Cannacurio Podcast Episode 20 with Kristen Nichols and Shannon Shuman of Marijuana Business Daily

In the latest episode of the Cannacurio Podcast from Cannabiz Media, my co-host, Amanda Guerrero, and I discuss dispensary and retailer license data from Oklahoma, Michigan, and California. We also speak with Kristen Nichols and Shannon Shuman of Marijuana Business Daily. Kristen is an author, editor, and reporter covering hemp and CBD news, and Shannon is the Vice President of Publishing at Hemp Industry Daily.

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Cannacurio Podcast Episode 20 Transcript

Welcome to the Cannacurio Podcast powered by Cannabiz Media. We're your hosts, Amanda Guerrero and Ed Keating. On today's show, we're joined by two very special guests, Shannon Shuman and Kristen Nichols of Marijuana Business Daily. Shannon is the Vice President of Publishing at Hemp Industry Daily, and Kristen is an author, editor, and reporter who covers both CBD and hemp news. We're so excited to have them on the show, but as always, we're going to jump in with Ed to see what he has for us today from the Data Vault. Ed?

‍Ed Keating: Thanks, Amanda. So we just released our monthly Cannacurio that focuses on what's happening with dispensaries and retailers around the country. And as you've heard me say virtually every month this year, Oklahoma leads again.

And now they're up to 261 new licenses that they've issued, but Michigan came in second with 182 new licenses, which is up 80% since January 1, and California is third with 70 new licenses. So we're still seeing dispensaries and retailers coming on board across the nation.

‍Amanda Guerrero: Yes, it does seem that our dispensary and retailers are coming on fast, Oklahoma, Michigan, California, still our pack leaders, same thing with cultivation, super excited to see where they go. Thanks for that update, Ed. After our commercial break, we'll return with an exciting interview with Shannon and Kristen of Marijuana Business Daily. Stay tuned.

‍Announcer: Are you in hemp or CBD? Don't make another business decision without first consulting Hemp Industry Daily's Hemp and CBD Industry Fact Book, the industry's most in-depth market research tool. To get this indispensable industry guide for a Cannabiz Media exclusive 25% off, go to hempindustryfactbook.com and enter the code leaf 25. That's code leaf 25.

‍Amanda Guerrero: Welcome back to the show, everybody. As mentioned, we are here with Shannon Shuman and Kristen Nichols of Marijuana Business Daily. Welcome to the show, Kristen and Shannon.

‍Shannon Shuman: Thank you.

‍Kristen Nichols: Thanks for having us.

‍Amanda Guerrero: Of course. As most of our subscribers know, Marijuana Business Daily is pretty much a household name at this point, but they were founded in 2011 and have been the leading source for cannabis and hemp business news, updates and so much more.

We have Kristen and Shannon on the show. So let's get a little bit more background on them. Kristen, your bio says that you've covered the CBD and hemp beats since 2009. Wow. How did you get involved and why?

‍Kristen Nichols: Okay. They say every year in cannabis is a dog year. So that makes me so ancient. I know. No.

‍Amanda Guerrero: No. No. No.

‍Kristen Nichols: For a long time, I covered politics and agriculture. So when it was campaign season, I was a reporter covering state politics, then the rest of the year would cover ag. I moved to Colorado, and boy, if you cover agriculture and politics, the perfect intersection of both is, of course, cannabis.

So when I came to Colorado in '08, this industry started taking off. I still think it's very much agriculture or flora culture really, and I was interested in it. And so I've been doing it ever since '09. I then moved out of covering politics entirely and now just get to focus on the plants.

‍Amanda Guerrero: So exciting. And you must've seen, I mean, so much since 2009. I mean that's almost 10 years covering the industry, so that's fantastic.

And Shannon, I know that you're a recent addition to the MJBiz Daily team. How does this job compare to your previous position and industries?

‍Shannon Shuman: Yeah, the previous stop I was running a media company serving the fresh produce industry, a product called The Packer. It had covered the market from basically grower to retailer and everything in between. It was a full supply chain news organization covering the fresh produce market. And there are a lot of similarities between the two, a lot of differences, obviously, but similar position here where I'm asked to build a business around a relatively new Hemp Industry Daily media brand serving the hemp industry.

‍Ed Keating: So one of the questions that we've been interested in is, looking at what's going on, especially on the hemp side and the emergence of CBD, is the adoption curve of new things coming into the marketplace, which I imagine you saw on the retail side. Is that similar to sort of the technology adoption curve, where you get innovators, people who buy really early and early adopters, et cetera? Sort of like we'd see with various types of consumer technology. You get those curious people first. So I'm just curious if there were any similarities between those markets.

‍Kristen Nichols: I'd say absolutely. And what a great analogy to kind of the early dot-com boom and tech. There's early adapters, people that are super into the newest, the latest, the coolest, then people who kind of come on when things get more affordable.

There's a lot of boom and bust where you have some enthusiastic investors and enthusiastic entrepreneurs who go big. A lot of them flame out. It's exciting to watch and painful to go through if you're in the industry.

But it's definitely a lot of really good analogies, I think, with the early dot-com days or other tech boom and cycles where you've got a lot of exciting innovations and it's starting to trickle to the mainstream, but it still changes every day.

‍Ed Keating: Yeah. That's a great point. And I appreciate you bringing in the boom and bust cycles because goodness knows we're seeing a lot of that this year. And I think COVID has certainly pushed a lot more busts than we would have thought in the last six months. And yeah, we'll see how it plays out, but it'll be interesting to see how this moves on.

So let's jump over to Shannon. So where you came from and sort of looking at retail trends, how does CBD look to you, because you've been through this before with other products and other market sectors?

‍Shannon Shuman: Right. Well, it certainly shows a lot of promise. I'll give it that. I think there are a number of inherent challenges with any new market, but this one, in particular, where there's just so much growing demand and not every player in the market is playing by the rules. So that's eroding some consumer confidence and probably more importantly, the retailer confidence.

I really think this market is going to be changed dramatically when major retailers like Walmart and Target and Costco make significant plays with CBD products. Right now, there's a lot of confusion and lack of confidence that they cannot only meet the demand of their consumers at that scale, but that the products themselves are in fact doing what they say they can. And these major retailers can feel comfortable putting those products on the shelves on behalf of their customer.

‍Ed Keating: That's a good point, especially in terms of do the products do what they say or do they even have the ingredients in them as labeled. And I imagine that's going to sort of dog these companies until they get it right.

‍Kristen Nichols: I want to add, I think one thing that Shannon mentioned that I think is so interesting about this industry and is changing so quickly where in the early days, definitely in early days of legalization, people in cannabis, growing, selling were all only in cannabis. They weren't in other lines of business.

What we're seeing now, like Shannon mentioned, we're seeing companies that this is not their main business, looking and exploring opportunities. But, again, if you're a Walmart, a Costco, or a big pharmaceutical or a big ag company, this is never going to be the only thing you do.

So it's a very different priority that we're seeing from kind of the newer entrance here. There's a lot of different challenges, and it's going to be exciting to watch, again, where do these big players land if this is not going to be what pays the bills for them. This is never going to be their main line of business versus kind of you think of an old school pot grower or pot retailer, this is what they do.

‍Ed Keating: Yeah. As we look at the marketplace on the cannabis side and people who subscribe to our products, we've put them into three buckets. And I've talked about this before on the pod, which is you've got canna-serious, people who this is their business and it's their primary business. You have canna-curious, they want to put a toe in, or they want to try it out. And then you have canna-clueless, people who are interested, but don't know what they don't know. And I think there may be some analogies here too, as people try and figure out the lay of the land during these tumultuous times.

‍Kristen Nichols: I love sayings. I'm going to rip you off.

‍Ed Keating: That would be fine. That would be fine. So Shannon, digging into a little bit more of the retail trends. One thing that I've seen that's personally confused me is out in the marketplace, we see CBD, CBG, CBN, and it makes me think of that supermarket challenge, the paradox of choice. You go in there and you've got 60 brands of jam or jelly, which one do you choose? So what happens in a market when there's maybe too much choice on the shelves?

‍Shannon Shuman: Yeah, I think that's a great question. CBD by itself is already confusing for most consumers, and part of that goes back to that consumer confidence is to not knowing exactly what CBD does and what kind of volume do you take? How many milligrams of CBD works for you and is there a method of taking your CBD that is more effective? So there's a lot of things I think driving consumer confidence or lack of consumer confidence in CBD.

And then if you add in CBG and CBN, I think it's just going to get really muddy, not to say that those other types don't have value to a consumer for one thing or another, but I do think there was this rapid race to get into CBD. And so many people got into it so quickly and it altered the kind of market supply and demand in a way that now it's forcing prices down and now people are rapidly looking for the next thing. And I've seen people kind of lean into CBD more and soon to be CBN. And I just think it's too quick because most of the consumers still don't know what CBD does.

‍Ed Keating: Right. Right. And is this how things become commodities? I know in our past conversations, you talked about sometimes products like this or alphabet soup like this can sort of just become merely an ingredient like Echinacea where it's just a thing. Could that be a possibility for CBD?

‍Shannon Shuman: I think so. Obviously I hope not. CBD has been driving the hemp industry and been a big win for a lot of people. But at the end of the day, if it ends up being a vitamin C or you get a product that is somehow boosted by CBD rather than it being a CBD forward product, I think that could slowly kind of commoditize the value of CBD as an independent brand of its own rather than just an ingredient.

‍Ed Keating: Yeah. And I'm glad you touched on brand and branding because in commodities, if you can establish a brand, you may be able to get a price premium, you might get more market share, et cetera. Once again, you've seen this happen in other spaces in the marketplace.

How soon before that starts to happen, where we maybe see a brand that people trust or they recognize, or a brand that they know for something else include CBD and suddenly it starts to be a bit more normalized? Are we there yet? Is it six months? Is it a year?

‍Shannon Shuman: Well, we're certainly not there yet. I'd almost be hesitant to put a timeframe on it, but I would add one thing that we talk about branding oftentimes from the viewpoint of a consumer, but many times a brand... I'll kind of reference back to the fresh produce industry.

When you walk into the grocery store, oftentimes, you're not buying a brand. You don't know what brand your apples are. You don't know where they came from, necessarily, at least who the grower was. But all of it is branded. And that brand is designed more for the retail buyer to have confidence that that product is going to serve their consumer needs.

They know that by buying a certain brand, they are going to be able to be confident in the supply, be confident in the stability of the products, be confident that it's not going to have a lot of failed product with it.

So a lot of branding I think, is overlooked in terms of how valuable it is to a retailer, which right now, I think is more important than how valuable it is to a consumer. Because there are so many CBD brands out there, there's just no way for the consumer to unpack that.

‍Ed Keating: Yeah. And on the retail side, we've seen a little bit of this from Cannabiz Media's side, where a couple of states have issued, what we'll call CBD retailer licenses. Right now, it's down in Louisiana and Florida.

And in the case of Florida, well, actually both, they've issued a lot of licenses, but they're pretty straightforward to get. I think in Florida, you're pretty much checking a box for an existing retailer to say, "I carry CBD as well." But they've gone up the wholesale chain as well to let people say that, "Yes, I produce this product." Like, there's one alligator meat processor who also has a CBD checkbox near his business.

So I'm curious, what happens now with the retail chain? Because you've got like over 700 public stores down in Florida that can now quote unquote, sell CBD. Is this how it starts, Shannon, and begins to roll out that way?

‍Shannon Shuman: Yeah, definitely. Yeah. I've had the good fortune of talking with a number of CBD category managers and buyers in some major retail chains, and some of the struggle that they've had is they've got a lot of curious consumers. And things like the size of the package has come up as far as most of these buyers have been relegated to buying relatively large packages of 100 gummies or something like that. And oftentimes, the curious consumer doesn't want to make that kind of commitment. So that's one small example.

But there are a lot of barriers that go into considering this. And when you look at Publix, for example, and all of their stores, the opportunity for CBD is enormous, but you have to be able to meet the requirements of that consumer at that scale. And I think that's a challenge. I think that's a major challenge and I see a lot of CBD brands that seem to be doing a good job, but I wonder if they've got the opportunity to really manufacture at that scale.

And it seems like in the next year, you are asking kind of a projection over the next year, I feel there's going to be a lot of consolidation of CBD brands as major retailers start to require high volume of consistency.

‍Ed Keating: Right. And sort of demand what the channel needs, not what the 10,000 producers want to produce.

And I thought your point was very interesting before about package size, because at this point in the industry is people are still canna-clueless or canna-curious. Going back to that thing, you're really trying to stimulate trial with consumers. They want to maybe buy four of something just to see what it's like, a sampler, but not get a relationship that's going to last you for six months, because maybe it's a bad experience. And you don't want to have that much product on hand.

‍Shannon Shuman: Right. And I think you hit the nail on the head. At the end of the day, the retailers have the keys to the car. And they're the ones that have access to most of the consumers. And it's good for CBD for finding a direct channel through e-commerce, but at some point when those major retailers get on board and develop a level of confidence that they can carry a full line of CBD products, that is going to significantly alter the market. And they will have every ounce of power because they're representing the ultimate buyer.

‍Ed Keating: Yeah. In a year from now, we're going to have you back and you're going to tell us all about slotting fees in the industry as the stores really start cramming down on the producers.

So just sticking with the licensing side of things, Kristen, I wanted to ask you from sort of that hemp side that you cover. Now we've got the US Department of Agriculture approving state hemp plans, the DEA approving testing labs. We're kind of seeing almost a federalization of regulations. What impact is that going to have in the marketplace? And how will that shape the industry in years to come?

‍Kristen Nichols: It's going to be enormous. It's a big case of be careful what you ask for. One big win is that hemp wants to be a national commodity.

Right now, in the marijuana space and still in hemp, rules are different. If you're growing and selling in Florida, as you mentioned, or you're in California or Michigan or Oklahoma or any other, everything really depends on your state rules. That's not how other crops and commodities work. If you're growing wheat or soybeans, how that market looks doesn't really depend on what state you're in, and your state doesn't make the rules for how you sell your soybeans.

So absolutely, where the feds come down on how hemp is regulated is going to drive all decisions. We're expecting this fall for some rules to become final. Right now, we just did kind of a top 10 ranking. You see some states, "Oh, we're so friendly for this industry. We allow this and that. Other states don't allow things." All of that I think eventually goes away.

I think that's a good sign of maturity. It's going to make the industry look more like other industries, but certainly it's going to be a challenge for those who have been operating under a state plan or maybe in the illicit market doing their own thing. Life is going to be different when you're regulated by a DC.

‍Ed Keating: Yeah. It's a good point because it makes me think when I've gone to your conferences and heard about the challenges in Europe of just cannabis rolling out, they often talk about the harmonization of regulation.

‍Kristen Nichols: True.

‍Ed Keating: And you're never going to get that over there because they're all sovereign nations. And you sort of get that in the US with cannabis, they're all sovereign states. But with the federalization of hemp, it should be pretty interesting to see how that plays out. And as some have opined, it may give some insights as to how cannabis may someday be regulated. But I think we're a long way away from that.

Kristen Nichols: We are, but no doubt. It's definitely a test run. The issues you're going to see with USDA and hemp, this is all going to play out when things change for high-THC cannabis.

Just to pile on when I was talking about my background as an ag writer, one thing that made me chuckle at pot shows or marijuana industry shows is people really looking forward to the USDA. Did not want to be regulated anymore like a drug. And I thought, you've never heard people say nice things about the USDA like they did in marijuana again. Before you were regulated by the USDA. Now we'll see how many folks have great things to say about the USDA coming up in growing seasons to come.

‍Amanda Guerrero: Yeah, we shall see what happens here. So looking into 2020, we've seen a complete shift of how we've had to operate our businesses, specifically within the media and event space. Shannon, I was curious, how are you and the team currently addressing these new challenges? I know you just had MJBizConNEXT, which was a virtual show. And how does this also kind of translate into the hemp space?

‍Shannon Shuman: Yeah, that's an interesting question. And this has been the oddest year, I think, most of us have ever experienced, but speaking on behalf of MJBiz and the events space in general, it's been devastating.

We've got the largest cannabis show in the world and to not be able to potentially put that on, it's not only a part of our business, but it's become a big part of the industry's expectation. It's the time of the year where a lot of industry members rely on to get together and find new partners or new customers. And without it, it's really created an enormous void.

And that's not just us. The event space around hemp and cannabis mirrors the cannabis and CBD space as well. You've got a lot of people chasing what they see as this pot of gold at the end of the rainbow and not everyone's going to survive this. But in the event space, you've got, what I've counted is, hundreds of events. And I've never seen that in another industry.

So it's put a real damper on this industry's ability to connect face to face. And I really feel like that networking is probably the biggest loss with not being able to have live events to date.

And you mentioned it, we have our MJBizNEXT and our Hemp Industry Daily Conference, they're co-located, or they were supposed to be co-located within New Orleans back in June. We obviously had to cancel that and shift it to a full virtual event. We learned a lot from it.

At the end of the day, without getting to the specifics of the event, one of the things that we took away is it's really difficult to replicate the exhibitor experience. We found some mechanisms to replicate and even in some cases improve on the networking experience. And so I think that it has forced us to reevaluate what a virtual event looks like.

I think prior to, as COVID hit, everyone wanted to try to turn a live event into a virtual event by using all the same components. And it's just too difficult to replicate what an exhibitor needs to get out of a show. But there are a lot of educational channels within that, the networking channels. There are some tools that we've been able to add that have really added a lot of value.

And going into MJBizCon later in the year, which at the moment, we are still working toward a hybrid, a live version of the event for those that can be there and a virtual version to run in parallel, that takes advantage of all the strengths of those channels without trying to replicate some things that it just can't.

So we've got some bold plans for December and probably worth pointing out as well, that we are keeping a very close eye on the COVID situation and doing everything that we can to be responsible on behalf of all of the visitors working with Las Vegas and the convention center, all in an effort to make this the safest event possible.

‍Amanda Guerrero: Wow. yeah-

‍Kristen Nichols: I would like to add some silver lining and say, this is an area where it's a huge advantage to be such a new, young, nimble industry. If you're in something like, again, mainstream ag that really relies on say big old style auctions, or you're in the auto industry or the fashion industry, they have been just totally upended.

I feel like relative to other industries, the cool thing about cannabis executives are so nimble, so quick to figure out how to get to e-commerce, how to survive when laws don't go their way, or events like this. So I think that to diminish how terrible this pandemic has been for the industry, but I think this industry is going to come right through it in a way better position than a lot of its colleague industries to survive this kind of downturn.

‍Amanda Guerrero: Yeah, absolutely. No, you've both given such thoughtful responses to this question. And, Shannon, as an exhibitor and as someone that did attend the virtual show that you guys put on a few months back, you did touch on the inability to replicate the actual in-person networking experience.

But as a former recruiter, having the ability to connect with everyone online virtually and having that chat message box was so helpful and such a great way to introduce ourselves with a new pressure approach, unlike in-person events where it can be a little intimidating to walk up and introduce yourself to someone brand new.

So I'm very much looking forward to what you guys have for us in December. I don't know if I'll be there due to COVID, but I will definitely be encouraging others to attend because I know you guys are going to do a great job there. Of course.

So looking forward, we kind of touched on MJBiz, but are there any other upcoming projects or releases that you guys would like to share on behalf of Hemp Industry Daily or MJBiz Daily?

‍Shannon Shuman: I'll bring up one and then, Kristen, if you've got something to add here. But the big one that ties in nicely to some of the things we've been talking about is we have covered the market supply chain from end to end. And I feel like I'm so fortunate to have joined this organization that's rooted in exceptional journalism and very high standards for the markets.

And looking at the hemp market, kind of going back to the key drivers right now, being around the CBD space, we are in the next couple of weeks, expanding our distribution and reach of our content into more retail outlets. And those are chain grocery stores, drug stores, gas stations, convenience stores, pet stores, you name it.

Anyone who is a high volume buyer, or could be a high volume buyer of CBD or hemp-infused products, we want to start engaging with them more. And part of it is to kind of help the CBD part of our industry continue to pursue that pot of gold. But part of it is to make sure that we're on the forefront of that conversation as those major retailers start changing the market dynamics.

‍Amanda Guerrero: Well, we can definitely help you with accessing data on the Florida and Louisiana retailers that are currently changing the market down there and very much looking forward to what you guys have, what you guys are able to uncover on your own because that will definitely be relevant to the Cannabiz Media platform. And we look forward to what you guys have for us. But thank you. Yeah, of course.

Thank you both so much for joining us on today's show. Shannon, Kristen, you've been such great guests. And while 2020 has been quite unexpectedly challenging, it sounds like you guys and the MJBiz team are doing a great job navigating that. So thank you for joining us on today's show.

‍Kristen Nichols: Thanks so much for having us.

‍Amanda Guerrero: All right, Ed. So let's take one last look into the future. What data and license updates should we look forward to from the Data Vault?

‍Ed Keating: Well, right now, we're in the process of publishing a part three of a report that I've been working on over the summer, which discusses companies that connect to seed to sale systems. So this one focuses on those vendors that actually are essentially involved with financial transactions. We identified 28 of these companies in the sector, and some of the things that we found were that half of those connected in California. So they saw that as the market to be in, and they were largely comprised by financial institutions, payment processors, financial compliance, and marketplaces.

The most interesting takeaway that I found is that most of these vendors did not connect to many states. There was nobody that was in 14 or 12 or 10, actually six was the most. So I think maybe because they're trying to build scale, so they probably need to go deep in the states they choose. So it was an interesting observation and being able to take a look into these 28 companies.

‍Amanda Guerrero: Well, no surprise that 14 out of 28 were based in California. Right, Ed? All right. Well, thank you everyone for joining us on today's podcast. We're your hosts, Amanda Guerrero and Ed Keating. Stay tuned for more updates from the Data Vault.