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May 17, 2024
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On this episode of the Cannacurio Podcast, Ed Keating chats with Patricia Rosi, Chief Marketing and Strategy Officer at Acreage Holdings. Their conversation touches on the evolution of cannabis brands, operational excellence, and the impact of federal policy changes. Tune in to learn about the key factors driving growth and innovation in the cannabis sector.
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Ed Keating
Welcome to the Cannacurio Podcast powered by Cannabiz Media. I'm your host, Ed Keating. And today we're joined by Patricia Rosi, Chief Marketing and Strategy Officer for Acreage Holdings. Good morning.
Patricia Rosi
Good morning, Ed. Thanks for having me today.
Ed Keating
Absolutely. Absolutely. Glad to finally get you on the pod. I've seen you at trade shows pretty much forever. So it's it's, it's good to finally have the opportunity to sit down and chat with you today. So you're at Acreage now and, your role has changed a lot in your tenure there. So what are you responsible for at acreage?
Patricia Rosi
So my title is Chief Marketing and Strategy Officer, but the long story short is I'm the steward of the brands and the brand strategy, and that covers several functions, from product development innovation also marketing communications, all the way to even digital and technology.
I'm in charge of technology because the, you know, our world is digitally live and it's really important that we integrate. Everything we do. So there is really importance and focus on making sure you know, everything we do from the brand experience and consumer standpoint is is really integrated with technology.
I think what is important about brand is, you know, my focus is to create a repeatable growth models based on our brands. Based on consumer appeal. And you know what I love, you know, I call it brand love, brand pride, brand love, brand pride internally, because we all are driven with the desire to produce the best quality products possible, but also brand love, we want our consumers to love our brands and to be really loyal to them and come back. And that's, you know, what fuels. This repeatable growth model. So I'm in charge of a lot of things, but but I love it. It's you know, we've made tremendous progress over the last four years that I've joined acreage and I'm really, really proud of the integration of, you know, product innovation, because it's really all the touch points of a brand experience we own and we've improved upon. I think also what is really interesting about my profile is because I was an operator before and I'm a marketer and advertiser by career. I'm able also to influence brand strategy and connect the dots with all our operators. So really the ability to not only think through strategy, but deliver results. So very exciting times. You know, our house of brand now is, is close to 100 million, these are within our two brands: The Botanist and Superflux. So amazing progress, amazing focus of the team. So so that's what I do. I'm passionate about brands. What can I say?
Ed Keating
Excellent. So Patricia, with respect to brands and, you know, also your background that we'll get into in a bit with CPG, you know, how are brands either similar or dissimilar to brands you've had to manage in other industries because there's always been a lot of talk about brands and cannabis, but trying to make them, as you said before, sort of repeatable and the experience to be consistent, let's say across states. What's it like managing brands and cannabis, I guess, versus other industries or markets that you've been in?
Patricia Rosi
Well, the fundamentals are the same, right? When, when we talk about CPG, for me, it's universal access. And that's a great aspiration. That's an aspiration that has been driving me for the 12 years. I've been in this industry. You said you see me at several trade show. Yes, I'm, I'm in the cannabis industry for 12 years. So really the ability for us to broaden access. To lift the stigma and to enable more people to really use cannabis to live their fullest life is that's, you know, for me, that's an aspiration that is very analog to CPG, CPG is all about, you know they wrote the playbook for us. So the aspiration and the fundamentals are there. Having a brand that is differentiated, producing a product that solve real problems that are differentiated, that are quality with also operations that are scalable, you know, scalable and also replicable and being able to build them. Efficient model that is always you know, innovating and driving category innovation. So the fundamentals are there where, where I think it's important and you cannot just apply CPG logic into our world is, I think there's our world is, you know, the cannabis industry is born from a compassion and prohibition. So from an operator's standpoint. It's a different mindset. It's a it's a mindset that is built on difference nuance. I think it's important as we scale a brand that we really respect the roots of our industry. And there's the craft geographical differences, nuances, but at the end of the day, it starts with the consumer. Where does the consumer wants? And yes, some. Some markets are more advanced than others in certain form factors and so on and so forth. But I think we're finally at a point where was the, you know, the maturity of our industry or like part of the life cycle of our industry where we're being able to build brands, brands that are really built on solid fundamentals learned from the CPG industry.
Ed Keating
So you talked about the playbook being the same sort of it already being written. I'm curious, as our industry matures, we hear more talk of key performance indicators or KPIs in our space. And I'm curious, do those come out of the playbook too? Or are there some new and different ones that you've had to contend with in cannabis that are unique?
Patricia Rosi
Well, there's the fundamentals are there, but there's definitely some, you know, some things we that is really important, for instance, for us is brand consistency across our footprints, and that's where compliance and regulatory make it challenging. So some things you might not think about checking in the CPG world is how close are you from one brand, one product everywhere. You know, if you, if you look, for instance, when we launched the gummies, I mean, gummies are called soft approach in, in Pennsylvania chewable lozenges in other places in one market in Massachusetts at some point they were called jellies. So for all these regulatory, so there's not one size fits all. But I think it's important for us to look at. Not to rule by exception, but really manage expectation, but still have an aspiration that is the one brand, but. You know, we're managing, reducing the exception and that's not something you would manage in, in a regular CPG environment. I guess it's much easier.
Ed Keating
Yeah. Interesting. Well, now let's rewind before you got to Acreage and talk about sort of how you got there. You know, one of the most interesting things that I've known about you is that you managed to get four of the eight licenses in Maine with the wellness connection and given. How that market was structured prior to the state program with really just caregivers that must have been just an arduous challenging journey that I'm wondering if you could tell us a little bit about that.
Patricia Rosi:
Well, you know, I view this as a journey as an adventure. It's I've never followed a, a very linear career path discovered in the US that I was an entrepreneur. In 2000 and December, 2011 you know, I, I, I joined a wellness connection and, and I really viewed this as an amazing challenge. Yes, we received four of the eight licenses because we had the best applications points in period, and there's a lot of, you know. There's a lot of conspiracy theories and all that. We simply had the best of the eight, you know so what was really fascinating, though, beyond that is the role, you know, what really motivated me and drove me through this experience was building a good company all around good companies in in industry that was nascent. So the challenge of making the impossible possible was really What was driving me because you know, a lot of folks are calling me and saying, Oh, how can I get into the cannabis industry? You know it's not for the faint of heart. I mean, it's not a walk in the park and you're going to have to problem solve for so many things all the time. So, You know, at the time that was true. I mean, you know, I was not used to not having credit card calling a banker and people like were hanging out for me or, or facing situation that was, Oh, wait a minute, everything that I know should be applying to railroad companies, not applying. So I think it was very stimulated and it has, as you can hear, I'm still very, very passionate about this adventure. You know, we're able to build a great company up to four years ago, where I wanted to get employees you know, full benefits paid serving thousands and thousands of of guests in our facilities, the ability to drive all the way up to, you know, 20 million in revenue. We were one of the first on the East coast. At a time where there was not really a clear financial model. And really all this fueled by a passion for the best consumer experience, the best brand experience, which was very novel at the time and, and really advocating for product quality policy all around. So, you know, the conversation with the caregivers for me, it's just a matter of consumer preference at the end of the day. I think there's space for all of us to succeed in this industry and, you know, very analog to some people buy their tomatoes at the farmers markets and other buy it at at the local grocery store. Well, I, our industry as it matures, everybody should be able to coexist and define you know, find their spot with their sweet spot in the market. It's all a matter of consumer preference. Yes, we have different views about, you know, how things should be regulated and but I think it's normal. It's a nascent industry. There's no, there's no book on how to be done at never done. I mean, since prohibition. So it was eons ago. So I, I really found this very it's a once in a lifetime opportunity to really start from the ground up on so many fronts. So some people might find this scary. I found this exciting and, you know, this was also the very 1st investment. You know, that further on led to the creation of, of, of acreage. So there's a lot of pride, you know, in, in starting in Maine, not a lot of things start in Maine. And I think there's, there's a very strong role for cannabis to be driving economic growth in Maine and full time jobs and, and, and all of that. So I think, you know, There's a lot of things that started in this little corner of the world back in 2011. But, you know, I still, some of the you know, what I pride myself is the team that I've built there and that has really been a phenomenal team and really a resilience that is exceptional. They're, they're still with the company and they're the oldest 10 year employees and in all acreage. So I take a lot of pride also in, in the development of the team, the skill set, being able to build a culture you know, a lot of commitment to communities, volunteering the environment and so on and so forth. So.Very very exciting adventure.
Ed Keating
Well, yeah, congratulations. That's a, that's a great legacy to have, especially when the people stay, you know, as you've moved that's, that's really I think bodes well for them. Jumping back to Acreage and sort of your strategy role, one thing that we have seen in Cannabiz Media as we've tracked licenses and companies and whatnot are, are. The variety of strategies that some MSOs have used over the years to grow in finance, like, for example, there were a lot of investments made by real estate investment trusts. There was a lot of M&A going on for time. We even saw people trying to franchise dispensaries in certain states. I'm just curious, like, what, what do you see as some successful strategies that are in place. Because I think for all those, aside from, you know, maybe the REITs are still in place, but I don't see new ones. And M& A really seems to have slowed down. Like, what do you think is, is Is likely for growth strategies for larger multi state operators.
Patricia Rosi
Well, I think, you know I'm not an expert by any means in REITs and all of that, but I think it was a time in the evolution of our industry where there were truly needed to expedite access to facilities. We were, you know, 2009, there was this. Race to scale up to, you know, as fast as possible and and I've learned first and the challenges of being able to access facilities, prime real estate, discussing with landlords and so on and so forth. So they, they were very needed at that time. I think now, you know, we are, again, our industry's in a different part of his life cycle. We're maturing. There's more broader access to to to assets. I think what, what is really important is there was a pivot over the last few years where The industry really became about not just financial investments, but the fundamentals of being a good operator talking about margins, talking about ERP, talking about all these elements. So I think that changed a little bit. The, the. The landscape for us. You know, we we pivoted from expanding as fast as possible to many states to really focusing and re centering on. Well, let's do less states, but do it really well and go really deep and make sure we own our skill and what we do which, which was a profound change. You know, going back to really being an operator off the company when it comes to merger and acquisition. I think they're, they're still happening and there will still be some. I mean, you know, this, this year, I mean, 2024 2025 are challenging years, right? There's. Increased competition. Price compression. It's very high velocity markets where things change day by day and and and it's really going to be about whether in the storm and survival of the fittest. So, as part of this scene, which I think is just a natural course correction of the evolution of a nascent industry, there will be distressed assets. And then you hear of about receiverships. So they will be assets for the right. I mean, funds are not as readily available, but they're still funding. There's distressed assets. So there still will be some consolidation and moving, but I think our industry is now smarter than it used to be about what is the right consolidation? What is the next move? And so on and so forth. So much more deliberate and curated growth. And I welcome that.
Ed Keating
So with that background you know, I don't know if you can share this, but like, are there certain states that you're looking towards? Like, boy, we'd like to enter that one. Or is that happening? Or is it really still about let's focus on operating where we are now and do it quality and, you know,
Patricia Rosi
As of now, we're very much focused on our footprints. We have an amazing footprints - we're in New York, New Jersey, there are Pennsylvania that are poised to be one of the biggest market in the world. Pennsylvania is looking to be you know, open up to adult use. Ohio also is about to shape up with adult use. So we're at the right place at the right time with very strong position in each market, and we want to turn this into a success.
Ed Keating
That's great. That's great. Now, talking about the market sort of in generally and almost globally. I'm curious how you see the structure of the market changing over time. Like, we have things happening potentially with federal policy. And then there's also been more quack on the international front, like, you know, with with what's going on in Germany. So I'm just curious your thoughts on that. And what kind of impact that may or may not have on on our industry?
Patricia Rosi
So let's start with the federal. So I'm in this industry for 12 years, and it's supposed to happen next year for the last 12 years. So, I'm a cynic. I will not uh, base my assumptions. On that, this being said last year, when DHHS made their rescheduling recommendation to DEA, this is the biggest milestone, the most promising or the closest we've ever been of being, becoming a normal industry.Regulated but I think, you know, being able to potentially come off the schedule run. For us would have profound changes in the sense that taxation would be lifted no more to 80, which would free a lot of capital in cash flow for us to reinvest in the business and extension and so on and so forth. So, on the federal level, I think we've been the closest we've ever been from seeing you know, a tight, tight change. This being said, I think we cannot forget. You know even if all of a sudden all of we were federally legal, there still will be all the state regulations to adjust all the way to the municipal real regulation in correlation to the state regulation and all that. So there's, there's a lonely, I've learned it firsthand that, you know. These changes take a lot of time to take into effect and be enacted and implemented and because you have to be regulation and all of that. So close to seeing a change, but it's it's going to take a time time and resilience to get there when it comes to international expansion. Hey, I think there's plenty in the US for us to focus, namely as potentially deregulate and all of that. And this is one of the biggest markets. So I think there's a lot to focus in the US. When I look at towards international expansion and, you know, namely Europe, I mean, I come from France, so I know a thing or two about administration in Europe.It's challenging and complex, and we should never underestimate the complexity of, yes, it's one market, but it's really still. You know, state by state and country by country, and it's going to be a very long haul. So I think, you know, looking towards international expansion, you have to be Very deliberate about where you go and also be able to have the funding or the backing to, to, to whether the time it's going to take before it comes to fruition.
Ed Keating
Yeah, that makes a lot of sense. Now, focusing, you know, as you did on, on our industry, I mean, in the last couple of years, we've seen it here where a lot of our clients have exited the industry, they've run out of money, they've gone out of business, you know, we're definitely wondering. You know, has the industry hit bottom in, in terms of contraction, or do you think there's still more to go?
Patricia Rosi
No, there's more to go. This is, you know, 80 percent of Americans have access to cannabis and, you know, for a regulated form of cannabis, but there's still a lot of potential. There's still, I mean, going back to CPG, right. I mean, we're not toothpaste yet, but I hope one day it will be easily, you know, easy for folks to access cannabis as as easy as going to a grocery store and, you know getting your natural remedies. So I think there's still a lot of potential. There's still a lot of potential from a product innovation standpoint, from really a consumer developing brand experiences that are differentiated. There's still some markets. That have not opened. Think about the south thinks about the potential of Texas. I think what we are experiencing now, which might sound like is the end of the world is after years of tremendous explosive growth, we're just, there's a course correct correction or you know, operators. There's also a recession that is on the horizon, you know, for the last. Next couple of years. So it's a challenging time. You know, post COVID the world is, there's uncertainty. There's you know, the world has never been that, you know, there's a lot of anxiety. I think 41 percent of Americans are accessing therapy or something like that. So cannabis can help. Oh my God. You know, pain, anxiety, insomnia, we're here for that. This, we can help. So there's a lot of potential from the consumer societal need. I think what we are currently experiencing is just another phase of the evolution. I mean, I've, I've been fortunate to see the evolution of the last or to live first, you know, first row, the evolution of this industry. And I think it's just normal, you know, that's the ebb and flow of an an industry that is maturing. But I still think there's a lot of potential markets are still opening. I mean, look at New York you know, several billion. So I think there's still some potential. It's just that. You know, we have to be more on our skill, more proficient and more expert. And yes, you know, there's a lot of you know, as you said, some of your clients exited, or I think there was also a time where it was people miss, took cannabis as the the cool industry to be in to generate very quickly and easily. A lot of profits easily is where they got it wrong. You know, there's no there's no pixie and fairy dust in this industry. It's more about grit, resilience and problem solving. So I think that's where some, some people were a little unrealistic, I would say about expectation and didn't set themselves for success.
Ed Keating
Yeah, I would agree. I think the notion that you mentioned before kind of about the financial and operational excellence is really what's important. And that's another reason why we can't wait. Hope on the federal government to sort of bail us out because. You know, you still have your business to run and given the constraints that we have. So, you know, you just have to deal with that and manage accordingly and effectively. And I think, you know, I don't spend a lot of time looking at financial statements of the public companies, but some of them are definitely moving in the right direction or actually, you know, getting card true profitability, which is which is a big milestone for the for the industry.
Patricia Rosi
Absolutely. You know you know, becoming cashflow positive is, is really driving us refinancing. There's a lot of refinancing going on because again, it's a different Phase of our industry used to be all the taxes, you know, capital and in costs, but now it's, no, we need to increase margins. We need to, you know, there's, there's all these fundamentals are in play and we cannot ignore that. You know, the, the plant is very special, but the fundamental of a successful company are, are the same.
Ed Keating
Yeah. Yeah. Very, very true. Now, you know, in terms of. You know, Acreage, you know, what challenges are, you know, Are, are you all confronted with, you know, sort of what the question, you know, what's keeping you up at night, you know, what, what, what challenges there you have really trying to solve, or that are taking up a lot of your brain power, your team's time and effort?
Patricia Rosi
What is keeping me at night? How are my brands to be national? This is, this is our mission. This is what we want to do. We are, we have created a huge momentum for our brands. We are, you know, we are very lean, very frugal. And, you know, how can we create one of a kind brand experience brand love, foster brands that are really, you know exemplifying how it should be done. You know, one of our brand super fluxes is a tribute or celebration of the craft of cannabis. Exceeded, you know, sales goals by 80 percent garnered multiple I times awards you know, concentrated flower category. This is what is driving us being the best we can and making sure. Has many consumers can potentially access it. So this is what's keeping me up, obviously.
Ed Keating
So that's that that's great now. Finally as we kind of look forward Patricia into you know, the trends and things out there What should we be keeping an eye on? I know when we last spoke there was you know, obviously new states coming on and also the whole hemp derived cannabinoids are, you know, we're seeing a lot of that with sage jumping in. I mean, you see those trends or others that are really going to affect our industry, you know, for, for let's say 2024.
Patricia Rosi
Yes. I mean, absolutely. And derived cannabinoid is something we, we must look at because it's much lower cost access to kind of, you know, it's like a much lower cost. So what do we do? Is this a threat? Is this an unfortunate, how do we play there? There's also interesting. I think if you look at the macro environments, you know, psychedelics are on the rise, too. It's another natural medicine, you know, medicine that has is embarking on the very similar paths and what we've lived through with cannabis. So there's different things that are on the horizon. I think at the end of the day, it's, it's about consumers. Where are consumers at and what should we look at? I mean, there's uncertainty, anxiety about the future, our society and I think this is what will be a driving a lot of, you know, how folks are willing to access the cannabis and will be, you know, fostering this momentum. I think from a geographic expansion, you know, as we mentioned earlier, there's still some. States that we have not cracked the code. But if you look into the, the I think what is interesting is we keep thinking in States, like one state at a time. But if you look at the reality, going back to the consumers, East Coast is fully adult...So the reality of the consumers as no compound of state borders or such. It's, it's the one open market already. Regulations are not like this policy is not making it us operators seeing like this, but consumer reality is different. You can get in your car and, you know, go 1 state up or 1 state over. And it's there, so I think it's very important to reconcile how, you know, the, the, the artificial economy built out of policy is, is very different from what the consumers are living. So, like, I think it's a really important part of what aspiration of what we have to be. Really catering to that.
Ed Keating
Excellent. Excellent. Well, thank you, Patricia, very much for that. Look forward and for the discussion today. It was it was great hearing from you and learning more about what acreage is doing.
Patricia Rosi
Thank you so much for your time. Always enjoy a great conversation to start my day.
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