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
#060 - Howdy! The Texas Hemp Takeover w/ Ben Meggs, CEO of Bayou City Hemp, Howdy, 8th Wonder...
๐ฑ๐๏ธ Join Ben & AnnaRae as we saddle up for another deep dive into the Texas cannabis scene. This time, we're exploring the booming hemp market with Benjamin Meggs, CEO of Bayou City Hemp Company and the beverage brand HOWDY . Ben's unique journey from the Oil and Gas industry to hemp cultivation and CBD retail has positioned him as a pivotal figure in shaping Texas's hemp landscape. In this episode, we'll uncover the challenges and opportunities of building a hemp business in the heart of Texas and what it means to extend a Texas-sized welcome across the US.
๐ค ๐ช๐ต๐ฎ๐ ๐ช๐ฒโ๐น๐น ๐๐ผ๐๐ฒ๐ฟ:
โข ๐๐ฆ๐น๐ข๐ด ๐๐ฐ๐ญ๐ช๐ต๐ช๐ค๐ด ๐ข๐ฏ๐ฅ ๐๐ฆ๐ฎ๐ฑ: A look into how state policies are influencing the growth and operations of hemp businesses. ๐ฑ
โข ๐๐ถ๐ช๐ญ๐ฅ๐ช๐ฏ๐จ ๐ข ๐๐ณ๐ข๐ฏ๐ฅ: Learn how Bayou City Hemp crafts its distinctly Texan brands to appeal to markets beyond state lines. ๐ข
โข ๐๐ข๐ณ๐ฌ๐ฆ๐ต ๐๐น๐ฑ๐ข๐ฏ๐ด๐ช๐ฐ๐ฏ: Strategies for taking local success to a national level with a focus on cultivating brand identity rooted in Texas culture. ๐บ๐ธ
๐ ๐ ๐ฒ๐ฒ๐ ๐๐ฒ๐ป ๐ ๐ฒ๐ด๐ด๐: Ben Meggs brings a wealth of experience from the Oil and Gas sector to the hemp industry, where he has become a pioneer in hemp retail and regulation. As CEO of Bayou City Hemp and Howdy, Ben is at the forefront of the industryโs expansion, driving technical oversight, operations, and ensuring top-quality production. His leadership is guiding his brands to capture the essence of Texas and deliver it to consumers across the country.
๐
๐ช๐ต๐ ๐ง๐๐ป๐ฒ ๐๐ป? This episode is perfect for entrepreneurs, hemp enthusiasts, and anyone interested in the dynamics of regional branding and its impact on national markets. Whether you're a Texan at heart or just curious about the business of hemp, you'll find valuable insights and inspiring stories in our conversation with Ben.
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Howdy. Welcome to episode 60 of High Spirits, the Texas Hemp Takeover. We're recording Thursday, september 19th, 2024. And today we're diving into the Texas hemp market with Ben Meggs, the CEO of Bayou City Hemp Company. A couple of months ago we had Nico Richardson on an operator in the CUP. The Compassionate Use Program gave the perspective of the regulated space and we had a lot of engagement, a lot of comments, a lot of people asking for the other side of the story. So we'll dive into all that. But first, anna Rae, how's your week going? Am I going to see you tomorrow? Are you going to Hall of Flowers.
AnnaRae Grabstein:I'm totally going to Hall of Flowers. Yeah, it's in my backyard, Hall of Flowers tons of cannabis events going up. I'm doing great. I've been trying to get lots of work done so that I could take a few days to focus on networking and engaging in the community and checking in with all my people, figuring out what deals everyone's working on and seeing what new products are in the market here. Nice.
Ben Larson:It's been a little while since I've been to a Hall of Flowers. Do you think it's attracting people from outside of California?
AnnaRae Grabstein:Yeah, you know, my business partner is coming in from Maryland, so that's good.
Ben Larson:Oh, wow.
AnnaRae Grabstein:Okay, I'm getting some texts from um, some folks, some tech people from new york coming out. I think so. And you know, hollow flowers is doing something new this year, um, which is that they are going to be doing a day two. That's a consumer event, and that event is going to be a whole different vibe. It will really be like a cannabis festival and they've got rides and they've got celebrity chefs, and I'm excited about it.
AnnaRae Grabstein:I think it should be really fun rides like uh, ferris wheel and all kinds of stuff, at least in the promo materials.
Ben Larson:We'll see, I'll let you know Report back next week. Yeah, yeah, I don't know if I'll be in the conference, but I was thinking about coming up and posting up at Russian River Brewing. So if anyone wants a Pliny the Elder or a blind pig, you know where to find me, yeah.
AnnaRae Grabstein:It's blocks away from the fairground, so it makes sense. Other kind of things that are, I think, worth mentioning today before we jump in is an announcement this morning that the CEO of Air Wellness is out, and that means that this is now the fourth CEO from the top 10 public cannabis companies that have left this year. So we've only got six CEOs out of 10 that are standing and a bunch of new leadership coming into the top companies, and I think that it really is going to bring a new wave of M&A. To be honest, I see that it's going to make it a lot easier, when people have interim CEOs or no leadership at all, to consolidate into other companies. I think we're going to see people looking at market mapping and trying to figure out what the perfect combination of companies is to have just the right footprint. That's my prediction.
Ben Larson:Yeah, you have like Ben Kovler out there running front with GTI and making everyone look bad's like, oh you actually can't have a profitable cannabis company like what's everyone else doing wrong.
AnnaRae Grabstein:so yeah, that's not surprising and not surprising, yeah, and then we've got a bunch of of turmoil going on in cannabis regulatory spaces in massachusetts and california.
AnnaRae Grabstein:Um missouri has been really wild. So it's been a big week and and now we're just on the front end of event season, which you mentioned, hall of flowers you and I are both going to be speaking at meadowlands, which is in about two weeks. Um, david hua and the team at meadow I. I heard it's the last one. So I talked to hua yesterday and he said it's the last one. So I talked to Hua yesterday and he said it's the last California event, but they plan to continue on the East Coast going forward which.
AnnaRae Grabstein:I think would be really great. It's been a very community-focused event and has brought out a bunch of legacy folks, but I think it's time to broaden the tent literally the tent, since everyone camps at this event. You asked me yesterday where are you staying? And I said in a tent, bring yours too.
Ben Larson:I'm super excited about it. I have my camping gear I'm going to load it in the trunk and I also have a webinar that I have to host the next morning, and we'll see if I host it from a tent or not.
AnnaRae Grabstein:Yeah, and I'll call out a couple more events and then we'll dive in or if you've got anything. So, after Meadowlands, revelry in New York is being hosted on the Revel team we're big fans of them. They are doing a brand showcase for the New York market and then also a consumer event. Ohio is hosting the Cannabis Health Business Summit, which I think is probably going to be a much bigger event than it's been in years past, because Ohio is just blowing up with the recent launch of their adult use market. And then and then Benzinga in Chicago at the beginning of and that really just gets us through, I think the next three weeks.
Ben Larson:So I think I need to start booking some flights flights and watch your budget, because it can.
AnnaRae Grabstein:It can get crazy.
Ben Larson:Speaking of flights, I think I'm actually flying down to Texas, and in a few weeks I think I'm actually flying down to Texas. In a few weeks, Texas A&M is hosting a hemp conference as well. That'll be interesting. I actually I don't think I've ever spent a fair amount of time in Texas. I've certainly flown through it. Let that be the appetizer for today's conversation.
AnnaRae Grabstein:Yeah, but let's learn about Texas. If you don't know anything, let's bring on our guest and I will introduce him. Welcome to the stage, ben Meggs. Ben is the CEO of Bayou City Hemp, also the CEO of a number of brands that live under the Bayou City Hemp umbrella Hemp umbrella and Ben is shaking things up in the cannabis market and beverage scene in Texas. He's got a 15-year career ranging from high-stakes energy deals to startup ventures, and he took the helm of Bayou City Hemp in 2019 and hasn't looked back. Teamed up with 8th Wonder Brewery to create Texas's first vertically integrated cannabis beverage company and under his leadership, the company has won a bunch of awards and has grown tremendously. He is driving sustainability and pushing for progressive cannabis regulations and really bringing, I think, a light to the national stage on what Texas is doing. So welcome, ben.
Ben Meggs:Thanks for joining us today, yeah thanks Anna Rae and thanks Ben for having me Excited to be on the High Spirits podcast. Always a listener but excited to be behind the scenes today.
AnnaRae Grabstein:Awesome. Well, we can't wait to hear what you have to say.
Ben Larson:Yeah, it's been awesome watching you guys grow. I know, as this industry has kind of emerged, you guys were a pillar in the Texas hemp market and at that time Texas kind of felt like it was on an island, it was doing its own thing and I was really just curious about what was going on, how this was even happening. And that's kind of where I want to start, because you've been there the whole time and have watched it emerge and how it kind of came to be. And then as we get later into the show, you know we'll talk about how that's kind of now working beyond Texas and you're taking your brand to other markets and states. But let's kind of start there. You know, like what was the genesis of Bayou City Hemp and how you guys have journeyed through the politics and launching brands and all that.
Ben Meggs:Sure, well, you know, as you know, the cannabis journey is a long one. It can be treacherous, but it's really rewarding and I think we're getting to change. You know, we're getting to give consumers choices, we're getting to change perception of cannabis and we're getting it. You know, really to bring it mainstream and to be able to do that from Texas is just it's kind of an oxymoron. It just seems like how could that be? But it is happening and you know, I'll try to keep the story brief and you kind of read my background. So, come from oil and gas, so do many of our executives here. But we always had an affinity for, affinity for cannabis and you know we wanted to step in when the timing was right. Medical markets opened here, you know slightly, but there are licenses and we didn't want to get in at that time.
Ben Meggs:And you know, we, we kind of we knew we wanted to get in, jeremy Sherman, my co-founder, and I, and really when the Farm Bill passed, we took the opportunity. We, you know, just like any other startup, we put together a pitch deck in the kitchen, brought on the right people, our CFO, karen Trotter that was kind of the original team and we raised capital, put it together. And you know, just like any other group, cbd was gosh, I don't know. It was upwards of 25 to $50,000 a kilo. You know, for CBD isolate at the time and you know we we come from the commodities industry. We knew it was going to shift and and so you know, um, we knew there was going to be price contraction. We just didn't know it was going to be so significant, so quick.
Ben Meggs:But you know, we always wanted to move into finished goods. In Texas in the medical market there are limited licenses so you have to be vertically integrated. So we knew we were going to move into finished goods and really that just moved our timeline up to move into finished goods. We moved into contract manufacturing. Really that's where we cut our teeth on learning how to create really, really wonderful beverages, flavors, different things like that.
Ben Meggs:And early on, you know, we brought in PhD chemists that had done their studies and their doctorates in nanoparticles, gold nanoparticles, things like that. So we were able to, you know, really step into beverage early on. I remember we started, we had pumps very early on and then you know, you can see where the industry's morphed. But long story short, we started playing in the beverage field. We teamed up with 8th Wonder. We made the first THC beverage in Texas called Wonder Water. That brand did really well from the get-go. And then we, you know, subsequent to that I think it's out there we saw the writing on the wall and took the opportunity and acquired business. I am in an array.
Ben Larson:I'm thinking you're thinking the same thing I'm thinking is that I'm surprised that a bunch of oil and gas guys all generally enjoyed cannabis in Texas, and is this a common thing that just most of us on the outside don't know about?
AnnaRae Grabstein:for this conservative state, hey, before you answer, I just want to say I wasn't thinking that. I know that everybody likes cannabis. That's the right answer, but I'll let you answer that.
Ben Meggs:Yeah, you know, like I said, always had an affinity for cannabis. I was a user in college, my college years, and you know, obviously I came in when I, when I started in oil and gas, you know, in Houston it's just very test, heavy drug test, heavy market for a lot of you know reasons, certainly in the field. You know, once that started, of course I had to stop and so that limited my use and I, you know, always looked forward to and of course there were the times when I would go to Colorado or California and use while I was there, but for the most part it you know it really it kept me from being able to do that. So, of course, just like everyone else, I used other things alcohol or whatever else. You know.
Ben Meggs:So and I will tell you that, you know, the oil and gas industry is just specifically because we're in Houston, we hear a lot about it, but we are working with different companies, the HR groups. They're starting to remove THC I'll say that and we are doing different tests and things to allow for them to understand what that timeframe is, how their employees are failing, what they're failing for different things like that. So it's exciting, it's opening up and they know it's something they can't get rid of. They have to work around it now. Yeah, that's great.
AnnaRae Grabstein:Well, so I've got a question. You touched on 8th Wonder and, for listeners that don't know, 8th Wonder is a legacy craft brewery founded and operating in Texas. I always think it's really interesting when companies that are in cannabinoids are also in other spaces, and specifically beer. You can look at Tilray, a Canadian public company that has really struggled in the cannabis space in Canada and has, over the past 12 to 18 months, started acquiring a lot of legacy beer and alcohol beverage brands and seems to be really leaning into it. I'd love to understand a little bit of what your footprint is in terms of what types of products you guys make, what the difference in the size of the beer business is compared to the size of the cannabinoid business, things like that. Put that in perspective for our listeners.
Ben Meggs:Sure. So, like you mentioned, 8th Wonder is a decade old brewery. It's really a mainstay in Houston and regionally Very, very well known brewery, has a deep history here. So you know it made a lot of sense for us. Not only did we want a trusted brand and really a lot of beverage expertise, we wanted distribution as well. And of course, since they're a decade-old brewery much like Tilray's doing, you know, we wanted that distribution footprint as well. We knew it was coming and they just happened to be one of the larger breweries here and more established, and so it allowed us to scale really, really quickly.
Ben Meggs:So, as far as products go, I mean, we lean very, very heavy THC. So we were a hemp company, cannabis company first, and then we acquired the brewery. But the brewery was around much longer, you know, long before we were. So that business was established but just like beer everywhere else out there, it's down right now, and so that was kind of you know we saw that as an opportunity. They loved what we were doing, and so it was really a match made in heaven, at least as it relates to the integration of those two teams, or our two teams, I'll say this um, eighth wonder. I don't want to give exact numbers, um, cause I don't want to say what's wrong, but and the alcohol numbers are out there, cause we have to pay taxes on that. It's public, but we've produced more in THC beverages in our tanks in this one year than they have produced in the last four years of beer altogether, wow. So it's, it's meaningful, um, but again, you can turn a tank, you know, and we've met I've mentioned this before but beer has to ferment. It takes three to six weeks. Thc is as quickly as you can get your test back right and and and get it turned on.
Ben Meggs:So we focus on, uh, you know we have three, uh soon to be four in-house brands. Um, we have three soon to be four in-house brands. We have Howdy, which is really our leading kind of Texas brand. We have Beach Break and then we have the Eighth Wonder brands and we have Wonder Water under that and we have Ocho Verde, which is more of the spirit play, and then so each beverage we have, we have nine SKUs right now I think we're we'll see where that ends up, but we'll end up with nine or 10 somewhere in there and each, each beverage skew has a matching exact replica gummy skew, both in potency and in flavor. So that's a real unique perspective that we're trying to give consumers. You know the same offering that they would get. They don't have to cut the gummies in half. Our gummies taste incredible. Now they get to eat a plethora of them and you know it creates the velocities that these mainstream sales channels are looking for.
Ben Larson:So one of the big narratives in the regulated cannabis space is that, you know, beverage is such a small percentage One to two percent is often the numbers that people are quoting and then gummies are accounting for 70% of edible sales. What kind of split are you seeing in the hemp channel between gummies and beverages? And it's really interesting because I don't know too many brands that are doing this exact same skew offering.
Ben Meggs:Yeah, so I'll tell you we are, we've just launched I mean like really launched we're just now moving into the distributors. It's, it's quite different, uh, than a beverage, right, All of these, you know, we, we typically, uh, we use beer distributors and so they're used to distributing beverages, uh, but you start putting in packages of gummies that, uh, you know it's just, uh, there's a little bit more worry there, so it's taken a little while to get all of those guardrails and you know items in place for them to feel confident and comfortable. So I will say, just from a standpoint of, I mean, beverage is much bigger for us because we're just now launching the gummies. But I think in Texas, I think, gummies is a much more established business, but we, and it's probably the higher dose gummies, but we just haven't, you know that, and it's probably mostly at the smoke shops and that's not really that's, that's not our general, that's not where we're putting our focus.
Ben Meggs:And as far as I'll finish, anna Rae, what you asked, just products. So we do. You know, when we acquired eighth wonder, I think they had 22 beer SKUs, I think we're down to about six, um, so we did a big rationalization, um, immediately, uh, we, you know, refreshed all of our brands and that's kind of when we leaned in very heavily. Um so we do beer? Um, we do. We did do spirits. We have recently um, here, we did do spirits. We have recently really shut that down just because we've turned our distillery into more capacity for our beverages and gummies. It's such a bigger part of the business.
AnnaRae Grabstein:Yeah, it makes sense. I think it's great that we got this nice foundation of what you're doing with Bayou City. I think that we should dive into the complexity of Texas a little bit and then we'll come back later and talk about your distribution and some things like that. Texas is a really interesting market and we talked about it on another episode. I think a lot of people think that Texas could be a great place to win. There's a lot of people in Texas. People like to have fun in Texas.
AnnaRae Grabstein:There's a very unique culture, but there's also a very unique way that policy moves through Texas and we've got these two things happening in the state. We have the medical program. That's highly restrictive. We heard about that when we brought on the Texas original CEO, nico. You know no inhalables, very limited distribution channels, very limited licenses, lots of restrictions. And then we have a pretty enormous hemp market that has developed without a ton of regulations. Some say that there's up to 7,000 hemp businesses operating in Texas right now. I would love to hear your perspective on the way that state policies are shaping the growth and operations of hemp businesses in Texas and how that has enabled you to get where you are right now.
Ben Meggs:Yeah, that's a loaded question, for sure, and there's a lot behind that. I mean, texas is a very unique state. It's a giant state, it's a behemoth, and the politics are very unique, but it's also, you know, generally speaking, a very conservative state, a very red state. So you know not where we live in, houston specifically, but, and the inner cities? Of course it's not. But generally speaking, the politics are. But what I will say is there are a lot of things happening in Texas right now and there have been and there's been a lot of, you know, things that come out optically, that raise eyebrows, right. But I think what's happening behind the scenes is there is, you know, it is getting attention. Thc beverages are getting attention in Texas, there's no doubt. But we like the attention, we like regulations, we like meaningful regulations. The more attention we can get, the more they're talking about it. We see it as an opportunity to really lean in and put meaningful regulations in place that open this market up. Now in Texas, this legislative session, we'll see what happens. I think the most likely thing is nothing happens, but of course we want to push for something to happen.
Ben Meggs:I will say, you know, as it relates to the medical side of the market. Here it is. You know the market is a bit more restrictive than other markets, we can absolutely say that. But I also think that in time it will open up and the right regulations will come in place and it will turn into, you know, what everyone expected it to eventually be. And so our perspective on this it's a two-tiered market.
Ben Meggs:There's two sides to this market.
Ben Meggs:I think hemp is going to be your low-dose, mainstream channel where you're going to have certainly THC beverages and gummies and spirits, and it's going to be a low-dose environment.
Ben Meggs:But it's going to, you know, for the first time and you're seeing the consumer demand out there and I'm sure we'll get into that. But the consumers like this choice, they want this choice and they're showing it and it's really not slowing down. It's growing tremendously and I think that that speaks volumes. And you know, when I go into the two-tier market, I think I do believe that there is going to be a high-dose medical market and a flower market, right, and I think that's going to be on your dispensary side of the market. And then I think there's going to be a low-dose, mainstream market where you're going to be in the grocery stores, c-stores, liquor stores and in bars and restaurants. That's what we believe, and I think there is an opportunity for both of us to live and thrive and have successful businesses, but at the same time, we can work together to usher in this new category and industry, because it is going to take both sides to make this happen.
Ben Larson:Being that you're beverage-centric, we'll say Sure, I know you do more, but especially on the low-dose side, beverage has seemingly been able to kind of like being kind of a, a place where both sides can come to an agreement before everything else. It appears at least that's what's happening in california and a lot of the behind the scenes conversations like are you experiencing a similar sentiment in in texas? Like have those conversations between the both sides started?
Ben Meggs:yeah, I mean, um, I here's what I'll say. I think Texas is everyone's watching Texas, all eyes are on Texas. It's a huge opportunity and I think you know, I think Texas is a little behind where usually they the two sides of the market can work together and effectively put in legislation, dose non-inhalable products and higher dose inhalable products, which you talked about being in the medical market or the other tier, which potentially could be adult use at one point in the future.
AnnaRae Grabstein:There is significant inhalable products right now in the Texas hemp market and, leaning into this idea of how we get things done legislatively and who we stand next to, as a CEO of a really prominent hemp-focused company in Texas, are you finding it challenging to stand next to the whole hemp space because there are so many different stakeholders and product types in the market that maybe don't align with you? How is the hemp space organizing or separating or being able to deliver? Is there a unified message? Does everyone have their own message because of their own self-interest?
Ben Meggs:These are some of the things that I see get in the way, I know that was a lot no that's the perfect question, anna Rae, and you're going to be able to watch it play out in real time. Yeah, I mean, look, there's no secret, there's give and take, and I don't think there's this like we win all sides of this, because it's not. You know, flower is a flower is going to go away. There's just no chance. I just don't believe that, especially and I'll speak for Texas just because I mean, they've already gone against inhalable products in general on the hemp side, and it's they don't allow it on the marijuana side, on the, on the medical side. So you know, it's going to be very difficult for the THCA flower. I just expect that that's what they're going to go after the most. I can't. I don't know that, I don't have any any reason to believe that, but that is the easiest target.
Ben Meggs:And everyone keeps talking about these 7,000 stores, smoke shops. These aren't. This is not like the specs and the total line that they're talking about, and you know. So I do believe, and really I think I can say this nationally I think there's a lot of lobbying dollars being spent both ways, but I do think everyone is starting to realize that it's time to come together and I think, in order to do that, both sides are going to have to give in. And I think the dispensary side you know the big MSOs, the big players, the big cannabis. I think they're willing to give in on the, you know the low dose beverages and even gummies. And you know, I think you know the biggest part of their business is the smokable flower and vapes and I think they're not going to give in on that.
Ben Larson:And they're powerful. You had mentioned that astutely, that all eyes are on Texas, and they most certainly are, especially after what's going down here in California. But you also indicated that there's a high likelihood of nothing gets done in the legislative session. And is that because it's just so polarized and there's people on either side? Because we really would like to see, like you, some progress on this?
Ben Meggs:We would too. It's going to be a huge fight. I don't want to sugarcoat it. Politics here in Texas, as I said, are very unique and things happen fast and you, you better be ahead of it, because it's going to be a huge fight and we feel very good about it and we're putting our money where our mouth is. We have our team and we're we're pushing meaningful regulation, but it it it's, it's going to be a difficult road, but I think they are starting to understand the toothpaste side of the tube.
Ben Meggs:But you know, there's a lot of things that are easy targets. Uh, due to the way the industry has evolved in Texas, um, and grown so rapidly, um, that there's a lot of negativity associated with those 7,000 doors and where they're located and how close they are to schools and things like that. Right, there's tons of public information out there. You know, against this and I think that's we have to be, we have to be smart and I think what we're doing in Texas, we hold ourselves to a very high standard, we self-regulate and I think you'll, you'll see the way that we we operate.
Ben Meggs:You know, I think there is one misnomer that I would like to hit on. There are really really great operators just like us out there that are holding themselves to higher values. That, at least as it relates to operations and products and what they're putting out there to consumers and how it's getting out there. So you know, I do want everyone to know that's listening out there to consumers and how it's getting out there. So you know, I do want everyone to know that's listening out there, that there is. There really are great operators that are doing it right in this space.
AnnaRae Grabstein:Let's talk about that a little bit more and talk about some of your brands and the consumers. You talked about consumer demand in Texas being really high. I'd love to hear what you've learned about consumers. You're developing these different brands and, if you have certain consumer persona focuses that you're thinking about when you develop those brands, how the strategy is unfolding. Yeah, let's talk about consumers.
Ben Meggs:Yeah, I mean, that's what you know. That's what this game is about. Yeah, I mean that's what you know. That's what this game is about. It it's. It's really. It's exciting to watch the category evolve and really turn into more of what we believe is a true CPG play, at least the way that we're doing it and the sales channels that we're focusing on. Here's the thing I think beverages in general are more understood and more widely accepted in the mainstream sales channels and I think that truly opens up a totally different consumer that you wouldn't otherwise be able to get.
Ben Meggs:Point out, there is, you can just and maybe this is old data at this point, but even you know it was set out there total wines data I mean it was 12% of their total revenue is now THC. That is an insane number. Um, when you're talking at the revenues that they bring in, um, it's uh, and and what they've been live since January, that's that's. This has never happened. Um, so, um, you know, as far as consumer demand in Texas, gosh, texas is probably the largest. You know, one of the largest illegal markets in the country. You know it's, it's a, it just is. It's right on the border, it's, it's a big marijuana state, just in general, the consumers here like they like their weed, they like their ganja, they like it in all forms and for the first time ever they're able to go to their general liquor store and go get a product. And what's unique about our products and what we're doing is it's one thing to go put a beverage in a smoke shop. Well, you know there's only you can do the math. And maybe you know, and even in the best medical markets you're looking at, I don't know five to 8% of the entire state population goes to a dispensary. So you know what we're able to do is put it on a mainstream shelf. That of course, you know, low dose, regulated, but it allows a consumer that wouldn't otherwise ever find themselves in dispensary wanting to try an alternative.
Ben Meggs:And you know, I think it's. You know it's the kind of curious consumer that we're able to target, and I think we're doing it in a lot of ways. It's not just at the off-premise accounts, it's really for us where we see the demand growing and where we see the opportunity. You know draft has been so meaningful for us to get out ahead, just because you know beer lines are, they're gold, right, I mean, that's what you really in the beer market. In that category, draft lines are really, really meaningful because they last a long time. It's not like a case, right, a 24-pack that goes in six four-packs right, this is a keg, so your margins may not be as good, but it's long-lasting and so you know, it really has allowed us to penetrate pretty deeply and widely in the states that we're going into, because there's just not a lot of groups out there that have had the scale or maybe the ability to lean into that so widely. And I think it also because Texas is somewhat open, it's allowed us to be able to do that early on.
Ben Larson:Can we double click on that a little bit, just because it's pretty unique? We don't hear people talking about kegs that often, and so in Texas and other states you mentioned, you're successfully getting kegs into bars, restaurants. Can you elaborate on that a little bit?
Ben Meggs:Sure, I mean you know it's, it's, it's, it's. How do I say this? Generally speaking, bars and restaurants don't carry a lot of cans Like you go to any bar and restaurant, I mean. Sure there are some, there are a lot of bars that do, excuse me, but the restaurants and the you know. I'll just say that right now it's easy to, it's easy to get take over beer draft lines. Right now. There are a lot of things you have to understand and how to do it and there's a lot of training that goes into it. It is complicated. It took us a long time to be able to get our distributors ready, everyone ready. I mean you've got to clean the draft lines. There's a lot that goes into it, but it is a real big opportunity for us and we've seen it. It's really allowed us to penetrate very, very quickly into the new states because there's just not a lot of players out there doing it.
AnnaRae Grabstein:I love that. I think you're naturally moving us into a conversation about distribution, and it sounds like you are distributing kegs in addition to single cans of product, which is really interesting, and you've talked about the difference between the total wines and the specs and the smoke shops. We haven't talked about online sales, which is something that many hemp beverages are really big into. Love it if you could just give us the landscape of how your distribution works, who and where you're distributing to, and how that might be changing for you as you execute on your 2025 strategy, which I know a lot of people are thinking about now.
Ben Meggs:Let's see, so you know as far as distribution goes, I will say it is unique in the way that we're doing this. So off-premise is a big part of the business for us. But what is unique is that, you know, I would say 35% of our business is on-premise and that's from you know. So when we're talking distribution, we're not just focused on distributing to the liquor stores. You know, we're distributing to, you know, movie theaters, bars, restaurants, sports entertainment venues you know the sky's really the limit where, where this is taking off, there's music venues, there's, you know, it's kind of everywhere as the consumer begins to take it in and as the retailer starts to feel comfortable and confident with the brands they're bringing in, that their consumers are safe and they're going to you know that they're going to be taken care of because there's still stigma associated with this.
Ben Meggs:But you know, right now we've got kegs in Tennessee, alabama, florida, and soon we'll have kegs in Louisiana, um, and so, you know, draft's been a big mover for us and these beer distributors as we continue to expand. Um, they're used to this. This is a part of the game that they've always played. So it's it's not, it's not necessarily anything new or out of the ordinary, you know. And as it relates to distribution I know you hit on that I'll just say that you know the emergence of this new beverage category. It really allows us to implement strategies in line with the traditional and I say CPG, I'll say it consumer packaged goods industry. And so, you know, as legislation continues to move in our favor and new markets open up, there's more opportunity for us to build our brands through activations and consumer engagement, as well, as you know, on-shelf promotions that you know that really drive the consumers. So I will say that one unique about the way we're doing it is really what I just said. It's so much more than just you get your distributor and then your beverages get delivered. We're building brands here and we haven't had a large presence online. Our focus has been very, very much so on distribution and really getting our footprint as wide and as deep as possible.
Ben Meggs:And you know now that the market is the market, I think, has spoken. I think there's no question it's taking off and it's a really exciting time and I think what you're about to see, or at least from us, is you're going to see us building brands. It's going to be about the consumer and you know, you can see, online. We've really launched with Howdy and we're going to kick that up a couple of notches and then we'll be coming in behind with our other brands as well. But, um, you know we've we've recently hired uh, uh, um, you know, uh, chief marketing officer, um and uh, a guy named Teddy um Boxberger and he comes from CPG industry, um, he Filson, and just he does a lot of brand building. So we're excited to get our content machine rolling and then you'll see, that's when you'll see us. You know, really in the beginning of the year, start leaning very heavily into online.
Ben Larson:So you initially launched with 8th Wonder. It was an existing brand, had a footprint, some recognition. But you launch Howdy and all of a sudden it starts to take off and I'm curious what do you think it is about the howdy brand in comparison to eighth wander that that kind of lit up the consumer? And and how did you internally recognize like, oh, this one we're going to put more fuel into, uh versus kind of an existing?
Ben Meggs:Well, I mean that's, yeah, fair, fair. You know I I don't think it's any secret Texans or you know they have a lot of Texas pride. So you know we are Texans at heart and we knew we wanted a brand that that felt like home, that that really resonated with, with us personally and and our state, and I think that just in general, you know this brand, it's Cosmic Cowboy, it's fun, it's serious, but it's also extremely playful and I think it. You know Texas brands just in general have they just resonate across the country and you can look at any, really any, any, not any. But Texas is a hub for brands. I mean we you can name, let's see, tito's is a perfect example, topo Chico it didn't, you know it, it didn't start here, it was a brand from Mexico.
Ben Meggs:But you know, when Coca-Cola bought it, 75 percent of the revenue was from Texas. Everybody believed it was a Texas brand. Almost Lone River was bought by Nestle. You've got Siete, waterloo, chameleon, cold Brew, there's so many. And then you know our very own Malk Organics. Joel Canada is our chief revenue officer. You know it's a Texas brand. He took that national. I think this one really speaks Texas Howdy. It leans very, very forward Texas. But I think you know all the brands I just named. I just think there's a hub here and I think there's there's just a unique connection to the consumer that Texas provides authenticity. Right, it's it. Texas is very authentic, it's very transparent and you get what you see usually, and so I think that the consumer you know they that translates.
AnnaRae Grabstein:I think we're in an interesting time right now for regional focused brands and and I think Texas really resonates with, with an Americana perspective, prideful energy, especially just even the symbolism of Texas, is just sort of American symbolism bigger, bigger stars, you know, bigger, bigger, brighter, deeper red, white and blue. And there's something about the presidential election cycle and the way that cannabis is starting to be seen as a bipartisan issue that it seems both subversive and exciting to be seeing pridefully positioned cannabis brands, because I think that there's a lot of crossover and I think that for a while and I think that for a while it was really looked at as a progressive versus a conservative thing and that red states were anti-cannabis and hemp has been a crossover.
Ben Meggs:Actually, maybe red states aren't anti-getting high, maybe they don't like regulations as much Do any of us with the path to like adult use legalization that some of the more blue states have taken, but but I love seeing that manifest in in brands and and that's really fun doing that, yeah and you know, we, we, we thought there would be value, um, with texas on our label, and then, and we, we, we put it on there and leaned in and then haven't looked back and I, I think, uh, um, I think you're gonna hear a lot more people saying howdy out there, I'm here for it, thanks for sure.
Ben Larson:Well, tell us a little bit about that, like when you're you know when you're approaching new accounts and in different states are, are they excited to see kind of something that's differentiated from? You know the more vanilla seltzers I guess that are out there on the market?
Ben Meggs:Sure, and I mean, look we, you know when we first started, you know Texas was Texas is still on an island to some degree um, as it comes, you know, when it comes to cannabis, um, but I will say that you know, we we have, we have had the unique ability to have a full portfolio of different brands, different potencies, different flavors. It's allowed us to really present a full not a full category exactly, but we're giving the retailers a lot of choices in which direction they want to lean in. Now, I think we push them typically based on how our brands are. You know how our brands are ranked per se, but you know, for instance, I think you know ABC, for instance, in Florida.
Ben Meggs:That's a really big account in Florida and you know they, they wanted to lean in very heavy early on with Howdy. You know they and you know that's where they wanted to lean first and then they'll bring in the other brands as we go. But you know, I think it's our brands are fun, they're they're, they're crushable and and they're not too sophisticated. Right, you're taking shelf space from alcohol almost consistently, and so that shelf space requires a lot of revenue to that retailer because the turnover on alcohol it's very high. Right, the velocities are high, so you better be putting products out there that either match or are better from a velocity standpoint.
Ben Larson:And can you talk a little bit about the large format? I think it's kind of it's a format that doesn't get too much play or you know, a lot of people aren't speaking to it, but I do think it's been effective in certain channels and so just curious kind of what you're seeing having launched that product.
Ben Meggs:Yeah, so are you talking about, I guess, the spirit? The spirit, yeah, basically. Yeah. So, ocho Verde, yeah, you know, I'll say that we soft launched that randomly, and I wouldn't say it was random, but the soft launch, the timing was, and you know it's been such a really great way to penetrate the, really the bars and restaurants, right, I mean, draft is a very unique way to penetrate, but retailers want to sell a $20 drink, at least here in Houston and Austin and Dallas, you know, and probably the cities we're at and all the other states. So you know, in order to sell a $15 or $20 drink without alcohol in it, you need the whole the theater of it, right, you need to shake the drink and make it, and I think it just really allows the bartenders to be bartenders still and it provides the consumer a choice.
Ben Meggs:And I think you know we've talked to some of the largest restaurant chains in the country and I will tell you that it's coming. They all believe there is a place on the menu, that this, it belongs there, there and it has to be there, because they've already started putting NA on their menus. This will be the largest part of NA very, very soon, and so you know, I'll say this we launched it, we soft launched it and we, we did a, we did a joint kind of a joint launch. We, we, there's this, really it's a, it's a staple, a mainstay. It's a Mexican restaurant here and there's a Tex-Mex restaurant in Houston, it's called Nympha's Been here forever and you know a lot of celebrities, a lot of musicians, they come and that's where they'll go eat, just because it's close to some of the music venues and stuff.
Ben Meggs:And so we launched with Ocho Verde, um, on on a weekend that, uh, and, and we, actually they did a margarita called the Tranquilita and it was with um, uh, it was, it was just a non-alcoholic margarita, um, and uh, randomly, uh, they had, uh, um, they had gosh, I can't remember when it was, but the Rolling Stones came in and, um, they loaded up on all of our Ocho Verdes and they proceeded to play that night and uh, uh, they went on stage and, uh, you can see it out there, the videos out there and he was like anybody heard of a Tranquilita. He's like, well, I had three of them and I tell you I'm floating- I tell you, I'm floating, that's amazing and it was just really cool.
Ben Meggs:You know, I didn't it's not like it got a ton of press, but it was just really cool to see you know that that's how you build trust out there, that's how you build these brands and that's how you can really get the Sumer on board, with this being a a mainstay product. Um, and and and we're excited. I think this is just another. The ocho verde is just another option for the consumer, just like they would get with any other product yeah, that's.
Ben Larson:That's one of those moments as like a business center where you just like what is this happening? You just pinch yourself.
Ben Meggs:It's like well, and, uh, I it was. It was 420 weekend, so that's why it was a soft launch, because we weren't really ready. And we did do it with a non-alcoholic tequila. It's called Cut Above, so that was really cool to kind of do a little. You know, work with them on that and as the market continues to grow, I think you'll you'll see a lot, a lot, a lot more collaborations in that space.
AnnaRae Grabstein:So we're getting. We're getting closer to the end of our time and I want to give you an opportunity to share some of the things that you are most excited about and that you predict is coming, coming next. Many people are talking about next year planning. What are you putting on the board?
Ben Meggs:Yeah. So I think it's going to be, just from a regulatory standpoint, I think it's going to be a very, very meaningful next 12 months. If you're ever going to lean in and help from a regulatory standpoint, this is the time, because one year from now, I think most of this is all going to be decided, at least on the state level. You're starting to see it's coming to a head, and so you know, for us, I think we're going to be very engaged and very involved, both federally and at the state level, very engaged and very involved both federally and at the state level. And I think it's most, you know, it's just most important for us to focus on that and really keep these states open, but also be willing to. We have to be willing to give in certain aspects to keep our business alive and usher in a new product for the consumers.
Ben Meggs:You know a couple of other things. We, you know we are in the process of building a much larger new facility. It's needed. As you know, we're expanding. So you know, as we continue to expand, we need production capacity and I think you know there's. I'll just say that there are a lot of groups out there using the same manufacturers and there is going to come a time when the market takes off. That inventory and you know line time is going to create a problem for some brands, and you know that's. I'll just say that's where we're focused and that's where you know we're really leaning heavily is it's brand building and and the regulatory side, and then, of course, really getting ready for the big boom that's about to come, ensuring we have enough inventory so we don't have out of stocks.
Ben Larson:Yeah, I'll, I'll amplify a lot of what you're saying. We work with a number of those manufacturers and brands and they're already reaching capacity and people. You know new ones are coming online here and there. So that's always nice, but people are expanding their, their, their facilities right now. But that takes time and so, as these waves come, yeah, there'll certainly be line time issues. But also I want to amplify what you were saying about getting involved.
Ben Larson:The next 12 months is critical and these conversations are important. You know, when you're talking at the localized state level, usually there's good awareness about the topics. But still, the beverage category in particular is new to a lot of people and I know we've been, as an industry, having conversations on the Hill. Shout out to Diana Eberlein with the work she's doing in DC. People just never even hearing about a beverage category and it's like we have to have those conversations. So if you're able to get involved, please do so. Ben. What's the best way for people to get involved in Texas? I know this conversation came up with California recently. It's like we don't live in California. How do we get involved?
Ben Meggs:Sure, there's several different trade groups. We're involved with the Texas Hemp Coalition, we're involved with you know several other different trade groups, but I would say you know, if you want to get involved, please reach out to us. We're a great resource and of course, you know there's also some national organizations. You know that, of course, diane is a big part of. You know the Cannabis Beverage Association. There's a couple of other ones Ben you and Anna Rae probably know more than I do, but I think there's a lot of focus on Texas and I think when things come out, it is really nice to see how quickly the hemp side of the industry can really huddle up and take on these surprises.
AnnaRae Grabstein:Awesome. Well, we're at the end of our hour, so we're going to turn the mic back to you one more time. Ben, for your last call. So what's your last call?
Ben Meggs:Yeah, okay. Well, we're inciting a beverage revolution. We spent the last 18 months building our distribution footprint and you know we can confidently say we're the category leaders in Texas and our plan is to, you know, really grow that and do that across the country. You know, right now you can find our brands in Texas, florida, louisiana, tennessee and coming soon, in the next 30 to 45 days, we'll be in Georgia, mississippi, missouri, northern South Carolina. 30 to 45 days will be in Georgia, mississippi, missouri, northern South Carolina, kentucky, minnesota and Ohio. So you know, if you're out there, come by, say howdy, and you know our goal is to put liquid to lips. We want you to taste our drinks. We're proud of them, love it, awesome, thank you so much.
AnnaRae Grabstein:This has been a really insightful conversation.
Ben Meggs:Well and really appreciate y'all's time. Thank you for having me on and look forward to another conversation soon.
AnnaRae Grabstein:Awesome. Well, we'll see you next time. Thanks, Ben.
Ben Larson:That's awesome. I love just the expansion that they've been experiencing and bringing the Howdy brand and the Texas lifestyle across the US, and I think he's right. The next 12 months is going the Howdy brand and the Texas lifestyle across the US, and I think he's right.
AnnaRae Grabstein:The next 12 months is going to be critical and their ranch water is really good. I really like it. Personal plug for me on that one.
Ben Larson:I will consume anything called ranch water. I think I've seen seltzers, thc, beveragesquila waters like bring it all. I'll consume it all, absolutely. What about you folks? What are you drinking? Thank you so much for watching, engaging, sharing, liking, subscribing, doing all the things. Thank you, thank you. Thank you to our teams at Burtosa and Wolfmeyer. Can't do it without you guys. Can't do it without all of you. Please remember to subscribe, like and share this show. Uh, you can find us on linkedin live when we're recording or in our podcast, or come say hi to us live at the list of events that anna ray went through at the top of the show, but also, most importantly, our mj biz morning mixer, really excited to be doing our second installment of that when that comes up later this year I don't know the exact dates beginning of December, I think. So until then, everyone, stay curious, stay informed and keep your spirits high until next time. That's the show.
