From Pearls to Pips, Grön is Reshaping the Infused Edible | Cannabis Business Executive – Cannabis and Marijuana industry news
The word “fun” is often used to describe the Grön brand, and with good reason. The name of the company, which means “green” in Swedish, is a lot of fun…
The post From Pearls to Pips, Grön is Reshaping the Infused Edible appeared first on Cannabis Business Executive – Cannabis and Marijuana industry news.
The word “fun” is often used to describe the Grön brand, and with good reason. The name of the company, which means “green” in Swedish, is a lot of fun to mispronounce, but more than that, the company’s products are different – and yet very similar – to anything else out there. From Pearl to Pips, each Grön SKU is both familiar and unique, and fun. Founded in Portland, Oregon in 2015, the women-owned company has expanded beyond the borders of The Beaver State and currently has operations in five states and Canada, with more markets on the way, according to CEO and co-founder Christine Smith, who spoke recently with CBE about the company’s plans for the future, its distinctive roster of edibles, and why she really likes to control her own destiny.
We actually caught up with Smith just as she was returning from the recent Benzinga conference in Chicago, and the experience was fresh on her mind, the residual excitement still evident in her voice. “There was a lot of momentum and interest in what’s happening in the market in general,” she said. “I mean, we all know what’s happened with the capital markets, so between that and interest about where to find money in general, there was an aura of uncertainty and pressure. But it was interesting, there were a lot of good conversations, and I think a majority of the players in the market were there. It’s short, two days, so it’s just really intense back-to-back, and there are some really exciting things happening. We’re really in a pretty exciting position, and there are a lot of people that are curious about what we’re doing.”
Did they go with specific goals in mind? “We did,” said Smith. “We’ve expanded and we’re in five states and Canada now with a majority of that growth happening in our last two years, primarily opening Arizona. I don’t know how much you know about our trajectory, but we’ve opened Arizona and Missouri this year, and I guess Oklahoma, and we’ve got plans for opening another five markets next year, and identifying which markets we’re going into, which partners we’re going to leverage into there. And I’ll be real honest, there’s a lot of talk right now between these MSOs about what position independent brands are going to play on their shelves, and those are the conversations that I think are really important for us to sit at the table and talk about.”
Those conversations must be interesting. Grön is already a multi-state brand, which takes it to the next level of achievement, telling everybody certain things about its capabilities. It could even mean the company has reached a point where even with all the turmoil in the industry, it can exert a modicum of control over its destiny. I asked Smith if, looking at the map, there are states she is particularly interested in entering because they are markets better suited to Grön’s products or the way it runs its business.
“That’s a great question,” she said. “As I said, we just launched in Missouri, and we’re really, really, really excited about that market, but we love all markets, and my personal opinion is over time we’re going to see everything level out between the open markets and the closed markets, which are the limited-license, more vertical markets. But it’s going to take a long time. So, what we tend to see as really good markets for us to enter are limited-license markets with a cap on retail so that we’re not looking at a market that’s owned by three players, and where we have the ability to go in as an independent brand that isn’t necessarily tied directly to a large MSO and be able to be really successful there.
“And there are quite a few of those, but it’s threading the needle on when we enter a market,” she added. “We entered Missouri just prior to recreational getting on the ballot, so we are placed well for that market and the trajectory we’re seeing is fantastic. We’re a self-funded company, we’ve been profitable from the beginning, and we’ve seen really good growth year over year, so I don’t doubt our ability to go in and dominate in a market, but it’s something we have to consider when we’re looking at larger players and whether or not they will allow us to be on their shelves.”
To that end, Grön does not like to go passively into a new market. “We are operators.,” said Smith. “We prefer to go into a market and operate ourselves. We bring in our own staff, and we do our own sales and distribution whenever possible. That’s not to say that every deal is not a little bit different, but what we’ve found is that one of the keys to our success is controlling our own destiny in that format. So, it’s finding strategic partnerships that are mutually beneficial, and potentially a license holder if we’re in a limited-license state, for us to operate under their license in that capacity. That’s not to say we haven’t done licensing deals; we have a license deal with Indiva up in Canada, and we’re really excited about that partnership and our growth in Canada, but for the most part, we’re looking for strategic partnerships or states where we’re able to get our own licenses, if that’s allowed. So, a horizontal license structure would be our ideal model.”
The Grön of today grew naturally from a pure love of chocolate, which is not in itself unique in the cannabis space, though executing on it is difficult. “I was just telling someone this week, the way I started, people can’t start companies in cannabis like this anymore,” said Smith. “I didn’t mean to start a company. I was an architect in my prior life and started this really on a whim and kind of as a hobby. I had a new baby, I was making chocolate at night, my nanny was wrapping it, and we sent somebody out with hand-wrapped chocolate bars in a shoebox to deliver it to stores back in 2014.”
The early days created a certain tenacity. “I have the ability to play and dive into this and really understand and work through the nuances and stumble and make mistakes and figure things out that weren’t detrimental,” she added. “I’ve been doing this a long time and growing up in Oregon; there are some amazing companies coming out of Oregon; maybe not a lot, but I’ll tell you, the companies coming out of Oregon are really strong, and it’s due to the hyper competition and the restraint that it takes to be successful due to the competition. There’s not a lot of money here, and it being an open market, there are a lot of people trying to vie for these top spots, and there’s only a few of us that made it.”
Make it might be an understatement. Cannabis and chocolate share a special bond that Grön understood from the beginning and exploited in the best way possible, by creating products that people loved, and which eventually came to dominate the Oregon market, opening the door for expansion beyond chocolate into the meat and potatoes of infused edibles – the gummy – albeit approaching the venerable little thing from a different point of view, literally.
“Grön is a parent brand that has developed this families of products,” explained Smith. “We started with chocolate initially, and our chocolate is just divine. It is amazing. We’ve always been committed to excellent ingredients; it’s one of the things that is tremendously important to me. We will not make products that we can’t stand behind, and we will not grow beyond our boundaries unless we’re able to commit to making these products that are at the same level of excellence that we’ve always had.
“In fact, one of the things that kept us in Oregon longer than some of our peers was making sure that we were ready and prepared to be able to go and do it really well and consistently wherever we went,” she added. “So, we started with chocolate, then we launched the Pearls, and that was a kind of happy accident. We came up with the idea, and no one else was crazy enough to do that mold shape. It’s not easy to mold, it’s a kind of a pain in the ass, but it’s fantastic and people love it. We’re using a gelatin-based recipe, and you don’t see too many purely gelatin-based recipes out in the market right now. It’s a true gummy, which is why the texture and feel is really special.
“From the pearls, we launched the Mega, which is an extra-large Pearl,” she continued. “That’s a different product; the same high level of quality but a different product for different consumers. So, we’re able to touch different consumer price points within these different avenues. And then last year, we launched the Pips, and we’re really excited to see how that does in the market as we start to roll it into other states, because, again, there’s no one crazy enough out there in this space to be making cannabis ‘M&Ms.’”
The commitment to using natural ingredients runs throughout the product lineup, starting with the original chocolate.” We’re not bean to bar, but we make all our own chocolate,” said Smith. “We’re using our own inputs for that and our own blends, and we work very, very closely with Creo Chocolate, which is a fantastic local chocolatier here in Portland, so we’re tied very closely to experts within the field of candy and chocolate that are keeping us moving forward not just in cannabis, but in the products themselves.
“And then related to that, we’re also committed to the minor cannabinoids and some of these products we’re seeing that are pushing the industry forward,” she added. “One of the luxuries of coming out of the West Coast and going into the East Coast is being able to see what’s happening on the forefront of technology and cannabis and then bring these east with us. I think that’s one of the reasons why you’re seeing these West Coast brands push east.”
Is sourcing a challenge as the company expands and the economy worsens? “It is,” said Smith. “It’s really challenging. The price of chocolate has almost doubled in some cases, and we ran into shortages, but we did not pass any of that on to our consumers; we just absorbed that. Cannabis is interesting. Due to supply and demand we’re all experiencing, it’s challenging to pass [rising costs] on to consumers in a way that’s understandable or relatable, because there’s so much competition in the market, someone else is willing to undercut you. So, it’s affected our margins, but it’s something that we’re committed to doing and maintaining the high level of quality and I believe in the long run, it all works itself out.”
Grön also brings its own formulations to the market, something Smith says has been instrumental in its success. “We have our own food scientists, and we do all our formulations internally,” she explained. We do work with an Oregon company called FloraWorks that is a minor cannabinoids company. Oregon has really strict laws around hemp and cannabinoids and we’re lucky to have a company here that meets all the regulations. There also are FDA approvals coming out in Oregon in order to still be able to have CBN on the market, so it’s critical for us to make sure that we’re working with companies that are able to meet the requirements for that. So, we’re not producing minor cannabinoids, but we are doing our own formulations.
“Our signature formulation, and the best-selling ratio we’ve ever done, is the one-to-one-to-one CBN, CBD, and THC,” she added. “It’s interesting, we came out with that a few years ago, and at the time CBN was on the market primarily down in California and had not come to Oregon as an edible. You saw it in really small quantities, probably due to the price. At the time, CBN was selling for $30,000 a kilo or something like that. We looked at it and we knew that it was an effective ingredient, but I went back to our team and said, ‘Give me the ratio that is going to be really effective.’ After lots of studies and R&D, they came back and said, ‘Christine, it’s a one-to-one-to-one. What’s that going to cost us to make?’ At the time, it didn’t make sense because of the cost and other factors, but we looked at in the long term and we took a risk, and we said, ‘We believe that by bringing this out in a ratio that is really effective, we’re going to be able to see the price of CBN come down, and we’re also going to see this start to really take over in the market.’ And we were right! The price of CBN is significantly less now, and we’ve got a product that is about 30 percent of our revenue right now across the board. We have it in all three of our product categories.”
What effect they were looking for that the formulation met? Was it sleep? “It’s really sleep,” she said, “but it was really interesting to see the effect. CBN is great for sleep, and also in my mind it kind of shifts it to your body and not so much in your head, so you’re really able to rest. I’m the wrong person to talk specifically about the science of how the receptor typically attached to that, but it is remarkably effective, and somehow that combination between the CBD, the CBN, and the THC in a one-to-one-to-one ratio is just fantastic and really works. I mean, it really works.”
Is Grön working on other effects-based edibles? “Absolutely,” said Smith. “We’re constantly innovating and we’re constantly looking at what’s coming next in our test kitchen. You’re going to see more minors come out, and we’re looking at formulations that work towards appetite suppressant, which is I think a really exciting opportunity in cannabis. We’re targeting effects, looking at some of the minors that are that are coming out, and we’re really blessed to have a minor cannabinoid company down the street that is able to help us stay ahead of the game with that. We’re also looking at real terpene profiles and how that works either through live rosin or live resin, but again, when we look at trying to scale that across multiple markets and how to make something that is consistent, that’s really challenging, and I don’t think anybody is able to do that successfully right now because it really requires controlling the supply chain.”
In lieu of that and having to live with the reality of supply chains as they exist and markets as they are configured, how does Grön classify itself in the hierarchy of infused edibles? “We’re a premium product at an approachable price, and we carry that across multiple price markets,” replied Smith. “We have a value product, which is our Mega and our Mini-bars. Depending on the market, that is retailing anywhere from $5 to $10, and that’s for 100 milligrams. That is a value product, and it is a really great product, but it’s not a 10-piece, it’s not a large chocolate bar; it’s a higher dose that’s intended more for medical patients, whether they’re an actual patient or coming in as a retail consumer.
“Then we have the chocolates, the Pearls, and the Pips, and depending on the market, they are somewhere between $18 and $30,” she added. “But again, the market in Oklahoma, across the border from Missouri, is vastly different in the pricing that you’re going to see for the same product. And we’re not dictating that. This is the EU before common currency. Different tax structures everywhere you go. But where we’re seeing the big boon and what we’re doing is in the value market, particularly with the state of financial affairs in the world right now, but also in our higher-end or more expensive products, the minor cannabinoids used for really targeted effect, and what we’re seeing is that those are two different customers.”
Are chocolate edibles customers and gummy customers two separate consumers as well? “That’s a good question,” she said. “Yes, I think there is a chocolate customer. I love it. If you ask me, chocolate is the most viable way to consume cannabis from an edible perspective. It’s fat-soluble, and a beautiful, lovely, dark chocolate is already a healthy alternative to anything. It’s medicine on its own, and it looks fabulous. But on a good day it will never consume probably more than 20 to 25 percent of the market. The edible market is a gummy market, and to be able to play in a big way, you’ve got to be in there on the gummy side. And there are a lot of crappy gummies on the market; it’s pretty easy to make gummies, it’s actually pretty hard to make a really good one and do it consistently and scale it, but there are a lot of crappy gummies out there.”
Is it harder to make a great gummy or a great chocolate product? “I don’t know if it’s harder to make one or the other,” said Smith. “We dominate chocolate in Oregon. I think we consume probably 60 or 70 percent of the market in Oregon, which is a lot. There used to be competitors and they’ve just fallen off; no one can keep up. So, it’s not much different, but we’ve been doing it for a really long time. With our gummies, we use a Japanese gelatin. We hired a food scientist who was instrumental in helping with development at Haribo, and we’ve really invested in our ingredients, using the right fruit powders and excellent fruit flavors and the encapsulation on the outside of our gummies, which makes them not stick together, so that they’ve got then right chew and the right texture.
“All of those things are important,” she added, “but it takes all the pieces. You can have a really great product and without great distribution, that product will sit there. A lot of great products don’t make it out, so you got to make a great product that tastes good, you got to look good, and you got to get it out there. We’ve really focused on all sorts of things, because you can’t just do one or the other.”
That said, does Grön’s range of formulations and products give it the option to enter any market at this time and be able to maintain control of its destiny? “Yes, but then you’re set with certain things,” said Smith. “For instance, we can’t make our single server products in Nevada. They want a stamp with a 10-milligrams symbol on every 10 piece, so it becomes challenging to bring certain products into that market. But you’re exactly right, every market that we go into is a very calculated launch with the product that we’re starting with, and the timing of the other products that will fall in behind, bringing the entire family of products to that market.
“Not only is that tied into what the consumer-base is going to demand,” she added, “but it’s also important to us and the culture that we’re building within our company so that we’re training our teams and setting them up for success. We’ll bring in our expansion team, we’ll set them up, we’ll train our kitchen team, our kitchen managers, within the state, we’ll get them started on one product category, and then we’ll feed in with the next, and then we end up with Pips coming in last because they’re the most complicated and difficult to learn. I think one of the keys to success for companies like ours that are in the sector is figuring out how to translate and how to grow these across borders. It would be easy if I could make it all from Oregon and just ship it, but we can’t. So, how do you duplicate that? How do you create consistency, and how do you create a company culture when you’re operating in franchises across the country?”
You do it by being hands-on. “We’re out there beating the doors down,” said Smith. “We bring our own sales team into every market. We go in very early on and start talking before we launch into the market. We know exactly which retailers we’re going to launch with and what our projected revenue will be and what we’re going to have in return within 60 to 90 days. And we hit it every time.”
Is that the sort of Oregon-tough upbringing that has made companies like her able to navigate a merciless market? “It’s discipline,” she said. “I mean, we can take a pea, cut it 13 ways, and feed our family for a month if we have to. We run really lean; we always have. We’re scrappy as hell, and we’ve just gotten really good. We’ve got a lot of tools in our toolbox. We’re really sophisticated marketers. We came out of a small market where we were servicing 550 retailers, which is a lot. We’ve got a distribution system that we’ve learned, and we came out of a market where the demand doesn’t meet the number of products, so we go to these other markets where the demand is greater. It’s so rewarding to be able to use the skills that we’ve learned and see such quick success.”
Grön is moving fast entering new markets. I asked Smith if that is an advantage for consumers who I am told are always looking for the newest product. “So, new can mean a lot of different things,” she answered. “New to a market in the Midwest could be as simple as something like our Mega coming in with something at a different price point that’s a value-driven product. Not that we’re undercutting and bringing crappy products to the market, but we’re bringing something new and good at a price point they haven’t seen, single serve and 10-piece. That’s new, right? Bringing that in and being able to bring minor cannabinoids at a price point that isn’t $20 to $30, we’re able to start something, and there are different ways that we’re able to approach that.
“It’s also bringing in Pips, running promotions, and looking at things that are geared differently,” she added. “We also lean in very heavily to support the retailer so that they’re getting the margins they need, and then also supporting the budtenders. I know everyone says that they’re supporting the budtenders and doing education, but they are our brand ambassadors in a way that is going to tell the consumers what they need.
“It’s not so much leaning into the consumer out on the street as it is leaning into the people that are going to be selling our products and getting them on board in a big way,” she continued. “But I’ll tell you right now, there is a huge demand in the market for value products. I hear it all the time from retailers, saying that they are seeing the same number of people come in, but the average ticket price is down $25. People are there, but they’re not spending as much money. They’re looking at ways that they can find value with their purchases. And we’ve seen that as the economy has change, our value product line has grown, and we’re leaning into that in the markets we’re going into. It’s a market disrupter, and we’re going to take it.”
Our time about up, I asked Smith if Gron needs to raise capital to power its expansion. “We’re exploring all sorts of options,” she said. “We’re not interested in being acquired; I can tell you that. We’re staying independent, and we’re looking at a lot of different options as we continue to grow. It’s no secret that money is really expensive right now, and there’s not a lot of it. But we’ve got a lot of options in front of us, and I think one of the things we’ve done to date is stay really disciplined. We’ve been looking at our plan and what we want to bite off next year, and then figuring out how we’re going to make that happen. The options are there, but again, it all comes down to discipline and strategy.”
And is Grön also eying foreign markets beyond Canada? “One of the beautiful things about Canada is it gives us the capacity to be able to leverage into Europe – into Germany and the other EU countries – because Canada is federally legal,” said Smith. “We partnered with Indiva, a very sophisticated edible manufacturer with large capacity, and we have a lot of confidence in their ability to bring the brand. We launched last month and it’s already performing really well. Right now, I think seven SKUs of Pearls that have been approved, which is really impressive, and we’ve got four SKUs of our Pips coming online.”
An architect as well as a chocolatier, a gummalier (made that up), and a chief executive, was Smith interested in opening a Grön-branded retail shop one day? “Heck, no,” she said. “We are laser-focused on what we are doing. We are excellent at it, we’re doing a good job, and this is what we are sticking with. So, while I cannot say that, what I can say is that we are open, and we continue to look at doing new flavors and new product-types or things that are specific to market regions. For example, we introduced the Cherry Limeade Mega flavor, which was intentionally looked at for the Midwest market in a way that was thoughtful for that market. It’s tone deaf to come out with something and say that universally this is what everyone is going to like. So, we’re putting our emphasis on continuing to innovate, see what works, and really lean into that. It’s so much fun.”
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