Tuck Alumni on Leading in an Emerging Industry

Last fall, Tuck held its seventh annual Marketing Symposium, and the theme of the event was “The New Wave of Marketing: Reaching New Consumers.” Along with alumni panelists from McKinsey & Company, Bain & Company, and Delta Airlines, there was a discussion with three alumni working as executives in the legal cannabis and CBD industries, where they talked about overcoming the challenges of marketing strategy in those spaces. In the weeks after the symposium, we sat down with those alumni—Koushi King T’13, Tim Moxey T’01 and Cris Rivera T’08—to continue the discussion and give them the opportunity to expand upon what they discussed during the event.

Koushi King is the CEO and founder of Stemless, an online platform for retail dispensaries. A native of Oregon, one of the first states to legalize marijuana for recreational use, King founded Stemless in 2015 to serve as a bridge between dispensaries and their customers. Today, Stemless has 12 employees, 150 stores on its platform, and is present in every legal-use state and the east coast of Canada.

Tim Moxey is the COO of Austin and Kat, a producer and retailer of all-natural CBD remedies for pets. Austin and Kat was founded by Moxey’s wife, Kat, and Austin is their black Labrador retriever. Before entering the CBD industry, Moxey built one of the first cannabis edible brands in Seattle with fellow classmate Chris Abbott. He also founded the sport hydration company Nuun, which has helped quite a few people be a little more active while reducing the number of plastic bottles in the world.

Cris Rivera is the Florida regional president at Cresco Labs, one of the largest vertically integrated, multi-state cannabis operators in the U.S. Rivera joined Cresco in 2018, after working in marketing for PepsiCo and Miller Coors. At Cresco, he built the Sunnyside brand of retail stores, a business devoted to making cannabis shopping simpler and more inviting. It’s the most productive retailer per store in the cannabis space.

What drew you to the cannabis/CBD industry?

King: When recreational cannabis was becoming legalized, stores were talking about THC levels, milligrams, flavor profiles, and all sorts of technical terms. There was a whole customer education component that was missing. Even past that goal of making this a mainstream product, stores are still going to want to be in touch with their customer base, and what’s challenging for a lot of retailers is they don’t have the typical advertisement channels that a small business typically does. That’s where Stemless bridges a gap; we provide them a bullhorn to reach the people who are interested in being reached.

Moxey: When cannabis legalization became a reality, I wanted to create edibles that could help redefine the stereotype and help gain mass acceptance. I partnered with my classmate Chris and we went on to create some pioneering brands including creating the first microdose edible called Mr. Moxey’s Mints.

Along the way I met Kat, fell in love, and helped her experiment with CBD to help one of her dogs. The results were honestly remarkable, so I encouraged her to start a company using holistic ingredients with a proven scientific basis. The category is different than Nuun but we’re following the same playbook: make the best product possible and harness the authentic user base to spread the word for you. Getting honest feedback and appreciation from customers who really go out of their way to say thank you is, for me, the best accolade you can ever receive.

Rivera: When I was working for Miller Coors, we were very curious to see what cannabis would do to our revenue. There are many occasions that call for alcohol and/or cannabis, so we were very aware that the cannabis trend was not a positive one for us. But then my dad, a Florida resident, became a medical marijuana patient. Watching him supplement his meds with cannabis and seeing the relief it provided him was a powerful personal story for me. When I joined Cresco, we didn’t think we were going to have a long presence in retail, but now it makes up 50 percent of our business. Building the Sunnyside brand has been an amazing experience.

What is your business’s value proposition?

King: Dispensaries are prohibited from marketing via the typical channels on the Internet and through social media, and they are limited in the words they can use in text messages. So the average customer who wants to buy something has to do a bit of a hunt. We have built a platform that takes into account these banned words, so that if a store starts to write something we know carriers won’t approve, we preemptively restrict the vendor from writing that word and tell them it’s a banned word. Our platform has all sorts of fail-safes like that that are specific to dispensary owners.

And because Stemless is plugged into the dispensaries’ point-of-sale system, we can handle their loyalty program. We can see what each customer is spending, how often they’re coming in, what they’re buying, when they last bought it. Stores can have very customized messages that are ad-hoc, and automated campaigns that go out. Our platform allows them to capitalize on their own user data in very specific and minute ways that serve the customers they want to reach with very targeted messages that are relevant to the things they’re buying and the actions they are taking.

Moxey: At Austin and Kat, it’s pretty simple: help owners discover a healthier, happier, and calmer pet. Our formulations use unique science-backed active ingredients that can have a profound impact on the length and quality of life for our dogs and cats so we get to spend more time with them.

On the cannabis side, Mr. Moxey’s was an experiment to make (very) low potency products for the 2.0 consumer, i.e., people new to cannabis looking to have a very precise, consistent, and discreet experience. The mints are the most widely distributed product in the U.S. and if you try them you’ll find they live up to the mantra “make life a little bit better.”

Rivera: When we built Sunnyside, it was about taking cannabis from dark corridors to main street and focusing on hiring folks of all ages and levels of cannabis experience, so as a team they would work to help shoppers at their level. We make sure to match shoppers up with the right wellness advisor to help them understand what’s next for them. Our merchandising approach is key: our stores are simply done, bright, airy, and not very cluttered. We believe that wherever people are on their cannabis journey, a conversation needs to happen. Our premise is to make cannabis shopping simple. That’s a very deep word that can be unpacked many ways, depending on who you are, how much cannabis experience you have, where you live, etc. We really try to unpack that with our wellness advisors, so they understand what this brand is trying to do for people.

What are the biggest challenges you are confronting?

King: The legal frameworks and attitudes change frequently. We are not plant-touching, but the attitudes towards our business are very fluid. We had an app in the App Store when Apple was open to dispensary apps where you couldn’t directly purchase cannabis. So we had a loyalty app. At the same time, Google did the opposite and cracked down on it. The Play Store suddenly was not in play. These attitudes shift in the same timeframes and move in opposite directions, and you’ve got products you’re trying to get out there. And it’s not just the legal frameworks, but the companies that react to them and how you might impact them.

Moxey: Both cannabis (THC) and hemp (CBD) have come a long way in a short space of time. Just a few years ago hemp was still classified as a Schedule 1 drug and defined as having no accepted medical use and a high potential for abuse. But people are more inquisitive and questioning the narrative they were told, but we still encounter regulations that are just out of sync with reality.

Progress is rarely a straight line and the rules are still being written, but some laws are still pretty nonsense. It’s evident in marketing and banking, but the restrictions on payment gateways, which govern point-of-sale processing of debit and credit cards, keeps mainstream retailers on the sidelines. Navigating those headwinds is part of the challenge but it makes for a wild ride at times.

Rivera: Every day has a lot of challenges. The whole advertising and marketing side of this business is super difficult. The things that are afforded many normalized businesses, like a Pepsi, are not available to us. The tools are really limited. As a result, we’ve got to get really creative, work around problems as best we can, and find ways to reach the audiences we need to reach.

Access to capital markets is still hard. As we continue to think about our growth and how to do it the right way, we want access to loans that aren’t at a 20 percent interest rate, and we want to purchase companies. We are a public company and have access to those markets, but we’d like to have access to debt markets, and that’s challenging.

Then it goes back to challenges in how to partner with your government officials. Every state has a different set of laws, and trying to scale that is super difficult. So you have to build relationships, be present at the capitols, and make sure they understand how other states are setting it up and what their objectives are. For me, most of my career was focused on only talking to consumers and retailers. And now at least 40 percent of my job is partnering with government affairs and my lobbyists to help them understand what my priorities are, the state’s priorities are, what that middle ground is, and to see what other states have done.