The Brand that Pioneered Functional Cannab*s | Peter Barsoom, 1906

Speaker 1: 00:00
Welcome to Shelf Help.

Speaker: 00:02
Today we're speaking with Peter Barsoom, who is the founder and CEO of 1906, who's joining us from New York City, one of today's most exciting cannabis markets in a lot of ways. 1906 was arguably the pioneer of what you might call functional cannabis, offering fast-acting cannabis products. Pride of 1906, Peter had quite a successful career in the finance world, leadership stints at powerhouses like American Express, Maryland, Morgan Stanley, et cetera. Definitely excited to dive into it. Yeah, Peter, maybe just first off, for the listeners that maybe aren't as familiar with 1906, maybe just kind of give just a quick lay of the land in terms of origin story, buy behind the brand, core products you guys offer, and uh maybe just you know a few places where people can get their hands on them and then we'll go from there.

Speaker 1: 00:52
Yeah. Thank you, Adam. It's great to be on the show here with you. But to give you a little background, so 1906 is now a 10-year-old company. We started back in 2015 in Colorado, you know, one of the first states to legalize. And we created the company for three reasons. One is we love smoking flour, but there are times in the day and and places where you can't smoke flour. And so the first reason why we created 1906 is for people like us who want to get the closest thing to a flour experience in an edible format. And as you know, and a lot of other people know, if you're a flour smoker, most edibles they suck. That you have no idea how it's gonna make you feel, takes way too much time to hit you. You don't know how long it's gonna last. And they're generally not made with good quality ingredients. So the first reason why we started in 1906 is to give cannabis consumers like myself and others who are probably watching this podcast, who love flour, the closest thing to a flour high you can get without the smoke. The second reason why we started in 1906 is cannabis is a confusing mess if you aren't familiar with it. And too often you feel like you need to have a PhD in the endocannabinoid system just to get a good night's sleep. So, what's a milligram? What's THC? Why am I taking something called Durban poison? And we wanted to simplify it. So we like to think of the second reason why we started 1906 is for people who don't know how to spell THC. All I need is a good night's sleep. I want relief from anxiety, relief from pain, boost in my libido. Why does it have to be so freaking complicated? And the third reason why we started 1906 has to do with our name, which is the year that started the prohibition of cannabis. And our mission is to bring cannabis back to the pre-prohibition era when it was a widely accepted plant medicine available to all and part of the apothecary of consumers and medical professionals. You know, that's a little bit kind of behind our mission. Currently, we operate in three major markets. We sell in dispensaries in six states: Illinois, Oklahoma, Missouri, New York, New Jersey, and Massachusetts. So Midwest and Northeast. We also operate 06.shop, which is our hemp-derived online platform where you can order 1906 products and have it shipped directly to your door across the country. And third is what we've just launched and expanding out the liquor retail channel with our beverages. So we're now available in Minnesota. We're soon going to be launching in New Jersey in September. And then we'll be spreading our wings out to other states in the liquor retail channel.

Speaker: 03:53
Yeah, definitely an exciting time with all the things happening on the hemp side of things. Let's rewind back to those early days of formulation product development and how things have kind of evolved over the years. I'm curious, just yeah, really taking a step back to those early days. Why press pills in the first place? And, you know, did you guys explore other form factors that you thought would be best for this rapid onset, precise dosing goal that you had before honing in on press pills, like versus you know, capsules or some type of liquid format? Or yeah, what was the process to kind of hone in on that form factor first off?

Speaker 1: 04:29
Yeah, uh a great question. You know, we look at it as the first thing that we're focused on is how it is that you want to feel. And so our product line covers all the major reasons why people use cannabis: Go for energy, genius for focus, bliss for mood enhancement, love for sex and intimacy, chill for anxiety, sleep for sleep. And then we've got our products for pain relief as well. We we first started out in, we first started out on chocolates, actually. So chocolates is our heritage. That's where uh where we were in Colorado. Today we do sell chocolates, but just in the New York market. And then back in 2020 is when we launched our our pills and they took off. We didn't think we were gonna, you know, that it was gonna do as well as it did in the pill category. So now we've got chocolates, pills, gummies, and beverages. And the whole idea behind it is like, hey, first is how is it you want to feel? And then second is how it is that you want to consume. The pills took off, and we call them drops, you know, because for years people have been talking about cannabis as medicine, but it's not available in a medicinal format. And people get a pill. You know, we take pills for supplements, we take pills for medication. And the idea of something that's vegan, gluten-free, calorie-free, portable, discreet, has no flavor that's kind of universal, really has had uh a big appeal. People understand that when they see and they get a pill, it's pharma-grade, it's precise, it's consistent. And our view is like, let's give consumers the choice of how it is that they want to consume. You know, so if you want a gummy, that's great. Um, if you want a pill, that's great. If you want a beverage or if you want it in other formats, 1906 is there to meet you, but first and foremost with how you want to feel, and then secondly, with here's the format of consumption. I think, you know, the other thing is that what we tried to do is really destigmatize pills. You know, pills have a bad rap because of the opioid crisis, because of how pharma has tried to push pills down our throat, you know, literally. And what we tried to do is say is, you know, there's nothing inherently wrong or evil with swallowing a pill. It's a it's a format. If you make it precise and functional and attractive, you know, because of the shape of the pill and it's easy to swallow, and you're and all of our pills are color-coded to how you want to actually feel, that just opens up a whole new format for consumers who don't necessarily want, you know, sugary gummies that taste a particular way. I may not like, you know, elderberry lavender in order to help me go to sleep. I may not want to brush my teeth after I take a gummy for my for sleep. So we know how to take pills. We take Ambient, we take Adderall, we take Xanax, you know, we take other medications here. So giving consumers that choice and seeing how much consumers have flocked to it as a format has been wonderful.

Speaker: 07:51
Yeah, that that makes a lot of sense. I know you've got some pretty proprietary, I think patented, which we'll dive into on the rapid onset side of things. Did you guys invest in that proprietary and rapid onset tech from the start and really go after that patent and do something pretty unique? Or to get off the ground, did you guys leverage existing rapid onset tech that was already in the market just to get to market and then evolve and upgrade over time?

Speaker 1: 08:19
Yeah. Like let's rewind back. You know, 10 years ago, when when we started, you know, there was there was no such thing as low-dose products. There was no such thing as fast acting, there was no such thing as edibles that made you feel a particular way. In fact, we were the first sleep product, and now we have a proliferation of sleep product. So when we look at it, we said, okay, how do we create an edible that gives you the closest thing to a flower high? It was really about two things. First is fast acting. And look, I, you know, I'm a New Yorker. I think that impatience is a virtue. I don't have time to wait for anything, let alone my edibles to kick in. And consumers, if they're experiencing anxiety or if they're in the mood and they need their libido boost, or if they need to get to sleep, they don't want to wait 60 to 90 minutes for their edibles to kick in. So fast acting for us was like number one, right? You shouldn't have to wait for your edibles to kick in. And it's great now to see so many fast acting products out there. But we were the first, and we are the only company for whom everything we do is fast acting. We will never make a slow acting product, period. And that's been a foundation and a core to everything we do. Like we'd love to see a world, just like today, you can't get a cell phone that doesn't have a camera on it, for instance, or doesn't have a browser on it. Similarly, like all edibles should be fast acting. So, yeah, we spent a year plus developing our proprietary fast acting technology. We licensed a patent from a Canadian biosciences company that had developed this lipid microencapsulation technology for use with other molecules. And then we took it and adapted it for use with THC and CBD. So fast acting is everything we do. We will never make a slow acting product. It's core to delivering to consumers what's what's a great experience. The second thing is about how do you give people a specific effect? Like I love smoking Jack Herer, I love smoking Durban Poison, I love certain strains because I know how it's going to make me feel. Now, how does that work in smoking? We know about the entourage effect of terpenes and cannabinoids that give you that different effect. When it comes to edibles, like terpenes just don't work. So terpenes are basically aromatherapy. Those are volatile organic compounds that are released into the nasal cavity when combusted and it makes you feel a particular way. If you eat limanine or mycine, it has no effect on you because that's not the way our body digests it. Otherwise, you'd be finding my gummies for anxiety and relaxation in whole foods, for instance. All of the brands out there that unfortunately are touting like terpenes in their gummies, it's a bunch of marketing gimmick, and consumers should be careful about buying anything based upon marketing gimmick. We create that entourage effect through other dietary supplements and plant medicines. So limonine is uplifting when it comes in a sativa strain. Caffeine is uplifting in our Go strain, in our Go experience. Myrosine is more relaxing and sedating in smoking indica strains. Our L-theanine and magnolia does the same in chill. So we took the whole concept of the entourage effect and then took the science behind how our actual body processes these different compounds. And that's how we got to our scientific formulations that work like flour. So fast acting, so it hits you as fast as possible. And secondly, science-based formulations with dietary supplements, not terpenes, that also give you that strain specificity that you would expect as a flour smoker.

Speaker: 12:11
How does that the rapid onset technology actually work that enables it to your products to have such a more rapid effect than other markets or other products on the market?

Speaker 1: 12:25
The fancy name for it is called lipid microencapsulation. I like to think of it as like it's a bullet train. A bullet train with the cannabinoids as the passengers in the bullet train. So when you ingest, normally edibles will sit in your stomach, degrade a little bit, go through the liver, the liver processes it into 11 hydroxy. It gives you that stone feeling kind of 45-60 minutes later. The way 1906 edibles work is that that bullet train, once you ingest it, it bypasses the liver, goes through the intestinal wall, and drops off the cannabinoids, the passengers, into your bloodstream directly. So what you get is number one, it's fast, hits you within 20 minutes. Number two is that it bypasses the liver. So you get a delta 9 high, not the 11 hydroxy high of typical edibles. And number three, you know how long it's gonna last. It lasts about two to three hours versus a six-hour date with an edible. So at the end of the day, the reason why we do fast acting also is because it gives you control. Like we like to think of 1906 as cannabis for control freaks. You get to control when it's gonna hit you, how long it's gonna last, and what kind of experience or or high you're gonna get.

Speaker: 13:41
You mentioned the Go product, a few other SKUs you have. How did you decide? Thinking back to those uh those early days when you launched with those initial need state SKUs, how did you decide which need state should be part of the core launch lineup or the ones that you knew had the most confident and were gonna have the most demand for?

Speaker 1: 14:00
Yeah, um, that's it. Like the thing that we did is we are maniacally focused on listening to our customers, right? So we asked consumers, what is it you use cannabis for? And they came back and said, I use it for sleep, I use it for pain, I use it for anxiety. You know, those are the top, typically three reasons why people use cannabis. And then the other reasons why is we've got people who use it for energy, we have people who use it for focus and creativity, you know, from artists and songwriters and other professionals who've been using cannabis to help them with focus and productivity. Cannabis is one of the most amazing aphrodisiacs out there. And as humans, we've been eating different plants and fungi and other things like that to help boost our libido. And then also for mood enhancement. So we've covered the major reasons why people use cannabis: energy, focus, mood enhancement, sex, anxiety, sleep, and pain. And then I would say, like, you know, the other area that we're focused on is uh women's health as well. So you'll see products coming out from us over the next 12 months that really target the needs of women, either going through menopause or postmenopause, as well as for menstrual cramps and conditions. So I think once we cover that really big and important piece of women's health, we will have covered like the 90 plus percent of reasons why people turn to cannabis for health and wellness.

Speaker: 15:35
Once you decide you're going to develop a new product based on, you know, a specific need state, you're focused on what does that process look like in terms of to test whether the advertised effect is actually what consumers are looking to feel, what they do feel, and that they feel the same effect consistently.

Speaker 1: 15:55
I'm really happy to say that we have by far the best product development team in the country, in the industry when it comes to cannabis-based products. And we have a really rigorous disciplined process when it comes to product development. You know, we first start, and it first starts with okay, what is it that the consumer wants? What makes for a really good energy experience, for instance? And what we heard from consumers is what they want is they want something that's fast. They want something that will give them a boost of energy. They want something that won't make them feel like they're overstimulated. They want something that also doesn't have the crash, for instance. And so then we take a look and be like, okay, this is what defines a great experience of energy, or this is what it means to boost your libido, or this is what it means to have a reduction of anxiety without sedation. And then we go through and we be like, what are the different ways in which we can achieve that? So, what are the different dietary supplements and plant medicines that meet those specific needs? And we've our science team then will filter through hundreds of different compounds that could possibly achieve, for instance, energy without the crash. And we look at the data. We have a lot more data about these dietary supplements than we do about cannabis. So caffeine is well studied, L-theanine is well studied, ashwagandha is well studied. And then we look at safety, efficacy, and the interaction with cannabis. Then after we do all that, that's what we call kind of our desk research phase. Then we start formulation. So we will have a list of you know, 10, 15, 20 different potential compounds that go through that, that pass that first screen of safety, efficacy, and interaction with cannabis. And then we start formulating. So we do a lot, a lot of product testing with ourselves, with consumers. And that process, you know, can typically take from months to potentially years. You know, as an example, we launched our pain products at the end of last year. Pain is something we've been working on literally for two years, and it took that long to get it right because there's so many different elements of pain, so many different factors associated with it. And then once we actually get a product that works, then we put it out into market and typically in pilot so that we start to get real customer feedback. And only then do we start launching it nationally. So that discipline approach, you know, it takes time. It takes science and it takes time and it takes engagement with customers. But and then often, you know, what it takes is then then then we tweak it over time based upon as we get more customer feedback. What is it that customers like? What is it that customers would like to see added to it? And then we make modifications on the margins then to continue to meet those needs. So we think of ourselves as like product first, a product innovation company first, grounded in science and grounded in customer feedback. Yeah. Our beta folks love people who are part of our beta team love being part of our product development cycle as well.

Speaker: 19:16
Oh, yeah, I'm sure. I think a lot of people would probably love to be part of that team. What's been your um what's historically been your best-selling SKU?

Speaker 1: 19:25
It's fascinating. It definitely differs. Like Colorado, it was much more a chill and a sleep product. New York is much more about Go and Bliss, for instance. So as you would expect, given kind of who the consumers are in each market, the demand definitely does change. You know, across the board, our top three selling SKUs are Bliss, because who doesn't need more bliss in their life? Chill, because don't we have like we have so much anxiety, particularly in this modern day and age. And then our in the markets where it's available, our pain product. 55 million Americans suffer from chronic pain with little hope in sight for relieving their pain. So we're introducing our pain relief products. It's now available in New York, Massachusetts, and online. It's soon going to be available in New Jersey. We're just launching also in Oklahoma and Missouri as well. So I would expect our pain products to be, you know, at the top of the list as we as we expand that out. But bliss, chill, and pain are the top. And then after that, love, because sex, we all could use help with connecting better with ourselves and with our our partners. Kind of that's uh that's next in the queue. Um and then genius and go thereafter, but genius and go are top sellers in New York, don't sell as strongly in Colorado and some of the West Coast markets, for instance.

Speaker: 21:04
Shifting gears a bit, from what I know, you guys have prime primarily focused on growth across the US, at least via partnerships, via Copackers and licensing partnerships, how a lot of different operators do in the space. Everyone has their different strategy and approach, but versus generally opening your own facilities, investing in CapEx and whatnot. You know, it seems like I think across CBG there's challenger, but it seemed like in Canada, in the cannabis space, it seems to be somewhat like littered with the skeletons of a lot of failed partnerships and seem like you guys have had a lot of success. I'm just curious from your perspective, when you look back, what's been key to building a really successful partnership in all these markets that you're in? And do you have somewhat of kind of a checklist or diligence process that's helped you hone in on who are going to be the best partners?

Speaker 1: 21:50
Yeah, one of the things you know, I I remember it was uh what when we first were looking at uh expanding out back in 2019, you know, how are we gonna? Expand across the country. And this is before hemp was really a thing. And if you're a brand who really didn't have good options, like so one option is you can go out and buy licenses and build facilities. That's expensive, takes a lot of time, it's a lot of overhead. Or you can just do a licensed partnership where you basically send them your packaging and hope that they'll do a good job creating their product. And I remember spending a lot of time with Nancy at WANA, with the folks at Kiva, for instance, to learn from their experience because they were the ones who were the early trailblazers in expanding across the country. And I remember those leaders sharing with me some of the trials and tribulations from partners that were underperforming to legal disputes to not being able to get enough product and focus from them. So early on, I was really attuned based upon the experience of other great brands about how to do it. And what we said is for us to expand, and because we're a product-focused first company, we must own the product. Like so at 1906, we make all of our products. It's our employees who are making all of our products because quality is never something that we will sacrifice. The second thing is that we needed to also sell our own products. Who better knows how to sell than us? So for me and for 1906, that was the two most important things to control: the product and also the messaging and the sales. And so we developed this model which has worked really well for us, where we have a mobile tableting operation. Think breaking bad, except that we don't make stuff in an RV. And we have a mobile tableting operation that goes from state to state. We set up shop in our operating partners' facilities. And over the course of two months, we will produce enough supply for three, four months. We hand over to them millions of our drops. They package and they distribute it. And then we have a sales team on the ground that sells our products. So that gave us control over product, control over sales. And also because we're investing the time and the energy and making of our product, we get more of the economics there. So that also gave us the ability to invest in sales, to invest in other things like that. And it means that our partners get to do what they do best: operate a facility, compliance, and distribution, collections, AR, that. And it allows us to do what we do best, make products and sell products. And I'm happy to say that, you know, that's worked out really well. It's what's helped us expand profitably at scale to multiple states. I mean, we opened up 11 markets. We've shut down five markets. So one of the other things that it has the advantage of is like if a market's not working, Arizona wasn't performing well, Michigan wasn't performing well, Pennsylvania wasn't performing well, for instance, we can exit it out cost effectively and then redeploy our resources to where the best opportunities are and where consumers are willing to meet us.

Speaker: 25:20
Yeah. Yeah, I think this is one of the more intelligent expansion models that I've seen in cannabis. So commend you for that. You touch on messaging a bit from a from a brand identity and visual identity packaging standpoint. I think I've heard you talk about, say, something along the lines of sometimes you just have to just ignore the data as it only reflects the limited choices consumers have, which I think is kind of similar to that saying where I can't remember what it was, but if Henry Ford is just listening to consumers, everyone would be asking for a faster horse and we'd never have the Model T or whatnot, which feels similar. But yeah, in the context of your needs-based approach versus what's been his typical sativa index hybrid approach, which we I think we all know, the and maximum potency approach, which we all know are a lot of limitations there. Like thinking back to those days when you're really designing that brand identity and the packaging, what were some of those key variables that were top of mind for you?

Speaker 1: 26:14
Yeah, you know, I I remember visiting dispensaries in 2015 as we were getting started, and you asked people, dispensary owners and butt tenders, like what do people want? And you know, what they would say is they want cheap and they want potent. And it was like, huh, yes, there are people who want that, but that's not me. And really what we did is we put the consumer first or we put ourselves first. Like we wanted to make products that work for us. And we said, okay, I don't need cheap and I don't want just potent. What do I want? I want control, I want beautiful, I want efficacy. And that infused everything that we do. It's got to be quality, it's got to be beautifully designed, it's gotta work, it's gotta be clear and simple. And whether it be through the use of our simple names or through the use of colors, how is it that we then communicate those traits? Quality, efficacy, safety. And that was our design brief. So we took that as a North Star. Here is who our consumer is. It is not the 25 year old, it is people like us who um want quality, are willing to pay for quality, don't want to take any chances with respect to safety and efficacy. And then we said part of our mission is also to make cannabis accessible. So, you know, whether it be our pouches that only contain, you know, 10 milligrams, how do we meet customers where they are from a from a price point perspective as well? So it isn't just about price per milligram, because that's not the way most consumers or or people think. Like people don't buy beer on price per proof or or or otherwise all we'd be drinking all day long is ever clear. So even when we think about things like price, it isn't about the price per milligram. It's about I only have $10 in my pocket. What is going to help me achieve the desired state I have for just $10? So making things that have lower volume, for instance, so it's much more price accessible, as an example of how we meet, you know, price-sensitive consumers where where they need to where they need where they need to be at. And um, you know, we're thankful because it's worked. Consumers have told us it worked because they keep coming back to buy more. And you could see it, you know, as they always say, like imitation is the best form of flattery. And now we could see many brands who have leaned into the use of colors or the use of names to tell consumers what it is that they're gonna get. Yeah. When we started, everybody thought we were crazy. Like the dispens the dispensaries thought we were crazy. They're like, nobody's gonna pay this much for it, or this is all that customers want. And we we stuck to our convictions.

Speaker: 29:05
Yeah, you did. I mean, I think that you touched on a lot, but it it feels like the at least the regulated dispensary market, it feels like it's the follows that typical 80-20 rule where it's like, you know, people will say 20% of the consumers are responsible for 80% of the sales, and that's the people that's going to the dispensary every week or every two weeks. It's often the people that are spending a good chunk of their paycheck on cannabis looking for the higher potency, fairly fickle consumer, whichever promotions running that week didn't get the most for their dollar. You you guys have obviously bucked that trend. I feel like there's been a lot of other brands that have tried to focus on everyone says that soccer mom consumer, and a lot of them have tried, and that frankly I feel like a lot of them have not had a whole lot of success. Like the sales just haven't been there. But you guys have had some of the success. How do you feel like you guys have had so much success and you know gotten the sales and revenue numbers that you've gotten where everyone else has tried a similar thing?

Speaker 1: 29:54
You know, first I I think it's a pay it take it took patience, right? If you want to chase a buck, then yeah, then it's much more expedient to be doing high-dose, high potent, cheap product because that's where the initial money is. Like if you just looked at the data, all you would do is just make another gummy, make another, you know, infused pre-roll joint. And what we did is said, okay, thank you very much. That's the data today, but we have to imagine a different future. And part of the problem was that dispensaries weren't, it's less so today, but dispensaries weren't friendly places. If you are a female consumer looking for low-dose products, like you'd walk in there and be like, okay, nah, I don't see anything here, and you walk out. And so if we don't actually create that future and give ourselves the time to let consumers adapt to that, then yeah, that then it could be a failed experiment. So that patience, thankfully, you know, is what we had as well. And now, as you can see, like, you know, lower dose products, while it's not the majority of customer purchases, because you still have high dose consumers who are probably the that have the highest velocity there, but it is a emerging and growing segment. Like the population of heavy user stoners, it's not growing. I mean, let's face it, like more and more people aren't going to come in and say, okay, I really want to start smoking or I want to start doing dabs. That population is, by definition, going to be limited. So if you keep chasing after that same group of people, you end up in a price war. And that's what's happened. You know, that's why you have markets like Michigan or Arizona where like the bottom has fallen out, because you're going after that same 20% of people with nothing new. And if all they want is cheaper and more potent, like you get to a place where the marginal returns on that get to zero. And that's what's happened. We have to go after the 80 plus percent of people who are not coming into the market. And we have to have the patience and the time to bring them into the market. And that's where the big growth is gonna come from. Like, the growth is not gonna come from lots more people smoking high dose, high potency weed. The growth is gonna come from my mother using 1906 for sleep and for pain. The growth is gonna come from the uh uh the professional nurse who is now, you know, take uh chill to relax at the end of the day, for instance. And that's our North Star. And if we stick to our North Star, then the can the consumers will uh will come there. But we got to give them a reason to come. And I think that's been a big problem in the industry is that all they've done is chase after that small and not growing segment. And then that's why we end up in a place where it's like, what's gonna be next? 105% flour, you know? Yeah, totally. Do we really need 40% flour? Like, really? I mean, do we really need 40% flour? No, it's gonna get you high. So maybe it takes two puffs or three puffs or four puffs. So this arms race to just higher potency flour and higher potency products, it doesn't make sense. It's a disservice. Like, what happened to the good old days where you could smoke a joint and enjoy the joint? Like, not just take one or two puffs and you are blasted seeing purple dragon. So I I think this industry has gotten off the rails by focusing way too much on potency and way too much on price. Personally, like for me, an 18% flour that has really nice terps is going to give me a way better high and a way better experience than something that is supercharged, 35% THC that doesn't have good terps in it, for instance. Yeah. It'll all get you high. Be patient. Just take another puff, enjoy the experience.

Speaker: 34:00
Yeah, you know, it's it's um, it seems like the um, you know, when when like when COVID happened and everything went to like curbside pickup or just delivery, it seems like the that whole concept like it got exacerbated because everyone was just looking at digital menus for what they were going to order and buy. And the way that dispensary menus are set up, it just focuses on the potency number just because that's the way these technology platforms are set up, because that's what retailers have told them that they want. It definitely feels like in a lot of ways that's sort of kind of an exacerbated because people weren't going to dispensaries asking butt tenders what I should get and getting bit more of a holistic understanding of products. They're just looking at digital menus. Okay, this is the highest potency, here's the price. Those are the two variables I'm gonna look at.

Speaker 1: 34:44
That's so right, Adam. Like if we look at the dispensary shopping experience, whether it be online or in the store, let's face it, it's terrible. It is terrible, it's gotta rank, you know, in like the worst customer experiences ever uh uh uh ever created. If we look at it, like we typically give people three pieces of information. We give them a name, and often the name doesn't mean anything. What is, you know, what is some of these strain names that make absolutely like no sense to a to a customer, right? So so we give them a name, but the name you can't tell anything about the name. Second is we give them a number, which is the potency, and we give them a price. So we give consumers three pieces of information, one of which contains no value, and then the other two, okay, usually consumers price lower is better. And um, and secondly, potency, which higher is better. So I think part of the issue is that you know you can't blame consumers for it. It's because we've created a uh really bad shopping experience, and that's what drives that consumer purchases into higher potency, lower price. What other experience is like that? You don't go in and buy alcohol and everything is just oriented around the percent, the proof, and the price. No, what you get when you go into a liquor store is here's a description of how it's gonna make you feel or how it tastes or the heritage there. So I think, like I said, the problem is not about consumers. The problem is what this industry has created as this Frankenstein of uh customer experience that is driving customers to, okay, you've just given me a name that means anything, a price, and a potency. So how else am I supposed to make a decision here?

Speaker: 36:50
Yeah, totally agree. It's just like you're talking about the hem side of things, I think there's a lot of excitement. Justin, from your perspective, like what's the where do you feel like we are today in this market, and where do you feel like it's it's heading over the next five to 10 years or so?

Speaker 1: 37:02
I think that when we started 1906, as I mentioned, like our mission is to make cannabis uh accessible. We didn't start the company to say we want to sell wheat through regulated dispensary channels. We said, nope, as consumers, as Americans, we should have access to cannabis. So hemp represents probably the most exciting moment that we have seen since we've started. The pace of legalization, like it was very exciting early on. More and more states were legalizing cannabis, and that was creating momentum. But what happened is we created this way overburdened regulatory environment. Like we're treating cannabis more restrictive than we're treating far, far more dangerous drugs. Like, let's face it, cannabis is no more harmful and probably a lot less harmful than things like nicotine and things like alcohol. We already have a system for the distribution, the taxation, and the sale of goods targeted for 21 and older adults, right? In states across the country, you have to be 21 and older to buy cigarettes, you have to be 21 and older to buy alcohol. Like, why are we recreating the wheel and making the experience so much harder and so much more expensive? So I think what hemp represents is the opportunity to make cannabis accessible to millions and millions of people in an infrastructure that already works today. We know how to card people for a can of beer or for a bottle of wine or for a pack of zin or for a pack of cigarettes, for instance. Age gating, we know, we know works. And so I think that that's that's why hemp is so exciting. I mean, at the end of the day, it's the same molecule. Like whether you get THC from hemp or whether you get THC from the marijuana plant, it's the same exact molecule. It's like caffeine. You can get caffeine from coffee, you can get caffeine from guarana. We stay away from all the synthetic cannabinoids, and frankly, I don't think they deserve to be in market. This THCO and Delta VII and all this other stuff. Like, it's there's no science behind it. Like, why bother? We know Delta 9 THC, it's a naturally occurring compound, so focus on that and then distribute it through liquor, through convenience stores where other 21 and older products are distributed today. So uh I think that's what makes the hemp market so exciting. And that's why um consumers are flocking to it. How is it that Texas has become the biggest cannabis market in the country?

Speaker: 39:41
Crazy.

Speaker 1: 39:42
It's not because of regulations, it's because consumers want it. Consumers want access to their cannabis and they'll and they'll, you know, in the form of hemp. So let's stop fighting customers. Let's stop forcing customers into a very difficult and very expensive regulatory scheme. And let's embrace hemp and let's embrace these other distribution models that that work.

Speaker: 40:08
Yeah. I know you guys jumped into this market fairly recently. When did you guys decide to jump in? And and more curious, like why did you feel like that was finally the right time?

Speaker 1: 40:20
I mean, we jumped in a year and a half ago because we saw the success of the beverages uh like can and others. And then um that that's when we jumped in in in December of 2023. And it's been uh a phenomenal ride. The most important thing is that hey, we've met consumers where where they want to meet.

Speaker: 40:41
From a distribution standpoint, what does your strategy look like in terms of D2C versus yes, some of those retailers you mentioned where you can buy products that, you know, 21 and a lot of people.

Speaker 1: 40:50
I mean, uh where we're focused is so we have three channels. We have the legal regulated market where you can buy higher potency products, you know, and also that's where you can get educated. So we love the dispensary channel because that's where you can talk to a butt tender, you can see a lot of options, you can get the education, and you can get higher dose products. Online, the convenience and the fact that a lot of people don't have access to a dispensary or don't have access to a butt tender. And then beverages sold through liquor stores, you know, because that's what people walk into a liquor store for. I want to be able to consume in a liquid format, but I don't necessarily want to drink alcohol. But I also, you know, want to feel the euphoric effects, the mood enhancing, uh, in the uh social inhibition effects that I like from alcohol, but I don't want the hangover, the calories and the negative consequences to my to my health. So that's the way I look at it. Dispensary has its place, D to C has its place, and liquor retail has its place.

Speaker: 41:51
He recently launched this product called off-duty, which is this powdered beverage additive. Tell me about how that thought process around expanding into this form factor and how did the hemp market play into that decision, if at all.

Speaker 1: 42:05
Yeah. So first it's a liquid, actually. So it's not a powder. Look, what we saw is like, yeah, it's a it's it's a liquid, which is which is even better. So you don't need a spoon to start. Yeah, that's great. You know, we saw much of the market was focused on these ready-to-drink beverages in a can. And those are great, but there's a lot of places where you can't carry a can around. I'm at a bar, I'm at a wedding, I'm, you know, I am at the gym, for instance, and I don't want to carry a can around. Second is you're tied to a specific flavor, you're tied to a specific volume, you're tied to a specific dose. It is the antithesis of control and flexibility. A can is the most inflexible way to deliver a beverage product there. And what we understood, you know, and what we believed, you know, from ourselves is that I want to be able to do social drinking, I want something that's portable, I want something that's discrete, and I want to be able to mix it into anything. And so off duty comes in a beautiful little snap pack that you can just fold, pop, and drop into any liquid, no spoon required, no flavor, no sugar, no calories. It's five milligrams of THC, five milligrams of CBD. So if you want a higher dose, great. Just put two off-duty into your liquid. And it's portable and it's discrete. So it's really revolutionizing the way in which people can socially drink. And it's been a like a phenomenal hit that that's uh uh that that we're great for because it works so well. And that's what consumers want. Like, yes, there's a place and a time for a canned beverage, but there's a lot of other moments where a can isn't appropriate. And that's the place that we fill in.

Speaker: 43:49
That's great. There's seem like there's been just a lot of excitement around this cannabinoid THCV within the industry, at least for quite a while, whether people say it's the, you know, an appetite suppressant or it's Much more euphoric energy standpoint. And I think it that's definitely interesting, but it just it hasn't really seemed to take off in a meaningful way. I know it's one of the much more expensive cannabinoids, so maybe just as simple as that. But I'm curious from your perspective, have you guys played around with this cannabinoid at all? And just curious why you've, from your take, why don't you feel like it's it's taken off as much as it attention it's gotten? First, it it hasn't really taken off.

Speaker 1: 44:24
I mean, let's be real. Like let's look at the facts. Yeah. And why? I think it's two reasons. Number one, it's very expensive. And number two, it doesn't work that well. Like it doesn't do appetite suppressant. You know, other Ozempic does appetite suppressant. So I think I think the claims are mostly bullshit around it. And if you want energy, like that's why we use caffeine, for instance, or other stimulants there, because there is science there and we know it works, and we know we can deliver it to customers at an affordable price. I think the more interesting compounds like CBG and CBC have a lot more science behind it, have a lot more efficacy. And that's, you know, look, we go where the science is, not where the marketing hype is. If there's more science behind THCV and the prices come down for it, you know, we will incorporate it into our products. But for now, you know, we see it as all expense and all hype.

Speaker: 45:21
Yeah. Yeah. I think that's a totally fair take. I think I also I could be wrong here, but I think I also read that you guys have been exploring a product line that's going to be focused on this other ingredient called Canna or Kana, K-A-N-N-A. I think it's a functional ingredient that I've I've heard just started here had been talked about a bit more. Assuming I read correctly, I'm not totally off there. Like, well, what is Kana and why is it getting more attention lately?

Speaker 1: 45:48
Yeah, yeah. No, actually, we use Kana and Skeletium. That's what's in our Bliss formula. So yeah, yeah. We are the we are the largest importer of kana or scaletium in North America. Um, we've been using kana in our Bliss product since day one. And it's a plant that comes from South Africa. It's a succulent plant. It is the closest thing to legal MDMA or legal MOLLE that you can get. It hits your serotonin 2A receptors. It gives you this mood enhancement, makes you feel like the world is the happiest place. It boosts your confidence, so it reduces your social anxiety. And that's what powers bliss. It's one of, you know, behind cannabis, it's like one of my favorite plant medicines there. It's amazing. It's great to see that more and more people and more and more brands are incorporated in because it is the bomb.

Speaker: 46:43
Just in terms of talent and kind of how your org structure is like what does your kind of leadership team look like and core function look like and any big important roles you guys are hiring for right now?

Speaker 1: 46:52
Yeah, we um we've got a really strong leadership team in place with our CMO Shaita, our operations team is world class. Where we're hiring for now is we've got some open roles on the D2C growth side. We've got uh an open role on the sales side to lead particularly our liquor distribution and liquor retail. So those are the two major senior hires that we're looking for. Somebody to lead growth on the D2C side, you know, revenue generation, owning the full PL there. And then secondly, sales and particularly focus on the on liquor distribution. Those two hires both make a lot of sense.

Speaker: 47:34
Here, this has been awesome. What's the um what's the best place for people to follow along with you? And then best place for people to follow along with 1906 these days.

Speaker 1: 47:46
Buy it online, have it delivered directly to your door, and then our Instagram at 1906 New Highs, N E W H I G H S. DM us. You know, we're constantly online, you know, we respond to everything, so that's the best way to reach us.

Speaker: 48:03
Perfect. Awesome, Pierre. Appreciate it. This is great. I think that's the pod.

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