SPEAKER_03: 0:00

I think 100% Oregon has everything to do with it. No one was investing into Oregon companies, even if we're looking for investment. Oh, it's too small of a market, it's too competitive. But then yet some of the healthiest and biggest national players have come out of Oregon. And like we took California by storm, Wilde did. We did it with$150,000. We launched into California. So like we learn things that businesses don't believe is possible by starting in Oregon. And I'm a proud Oregonian. I was born and raised here. So like I'll die on this hill.

SPEAKER_00: 0:31

Love that. And what one other thing to add to what Aaron's saying was I think if you take a zoom out and just look at the market as a whole, then we see this in some of the newer markets that are in place right now. Oregon has experienced compressions like two or three times already. Whereas California probably just had theirs two years ago, Colorado had theirs three years ago, and that was their first one. Oregon's gone through two or three of them, right? So we've had these brands that have survived through all of these compressions. I think what both Gruin and Wilde were able to see early on were those compressions, and we went into new markets that haven't experienced those compressions yet. We had a playbook that was able to be executed against. We knew it was coming. How do you build your business for that level of compression that you know every market inevitably has?

SPEAKER_04: 1:54

And boy, do we have a show for you today. We have Aaron Morris of Wild and Draper Bender of Gron. It's going to be a great conversation about the recent requisition. Anna Ray, how are you doing today?

SPEAKER_06: 2:06

I'm doing fabulous. Feeling really good. Um just yeah, feeling like we are getting to have the conversations that we want to have with the guests that we want to talk to. So pumped to get to to do this and dive in. How are you doing?

SPEAKER_04: 2:23

I'm doing great. Uh, it's been a rapid start to the year. As we talked about last week, there was a bunch of deals getting done, but you know, I just felt my schedule last week felt a lot like uh my morning gym visits. It's just chocked full of of people and things and everyone running everywhere, and just uh the confidence that by the first week of February things will calm down and and settle into its its routine.

SPEAKER_06: 2:48

Totally. Yeah. And there has been a lot of deal news, and we've been predicting that that it's coming. I think that the the news that we want to cover today before we jump into talking about a big uh ME deal is actually more policy related. Uh yesterday there was uh a bill introduced in Washington, uh, I guess we're calling it the Baird bill. Uh and Representative Baird uh introduced a federal bill to delay the implementation of the new hemp language in the appropriation bill for two years from the time that it passed, uh, which would move the effective date to November of 2028 to give more time to create a legislative framework. Good news?

SPEAKER_04: 3:33

Yeah. Yeah. I mean, generally good news. It's it's we we I think everyone knew that's what uh the hemp industry was pushing for. And what we've seen over the last several weeks uh since the EO was pretty broad alignment. You know, again, everyone from the the therapeutic, full-spectrum C VD realm, like the Charlotte's webs of the world, all the way over to, you know, intoxicating hemp and and synthetic hemp and all that kind of stuff. So everyone agreeing that we just need a little bit more time to implement a framework and a bill that that responsibly governs this side of the market. And everything that I'm hearing is that there's well, first off, that there's no precedent for something like this being done before. So uh it's anyone's guess about the chances of this bill getting through. Um, that number is seemingly a large, long timeline. I don't know exactly how long it takes to get these bills done in Congress. Maybe that gets negotiated down. Um, but there does seem to be uh seem to be some good support uh from the talking heads on the hill about wanting to get uh some of these products protected, and this would be the way.

SPEAKER_06: 4:47

Yeah, this concept of a two-year extension is interesting because I think that prior to the hemp ban language and the appropriations bill, there was sort of this like the toothpaste is out of the tube, the opportunity is endless, growth, growth, growth on the hemp side. And um, and then the appropriations language passed, and there was a real contraction and pullback in terms of what folks were going to run after in 2026. I know that product launches and folks that weren't yet in market or that were raising money, the landscape changed. And um and I am curious of what an extension might do, because an extension is is much more grounded in a reality that even though people used to think that the toothpaste couldn't go back in the tube, now everyone is operating with the understanding that actually things can happen that can cause some real big tumult in terms of the opportunity. And would a two-year extension be enough to bring people back into the market um and bring that same level of optimism? Or does it just kind of solidify the current players and new money wouldn't come in? I'd be I'll be really interested to see um if if this does happen, kind of what what the what the domino effect is in the market with businesses.

SPEAKER_04: 6:08

Yeah, I think I mean speaking from the beverage perspective, I think overnight you would see the exuberance uh return. Because essentially what we're working with right now is like sales are better than ever. You know, after the after the hemp ban was announced the following week, we saw 20% increases in sales uh in mainstream retailers. And then the first week of January, yet again breaking records, you know, dry January. Uh it's is not passe yet. Uh, but you know, people are really leaning into the category. Um, retailers and distributors and brands are are protecting themselves by by limiting inventory, uh, but the the the demand is still there. And so if you create a longer timeline, that just pushes out you know the the the point at which there's concern. And I think people are fairly confident that, you know, given a six-month deadline, that they would be able to sell through their their product, and so I think it would go back to kind of business as usual, and that would encourage more players to get in. We just saw Sprouts uh launch four THC beverage brands, like across 120 stores, like that's another big mainstream retailer. So more time for more retailers, more distributors, more brands to get involved. And yeah, I think it would pretty much be here to stay at that point.

SPEAKER_06: 7:33

All right. Exuberance shall return. I like it. Uh great. Well, going into the regulated cannabis space, there is also a lot of policy kicking off 2026. And so I wanted to highlight a few states where there is action. We've got kind of three categories of policy potentiality kind of in motion here. We've got adult use pushes, uh, both via via ballots and legislatures in Florida, Hawaii, New Hampshire, Pennsylvania, and Virginia, uh, all which could be very exciting adult use markets. And then we've got medical pushes going on in um Idaho, Kansas, North Carolina, South Carolina, and Wisconsin.

SPEAKER_04: 8:22

Uh Idaho's probably the most interesting one to me, just because they've long been a huge conservative holdout. Uh nice way to kind of fill in the map a little bit up there.

SPEAKER_06: 8:33

Yeah. Prohibition is strong in that state. Um, but then on the flip side, we have four states that have actual rollback campaigns actively underway. And that includes Maine, Massachusetts, Ohio, and Arizona, which all in some form are trying to pull back what they have already commercialized.

SPEAKER_04: 8:55

So we've got this really when you say they, are we talking like Sam or like are is there any visibility in who's like pushing these initiatives forward?

SPEAKER_06: 9:04

Sam is actively involved, I know, in the Arizona campaign and likely in some of the others, although I didn't do that research this morning as as we are queuing this up. Uh the Maine and Massachusetts uh initiatives are both driven by signatures that somebody, I'm sure, had to raise a lot of money in order to fund. You know, it costs money to put those people on the street to collect signatures. And it's it's just been a real surprise to me to see this. Uh, because I, you know, it's it's just it's not what the public seems to support. And yet there are some loud voices that are trying to send us back into the dark ages.

SPEAKER_04: 9:46

The fight doesn't stop, does not stop on all fronts.

SPEAKER_06: 9:51

You know, but all that said, I feel like we should just cruise into this conversation uh that we're gonna have uh last week.

SPEAKER_04: 10:00

Please do a better job at introducing it than I did at the top of this.

SPEAKER_06: 10:04

Yeah. You know, last week it was a big um exciting announcement to hear that um that Grune was being acquired by Wild. And Wild is the largest edible company in the US and has two brands in the top 10. And Grune is is already up there in the top 10 as well. So this is a big deal in the edigory edibles category. And also, you know, these are both companies that hail from Oregon, a mature market that uh that I always think that if you are an operator from a mature market that is thriving and growing, that you've got a level of grit that a lot of these folks in new markets that are uh that are just not have they just haven't made it through on the same level um that these folks have. So really excited to bring on Aaron Morris, CEO of Wild, and uh Draper Bender, president of Grune. Welcome, guys.

SPEAKER_00: 11:01

Hey guys, thank you for having us. What's going on? Thanks for having us.

SPEAKER_06: 11:06

So you guys are on opposite coasts, is that right? We've got Draper in Florida and Aaron in Oregon.

SPEAKER_00: 11:12

Yep, here in uh sunny South Florida, and I'm not sure I can say the same inside of Portland, Oregon right now for Aaron, but it's it's sunny right now. Okay, there you go.

SPEAKER_06: 11:23

Amazing. So I hear this is the first interview that you guys are doing together uh as a company enjoined.

SPEAKER_00: 11:32

That is correct.

SPEAKER_06: 11:34

Awesome. How does it feel?

SPEAKER_00: 11:37

Exciting, it's really good. Awesome.

SPEAKER_06: 11:40

Well, Aaron, why don't you kick us off giving us give us a little bit of the origin story um for Wilde and and when you started paying attention to Grune and they came onto your radar?

SPEAKER_03: 11:54

Yeah, I'll try to do the quick version. I mean, Wilde started in the medical days back in 2015 in Oregon. Uh, we did 150k. So some kids threw me some money and we're like, what the hell are we gonna do here? We ended up on making an edible company, launched it in the med skew days, which is hilarious if anyone knows what that means. We're just like single residential burner. Literally, it's a garage story. I won't spend too much time on it. Um, I was like, Oh, we'll sell the Pepsi in four years and we'll sell it for 20 million dollars, and what a success story that could be. And then, you know, into the med concept worked. We went into wreck, and I think the rest is history from there. We went on a rapid tear of expansion for the next eight years. Uh, Grune's actually a year older than us, so we knew of Grune kind of forever, right? So Gruen was like the dominant chocolate of Oregon uh before they were doing gummies. So we were very familiar. We're like, oh, look how nice this packaging is. What it would be so cool to have a real brand one day. So they're kind of like inspirational because they were doing it right back in the medical days. You're talking about clear plastic bags, right? And like Grune was, I would say, the first brand in Oregon that actually had a brand. Um, so I've been familiar with them forever. Uh, speeding up down the road, let's say, when do we come competitors, Draper? I don't know. We came really competitors probably like four or five years ago. Groon's been on a terror, expanding rapidly, their pearls are on fire. And you know, then it kind of became the Wild versus Grune part of the gummy wars for the last four or five years. Um, and now we're best friends.

SPEAKER_04: 13:29

Draper, does this does this track? Wait, when did Wild pop onto the radar for you?

SPEAKER_00: 13:35

Oh, I mean, they've been on the radar since day one for us. I mean, since day one's been the the gold star that we've all been kind of chasing after. And you know, really what's been really unique about Wilde has been their kind of emphasis and focus on product quality as well as the sales and distribution aspect of it. And for us, that's always kind of been a big focus is sales and distribution and you know, retail uh penetration and all that. So kind of Wilde being the first ones to be able to execute a real multi-state strategy inside of our industry to scale has been kind of the the darling of what the playbook is to execute.

SPEAKER_06: 14:14

Well, Draper, you've you've said that you're that Gruen has been really focused on relationships across the industry. And and Aaron just said that you guys are best friends now. And I'm wondering kind of how that happened. Um, you know, a lot of people uh who are entrepreneurs and have companies, um, they're paying attention in the market. They think about and talk about kind of who a dance partner might be or what that might look like. But actually building that relationship, I think, is something that uh takes a special kind of sauce. And I'd love to hear about how that happened and how you guys got to that what if conversation, what if we came together?

SPEAKER_00: 14:51

Yeah, so I think Aaron's kind of built this like great Kaiser Sose kind of like persona about him, especially online of like, you know, on LinkedIn, he's this great personality. He's always talking about the industry, and it's very much like a fuck you to everybody, which I think is great. And we I was introduced to him by Seth Yakatan. Um I was in Oregon at the same time that Aaron happened to be in town as well, and we met for a beer, and it turned into Aaron and I kind of sitting down inside of this brewery for probably five or six hours, just talking about the world as a whole and then talking about the industry as a whole. And inside of that five hours, I was like, I couldn't believe how similar the two businesses were at that point in time. This is probably, I don't know, 14, 15 months ago. And from there, Aaron's just been a good friend throughout all of this. And it's nice to have somebody, you know, before we started having these conversations, to just be like, you know, hey, did you hear about so and so or this retailer doing X, Y, and Z and being able to have, you know, a source of truth where I think a lot of times we've seen retailers try to pit us against each other in some ways. Uh, you know, back to Aaron's kind of uh the gummy wars. Um, so it's been nice to just kind of have somebody during that time uh to really just almost be like a true sparring partner to be able to look at the industry as a whole with.

SPEAKER_04: 16:17

Aaron, I'm curious how you feel about your personal brand being threatened right now. I don't know. This this nicer side of Aaron, I I kind of like the Kaiser Sose. Like uh what is it? Who is the real Aaron in in your own eyes?

SPEAKER_03: 16:31

Uh my mom calls me the kindest asshole she's ever met. So some some combo of both. Um I think this industry takes itself too seriously and feels really sorry for itself. So I kind of just like add fuel to that fire. Um, but yeah, I can be intense, but I can also McCarian individual, so some say. So you pick. That's awesome.

SPEAKER_06: 16:55

Yeah. Well, and I think it's said in the press release that uh Wilde has around 1200 employees today and Groon, I think 300. Uh, so now you guys have a lot of people to be kind assholes to.

SPEAKER_05: 17:12

Great leadership quality at a CEO. Um is is the team excited about this?

SPEAKER_03: 17:20

I mean, I'll go. Yeah, our our team is amped, right? Um, we kind of kept it on the wraps for a while. The game of not trying to leak this was tough. And some leaks kind of came out, but you know, largely our team didn't know. Largely most of our teams didn't know until like two weeks ago. So for the last six months, our sales team has been like, what's our anti-groon strategy? How are we gonna do the sales tactics? What permission schedule do we have to run against them? Like, their megas are entering our market. What do we do? And me and the leadership team that knew about it was just dying. It's like, yeah, propose something. We'll uh we'll hear you out. Um so the team, the teams are amped, obviously, particularly the sales teams, but overall the teams are amped, right? Like, uh, I don't know if we're gonna get into it, but this was the grand plan, right? Wild is trying to build a platform that scales, and we already have a distro platform for brands we don't own. We already have two brands we launched. We were developing a third brand, um, more like gas station fun candy. Um, and then this transaction we weren't even looking for, it just kind of like what Draper said, we kind of met and then it kind of just naturally happened. Neither of us were like shopping each other on the market.

SPEAKER_06: 18:28

Well, so you said that that meeting happened about 14 months ago, and I'm curious how long it took from that time to when you had that what if of hey, let's maybe talk about what a transaction would look like and then how long it took after that. And we'll we'll dive into what the process looked like.

SPEAKER_00: 18:47

That's all you, Draper. Cool. So it was probably I think it was back in June. Again, happened to be in Oregon. Aaron was in Oregon, and we were just kind of you know sitting down again, talking about the industry as a whole and kind of where things are. And I again, it was really leaning into there's so many things that the companies do so similarly. You know, Wild's in several key markets that Grune isn't in, right? California, Colorado, Michigan, Washington, Maryland. And in each one of those markets, they're the thousand-pound gorilla in the room, right? Um, whereas Grune does a great job on the east, you know, we haven't really built an incredible foundation inside of the West. And, you know, I kind of broached the subject of like, what does this look like to have the two of us come together? I think Aaron's initial response is like, you're not serious, right? And I was like, Oh, we we should take a look at it, you know, if that's uh if you're serious about it. He goes, Oh, you know, let me think about it and I'll come back to you. I think within like 24 hours, I just landed in Florida and he called me that night and goes, All right, I spoke to my team. Are you serious about this? I was like, I'll get with Christine, but I'm I'm pretty serious. Yeah. I think this may. This is the only deal in the industry that makes a ton of sense. And he's like, let's do it. So that's kind of what's like kicked it off from there, uh just you know, being able to charge forward with this. Um, but it just kind of made a ton of sense.

SPEAKER_06: 20:16

I I feel like 99% of deals in cannabis, even the ones that make a ton of sense, don't get done. Um it's uh and it's there's a lot of reasons. It's like often it's at the last minute. Like it's people you walk work on it for months and do you know 20,000 lines of diligence, and there's just something at the last minute, often around terms that that makes somebody walk away. Um, but I noticed when you guys uh put all the details in the press release that you each uh called out legal counsel, but no bankers. And uh so often these ME deals are done with bankers. Is my assumption correct that but there were no bankers listed because there were no bankers involved?

SPEAKER_03: 21:02

Correct.

SPEAKER_06: 21:04

Say more.

SPEAKER_03: 21:06

Um, I think, well, I guess whatever my internet personality is pretty public about my opinion on bankers, but we'll go we'll go with this angle. I mean, honestly, so like our stories are very similar. So Christine, founder of Grune, and uh me and then the founding teams bootstrap this thing, right? We haven't taken on equity raises, we've never done series A's, these are both. We neither of us operate with the board of directors, we don't have consultants telling us what to do, we don't have CPG experts trying to tell us what to do. And so, literally, I think for both of us, just like looking at our DNA, it's like, why all of a sudden, with the two, like, you know, I'd say the two most successful edible companies in the country, we're gonna bring in a third-party negotiator broker. We're also famous. Like, if there's a broker on a lease, we're just like, can we just pay you and end run you? Like, if anytime there's a broker when we're negotiating deals, we just end run it. I don't even care if we have to pay you. We're just like, we don't play that game. So to me, even if they had a banker, we wouldn't have got a banker. Um, big shout out to our CFO, Eric Haste. He also comes from that, he calls himself a reform banker. Um, so we have like technical experts internal, but no third parties of any shape, form, no interest, at least on our end.

SPEAKER_04: 22:20

Yeah, it's really interesting that you guys had such a similar profile. Like I I've been in a number of conversations and looking at different companies, and you know, cap structure is always such like a huge concern and and how to balance things and how you measure the value of a company. But to not only have that alignment, but to have the personal alignment all drive it forward as well is like super interesting. I'm curious if the broader narrative of what's happening in the industry and how people have been talking about MA for so long and about like this is the year of MA again. Like three years, did that did that kind of like plant the seed in your head, Draper? Is that like kind of like is that what kind of started spitting up these these thoughts?

SPEAKER_00: 23:09

I I think a lot of times you get like the the people in the industry are like, oh, you know, one plus one equals three. And you you hear this and it's like a vertical MSO trying to acquire a brand, right? That kind of starts that kind of like MA conversation. You're like, it's more like one plus one equals two and a half type of a thing, where it's like, you know, when when we looked at this, it was like one plus one really equals five here in this kind of really unique situation. Um do I believe that now is like the entrance point for MA to really kind of like kick off? I think there's a lot of good things that are going for it. And I think this deal kind of gives the ability for the industry to start thinking a little bit outside of the box. Um, and it still comes down to like good operators coming together. You it doesn't make sense for groups that are, you know, like Aaron said, both companies are extremely profitable in what we were doing in the direction that we were going. So it makes a ton of sense. There wasn't a loser company that was in distress in this situation that needed the other. So it's kind of been our kind of objective, which was you know when you are in those situations, you're able to be choosy in terms of who you want to be able to go and do deals with. And for us, Wild was like the clear direction of the deal that we wanted to do something with.

SPEAKER_06: 24:31

Well, and I I know you guys are on purpose not talking about the terms that the deal was done on, and you don't have to because you're not a public company. Um, there's a lot of public companies out there that have done some um shitty deals, to be honest, and have been going through just tremendous distress for years. Um, but it's kind of nice to get to watch what the terms are that they're doing on deals from the outside and be able to track that to what's happening internally. And so, right a few days before you guys came out, there was uh a pretty big deal, uh, Vireo announcing its acquisition of Ease. And um, that was done at uh a little under a 4X EBITDAM margin, um, which brought the whole Ease deal a little under$50 million. Um, and Ease has at times been valued in its history. I think I saw something 600 million. So I mean, this is a major distress deal. I'm hearing that both companies are profitable here between the two of you. Even without sharing details, I'd love for you to talk about kind of how you see the metrics that matter when you were doing this deal and looking into each other's performance of what you were most interested to learn about each other and what were the metrics that you used to get to evaluation, even if you won't tell us what it is.

SPEAKER_03: 25:56

I mean, I wanted to do this one. I can start. Um, yeah, I mean, I I think this goes back to why we don't use bankers and why I don't speak banker. So if one more banker brings a public, a PubCo comparison and evaluation metric to my desk in my life ever again. I'm just, I don't know what I'm gonna do, but I'll never work with that person. So the public markets, the distressed assets in cannabis, the ease overcapitalized, and all of the MA. So to answer your MA question earlier, there's gonna be tons of consolidation of distressed assets. I think most of us know that and feel that. In terms of actual healthy acquisitions and profitable companies buying companies for real reasons instead of financial engineering, I don't think we're gonna see that for at least another year and a half, too. Um, I think most companies are trying to get by. Uh, where's the war chests in the banks? Um, yeah, Vireo, you should be very careful about good day farms and Vireo because they have war chests like no one else. But um, in terms of valuation metrics, um I mean metrics. I mean, we didn't even, but really the end of the day, I looked at it from does this brand actually make sense for us? Right. So I started there, right? Like, does this brand actually make sense? If you look at the data, right, on our sales, and this is credit to Draper because this is Draper's sales, sales bullshit, but he's right. Um, of like both of us are in a store where we actually help the category, and it's true, we do. But if you look at our sales, we don't actually trade sales and market share when we enter a market. So to me, I was like, you know, does Pepsi and Coke actually make sense? Maybe, maybe not, but literally we don't actually fight for the same customer. And then it's literally a copy and paste, right? I'm not saying that Grune does everything Wild does, and vice versa, but in terms of from the founder story to the lack of board to the profitability, I'm not saying like adjusted EBITDA profitability. I'm talking about cash flow positive from the first year of existence. So this chamber that no one makes any money in cannabis, you're looking at two people that make money in cannabis. Um, so really we started there, and then it was just a matter of getting to a valuation that made sense for both parties. I don't think we like really tackled it that aggressively from uh we're looking at revenue multipliers, looking at EBITDA multipliers, we're looking at this, we're looking at cash up front versus the it came down to a very healthy EBITDA multiple, but I wouldn't say that's how we looked at it. Um, I just looked at it as top line and then modeled out the synergies, right? And I hate that I you were we were talking shit about that word earlier, but like, yo, there's a lot of redundancy and a lot of like scale, right? Like we're in the entire West that Gruen. So we can compete for five more years or we can combine forces, we can make Gruen the second biggest edible company, maybe the biggest edible company in the world. So yeah, it was a no-brainer as long as the pennies, but if you want to talk about metrics, Draper, that's all you, man. I don't speak this world. I think you covered a great Aaron.

SPEAKER_06: 28:58

Yeah, so I'm hearing category dominance, brand durability, lots of upside, and that's that's what this was about.

SPEAKER_03: 29:06

Yeah, and they were profitable. So, like, even this, we don't have to like force when you look at this MA, you see all these like force SGNA. We don't have to do that. Both companies, standalone, are the two most profitable edible companies in the country.

SPEAKER_04: 29:20

Um, so it's I I just find so many interesting similarities and coincidence or coincidences here. How did like I'm trying to piece it together, right? Because Anna Ray and I are sitting in California and trying to think of a brand that kind of emulates this, that would be also like another target for you guys. Would I'm having a hard time, but you both are from the Oregon market. Do you think there's something about the Oregon market that helped cultivate kind of um this profitability mindset versus the the venture capital start that that many brands have started with?

SPEAKER_03: 30:00

All day. Um, so and I took this from another podcast, but like you know, select Oregon or Wild Groon. Um, I talk a lot of shit on the internet about how everyone avoids the difficult markets, price compressed, markets that are failing, failed rec states. So I'm of the camp that we should issue as many licenses as humanly possible and drive competition because we're talking about commodities. You can buy one gram pre-rolls for 50 cents in Oregon, you can buy ounces with tax for$15 of like B greenhouse buds. Our industry likes to convince each other that's bad, but I know growers that are profitable selling, selling at those wholesale rates to dispensaries. So the fact is, I think we're 10 years ahead of the industry. The Michigans and the Oregons are three to five years ahead of California, and we're 10, 20 years ahead of everyone from a brand durability and a business like foundation. So if you want to build a real business, you have to look at this industry and what it'll be in 10 years. Um, I think the other part of this industry is everyone just looking for a quick transaction. And there was this notion that if you got a Canvas license, you became a millionaire, and then you capitalize your business ease. You capitalized your business on hype, and we all know how this story plays out. Um, so I think 100% Oregon has everything to do with it. No one was investing into Oregon companies, even if we're looking for investment. Oh, it's too small of a market, it's too competitive, but then yet some of the healthiest and biggest and biggest national players have come out of Oregon. And like we took California by storm, Wilde did. We did it with$150,000. We launched into California. So, like, we learned things that businesses don't believe is possible by starting in Oregon. Is my and I'm a proud Oregonian, I was born and raised here, so like I'll die on this hill.

SPEAKER_00: 31:49

I love that. And what one other thing to add to what Aaron's saying as well, too, is like I think if you take a zoom out and just kind of look at the the market as a whole, it experienced, and we see this in some of the newer markets that are in place right now, Oregon has experienced compressions like two or three times already as a market. Whereas like California probably just had theirs two years ago, Colorado had theirs three years ago, and that was their first one. Oregon's gone through like two or three of them, right? So we've had these kind of brands that have survived through all of these compressions. I think what both Grun and Wilde were able to see early on were those compressions, and we went into new markets that haven't experienced those compressions yet. We were we had a playbook that was able to be executed against. We knew it was coming. How do you build your business for that level of compression that you know every market inevitably has? Yeah.

SPEAKER_06: 32:44

You know, uh, Aaron, you mentioned earlier that Wild is in some other categories like beverage, but that it's largely a distraction and that you're an edibles company. I'm wondering what what's ahead here? Like how how do you see this platform and this ecosystem? What else is going to be in it? Um, will you be buying more? Will you be building more brands? Uh what's the vision?

SPEAKER_03: 33:12

Oh God. Um, for since we're doing this on record, we do very well in beverage. It's just, you know, a couple points of our uh our revenue. Um, so yeah, we're in D9. We've been in C B D beverage since 2019. We launched our D9 beverage, you know, around nine months ago. But you know, the vision, the honest vision was day one, was like become the number one brand in Oregon, sell it to Pepsi or whatever, do what you know I was kind of talking shit about. Um, but honestly, once the concept worked, I didn't invent this business model, it's just the NBEV, AB InBev model. So we are a sales and distribution company that happens to own brands. And Draper's heard this a million times. My team has heard this for 10 years. We were doing 150K a month in revenue, and everyone's like, oh, you origami box, your brand, you actually have a real brand, you understand marketing. And I'm sitting over here being like, we're a sales and distribution company. So we control all of our sales and distro, everything or everywhere we go. We're even reluctant to even partner with distribution on hemp. We do, um, but we invest heavily into sales and distribution. So we're building a sales and distribution platform, is like the simplest and most concise way to put it. Um are we buying brands? Kind of looking at it constantly. So we're taking three brands nationally right now from our third-party distribution deals. Um, that is Journeyman Moxie's, which is owned by Botanica. That is a brand called Portland Heights, recently rebranded into Heights, and we're taking Birdie. So a couple pre-rolls, another edible company. Um, we have the most infrastructure in the country, and we are the only one-stop shop that can take you from one, two, three states into 16 states in 12 months. And we can do that from tip to tail in all facets, right? That's not even a plug, but like people are finally seeing what the plan is. We didn't invest all this infrastructure and have 150 sales reps to and buy, oh god, I'd have to check, but a hundred plus reefer vans to sell gummies. Um, so that's kind of always been the plan. This is just kind of like we thought we'd be buying brands in a few years down the road. Like I said, and I think this is an important part of the story. Neither brand was shopping. Um, we weren't like knocking on Grune's door, being like, hey, we're buying brands, and Grune wasn't like, hey, we're trying to sell. It was simple of like this made a lot of sense once we kind of put the dots together.

SPEAKER_04: 35:31

I want to double-click on something that you said because I, you know, acknowledging the importance of sales and distribution, but anyone operating in the cannabis space in more than 10 states knows that infrastructure itself could mean a lot of things and and being able to deliver quality products consistently. And I know the botanical botanica portfolio, it's it's it's different than you know, gummies and chocolates, right? And so how do you actually do that? Is it through partnerships and building a strong network of partners, or is it really investing in your own facilities? Like, yeah, how are you building out that that network to rapidly deploy?

SPEAKER_03: 36:09

So we're trying to find you know, obviously, portfolio synergies, but a lot of it also has to do with cannabis brands and businesses that still have the oomph. A lot of founders are wanting out, they're tired. I get it. This market is ridiculously brutal. I'm not gonna try to like even sugarcoat that. It's a tough space out there. So you need to have portfolio synergy, you need to have founders that are still invested, and you have to have national appetite, which requires a decent amount of cash flow or just cash ability to raise, right? Or just so um we are looking at distribution through portfolio strength. You know, I've just said this on the record and I'll say it again since the cat's out of the bag. We're not trying to build Navis, we're not trying to build KSS. We're doing the ABN bev. We want distribution strength through portfolio strength. We are not in a rush to fill our vans. The amount of 50 plus year old white dudes that have told me about the synergies you must be able to find from being able to find economies of scale on your vans, kill me now. Um it's about shelf space relationships, hence why it also works with Grune. It's all about retail relationships and sales. Um, we're profitable with our own two brands. So we are not in a rush. We want to do it right. Uh the grand plan is actually just to do edibles. The uh unfortunate reality is after the hemp opened up, no one has really entered the edible space on the recreational market in a serious way for a very long time. Oh, that's really interesting.

SPEAKER_06: 37:38

You know, I I appreciate what you're saying as you're talking about your your sales reps, because I know all too well that sales reps want to have more to sell. That's how they can individually, you know, be able to have excellent performance, is when they can stock the shelves at their retail partners with more products. And um, it can be really powerful for a great sales team to have a great portfolio. Um, so I I definitely see see the vision here. But I think what what Ben is talking about is is the supply chain that comes before sales and distribution and the quality products that need to happen. And and you you control a lot of your own manufacturing in many of these markets as well. Is that right?

SPEAKER_03: 38:20

Yes.

SPEAKER_06: 38:21

Is it 100% that you control your own manufacturing, or are there some states that you uh manufacture?

SPEAKER_03: 38:27

There's some states that we have to partner with with compliance, um, but pretty much, and then now we're trying to buy pretty much as many licenses as we can. So, yes.

SPEAKER_06: 38:36

Yeah, so it's it is more vertical than than an A B in bev model, in that they don't produce all of their brands on the same level that what you're talking about. Or you're not gonna produce all the brands, just yours?

SPEAKER_03: 38:49

Some combo. So it depends on the state. We're gonna get into the details, won't spend too much time. Obviously, we have processor and edible license in most states, so some places we can't even make vape, we can't even make pre-rolls. So, for a national expansion, if it's an edible company, we're probably producing it. If we can fit it in our buildings and legally produce it, we're probably producing it. Otherwise, we're gonna use com have the brands manage it. So we're not managing those other brands, we're just the sales industrial vehicle and the infrastructure partner. We will manufacture it, but that's not our value add. That's just because, well, we have the license in this space, if that's available.

SPEAKER_04: 39:24

I'm curious about your perspective, um, a little bit more on the on the policy side. You know, you've talked about operating in both hemp and regulated cannabis, and obviously it's a big discussion, especially this year, as we're talking about the top of the show. Um, how are you thinking about that? Because uh running sales and and distribution in the regulated side of the business is is very different than kind of getting broad distribution of of hemp infused products. And you've both been in this game a while now. Um if If you want to opine on your general philosophy around the two regulatory structures and their potential convergence, um, we'd be happy to discuss that too.

SPEAKER_03: 40:11

I mean, I'm gonna stay out of the rec market versus the hemp force. Um, that's for sure. Most toxic echo chamber in our industry. Uh Wilde participates in both. We are very successful in CBD. We've been in doing hemp for six years now. Uh we service 7,500 to 8,000 doors on hemp, largely with CBD. Our CBD is still 70% of our business over our D9. Um, from a distribution, you're not wrong. You can't control it. A lot of these states are moving to franchise with their alcohol lobbyists. Tennessee is another good example. Georgia's probably pretty close. So we do know we have to work with distribution partners. Um honestly, we come from liquor, though. So as much as I say beverage is a distraction, it's like my my first true love. Um, so we know how to navigate it, but it is different. Um, for beverage, we are full-on distribution partners. For edibles, you can still ship it into a lot of states. And so we're investing heavily into the ground game and then just shipping through basically our fulfillment centers, um, which is just partial shipping of D9.

SPEAKER_04: 41:14

Yeah, it's really interesting. I've I've talked to a number of you know liquor retailers, and the ones that have tasted the opportunity with with infused gummies have gotten really excited uh about the the product. And in Draper, I could very much see the pearls being a uh a popular seller in in those those liquor marts. That's that's the hope.

SPEAKER_00: 41:37

We'll see what happens, we'll see how the regulations uh shake out with all that.

SPEAKER_06: 41:42

Those pearls are so amazing. For for Christmas, I was given this um this like ice tray to make round ice cubes, and uh it is it has like been such a crazy pain in my ass. I can't tell you like I'm failing at making round ice cubes. And I thought about you guys because I was like, they make these amazing round gummies all the way around. I can't make a fucking round ice cube, like I'm just losing here.

SPEAKER_00: 42:11

So I I give Christine the full credit on the design aspect of that. We've dealt with like several food scientists that were like anything other than the sphere that you guys have made from an automation standpoint will far win here. But it's just been really important. It's just like the one form factor that people resonate with, which is the sphere. It's you know, not something that's flat for the most part, that you see a lot inside of that. And what's funny, Anna Ray, is the those kind of like silicone uh molds that you're talking about for the the ice cubes. That's kind of our that was the initial mold when Christine was RDing this. We bought one of those molds um for ice cubes, and it's kind of been like our launching point for the pearl from there.

SPEAKER_06: 43:00

Is it still that? How the heck do you make around coming?

SPEAKER_05: 43:03

It's like I promise I'm not gonna, you know, start a competing company, but what is going on there?

SPEAKER_06: 43:09

What does the machine look like?

SPEAKER_00: 43:11

So we've we've kind of since like we've become much more sophisticated over the years and kind of how we we did this. When we first launched the Pearls, and I'm sure Aaron has a similar story. Um, you know, we were these like incredible chocolatiers. We make incredible chocolates, we're so good at edibles, you know, we can make gummies no problem. And really, when we try to make gummies, we pretty much created marshmallows and was like, okay, we got to. Uh, we might need to hire a specialist in this. So we we hired um a haribo food scientist to help us with the formulation. So that's why when you taste the groom like a pearl or a mega or any of our gummy products, it has that same kind of like taste and consistency as like a haribo uh gummy. So it's a very kind of proprietary gelatin that we're utilizing. And to that point, we wanted it to be different. I think that's a big thing inside of our industry, especially with brands, is yes, you come up with like beautiful packaging and a beautiful story, but the products are just like everybody else's. So, like, what is that differentiating you know, product that's really not there? That's kind of where that, you know, the the square came from and all of that. So it's like tons of RDing of taking a look at molds. Like I said, we ordered like Amazon molds that were made for ice cubes that we've since, you know, worked with like companies like Truffly Made and some companies overseas to help, you know, mass produce these molds for us that we use in some of our other markets. But it's kind of how it all starts.

SPEAKER_04: 44:39

I think that's another interesting commonality between the two of you is like coming up with a unique form factor that kind of broke the mold. Sorry. Um, you know, it's like there's so many, you know, squishy gummies that fuse together inside their mylar bags, and then you have the the the wild flats in their in their nice little container, and then the the pearls, they're they're both just unique form factors that really stand out. I love that.

SPEAKER_00: 45:09

Aaron and I will both tell you that we hate the boxes that both of our products are in. The origami box, and with us with our little like triangle box that we do. It's an extra step, but you know, to the consumer, you know, we internally we've been like, what do we think about just getting rid of the box? And we go out and we kind of like ask a series of butt tenders, and they're like, Everyone loves the box. Like, we're keeping the boxing experience.

SPEAKER_06: 45:35

Well, you guys are talking about kind of both packaging innovation and uniqueness and also product innovation. And I'm wondering if there is anything that you're seeing other folks do uh that is exciting or green space that you want to run after. Like, what is what is the the unsatisfied uh consumer opportunity in the space right now to run after?

SPEAKER_00: 45:59

This is such a good one for Aaron.

SPEAKER_03: 46:02

Oh, fuck you. Um yeah, um, he's not wrong. Yeah, I mean, I think there's a reality of like if you go back when I started this 10 years ago, everyone was like, do anything but gummies, everyone wants weed ever in every type of like edible format. And I'm just gonna stick to edibles because that's honestly the only thing I'm qualified to speak on. And I was sitting over here 10 years ago, just being like, yo, you don't pour your wine in your pasta and then eat it. You eat your pasta and you drink your wine. So, like, why and this notion that you want THC into every type of like edible and just food factor is like nonsensical. Um, that being said, no one thought gummies was gonna be 80% of the market share. Gummies has become 80% of the market share. It is crazy. I know all the talk is around beverage, and I think beverage is very viable, but it'll never be gummies, right? So, like gummies, chocolate, beverage are seemingly the only three current viable edible categories. Um, so we are looking at expanding like food, or not food, sorry, like confections candy. So it to answer your question, what others are doing, I don't know. I know what we kind of just are what we're working on, we're looking at more fun factors of candy, right? Um, and people can sit here and talk about the sugar and that whole pointless argument. We're like, we're looking at the sugar freeze and XYZ. Um, but no, I don't know. I honestly think the edible category has lacked innovation a very long time. I think Grune brings like a playful element to it. And we were like designing a gas station candy fun, playful brand that we could just throw ridiculous concepts into. Um, I'm not saying that's what we're gonna do with Grune necessarily, but in terms of where we're headed, I don't think we need a square gummy now that we have a rectangle and a circle. Um, I think we can look at you know, form factors that are adjacent, but I think we're not like we're not gonna touch savory and all of those things. What other people are doing, I don't know. Don't ask me about nano. Draper can speak about nano.

SPEAKER_00: 48:05

Um stay away from it. Stay away from it. I I would say the one thing too is like I I think as it pertains to just like the future of edibles, like to Aaron, Aaron's point, it I think it more comes down to like form factor and how consumers are actually consuming products at that point. There's some stuff around five milligram versus ten milligram that's really interesting right now that we're taking a look at inside of the data. Um, out of all the markets that we're seeing, there's a ton of really cool innovation that we're seeing with other brands outside of Grune and Wild coming out of New York right now. Um, that I think is something close for us to watch. There's a lot of just overall really good innovation coming out of New York. I think the some of the future of the big brands that we'll be seeing in the next like three to five years will hail from New York. So um just kind of being on trend too, of like what the future consumers are gonna want. I think both Wild and Grune, in terms of form factor, we've been able to capture the millennials really well. But now it's like, okay, what is Gen Z looking for as they're becoming this new consumer? Um, and that to me is more so where this innovation and the next edible, you know, kickoff will really be.

SPEAKER_04: 49:18

Yeah. Well, sticking with the the consumer point, right? Part of building a successful brand is is connecting with the consumer. And uh, we've talked a lot about uh how challenging that can be in the regular cannabis space when you have the retail barrier in between you and the consumer, but um you guys have managed to grow and scale across multi multiple states, and I'm curious too what you think that the two brands have done differently compared to your cohort in actually connecting with the consumer and serving them what they want, besides like a clever form factor.

SPEAKER_03: 49:56

Go for it, Draper.

SPEAKER_00: 49:59

That's a really good question, Ben. And I'm actually really excited to hear Aaron's. So I'm a little upset that we're gonna go first, but I'll I'll take it from that. Um, I would say between the two brands, like what we've spent a lot of time on is being very kind of new and innovative, and like Aaron said earlier, like fun in our approach of how we do things. It's essentially how we created the Mega, which is a single serve 100 milligram product, and we were kind of the first to create the single serve category in what we did. And that was just again, how do we find a product made for value consumers, right? So, what is the product that the market is missing? How do we go and find that? And that's kind of what it kind of started off with. You know, we've done a few fun things over the year, like our Halloween SKUs, which we call them LTOs or limited time offerings. And it's our way of really just coming up with fun and creative ways to, you know, kind of work with the consumer. I think what we've also, you know, both companies have done a really good job in is focusing on minor cannabinoids and really coming up with like effect-driven ratios. That's been something that Ground has spent a ton of time on. You know, with some of our products, you'll see like, you know, three to one or one to one to one or two to one to one. And that's the emphasis on making sure we're giving the consumer a product that actually works, where you'll see standard ratios like one to one. And it's like everybody and their mother does a one-to-one edible, right? How do you create a ratio that's unique and different? So I think that's going back to some of our playful innovation of kind of what we're doing to meet the consumer where they are.

SPEAKER_03: 51:34

Amazing. Yeah, I mean, I don't think it's rocket science as much as people make it out to be. The one of the quotes I say is distribution builds brands and brands retain customers. So I think the cannabis industry really gets stuck on this innovation word, just like we got stuck on nano, where everything in the world and food is nano. So, like, we're like, this is innovative. I'm like, this was designed a hundred years ago. Um, so I honestly think it's about being an emotional connection to your customer and the brand. Like, Wild is not innovative, we are not playful, we are deliberate, we are intentional, we are consistent, and we are of high quality. We are available everywhere, you know what you're getting. Um, all of our brands serve like a very deliberate purpose. Um, where Grune is obviously what Draper said, way more playful. But like end of the day, like Wild spent a ton of time on the back end building its brand. Like Wild works. If you ever want to learn what we're actually doing that has nothing to do with capitalism, check out our website, do our QR code. I'm doing the plug already, sorry. Um my entire goal in this world was to build the Patagonia of edibles, meats, and Heiser Busch. So I think Wild's brand building that has nothing to do with cannabis has been a big part of retaining our customers. Um, but yes, I think you have to have distribution and you have to build an emotional connection with your consumers. People are so stuck on the literal, and then you go look at beer. How many terrible beers are massive because they have an emotional connection with their customers? So it's not just product quality, it's also just building a connection with your consumer. But obviously, you have to have product quality.

SPEAKER_06: 53:08

Are you in touch with your consumers directly? Are you guys building email lists and doing um direct customer outreach since since you haven't had the the marketing opportunities that that you know non-cannabis companies have? We've seen some companies that are really making an effort to build direct connection with with their cannabis consumers, but I haven't seen a lot of folks do it. And I'm just curious on the on the back of what you just said, if if you are.

SPEAKER_00: 53:39

It's probably one of the hardest things to do inside of our industry, in my opinion. Um, I've seen a lot of really, really influential brands do a good job of doing it. It's uh it's been a focus of ours of how to do it the right way. The bigger issue, and Aaron might not have the same problem due to his like direct-to-consumer business on the actual uh hem side, but there is a level of gatekeep of consumer at the retail level where the retailers really don't want to share that information. It's their information, even though they are buying you know, groom-based products. There's a ton of gatekeeping that goes on on that, um, on that side. And I think it's something that for brands, it would be really great to be able to have access to that level of information so we could be more in touch. But we've been deploying strategies, you know, both with like in-store activations, um, you know, through our website, SEO, and all sorts of other ways to be able to gather um, you know, kind of emails to be able to be directly in touch with some of our consumers.

SPEAKER_04: 54:42

Yeah, that's awesome. Look, I that it's uh really amazing to see two very notable brands come together. You know, there's been to Aaron's point, there's been a lot of uh consolidation, especially amongst distressed assets, but to see two great companies with great momentum uh fuse together is is is fantastic. I'm curious, just kind of as we close out here, you know, what are what are some things that you guys are excited about structurally? You know, the the stronger together, the one plus one equals five. Uh I I love that. Um, what's gonna make it a five?

SPEAKER_00: 55:22

Aaron, you want to take this one? I'll sound bite at the end.

SPEAKER_03: 55:26

Oh god. Um I mean, honestly, it's like the uh oh god, maybe you'll just have to wait and see. Um, from a distribution and a brand strength, right? There's two edible companies that are growing rapidly. There's two edible companies that have cracked the code and actually have consumer loyalty. There's more, right? I am not like I got mad respect for Kiva and Kana and the other people in the space. I'm not saying it's just us. Um, but I think there is a lot of the obvious does market share, it streamlines our distribution. It's going to hit economies of scale, plus, it also gives us more brands and more avenues to play with. Um, I guess that's what I'll say. You'll have to wait and see for the rest. Love it. Love it.

SPEAKER_00: 56:09

Yeah, and I think I brought this up earlier too, where it's like, again, what are the markets? The grun's currently a number four brand, according to Anna Ray's uh LinkedIn post that she made. And that's without us being in California, Colorado, Michigan, Washington, Maryland. Really key markets here in the in the US. And I think really that's the real advantage of being able to bring Grune into some of these markets that Wilde is not just in, but are is dominating in. Wilde's number one in every single one of those markets, has the highest distribution channel and retail penetration inside of those markets. So it's really now the opportunity to be able to bring Grune to all those markets and be a real national player outside of the nine markets that we're currently operating in.

SPEAKER_03: 56:56

It saves us both 10 years, is the easiest way to sum it up. Correct. Yeah. Yeah.

SPEAKER_06: 57:00

Well, so we're at the end of the hour. It is time for our last call. Our listeners are not necessarily the same investors and bankers that that Aaron, you shit on a little bit earlier. They're operators and they're looking to you guys as aspirational and in this deal. And um, I'd love for you to just drop a last call to our listeners. Advice, call to action, a closing thought uh for them.

SPEAKER_03: 57:27

If we're not talking industry folks, uh my biggest advice, like my the university I went to, U of O wants me to teach a class, um, don't listen. So my ethos is middle fingers in the air. I think everyone in your world is gonna tell you what you need to do. I've never wrote or written a business plan in my life. I don't really actually do a lot of planning. Uh, my biggest take is if you believe in it, just do it. Stop thinking about it. And then my other biggest advice for anyone trying to start any business anywhere, you have to be able to be your first sales rep. A pitch deck is never gonna get you anywhere. Investors are only gonna give you expectations and ROIs you must hit. You must be able to sell your product, go get your first hundred customers and don't listen to all the experts. If they were experts, they would be running their own businesses and starting scrappy innovative startups to come after their market share. That's great.

SPEAKER_06: 58:25

Oh, yeah. Thank you so much. Well, it's been amazing having you guys on. Thank you so much. I think people are really curious, and I think you pulled the curtain back for people today. So appreciate the honesty, vulnerability, and transparency. Awesome. This was fun. Well, thank you for having us.

SPEAKER_04: 58:43

Yeah, Draper Bender, president of Groon Edibles, Aaron Morris, founder and CEO of Wild. Now, best friends, now join forces.

SPEAKER_02: 58:53

Best friends.

SPEAKER_04: 58:56

Thanks for joining us, guys. Really appreciate the time. Talk to you soon.

SPEAKER_03: 59:00

Thank you. Bye.

unknown: 59:01

Bye.

SPEAKER_04: 59:02

All right, everybody. What do you think? Thanks for watching, listening, doing all the things. Thank you to our teams at Virtosa and Wolfmeyer, and of course, our producer, Eric Rossetti. Uh, if you've enjoyed this episode, which I know you did, please drop a review, Apple Pet Podcast, Spotify, wherever you listen. Like, subscribe, share with your family, with your friends, with your coworkers, anyone who listen. Thank you, thank you, thank you. As always, folks, stay curious, stay informed, and keep your spirits high. Until next time, that's the show.