High Spirits: The Cannabis Business Podcast
Hosts Ben Larson and AnnaRae Grabstein serve up unfiltered insights, reveal their insiders' perspectives, and illuminate transformative ideas about the cannabis industry for people who want to make sense of it all.
High Spirits: The Cannabis Business Podcast
#056 - Building and Rapidly Scaling in Public with Brēz w/ CEO and Founder, Aaron Nosbisch
Imagine launching your first business at just 13 years old. That's precisely what our special guest, Aaron Nosbisch, did, and his entrepreneurial spirit has only grown since. Aaron, now the founder and CEO of Breeze and Lucyd Media, joins us from an airport en route to Burning Man to share his incredible journey. From his early days in the fashion world to the intricate landscape of cannabis and hemp marketing, Aaron brings a wealth of knowledge and some really creative strategies.
Our conversation doesn't stop at marketing tactics. We dive deep into the importance of transparency and community engagement in building a brand, inspired by industry leaders. Aaron discusses the substantial investments—nearly a million dollars monthly—necessary for driving brand awareness and growth. By focusing on the value of sharing a brand's story publicly, we explore how a cooperative approach over competition can foster innovation and elevate the industry as a whole.
Navigating from direct-to-consumer to retail sales strategies, we examine the operational and marketing nuances essential for scaling a beverage startup. From customer acquisition costs to lifetime value, Aaron shares the metrics that drive real-time advertising decisions. We also discuss the complexities of cannabis legalization in Florida, emphasizing the need for equity and fair access to the market. As we wrap up, we express our anticipation for upcoming events like Benzinga in October and the High Spirits Morning Mixer in Vegas for MJBiz, ensuring you stay connected and informed.
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Hey everybody, welcome to High Spirits. I'm Ben Larson and, as always, I'm joined today by Anna Rae Grabstein. Hey guys, it is Wednesday, august 21st, and we have an exciting show for you today. We're going to be talking about Breeze, all things, direct-to-consumer marketing and just the amazing, amazing growth story of this incredible brand. But before we get there, I'm going to check in with Anna Rae. Anna Rae, how's your week going?
AnnaRae Grabstein:I am feeling the whiplash man, per usual. Cannabis is wild and it's constantly changing, and so I have got my hands on all kinds of different things. It's constantly changing and so I have got my hands on all kinds of different things, and this week that even landed me learning all about online gaming and what's going on in that wild world, another highly regulated space that was somehow found its way into my brain as I was learning about payments and cannabis and different types of payment processing options, and all of a sudden, voila. So, yeah, lots going on per usual, and just happy to have this time to settle in and talk about big picture stuff, get out of the weeds and into the weeds with some friends. So, doug, how are you doing?
Ben Larson:Excellent, excellent. Yeah, I don't know. I've been watching some clips from the DNC. It's exciting to see just people excited about politics again. I feel like it hasn't been the most exciting topic in some time, but I got to see Little John cast the electoral votes for Georgia, and that was something new I don't know. Votes for, for georgia, and, and that was something new, I don't know um so exciting about that and and most exciting in my life actually are uh, is the summer coming to an end and my kids going back to school next week? So, yay, I get my life back, yeah hallelujah.
AnnaRae Grabstein:Today is my son's first day back at school and also his birthday, so uh big day, happy birthday.
Ben Larson:I feel that, and I know I know this is his favorite podcast, so, so I know he's listening. So happy birthday.
AnnaRae Grabstein:This is definitely content that seven-year-olds love. Cannabis business news Very cool. Well, I am pumped to get this conversation started today, so let's, let's do that. I will queue up our guests. We're going to welcome Aaron Nospich onto the podcast today. He's the founder and CEO at Breeze and also the founder of Lucid Media, and Aaron is not just the driving force behind Breeze, but he's also a seasoned entrepreneur who has worked in cannabis and hemp for a while. He even launched his first direct-to-consumer clothing line at 13 and has steered Breeze's growth, doing all kinds of really cool stuff like building in public and creating all types of really unique, really modern types of content to be getting the word out about what the brand is doing. So there's just a lot for us to learn and talk about today and I'm really excited to welcome Aaron. So welcome to the pod.
Aaron Nosbisch:Hey guys, thanks for having me. This is like being on your favorite TV show. I gotta be honest.
Ben Larson:Well, you look great and you're sitting in an airport right now.
Aaron Nosbisch:Yeah, man, it's crazy. I'm actually on my way to burning man, so I even got the the full boots on, oh there you go nine yards, so on my way over there ready to burn?
Ben Larson:are you gonna help hydrate the playa with, uh, some breeze?
Aaron Nosbisch:yes, sir, I shipped. Well, you know this is a decommodification rule or principle that they have, so I gotta be a little bit careful and maybe not push it as hard as I usually do on linkedin, but uh, but I'm definitely gonna uh have it there for people who want to give it a shot. And I thought about actually making, just like a silver can, just a nutrition panel on it and see if I could pass that out at scale.
AnnaRae Grabstein:But yeah, I'll definitely have some breeze at the burn for sure wait, you're saying that you thought about making a brandless version of your product to bring to burning man yeah, I thought about it for real because I think people would like it.
Aaron Nosbisch:You know it's, it's a, it's like the perfect kind of solution. I mean, like I always have said, like m2ripe thc beverage is like the ultimate, ultimate festival drink, like you're not getting lost out of your mind, you're not acting kind of silly, you just, you know, like a happy, little positive vibe to kind of dance, to music with. So, um, I thought about it. We didn't do it, but I got close with it. You know, like the issue is just like how do you create a? You got to create a label that just is the nutrition. And then what do you put on the front? Microdose cannabis and mushrooms in the can, maybe, and just kind of, like you know, roll with it, but maybe next year.
Ben Larson:You're teeing me up perfectly, because what you've been great at with this brand is working around different rules and regulations and getting creative, whether it's the use of emojis in your social media marketing or what have you. But let's go back to just the genesis of Breeze, and Anna Rae mentioned Lucid Media. Where did it all begin? Chicken or the egg? Yeah, what came first? Was it Lucid Media or Breeze? And did one inspire the other?
Aaron Nosbisch:Yeah, so actually I started the brand in January of 2019 called Maku M-A-K-U, and it was a CBD oil and gummy product, and so we were one of the early CBD brands that came out right after the farm built, and so with Maku, I kept trying to advertise and I just kept running into wall after wall. Before that, I had really cut my teeth at CMO with a big wellness product that spent a lot on ads, and so I had a lot of experience there, and so I tried to take that over to the CBD industry, and every time I would get my ads live for a couple of days, I would just get shut down, and it was so expensive to just keep playing that game over and over and over. And I had this revelation Elon talks about this quote. I really like. He says that you get paid in direct proportion to the challenges that you solve or the problems that you solve, and so I thought to myself I'm like, hey, man, no one will even touch this problem because it's so hard and it's so infuriating and it doesn't actually make sense for most agencies because it's such a time stock, so infuriating and it doesn't actually make sense for most agencies because it's such a time stock. If I could figure out how to advertise compliantly and effectively and scalably and sustainably hemp products and CBD products, then it would be a very successful agency. So I just kept working on it, kept working on it, kept working on it, studied the policies internally at Meta of like what do they allow and what don't they allow, and we found some paths of compliant advertising that were effective for conversion as well and hold it off, and we were the first to really crack that code per se.
Aaron Nosbisch:And then Lucid, from 2019 to 2023, grew to the largest cannabis social advertising agency in the world and we run 90% of all ads on Facebook, on Instagram, for any cannabis brands and have done so for quite a while now. So that was really where I got my tenure in the cannabis and the hemp space and I went through the CBD rise in the fall, the Delta 8 rise and then the D9 rise from there and just surf, surf that whole wave, um, and then in 2023, uh, actually can came to us. Uh, I forget I think it was mo um, uh who reached out to me and was like hey, you know, like we're trying, we're launching this hemp derived thc version of can and we want to know if you, if you could advertise it for us. And I said, yeah, hey, send me some products and like we'll see what we can do. And and you know time, we were doing a lot of CBD advertising and THC was just on the rise. So I was like maybe it's possible.
Aaron Nosbisch:So I had tried the product and I remember when I tried Cain's product I was just like holy shit, this is fundamentally the future of drinking. This is it. And for me I joke around, I say that I used to be a pro drinker. I used to be a pro drinker. I just retired early and you know, and the thing is like alcohol is a lot fun. Some of the best times of my life, and I'm sure you guys might have been consuming alcohol it's just like when you zoom out, you realize the cost is really not worth it. The juice is not worth the squeeze per se. And I realized that these new products, this could really satisfy a really important problem for a lot of humans. And so I tried the product. I really liked it, I helped them with their advertising and they were doing really well.
Aaron Nosbisch:And it was at that moment that I realized like, okay, if I'm going to get back into the hemp industry. If I'm going to get back into the cannabis industry, it's going to be through beverage. But I want to do it differently. I want to have something that's a little bit more social, a little bit more fun, a little bit more exciting and a little bit more energetic, and that would also not have the anxiety or paranoia that's traditionally associated with potentially sativa blends or other sativa-based products in the more regulated space.
Aaron Nosbisch:And so I just started working on a brand. I started calling different people. I went to a few different conventions and conferences. I met Travis Duncan, who's this really smart guy. He also runs FB Distro, which is a small distribution company out of Tampa Florida. It does a lot of service for our industry. They carry most of the brands in the space and make sure that they get distributed on this direct to retailer basis.
Aaron Nosbisch:And he had brought to me some unique ingredients like a nano emulsified lion's mane, and he had some formulation experience and access to some different emulsion labs. And so we worked on a beverage. And the first one man it was gnarly like. I was like oh, let's make sure it's no anxiety. So we're like heavy mercy, like let's make this thing like you know, no anxiety, no chance, uh, and I would drink it, and you know, I think, uh, then you know this, of course, and I'm sure in a way you as well. It's like the particle size is an option. You can kind of change how big or small your particle is.
Aaron Nosbisch:For for these foods you know most by uh, thc and cbd, um, you know, the smaller they get, the faster they act. But also cannabis, cannabinoids are very bitter, so the smaller they get, the more bitter they are on the mouth. So he made it really, really small, uh, and it was a small not just in the thc but also this mercine, and I drank it and I swear, like two seconds after I drank it I felt like I just got hit by a truck and I'm like, oh man, like this is never gonna work. What am I doing? So?
Aaron Nosbisch:So we went through some iterations and, uh, eventually, uh, travis called me and after we tried a bunch of different drinks and he said man, I got it, this is it, it's perfect, it's perfect. He said fly to Miami, benzinga, I'll meet you there. You try it as long as you like it. We'll pass out a bunch at Benzinga and see what people think I literally was on the plane. I ordered labels on the plane for a $48 or $24 delivery. The labels showed up at the hotels. He came with a box of silver cans and I literally went to the room there's a video about it on social actually Cut the labels with like a label cutter thing that I bought at Office Depot, slapped them on the cans, ran downstairs to the conference and just passed out the drinks to everyone, which is kind of funny.
Ben Larson:That is amazing.
Aaron Nosbisch:Well, what's funny about Bazinga is it's like the regulated cannabis industry. This is where MSOs live and this is where they go to hang out and figure out how to take over the world or whatever they do. And so we went over to them and at this time they were really clueless. Hemp was kind of like, oh, that's that CBD stuff that doesn't work. It was this kind of nonchalant thing. And so they started drinking the products and we thing. And so, uh, they started drinking the products and we were the only cannabis product that you could consume at the conference. Uh, like legally, quote, unquote, and so it was. It was cool. And since then we've been back every year and pass out more brands and our products and anyway.
AnnaRae Grabstein:So that's how it came to be and so that was about a year and a half ago um, because benzenga usually happens like january, ish, um, something like that fe February, and so there has been an enormous amount of growth since then.
AnnaRae Grabstein:And so it seems like what you did is you leaned into all the skills that you figured out with Lucid and you took those to the brand that you created and you really started pouring just a lot of accelerant on this brand. And what I have seen that really stuck out at me is how much you've chosen to build in public, and what I mean by that is not only stories about you and the content that you're creating specifically, as you have been doing things like formulating or putting labels on cans but also sharing transparently how much it's costing you to make the product, what your sales are, how much you're spending on advertising, and I think that that has made a lot of people in the industry really pay attention. I can't think of a single other cannabis or hemp company that has been sharing information like that. That isn't forced to because they're a public company. And what is that about? Was that something that you set out to do? Did it happen by accident? Is it a part of your leadership philosophy, like what is going on there.
Aaron Nosbisch:Yeah, absolutely. Well, honestly, I kind of I kind of didn't really know what I was doing fully and so I thought if I shared in the public, maybe people would give me advice on how to kind of orient the ship and which way to go. So that was kind of part of it, and it started really on Twitter, actually more so than LinkedIn. I started posting on Twitter. I'm like, hey, we're going to launch this brand and one of my partners, nick Shackelford he's a very influential D2C guy. He's big in the direct-to-consumer e-commerce world, so he had a bit of an audience as well. So I thought, you know, hey, like let's, let's just share what we're up to and share this launch and then we'll take it from there and kind of see where it goes. And I had this concept.
Aaron Nosbisch:I guess I realized that the people I enjoyed following the most on the internet were the ones who were really documenting and sharing their story. Like that was intriguing to me, that was interesting. I felt like I was learning and I was part of their story and I was part of, you know, this bigger thing happening and I and I thought, you know, we could do the same thing and that, you know, I everyone told me that was a really bad idea. Everyone was like you know, you shouldn't do that. People are going to rip you off and they're going to screw you over and you know it's going to be a problem and I'm like I just didn't really see why. I get it that people can copy you or maybe try to infiltrate or something. But the thing about competition is that one in Hemp, we're way too early for it. This category needs to build and it needs to build quickly and effectively and we need to all be in unison in that process. So one is I didn't really think that the industry needs competition. And two, I don't really believe in the fundamental idea of competition. Like the thing is, when you're competing, you're always kind of chasing or following someone else.
Aaron Nosbisch:I don't want to build a brand like that. I don't want to chase or follow anyone. I want to come up with a vision and an idea and look for new ways to innovate and add value to society. And I think that no one can really copy that part of me or Breeze or our team's ability. They can only replicate that, they can only follow that, they can only chase that.
Aaron Nosbisch:So our kind of premise is like sharing in the public is going to be a way that it's going to be able to bring attention to the brand. It's going to bring solutions to learn very quickly and share with the growing industry and potentially support their growth in the process, and so you know. The other idea here is like I don't want people feeling like we were just running off and doing our own thing and keeping it like. Instead, I was like, hey, if I just build this in the public and show everyone what we're doing, I mean that's that that would be a net value add to them as clients as well as to us. And and it seems people have been very receptive. I would say it's definitely been. It's definitely working for us, I think.
Ben Larson:I love that.
Ben Larson:I love the fact that it resonates a lot with me, because I always talk to people about coopetition and just like the rising tide mentality.
Ben Larson:I'm wondering now, though, if it's had kind of the reverse effect you were out there seeking knowledge, but now you're providing so much knowledge yes, a master class um in direct-to-consumer marketing, and and one of the aspects that really jumps out to me is is the marketing spend, because in our industry, we've been so strapped for cash that I think people are hesitant to spend into marketing, and I think we did a previous episode where the typical spend is is dramatically less in cannabis compared to other other industries.
Ben Larson:But I think the last metrics I saw from you you're you're approaching like three quarters of a million dollars in ad spend, which is a astounding number for a lot of people a month, a month, I you know, I think that's been our, our spend maybe over six years, and we're we're a little different. We're B2B, so can you just dig into that a little bit, like, have people been coming to you asking for advice, or maybe that is what you're just putting out there in the world? It's like it is okay to invest in your brand and get it out there and look it is possible to get returns on it.
Aaron Nosbisch:Yeah.
Aaron Nosbisch:So you know, I think this is where my e-commerce and D2C background really came into play. I had known separate of beverage and I think that this is the big delta here. Most people in beverage have been in beverage for a minute and there's a lot of decade-old experience or multi-decade-old experience in that I was pretty clueless. I never had ran a beverage company before and I had some friends who did and I called people like Ben who gave me some crash horses on what I needed to know. But all I knew was Ecommerce. I knew direct-to-consumer, I knew digital advertising, I knew brand building, I knew how to love people. I knew people and I knew what I wanted and what I was looking for as a solution and I figured that that part of me was also something else and other people. So I guess my point that is like by. Because I had this experience, I knew that I needed to build a business model that was going to sustain direct to consumer success. So one thing and this ties back to your question is just to be clear One thing is Breeze is an expensive product, like it's probably the most premier in the price range of beverage, so it's definitely at the top of that range. So, for example, our seven, our six pack, over seven and a half, for example, our six pack of our seven and a half ounces is $40. So six pack of our 12 ounces is 60. And that is both a combination of the craft ingredients and the quality that we put into it. But it's also because the business model necessary to succeed in B2C requires a certain set of unit economics. To be successful, you need an AOV average order value of somewhere around 70 to $100 to be successful, you need an AOV average order value of somewhere around $70 to $100 to be successful. The reason for that is the cost to acquire a customer. The CAC is average $50 across meta, and for new products and beverage products it can be even higher than that. So I knew that I needed a business model that was going to facilitate me being able to pay for a lot in advertisements and pay an average CAC around that. That would still be profitable and cashflow positive, and so that was kind of the instinct going into it. But you know this is the thing that people get wrong about advertising all the time is they think I'm going to need a certain level of money invested into the ads machine until it starts working for me, and that's like an idea that I think came over from SEO, because there is a little bit of a buildup in the SEO world, but in the digital advertising world it's really not so much like that. The more data you have, the better your ads will perform. Yes, but Breeze was spending $100 a day until it was profitable and then we scaled it up so that $750 or $1 million in spend I think we're going to probably spend a million dollars this month it started at $100 a day and we achieved profitability with that and then scaled that up incrementally until and here's the thing Hemp, thc beverages and Breeze is a sticky product.
Aaron Nosbisch:People buy these products. They have really fun times that come at very little cost and then they want more of it. So when you're paying $50 to $60 to an acquired customer, if you've built a system that can serve those customers ongoing, maybe subscription, like we have, and others have the LTV the lifetime value of that customer is strong. So, for example, breeze, we're seeing like a 250% six-month LTV. So that means that every customer that buys buys two and a half times by the sixth month and then by the 12th month it's about 3.2 times. So like we know that if we're buying a customer break-even on month one, that in about 12 weeks you know 24 weeks that it's going to be really like 3x return or 4x return on that dollar that was spent. But be careful with that, because you know you don't want to hope for things in the future that don't come Count your chickens before they hatch. But once you dial it in you can do a little bit more of that.
AnnaRae Grabstein:I'm seeing you make a lot of connections between the creativity, the purpose and the authenticity of the brand and also the data and the metrics that drive the decision, like how much money to spend on advertising. And with advertising, it's clear that you can monitor the metrics in real time and so as long as the metrics are still meeting certain benchmarks, you can keep pouring the sugar on and hopefully it keeps returning, and as soon as the metrics start declining, you can quickly make those decisions and pivot. Quickly make those decisions and pivot. But what you've done by building so much based around acquiring your own customers, has been really like a focus and investment in direct-to-consumer, and I think at the beginning you guys were 100% direct-to-consumer.
AnnaRae Grabstein:In your most recent July update you shared that you're at. 90% of your sales are coming from direct to consumer, so it sounds like you're starting to think about an experiment with other channels and I think that it's worth talking about that and we talk about it on the show and when we're talking about beverage. There are a lot of folks that have started in direct-to-consumer and decided that actually the long game for them in hemp-derived cannabinoid beverages is in actual distribution and in traditional retail, and that might be just because of the sheer volume that moves through those channels, or even some regulatory risk associated with long-term D2C strategy. So I'd like to hear from you the way you think about those two channels and what the long tail is for Breeze in direct-to-consumer versus traditional retail outlets.
Aaron Nosbisch:That's a great question. Thanks for asking. Okay, so I think and I'll both share about my experience, but something that I really want to do is and you guys know this about me is I want to equip people to have similar levels of success with their own brands and with new brands that are starting, especially regulated cannabis. This is a great opportunity for you to get into hemp and learn from us and how we're talking about it, so you can do the same. So, but this is the key factor is like I did not have the retail experience that ben has, that any of these beverage guys has.
Aaron Nosbisch:If you looked, so Breeze was early in the hemp beverage movement, but we weren't the earliest in the hemp beverage movement. You had people like Can and Delta Delta's been in the game for a really long time and you had Cycling Frog All of these guys that have big beverage backgrounds, really smart guys that are really leaning on their skill sets, which were traditional retail. And I was coming to the table and my team was coming to the table kind of, you know, twiddling our thumbs, thinking like, well, what does a distributor do, you know? And so like it's, it was this kind of thing where it's like, okay, well, we're not going to be, we're not going to, we're not going to be able to succeed or beat the game or really get into the game quickly by trying to go that route. That's not what we're good at, but these things over here we are good at. So that was the first thing is that we kind of really thought that D2C was going to be our path to break into the category quickly, to catch up for the lost time that we had lost by being an early but later entrant to the space, and I don't think anyone thought that that was going to work. I'm not even sure I thought it was going to work when we started and then, thankfully it did.
Aaron Nosbisch:But to your point, I think we can grow a very successful direct consumer brand. I think that it's grown bigger than even I thought it was initially going to. Now we're on this run rate for about $25 million a year. I think I could probably get that to $100, maybe $200 million a year. I think I could probably get that to 100, maybe 200 million a year through D2C. My buddy, james runs this company, element Now they sell powder packets and they're doing a couple hundred. So I do think you can build a big business in D2C. That being said, you're not going to build a $60 billion monster energy drink company by doing direct consumer. It's a great way at this stage to introduce your product to the masses, to have that personal relationship. Sometimes it's more profitable because you're not cutting these wholesale and these distributor margins out of it. But ultimately, to get real mass saturation of a brand, it has to be retail. So we're leaning in pretty heavily.
Aaron Nosbisch:I brought on this really awesome guy named Brian Dewey. He was the head of sales over at Navis and then he worked at Stone Brewery. Prior to that he, after a lot of convincing and a lot of research on us, he agreed to come on as our chief revenue officer and lead our retail strategy. He's been doing a great job. So I think we've doubled our retail output. We're still small compared to players like Han and these other guys, but we're in. We're still small compared to players like hand and these other guys, but you know we're in about like 500 or so uh different locations now across across the us and then just trying to ramp that up as as quickly as we can.
Aaron Nosbisch:But ultimately I think that all the the the major uh expansion in this category. It's going to come from retail, but I do think that those who have a really strong dvc presence are going to be able to move significantly more volume and velocity than those who don't off the retail shelves, which this is what you see in CPG. You see it all over in CPG. It's on all these other categories. What are the things that actually lead to a velocity increase of movement off the shelf? It's online branding, it's online advertising, it's online marketing, it's those direct relationships. So I'm hoping we can balance that out and then use that as our advantage to move a lot of blocks.
Ben Larson:So one of the strategies that you've implemented to kind of get around some of the marketing rules is your lines main only product, and I don't know if this is on purpose, I'll let you tell me but the happy accident here maybe is that people really love this product, and so I think the avenues that you have ahead of you actually transcend that of some other brands, because you already have a line extension that does not have cannabinoids in it.
Ben Larson:And what I've really appreciated about the brand and how you've designed it and you talked about the formulation and the experience is that you're kind of skating to where the puck is going and using cannabis or THC as an ingredient, and so I don't know if I classify you necessarily as a classic, you know hemp beverage brand, Like.
Ben Larson:Of course, you're participating in the marketplace with the rest of everyone else, but I mean you're Breeze and you're creating the Breeze experience. And you know I was talking to Lucas Southard from Bevanette earlier today and he was talking about how his wife just likes to order the Lion's Mane product. And I think that's your opportunity. You can take these Lion's Mane products into the mainstream retailers and deliver pallets of them at scale right, and can you. I'm kind of dancing around as I typically do, but can you talk a little bit about the Lion's Mane product, Because it is still a significant amount of your sales. It is that kind of that beachhead product when people are finding you online and then a lot of those customers are finding the THC product through that, and so can you talk about that dynamic a little bit?
Aaron Nosbisch:Yeah, absolutely. It's both the most opportune and most challenging thing that we did and I'll tell you both sides of it and so I think at the base level is that we never really set out to be a cannabis brand. I love cannabis and I think it's great, but it was kind of more of a presentation and an entry into the market. But I've known in my heart, after trying a handful of different great products and beverage brands, that ultimately the future of drinking is actually functional drinking and that cannabis is a drink that has a function. In that category of functional drinking it will have its own massive segment. Don't get me wrong, it will be massive, but it is a functional drink nonetheless. Kind of belief in how I see this expanding category is that really there's this new emerging category coming to be that's even potentially bigger than the hemp category, which is this functional drink category where you're going to see thousands of different adaptogens, fungi, botanicals being used in modern ways to create net positive experiences that give people the fun or it doesn't always have to be fun, it can be productivity, it can be sleep, it can be utility in some capacity that adds value to their life, and I think that's where this whole thing goes and I and that's kind of the bet that I'm making is that, you know, breeze is really not a cannabis brand. Breeze is a craft experience brand. Like we are out, we are set on a mission to reduce human suffering and maximize human potential by using conscious compounds that lead to therapeutic benefits that and provide a net positive return. Uh, that that's kind of how I see the game. So, so with that it was like, okay, we have this infused, but we've added a lion's mane to it to kind of create something unique and different, a little bit more of a broader functional beverage. And then we're like, okay, let's take that and let's do just the Lion's Mane variant which, to your point, ben, it's going to give us the opportunity to sell on Amazon. It's going to give us the opportunity to run direct advertising without risk. Even if our hemp ads went down, we could still run those ads compliantly. It gave us the opportunity to get onto TikTok shop so we could market and advertise on a new channel that other people. It gives you the opportunity to sell into Sprout Social or not Sprout Social, sprouts or Whole Foods. Sprout Social is like an e-commerce tool, so it gave us this opportunity to kind of expand so kind of like how?
Aaron Nosbisch:Like what I'm more interested in is I think that the team that we've created has the capacity to create the largest functional beverage in the world. I just really do. I think that we have a really keen focus on experience. I think that we're the people who actually want the products, and I think that when the people who need the change or need the thing need it, they usually create great products, and so that's kind of the idea.
Aaron Nosbisch:There is that and I don't think you have to do that, though, to be clear Like it's not like one of these things where it's like oh, if you don't release a functional, non-thc product, your brand's not going to do well. In fact, I think it could be a liability to many people's brands. But I do think that there is this much bigger growing category, which you know we talk about regulations and challenges. There's going to be regulations and challenges for that industry as well, in a whole different way. It doesn't have the stigma that cannabis has, but they are efficacious compounds that lead to an effect, and so you know there will be an evolving landscape there as well. And to your point about the legal so we tried it and then the idea was like okay, well, like can we sell it though? And we found out it took us a little bit, but in July, 40% of our sales were actually at AllianceMain only. So that was like okay, we now know that we can do it and again, I don't want to make it sound too easy A lot of that comes from our skill sets in e-commerce and marketing.
Aaron Nosbisch:We knew how to get these things rolling, but it did work. But here's one of the challenges is that the satisfaction rate of our Lion's Mane although people love it like Lucas, for example, or his wife is it doesn't have the same satisfaction rate that our THC blend does. We probably have like a 90, 95% even satisfaction rate of our THC. People drink it, they love it, but the Lion's Mane it's more like a 70% satisfaction rate. So there's some challenges there. So we're in the process of reformulating now and making a more efficacious, more safe blend and relaunch that. But ultimately, our plan is to create a whole host of different drinks that create unique and different experiences, that are undeniably efficacious, yet safe for the consumer and add value don't take value from the collection.
Ben Larson:I just love the fact that you're tracking all of this and now you're telling everyone. It's like you need to be tracking this information or else you're not doing yourself any favors.
AnnaRae Grabstein:And the thing about efficaciousness. It's interesting. This comes up a lot and you spent some time marketing CBD products. I think that products that don't make you obviously feel a certain way can be really challenging for consumers to know if they're working. Quote unquote, like if you can't exactly feel it. Is it even there, and with some of the more subtle effects, whether it be CBD or adaptogenic mushrooms or anything else, you're not really sure. Am I just in a good mood or is this because of that thing that I just drank and maybe I don't want to go spend that same money again because maybe I'm just in a good mood and it didn't really work?
AnnaRae Grabstein:What I heard you say when you were talking about your aspirations in terms of functional beverages is about scale, and you talked about how big you hope Breeze to be and how big you think it can be. And inherently in that, something that we haven't talked about is your operational infrastructure, manufacturing and fulfillment, and with DTC operations, whether you're fulfilling a beverage or a t-shirt, there is definitely a lot of strategy about the way that people set up fulfillment in multiple regional areas so that shipping can happen faster and cheaper, and then, even before that, fulfillment can happen in terms of operations, and my understanding is that you guys do not own your own manufacturing and fulfillment. I'd love to hear about your vision coming from a brand marketing kind of impact perspective. As the CEO, how are you tackling manufacturing, operations and fulfillment, all the logistics that come along with moving things from place to place and making them?
Aaron Nosbisch:Honestly, a really smart team is the short answer. You know it's like I don't know enough about all this stuff, you know. But I do know how to connect with other people and I do know how to kind of like use, work with my network to find those other people and bring them and create a great team and I think that's maybe one of my skill sets there is is that. But we have a really great team. Like I brought on daniel gleischstein, um from uh. He's our ceo. He was um previously the ceo at cloudwater uh, which was a big uh, him derived uh cbd brand, uh beverage brand, so he had a lot of experience in that. Um, honestly, like when we started, like literally I go, we'd make small batches. I you know, probably a mutual friend of ours, pierce Riley and Billy. They have an operation in North Carolina, so they would make some small batches for us. They would literally freight it to like Florida and we would put it in like storage units at the beginning and like put some, get one pallet to our my backyard, like bungalow, and I'd have, you know, the neighbors come over and package boxes for us. So at the beginning it was very hands-on and I think that's important because you learn the intricacies that go into it, and I had some of this experience from e-commerce in the past and the intention initially was really to do it all of ourselves. We were going to go get the full 3PL, we were going to make the whole thing. But again, beverage is more challenging than other categories and I think that people undervalue that when they get into beverage for the first time or at least I did and so I quickly realized that, like when you're moving 20 trucks around and you got 200 pallets, that like maybe your house won't work for shipping and so whatever you're trying to do. So I found some really cool partners. I, we have a 3PL out of Delaware, tondo. They're fantastic. If you go to them, tell them you're in Senia. And they were a smaller operation and they agreed to grow with us and so we scaled up together, which was really cool. So they do all of our 3PL nothing Delaware. And then we actually work with Best Bev, which I'm sure you guys are familiar with. So that's owned by the same people. That own wink uh, amazing brand, amazing product. Um, and so they've been helping us for quite a while. Um, they're, they run it in an amazing operation when it comes to that co-packing. They have really high-tech machines there, they have every accreditation and like all the boxes are checked, uh, you know it's it's a very, very lean operation. So so we make it there, uh, or a very, a very awesome operation. So we make it and then we freight it over from there to Delaware and we run our D2C business and then our product ships directly out of Delaware.
Aaron Nosbisch:We really do need to have plenty of more access points all over the country to lower our costs, because shipping beverages across the country is expensive as hell. But that's kind of the process that we're kind of expanding to now. But you know, like it does take a lot of operational efficiency. But I think the key when you're doing anything new or you're trying to scale things I think it's actually more important when you're trying to scale things is you got to keep it simple.
Aaron Nosbisch:Stupid, like the simpler you can keep your operations. Like you know, at the end of the day, all e-commerce is is like make a product, sell that product, ship that product and make sure the customers are happy. So it's like if you can really isolate those pillars and just focus on operational efficiency around each of those pillars. Then you have aerodynamics built into the company that allows for efficient and fast scaling. That is the key point that most people get wrong, because they overcomplicate at different stages of the growth and then they're not actually able to leanly scale very quickly. Where I think that's something we did right, it's just like really get clean easy about those and then be ready for velocity, and then we got there.
Ben Larson:Amen to that. I know you've been scaling quickly. I think it was at the beginning of the year. We were celebrating, all of us online together, you crossing that million-dollar-a-month and then recently crossing the $2.5 million mark, all in the same year. So y'all do the math, that's some pretty phenomenal growth rate. But talking about streamlining, you did hit some hiccups. I think you describe it as a reset month in July. Can you talk a little bit about that? And I don't think it was due to logistics. But what does a reset month mean and look like? And still be able to turn a strong revenue?
Aaron Nosbisch:So I think of it like if you're climbing a mountain, the higher you go up on that mountain, the longer you walk. Eventually you need to set up camp and sleep for a night and kind of take a break and restock and reset. You know. So for us it was like we had gone from like a brand new company figuring out our way around the beverage world to, oh my gosh, now in 15 months, we're a 2.5 million dollar a month company moving 500,000, 600,000 cans a month at least, and, and and it was a big operation. Like, hey, man, like there's some missing infrastructure necessary to facilitate an operation this size. You know, and so, and not even that we're that big, yet, like, the reality is we're very tiny compared to the big beverages of the world. Uh, you know, and so I try to keep that in check as well. Um, but, but that being said, I you know it was a much bigger operation that we had. So it was a lot of infrastructure. It was a lot of infrastructure, it was a lot of team management, it was a lot of refocusing, it was a lot of like, okay, here's what my thought was it's like growth at all costs is not the answer and not the goal at Breeze. The real goal at Breeze is to serve humanity as best as we can, and the way we're trying to do that is by giving them an efficacious product that adds value and doesn't take it like we're talking about. And so I felt like we were losing a little bit of grip on that. I felt like we were not taking as much care of our customers as we could. Our shipping times were a little delayed, packages were getting a little roughed up in the mail, and it was like, okay, let's refocus, let's make sure that the main thing has to stay the main thing, and it doesn't matter what brand or what vertical you're in. That main thing is serving your customers. If you do not do that right, you do not do anything right, and so it was really kind of a refocus there. Now there's other aspects to it. We had our meta account go down for three days, which sucked, and so there's not just like your account goes down and you have downtime, but then you have rebuilding the momentum as well. So then you have downtime, but then you have rebuilding the momentum as well. So that takes a minute as well. I think our TikTok shop went down for a brief period of time.
Aaron Nosbisch:So there were some things like this that were also kind of part of that, and I don't think I don't think it's always going to be roses in this game. It's going to be challenging, whether it's an evolving legal landscape, whether it's new restrictions. There's just going to be ups and downs. So how I thought about July, to be clear, I was kind of beating myself up and going from 2.5 to 2.42. But the focus was like like let's make sure that we're doing the, the number one thing right, which is, uh, serving our customers, and we'll trust that if we can do that right, that the rest will take care of itself, even if it's not just a constantly upward you know thing one of the things that often comes up when I'm working with growing companies and and founders is that they become surprised sometimes when systems that they built break, and especially when it's a system that was working.
AnnaRae Grabstein:And I hear that that's a little bit about what you're talking about, and it seems to me that what I've encountered over working building many businesses myself and now working on the outside helping businesses is that it's almost a sure thing that when something doubles and for sure if it triples, be it the number of employees or the number of transactions or the number of SKUs that the system is going to break. And that's just part of it. That's part of what growth is about. And so we look ahead and we try to design a system that's going to work for when our business doubles, but it's really possible that when it triples, that system is just not going to work anymore. And uh, and part of the experience of being, I think, a a CEO that can really lead is how we lead through those changes and um and realizing when it's time to reset and realizing that there's lots of resets. So I'm with you and I think that there's going to be many more resets that we can't yet predict on your path and the things that are going to break.
Aaron Nosbisch:I love that for the record. It's an undervalued concept in business and e-commerce and all of it. Everyone wants scale but they don't really understand what, what, what it pertains like, what it contains, like in something I say all the time. So it's kind of funny that you said this. Like every time you double your company, everything works like like there's no if and around it, like it's just a different company. All of a sudden it's like it's like if your child was growing year after year, like day after day by year. You know it's like it's it. It's a whole new game that you have to play and you have to support and do it differently.
AnnaRae Grabstein:You have to have the muscle to expect it. It's like realize that it's going to keep breaking and then we get to keep rebuilding and shifting and adjusting. At the beginning, you probably could have put all your orders through a Slack channel and at some point that just no longer works. You got to up-level and now you need customer service or whatever the thing is, and yeah, Well, I just echo off of that.
Aaron Nosbisch:And so then what matters? Right Mindset matters, because if you don't come in with the right mindset that you're going to get knocked down every day and you're going to have to figure out how to collect your stuff and get back up again. You know then then you're not going to, and so you know. This is something we really do our best to teach our team and share with our team on how to. It's less we really try not to tell anyone in our company what to do. We just kind of try to help them how to think and to live by principles. So one of those principles would be like no-transcript and that kind of is a philosophy we take uh to heart here, and so I think that those are in array. This goes to also what I was saying earlier about like these kind of like pillars of focus and simplification, like the tighter, the leaner operations and focus we could have around distribution and around product and around e-com and just the store, the faster we had built the company to be ready to rebuild it every cycle.
Ben Larson:Man, aaron, I just love your leadership philosophy. I share a lot of the same principles and I'm amazed that you're calling this first hiccup. It was all contained within this one month. I feel like we recently went through one, but it was a 12 month kind of rebuild. Um, so kudos to you and and and propelling the team forward, talking about kind of just in in making a little bit of a left turn, notably, but talking about some of those hiccups that can come along. Um, you're also quite involved in the, the hemp beverage Alliance, and kind of the, the ongoing conversations and state to state and, uh, you spent a lot of time in Florida and Florida is just one of those embattled states, and so I'm just curious what's happening down in Florida. There's a lot of conversations going on between cannabis and hemp, and are they really related in? Why is one posed against the other? Just kind of give us the Florida landscape really quickly to the depth that you feel comfortable.
Aaron Nosbisch:Yeah, I will. I mean, I'll start off by saying I'm definitely not a politician and I don't have all the facts, but I am in the space and I live in Florida and I pay attention. So I'll tell you what I, what I see, and I'd love to hear your guys opinion in the process. But you know, first off I'd like to say it's like we all want access to cannabis. We all want access to cannabis, we all want access to hemp, we all want access to THC, we all want access to regulated cannabis. We all want access.
Aaron Nosbisch:So the kind of situation that's unfolding is that there's this Amendment 3 coming to ballot that's going to legalize cannabis. Is the idea. The idea and part of that amendment is that the only distribution point or access points for this recreational cannabis will be the existing dispensaries that sell medical cannabis. And the trouble with that is that the whole kind of medical operation that happened in Florida is kind of screwy, no matter which way you look at it. Like at the very beginning, rick Scott, governor, rick Scott issued, I think, seven licenses to what some people might assume would be family and friends or friends of friends or people who had 100 year old farms within Florida, so they had deep infrastructure, kind of what I would consider the opposite of socially equitable, and that led to this massive runway of opportunity for those companies to build vertically. And it wasn't just that they had licenses, but you had to have a vertically integrated operation. A vertically integrated operation the way that it was described is about a $10 million investment, so it's not like there's an easy way to get into the cannabis industry. You have to have an expensive license that's hand-selected, and then you have to have this big operation. So that's kind of how that started, which led to this runway for these companies to create massive infrastructure all throughout the state of Florida to own and monopolize the game, I'm sorry.
Aaron Nosbisch:And so we saw papers. I won't call names out, but there are brands and MSOs out there now who run 51 percent of the market, and so when you have Amendment 3 on the ballot, the kind of concern isn't about access for consumers. The concern is that, if we do it this way, that we are really kind of monopolizing the cannabis space within Florida, and Florida is just kind of an obvious place to see it. But it's actually happening in a lot of other states right now, not just Florida, and so then you kind of see, there was this hemp bill that was kind of pushed forward by some of the potentially MSOs or lobbied for by these MSOs to kind of shut down hemp. And then we saw Ron DeSantis come and vetoed that and there got a lot of hype on the Internet that that was due to hemp companies agreeing to push away Amendment 3 and support.
Aaron Nosbisch:I don't really know where all that kind of stuff came from. I'm not even sure if Ron knows what hemp is, to be honest, or fully. I think that what's really unfortunate is that there's this silly civil war type activity happening and this yucky kind of lobbying and this political greed and this monopolistic corporate greed. And I think it's really the ones who are losing is not even the corporations on either side, it's really the ones who are losing is not even the corporations on either side. The people are the ones who are losing and it's really really unfortunate because these plants are put here not by us and they should be accessible by us by that fact alone, through our free rights, and it's just really unfortunate to see all this nonsense. So me personally it's like I really would like there to be legal access to recreational cannabis in Florida. But I personally would not like to just hand that over to a bunch of monopolistic corporations.
Ben Larson:So I'm going to call out someone because they put themselves out there in a marijuana moment article. So, Kim Rivers, truly we've all heard of them. No-transcript in Florida that gets around this kind of key issue. I think.
Aaron Nosbisch:I unfortunately think that that path is him. It's to be honest and because there's an issue inherent, it's already. Think that that path is him. It's to be honest Because there's an issue inherent it's already corrupted. The well has already been poisoned.
Aaron Nosbisch:The reality is that Trulieve owns 51% plus of the market share in Florida. They have deep and wide infrastructure and so do the other MSOs that operate in Florida. When is some entrepreneur that is young or older, whatever going to come and actually have a shot at grabbing real market share in Florida? There is no chance. It's not a viable option. The license cost of Fortune even the new, cheaper ones, they still cost a lot. I think it's $146,000 or something minimum. And then you still have to have a vertically integrated operation. Then you still have to have a vertically integrated operation. Just to be clear for those who don't know what a vertically integrated operation means you have to grow the product, you have to process the product, you have to test the product. You have to put it in compliant packaging, label it, test it again. Then you have to own the retail store that sells it and staff it with trained professionals. It's crazy.
Aaron Nosbisch:So what's the solution? I think there's smarter people than me who might know a way to make that a little bit more equitable for everyone. But the thing I know how to do that will make that more equitable is teach people how to launch hemp businesses that succeed quickly, because that's what's going to actually get these cannabinoids into people's hands in a truly fair and accessible way, in new ways that is actually socially equitable. Like I can sell breeze at ABC liquor at total wine. You know what?
Aaron Nosbisch:What truly doesn't have access to today is doing that. But here's the thing they could have access to it. They could do it in a heartbeat if they wanted to, and you're seeing that from Curaleaf, you're seeing that from GTI, you're seeing that from many MSOs who are releasing their own derived products to enter the free market, that is, him to compete fairly against the other brands. That's what free market looks like, that's what free access looks like, and I think that that's one of the few ways that we're going to actually be able to see equitable cannabis operations today in these regulated states. But I hope that I hope that some smart people can figure out better paths than the ones that are being proper, because it's easy to say're saying like and it's easy to say, hey, sorry, the way that it kind of happened just puts us in first place.
Ben Larson:Whoops, it's like, come on whatever part of me is just like well, they already own it. Just let them own it more, I guess. But as long as the hemp pathway stays open in florida, like that, opportunity will still be more attractive for you know the types of products that breeze is selling right, and so maybe that could coexist and then maybe there's a stepwise function from there. I don't know enough about the florida politics to really opine on this, but that's kind of what's coming to mind right now.
Aaron Nosbisch:Um, the question is just from also thinking of sorry.
Ben Larson:No, I mean, I trust very few people to be honest, um, especially politicians, uh but I just start thinking about the kind of criminal justice aspect and and getting the plant legalized on both sides, uh, so that there's not confusion when someone encounters a peace officer.
Aaron Nosbisch:Peace officer, I don't know the right label well, I think that that's, I guess, my concern and I, I, I, you know. Here's the thing dispensary should exist, regulated cannabis? I think I don't really think it's. There's a lot of problems with it, but it needs to evolve and get this and settle down, run from its mistakes. But I don't think it's about making that, uh, making that the the end. I think I I'm putting it into that. I think the thing is it's about making that, uh, making that the the end, I think I putting it into that.
Aaron Nosbisch:I think the thing is it's like, if we're going to go that path, do we really trust these, these corporations, these corporations, to not lobby hemp out of the state? And I don't really, I don't really trust that because, like, there's a fear that they have that it's gonna, that hemp is going to compete with their monopoly. But if you look at the facts, that's traditionally not even the case. A lot of these low-dose products, especially in the beverage world, they are not being sold in the dispensaries at scale. It's 2% of the total sales of dispensaries, as you guys know. So anyway, I hope that we can all find a way to unify and really focus on the consumer and work on getting fair access to them. I think that's really what all of our girls should do, yeah.
AnnaRae Grabstein:Well, we've been talking about having some kind of Florida debate leading up to the election. So if you want to participate, or if you have someone that you think would be fun to have be a part of that conversation, I think that there's a lot of complexity to what's going on to make adult use accessible in Florida. So more on that later, and we're going to start wrapping up the conversation because all of you out there who are listening, you've been with us for almost an hour now. So thank you. We hope this has been instructive. It's been fun for us for sure. And so, aaron, what we like to do at the end of the show is to hand back the mic to you for a last call. So what's your last call?
Aaron Nosbisch:Well, I just want to say thank you guys for having me on the show. You know I'm very grateful for the work that you're doing for our industry. High Spirits is the premier place to learn about beverages, the future of THC and how to build a great brand in the States and to get the latest news on it. So I'm grateful to be on your guys' show. You can check us out at drinkgracecom. I hope to come back sometime and talk to you guys soon and I'm very grateful for the time today Awesome.
Ben Larson:Well, we'll accept that. But thank you so much for catching us in transit. We hope you have a great burn. I'll see you on the flip side. Thank you so much, aaron. Knowledge bombs abound. Thank you, anna Rae. Were you taking notes? I'm going to have to go back through the transcript. Really appreciate every one of you. Thank you, as always. In fact, this time I'm going to be a little audacious and you can thank us and you're welcome because he was awesome. Thank you, aaron, it was a great show.
Ben Larson:Don't forget to like, subscribe, share, do all the things. We're growing and it is fun, and the more we grow, the better guests we get, the better content we have for you. Yeah, we're moving on. I think we're going to be live in person very soon as we approach the end of the year. We have Benzinga coming up in October, the recording live there, and then also the High Spirits Morning Mixer in Vegas for MJBiz. So keep an eye out for invites. If you were at the last one, if you weren't at the last one, reach out, make sure you get yours. Until then, remember everyone, stay curious, stay informed and keep your spirits high. That's the show.
