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Welcome to the Free Spirits Podcast with David Gonzalez and Lars Miller, your go-to source for deep dives into the world of beverage business operations. Each episode, we bring you insightful discussions with industry professionals, from founders and brand operators to retail managers and supply chain experts. Whether you’re an entrepreneur interested in the hemp and cannabis space, a functional beverage enthusiast, or a curious consumer wanting to understand the intricate details behind your favorite brands, this podcast is for you. Join us as we uncover the stories behind the founders, explore retail strategies, and navigate the complexities of running successful beverage companies. Tune in and elevate your understanding of the beverage industry’s dynamic landscape.
Lars Miller (00:00.898)
Welcome back to the free spirits podcast where we dive into the functional and THC beverage industries. We will be exploring the brand stories and operations that redefine how we relax, connect, socialize. I'm your host Lars Miller here with my co host David Gonzalez. Before we jump in quick reminder to be sure to check out our YouTube channel, subscribe and follow us on whatever podcast platform you use. You can find us on all of them and your ratings for reviews help us grow. please do that. Joining us today is Brandon Harshberger.
the president of Cheech & Chong's global holding company, the company behind the legendary Cheech, Marne and Tommy Chong. Cheech & Chong sells all types of cannabis products, has their own stores, has an impressive and expansive business operation that spans well beyond drinks. Welcome Brandon, how are you doing today?
Brandon (00:50.56)
Well, thanks for the invite guys. Appreciate it.
Lars Miller (00:54.549)
Absolutely.
David Gonzalez (00:56.341)
So Brandon to start, the first thing I wanted to touch on before we dive into drinks, so just setting the stage for everybody here. So Cheech & Chong's Global Holding Co. Let me just make sure I have all these right. We have Cheech & Chong's Cannabis Company, Cheech & Chong's Bullmates, Cheech & Chong's Hemp Company, Tommy Chong's CBD, Cheech's Stash, Cheech & Chong's Dispensaria, Cheech & Chong's Apothecary, Cheech & Chong's Takeout,
Brandon (01:15.776)
us.
Brandon (01:20.064)
Yes. Yes.
David Gonzalez (01:24.289)
dreams and more. So my first question for you is can you just walk us through like what your day looks like? Like all these pieces under one umbrella. Is it for you now, is it mostly drink focused or are you juggling all these different business units every single day?
Brandon (01:43.144)
Yeah, I mean, it would be nice to be like, these are all business units, but the reality is the core of the business and what Cheech and Tommy have allowed us to do is basically control all of the IP. So all the intellectual property, which really turns into licensing. So all of those names you've kind of described, some of them are internal operations. We're manufacturing, we're setting up sales and marketing. We're building a business. Others have really great operators and there's a licensing.
David Gonzalez (01:47.468)
Sure.
Brandon (02:12.246)
relationship in there, right? So a good example is the apothecary is of the dispensary a model. dispensary is just the dispensary business. Those are, you know, legit dispensaries, traditional regulated market, as you'd understand them. We're opening, you know, probably 25 to 30 of those over the course of the next year with different operators in different markets. Right after Benzinga next week, we fly out to Maine, we're opening three in Maine in the Portland area.
David Gonzalez (02:19.029)
Mm.
David Gonzalez (02:33.702)
wow.
Brandon (02:41.898)
We opened four or five of them in New Mexico six months ago. It is literally the one year anniversary of the location we opened in Northampton, Massachusetts. So there's that. And then there's the drinks, which we're all familiar with where we're obviously the operator behind that business. So we're not manufacturing it, right? We're working with comans, but we're getting those products. We're building out the distribution footprint. We're putting together the sales teams. We're actually behind the wheel of that business.
David Gonzalez (02:52.512)
Congrats.
David Gonzalez (02:56.704)
Hmm?
Brandon (03:11.072)
We do have great strategic partners, but there's, you see a lot of with IP that's, you know, I would call this IP iconic. There are always people knocking on our door that want to do something. Like we got a socks licensee. He makes some awesome socks. I've never seen a die cut. I've got a couple of pairs. I don't even know who the dude is, but a really good operator, you know, like cranks out some sock money. Yeah. Yeah.
David Gonzalez (03:19.904)
Mm-hmm.
David Gonzalez (03:24.544)
Sure.
That's great.
David Gonzalez (03:33.856)
Sure. Good. Comfy, yeah.
Lars Miller (03:40.652)
That's awesome. Let's take a step back here, Brandon. When did you start with Jichang's holding company and how did you get recruited and what was your background before you joined?
Brandon (03:52.436)
Yeah. my background was actually kind of similar to Aaron, online advertising, mostly health and wellness products, but you know, everything from traditional lead gen and the mortgage industry all the way to. enhancement products at one point in time. but I had a chance to meet Tommy's son Paris in 2019. They had a license on just Tommy Chong's CBD line. It was going through diamond CBD, you know, pretty well known operators. Diamond's still out there. They've got a.
pretty solid e-commerce business that they built over the years. And basically it was like, Hey, I, know, they're just a big business. We want somebody a little prioritize me. So I said, you know, I'll take the license. I'll prioritize building your CBD line out. We'll create some really cool new novel products. We'll use our marketing engine, which is, you know, a direct to consumer engine that kind of specializes in more aggressive direct to consumer campaigns. Right. Like
Advertising mail enhancement products. You can imagine those aren't just traditionally easily sold. So you really have to have some marketing techniques that most probably aren't aware of to be able to drive sales like that online. So we were able to take that kind of gray hat online advertising background that I had, apply it to CBD right as the pandemic happened in 2020. So we just happened to be launching two different kind of flagship products. We called them good vibes and nice dreams.
good vibes. can't really trademark cause it's like taco Tuesday. Everybody uses that term, but nice dreams. Tommy actually owns, you know, the rights. Cause he, you know, was the producer and director and creator of the nice dreams movie, a Cheech and Chong movie. So we took two products early on CBD products, got them water soluble and actually produce those in 2019 and 20, just right at the very end of the year and launched them direct to consumer.
David Gonzalez (05:24.172)
Yep, everybody says it.
David Gonzalez (05:34.469)
Hmm.
Brandon (05:47.176)
Right when the whole world was locked in their house with a little bit of extra money, really concerned about their health. And here we are with CBD, a booming industry, tremendous IP, the first water soluble products in the market, some of the first for sure. And we did one more thing. We added a lot of synergistic ingredients. So in good vibes, there's some B vitamins, a little bit of caffeine, some GABA, you know, things like that. In nice dreams, there's melatonin and L-tryptophan.
and a couple other things. So we created blends that were really supportive of the experience you would have. We sold them together as a protocol and we sold them for half of what everybody else was selling CBD for. And it just blew the fuck up.
David Gonzalez (06:31.903)
wow.
Lars Miller (06:34.247)
That's awesome. So as we kind of went through in the first part there, you guys have a lot of different IP under your control. And I imagine hiring the right team to help keep everything running smoothly is pretty crucial to that success. Can you talk to us a little bit about how you guys go and find the right team and continue the grid forward?
Brandon (06:57.546)
Yeah. 2019, basically I just had that Tommy Chong licensed by the end of 2020. There was another group who had started to work with both Cheech and Tommy together to put the co-brand back into the California market in cannabis. And that's Jonathan Black. He's the CEO. So I'm the president. He's the CEO together. He and I basically make all of the senior level decisions for the business. And then we've got an incredible C-suite.
David Gonzalez (07:13.533)
you
Brandon (07:27.184)
And to be honest, a couple of those C-suite members were people that were on my team for years, previous to starting Tommy Chong's CBD license. John's C-suite were people he had worked with for years. And when he came to me and he was like, you've got Tommy's license for CBD and you've got this incredible marketing engine. I've got VIP for the cannabis company in California. What do you think about putting it all under one roof?
So we had this kind of natural advantage of John had stood up the cannabis company operations with really talented people. I was operating on the direct to consumer side with a really talented team. We were able to bring them together. because John's focus was traditional cannabis and retail and as an attorney, he's a practicing attorney barred in the state of California. The guy fucking worked at like he was in Schwarzenegger's office. Yeah. Like he's done a lot of big business before he got there.
David Gonzalez (08:17.906)
Wow.
Brandon (08:20.886)
So we were really fortunate to have two teams that were dynamic, but the crossover, it's not like anybody really was treading on anybody else's territory. And we just fucking dovetailed them together. And that took about a year of, you know, really into 2021 before we kind of had the engine put together, the IP all together, positioned under one entity, Chitin Chong's Global Holdings, which if Prestige Worldwide had not been taken, would have for sure been the name.
David Gonzalez (08:27.272)
Mm-hmm.
David Gonzalez (08:44.746)
Mm-hmm.
Brandon (08:50.493)
And then it was like, all right, well, we've got all this IP. We've got to create at least some siloed environments here so that as different operating partners come in, they're not all just commingled into our global holdings partnership.
David Gonzalez (08:50.921)
sure.
David Gonzalez (09:05.311)
Love that. That's great, yeah, no. Well Brandon, we're actually gonna dive into that a little bit further on about the whole marketing engine, how you guys make all this work, how these different, we won't call them business units, but different IPs kind of interact and all these data streams you guys have. It's gotta be wild behind the scenes and I know you're a performance marketer at trade, if you will. So you kind of mentioned this, you mentioned that CBE was the big impetus, but.
Brandon (09:05.878)
Yeah.
David Gonzalez (09:32.211)
When did you guys decide to officially go in on drinks? Like what did you notice was happening in the market? Where did you see the opportunity? And what was that process like? How'd you guys go from zero to one and actually come up with a drink and launch this thing?
Brandon (09:48.297)
It's crazy, right? were, everyone's always like, who thought of it? I don't really know. It's like everybody in the company started getting some signal that there was some fucking frog drink killing it. And that is obviously cycling frog, right? So somehow, some way in a through a friend of mine, I had actually met David Knight, David Knight, who is now the CEO of Jones Soda. It's been a couple years ago because we launched the drinks more than a year ago, but
David Gonzalez (09:58.186)
Yep.
David Gonzalez (10:03.337)
Yeah, all right, yep.
David Gonzalez (10:09.354)
Hmm?
Brandon (10:17.38)
I had met David, we had this IP, we have this direct to consumer business building, we were licensing and getting really active in the regulated market. I'm like, there's something to this hemp drink thing. Cause once you started looking, you could see it and find it. And we were really hesitant about going into the psychoactive hemp derived space. To be honest, I saw the DEA's rules in 2019 and 20, and I was not touching Delta 8 or Delta 9 or any of those other minor synthetics because I really thought.
David Gonzalez (10:35.485)
yep.
David Gonzalez (10:42.613)
Sir.
Brandon (10:46.03)
Tommy went to jail for a bong. I've seen regulatory environments break down and people thought that they had an opportunity, you know, that they weren't gonna get popped on. And I was just like, there's no fucking way these guys floating Delta-8 all over the internet are not gonna get in trouble. And we're way too visible to be in it. Didn't touch it. And that kind of held us out of that psychoactive space, which was a huge opportunity and opportunity costs of probably $50 million for us. Knowing what our revenues have been, if I had added those products in,
David Gonzalez (10:48.522)
Right?
David Gonzalez (11:00.881)
Right. Right.
David Gonzalez (11:12.55)
wow.
Brandon (11:15.257)
There was a significant amount of revenue that we didn't touch on. So I somehow get introduced to David Knight. It's pre-Jones Soda. David Knight's the guy who actually we brought on with Pepsi co-experience to launch our drinks. He immediately flies to Minnesota. He goes and meets John Dugas at Superior, starts feeling his way around the industry. He's got a great network, picks the phone up. Before you know, we're talking to the Anheuser-Busch guys. The market's already starting to mature.
David Gonzalez (11:15.531)
Yeah.
Mm-hmm.
David Gonzalez (11:24.043)
Mm-hmm.
David Gonzalez (11:28.513)
Yep. shit. Yep.
Yup.
David Gonzalez (11:42.872)
Great.
Brandon (11:44.887)
And he has got seltzers coming down the line in like six fucking weeks. Like it was just so fast how rapidly he got in there and deployed a product. And you look back on it you're like, those things just could have never happened. And we would have faltered, failed to launch or, you know, launch the wrong way with the wrong partners. That success led to David getting picked off by Joan Soda. And I was like, man.
David Gonzalez (11:55.245)
Holy shit.
David Gonzalez (12:01.323)
Yeah.
Brandon (12:13.796)
You know, hate to see you go, but like, I'm not going to tell you not to take this deal. You should go run Jones soda. And you know, the rest is kind of history. We got lucky and we were able to kind of continue to maneuver in the space once we got those first products into the market and we've done. Okay.
David Gonzalez (12:15.905)
Thank you, yeah. Sure.
David Gonzalez (12:30.176)
Yeah, it's an incredible story to have. It's very serendipitous to hear David being the CEO at John Soda Now, to hear him come out, fly out to Minnesota, see this burgeoning market that's just kind of unfolding randomly in this weird Midwestern state, in Duluth of all places.
Brandon (12:44.837)
Yep. In Duluth. You know, he was like up in Duluth, so like bent paddle. And I was like, I think my mom was born in Duluth.
David Gonzalez (12:53.243)
Exactly. it's always crazy for me to hear these origin stories. And we were talking to Jason Dayton the other week as well. He one of the first seltzers launched in Minnesota. And we go, how did you pull this off? He was like, we went from idea to launch and like, was it 13 days? Like something insane like that.
Lars Miller (13:09.137)
was 19, but yeah. Yeah.
Brandon (13:12.749)
Yeah, because let's be real. It's not as though people weren't cranking out hemp-derived cannabinoid products. And there was some water soluble stuff out there. There were tinctures. We had been doing since 2019. to throw it into a canned drink in a brewery setting is just such a natural fit. Why not?
David Gonzalez (13:32.527)
yeah, absolutely. Yeah.
Lars Miller (13:33.253)
Yeah. So you mentioned you guys had another or a rapid launch there. So when you launched beverages, what mistakes did you make that other brands could potentially learn from and what's some things that you didn't anticipate from launching?
Brandon (13:52.924)
I mean, we've made the mistakes we've made have even still been recent, right? Like you really can deploy something pretty quickly and sometimes it works. Other times you can really mess something up. We were great when we launched the seltzers. What we probably poorly timed was just the reality of specific in Minnesota. We took our eye off of Minnesota when we went out to open other markets and we actually just thought Minnesota will take care of itself. We're Cheech and Chong.
What we didn't pay attention to was the price compression that occurred there almost immediately. And we were still in our, what we called our Gen 1 Thor Pack, which was a press on label in a pack tech, price too high. And my lack of experience in the beverage category, I really didn't know how hard you need to go in and work a market. And then how much you really need to pay attention to if you're not pulling through or selling through, you better have a plan.
David Gonzalez (14:34.906)
Thank you.
David Gonzalez (14:51.246)
Yeah.
Brandon (14:51.333)
What we did right was we did focus on a generation two product. We got to printed cans. We got to a six pack chip board. We got scale and production. We're fortunate in that regard that we've got the money to do things like that. Probably a little ahead of the curve. We brought the price down on that six pack format, went into Massachusetts, activated really, really well and showed that we had a good business model and we had a good plan and we had a good product. But we kind of let, unfortunately, Minnesota languish.
By letting it languish the, you know, whatever you want to call kind of the core of this market in a lot of ways, the heartbeat has been Minnesota because it's been ground zero for the proactive consent. The brewer's really getting engaged in policy that just looks smart between the hemp derived side and the regulated side. So the mistake we made was just being probably too aggressive on new markets and not realizing the work and the effort and the time.
David Gonzalez (15:35.173)
Mm-hmm.
Brandon (15:48.347)
that it would take to continue to sustain ourselves in a competitive market like Minnesota. And by the time we circled back, we were getting our asses kicked.
David Gonzalez (15:57.811)
Well, it's kind of one of the tricky parts about beverages too, and maybe this is true in cannabis as well. There is such a local affinity that you really have to have your pulse on. And so one of the behaviors that I picked up on early was people were buying
Brandon (16:06.951)
Absolutely.
David Gonzalez (16:14.855)
Like there were these massive national brands, your cans of the world, the cheeches, like all these national well-known ones that have advertising engines. But then these breweries were just blowing people out of the water. And it was like, well, people have this kind of local affinity. They know that brand already. And so for you as an advertiser, as an operator, you have to then go compete against those people and still find a way to produce a trusted brand in this brand new market.
and Minnesota and Duluth of all places, it's gotta be the strange dichotomy trying to compete against that local familiarity. on top of that piece, yeah.
Brandon (16:54.181)
way more granular, right? It's very granular when you get into like local markets, especially in Minnesota is driven by craft beer. So those loyalties to the brew pubs, you know, they've always existed. They're not going to go away. So the products they produce, they're always going to have that, that advantage, right? In a local marketplace, it just becomes as the category really matures, what are we going to start to see take shape, you know, around the hemp derived brands.
David Gonzalez (17:02.355)
Mm-hmm.
yeah.
David Gonzalez (17:13.016)
yeah.
David Gonzalez (17:20.053)
Of of course. Absolutely. And then one of questions I have for you is as you guys are making this shift internally, you're predominantly in gummies, pre-rolls, carts, other types of products that are specifically not beverages. So once you made that change to go into beverages, how did your resource allocation...
change? How did you distribute resources differently to different business units? And logistically, you mentioned you have this ecom engine. So one of the biggest things I ask all the time is, how did that logistics supply chain fulfillment? How did all of that change for you once you got into beverages?
Brandon (18:03.985)
I don't think anyone realizes just how cumbersome freight and storage is with beverages, right? So we have the fortune, we invested into a 3PL a couple of years ago that's done fairly well. It's got a location in Florida and a location in Utah that gives us two zone shipping for the direct to consumer side. And it also gives us some additional space that's flexible space where we don't quite have some of the...
David Gonzalez (18:08.434)
my god, yeah.
Brandon (18:31.141)
disadvantages of a traditional storage partner. So that gave us one lever to pull in terms of how beverages would suddenly run into like, shit, the storage cost per pallet becomes a very real additional line item. When you start looking at four different skews and 40 pallets of each skew, right? You're suddenly like, that's not nothing. And it's also just the work and the energy to move those around and get them stored and make sure they're stored properly. So that's the part that it just took a lot of work.
David Gonzalez (18:44.841)
yeah.
David Gonzalez (18:50.674)
Yep.
David Gonzalez (18:57.397)
Hmm.
Brandon (19:00.315)
Like I said, we're lucky in the fact that we have this business that is a combination of the cannabis company early on and our company early on. And thankfully there's a lot of smart players involved from like a CTO and a COO and then the logistics team that was able to learn really pretty rapidly when mistakes were made. And the reality of technology is always, there's always a solution with enough technology, it seems like.
David Gonzalez (19:08.246)
Mm-hmm.
Brandon (19:29.199)
And because we're pretty technically advanced, we're able to probably do things that I think, you know, the brewery has the advantage of being the manufacturer of record at the end of the day, and they can flip a switch and they can run and they can turn lines over and they can support their business pretty rapidly there. But to that point, what they don't have necessarily a lot of times is some of those technical skills that we've developed over years of running a big direct to consumer engine and having to manage 40 other SKUs at any given time.
David Gonzalez (19:53.056)
Mm-hmm.
Yeah.
Brandon (19:57.199)
So it was just another handful of SKUs to add, but they had their own area of concern for sure. And it was storage and freight. You start realizing that you're like, you've got to find comands in other markets because it's just, you know, the cost per case, if you're moving in what's, know, LTL type of shipping, right? Not full truck. It becomes very expensive per pallet to move. And, know, you got wholesalers that are like, I'll take two pallets. And you're like, you have four SKUs. they're like,
David Gonzalez (20:06.009)
yeah.
David Gonzalez (20:10.613)
Mm-hmm.
David Gonzalez (20:17.088)
Thousands. Yeah
Brandon (20:26.363)
Let's mix them up. You're like, well, that's not gonna do much. You know, by the time we repack this and ship it to you, we will have made no money. But you do it to just keep getting, you know, traction in markets.
David Gonzalez (20:32.624)
Yeah. Market share. Yeah. Absolutely.
Lars Miller (20:38.179)
Yeah. So David mentioned it as you did as well, Brandon, that you guys have quite the econ engine and also the media engine as well. So with names like teaching, Sean backing the brand, you know, how big of an advantage is that for you guys? I'm pretty sure haven't checked this recently, but across, you know, Instagram x, tik tok, and social media has have around 14 million followers or so been featured in Bloomberg, Rolling Stone, Wall Street Journal, the list goes on.
So with all the followers, billions of impressions, how do you guys turn those eyeballs into dollars?
Brandon (21:15.399)
So we run a pretty sophisticated performance advertising engine. And so the followers are helpful, but like as Drake would say, bring me your dollars and not your followers. I think followers add a lot of credibility. Cheech and Tommy add a lot of credibility and there's a lot of impressions there and there's a lot of brand awareness and it's authentic, right? Cheech and Tommy are authentic. But to support that, we have a studio in LA. It's a half hour from where Cheech and Tommy both live.
Lars Miller (21:26.554)
Ha
Brandon (21:45.445)
their families involved in the business. They're in that studio once every week, once every couple of weeks, every quarter they're in for a full week. The Creative UC is being planned months in advance and staged months in advance. We were shooting in Venice Beach, all of our holiday spots, probably three weeks ago. And then you're slicing and dicing and putting that all out into the social media ecosystem, platform dependent. And that's great.
But the real power in the business also comes down to the performance advertising engine. We spend about a million dollars a month across all platforms. And that's why you see like all of a sudden people are like, how the fuck are their Cheech and Chong gummies all over Twitter, right? And we're not just doing brand awareness. We're definitely, you know, dollar in, dollar out driven. We've got, you know, KPIs and metrics that we're, you know, looking at every single day. We're looking at lifetime customer values and how those change as product mix changes. We write.
David Gonzalez (22:19.147)
Yep.
Brandon (22:43.855)
long form sales letters for native and we write very short form entertainment, entertaining, you know, pages for other platforms. There's different compliance across the board, like all the same stuff that, you know, Aaron talks about where, you know, having to be, you know, mindful of. So when you take that million dollars, which is another couple billion impressions a month.
David Gonzalez (22:56.618)
Mm-hmm.
David Gonzalez (23:07.222)
Mm-hmm.
Brandon (23:07.641)
and a couple million clicks to a handful of different websites that are always being run for sure. then hundreds of, you know, sub variants beneath them. We generate a lot of firepower online. So, you know, there's half a million Cheech and Chong searches every month. Most of those people are looking for, you know, a product of some kind. becomes.
Lars Miller (23:29.602)
Mm-hmm.
Brandon (23:30.959)
Making sure that the audience graphs and everything necessary on those websites to capture that data with the highest ratio of success possible, converting the buyers into immediate sales, grabbing as many emails and as much customer data as possible and making sure that your follow-up sequences are dialed in. And then making sure that the messaging everywhere else supports that performance driven engine. Right. And at the end of the day, that's what we think we've built. Right. Like.
David Gonzalez (23:56.438)
Mm-hmm.
Brandon (23:59.836)
The earned media is always cool. The social media is relevant and adds the value of being like, this is a real brand with the celebrities really involved behind the wheel day to day. And then the performance engine is just max volume conversion dependent. And that's just being tested across the board every single day. Right? Like there's, there's a dozen media buyers behind the wheel of, you know, a different ad platform every day.
David Gonzalez (24:18.422)
Hmm.
David Gonzalez (24:26.323)
wow.
I love that. So Brandon, we actually have a few questions to follow up on the data side, specifically though, to start with. I love what you're saying about this whole.
performance marketing approach and how that really is almost like another IP that you guys have in your portfolio. It really wouldn't matter what the product is. You have an engine that you've built and all you're doing is turning dials and figuring out what's actually printing dollars for you guys. So are you at liberty to talk through what that architecture kind of looks like? You probably have a tech stack that's for hemp that are certain advertising channels. You have recreational, which might be different.
How do you set up that plumbing to have that first party data so you know what's working and what's not, or maybe where to double down?
Brandon (25:10.568)
I mean, we so, yeah, we don't run on Shopify, right? We run what's called like a headless e-commerce engine. So we've got our own center API driven models built that are connecting to all of the different ad platforms that are connected to a CRM that's really well known in the performance marketing industry. But it's, you know, its roots go back more than a dozen years when we were running.
David Gonzalez (25:17.903)
nice, okay, sure.
Brandon (25:38.017)
high, high, high volume health and wellness offers online. So, you know, there were days where in the past we could convert five to 10,000 weight loss sales a day into like traditional weight loss sequences. So that CRM and all of that infrastructure that worked there that has literally been tried, true and tested and modified and improved over the past 10 years, that's what we sit on. And
David Gonzalez (25:41.504)
Sure.
David Gonzalez (25:49.792)
Sure.
David Gonzalez (26:01.396)
Mm-hmm. Yeah.
Brandon (26:04.426)
You know, the APIs and the attribution and the ability to like make sure that all of those integrations and all those different ad platforms are feeding an abundance of signal from ad to cart, cart abandonment, checkout, upsells, everything. It's every data point is there. And then we've got the team that can go in and look at that nest of data. And they're so in tune with what's going on that we can basically pull any
David Gonzalez (26:15.06)
Mm-hmm.
Yep.
David Gonzalez (26:22.89)
Yeah.
David Gonzalez (26:28.725)
Got it.
Brandon (26:34.068)
anything out of it, we need to pull out of it. And it's all first party because it's all landing on our website, right? It's all ours. And if you just get on one of our websites, 60 to 70 % of the time, I've got enough data to know who you are. And if I want to send you a fucking postcard, can, right? Like it's there. It just becomes what's the cost benefit analysis of doing all of that work and finding out if that last form of messaging creates a conversion that's meaningful in terms of getting people.
David Gonzalez (26:37.726)
Yep. yeah.
David Gonzalez (26:46.645)
Mm-hmm.
Sure. Yeah.
David Gonzalez (26:53.91)
Of
Brandon (27:03.435)
positioned where they're in a place to hopefully buy from us, not necessarily in that direct hemp performance sequence. Once you're ours, you're ours. And we're using every other messaging, you know, thing you can think of other than fucking smoke signals and carrier pigeons to drive you at some form of value in the company. And a lot of that ends up being the better our retail distribution footprint is, the more apothecary is.
David Gonzalez (27:13.014)
Sir.
David Gonzalez (27:20.31)
Sure.
Brandon (27:29.589)
the more dispensaries, the more regulated product and regulated channels, we just become ubiquitous. And once you're ubiquitous, you start to get that flywheel turning and the flywheel starts to turn itself. And that's the magic of marketing that people are always, you know, hoping occurs. It's just really.
David Gonzalez (27:29.963)
Mm-hmm.
David Gonzalez (27:37.28)
Yep.
David Gonzalez (27:43.222)
yeah. Yeah. Yeah, I actually have, so I have two follow-ups for that. So the first one is if you are sitting on...
all these different data streams coming in, you have that first party data, CRM, customer data platform, whatever you wanna call it. Do you guys have a team behind the scenes that's just parsing through this data warehouse and figuring out like, hey, here's this signal, here's how we segment these shoppers. There's a lot of this automated at this point. you like, how does this magic happen behind the scenes?
Brandon (28:12.792)
There's that's a thing, right? Like we're using every AI toolkit you can think of to try to like get as much as many indicators as possible. But it really comes down to like our CTO, the guy behind the wheel. He and I have worked together for 15 years. He, he is just a fucking savant and there is nothing happening in this company, technically speaking.
David Gonzalez (28:19.434)
Got it. Sure.
David Gonzalez (28:25.088)
Yep.
Yep.
David Gonzalez (28:32.446)
shit.
Brandon (28:42.04)
that he is not aware enough of that we're always asking those questions. And it really is just like, these are fundamentals to us. So we're in a position where there's not a campaign that's getting launched that doesn't have SOPs built around it that are going to quickly define whether or not it's successful. And if it is successful, where we can start to hopefully improve performance and even doing all of that, it still continues to be a more difficult market tomorrow than it was yesterday.
David Gonzalez (29:09.622)
Mm-hmm. Mm-hmm.
Brandon (29:11.487)
It just gets harder every single day because e-commerce continues to grow. But as e-commerce grows, whether it's performance or traditional e-comm, more people come in more me too, products, more advertisers. Right now the battle is fucking political spending, right? Like right now the algorithms are all tuned on the ad, approval side to be very, very, very sensitive to anything and everything.
David Gonzalez (29:23.191)
Yep.
David Gonzalez (29:28.448)
Yeah
David Gonzalez (29:35.734)
Mm-hmm.
Brandon (29:39.684)
So like ad disapproval rates right now are higher than they would normally be. That's just a reality. So we're looking at, all right, well, going into this election, we're gonna continue to just probably dial back media spend and get more efficient. And then you know you're gonna hit that traditional fourth quarter time where like you're advertising, you're advertising around the holiday, but what you're really doing is you're staging your business to capture that last year's worth of acquisitions and all of your customers.
David Gonzalez (29:39.776)
Yeah.
David Gonzalez (29:44.468)
Mm-hmm. Mm-hmm.
David Gonzalez (29:52.119)
Yep.
Brandon (30:06.639)
to get them to convert across Black Friday, Cyber Monday, and the rest of the holiday period. Knowing that on January 1, CPMs will come way down. Those holiday ad budgets have been exploited by brand companies. And in January, they're just not out there spending. And that is when we just go to work. We are staging everything to try to create as much liquidity as we can from a year's worth of acquisitions to just go.
David Gonzalez (30:07.009)
Mm-hmm.
David Gonzalez (30:10.818)
Yeah.
David Gonzalez (30:16.749)
Yep.
David Gonzalez (30:23.033)
Mm-hmm.
David Gonzalez (30:28.568)
I love it.
David Gonzalez (30:34.754)
Yep.
Brandon (30:35.736)
out as hard as we can in January.
David Gonzalez (30:38.308)
I love it. All right, my last data question and I'll shut up about this. So on top of the e-comm engine, with Beverages specifically, you mentioned this, if you're ubiquitous, that helps distributors, that helps sell through at points of distribution, obviously. So how do you guys then ingest data that's actually happening out in the real world beyond just your website? And do you use that engine to actually drive people into stores to help those distributors sell through as well?
Brandon (31:07.486)
So, you know, we're working on Dutchy integrations all the time, you know, for the store sales and the dispensary side. With Ted now involved, our chief beverage officer, which is a nice little capture recently, Ted has a awareness of the VIP system, which is kind of like the engine of like reporting across the board for beverage sales in this traditional wholesale market, right? And having Ted
David Gonzalez (31:10.936)
Nice.
David Gonzalez (31:18.958)
Yeah.
Brandon (31:36.623)
in the VIP data, starting to pull together some of the Nielsen data that's relevant. That has been really, really helpful because up until that point, we were just relying on our wholesalers to basically like kind of talk about depletions and maybe get some signal from a retailer. But you you can be on a meeting with Total Wine and they'll be like, yeah, your numbers looked pretty good last week. And you're like, what does that mean?
David Gonzalez (31:46.938)
Yeah.
David Gonzalez (31:51.759)
Mm-hmm.
David Gonzalez (31:58.658)
Sure. Alright.
Brandon (32:00.423)
Like, can I just get some sense of where the fuck I'm at here? You know, but they don't really want to share that data necessarily. So you've got to kind of back into it in ways. And then for us, we're, you know, we're utilizing all of these different messaging tactics, right? Like we've got a few hundred thousand customers in this business. So when we launch a product, like right now, the T's are going into ABC in Florida, 130 stores. We've got a specific Miami launch sequence that'll go out on social.
David Gonzalez (32:04.472)
Right.
David Gonzalez (32:08.716)
Sure.
David Gonzalez (32:24.558)
Nice.
Brandon (32:30.131)
That'll be cut up and edited into Facebook ads that are localized and targeted to what we believe will be ABC shoppers. We will obviously be messaging our own customers and anybody who's even a prospect within that geo. And we're going to just carpet bomb Florida around that launch these products. The teas are a new format. You know, I can tell you more about the teas when there's a question around them because that, you know, it was a sad story to begin with and that's why they're launching so late.
David Gonzalez (32:47.26)
Yeah.
Yep.
David Gonzalez (32:56.161)
Sure.
Lars Miller (33:01.809)
Well, I can't wait to be carbon bombed with all those ads in my social media. Yeah, I'm in Florida, I'll have to go to ABC. So on top of all the data, we've mentioned some of this as well, but you have a fantastic network. So you did an episode on taste radio with David Knight from Mary Jones, like you said. You've been on panels with Aaron from Breeze, Louis from Flyers.
Brandon (33:06.204)
Is that where you live? Are you in Florida? Nice. Okay. You're my guy, Lars. Yeah.
David Gonzalez (33:07.655)
you
Lars Miller (33:28.372)
I do lobbying work with people like Art from Cycling Frog. So how has this network of operators helped you speed up that learning curve in this beverage category? And how important is that cooperation over competition for a new category?
Brandon (33:45.033)
I think everybody who's involved and even people that looking from the outside in are really impressed by how the category has galvanized together and tried to be as supportive as you can be and still be, you know, obviously focused on your own business. And I, to be real, I feel like lately I probably haven't engaged as much as I have directly into like the HBA, but that's because we have been like fucking filed, you know, like
Lars Miller (34:10.587)
Mm-hmm.
Brandon (34:13.959)
We went and got the lobbyists like it's Jonathan Black that's in Sacramento. Like we're fucking suing the state and we're joining HBA and we're joining USM Brown table. And it's like, I feel like we're doing enough. Like we're really trying here, but there is something so cool that you can go to any one of these events and we're all good friends. And that's cause right now we are insignificant in the world of beverage. And it will be such a long time before anybody ever has to take the fucking Pepsi challenge that if we can just
David Gonzalez (34:15.72)
Mm-hmm.
Lars Miller (34:25.628)
you
Brandon (34:43.18)
take care of each other and look after the category, which I think the best of the best have done. And there's only a brand or two out there that I would say I was like, let's fucked up. And I never even said anything to them, but you're like, definitely, you know, they're not friends, so to speak. But other than that, the behavior, I think as a community has been really, like it's, I don't think it's been done.
I really don't know that anything like this has necessarily ever happened. And I think that right there speaks to the magic of cannabis and what the plant does for people. No one's out there in a way where they're trying to be a hero and in a way turn themselves into a villain. It really feels like no matter where you turn, you get support.
David Gonzalez (35:31.636)
Love that. So I'm gonna do my best to tie in the T question from earlier so you get a chance to talk about it. So my actual question for you was, as somebody who is, and I know you have a team, you guys mentioned it's like almost two separate C-suites that have meshed together here, but for an operator like you, when you're looking at this marketplace, how are you weighing risk reward?
So I guess how this ties in with tea, right? Launching a new product always has some inherent risk. So how do you reconcile that risk reward? And then specifically, we also just mentioned, you you're doing lobbying efforts, suing the state of California. What are those short term and long term challenges that you see for this category as well?
Brandon (36:18.86)
You know, we're probably too risk tolerant at the end of the day. If you're in this industry, you're, you're not risk averse at all. And we have the luck of having that advantage of really incredible IP. And it's not like we just have Cheech and Tommy. mean, literally like, you know, on Saturday, our whole team is going to get on planes from different parts of the world. And we're all going to let go to Portland, Maine, which there's no direct to Portland, Maine.
David Gonzalez (36:22.354)
Okay.
David Gonzalez (36:27.668)
sure.
Brandon (36:47.074)
So it's gonna be an eight hour travel day to land Cheech and Tommy and their kids and myself and our CMO and everybody's gonna converge at 11 o'clock at night on Saturday night at a hotel in Portland, Maine. And on Sunday, we're gonna go out and we're gonna get lobster rolls. And by two in the afternoon, we're gonna be at a dispensary opening. We're gonna see a thousand or 2000 people.
have a chance to come through that disciplinary and meet Cheech and Tommy firsthand in a place that Cheech and Tommy would have normally never gone before for the purpose of obviously opening a store in their name, which for them, like, let's be real, like, only have they been around for 50 years, but like Tommy went to jail for selling a fucking bomb 20 years ago. Now we're opening retail stores with his name on them and the cops are there to protect him.
David Gonzalez (37:25.452)
Mm-hmm.
David Gonzalez (37:30.433)
Mm-hmm.
Brandon (37:42.73)
Right? So like, that's the type of like, where we are transcending something that has just never been done before. So those are powerful tools that actually exist in this business. And because of that, I think we are unusually risk tolerant. So that allows us to go after all of these new markets, as long as we don't feel like they create actual liability, like criminal liability, right? Like I'm not going to go out into markets and drop fucking thousand milligram Delta eight.
David Gonzalez (37:42.987)
crazy.
David Gonzalez (37:49.772)
Mm-hmm.
David Gonzalez (37:57.505)
So that's...
David Gonzalez (38:05.268)
Right, of course.
Brandon (38:11.094)
gummy bears, right? That's just not gonna happen. But we are going to be as aggressive as we can be in every single market with products that we feel comfortable with, that we know people want, that we do not think are harmful at all. And that is part of our ethos. That's part of our brand. Like Cheech and Tommy were breaking down fucking barriers 60 years ago. Nothing since then has changed. We're just maybe a little more organized while we do it.
David Gonzalez (38:11.572)
Mm-hmm. Right.
Brandon (38:38.666)
And then that risk tolerance, of course, leads to stuff like we wanted to get those teas out there because guess what really matters in Minnesota, man? You don't have a 10 milligram. It's only a five. Guess what? If you go get into the data, the 10 millis are selling at six times the rate of the fives. And it doesn't matter how cheap you make those fives. So it was the HBA festival in Minnesota. We were pressing. wanted so bad to have those teas, at least in my hands.
David Gonzalez (38:47.224)
Summertime.
David Gonzalez (38:50.946)
Yep.
David Gonzalez (38:57.302)
Believe it.
David Gonzalez (39:04.235)
yep right
Brandon (39:08.104)
In Minnesota that week, and by the time we use Surly in Minnesota, Omar came to the event and was like, your teeth suck, man. And like, they didn't make a mistake, but somewhere along the way, this formula failed to perform at scale. And we flushed easily $20,000 in liquid down the drain and more than cans got fucking crushed.
David Gonzalez (39:20.928)
Really?
David Gonzalez (39:26.375)
Okay.
Brandon (39:37.204)
And chipboard got thrown out the window and we started fucking formulating new teas. And the thing it was when we ran the first batch, we ran them with fucking a bent paddle and they were carbonated. And you have no idea how much change occurs in a beverage when you remove carbonation. So the formula on carbonated was so bad. It was just terrible. And it was.
David Gonzalez (40:00.504)
Yeah. It's mud water. Yep.
Brandon (40:04.692)
I've never been so pissed and I had to call John and be like, yeah, we're not going to launch those T's yet and we just took a $50,000 loss on them. And we're now fucking four months from deploying them into the market. Because I don't know when that festival was, Dave, but it's been a while.
David Gonzalez (40:12.838)
Yeah.
David Gonzalez (40:17.206)
I think it was June or July.
Lars Miller (40:19.225)
June 7th be exact.
Brandon (40:20.834)
Yeah. And yeah, right. So, and dude, you know, like I think I love our seltzers at the end of the day. Like I believe that we're a brand that can be a 30 or 40 share in the THC seltzer market. And I think the THC seltzer market is still, when you look at it in its entirety, it's going to be a huge opportunity, but we really did focus on zero calories, zero sugar, no artificial preservatives.
David Gonzalez (40:22.977)
Yep.
David Gonzalez (40:26.35)
Mm-hmm.
Brandon (40:50.344)
No, nothing. This is the cleanest thing you can drink. Even the flavoring, it's just natural extracts. So that product I believe in, I love it, I drink it. It's a great base for mocktails. I believe in the seltzer category, but I really wanted a more full flavored product in the market because we saw that there needed to be an answer there and we saw that we needed a 10 milligram. So bro, we flew through the process and we're just like, fucking any stop sign we saw.
David Gonzalez (41:09.592)
Sure.
David Gonzalez (41:17.154)
Sure.
Brandon (41:19.786)
just we didn't yield to and we developed a really shitty product and literally took it all the way to a very large batch size before we realized it.
David Gonzalez (41:29.826)
Funny you mentioned that. I've had a handful of horror stories with people who have done similar challenges or like for instance, they're like, I didn't use a pasteurizer this time around. I don't think people realize like the chain reaction that that happens. So as an example, if you're a retailer and you get some bad product and stuff, this spoil, their pasteurized, the gas has changed, shit starts exploding, then your whole cooler is exploding, you're pissed.
Brandon (41:40.747)
I would change it.
David Gonzalez (41:59.261)
You go to your distributor, distributors being like, shit, sorry, they're pissed. You as the brand, you have to go then order more cans. That's taking you weeks to order more supplies. You have to get back on the co-packer schedule. And then you're paying for all that to get product back and market over just a tiny step like that. And it's like, that pisses off everybody in the entire supply chain over the smallest things.
Brandon (42:25.502)
it makes us look like freshmen, right? You're just like, you know, like, okay, well, it's obvious you have no idea what you're doing type of thing. you know, like good thing I got on a podcast and told everybody, but I really do like, we're, you know, we're one those brands where I know one's trying to pretend that we've got it all figured out. Like we definitely have some, some skill and some core competencies, but you know, we've been able to obfuscate it with just like great teamwork.
David Gonzalez (42:28.379)
Sure.
David Gonzalez (42:32.274)
That's true, sure.
Brandon (42:54.203)
and a willingness to just kind of, you know, I think overcome the challenge by virtue of just being willing to ignore it and just keep going.
David Gonzalez (43:03.058)
Of course, I like it.
Lars Miller (43:06.794)
That's great. Thank you for sharing that story. And I actually only know the day of the HBA Festival because that was my wedding reception. that's the... I don't have like... I don't have perfect recall on dates or anything like that.
Brandon (43:14.795)
I was going to say, I was impressed. was like, man, you got a little AI fucking assistant just fucking typing notes back to you right now.
David Gonzalez (43:22.277)
Sure.
Lars Miller (43:22.827)
Yes, the apple intelligence that hasn't dropped yet. So the last question here. Exactly. Last question here. So you got a lot of moving pieces there. What does the dream outcome look like for Cheech & Chong's global holding company? Obviously you can technically IPO as a hemp company, but with you guys also having the recreational cannabis, add some wrinkles in there.
Brandon (43:29.43)
Tell me when to upgrade.
Lars Miller (43:51.915)
So five years from now, what's a successful outcome look like for you guys?
Brandon (43:57.836)
keep it in the family, you know, to be honest, I think that as a brand, it's always cool to think you might find a great strategic partner along the way, right? They'd want to make a minority investment that would give you the chance to really hit that scale. But the truth is like Cheech's daughter, Jasmine, Cheech's son, Joey, Tommy's son, Paris, they are their leaders in the company. All the design work.
David Gonzalez (44:01.042)
thing.
Lars Miller (44:07.225)
Mm-hmm.
Brandon (44:25.16)
in the dispensary is and in the apothecary is done by teachers daughter Jasmine. Like she worked at McCann. She has a degree in architectural lighting. Like she is profoundly talented. Joey is essentially our chief product officer. He's a Marin. That guy knows more about the plant and cultivation than anybody else I've ever met and has the respect of the name. But his entertainment is going to Oklahoma building a greenhouse like
David Gonzalez (44:30.108)
Wow.
David Gonzalez (44:51.356)
Sure.
Brandon (44:51.636)
That's what he wants to do. And so he's living that, right? He's in it. And then Paris was Tommy and Cheech's manager in their tour as far back as the eighties. And Paris is, you I would just say at the end of the day, like in the, political machine of, of Cheech and Chong as a whole, Paris is always there no matter what, as a, as a figure who just knows what we can and what we can't do and what we should do to live up to the expectation, expectations of Cheech and Tommy.
David Gonzalez (45:01.746)
Brandon (45:20.994)
because it's not easy to go to those guys necessarily and say like, Hey, you want to fly to Portland, Maine for 48 hours? You know, you're famous and rich and you could just be in Malibu, but we could go to Portland for three days. But in that you find out they actually want to do it. Right. And they do love it, but we really work through that. And the kids are so intimately involved that they want to, we want to, we want this brand to be.
around forever and we want the people that are making decisions for the brand to be closest to it and from.
Lars Miller (45:58.487)
That's beautiful. Well, thank you so much for your time today, Brandon. It's been awesome getting to know you, getting to know Chichen Chaw. Do you have any questions for us?
Brandon (46:04.738)
I don't get to ask you guys questions. This is not a two-way street. Tell me about your wedding reception, Lars. Why did you decide to get married and have a reception as opposed to go to the HBA Festival?
David Gonzalez (46:08.334)
time.
Lars Miller (46:13.408)
Well...
Lars Miller (46:17.896)
Well, to be fair, we actually got married in August of 23 in Colorado. We eloped. So we just decided to have a party on June 7th. The one weekend of whole summer they had actual plans. They couldn't go.
Brandon (46:25.846)
Nice.
Brandon (46:34.333)
man. Well, you know what? You didn't really miss much. I think Dave and I were there. Yeah. Yeah, I mean.
David Gonzalez (46:34.964)
next year.
David Gonzalez (46:39.206)
about it. Mayor Frye. Well you can have your first anniversary next year, the second annual HBA Fest.
Lars Miller (46:39.735)
I miss meeting you guys, so that's pretty cool.
Lars Miller (46:45.61)
Exactly.
Yeah.
Brandon (46:49.194)
It'll happen next year. I guarantee it'll be even bigger. It'll be cool. Yeah. Yeah. Thank you guys. I honestly really appreciate the time. It was fun.
Lars Miller (46:52.854)
I so.
David Gonzalez (46:53.316)
yeah.
Lars Miller (46:55.968)
Thank you.
David Gonzalez (46:56.882)
Of course. Absolutely.
Lars Miller (46:58.664)
Absolutely. So thank you again. And this has been the Free Spirits podcast with David and Lars. Please subscribe and review on all the podcast platforms. And until next time, guys, cheers.
Brandon (47:10.4)
Cheers, bye.