Rusty Wilenkin on Making New Friends with Old Pal | Cannabis Business Executive – Cannabis and Marijuana industry news

Maybe it’s the name, but it feels as though Old Pal has been around for a long time, much longer than it has existed. Based in Venice, California, the cannabis brand known mostly for its roll-your-own pouch of pre-ground, affordable weed was founded in 2018 by Rusty Wilenkin and Jason Osni. As explained to CBE…
The post Rusty Wilenkin on Making New Friends with Old Pal appeared first on Cannabis Business Executive – Cannabis and Marijuana industry news.

Maybe it’s the name, but it feels as though Old Pal has been around for a long time, much longer than it has existed. Based in Venice, California, the cannabis brand known mostly for its roll-your-own pouch of pre-ground, affordable weed was founded in 2018 by Rusty Wilenkin and Jason Osni. As explained to CBE by Wilenkin, Old Pal was devised to meet what the friends saw was an unmet need in the market, but it also was built to meet that need for years to come. The execution of that original idea has been the driving catalyst for growth ever since as Old Pal has moved from state to state in a bid to become the kind of branded product that people expect to find everywhere, as if it has been around for a long, long time.

Originally from New York, Wilenkin went to school in Boston from 2008 to 2013. “I sold a bunch of weed while I was going to college and moved out to Los Angeles in 2013,” he said of his introduction to the industry. “I worked in finance for a couple months, wasn’t really my thing, and then I got a job at Kiva as one of their first sales reps. This was early 2014. I was at Kiva for a little over a year and then I went to Flow Kana to help them build out their Southern California distribution. I hired a team, helped them start getting products on the shelves, and then towards the end of 2017 I went back to Kiva to help them with the procurement of bulk input materials.”

It wasn’t long before an old pal came knocking. “In February of 2018, my partner Jason called me with the idea for Old Pal. He had recently sold his previous brand, NATIV, and he was really excited about the idea of bringing this brand to market. We started talking and quickly realized that in 2018, everyone wanted to be Canndescent or Dosist, focused on this proverbial cannabis 2.0 consumer, and we wanted to create something for the people the industry was alienating. At the time, anything affordable on the shelf and dispensary looked like trash. Packaging was ugly, the brand wasn’t real, and we really just wanted to provide consumers the price that made sense for them, that was still amazing quality, and was part of a community they wanted to be part of.”

I asked Wilenkin how those realizations influenced their plans. “We knew we wanted a seat at the table,” he said. “We knew we didn’t have the access to licenses. In 2018, a cultivation license was $10 million, and no one was going to lend that to me and Jason. I’d grown weed in two-car garages but never at scale. No one was going to fund us to go build a farm and become this vertically integrated brand. And it wasn’t really what we wanted to focus on doing. What I learned at Kiva and I saw them do really well was to focus on something, get really good at it, and then move on to the next thing, and not to really do too much at once.

“And so, for us, the opportunity to focus on building a beautiful brand working with great partners and making sure there’s a ton of demand for that brand and market, and driving expansion for that brand nationally, was a lot more exciting than becoming expert farmers,” he added. “There are people who have done this for multiple generations that are great at it that we’d rather partner with and continue bringing their product to market, than try to cut them out of the equation.”

A lot of these were established relationships. “Jason and I had been working in legal cannabis since 2013 and 14 and call it a good number of years before that,” said Wilenkin. “When we started Old Pal, the idea that a farmer was going to put their weed into an Old Pal bag and ship it to a distributor, and work with us in doing that, was a little bit foreign to them. Had we not had that preexisting trust, I think we may have ended up with a chicken and egg problem in terms of getting a farmer to believe that there will be demand for his product and proving that there will be demand for this product you don’t have to sell. So, we were really fortunate that we had close relationships with a number of key retailers to launch the brand, and close relationships with a number of farming partners who were willing to make a bet on us and what we wanted to do next.

“We used to work with a large number of farms,” he added. “In 2018, people weren’t at scale yet and we were looking for really specific type of flower. We partnered with a distributor that was sourcing for the brand, and they brought in weed from somewhere between 50 and 100 farms just to keep up with the demand for Old Pal at that time. Over the years, we’ve refined who we are working with and who understands our brand and wants to see that brand survive. We work with three greenhouses in California, and seven partners around the country in order to power the brand nationally.”

Could he estimate how much flower they purchase overall? “To be clear, we don’t purchase any flower,” he corrected me. “We really just partner with the farmers to bring flower to market, and we don’t hold licenses anywhere in the country. That said, in 2018 we didn’t launch the brand until May, and we probably sold somewhere between 6,000 and 10,000 pounds a week under the Old Pal brand.”

The Old Pal model is distinctly different from the Flow Kana model or most others out there, said Wilenkin. “We’re different from a lot of brands and a lot of companies and a lot of people that want to go to a farm, buy bulk flower at a commodity price, put it in their package, and then go sell it to a retailer and pick up the additional margin. We partner with farms, and the partner farm of ours produces our product, they sell it to the distributor, and then we have a relationship with that farm in terms of how we make our money.”

Is it percentage-based? “It varies on the deal,” he said. “We try not to get too specific with what we do, but at the highest level it’s a structure. We’re partnered with the farm, the farm gets to sell a market-ready product, so they get a much higher total credits-per-pound they grow, and then we have margins for them using our brand and marketing and sales.”

So, to clarify, Old Pal provides packaging to the farm, which does the cultivating and the curing obviously but also processing and then packaging, and if it’s an oil, they do it for that as well? “That’s exactly it,” said Wilenkin. “We partner with farms and manufacturers. We provide them SOPs for producing our products, and then the extent to which there’s education needed to help them, we do that too. And then we have a really robust 10-step QC process that we’ve rolled out nationwide to ensure that Old Pal quality standards in California, Ohio, Massachusetts, and Michigan are all the same and that they also comply with the state regulations.”

The Flower

Regarding Wilenkin’s earlier comment that there was specific flower Old Pal was looking for, I wondered if that has remained the same or has it evolved. “It really has,” he said of the latter. “In 2018 in California, you were so limited in terms of the number of places to source flower from that our quality standards weren’t what they are today. I think last month, the average potency of Old Pal flower in California was sitting around 26 percent. It’s all fresh greenhouse flower. There are some strains that are unique to us, and the quality standard that we’ve built out over the past four years has just gotten to a whole new level. Also, the product team we have here has put the pieces in place to make sure we live up to that quality, which is way easier to do when you work with 10 partners nationwide versus 100 in California.”

The region determines the type of grow. “Nationwide, we use different inputs depending on the market,” said Wilenkin. “In California and Nevada, it’s all greenhouse. In a number of the other markets, it’s indoor, because growing sun-grown flower in Michigan is not that easy.”

Do they work with farms of varying sizes as well? “It’s more about the people than anything,” he said. “The way we work with people it truly is a partnership, and at this point there’s so much flower in California that finding 10 farmers that grow a quality of flower that we feel good enough to work with them is probably easier historically than it’s ever been. But the quality of people for us is everything. We’re out there every day packing those bags and one bad partner can ruin it for everyone. So, I wouldn’t say it’s that we love working with people that are one acre, but we love working with people that are hungry, and we like working with good people that do what they say they’re going to do.”

Wilenkin also had said that when they approached farmers in 2018, they hadn’t seen this model. Have other people picking up on it since then? “I’d say a handful of other brands are using a similar model,” he said. “Miss Grass takes a similar approach in terms of their expansion and there are a handful of others. The reality is in 2018, when supply chains were immature, it was difficult to have a model like this where you could trust someone else to produce your products. As the markets matured and more robust quality operators have come to light, it makes it easier to start to think about specializing in what you’re good at, because there’s someone else that specializes in that other piece.”

So, what is Old Pal best at?  “It’s building this brand and community and having a relationship with a retailer or retail consumer,” said Wilenkin. “When you put a product in an Old Pal bag, it sells faster nationwide. There’s a ton of brand awareness around the Old Pal brand in retail, and I’d say most of what we’re doing on the lifestyle side is what differentiates us from everyone else that’s just putting a label on the shelf in the dispensary. Time and again you’re seeing MSOs produce brands for their own shelves, and you see right through them. It’s like walking into Costco and looking at the Costco brands instead of the name-brand stuff. There’s a difference in terms of the support and that feeling you get interacting with that product, and that’s what we bring to the table along with constantly designing products that fit the consumers in the markets where we are.

“In California,” he added, “we just rolled out blunts because we’re seeing consumers pushing towards higher potency. In Ohio, we’re doing Luster pods, and the community there seems to love them. It’s just market to market, and what we do really well is getting ourselves localized with the community, understand what that market wants, and working with our partners to make sure we’re driving velocity in those markets.

I mentioned to Wilenkin that I had very recently moved from Los Angeles to Connecticut and was concerned about the availability of good weed in my new home state and even next door in Massachusetts. Knowing Old Pal is now available in the commonwealth, could he set my mind at ease? “Man, I travel a lot for work in this industry, and I am constantly surprised at the quality you find around the country,” he said. “Pricing nationwide is not very consistent – coming from California, we’re spoiled that you can buy amazing products at amazing prices across the board – but I will say the Old Pal offering in Massachusetts is an incredibly high-quality product at a great price. Our brownies in that market are fantastic. The chef who designed them used to be a pastry chef and they’re just incredible. I actually think the Massachusetts retail landscape is a lot of fun. I think you’ll enjoy it.”

That helped.

Putting the Nightclub into Cannabis

I related to Wilenkin that in a recent interview with CBE, Ryan Jennemann of THC Design had mentioned him by name to make a point about the nature of cannabis branding. Jennemann had said that unlike his own nightclub analogy, he currently preferred Wilenkin’s fashion industry analogy for the cannabis industry.

“I’m not sure I remember where I was going with that,” said Wilenkin, “but I think the point I was making when we were having that conversation and where my head’ has been at is that eventually this industry will mature, and it will look like alcohol in a nightclub, where the top shelf has barely changed in over the past 20 years. But until this industry gets anywhere near maturity, it’s going to be the fashion game every time a consumer walks into a different store and they see different products.

“Today,” he continued, “there is no standard assortment across the board. If you go into 30 dispensaries in LA, how many brands do all 30 have on their shelves? Maybe one, two, or three? And that’s where the consumer is forced to look at new things every single time they go to a new shop. Until we start providing that consistency on the shelf to consumers, the retail experience cannot mature where there’s an expectation of, ‘Hey, the value shelf is these three brands. The premium shelf is these three brands.’ When you go in your liquor store, they have a random new whiskey or two, but they don’t have 30 whiskies you’ve never heard of sitting behind the counter.”

Ironically, the point Jennemann was making was that based on his observation of consumers at dispensaries, most of them by far come in and ask for the “new” product. For him, the fashion play was having to consistently come up with something new for the fickle consumer.

“I think with the more premium price points, if you will, that is incredibly required at this point,” agreed Wilenkin. “Because if you don’t have that level of hype around it, why are you asking a consumer to pay $75 out the door for an eighth? And where we’re a little bit different with Old Pal. We’re more of your everyday cannabis. We’re not ultra-premium nightclub weed, if you will. In doing that, we succeed as a brand by always being available where our consumers are. The analogy I’ve always used is Bud Light. Five minutes before the Superbowl, you can buy it at any 7-11 in the country. The goal for Old Pal is to have that level of distribution one day and for the consumer that loves our product in California and they’re in Massachusetts and they go to a dispensary, that the first thing they ask for and look for is that trusted brand they’re used to buying here.”

Old Pal is currently in California, Nevada. Arizona, Michigan, Massachusetts, Ohio, Pennsylvania, and most recently, Maryland. I assumed that even with its partnership model, it had to employ a whole bunch of people scattered around the country ensuring quality control.

“We’re 25 people sitting here today,” said Wilenkin.

“You guys must be really good,” I said.

“You know, we started the business – my partner, Jason, and myself – and we still work in it all day, every day,” said Wilenkin. “We’ve hired some great folks, and we’ve been really fortunate. We’ve had a really strong team that could take on state expansion, but where we got lucky was because we were never vertical. Here in California, we had to learn to run our business based on partnerships from day one. A lot of people who are vertical look at our business and they think it’s so easy. We do this here, and we just go and tell this group to do the same thing there. But when the partner is four hours away on an airplane, all of a sudden the things you think are so simple just don’t translate the same way. But by virtue, we’ve always had to operate hands-off as a company, so we’ve always had the SOPs and the team in place to pivot to national I’d say quicker than most folks.”

That said, he added, “Our product team and myself are fairly nomadic in terms of making sure we’re at our partners facilities often enough that we can be confident in the product going into Old Pal.”

As he travels around managing existing operations and starting new ones, does he feel a sense of urgency or is Old Pal expansion going according to plan? “We always feel urgency to continue growing our footprint nationwide,” said Wilenkin. “Now, when I feel urgency, that doesn’t necessarily mean that we’re going to jump into a market that doesn’t make sense. We need to have a great partner, there needs to be a retail infrastructure to support what we’re trying to do, and there are a lot of boxes that need to be checked. But I’d say one of my top priorities is doing the biz-dev work to meet new partners around the country, to understand when things are going legal, and to make sure that when those new geographies come online, even if we’re not there the first year, that we’re having conversations to be there year two, three, or four.”

More established out West, Old Pal is on a steady march eastward, knocking down markets that operate a little differently than the older ones. Does the company prefer open states over limited-license states? “We’ve gotten pretty solid at playing and all the different environments,” said Wilenkin. “In Pennsylvania, you’re not allowed to talk about smoking weed. That was new to us. It’s a combustion-free market, so our products are only intended for medical patients to vaporize. It’s been a learning curve to do things right in each individual state we’re in, but whether it’s a medical state or an adult-use state, something in the middle or something with both, we see value in getting our brand in the hands of people consuming cannabis around the country. We provide those people with an amazing experience, we make sure they’re part of a community they enjoy, we activate on the ground, and we support them. And whether a market is early in its iteration or late, we can design products that makes sense for now and products that makes sense for the future.”

Beyond the Pouch

Old Pal’s lineup of products has evolved while staying true to the company’s original identity. “Our original ready-to-roll is our flagship product,” explained Wilenkin. “It’s the thing that we did different than everyone else. If you’ve ever seen an American Spirit or Bugler tobacco roll-your-own cigarette pouch, the Old Pal roll-your-own pouch is very much the same thing. Pre-ground flower, papers, and crutches. In states that don’t allow smoking, there are no papers, and the product is just used to vape. But that’s the product we launched in most markets nationwide, it’s the product we’re most known for, and as somebody that used to smoke spliffs, it’s a product that’s closest to my heart. It was designed for me.

“That’s the flagship,” he added, “but if you ask me what my favorite is today, our two-gram infused blunts are just awesome. They’re the opposite of what we did for a long time. We’ve always been sessionable fun cannabis to share with your friends. The blunts are definitely shareable – if you smoke one yourself, you’ll probably fall asleep in the corner – but they’re just wildly potent, super high-quality flower with a glass tip.”

They retail in the neighborhood of 25 to 30 bucks, he added. I noted that they seem to faithfully follow the model of providing quality at a relatively lower price point. Isn’t that generally how it has worked out for Old Pal over time? “I think we made the right choice from the state of being able to focus on what we do well, but we’ve shifted a little bit,” said Wilenkin of the price points. “In 2018, we were the cheapest thing in the dispensary. Today, we’re not. Prices in the dispensary have compressed to a point where probably 30 percent above the cheapest thing on the shelf, and our brand speaks for itself. That price is still affordable to a consumer, and we’re selling a great quality product at that price point. But the reality of this model, and why we love it, is this is what we’re good at, and to go bet the brand on a farm or if we have a bad crop, we could lose it, that seems crazy to us. We’d rather focus on national expansion. I’ve sold weed since I was 14 years old. I think cannabis is going to be here for a while, and I’m hopeful that we’re going to be here doing it.

“And for us, it’s still the first inning,” he reminded me. “We think there’s a lot of runway and we think that brands are what’s going to matter. Go walk around the grocery store; it’s all brands, and you’re seeing it now even in the produce section. Forever, the MSOs have been saying a dispensary is going to look like a produce section. Well, there’s cotton-candy grapes now, there’s fancy heirloom tomato brands now, and it’s only a matter of time when that sort of differentiation is found in this space. We’re already starting to see retailers get wise to it, and as that evolution continues nationwide, I think being focused on being a national brand is going to be a ton of fun for us. I couldn’t fathom trying to build this brand while managing cultivation facilities in eight different markets and eight production teams that need sales. We think being small and focusing on what we’re good at is the right path for us and where we want to stay.”

Wilenkin could only estimate that Old Pal products are in somewhere between 500 and a thousand dispensaries, but whatever the number, it is a large number that will only get larger. I asked Wilenkin if cannabis consumers are in general brand-loyal.

“Yes, to the extent they’re given the opportunity to be,” he replied. “If Jack goes and buys weed at MedMen every week, and he likes Old Pal, and it’s there every single week, he’ll keep buying it. But if one week Old Pal is not on the shelf, and something else is there at a similar price and quality, is Jack going to turn around and go to a retailer down the street to buy Old Pal? I don’t know that, as an industry, we’ve hit that level of maturity yet. I think we’re getting close, and we do have super-fans that seek out our new products and our new SKUs across the country, but I don’t know that the everyday cannabis consumer is so loyal to a brand that they’re going to turn around and walk out of the dispensary empty-handed.”

An excellent point, and a good reason to want to keep Old Pal in front of as many people as possible. The company is privately held but has investment support. “We don’t talk a ton in terms of revenue and stuff publicly, but our main investor is Turning Point Brands,” said Wilenkin. “They’re a publicly traded company out of New York, they are our the most recent investor, and they wrote the largest check of anyone on our cap table. But we started the brand with $20,000 in credit card debt, for lack of a better way to put it. We had to raise capital – neither of us was in a financial position to quit our job and make this thing happen any other way – but that said, we’ve been very fortunate; our investor base has been very supportive of the business and the brand, and we’ve been able to continue adding new states, aggressively continuing to grow the business.”

Without a lot of capex expenditures, how does Old Pal spend its capital? “Product development, market development, and really building the brand,” said Wilenkin. “We’re not a celebrity cannabis brand. We’re a true lifestyle brand that has done the work to have a community and a following, and that’s what a lot of our time and resources go to, making sure we’re having those brand moments and that we’re speaking to the consumers where they want to be spoken to.”

Before we rang off, I had to ask Wilenkin about a state Old Pal is not yet in – New York. As a native New Yorker, it had to beckon Wilenkin. “I dream about the market,” he admitted. “I also hope the regulators figure it out, but I’m not optimistic for the first year of New York. Ignoring its robust illicit market is laughable. There are delivery services in New York doing volumes that licensed delivery services in California do. So, you have to take a step back and think about how long it is going to take the consumer that already consumes quite a bit of cannabis in New York to transition to the legal market. We’re beyond excited about it, we’re talking to cultivators every day, and we’re trying to figure out the right path in that market, but we’re also cautious in terms of the very limited retail that’s open, and the lack of clarity on a number of key things that have the potential to make or break the market.”

It sounded like a conundrum. “There’s urgency to do it right and there are ways we can come into the market in a limited capacity – there are a lot of different ways to skin that cat – but if you are asking me if on day one of New York retail, will Old Pal have 20 billboards in New York and a street team ready to activate the shit out of the market? No chance. I need to see the market be real. I think we crawl, walk, and run versus a blitz. Now, if tomorrow the perfect partner showed up and they had 25 retail locations ready to carry product, all that would change. But through the lens of a market that hasn’t really become super clear yet, I’m not going to bet the house on it.”

What markets are next on the list for Old Pal? “I can tell you the two I want most,” said Wilenkin. “I’m itching for Illinois and Florida.”

“Really,” I responded, slightly surprised. “How do you get into Florida?”

“The same way we do any other state, except due to the vertical nature of the market we need to partner with groups that we believe could do it all for us,” he said. “We’re having conversations with a few now, and I’m hopeful we’ll be there soon. When you think about places where so many things become relevant, it’s New York, Florida, California, Texas; it’s where you start building that real national following? I think we’ve built the following already, where there’s a desire for the product in that market, and the MSOs that control the market really are looking for differentiation, so I’m hopeful we can find a great partner in that market in the coming months.”

Has there been much interest from MSOs of late in partnering with a brand that could one day be the Bud Light of cannabis? “It really has gone in waves,” said Wilenkin. “In 2018, I don’t think there were many MSOs that saw a lot of value in partnering with brands. Almost every market was under-supplied, and you could sell as much weed as you could grow. Today, that’s changed. Nationwide, people are realizing that if you can’t differentiate your offering, you have trouble and that’s really changed the narrative. We’ve seen a ton of inbound from MSOs over the past year as markets have started to commoditize. Up until six months to a year ago, it didn’t matter what the quality was or what the price was in Florida; the retailers were selling out of everything. That’s quickly changed, and we’re seeing a lot more inbound as MSOs understand that they need to be able to differentiate themselves from their neighbors.”

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