Ep 8: Marketing Cannabis at Scale — The Shift

with Josh Karchmer · The Shift, a podcast by Headquarters

Former Glass House Brands VP of Marketing Josh Karchmer on treating marketing as the connective tissue of a cannabis company - budgeting from zero, cutting the waste that quietly kills margins, and why storytelling and brand trust win in an AI-flooded market.

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Auto-generated from the episode audio and lightly edited for readability.

0:00 just been knocking around in California cannabis since 2018. Um my first job was um Mo with a company called Moxie who are you know a concentrate and and vape company that were operating in four states. One of the co-founders used to work for me um in in advertising. So I ended up following him into the business in 2018. Um I'd been smoking my whole life, but I never really understood where I would fit in the industry. So it was like we sat down in 2018 was right after it went rec. We talked for like four hours. Billy Maddox who used to be at Moxie and um and at the end of that conversation I saw where it was going. I like this going to be a a CPG business.

0:39 They're going to meet people who can create brands and connect brands and culture and tell stories. And so that moment like I made that decision. I shut down my agency. I'm like, "Okay, I'm going to go spend the rest of my career, at least next chapter of my career in cannabis." and um and specifically building rec brands and so you know I did it I was in Moxie for a couple years then I went and consulted on a bunch of other bunch of small brands and I went to high season got to create high season and gratitude and that was the first time really controlled supply chain we had had my own cultivation or the company did um and learned so much through that and then you know I wasn't looking for a job but glass house came calling and that was like an opportunity to go to the big leagues really like, you know, it's as close to the NFL as you're going to get to go run uh, you know, House of Brands with a big publicly traded company and be responsible for storytelling, not just for CPG, but like I make the investor videos, too. So, like a lot of, you know, pretty much all the storytelling like that, a lot of that came through came through marketing. So, it's just like the cool thing about cannabis was it was just a place to take everything I've learned from 20 years of marketing and music and and in advertising and then go apply it like within a product company. And um it's just been it's been a blast. Like um I've done a lot of cool things in my life, but like my cannabis experience is, you know, something I treasure the most. So you believe that marketing shouldn't be viewed solely as the creative department. And if marketing is actually the connective tissue of a company, what does that look like in practice in inside a cannabis business? Pretty much.

2:17 Yeah. My my whole philosophy on marketing is that marketing is really everything you know everything is a marketing uh everything from your product you know all the five Ps of marketing the product the price you know where we sell it distribution strategy um promotion storytelling um and people is a huge part of marketing um or a huge part of business and marketing's job is to create the stories the energy the the tools the events the, you know, everything you need for that business to run well. So, it's what that looks like in practice. We could, you know, look specifically at Glass House. I'm coming off of three years where I ran marketing at Glass House, which is, you know, um, one of the biggest publicly traded companies in, you know, in the business.

3:07 And our business was a lot bigger than brands. So, you know, if you think about the whole organization, it wasn't just marketing for the the narrow version of um just CPG brands. I'm looking at an organization where the business is dependent on the farm doing well. The farm is the biggest piece of the business. And then we have um the house of brands, you know, Glass House, Allswell, Mamasu, Reform, and we had retail.

3:33 So, we're completely vertically integrated and we supported um the retail marketing as well. So, you know, uh what that looks like is a small team that partners throughout the entire organization to move the business forward. Um so you know as the vice president of marketing I I sit in the leadership or I sat in the leadership team with head of sales revenue um retail data you know all of the the VPs and SVPs um who really run the business and you know everything from marketing strategy to product and portfolio strategy um all the there's a lot of things that happen before you know what people think is marketing which is taking it out to market um before you can do that you really have to understand your business, what you're trying to do, um, and develop a strategy that supports that.

4:24 Got it. That's that's actually I love that because now what I'm trying to understand is like you share this situation or your view of marketing as as what it is. And now I'm thinking because you gave this picture of like I'm sitting in a room with, you know, a bunch of these people. How does how does Josh prioritize who's he gonna pull first? Who's uh notes he's going to take in? What are the priorities of the company? How do how do you specifically prioritize when you when you think through marketing perspective?

4:56 Yeah. Well, I guess it's really understanding what you know what the business is. Where does the revenue come from? You know what's the you know in this business like certain you know a lot of the revenue came from cultivation. So the the you know we're not spending money to market to cultivation but we're certainly creating training materials and and and you know um teaching people and partnering with the farm and HR to do that. Um the goals for the CPG and and retail is you know understanding that um and also helping connect the dots. If we have the biggest farm in the world we should also have the biggest flower portfolio in the world. So that was, you know, part of what we built, which is making sure we got the right products at the right price. Um, portfolio strategy. Um, a big part of marketing, too. It in my strengths from, you know, 20 years of marketing before I got to cannabis. Um, and a lot of operational experience in cannabis, a lot of it is figuring out what's absolutely necessary, like what should we be spending money on, what do we prioritize? And I always like to, you know, start from never take a a big budget and and break it out. I always budget from zero. So you you know you start at the beginning figuring out like let's look at the product right like do we have the right product does you know um a lot of what I did was I you know I did rebrand glass house and actually really changed the look of all of the brands um fixed a lot of things in the product um you know is the number one selling flower brand in California um it became that during during my tenure there when I got there it didn't look like it does now and all the relevant product information that customers and budtenders need was on the back of the package. So, it would merchandised upside down. So, that's just like an easy one. It's like, oh, okay, we need to go redesign this, put everything that the customer wants on the front, maybe give it a look. Um, and when you see now, it's got beautiful blue color. You walk into dispensaries, it's just, you know, just punches you in the face. And before it didn't look, yeah, it was I cringed when I saw it earlier. there's this like weird primary colors and you know everything the customer wanted was on the wrong side. So you know what do you prioritize? Yeah, I mean it really comes down Yeah. It comes down to revenue goals um sales and marketing working together to try to figure out okay what do we got to do this quart you know where are we going this year and what do we got to do this quarter to get there and um yeah a lot of it is rationalization like we don't have to do everything we don't have to be number one in everything. Um so you know in the first 6 months we did a lot of portfolio rationalization killed brands off um and really tight tightened our focus to go win where it made sense to win.

7:35 You did mention when when you start working you start off with like the the easy budget or almost no budget. So a lot of operators see marketing as an expense let's say. What metrics does marketing need to own before leadership starts viewing it as a revenue driver instead of a cost center?

7:58 Um well I I think that you know marketing should should share a bunch of metrics with sales you know um especially in CPG I think um distribution and velocity should be shared sales and marketing because then you're building a marketing strategy to go attack the problem. um awareness. Well, think about it like this. In a in a rec market like California, you got maybe a thousand stores, right? So, there's only a thousand customers.

8:28 They're not all people that you want to sell to. So, if you're going to build a brand, number one thing is, okay, who are we going to sell to? Like, what shelves are, you know, who do we want to build partnerships with? Who can pay their bills? Who, you know, where can we build relationships and drive velocity? So, if I'm building marketing based, oh, I'm going to go throw this great party and we're going to go get this influencer and that. If that doesn't actually bring somebody to one of those stores that your product is actually in, it's, you know, it's for your ego. So, like I don't market out of ego, I market out of how do we solve the problem. If we're trying to be, you know, if the goal is to have the number one flower portfolio in California, it's do we have the right products? Are they priced properly? Do budtenders understand the story enough to tell them? Do we make it easy for consumers? Um, and then, you know, ruthless trade marketing. So, you know, I think in cannabis we don't have big budgets.

9:26 Even a big company like Glass House, you know, I spent, you know, a fraction of what my predecessors did because a lot of it was waste. If we look, there was a lot of a lot of wasted money spent on things that don't actually move the business. C can you be more specific? And again, I understand if you know there's there there's not really room for that. But when you say waste, give me an example.

9:48 Can you give me an example? Yeah. I mean, a lot of places that cannabis companies waste money. Um outsourcing creativity. So, you got to ask somebody else to, you know, what is my brand? What what should we be? You're you're in the wrong game. So, I' I'd rather invest in people rather than outsource creativity. I want to have a strong team and be able to do that. So doing as much in-house as possible, you know, you want to outsource certain things that you don't have strengths in. Like I would outsource, you know, accounting or, you know, or like things like that, but I wouldn't outsource like my the essence of my brand. Um, so it's that also a lot of people waste money in packaging.

10:30 There's tons of waste in custom packaging. um extra touch points that add you know your COGS in a product won't make sense if you're overspending because you got to have this QR code and maybe that QR code cost you 12 cents by the time you know by the time you're done and if it doesn't add that value to the consumer then it's it's a waste. So, um, a lot of it's just rationalization, getting rid of things that don't make sense. Um, figuring out what the consumer actually wants. Um, and focusing on that. Um, I would say the only channel that you really like if you if you have to spend money, if I was going to spend money in a single channel, it'd be trade marketing and that's it.

11:12 I wouldn't I wouldn't worry about events. I wouldn't, you know, I'd make content in-house for free. Um, and I would focus and trade because that's the money that's going to actually um market as close to the consumer as pos possible and move product that way. Let me let me quickly get back to the the u the conversation about the packaging because this is interesting to me. Um, h, so how does a brand stand out with not so much personalized packaging, but like or how do I say that you don't have to go that extra um personalized packaging system that's more expensive as you said as a as a waste. How do you stand out from a creative perspective, let's say, by not really going uh that extra mile in terms of spending money for packaging, but making it really, you know, stand out and and get attract.

12:06 Okay, do this. Um, so I mean this is this is obviously oversized. Uh it's a the real bag is not this big. But um you know the whole idea with with glass house was jars are expensive you know and and so when I got there um we weren't really selling big we weren't selling big flour in everything was in a jar. So going moving to Mylar bags which are which are more cost effective than than a uh you know than a jar. Anyway, if you especially in flower like the customers that we care about the most are the the high volume customers, it's the the packaging is a waste item.

12:49 So, you know, if I smoke an eighth a day, I don't need 300 jars. Like, what do I do with 300 jars at the end of the year? It's a waste. Um, so, you know, we move we started moving everything into, you know, lesser expensive packaging. And, you know, I take a bag home now. I rip the top off and I pour it into my mason jar. I just keep reusing mason jars, right? So the be like investing in a jar for every eighth is to me is kind of silly. Um you know especially on the low with price compression on the lower end but in terms of how do you stand out on the shelf like when I redesign glass house didn't always look like this it black package before but the thesis of glass house is that you know and the thesis is that the world wants California cannabis right not just glass house but everywhere. And so that's why I I went to this company. We were going to be the biggest grower. Um and I was like, well, let's the game I was playing for. Um I didn't see Schedule III happening the way it did. I was hoping that we'd get to, you know, um you know, uh descheduling and that we'd be, you know, be treated more like alcohol. So when I designed this, I'm thinking of like if I'm going to walk into a 7-Eleven in Omaha, you know, and want weed, I don't think the question is going to be indoor/outdoor greenhouse. it's going to be California or not California. So, you know, when we did this, it was let's just own the California positioning. Um, you know, award-winning California cannabis flower. So, that's so I think you do it with you don't need to send it in. It's not expensive packaging. It's just a, you know, it's a Mylar bag. Just smart branding. Um, that didn't have a strain sticker on it, but all of the information that the customer wants is right is on the the label on the front of the bag. That's a marketing function.

14:35 We designed the label to um give you everything you want. So, I'll put flavor notes on there, dominant terpenes, you know, in addition to everything that that uh that's required to be on there. Um and in past brands, uh the brand I came I was at before Glass House, I was putting harvest dates on the package and I created a system. I I had I got rid of indica/sativa/hybrid alto together and created I had a brand called high season and I built the product portfolio around flavor profiles.

15:06 So I just took you know we're growing a lot of you know all the cookies and cake strains were in one color way. All my purple weed was in a color way. Um OG's and gas strains were in a color way. So that was an easy way for people to understand oh okay I like these type of strains. Another thing that you did mention which is extremely important because obviously headquarters does outsourcing with a bunch of different um business options whether that's like accounting or AI or whatever. Um but what I also wanted to touch on as well which is like besides outsourcing we obviously now do have a lot of AI and um everyone is talking about AI automation and data um yet you said stories and people matter more than ever. Why do you think brand trust is becoming more valuable not less in an AI-driven world?

16:03 Well, I just think that in an AI-driven world, you can already see it like AI is making everything look really homogeneous. Like everything's the same. You know, if people are, especially people use AI for generative things. Like if you if I flip through my Instagram feed right now, ChatGPT, like you could tell and I think people already like tune that out. Like I just I wouldn't take Nike seriously if like it was like, "Oh yeah, you just that was cloud design and you built it in HTML." How do I use AI?

16:37 Um I use AI to clarify my own thinking and to communicate better. So, um, a lot of it is just I can I can create a stronger brief through AI because I can go work through all the problems and then by the time I finish it, I can go hand a collaborator something that's crystal clear like here's what here's what I want you to do because I've already beat it to death, you know, with my AI for 30 minutes. Um, you know, you especially when you know you have to massage something to really get what you want with AI and and I can work that out with AI before it gets too human because a human can't take that level of criticism or you know what I mean? Um, or like if I want to iterate a hundred times, I will burn a human being out and I do that with the machine, get it here and like, okay, here's the demo. This is what we're building.

17:33 So, I don't know. I'm able to get get things to Yeah. places where it's e easier for people to understand what what we want. Um, and keep things organized. Going back to obviously a huge experience that you have and um not just the the quantity of the experience.

17:55 If you were stepping into a cannabis company today, um, as a chief marketing officer, what's the biggest marketing mistake you'd fix in the first 90 days? And I'd like you to give me concrete like what is based on your experience, what you've saw, you step in, what are the first things that you do. First 90 days at a cannabis company, um, in the first 30, you just immerse yourself. Like don't have opinions. you learn, get plugged in, understand what you're getting into, understand your team, assess the talent that you have, see where gaps might be. Um, and also just understand is everybody there? Do they get do they get it? You know, do they want to be here and can they do it?

18:38 And if and if they can't, then you got to make changes. So yeah, I think it's assessing team, assessing situation, understanding the business, getting a really good look under the hood, understanding your numbers. So sitting with people in data, sitting with people in ops, accounting, um yeah, to kind of really understand what you're playing with, getting into the field, too.

18:59 So CPG company being going to stores and talking to budtenders and buyers about your product and and understanding, you know, you can see where you're at. You can figure out, do I have a problem with my my product? Is my positioning right? Are we p, you know, where where are we not aligned? Um yeah, just you have a fuller before you can really add value, you have to understand what you're what you're doing. And if you come in and have an idea on day one, like that's ego, you know.

19:29 Yeah. Uh yeah. So you try to just like really suppress that as much as possible in the beginning. Got it. And remove the glass jars. Uh I mean or just put the focus towards things that are the higher margin, you know. Um but yeah, I mean some of the Yeah, some of the product decisions that made like I didn't I didn't go to this like I didn't do this I didn't start this till after I've been there like well over a year because it the packaging wasn't really the problem. It was like the storytelling was the problem with Glass House in my opinion.

20:05 And so you know it was really like first goal with that was just let's humanize it. let's humanize the company, tell people it's, you know, you can't hate people that grow weed or we're passionate about weed. So, that was that was one of the first things there with Allswell. It was like understanding that the, you know, that was the first package I changed, but the just the labeling um understanding like what you're getting into and and where the opportunities are.

20:31 For me personally, this was a lot of information that I was not uh familiar with. So, really appreciate that and thank you. Um and uh if if you can uh share with us where can people find you on social media? I am uh LinkedIn. Um I think it's just Karchmer K A R C H R is my my handle there.

20:53 Uh Josh Karchmer um or on Instagram Josh. Karchmer and uh or events in California. Um I'm around. Say hi.