AnnaRae Grabstein: 0:05

Hey everybody, welcome to episode 85 of High Spirits. I'm Anna Rae Grabstein and today I'll be joined by a special guest, but not my fantastic co-host, ben Larson. We're missing him today. He's out. We are recording Thursday, april 24th 2025. And we're going to be talking with Chris Walker from Hoodie Analytics, all about 420, data and the macro environment in the cannabis industry.

AnnaRae Grabstein: 0:32

But before we dive into that conversation, I want to check in with the audience. I'm coming off a great weekend. I had a celebration on Sunday 420, that was this mashup of Passover and Easter and Earth Day and 420 with a bunch of families and kids at my house. It was amazing. And this weekend I am headed to totally unplug, to Yosemite. And so if anybody has experience with unplugging recently and turning off their cell phones and their Wi-Fi, send me some love. I'm realizing I'm a little nervous about it, which doesn't make me feel good. I want it to be easier to unplug. So, moving into a bit of news, I wanted to just call out and appreciate the Green Market Report, who's been bringing all of us in the cannabis industry business news for a couple years now, and Deborah Borshart, john Schroer and the entire team have just had the business cut off by Crane Media, who is the owner of Green Market Report, and it's a sad day. Media is really hard. The cannabis media space is even harder and we all are going to be equipped with less business insights than we were before. So I hope that someone steps up to fill the gap and I hope that all of us really stand behind the existing media groups, like Marijuana Moment and Cultivated, and support them in their efforts to make sure that we can keep getting good information, because we need it and it helps us to be smarter and more thoughtful in everything that we do as leaders in the space.

AnnaRae Grabstein: 2:08

Just a couple quick news updates. Today, maryland just passed a law allowing cannabis businesses to convert to ESOPs, which are employee stock ownership plans. We've talked about ESOPs on the podcast before. We had on Darren Gleeman, who's a banker that facilitates the transactions of cannabis businesses to become ESOPs, and it's a really, I think, useful structure for businesses that can become employee owned but also have an exit path by being able to sell to the employees. So the founders and the existing cap table can find an exit that isn't necessarily an acquisition by another company, and so this is good news for Maryland cannabis founders and also for Maryland cannabis employees.

AnnaRae Grabstein: 2:55

Of note, there are some states, like the state of Washington, that doesn't allow cannabis ESOPs at all, and that is a strange thing in my opinion, considering that there is so much effort to create equity in cannabis that a state wouldn't allow it. And it has to do with disclosure of owners and the state thinks that having the company held in a trust, which is the way the ESOPs are formed, doesn't facilitate that level of needed transparency. So Maryland is allowing companies to convert to these ESOPs and allowing them to bypass a five-year transfer restriction on licenses early to convert. So this is good news. Nice to have some good news out there for operators.

AnnaRae Grabstein: 3:40

Another thing to touch on is that the Wine and Spirits Wholesalers of America, often called the WSWA, one of the largest alcohol trade associations in the US, has been in Washington lobbying for federal framework to allow cannabinoid infused beverages. The WSWA is urging lawmakers to clarify rules around hemp derived cannabinoid products in the next farm bill and the group said in a press release quote that it believes the next farm bill should explicitly allow for the production of only naturally derived THC products from hemp, specifically Delta-9, while explicitly granting individual states primary authority to regulate, distribute and sell, including allowing states to prohibit and to ensure that consumers over the age of 21 are the only people buying these products. So this is really interesting to see the WSWA planting a very clear flag on their policy agenda as it relates to cannabis beverages and their commitment to rallying behind the farm bill as the path forward. So, yeah, there is lots of other news in cannabis, but we don't have the Green Market Report to help us have access to it as easily. So we will keep trying to bring you the things that we think are most interesting here on this show, but now we will transition into bringing on our guest.

AnnaRae Grabstein: 5:06

Today's guest has been behind some of the biggest insights in cannabis commerce. Chris Walker is the president and chief commercial officer at Hoodie Analytics, where he's leading the charge on helping cannabis companies make better decisions with better data. Chris started his career at Procter Gamble and went on to become an SVP at Nielsen, the global leader in audience and market analytics. At Hoodie, he brings decades of experience in CPG, retail and tech to the most complex regulated market that there is cannabis. He's a straight shooter, a data evangelist and a believer that execution is everything, so I'm excited to bring Chris onto the show today.

Kris Walker: 5:44

Welcome, chris, thanks for having me Very good to. It's great to be here.

AnnaRae Grabstein: 5:49

Awesome. Yeah, we set this up a long time ago because I knew that you would be a great person to come on this week after 420 and share with us some of the numbers. So tell me, was it a wild 420 in the industry? There hasn't been a lot of talk about what happened.

Kris Walker: 6:08

So 420, as in the industry this year, it does unfortunately look like it was a bit of a wash, you know, I'm not going to say wash out, you know, because you know there was still some strong, there were some strong performances on 420 by, you know, by some states and some specific players. But in general I think the industry fell victim to 420 falling on a Sunday which was also Easter and also the Passover, and there's just a lot of things that were pulling people's attention away from what is traditionally a stronger day. So we did get some decent results overall, but to find them you really need to look across the entire weekend and even a couple days before to look at that overall contribution around the 420 holiday.

AnnaRae Grabstein: 7:02

Yeah, well, historically, cannabis has been basically the cannabis's version of Black Friday, the highest sales day of the year, whereas 420 this year fell on a Sunday. It seems like, like you mentioned, the industry was really trying to promote this whole week of 420. And so if you look at the whole week, it seems like, from the data that you shared with me, that Friday and Saturday were bigger days than Sunday and that, overall, there was still an outperformance from a regular week. It was just a pretty steep decline from the 2024 performance. Is that right? Can you give us some actual percentages?

Kris Walker: 7:38

Yeah, it was still a good week and we had, you know, and obviously you know, as I'm talking in general generalities across the you know, averages across the entire industry. I mean, there there are some dispensaries who just killed right, some brands just killed it, uh, but uh, but in general it was definitely a way better week than a normal week was sunday was way better than a normal sunday. But if you look year over year at the overall performance, like like the entire weekend weekend, the lift that it was, it was roughly about 12 percent softer this year than than last year. If you look at across the entire weekend and you know, obviously looking for 20 versus 420, there was a significant delta because you're comparing a Saturday where, like, everything was concentrated, to a Sunday, which is a softer day, easter Passover, everything else going on that day. But again, probably the number that most people are going to care about is the overall contributions to their business and we probably saw about 12% across the entirety of the US, about a 12% hit versus last year.

AnnaRae Grabstein: 8:42

How do you interpret the shift in consumer behavior at a macro level? Do you think that people are less interested in 420, that this is really just because of Easter and Passover and it being a Sunday? How do you think about this?

Kris Walker: 8:57

You hear different things. So, at the end of the day, I do think there is a lot of different noise and messages that consumers are that are pulling at consumers attention. Every single, you know, every single day. These days, I mean, the media is, unfortunately, something a lot of people are trying to stay away from. Right now, you know, with the stock market challenges, people may not be as excited about stocking up on their favorite cannabis products because they don't know what the future is going to hold.

Kris Walker: 9:28

What we do know is as a fact is that you know you saw some pretty significant demographic differences and where you had the 420 lifts, and so you know areas that you know are more suburban, people that have families and are probably celebrating Easter and doing different things on Easter itself, you know, did not get the same kind of uplifts that they had, that they had last year. Whereas you know, if you look at younger areas that are predominantly younger urban, you've got a bit more consistency and performance versus a year ago and performance versus a year ago. So that would lead me to believe that there is definitely a stronger impact because of the unique holidays that fell on that day itself, versus any sort of macro consumer trends away from 420, the holiday.

AnnaRae Grabstein: 10:15

Do you guys track promotional saturation and discounting in your data? Can you tell how much something was discounted?

Kris Walker: 10:22

We do, we do, and discounts this year were. It's obviously it's a big blend of averages. We did see gummies in particular seem to have a little stronger discounts this year than we saw in previous years, but overall we did see the discounts tended to be spread across the week. As you know, I think in previous years when we had 420 on a Thursday, Friday or Saturday, a lot of retailers used that to provide very unique promotions just on the day. But I think, I think preemptively, a lot of retailers this year decided to make their 420, you know the 420 discounts spread across the week and so we do see that people were purchasing more on discount this this year throughout the week, not just isolated to that one single day of 420. Are showing that the percentage of sales on discount on Tuesday, Wednesday, Thursday, Friday this year are much higher than they were last year. Versus last year, it did seem like everyone was like I'm going to wait and buy everything at 420 because I'm going to get these amazing deals.

AnnaRae Grabstein: 11:35

Well. So, with all this insight about the deals and the performance at the store level, do you think that the industry needs to be rethinking this holiday based sales focus in the context of, like, a more maturing consumer and that behavior is shifting towards just keeping products at home all the time and that cannabis is just like having beer in the fridge? Or is this holiday based sales focus something that really is meaningful and that and that retailers should pay attention to build strategy on?

Kris Walker: 12:07

I um, I personally believe that, uh, retailers, you know, and brands, we, you know, we holidays create excitement, you know. I I mean we know, I mean Valentine's day and you know things like that, like it's, you know, and you've got, um, what is the? And you know things like that, like you know, you've got what is the Amazon holiday? I should know this offhand.

AnnaRae Grabstein: 12:31

Yes, the Amazon holiday. It's a fake holiday. Amazon created it. It's primed.

Kris Walker: 12:37

You know, but, I, mean, yeah, but you have all these manufactured holidays. Why do we have them? Because it gives us something to talk about, it gives us excitement, it gets some, it's newsworthy and people talk about it Like it's like I don't. I do not think it's a smart move to go away from it and we look to leverage as an industry as much as we can. Now should we be smarter about how we promote and how we communicate and how we manage stock and inventory. A hundred percent. We need to be way better about it, make a conscious effort to, you know, not necessarily give away product at half off, like on 420, because they know when they do that their customers will load up on that day and they won't be back for the next or the rest of the month, you know, and then? And so what?

AnnaRae Grabstein: 13:36

that doesn't drive a lot of benefit for that retailer.

Kris Walker: 13:38

Yes, it's great for the consumer because the because the the consumer was able to, you know, obviously benefit from it, but from the retailer, who's who's in the business to make money, it hurts them longer term and so you know. So we are seeing that consumer. You know, smarter retailers are realizing that consumers are going to. We need to give them a reason to come out to celebrate this plant and to celebrate the product. But it doesn't always have to be through getting 50% off discounts. And you know and you referenced Black Friday earlier, and I mean you see that happening in Black Friday now as well Like the discounts went from everyone lining up outside the stores the night before so they could be there at 6 am when they open, and then it became a whole weekend and now it's a whole week, and so you're getting those discounts spread out and I don't know that there's a lot.

Kris Walker: 14:32

You know the retailers themselves are getting as much of a benefit but they're trying to extend the opportunity longer and you know, to some extent it played out a little bit that way this year just because of the nature of the holiday. Like I said, overall, like you know, it was a 12% hit that everyone took on average.

AnnaRae Grabstein: 14:52

Yeah, I like what you said about the consumers having a reason to come to the store, though I spoke with my mom last night. She's 75. And and I I asked her how her weekend was and she said oh, it's fine. Oh, you know, your father went with his friend to the dispensary on 420 and had so much fun getting all of these discounts and I thought, wow, when it has reached the 75 year olds that they get discounts on 420, it's like this is a real holiday. Now apparently it's reached the masses fully. And it's true.

AnnaRae Grabstein: 15:28

My dad went with one of his other 70-year-old plus friends and they went to the dispensary together and they came home with a bunch of very strange products that they would have never purchased otherwise, and I thought that was a good sign, because they bought stuff that they wouldn't have already been going there to purchase. He often goes and buys flour or pre-rolls, but he came home with tablets and tincture and other fun things that the bud tender suggested. It seems like it was positive for introduction of new categories in that example, but I don't know if that's true across the board.

Kris Walker: 16:09

That's funny. You referenced your father being 75. So I mean he's right on the cusp of what our demographic age cut off. We looked at all the data and blocks of 65 to 74, 75 to 84, 85 plus and actually the 75 to 84 bracket actually this year had the biggest fall off on the for the weekend. Now I do think you know your father being 75 to 84, he's on the, he's right on the border there. And actually the 65 to 74s were fairly yeah, it was a good year for 420 for those folks. But we did see a fall off in the older consumer like 75 plus. There was definitely a fairly sizable fall off on their investments in 420 this year, off on their investments in 420 this year. And the other one that was kind of interesting was the 45 to 54, which is kind of the generation where this all started, and so that one age group dropped about 20%.

AnnaRae Grabstein: 17:19

That is interesting. What about brands? We didn't talk about what you saw in terms of brands or specific form factors. What popped out of the data? Yeah, and that it's a little.

Kris Walker: 17:30

it's a little all over the board, you know, depending on, depending on the states and and you know obviously the the specific location of the specific brand. So we had what we did find is there was a decent amount of trend of folks using non core brands to really drive people in with just some crazy discounts. And so, seeing some of the largest lifts that we saw were on brands that most people on this call would never have heard of, like they were isolated in certain areas. They used this as a chance to get their name out and get that distribution and they blew through the product at very high discounts and got great uplifts. But again, it's kind of a means to an end for the retailers. I'm not sure that the brand itself is going to get the follow-on impact. You know, and taking what was a 75% discount and now you know, and now moving, you know trying to get a consumer away from doing that, you know, and now moving, you know trying to get a consumer away from doing that, you know is going to be challenging.

Kris Walker: 18:37

But we did see, you know I mean Flower in particular, you know, was a little all over the board with top brands. I mean you've got a lot of the normal you know the normal names in there, you know. And Edibles, again, a similar way. It was less the known brands that got the biggest uplifts, as much as it was these, you know these newer, you know some of the newer and kind of less top 10 gummies and less top 10 edibles that were getting the biggest bumps, edibles that were getting the biggest bumps, and again, I mean for better or worse. I think some of that probably, you know, comes down to the fact that you know the larger brands probably have a bit more discipline in pricing and margin management and you know, they know that this is still an industry that people are in to make money and you know. So you know, getting a 300% lift is probably not what they're looking to do. Their goal is to grow their share over the duration, not just on that one day.

AnnaRae Grabstein: 19:40

Sure. Well, so, starting to shift away from 420, I think that my takeaway is from what you've shared is that it wasn't a total loss but it just didn't match past impact for a lot of reasons and that it still remains a vital sales opportunity and that, looking to 2026 and and the future, like retailers shouldn't give up on promoting 420. Just maybe getting a little bit more grounded and in realism of the different fundamentals that are going to drive behavior around the holiday makes sense. Anything else that we should mention about 420 before we move on to just bigger discussion about data.

Kris Walker: 20:19

You know, a lot of the trends that we're seeing at a macro level were pronounced here as well. I mean pre-rolls did very well. I mean we've seen a big move towards that. Pre-rolls as a convenient form factor. It's probably the strongest growth this year relative to a lot of the other categories and we saw that continue in 420. Flower was king once again.

Kris Walker: 20:46

It was interesting, like I said, just to look at those brands that chose to go with heavy, heavy discounts. Versus a year ago. I think some of your more national brands were just more thoughtful about how they deployed their programs, so it wasn't just around X amount of percent off or dollars off, but come in and you get a hat or you get something that is meaningful. That will, you know, maybe incentivize you to come back and and pay full price for my product the next time you try it, and so so anyway, there's just some, I think, some smarter, some smarter behavior, you know, for for folks that probably felt like they had to do something different this year because because the product, because the date was in fact on a, on fact on a special day with a big Easter than just a normal Saturday.

AnnaRae Grabstein: 21:37

Sure, I love this. You just said smarter behavior, and I think it's a perfect segue into this concept of just how we're all running our businesses, how cannabis businesses are deploying smart insights to make decisions, and I've been in this for a long time and there is more data today than there's ever been. There are there are multiple different companies that are selling different types of data and and I'm curious for you to like give us some your perspective on where we are in the evolution of creating data and using data in cannabis, as someone that has worked previously for some of the biggest data companies in the world and and CPG companies that are experts at deploying data. Yeah, yeah, what are you seeing? What's the environment like?

Kris Walker: 22:30

So it's. It's funny. I've got a my one of my co-founders, kelly Bernalza-Hall, and I were talking about this yesterday because we're prepping for a keynote that we're doing at MGEMPAC next week on market trends, and I was raising to her. I was like what would right If we, if you were, if you were to, if you know sorry, zooming out for a minute, if I showed you, if I asked you like what's going on with pricing in the past 12 months or 18 months or two years, you like everybody else would say, oh well, it's been coming way down, pricing's coming down, you know, and surprise, surprise, it's doing it again. Michigan flower pricing is down 20% in one year. 20% and you see it across the board. Everyone's like, oh well, it's a new market, so it starts high and it starts profitable, but then after a while it becomes less profitable and people aren't making money anymore. And why is this happening? Why is it continuing to happen over and over again? And, to be fair, you've got some markets like. Missouri is a good example.

AnnaRae Grabstein: 23:44

People are still making good money in Missouri.

Kris Walker: 23:46

Like it's a good market. You know that's. You know you can get good product there. Operators and brands are making money in Missouri and you know they have a price point that's probably a bit more sustainable for allowing that to happen. So it's a long winded way of saying.

Kris Walker: 24:03

You know Kelly and I were talking about this and you know I was. I was hypothesizing, like you know, if we were just able to snap our fingers and go back in time like three years and take all of the cannabis operators and just keep in mind we are a young industry. Lots of people are coming into it for the first time. We may not have the experience of some of these bigger brands and bigger retailers and we were it. So we had the ability to replace every operator with an experienced you know person who ran Kroger or person who ran you know, I don't know Banana Republic. You know these experienced retail operators are used to using data and making smart decisions and not being complete like as reactive to to changes to what the guy across the street did, would it make a difference? Would we still have $40 eighth pricing in Michigan or would we be where we are now at $20?

Kris Walker: 25:06

And Kelly said to me, she was like I'm not sure it would make a difference. It might help, because one of the theories is like, you know, we just need, we need to educate the industry. We need to give that, you know, let people like have more you know, get people that are more experienced to learn how to do these cool things. You know Kelly's point. To me she's like well, chris, the other, the other issue is just the data hasn't been there Like. It just hasn't hasn't. So even if you have the best people there, if you don't have the data and tools to be able to make the right decisions, you're still using gut feel and having to be reactive. And so I do think there's this combination of the industry I do think has evolved now where the data and tools are available, but we still also have to have the discipline and the people and the accountability, even to each other, to say, hey guys, maybe it's not a good idea for all of us to just drop our prices by 50% on 420.

AnnaRae Grabstein: 26:05

Maybe we can get the same results we do. I want to jump in because this is something that's this is a big deal, as is sort of this endless race to the bottom with pricing and and I like that you're bringing it up, and I'm curious to understand from your perspective what is the discipline that data can support to help people not lower their pricing, because I perceive that the the price compression is being driven by oversupply and desperation, and so people are trying to just bring in cash as fast as they can. They're not even thinking about the market, but then it's having these market ripples where then people are having to follow, and it's just this endless race. But what is the data that can help us to better manage pricing? I mean, I probably should answer this two ways.

Kris Walker: 26:55

I will answer the technical side first. So you know there is a volume price trade-off equation, right? It's called price elasticity, right? So the way you should think of that is if I drop my price by 10%, how much more volume am I going to get? Am I going to get more people through the door? Am I going to sell more stuff? Am I going to get more people through the door? Am I going to sell more stuff? Am I going to make more money? Okay, and the answer might be yes, I should drop my price by 10% because it's going to bring 20% more to my bottom line. That's a great win-win. If I drop my price by 20%, am I going to make more than if I did 10%? Or am I going to make more than if I did 10%, or am I going to make less? And so this concept of price elasticity basically allows you to understand the impact of what happens if I drop my price by 10%, 20%, 30%, and you can do the same thing for promotions. And the data is there, right, like the data now exists with Hoodie that you can start measuring the impact to your business.

Kris Walker: 27:55

If you drop your price, you raise your price. What's going to happen? Because, by the way, everyone's petrified of raising prices. Oh my God, a raised price. Look at that. I could tell you in the CPG industry and like other industries that, like I that I came from, you know it is that is much more of an emotional concern than a practical concern, because generally, when you raise your prices, yes, you're going to lose a bit of business, but you're going to make more money, so you should probably still do it. Now, if you get to a point where you're suddenly at 30% higher than anybody else, then yes, that's going to hurt you, but you know, if you're, if you're, if you're on the margins, then you know there's a way you should be able to make more money by leveraging this idea of price elasticity and and that. So that's, that's the conceptual side of that. So that's the real technical side. So that's the real technical data side.

Kris Walker: 28:52

The other side is there are ways that you can manage pricing in order to maximize your profits and, like you said, the whole point about oversupply. Oversupply is great. So I've got a lot of product. That means all the brands can get product for cheaper. Smart retailers can negotiate better deals Now a smart retailer also. There's no need for them to be passing on that price discount to the consumer.

Kris Walker: 29:20

And so what we saw a couple of years ago is all the brands went and you had a bunch of retailers sitting there and said thank you very much. I love the fact that I can now make two times the amount of profit on this product than I did just six months ago, but I'm going to hold my price flat because, at the end of the day, the consumers are willing to pay for it. They're going to pay for a good experience, they're going to pay for good brands. They're going to pay for that brand experience, and I don't need to just throw money away because I'm getting a better deal and so so, having the discipline to for a retailer to understand what's going to happen if I do these things not just today, but for the longer term it's it's important, and so so I mean that's you know, and again, I can go on about the. You know there, there's, there's. So go ahead. I was going to say I just love that you're talking about the. You know there, there's, this, there's so go ahead.

AnnaRae Grabstein: 30:13

I was going to say I just love that you're talking about this as a discipline, because I think that it it it really is in that leaders are being, I think, pressured by market forces and what they perceive to be consumer behaviors to go down, down, down. But sticking with with the pricing that is profitable and that makes sense in the market is what you're saying can be more profitable at the retail level. And this concept of when the prices are going down at wholesale, of keeping your prices steady in the market I've been advising people to do this for a while it's like your store isn't profitable yet, so if the product costs less money, this is a good thing. This means that you might make more money per transaction, which is what you need to not be in the red and, in general, like we need to be moving out of the red in this industry and into the black and up into the right.

AnnaRae Grabstein: 31:06

And the way that we do that is by being able to see clear lines of profitability and just having set markups, especially if stores were just always going with like a 2x markup as an example, but then all of a sudden, the prices start dropping of their wholesale supply and they stick with that 2x markup but they're not selling more product. All of a sudden their profit is declining and they can't pay their staff, they can't pay their benefits, they can't pay their rent, because the same number of transactions and the same number of units are happening in the store but they're making less dollars. And there's this difference between margin and dollars that I think is really important for people to understand and to have a target of you know what is your target average dollars per transaction as opposed to just looking at what is the margin that you were able to capture on that transaction can be, I think, a good way to start to create that discipline for an operator to be able to understand, kind of how it trickles through the whole business.

Kris Walker: 32:11

Yep, and that same concept and you know not to go away from pricing too much, but that same concept is there for the taking across other disciplines in the industry as well. How, if I have a brand and I've got one of the most expensive costs for brands is their selling organization, right, they've got really smart, great people that are knocking on doors selling products and you know and they live and die by, you know their success with their sales teams, right? And so if you look at the cost of that the sales organizations you look at them as an asset and the cost of that asset you want to figure out what is. How do I maximize the return? Like, for every dollar I'm spending with that sales guy to get back, what's the return for me as a brand, for my profit? And again, just looking at it from a process perspective and just with dollars and cents and data, we can say, hey, you know what, there are 100 different accounts I could go after.

Kris Walker: 33:15

Like, there's a hundred different stores in my market that I could go after that are not buying my product today, and you might have 10 of those stores that I'm just using silly numbers. 10 of those stores are selling a thousand dollars a year of stuff, and another 10 of those stores are selling a million dollars a year of stuff. And so should I be spending the same amount of time with the 10 that are doing a thousand dollars as I, as I should be with the 10 that are doing a million dollars? And like, intuitively, obviously the answer is no way there's, because if I get, if I get, you know 5 percent share of the million dollar store, that's worth you know what $50,000, versus if I make 5% of the thousand dollar store, that's $5, you know, and or $50, you know, and so that's that's a very different return for the same amount of time in many cases.

Kris Walker: 34:06

Right and so so. So you just so trying to build discipline around your major cost drivers and how you go to market, say, maybe I don't need to be in every single dispensary in Michigan, I want to be in the 50 percent of stores in Michigan that actually do 80 percent of the total Michigan sales volume, and and that is the cost to doing that is so much less. But the you know, but the ROI that I have for every hour that my sales guys are spending is so much higher.

AnnaRae Grabstein: 34:38

Yeah, do you see that, as one of the common pitfalls that you encounter in working with brands is that they're spending the same effort, resources, dollars on all of the accounts, as opposed to focusing on the most important ones?

Kris Walker: 34:51

Yeah, I mean again. I mean, sales guys are smart and and, uh, I mean so they, they have some indication of like this this is a big account, this is a smaller account, um, you know, but it. But there's just and and don't. I will tell you, just to be very fair, there are a lot of organizations that are getting their act together, that are starting to do a really good job at this. Okay, and and organizations that are getting their act together that are starting to do a really good job at this and layering in account tiering, like by this is an account of mine, but I should have 10% of their business, and right now I only have 2%, and if I can get 10% instead of 2%, that's worth $100,000 a year to me. So I'm willing to spend X amount of dollars in order to get that extra hundred thousand dollars Right, and being very disciplined about assigning a certain value and a certain opportunity to every account in a market and then and then and then basically incentivizing my sales teams to behave in certain ways to capture that opportunity, and then tracking their success of doing that through, you know, and then tracking their success of doing that through, you know, a tool like Hoodie, that basically allows you to do that and hold everyone accountable, to say, figure out who should get their bonus and who should get fired, and like it's not just about relationships anymore.

Kris Walker: 36:04

I mean, and some of it is right, I mean you still have there's a lot of, a lot people matter, right, and there's still a lot of that going on. So I'm never for one minute going to gonna say you know that that people don't matter, relationships don't matter, they do like they matter my business, you know and you know, but it's it's the relationship. Relationship still has to be grounded in data. Like you still have to say, hey, if you do this for me, it's gonna make me this, it's gonna make you this amount of dollars, and then you should hold me accountable for delivering against that. And if I make you that money, I'm going to expect you to come back and buy more stuff from me because you're going to make more money.

AnnaRae Grabstein: 36:40

And like and that's cyclical. I like that you're talking about some of the things that are working for people and that we're getting into. What I like to be is like optimistic and and and being able to point to some of the strategies that can move the needle. So a company that decides that they want to focus on this one account, that you said that right now they have 2% of the business, they want 10% of their business, and that that could move the needle for their company, the companies that are winning at a strategy like that, when they're saying, okay, we're going to spend more to try to capture more of the sell-through in this store. What are some of the?

Kris Walker: 37:17

I'm going to start with the one that everyone has been using for a while. Like build relationships, build trust, be creative.

AnnaRae Grabstein: 37:26

OK, like taking people to the basketball game.

Kris Walker: 37:30

It depends. You have to define who the personality is. You know there are different people that are going to be motivated by different things. Ok, so let's I'll put that on the table. You should still use creativity and relationships, do relationship mapping and all that kind of discipline stuff. But the other thing that you have the opportunity to do is to become a trusted partner of that retailer by showing them how much you can help them grow their category Right, and not just, maybe, with your products, like you might. You know, like I hesitate to use any specific, specific brands in a public forum like this, but you know.

Kris Walker: 38:10

But let's say you are with Smokies and you know, and so and you go in to say, hey, you know, hey, retailer, that I want to sell a bunch more stuff to. You know, hey, retailer, that I want to sell a bunch more stuff to. Did you know that? You know your gummy category is performing about 10 percent softer than other dispensaries, just like yours, like, in fact? You know you did about one hundred thousand dollars in gummies last month, but all of your other competitors that are just like you, they did about one hundred ten thousand dollars and let me tell you.

Kris Walker: 38:42

Let me tell you the things that they are doing that are a little bit different than you are, than you're doing right now, and and you know, and and and maybe we can help grow that together, right? So in the CPG world that I came, you know I came from, it's called, it's a term called category management, right, and so the idea is you're not just there to sell your own products and your own stuff. Yes, smokies wants to sell as many Smokie gummies as they can, but the smart Smokies rep is going to tell, is going to partner with that retailer to teach them how they can grow the whole category. And then you know, and it might be, and it may be like hey, you don't.

Kris Walker: 39:17

You don't actually need 30 different flavors of Smokies. You know cause, cause, you know. But what we know is that you need, you need X amount of flavors of Smokies and you're going to need something that's even more super premium. And then we and we know that you also need a value option. So make sure that you're meeting all of your customers and you've got enough value options of mid tier enough here. And and you know, because what's going to happen is, if you are helping that retailer grow their business, they're going to trust you, they're going to put more stuff of yours on on, you know, into their store and you're both going to win together. And that that's that's honestly like my, what I say, my number one recommendation, folks. It's like don't be so self-interested and remember that, at the end of the day, your job is to help that retailer grow their business, and if you can give them other tools and tips and data and tricks to allow them to do that, they're going to want to spend more time with you and more money with you.

AnnaRae Grabstein: 40:15

Yeah, it's a great. It's a great tip, and moving towards a better, more strategic category management in cannabis is something we should be talking about more, so I like it. Thank you for that. You alluded to this relationship with dispensaries and I think that more and more it becomes clear, as brands are in multiple states or even if they're just becoming more successful in their existing state market, that dispensaries are very different and that you can't have the same strategy for all stores. There are stores that are doing central buying through certain hubs and distributing to lots of different stores. There are stores that carry very different levels of inventory depending on their strategy. I'm just wondering what you find and maybe it's something that you even just learned from getting to see all of the data, but what is like a misconception that people have about retail channels and cannabis?

Kris Walker: 41:11

I mean you are correct. Like I mean, particularly in the world of the MSOs. I mean there's a lot of central buying and you know, and other challenges that a brand may have that does not have their own vertical distribution and working with those folks. You do need to segment your customer base right. So this idea of segmenting customers and creating attributes, you know, and again you can use a tool like Hoodie and go in, you can create all your own attributes and tag a dispensary to say this one is a heavy promotion store, this one has a lot of competition, this one's sitting right on a non-legal border, this is a highly affluent dispensary and like, we have a lot of that kind of baked in.

AnnaRae Grabstein: 41:52

But you can also create your own.

Kris Walker: 41:54

It could be, you know.

AnnaRae Grabstein: 41:55

I only visit this guy on.

Kris Walker: 41:56

Tuesdays and stuff like that. But you are going to want to segment your customers right and because you know and stuff and stuff like that. But you are going to want to segment your customers Right and because and you know. And then again, my my number one thing I tell everybody is you segment, you segment your customers around the opportunities you're trying to create, and you know. And then you know, and if you have some that are not going to be able to, you've got to. You've got to handle them centrally. Then assign someone that role that is good at that and support them with the selling stories to allow them to be successful in that role. And it's another one of the.

Kris Walker: 42:32

I think one of the challenges we have as an industry is because there is so much fragmentation. The job of a salesperson is infinite. It's like your job is, you've got. If you ask the salesperson, the job of a salesperson is is infinite. It's like your job is you've got. You know. If you ask the salesperson the job description, they're like well, I got these 95 things I have to do every single day. And it's like how are you going to be successful in doing all those 95 things? Because I get got it, john, you're really good with people, but you are terrible with following up with cash collections and, uh, you know, and john and you know John may not have ever been really good at handling, looking at data, telling stories with data. So is there an opportunity to compartmentalize those tasks in order to give John a better chance of being successful?

Kris Walker: 43:13

And it starts. I really think it starts with segmenting your customers around things that you know of how they purchase and how you know, in order to give you the best chance of being successful. The obvious one is are they paying their bills or not? Like if they, you know your job is to. Your job is to is to make money and it's to stay financially solvent. And if I'm providing all of my inventory to somebody who's not paying their bills, you know that that becomes. That becomes challenging.

AnnaRae Grabstein: 43:44

This is.

AnnaRae Grabstein: 43:44

This is a great point that, even though we're mostly talking about brands selling to retailers and cannabis, that that translates kind of across the supply chain to no matter what you're doing, this idea of customer segmentation because how often are we getting promotional emails from companies that don't apply to us at all and what a waste.

AnnaRae Grabstein: 44:05

Right, and what Chris, you're talking about here is really focusing on the outcome that we are trying to create with our effort and segmenting around that. So, whether you're a retailer sending out emails and text messages to consumers, or you're a brand that's trying to stock your product in retail stores, or even if you are a lawyer that is trying to serve the cannabis industry, segment your customers and try to serve the customers things that are going to be valuable and relevant to them. It's so important because not only can it drive the outcome, but when you segment, when you don't segment or you do it wrong, people get offended and are just like spam and leave me alone. You don't understand my business and you're trying to come at this the wrong way and it's it's a great way to uh, to become a less trusted partner and people to think that you're just not thinking of them and you don't know who they are.

Kris Walker: 45:09

Yeah, yeah, I think personalization and segmentation is so important across I agree with you, uh, like it's so important across everything you do. And you know, and I, I'm, you know, I, getting back to our pricing, pricing stuff that we started this on in 420. You know I I won't name names, but you know I, I, I sat in a conference and there was a CEO of another data company who basically told everyone at the conference that the you know that, that you know they're, they've done all this analysis and segment all the customers and and 80 percent of every product is bought on promotion. And so, because of that, you know we are not doing a good enough job to to meet the needs of the promotionally deal sensitive consumer. And it, like it just killed, it killed me to hear Candidly, I'm like, I'm like this, this isn't. We need to be driving smarter decisions as an industry right now. And and like segmenting because, like, like it, you know the fact that 80 percent of sales, like, even if you believe that number, 80 percent of products are bought on promotion cannabis.

Kris Walker: 46:20

That is because we as an industry are behaving in that way. That is not a normal. That's not normal consumer behavior because, guess what, you know, there were a bunch of people that walk in that store and they were happy to pay full price for your brand because you've got an awesome brand. But they're happy to take the discount if you're going to give it to them, Right. So so I might as well take the discount, but you just lost. You know we call it cannibalization. Like, I ran a promotion and the idea is that I want to get a whole bunch more sales because of the promotion, not just incentivize my existing customers who are already going to buy my product anyway, right. And so you have to ensure that the lift I'm getting is greater than the cannibalization.

Kris Walker: 47:04

And and I and I, and right now as an, as an industry, we've got to acknowledge that there, there are plenty of people out there that are happy to pay 40, 50, a hundred dollars, you know, for it, for an eighth of flower, if it's the right stuff, that it's meaningful and it's, you know, and and it it does, you know it makes me feel a certain way, or it makes you know, it just makes me feel good about myself, and and there are a lot of things that can you know. You know it's the I've used this analogy a bunch. But like you can get a candle at you know, you can get a candle at Walmart for a buck. You can go get the same candle at Bed Bath Beyond for $10.

Kris Walker: 47:41

Or you can get the same candle that basically smells like Disneyland on Etsy for $50. It's the same candle but I will buy that $50. There's a bunch of people out there happy to buy that $50 candle that creates a feeling in me and has an emotional attachment to you know, feeling like Disneyland and this candle, and I'm going to spend that 50 bucks and I'm going to tell my friends about how amazing this made me feel. And guess what? You know, you just made a whole bunch of money on and that's brand equity, right, that's creating brand equity. And that's the same candle and there's no reason. There's no reason we cannot do the same in this industry.

AnnaRae Grabstein: 48:26

Yes, cheers to that. And there's so many examples outside of cannabis of where perception of quality love and love of a brand has has driven premium pricing, and the cannabis industry, for better or for worse, has really degraded a lot of that. And and people are just shopping on discounts because they're so used to it. They've been trained that way. We need to untrain the consumer well, so, as we're getting closer to the hour, um, I'm curious, as we start to to wrap this conversation as a as a self-proclaimed data nerd what are some of your favorite benchmarks that you look at when you open up the platform that you keep going back to again and again?

Kris Walker: 49:11

I learned a while ago that this concept of leading indicators versus trailing indicators so, being specific about it, like sales, dollar sales or unit sales, that's a trailing indicator. That has already happened.

Kris Walker: 49:29

What you want to be measuring are the leading indicators of sales, the things that you can control that will give you those sales results. So we know the number one driver of sales is distribution, and you know. So. Points of distribution how many dispensaries am I in and how many SKUs do I have in each one of those dispensaries? That is a point of distribution and you know, if you can get the points of distribution, you're going to eventually get the sales right.

Kris Walker: 50:00

And so you want to track leading indicators right. You want to be managing to a price point or a price gap. So you know, in the CPG world it's often called DSMP, distribution, shelving or share of shelf, merchandising and pricing right. So those are your four leading indicators that if you go to any like head of sales in the CPG world, they'll often, like, have a printout behind them on their desk with their DSMP KPIs that they know if they deliver on that they're gonna get their sales results, they're gonna get their bonuses, their teams are gonna be happy and all is good. And so I do really try to focus on those leading indicators anytime you can.

AnnaRae Grabstein: 50:40

I love that Cool. Well, so, looking ahead, I know that hoodie is continuing to roll out some new stuff. Why don't you tell us what hoodie is up to in in 2025?

Kris Walker: 50:54

Awesome thing, yeah, the the, the major excitement where we are. We've been very fortunate. We've got a. We've got a lot of hoodie evangelists out there. I think we're working with 13 of the top 20 brands in the market right now, which is more and more each day. We've been very blessed and fortunate with the support we've had from this industry and, to that end, we're excited about launching a new service called Hoodie Connect, and Hoodie Connect is going to allow a dispensary, a retailer and a brand to be able to collaborate directly with each other, you know, on KPIs and on measures that will allow them to both be more successful.

Kris Walker: 51:35

So imagine a retailer no longer having to like take a hundred phone calls from a hundred different vendors to say how did I do this week? Come on, Jane, tell me how I did. And now, and the retailers that have been approved, you know we'll be able to actually just see the results directly. They can set KPIs, you know, around. You know we're going to agree that we need to hit at least, you know, five units, five units per week on this product and we need to hit a certain margin target within 90 days. We can establish that and then everyone's very transparent with what they need to do to achieve that, and if a brand doesn't achieve it, they see it and they can come back to the retailer to say you know what it didn't work out? I'm right below it, but I think if we ran this extra promotion or if I did some sampling with you or we did some in-store training, we're going to get there, and so it just allows a lot stronger collaboration.

Kris Walker: 52:27

And then, obviously, on the ordering side, it gives the brands the opportunity to come up with recommended purchase orders for the retailer, based off of how they're seeing their products performing in market and how products are performing in the industry as a whole. So, hey, I think this other product that we're seeing sell a lot of stuff in dispensaries just like you in Illinois, I think would add this amount of value to you. So why don't we try a case of that instead of this other one that's lower performing this time around and just helping to facilitate that buying and purchasing transaction? So keep a lookout for Hoodie Connect. It's going to be launching here in the next couple of weeks. You're going to see a lot more about this. We're very excited to be partnering with some of the biggest and most exciting brands and MSOs and retailers in the space with this. So more to come.

AnnaRae Grabstein: 53:20

It's great to hear about companies that are continuing to innovate within this compressed market environment. We need to keep moving forward and having that growth mindset to be able to do things better. So I love it. So thank you for sharing that. My last question before we move to the last call is just if you were going to give a tip for brands to take just one step this year towards better data, how would you suggest that they get started? What would be the first step to becoming more data-driven?

Kris Walker: 53:52

You're only giving me one. You're making it tough. You can give a couple if you want. I'm going to say so as an individual or brand. One of the most the best things you can do is is to basically basically showcase the value that a data driven insights contributed to my business. Right, and you know, because one of the one of the challenges you have in any organization is change, right? Well, we've been doing it this way for a while. It's been, it's been fine. One of the challenges you have in any organization is change, right? Well, we've been doing it this way for a while. It's been fine.

Kris Walker: 54:26

Like I don't need to use this stuff. I got a good relationship with Paul. He's going to buy stuff from me. It's fine, you know. But if I could say, hey, we did this one thing differently. We used data and look, you know, paul still bought stuff from me, but his average order size is now $2,000 more than it used to be because he's now seeing this data, so capturing that insight and then sharing it and communicating it. If you talk to any of my customer success guys at Hoodie, they are awesome at saying, hey, tell me your wins and share your story, and half of it. It's not for us candidly, because we want them thinking about it and documenting it. So they're telling other people in their organization to say, hey, if up in the morning brushing my teeth, taking my shower and looking at the data today, so I could define what I need to spend my next several hours doing. If we can get to that point as an industry, we're going to be making a lot more profit, a lot more money.

AnnaRae Grabstein: 55:36

Thank you so much. Well, chris, you've shared so much great stuff with us today and it's time for our last call. So, chris, what's shared so much great stuff with us today and it's time for our last call. So, chris, what's your final message for our listeners? Advice, call to action, closing thought to leave them with.

Kris Walker: 55:49

Come out and see us at hoodieanalyticscom, if you haven't already. We'd love to talk to you. We are in the business to help brands make better decisions and operators make better decisions using data, because if you're making better decisions, you're going to make more money, you're going to be more profitable and everyone wins, and we'd love to talk to you about how we can support your business in doing just that.

AnnaRae Grabstein: 56:13

Nice, I love it. Well, thank you so much for joining us today. We really appreciated your insight and I think that there's been some great takeaways for folks, so have a great one, chris. Good luck with everything. Be Connect yeah.

Kris Walker: 56:26

Thanks for having me.

AnnaRae Grabstein: 56:27

All right, folks. Well, that's the episode. How would I do without Ben? Thank you for everyone that engaged with us in the comments on LinkedIn. Please continue to engage with us. If you liked this episode, drop us a review on Apple or Spotify or wherever you listen to podcasts. It really helps listeners find our content, and thank you to our support from our teams at Vertosa and Wolfmeyer and to our producer, Eric Rossetti. Subscribe, share high spirits with your colleagues, friends and family and, as always, folks stay curious, stay informed and, most importantly, keep your spirits high. That's a wrap.