To reach today's cannabis consumers companies must elevate their branding and packaging.
Product packaging and design is more important today because patients and consumers are very aware of the quality and safety of the products that they ingest. In less than 3 years, 14th Round has established itself as the industry's leading design and technology company. Trent Overholt speaks to Dan Humiston about creating high quality products and helping top cannabis companies define their brands.
Produced By MJBulls Cannabis Podcasts
Trent Overholt: [00:00:07] The history of Cannabis branding is pretty unsophisticated. It was just loud trying to be louder than the last version allowed. And now it's in. There's a lot of different players that are doing with things that speak to their segments, whereas before there really wasn't a lot of segmentation.
Trent Overholt: [00:00:21] Like, I made this for guys thinking new and looked like I do. They were just kind of marketing to each other.
Trent Overholt: [00:00:28] So it was okay that we're talking about this product as if it's medicine and we're going to call it poising or crack.
Dan Humiston: [00:00:40] From MJBulls Media, it's the Raising Cannabis Capital show.Today, a Raising Cannabis Capital. We are joined by Trent Overholt from 14th Round. Trent, welcome to the show.
Trent Overholt: [00:01:07] It's a pleasure to be on the show.
Dan Humiston: [00:01:09] Well, I've been looking forward to speaking with you about trends in Cannabis consumer packaging, especially with Colvard 19. There's so many negative ramifications, but one positive ramification is that consumers seem to be moving away from the black market. And I think health being made a top priority. People are thinking twice about the quality and the safety of the products that they're ingesting and packaging. Is one noticeable difference between products that are sold in dispensaries and products that are sold on the street as the industry's premiere design technology company. Are you seeing the need for improved Cannabis packaging really ramping up?
Trent Overholt: [00:01:51] Definitely the need for it. The Corona virus situation has been challenging and unique and reasonably unprecedented for most people our age. Being deemed essential in most of the major markets was really good for the industry. Going back to the importance of packaging, it's certainly there for that initial appeal. It matters tremendously to compete for attention once you're in a legal channel. But what you're talking about is really a separating yourself from counterfeited products that have not gone through compliance testing, have not gone through the rigors that ensure that Cannabis product bought through a legal channel is in fact clean, safe, free of pesticides, heavy metals, et cetera. In California, the black market is still considerably larger than the legal channel. Some estimate that it's twice as big as the legal channel. So it just shows you the size of this industry. And so proceeding this number one, you had a lot of stuff in the headlines around vaporizers that had nothing to do with the Cannabis industry. It was about dual marketing nicotine products to teenagers and it was all negative. And then there started to be this weird respiratory thing that seemed to have some sort of overlap with vaporizers, you know, not specified. Now that we're here, it appears that it was Cannabis products that were blackmarket and that were made with a cheap cutting agents. It undermines consumer confidence in a big way. And we did see the vaporizer category of the legal channel drop for a few months after that. It proved to be quite resilient. Once the facts came out and a lot of that confusion began to subside, it restored confidence in the legal channel. But now that we're here in this crisis, are now that a little time has passed, all Cannabis channels are up for the last 60 days.
Dan Humiston: [00:03:37] We really talked a little bit about the vape sector of our industry. And you're talking about regaining consumer confidence after some of the hiccups that we've had to deal with. Are you finding the companies are investing more in their design? Is that sort of the next phase for this sector?
Trent Overholt: [00:03:53] Yes. The first thing we saw was an increased interest in antique counterfeiting. We have a partnership with so low, so low science of some of the technology that's integrated into the packaging. It's proof of authenticity as I counterfeiting. There's some other things that it includes that help protect consumers in that it is what it says it is. Right. So then the packaging becomes more about shelf presents competing for attention. Right. You want it to be visually arresting and on brand, but it still needs to compete for attention in a really loud marketplace. The history of Cannabis branding is pretty unsophisticated. It was just loud trying to be louder than the last version of loud. And now it's there's a lot of different players that are doing it with things that speak to their segments. Right. Whereas before there really wasn't a lot of segmentation. I made this for you guys and gals can do and looks like I do. They were just kind of marketing to each other. So it was okay that, you know, we're talking about this product as if it's medicine and we're going to call it poison or crack.
Dan Humiston: [00:04:56] I know one of the things about brands now, we're at a point in an industry where the good brands all have quality products and they have a full line of products. And the thing that really sets them apart is the branding and marketing. But most companies still want to manage their brand in-house. Tell our listeners why it's so important. Is is somebody from the outside overseeing the branding and marketing?
Trent Overholt: [00:05:19] Yeah. I mean, it certainly can be done well in house. It's just that it's an investment of its own. That's not free either. The reason you don't really want to do that is you want them to have other clients. You want them to have other experiences and other products in the same industry, but also in other industries. Like, is there anything useful that we can learn from the wine industry? Right. There's an industry that's based in agriculture that celebrates variability. Most traditional brand building indexes around consistency like Coca-Cola. I had tasted great weather. I was standing in Alabama. California or Minnesota? Right. It was remarkably consistent. And to my taste buds. It tastes good, right? So just as an example, whereas in the wine industry, same plot of land, same brand on the bottle. But the 2012 was different than the 2013 and different in a way that was appealing to me. And they celebrate that inconsistency in a way that's thoughtful and builds equity in the brand. That is an artful science that is hard to build in-house, especially when so much of the Cannabis industry has a burn rate, has a limited budget or a scrutinized budget. You can only do so much experimentation before you undermine the confidence of the people that invested in your business. Right. The most cost effective thing to do is to outsource that and leverage those experiences that an agency or a brand firm or even a company like ourselves. We're seeing and trying a lot of things and X percentage of them work and then we build upon that. We see what didn't work. We try to understand why and we move forward with that new higher level of knowledge.
Dan Humiston: [00:07:05] I might want to jump in because I love what you're saying. I think for startups, a lot of times this is like afterthought. And it really shouldn't be it should be the first thing, because if you start, you make all your decisions based on how you want the brand to be and where you want it to go. It makes decision making easier and it's something I think a lot of startups look at. Too late.
Trent Overholt: [00:07:27] Yeah, I would say the biggest mistake is just not taking enough time for consideration around the segment. This isn't for everyone. And you need to speak very deliberately to the consumer base that you want to have.
Trent Overholt: [00:07:40] That's the thing I see most when we sit down with clients as they just haven't thought about segmentation and how they want to conquer their piece of the world.
Dan Humiston: [00:07:51] I want to take a short break to play you a preview of our next episode and to thank our sponsors.
Nick Tennant: [00:08:06] If you're talking about 10000 pounds a day, a semi truck full of biomass rolling in every single day and you processing that, it's got to be done completely automated. It has to be done to code. You have, you know, solve it and organic compound environmental regulations that you have to worry about. There's there's a lot of complexity that lies within that scale. And you can almost think of it as you're building a many, many refineries.
Dan Humiston: [00:08:35] Tune in on Sunday for another episode of the Raising Cannabis Capital show with Nick Tennet from Precision Extraction Solutions. And now let's get back to today's show.
Dan Humiston: [00:08:50] Let's jump forward and talk a little bit more about your company. What are your plans moving forward as far as expansion? And will you be raising any capital? What's next?
Trent Overholt: [00:09:02] Yeah, so we were formed in April of 2018 up to a very fast start with access to some powerful intellectual property where we could immediately go to market with some very relevant brands. Number one brand in Colorado, very strong emerging brand in California.
Trent Overholt: [00:09:20] So right out of the gate, first year we did 25 million and we were profitable, which I stop right there. That was a differentiated story right there.
Trent Overholt: [00:09:29] And in year two, it's even more differentiated. We grew about 70 percent with enhanced snowmakers margins of profitability. We do plan to go public in September, October timeframe if we'd like the market conditions. And we certainly will be ready from a financial rigor audit of those items of compliance and also from an operating performance. So the strategy DACS from two years ago is unchanged. So it's proving to be the right approach. The results support that and we're excited to take that forward.
Dan Humiston: [00:10:01] Okay. So now if you decide to go in October, September, October, the fall, winter, how will my listeners know about it? Will you be posted on your website or are you going to send an announcement?
Trent Overholt: [00:10:12] Yeah, absolutely. Because of these plans, we we've now upgrading the Web site. There'll be an investor relations page and we will keep that updated with everything that's coming. And that would be the best place to look.
Dan Humiston: [00:10:24] All right. Well, we're going to have all of trans information and 14th rounds in the show notes and also at MJBulls.com. So for our listeners, pay attention in the fall. We want to double check on their Web site to see if when it's up. And, man, it's a great opportunity, especially 25 million over the Gayton in the 70 percent increase. I think you're going to have a lot of interest in this trend.
Trent Overholt: [00:10:48] And I think this is this year three should be most interesting. The industry is proven to be quite resilient. I think this is the most exciting chapter of it all.
Dan Humiston: [00:10:56] Well, you made it through the sophomore cu. Now, around here, three is right.
Nick Tennant: [00:11:01] That's right. Trent, thanks for being on the show today. This is great.
Nick Tennant: [00:11:04] Thanks, Dan. Pleasure being with.
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