Melissa VonderHaar: 0:00

We have never seen a category with the potential like this before, because it's not just an alcohol replacement or an intoxicating. There are functional aspects of this and oh, by the way, there's a million different forms that you can use, whether it's beverage, edibles, flour, vape, topicals. I cannot wrap my head around how big it could possibly be if we do this right be if we do this right.

Ben Larson: 0:35

Hey everybody, welcome to episode 88 of High Spirits. I'm Ben Larson and with me, as always, is Anna Rae Grabstein. We're recording Thursday, may 15, 2025. And we have an exciting conversation for you today. We have Melissa Vonderhaar on the show. She's going to unpack everything that the convenience stores are doing and how they're looking at the emerging THC categories. But before we get there, anna Rae, hello from DC.

AnnaRae Grabstein: 1:02

Hello, thank you so much for being in DC and standing up for the industry this week. Absolutely Homework and starting a new workout routine. I've got sore muscles. I'm feeling strong.

Ben Larson: 1:16

Yes.

AnnaRae Grabstein: 1:17

I am not. I'm not in DC pounding the pavement, so very grateful that you are there pound in the pavement.

Ben Larson: 1:24

So very grateful that you are there. How's it? It's all right. This is my favorite week of the year. I'm here with about 60 to 70 of my favorite people in the cannabis industry and, yeah, we know it's been a tough time in the cannabis industry, so understandable that not everyone can be here, but rest assured that we are here speaking on behalf of the industry, and it's important.

Ben Larson: 1:46

I know a lot of people feel that we aren't seeing progress and that the conversation is moving too. The bipartisan nature of the of these different conversations are shifting. You know, we can have very healthy conversations with republican committees and talk about the need for safe banking and all this kind of stuff, of which I think we do have an eighth iteration coming, coming down the pike at some point this year and, yeah, yeah, it's time to charm um. But even more important than that, there's there's just like these persistent existential threats that we still face as an industry, and whether you're on hemp or cannabis, I think it's all signaling to to how a lot of politicians and and communities still view thc, and so the the no deductions for Cannabis Businesses Act was introduced this year, which would essentially memorialize 280E penalty, even with rescheduling or the States Act or what have you. And so you know, not only are we fighting for progress, but we're merely fighting to, to at least maintain the status quo, which is a little scary.

AnnaRae Grabstein: 3:03

This idea that maintaining the status quo is a win is so unfortunate. And I hear you and I appreciate that folks like you and the others that are showing up in DC to get our voices heard are working to maintain the status quo, but I just see this endless disconnect between our representatives in Washington and the realities of the American constituency. We know how the large majority of Americans are in support of legal cannabis access, and so why is it that these few small voices seem to keep trying to set us back to reefer madness?

Ben Larson: 3:48

small voices seem to keep trying to set us back to reefer madness yeah, these are. These are the questions I can't answer, but I I guess I can simply say that the the swamp has not been drained and there there's plenty of swampiness changing, but there's always seems to be a new voice that that just wants to to shut it all down and yeah, I did.

Ben Larson: 4:04

I mean. Well, that's the other piece, right. The persistent conversations that are necessary for just pure educational purposes. I think we had somewhere between like 20 and 30% freshmen Congress folk like in position, and so like these are new conversations, not to mention and I've said this on the show before staffers. They turn over every 18 months. Those are the people that have Congress's ear and are setting a lot of the policy or drafting a lot of the initial policy, and so if they are not educated on these things, many of them have never even heard of 280E, and so it's just this persistent conversation that has to be had in order to see any progress to be had in order to see any progress, and I'm not trying to go back to the old administration, but one of the things that I appreciated when Javier Becerra was appointed as the head of HHS under the Biden administration is that he's a native Angeleno.

AnnaRae Grabstein: 4:59

He comes from Los Angeles and, as a result, you don't come from Los Angeles and not understand cannabis to some extent. There's stores everywhere. There has been medical cannabis dispensaries there since 1996, when Prop 215 came on, and then really experienced like a lot of complexity and progress and all kinds of different ways when legalization hit. And just knowing that there was someone in Washington that, just by virtue of where they came from, understood something about the industry was heartening. We know how many states now have legal programs with regulated cannabis and now there's hemp in even more places, and so I hear you that there's this massive turnover. But more and more people have personal experiences just because of where they live and the things that they drive their way to school or work or the grocery store. So, yeah, I think that the efforts to try to mainstay the status quo are so critical, but let's also see some progress. I can't wait.

Ben Larson: 6:06

Yeah, well, to leave it on a high note, I will say that you know? A Sun Tzu quote, if I may, is that in the midst of chaos there's also opportunity, right, and we are in a fully read administration which, if anything, if we find the talking point, we find the path forward that we might actually see progress, and that might come in the form of safe banking, because generally people agree that if we put people in banking and provide access to the rails, that creates transparency and a safer industry. We also have the States Act, which preserves states' rights and allows states to make decisions for themselves and prevents federal overreach. These are talking points that I think both sides can get aligned with and if they don't get overcomplicated, maybe we'll see progress.

AnnaRae Grabstein: 7:03

Nice, I like it.

AnnaRae Grabstein: 7:04

Okay, leave us with some hope, and I am excited for this conversation that we're going to have today, because one thing that Washington did provide in 2018 with the Farm Bill was some new channels for cannabinoids to come to market, and, while it's taken some time, we now see hemp-derived cannabinoids in lots of traditional retail channels, including convenience stores, and we have somebody here today that's going to share a lot more information with the audience aboutar, who has spent the past 15 years as a journalist and a leading voice in the emerging product categories of mainstream retail, including early in the vaping and tobacco spaces and now in the cannabis space.

AnnaRae Grabstein: 7:58

She began her journey as a journalist on CSP's media platform as the senior tobacco editor and now serves as the director of marketing and industry relations at IC Innovations, where she creates merchandising solutions and services for emerging brands, especially those in THC. Melissa is still a freelance journalist, but now is also on the board and the chair of the board of CSP's newly formed C-Store Cannabis Board, and is also on the NACS Foundation Advisory Committee, and that is the National Association of Convenience Stores, which is a trade association. So lots of stuff to talk with Melissa about today. Really excited to have you here, melissa. Thanks for joining us.

Melissa VonderHaar: 8:44

It's wonderful to be here. Thank you so much for having me.

Ben Larson: 8:48

And I'd like to point out that in talking with Melissa, I have learned that not only is she on the board of this new committee because it's an opportunity, but she's actually a big supporter of cannabis and has long been a fan. Can we say that in public, Melissa?

Melissa VonderHaar: 9:03

Absolutely. I am really trying to normalize it. We have this conversation with my husband all the time about should we let our kids we have a seven and a two and a half year old should we be consuming cannabis in front of them? And I live in New York. It is a legal state and I want to normalize it. My parents would never hesitate to have an alcoholic beverage in front of us growing up. Now, granted, my dad worked for Anheuser-Busch, so you know I learned how to pour a draft beer at five years old. So that might not be the most normal, but we drink in front of our children. It is not a taboo thing to do. So why would I hide cannabis use? I am a proud cannabis user.

Ben Larson: 9:41

Amen.

AnnaRae Grabstein: 9:47

Yeah Well, so let's just jump in. You've been at the forefront of the convenience store space for a long time and I'm curious if you could tell us how you've seen perceptions shift about cannabinoids over time.

Melissa VonderHaar: 9:55

Yeah, it's really rewarding for me to watch this happen. I did my first cannabis story for convenience one year onto the job at CSP. That stands for C-Store Petroleum. Nobody ever refers to it as that, so if I get into acronyms, I'm going to trust the two of you to ask me to clarify. I started there covering tobacco nicotine and that started in 2011. So when Colorado and Washington went legal, colorado framed their legalization efforts as treat marijuana like alcohol and tobacco.

Melissa VonderHaar: 10:29

Now, growing up in the convenience industry, as I said, my dad worked for Anheuser-Busch. He ran their small format sales. So one of the first facts I knew before I was 21 was that 7-Eleven sells more beer than any retail or bar in the entire world. Convenience sells the most beer and by far the most tobacco. So when I heard it framed that way, I said we better be paying attention to this, because if it's going to be treated like alcohol and tobacco, it's going to end up in C-Store or it should. And I want to thank my boss at the time, mitch Morrison, for allowing this kind of naive 29-year-old to write about weed to a very, very, very conservative industry. And in fact, when I did that story, I could not get a single retailer to go on the record. So the story is all off the record, quotes of retailers saying, yeah, we think this could be a really good fit, but I don't want to be the guy that goes to my CEO and suggest that we sell dope like bunch of boomers. So that's the language that was actually used.

Melissa VonderHaar: 11:32

And to watch the evolution of that happen to now. You know, fast forward to last week at the CSP Cold Vault Forum, which was filled with category managers from all over the country and the biggest takeaway all of them had was THC beverages here. And we are so excited and we're sampling it. One retailer had a can of 10 milligram soda at nine in the morning. So bravo to him for normalizing it even further. To see the excitement and the willingness to talk about it. And you know, yes, that has taken almost 15 years, but it's really exciting. So that's the evolution of that journey. It's really rewarding to see just how much both the convenience industry wants to engage in this space and, on the flip side, seeing that the cannabis industry wants to engage in convenience. I've been used to ringing this bell of convenience. Pay attention to cannabis. Let me tell you all about it. This year marks the first time that I've really gotten to talk to cannabis brands about convenience.

Ben Larson: 12:36

What's really interesting is like the scale that convenience has. Right, because a lot of us in the industry have talked about liquor stores. Where I think there's about 40 to 50,000 liquor stores across the nation, convenience is in excess of 150,000, right? So like what's that? Three or four times as large? What's also interesting, though, is, with C-Stores, that you have a lot of independent operators, and so what I think would be helpful is to just understand how they function a little bit differently than say, the liquor store channel, just so we can understand that a little bit better.

Melissa VonderHaar: 13:12

Sure, sure. So you hit the nail on the head there, ben. It is over 150,000 C-stores. That is three times. Liquor. Grocery is also about 45,000. So it's you know, if you look at the full retail landscape of where this is being sold, c-store feasibly could represent more than half. That is just a huge, huge channel. You are correct, it is. Of those 150,000 stores, 90,000 plus are single store owners. So you know, you hear about Circle K, 7-eleven, casey's and yes, they have massive footprints, but they actually don't represent the majority of the industry.

Melissa VonderHaar: 13:53

And what's so interesting to me I was thinking about it the other day the entrepreneurial spirit of those single store owners is so aligned with what I've seen with these THC beverage brands, thc startups in general. They want to try new stuff. They are the ones that are at the forefront of these emerging categories. It's something that I have watched happen. I watched it happen with Vapor. The independents were the first ones to bring that in and then it rolls out to the big chains.

Melissa VonderHaar: 14:23

The other really interesting fact that I think people should understand about convenience is that even though they're competitors, they really work together. They go to an event like Cold Vault last week. They go to the NAX show. That's the National Association of Convenience Stores. They throw a giant trade show in October. Association of Convenience Stores. They throw a giant trade show in October. They go to these events and they work together.

Melissa VonderHaar: 14:48

Wawa and Sheets are two of the biggest retailers in the Northeast and they're both out of Pennsylvania. They advise each other. It's not the kind of oh, don't talk to me, you're a competitor. They work together. And that goes for the single store owners too. There are many, many single store or independent owners that are on the NACS board because they do these new categories, but then they're talking to the Circle Ks, the 7-Elevens, the KCs, the Wawas, the Sheets and really advising them. They are the ones that are getting stuff moving. So I know when I talk to a lot of brands, they want to get in with the big guys, right? That's the easiest way to fill the doors and activate. However, don't sleep on the independents. Getting in with the right independent who is going to champion this category can make all the difference in the world.

AnnaRae Grabstein: 15:43

Let's talk about that a little more, this concept of championing new categories. You said that independent C-stores and C-stores in general are often early adopters of new products and certainly we're starting to see traction of THC beverage. I'm curious if you could talk about what makes the convenience model compatible with innovation and trying new things. Is it that people are purchasing individual units or what is it?

Melissa VonderHaar: 16:15

Yeah. So let me make the case why, if you are launching a new product category, convenience is what will make the difference. It is the activator. They might not always be the first one to the table right. Vape was first sold at mall kiosks. That was the thing. Smoke shops picked it up. Sooner there were vape shops. However, convenience is what took it mainstream and I really so firmly believe, and have believed for 15 years, that convenience can unlock not just THC beverage, not just hemp products, but really introduce a whole new wave of people to cannabis. So it can really benefit not just those of you in hemp but those on the adult use model, because there are people that have never, never, ever wanted to go into a dispensary for whatever reason, but they go into a convenience store all the time. So let me, let me drop some data for everybody. I shared the number 150,000. That's a lot, but let me put that in context.

Melissa VonderHaar: 17:15

Nearly 90% of Americans live within 10 minutes of a convenience store. Now I'm in New York. That's not terribly impressive. I expect to be in 10 minutes of anything, but that includes rural Utah, where you might be 30 to 40 minutes from a hospital. The convenience store is in those communities. It's not just where you go to get fuel, it is your grocery store, it is your liquor store and it is your quick service restaurant. Casey's again, they are the third largest retailer in the country. However, they are the fifth largest pizza company. They are up there with Pizza Hut, domino's, and that's with limited footprints. With that in mind, a convenience store that sells fuel has 1,100 people going through their store every day and that's 80% of the channel sells fuel. So just in terms of the amount of people going through there, it is huge. Not everybody goes to a grocery store. I do DoorDash or Fresh Direct for my groceries. I rarely go into a grocery store. Not everybody goes into a liquor store, especially people that are in recovery, especially people that are not drinking. Almost everybody drives, which means almost everybody has to go to a convenience store to get gas. We sell 80% of the gas in the United States. They also now have fuel chargers too, so they are investing in EV. So A you're getting the audience, and it's a broad audience, it's not just one person, it is, again, anybody that drives is probably going into a convenience store and they're Of that.

Melissa VonderHaar: 18:52

The singles are what is sold in terms of beverage. It is 60, it's over 60% of the category are singles. It's twice as much as six packs. And why that's so important for an emerging category it's not just the visibility, it is.

Melissa VonderHaar: 19:10

You might not want to spend $15, $20 on a multi-pack of a THC beverage when you've never had THC. That is a big commitment. You don't know if you're going to like it. However, a single, even a marked up single, you could sell that for $6 or $7. That happens with beer. That is a great impulse and they're already shopping and 60 plus percent of cold vault shoppers purchase, make an impulse purchase. So, in terms of exposure to a full breadth of America consumers and in terms of people that are willing to purchase, another interesting fact and this is why cold is so important in convenience, which is definitively different than liquor, is that I just pulled this data of beer 50% of beer that is sold at convenience is consumed within the hour. It is a for me for now channel. So cold is super, super important. You know, realistically, yeah, somebody might grab that beverage single, take it home and drink it immediately. Just in terms of activating, this is where you can do it.

Ben Larson: 20:17

So I'm going to quote one of my favorite philosophers right With great power which this sounds like a lot of power comes great responsibility. I think one of the challenges, especially from the lens of the cannabis industry, that we have been seeing with C-Stores is is this willingness to innovate ahead of be it regulations or guidelines? Now that CSP and others NACs are acknowledging the category and stating it, does that give an opportunity to provide guidelines as to what should be sold in C-Stores and what shouldn't be sold? Because I think that's the biggest criticism of the emerging space.

Melissa VonderHaar: 20:57

Yeah, and that's you know. I'm not going to look you in the eye and say that every single C-store owner is a responsible actor. You have 150,000, there are going to be some bad actors in there. That said, the people that are going to a NAX event, the people that are going to a CSP event or reading the magazine or participating in the board, they are absolutely going to look at this, they will listen and respect. They want to be responsible players because we as an industry know if regulators want to make an example, the easiest way to do so is the convenience channel. We have three times as many locations.

Melissa VonderHaar: 21:36

So you know, we saw this happen in Alabama, where C-Store, seemingly, is the only channel that was locked out, and you know, yes, part of that is that the channel needs to advocate for itself, and we are. I think there is an awareness and a desire. I think Alabama is going to be the rallying cry of this industry. However, even you know, I was speaking to a retailer in Louisiana. In Louisiana, everywhere can sell liquor. They have drive-through daiquiri. So it was not the liquor channel advocating and saying, hey, this should be 21 and up, because convenience stores can sell liquor in Louisiana. It was that the regulators were getting pressure to do something, and by locking out convenience, which is what they did they said you need a hemp license in order to sell hemp and oh, by the way, if you sell fuel, you cannot have a hemp license. It was a very clear lockout of convenience.

Ben Larson: 22:30

It was tied to fuel, so interesting.

Melissa VonderHaar: 22:33

Yeah, it was what I was told and the reason that I can see is politically it makes a great headline to say, hey, we locked out three fifths of the market. Over half of the market now cannot sell hemp, and that's a very simple, easy way to do it. And because of the size and because, yes, there are some bad actors, but I would argue there are plenty of bad actors in liquor. There are plenty of bad actors in liquor. There are plenty of bad actors in grocery. I have seen them very firsthand in Brooklyn, new York. Because there are bad actors and because of the size, it is the easiest channel to kind of pick on and I've seen this happen with tobacco and nicotine especially.

Melissa VonderHaar: 23:12

With tobacco and nicotine especially, there was a movement in 2019 with the height of kind of the youth vaping usage where the FDA was talking specifically about locking convenience out of vape federally. No evidence Based on that. There is absolutely no evidence that convenience cannot age-gate. I will note that convenience checks more IDs on a daily basis than TSA does, and I'll also call out NACS. The National Association created its own age-gating software, trueage, and retailers that are using this can demonstrate that they have 100% compliance on carding. It is a very simple, seamless technology, and I would beg you to show me an example of another industry that created their own age restriction software For convenience.

Melissa VonderHaar: 24:01

When you talk about responsible practices, it's so important to this channel. Why? Because over 50% of their in-store sales come from age-gated categories. Tobacco is the number one driver of in-store sales. Beer is up there, I think it's number three. They're so important. And so if they screw up on age-gating, if they get a violation, if they lose their right to sell, they have lost their business. They cannot afford to be lax about this. So, yes, there are bad actors. Yes, I think a conversation needs to be had about dosing and about merchandising, and about making sure that you protect and make sure that kids don't get access and make sure that, by the way, a grown up knows that they're buying an intoxicating product, because that's not always clear.

AnnaRae Grabstein: 24:53

I think yeah, I want to jump in. I think that what you're bringing up with, this idea of bad actors is something that comes up in all areas of the cannabis industry and, just in general, that bad actors overshadow the large majority of everyone else in almost all situations. I don't think we need to spend too much time on it. I think that you've really demonstrated that there is largely age gating going on properly, but you did bring up that one of those age gated products tobacco has been driving most of the revenue at C-stores for a long time and we know that there's declining tobacco revenue across the globe.

Ben Larson: 25:37

And unless it's in.

AnnaRae Grabstein: 25:39

Yeah, unless we're talking about the pouches. But let's just be real here. I think that C-stores also are looking at how can they diversify as they're having declines in this historically large category of tobacco, and hemp-derived cannabinoids are an option that seems like it makes a lot of sense and at the same time you also talked about that 80% of C-stores sell fuel. Hence, I think, the term gas station weed that people are throwing around and I'm wondering if you would respond to that. Gas station weed does not have a positive connotations in the marketplace.

Melissa VonderHaar: 26:25

No, and this is not the first time we've experienced this Gas station. Sushi was another rallying cry for a while. Convenience historically, you are absolutely correct. We talk about the holy trinity of convenience. It's gas, cokes and smokes. And smokes are absolutely declining. Nobody is considering otherwise. And yes, ben, you're right, zin and Modern, oral and, to an extent, vapor, are helping offset that some, but it's still. It is a category that is in decline and regulations are likely going to continue to drive that, as well as changing attitudes and looking at wellness.

Melissa VonderHaar: 27:03

So convenience for the entirety of when I've been there, and in fact probably going back to when my father started in the 1980s, they have recognized that they need to be less reliant on cigarettes. And in fact, the next state of the industry data, their big data source, shows that cigarettes used to be the top driver of in-store sales and in-store profits. Several years ago, pacbev took over in-store profits and it is within striking range of in-store sales Every year. I kind of do a mental bet with myself of is this the year that PacBev overtakes cigarettes? So those categories are in decline. We also know that beer is not doing so great. That's another core category. And fuel we have more fuel efficient vehicles. So trips as a whole are down for convenience. So, yeah, they need to move away from it. And so that I'm going to bring that back to the gas station weed, I promise, because that is a trigger word for me and I really never want to hear it again.

Ben Larson: 28:03

This will be the last time I swear.

AnnaRae Grabstein: 28:05

Gas station weed.

Melissa VonderHaar: 28:07

If there is a takeaway I would like every person interested in working in convenience to know, is that get gas station weed out of your mouth, out of your vocabulary. You say that in front of a retailer and it's going to be an automatic. I don't want to work with that person. Gas station sushi big thing. The industry has really pivoted to be food service forward. It is now one of the top profit drivers of stores, given that not every store does food service. But you look at Wawa. They are known for hoagies. That food is good. I would rather stop there any day than a McDonald's or a Taco Bell. When I'm on the road, Casey's is doing pizza. But it's also the independents. You can go on YouTube and there are YouTube channels dedicated to independent retailers that bring in a grandma to do her fried chicken on a Sunday. So we have been working actively to get away from gas station sushi and really be proud of the food service we're doing. And I know we can do it with cannabis as well.

Melissa VonderHaar: 29:05

And when you say gas station weed, that's not just an insult to convenience retailers, it's an insult to every brand that sells inconvenience. Would you say gas station Pepsi? Would you say gas station Doritos? No, of course you wouldn't, because Doritos are Doritos, Pepsi is Pepsi and a hemp beverage is a hemp beverage, whether it's sold in convenience or in a liquor store or in a grocery store or DTC. We don't single out other. I don't say bullet ridden liquor store weed, Like I wouldn't say that. And I wouldn't say grocery weed or hemp shop weed, it's just cannabis.

AnnaRae Grabstein: 29:43

Like it's just the flip side is that what you're talking about is acceptance, and something that proves acceptance more than the term that you're talking about is that Nielsen, the largest brand data aggregator in the world, is now covering the category, and I'd love it for you to tell the audience more about what Nielsen is doing and the data that they are sharing. So far, yeah.

Melissa VonderHaar: 30:10

So I am going to shout out Jason Zielinski with Nielsen, who last week gave a preview at CSP Cold Vault to kind of the data that they are tracking specific to hemp beverage at convenience, and he was the first to acknowledge this is the very earliest data set. They are actively looking for more brands to get into their database. So I will share contact information on how to get in touch with Jason on my LinkedIn. But if you're not in their database, you should get in it because that will help get real concrete data. So this is early on. They should have full data later this summer is what I'm being told, but he gave us a preview and it was really promising To me.

Melissa VonderHaar: 30:53

No, it's not hugely surprising that we're seeing 345% growth at convenience. This is the first time they're tracking it and I've again watched this happen with vape. You have these triple digit years because the category is going from nothing. To an extent you're still seeing that within in modern oral. When you're going from nothing, the growth isn't so much necessarily. What I'm looking at what did stand out to me is their data on dosages and what is selling at convenience. I think you're both well aware anybody that's looked at LinkedIn recently.

Melissa VonderHaar: 31:27

There is this internal debate in the hemp industry of what is low dose and is this too low? We should be doing more, and that it seems to be that what we're seeing at liquor, or at least anecdotally, is that the higher doses are all that is selling In convenience. By far and away the largest dose category that was selling was five milligrams. Nielsen showed that at 35% of convenience sales are in that five milligram range and that was, as opposed to 9% in the six to nine range, 9% in the 10 milligram range. So it is outselling. Now I'll put the caveat of this is early data, so it could be that 80% of what they're tracking is in Minnesota where there's the five milligram cap. We will wait and see. And the other thing that gave me pause is that tied with five milligrams was 35% of what Nielsen was seeing was all other aka THC beverage that didn't label the dosage.

Ben Larson: 32:28

So we'll see where and this was specifically beverage that they were calling out- this was specifically beverage.

Melissa VonderHaar: 32:34

It was calling out. This was specifically beverage, it was a beverage event. So I'll be curious to see if they are tracking other formats. I know a few places are. I'll call out Management Science Associates, msa. They track distributor shipment data, so it's a little bit different. They actually haven't been tracking form factor I believe they have switched but they were tracking by cannabinoid and they have also seen great growth in Delta 9 of late.

Ben Larson: 33:03

What do you think is driving this difference? Because, as you mentioned, like on LinkedIn, we do hear from the liquor store owners. John Halper from Top 10 Liquors has been really vocal. I've talked to leadership at Total Wine and Specs and yeahx and yeah, far and away 10 milligram products are flying off the shelves and I'm advocating to make sure we maintain the on-ramp. But it's great to hear that this on-ramp is actually really viable in the convenience stores. And was there a hypothesis that you had that this would actually be true? Or you know what's your perspective on the difference of the consumer?

Melissa VonderHaar: 33:34

Yeah, you know, I've had a lot of conversations with Diana Eberlein about you know, as we're lobbying at the state level and liquor is saying this should only be sold at 21 and up locations, is there a compromise to be had where maybe there is a higher cap for liquor and a lower cap for convenience? And while on principle I don't think there's evidence that suggests that convenience is ill-equipped to sell higher dosage and also, by the way, I think it misrepresents what THC is, to suggest that it's the same as tequila or vodka or bourbon it's not so on principle. I'm not thrilled about that. Bourbon it's not so on principle. I'm not thrilled about that. But to me, a convenience store is going to be a lot of new consumers, so I would rather see those lower doses there, specifically because somebody that's new to the category. They shouldn't be having a 10 milligram beverage as their first entrance and a lot of people aren't aware, and so I have long held a personal theory that if it is 10 milligrams and up that are selling, then those are experienced cannabis users. It's either experienced cannabis users or it's somebody that is about to perhaps not have the best introduction into the category, and that's okay If liquor wants to have the experienced cannabis users. I'm fine with that. If dispensaries want to have the experienced cannabis users, that's great, that's where they belong. But convenience you are going to get the new consumers. And so by seeing five milligrams do well and in fact they were doing okay with the two to threes as well I don't remember the exact figure, but it was higher than the tens that's great To me. That says we are getting new consumers, which is my whole argument for convenience. This is what can unlock and normalize a new category. We saw it happen with energy drinks, we saw it happen with vapor, we saw it happen with modern oral and, if we are given the opportunity, we are going to see it happen with cannabis.

Melissa VonderHaar: 35:32

And again, as I said at the beginning, that is good news for the liquor stores that are carrying it, because the convenience store shoppers will go to a liquor store to get a six pack or a 12 pack or a spirit bottle, especially if they can't get it at their convenience store. They may decide hey, I really like cannabis, I'd like to see what more is out there. Let me go to my dispensary. That, by the way, I never would have done before, but now that I know that this is not this big scary reefer madness thing.

Melissa VonderHaar: 36:01

This is actually quite wonderful and, by the way, a great alcohol alternative. Let's go explore what I can do at a dispensary. It makes me optimistic and I'll say yes. The other explanation could be that convenience operators in that database may only be offering fives or they may only be able to offer fives. There are a lot of reasons for the data. I am not saying that what's happening in liquor is necessarily not accurate or, you know, definitively only experienced cannabis users. But this gives makes me really optimistic of the theory that convenience is where new consumers can get into this.

AnnaRae Grabstein: 36:41

So, as you're talking about these legislative debates in terms of different regulations for different channels, I would like for you to paint the picture of the landscape for the trade associations and the policy groups both that you're involved in that are working in convenience and help the audience to understand what the policy agenda is that these organizations specifically are advocating for, as it relates to convenience's participation in the channel.

Melissa VonderHaar: 37:11

Yeah. So I will start with the National Association of Convenience Stores, NACS. And let me be clear I do not work for NACS and I don't work for CSP. I do a lot of work with them and I have't work for CSP. I do a lot of work with them and I have talked with them both about what I'm going to say here. So these statements are blessed.

Melissa VonderHaar: 37:26

National Association of Convenience Stores has long taken a position on virtually every category that if it is legal convenience should be allowed to sell it, and they even have a statement on this about marijuana. That if it is legal convenience should be allowed to sell it, and they even have a statement on this about marijuana. That if it is legal, regulators should not be picking winners and losers in the retail channels, especially when there is zero evidence that a convenience store is less equipped to sell an age-gated product than any other channel. Now, what has updated with NACS? And I will note they are a federal organization so they do not lobby at the state level. They do work with state level groups, but they will not take a position on most state regulations. However, they have recently, very, very recently, changed their stance in terms of who can join as a NACS supplier partner and who can do booths at their trade show in October, and I am very happy to announce that they, as of March, THC beverage, specifically, specifically, hemp derived THC beverage. Those companies are allowed to join NACS as supplier partners and they are allowed to have booths at the show. They are not allowed to sample. That said, for 2025, NACS is totally sold out on booth space and they also have some policies that they have to consider. You know, as they are going to embark on this THC journey, they are an organization again, federal organization industry advocacy organization, so they're very sensitive to having products that are not legal at the show and I can tell you it's been a big problem. It is a huge trade show and there are people that say I'm going to do cigars and then they have illegal flavored vapes. Or there are people that are saying, oh, I'm doing beverages and oh, hey, look, they have some THC beverages that really aren't supposed to be there. So they are in the process of kind of determining what the policies are going to be, but, that said, a THC beverage company, as of today, can join as a supplier member, which gets them engaged with the industry and also puts them first on the list to learn about those new booth policies. So that is super exciting.

Melissa VonderHaar: 39:43

And I can say that there are people within the NACS organization that are doing some great, great advocacy at the state and local level. So that is wonderful. It's just not officially part of NACS CSP. They are a media company. They do media and events. There is a little bit of a difference, However. They came up with the idea of doing this C-Store Cannabis Board. They already do one for technology. They do one for advancing women's causes, so they really do get involved in important industry areas in creating these boards that are really about taking things to the next level.

Melissa VonderHaar: 40:20

And when they approached me about chairing the board, I said I love this, I'm super excited to do it, but regulatory advocacy has to be at the forefront because we are not organized yet and I think there are still retailers that are a little nervous about coming out full force for cannabis because we are the channel that historically gets our wrists slapped.

Melissa VonderHaar: 40:41

So there's been some nerves.

Melissa VonderHaar: 40:44

That said, I can tell you being with retailers last week after Alabama passed their bill, there's a rallying cry.

Melissa VonderHaar: 40:52

People seem to understand that we cannot rely on brands and distributors to protect our right to be in this channel, on brands and distributors, to protect our right to be in this channel. And even if you are not in it yet, you need to protect your rights. I said I grew up a brewery brat, so Pennsylvania beer is something I'm very familiar with. Mainstream retail was locked out of Pennsylvania beer sales for a hundred years after prohibition and they're still untangling it and I do not want THC beverage or THC as a whole to become Pennsylvania beer. We have to work to keep those laws from getting passed and carving out winners and losers on the retail space. So, while CSP will not be sending lobbyists to the state and local level, we are going to rely on our board members on the retailer and the brand side to alert us to when something is going on so that we can get the local groups up there and explaining why we are very qualified to sell age-gated products.

Ben Larson: 41:49

Melissa, you're highlighting a lot of the complexities of constantly shifting stands of legislation as these categories emerge. I really appreciate your perspectives on this. One of the conversations that keeps popping up is the influence of alcohol and the three-tier system. I'd love to hear your perspective on the three-tier system and how that perspective might differ from that of the liquor store channels. It's been a very sensitive conversation on LinkedIn, as you've probably seen.

Melissa VonderHaar: 42:18

Yes, yes, I have observed, and I'm sure I'll get some flack because, yeah, the three-tier system is a way to protect people and one of my biggest concerns with this category. I was 29 when I started covering Vapor and it was very similar in so much as, hey, this is this whole new thing that has not existed before, that has the opportunity to be a harm reduction tool for smokers and it has this opportunity to totally change our whole tobacco nicotine landscape and it's super, super exciting. And it was very similar to what I'm seeing with THC beverage, just in so much as hundreds and hundreds of brands out there, you have no idea who's going to be the winners and losers of it. It's all moving at this very fast pace and then, oh hey, at a certain point it gets popular enough that kids are using it. And what happened with vape? It's an example of what shouldn't happen in a CPG category.

Melissa VonderHaar: 43:19

The growth here versus other countries is different and it's in part because it got out of control. There wasn't responsible players happening right away and that really stymied the category. We are still kind of clawing our way out of it. There's still a lot of illegal product on the market. There are still a lot of brands that are waiting for approval from the FDA, and it was because of this product on the market. There are still a lot of brands that are waiting for approval from the FDA, and it was because of this course correction that happened.

Melissa VonderHaar: 43:45

And whether it's through the three-tier system or something else, I don't want to see that happen to THC. The stakes are too high because, as awesome as the potential of vape was, we have never seen a category with the potential like this before, because it's not just an alcohol replacement or an intoxicating. There are functional aspects of this and oh, by the way, there's a million different forms that you can use, whether it's beverage, edibles, flour, vape, topicals. I cannot wrap my head around how big it could possibly be if we do this right. And so for me, yes, I am supportive of three-tier as a way to do this responsibly and show that we're doing it.

Melissa VonderHaar: 44:25

That doesn't mean I outright oppose D2C. It doesn't mean that I outright oppose doing something more similar to tobacco, which is not required to go through the three-tier system. But the reality is, if you're going to be in convenience with 90,000 single-store operators, you're not going to sell direct to all of them, the easiest way for you to service those 90,000 independents is to go through a trusted distributor, whether it's an alcohol distributor or other CPG distributor. When I look at that fight that's going on, it seems to be a very right now thinking fight. It's not looking at what normalization of this category looks like.

AnnaRae Grabstein: 45:05

Bringing up distribution is a great segue into how brands are setting themselves up to win in C-stores and I know, as part of your day job outside of the thought leadership and the industry advocacy that you're doing and that we're talking about you do work on merchandising and displays and things in stores for brands and I'd love it if you could help us talk through and understand what are some of the wins that you've seen in C-Stores with brands and how you think brands can be setting themselves up to succeed in the C-Store space.

Melissa VonderHaar: 45:43

Yeah. So I am super, super excited. For the first time in my career I can say that THC is part of my day job. Usually it's been this extra little passion project of mine doing the freelance journalism and the education work. That said, after CanadaCon, after kind of the progress going on with CSP and NACS and meeting with Cannabis, brand after brand after brand, we kind of looked at our core business model and said you know what? Yes, we have these great merchandising displays, my IC Store Innovations. We specialize in small format merchandising displays specifically for a convenience store channel that, by the way, can size up for liquor and grocery.

Melissa VonderHaar: 46:29

But kind of working on the premise of it's easy to take something small and make it bigger, it's much, much more difficult to take those giant beautiful floor displays that I've seen at Top 10 Liquor, that I've seen at Total Wine, and try to cram that into not just a Circle K but like a Murphy's. Those are kiosks. They really don't have space for that. Yes, our core business is always going to be those displays. However, we realized with emerging brands, with emerging categories, there's points that you are scaling up at a rate that your team can't handle. So, say you go from doing a pilot at a major C store and then they expand it and suddenly you're going from 500 locations to 6,000. You might not have the time to vet and hire a trade marketing team to vet and hire a procurement person to vet and hire a new warehouse to handle all of this.

Melissa VonderHaar: 47:23

Our team has all of those capabilities and so my new role on the day-to-day is for a business unit that we are calling TradeWorks.

Melissa VonderHaar: 47:31

That is really complete trade marketing solutions and it is looking at how does a brand approach convenience.

Melissa VonderHaar: 47:39

And one of the big things that we really feel strongly about is because this is a new category the brands that come in not just showing brand leadership but category leadership and saying, yes, we want to bring a display that doesn't just call out our brand but does some education on dosing, on the minors, on how beverage is different than smoking or vaping or what five milligrams is equivalent, to the brands that are really taking a category leadership.

Melissa VonderHaar: 48:09

In addition to brand leadership and understanding the small format space which, by the way, space is at a premium in a convenience store. It's thousands and thousands of SKUs, so just getting on the shelf in a cold vault it's only a part of the battle, because if you are in the bottom shelf corner in a category that they don't expect to see, they're not going to see you. The average convenience store shopper at the cold vault spends 15 seconds. So, yes, we have merchandising displays that can help you get more prominent placement, but also we are encouraging brands to think about how do you build a category home and showing the retailer that you are invested in these different categories?

Ben Larson: 48:47

boom and sometimes bust and you have the data, you have the consumer insights. If we're having the same conversation a year from now, what's your prediction over the next 12 months as far as how this category continues to grow and expand?

Melissa VonderHaar: 49:17

Yeah, I think we're at the point of precipice here where you're about to go from hearing mumblings of independents and a few smaller brands or brands that are doing it but aren't allowed to talk about it or don't want to talk about it.

Melissa VonderHaar: 49:32

I think, not even the next 12, I think in the next six months, we're about to see the floodgates open up and where you will see major retailers investing in this space. And I think, so long as we can get our act together and advocate and make sure that we are not getting locked out of states, but that we are advocating, saying we want the regulations, give us the guardrails so that we can do this responsibly and let us be an ally in it, so that we can do this responsibly and let us be an ally in it, I think it's going to blow the doors off things and it is going to get new consumers into this category and you are going to see this have a home in convenience and I predict that, if allowed, it's not just going to be in the cold vault. I think edibles, even vape, has a home on the back bar, as convenience retailers are looking to drive more people into their stores and build the baskets. This is a huge opportunity for everyone.

AnnaRae Grabstein: 50:28

Wow. What shift in terms of the world that we lived in five years ago compared to where you see this all going. I'm excited to see what happens next. Melissa, what is the best way for our listeners to stay in touch and keep up with you if they're interested in anything they heard today or want to just stay up to date on your latest?

Melissa VonderHaar: 50:51

Yeah, so I am super active on LinkedIn. You are absolutely welcome to engage with me there, but also email me. My email is melissa at ictradeworkscom.

AnnaRae Grabstein: 51:03

Awesome, and it is time for our last call. So, melissa, what is your final message for our listeners? Advice, call to action. Closing thought.

Melissa VonderHaar: 51:12

I gave this a little thought and I think I've referenced a few times. I'm second generation convenience supplier. I grew up with a dad in the beer industry and, as we have talked to new brands or even brands that are just new to convenience full disclosure I was an arts major, so I know zero about economics, but I do know something about the four Ps of profit, pricing, whatever, and I kind of tuned out the rest. However, in a recent conversation my dad cited that with convenience there's a fifth P and it's the people. The people are so important to this industry and you really do build relationships.

Melissa VonderHaar: 51:49

So for brands that are looking to get involved in convenience, I urge you to invest in people, whether it's getting people on your team that have experience with convenience and can therefore open some doors for you, whether it's attending events like Cold Vault, like the NACS show. There are ways for you to get involved. There's a million ways and the CSP board. We are taking brand seats. They are paid and we are probably going to have more applicants than we can deal with, but they will be doing a cannabis specific event. I can tell you that the retailers that were at Cold Vault last week there were three brands, thc brands that were there. Those retailers are going to remember that those brands showed up, so I so encourage people to invest in people for the convenience space.

Ben Larson: 52:37

Love it. Invest in the people. Melissa Vonderhaar, thank you so much. This was an incredibly insightful conversation. Thank you, thank you, thank you.

Melissa VonderHaar: 52:46

Thank you.

Ben Larson: 52:47

All right, anna Rae, what do you think? My spirits are higher.

AnnaRae Grabstein: 52:52

It's wild just to think about all of the places that cannabis could be sold in the future, and to hear that there are 150,000 convenience stores that would love to participate in this channel is a little bit mind-blowing. It's a lot to think about.

Ben Larson: 53:09

Yeah, absolutely. What do you guys think? Thank you for engaging during our live recording. Thank you for liking, subscribing, sharing, doing all the things with the podcast on Apple, itunes or Spotify or wherever you like to listen to your podcasts. Thank you to our teams at Virtosa and Wolfmeyer. Thank you to our producer, eric Rossetti. Couldn't do this without you guys. Thank you for allowing me to be out here in DC this week doing the important work with NCIA. If you're not a part of NCIA, really consider joining and joining me next time in DC. Thank you to everyone that is supporting and doing the work at home and continuing to push this industry forward. If you've enjoyed this episode, please share it, tell your friends and follow us anywhere you'd like to listen. Until next time, folks stay curious, stay informed and keep your spirits high. That's the show.