp license in Texas? Well, it's like north of 7,000. That's interesting. Texas Well, it's like north of 7,000. That's interesting.

Chris Violas: 49:06

Although small AOV or small GMV, all right on the monthly, but like they're there, 9,000 plus in Florida, Like it's hard to ignore these numbers when the market for cannabis is is pretty small. There's like what? 11,000 in the US cannabis retailers, both medical and recreational, maybe another 4,000 in Canada and consolidations happening. So your actual customer base is getting smaller, as that happens Right. So naturally we want to pick our head up, we want to continue to grow and I think there's a lot of lessons that we've learned mostly in Canada, frankly that apply really well to the hemp market in the U? S albeit, you know, it's an interesting it's pretty nascent. Who knows where it's going to happen, what's going to happen? I think we've got some tools and some experiences that can better serve that. So I'm curious to see how that evolves in the next 12 months for us.

Ben Larson: 49:49

But it's something we're interested in. Quick follow-up to that. We've always or those of us entrepreneurs in the space have celebrated the cannabis market as kind of this walled garden when, yeah, it's a small market market, but it's a great way to like test your concepts. Uh, competition is relatively small, um, and it's a different world out there. So, as you've poked your head out and as you look kind of beyond the walled garden, so to speak, what are you seeing as far as competition goes, and how, how you might slot in alongside some of the existing players?

Chris Violas: 50:25

yeah, I mean a lot of these. You know I talked about horizontal pos's. They're kind of servicing and how you might slot in alongside some of the existing players. Yeah, I mean a lot of these. You know I talked about horizontal POSs. They're kind of servicing these SMBs today and a lot of the software, while it's good and services a lot of what they need, the payment processing continues to be a problem for these folks because of the high-risk nature. And then these horizontals, because they have so much volume in other industries. Like the last thing they want is to put any of that at risk with some of these high risk operators and I think that is kind of the main pain point we're seeing is no one's really quite servicing both of those together.

Chris Violas: 50:54

Well, you know, you've got the light speeds of the world that are certainly applying, you know the software layer, but they don't really handle the payment processing right. Or you might? We get our contact form on our website filled out daily from Texas because hey, square shut me down. Well why? Well, square requires content monitoring right To be able to process those transactions. If you make health claims or anything outside the hemp bill, they're going to turn you off.

Chris Violas: 51:17

And there's certain things combustibles, ingestibles, like are they comfortable processing that? So there's so much detail here. There's so much to unpack. But I think again, you look at the world of high risk merchants and I think they actually fall into that and there's a lot that we could apply there and there's a lot of horizontal players in that market that I don't really think care to service that market frankly at all. So I think there's some opening there and I think a lot of these smoke shops, which is really where these sales are happening, they kind of like having a provider called Blaze, they kind of like the swag that we bring from the cannabis side. So I think again there's some opportunity, just through the clout and our experience here, to kind of peek our head out of the wall garden. I think we can play, we can participate here. It's a much different of a world but it's something that we can certainly adapt to.

AnnaRae Grabstein: 52:02

I think it is so cool when companies that started in cannabis got to expand into other sectors and smoke shops and hemp or alcohol all count adjacent. But I think when cannabis was just getting started, people thought that we had to bring in people from other industries to come and build here. And now we're getting to see that there was innovative things that were built for cannabis that are being applied elsewhere and it's mostly happened, I think, in ag tech. But now we're starting to see it with technology and I think it's a good segue into talking about quickly if we could for just a couple of minutes, this concept of an integrated technology stack and consolidation that's happening in technology and I know that you have acquired some other technology companies and that has allowed you to do more vertically and I'm just wondering kind of how you see that the build versus buy approach and why you have acquired companies, what you are looking to acquire in the future. Talk to us a little bit about that.

Chris Violas: 53:06

Yeah and this ties beautifully back to the start of the conversation for us Consolidation and some of the things that change in the product. So, yeah, build M&A in general and this whole idea of call it the all-in-one people like to say type of provider and stance. The reality is, as consolidation happens, these retailers have less resources. Again, they need to do more with less. And so let's just take an example of, hey, you want to merchandising or discounting? Let's just say discounting. Let's say you've got 15 stores, you're going to go put a discount in the POS. Maybe have to do it per location. That'd be terrible, that'd take you an hour to go do and then you got to go put it up online because, again, most of the shopping is going online.

Chris Violas: 53:47

So, like that's another person, is that marketing? Is that you? There's just so many things that can be stitched together and so much better use of folks' time to get the end result by having that vertical nature for us. And so promotions is a great example. Right, build a promotion in Blaze, point it to the web and boom, like you don't need to go call your marketing department. Things are up, things are connected, the logic layer is done, and so we can go faster as a result.

Chris Violas: 54:13

These retailers can get more efficient as a result through that, versus a fragmented system where you might have an IT guy having to manage the integrations and manage all these other pieces of the business, and are they really helping drive value to that business? I don't think so. I think they're just kind of keeping the duct tape together, and so that goes back to again the efficiency stack, and that's where we're going after. Ecom is one example, I think you'll see us look at more targets that are kind of accretive for our business. We've got a great data layer. What can we do with that? Could be an AI move, could be some other moves around procurement or automation loyalty marketing.

Chris Violas: 54:49

These are things that we can certainly look at as we move forward, that are easy to kind of add to the stack, if you will. So I hope that answers quickly. Yeah, that's great.

AnnaRae Grabstein: 55:00

There's so much more here. We could talk about it all day, but we don't have all day, so thank you so much. You have been sharing tons of wisdom with us. It's been cool to hear about the journey with Blaze and also to think about just retail's evolving reality in cannabis and how behaviors are going more digital, and it's really exciting. I love hearing about innovation and growing companies from the ground up's. Let's take it to our last call, chris. Why don't you share a final message with our listeners, any advice or a call to action, closing thought to leave them with?

Chris Violas: 55:36

Yeah, just really want to challenge people on the digital strategy. It's really important as retailers to own that. Understand it. If you actually see the metrics that are happening here like again, people talk about, about, talk, talk bad on mobile app stuff or mobile e commerce site the reality is AOV is higher on ecom, aov is even higher on the mobile app and retention is higher there. Like less drop off, higher conversion.

Chris Violas: 55:59

There's so many good things that are coming out that you really need to own your digital channel. That experience should be flawless. It should be one that you guys are looking at Exercising, like as an owner, you should go try to buy weed through your own mobile app and through your own e-commerce. Is it a smooth experience, right? We really need that to be the channel that is optimized, because it's so much more efficient to pack orders that way versus having a huge retail staff on the floor that you're paying a lot of money to to only handle call it three, five, seven orders an hour, right? Versus a packer can pack a ton of orders and we can get it out and they can pick it up when they're ready.

Chris Violas: 56:32

That is one. The other one is you know, we're continuing to move up market through our centralization efforts. So you're going to see Blaze and more of the kind of mid tier enterprise level customers which we're really excited about. And last, you know, blaze is a partner, not a provider. We have so much knowledge and wisdom to bring and to partner with you guys and really with our retailers and to go on the offensive together.

Chris Violas: 56:56

Those that can weaponize tech, in my opinion, are really the ones that are going to succeed and separate themselves on a number of metrics, you know conversion, retention, just all the stuff that matters. So, outside that, I think those are the main takeaways. You know, if you're listening live our team's in New York this week we got another big bio track, kind of get ready for track and trace hitting New York tomorrow. I think we got 100 retailers signed up for that. It's gonna be a big event. If you guys want any information on that, reach out to us. We can still fit you in, but we're on the ground. We're trying to meet people and continue to be a resource.

Ben Larson: 57:33

Chris Violas from Blaze. Thank you so much, man. Yeah, thank you. Wow, I do believe we could keep going for another hour. Dare I say we blazed through that hour?

Chris Violas: 57:47

I love it, Ben. Thank you so much. You know, Anna Rae, congrats on the success of this podcast. I'm going to keep listening to it. It's super fun and I hope to be able to come back at some point, maybe bring some more data and give you guys some updates as well.

Ben Larson: 57:59

Awesome Sounds great. Thanks so much, all right, great. Thanks so much, all right. Anna Rae another great show in the bag.

Ben Larson: 58:07

Stay safe out there in Arizona, don't get poked by a cacti, I'll be fine, all right, folks, as we wrap up, remember that the dialogue doesn't have to end here. Drop your comments in. We'd love to hear your thoughts. What topics should we cover? Who should we have on? Comments in? We'd love to hear your thoughts. What topics should we cover? Who should we have on? A huge thank you to our guest, chris Violas, ceo of Blaze, eric Rossetti, our producer, our teams at Virtosa and Wolfmeyer and our sponsor at Kipprint. Thank you so much, thank you. Thank you. Thank you for tuning in to High Spirits every week. If you've enjoyed this episode, please like, subscribe, share, do all the things and, as always, folks stay curious, stay informed and, most importantly, keep your spirits high Until next time. That's the show.