Chocolate: edibles leading the way for higher growth in the cannabis industry.

Chocolate: edibles leading the way for higher growth in the cannabis industry.

The Economist Corner:  The Elites go all in for Cannabis

In what strikes me as an “a ha” moment The Economist  takes a serious look at the growing cannabis industry with the article Pot of Gold, America’s cannabis industry prepares for new highs.

Any doubts about where the Economist stands on cannabis are erased with the statement they end the article with: ” Colorado offers a tantalizing glimpse of the future: there are more cannabis dispensaries in the state than there are Starbucks coffee outlets”

“Tantalizing.” Hm. This piece appears after both the British Medical Journal and The Global Commission on Drug Policy (which includes Sir Richard Branson on its board) recently called for the legalization of “illicit” drugs.

The Economist labels the fed’s reluctance to legalize cannabis across the board as “dispiriting,” and then speculates about the prospects for the future . What will the President Elect’s administration  do about cannabis. Will they keep it way it is now? Get tough? No one knows.

Considering his statements about state’s rights, not to mention more pressing matters related to the various things the President Elect brought up during his campaign, it doesn’t appear that stopping the  cannabis roll-out would be a high priority. We’ll see if less regulations will allow banks to move forward in the industry.

At this point as the Economist says, about 60% of the population is already living in areas where cannabis can be legally consumed- with at least 32 million people using cannabis.

This article’s a good primer on the business prospects for the industry. They quote a principal with Privateer Holdings, a private equity company whose focus is on the cannabis industry saying, “It’s not often you see an industry and you know the inevitability of it.”

He’s right of course. But there are still a few hurdles to overcome before the industry explodes like observers expect it too. For one thing banks are not into making loans too or handling money for companies that actually grow and “touch” the plant.

The cannabis companies that do grow distribute and sell in their own stores can’t operate across state lines. And they can’t take the usual deductions on taxes-which reduces margins and is especially hard on the smaller operations.  But none of these things are slowing the rate of new companies entering the cannabis industry.

What I like about this article is that it discusses some of the opportunities for companies that don’t actually handle the cannabis itself- similar to what I did in previous posts on Colorado Cannabis stores see:

For instance the article mentions Kush Bottles in CA which is able navigate the maze of laws surrounding packaging for the industry. The piece also mentions Scotts Miracle Gro and its attempts to appeal to cannabis growers who are looking for great yields.

The piece also discusses some of the strategies cannabis companies use to address the varied demands of the industry-which The Economist compares to “traditional consumer businesses.”

But for me some of the most important points in this article are about the future-in terms of products and services- and for some even investment strategies.

In particular the article discusses the elephant in the room: cigarette makers. They’ve got the experience in dealing with complex regulations, data from their research into e-cigarettes and of course the money.

The latter means that companies like Native Root and LivWell  in Colorado-between them these two have over 30 stores -would be prime targets for buy outs from cigarette producers like R.J. Reynolds.  So it’s easy to envision well-funded companies forming with a specific exit strategy designed to capitalize on the investments cigarette companies will be making in the future.

The ma and pa stores that initially opened up the industry are already in decline as the chains that have sprung up are better capitalized and more attuned to the direction of the market. Take the store I saw in Pueblo, CO, it was focused on the actual bud itself rather than edibles and other non-smoking cannabis products. It felt old fashioned with its large mason jars on simple shelves behind the counter whereas the stores in Boulder were slick and featured all kinds of other cannabis products. And had more assertive people at the counters. Demographics matter.

The market share for cannabis buds to be smoked is going down not up.  The latest figures show that the sales of bud have fallen from 68% to 57% over the last year or so.   Instead as The Economist says, “the processed versions of cannabis,”… tinctures and edibles…., “are on the rise.”

Chocolates, lollipops, biscuits and other food –like substances represent the future. These are the high trending products in the cannabis industry.  In Colorado there’s even a food truck that specializes in offering an edibles menu.  And then there are the gatherings happening in OR and CO that feature cannabis infused gourmet meals that participants pay a set fee to attend- which involve both eating foods with cannabis and smoking in the traditional way.

Over the last few weeks I’ve sent several articles about these kinds of dinners to my brother, a five star chief who lives in NYC-suggesting he explore this area.

With both CA and MA along with a couple of other states having just approved recreational cannabis critical mass just got a boost- the momentum’s there.

And while the biggest profits come from touching the cannabis-there are other entry points into this industry…and room to invent more..anyone who provides services and products to grocery stores and other retail concerns could find opportunities if they’re willing to deal with the exacting laws around cannabis regulation.

Purists are going to deride the corporate nature of the industry. It doesn’t look like that can be stopped.  But they might put their efforts into lobbying states and  the Feds about the inalienable right of the individual to cultivate their own plants if they desire..

One special note: today marks the 53rd anniversary of JFK’s passing.



A close up of the Bloomberg article lead in.

A close up of the Bloomberg article lead in.  illustration by Andi Burnett

American Spirit and The Spirit of Memory

Although you hear plenty of stories about great companies that started in someone’s garage it’s comparatively rare for any of us to actually be involved at that stage. But in the case of the American Spirit tobacco company I was involved with the garage stage.

Memories -the early 80’s -my first few years in Santa Fe- appeared when I read the article Nature’s Cancer Sticks in this week’s Bloomberg Businessweek. This lengthy piece goes into the history of the brand’s founding and evolution over the last couple of decades -in providing the context behind a pending class action complaint against  its present owner RJ Reynolds for advertising “in a false and misleading manner.”

As Bloomberg notes this is the brand’s “bar mitzvah,” it’s coming of age moment in light of the way all the big brands have been attacked over the years. And as Bloomberg notes what’s really amazing here is not the specific issue of the truth in advertising but how well the marketing for the brand has done.

In contrast to an industry that’s seen a 17% decline in sales since 2009 Natural American Spirit has seen an 86% rise in sales during the same period.

It’s not hard to understand as the brand garnered its critical mass at the same time as the natural health movement was picking up real steam. Whole Foods even carried the brand for a number of years in its early days. And when you factor in the celebrity endorsement of American Spirit by the likes of Sean Penn and Gwyneth Paltrow plus all the hipsters it’s not hard to understand the allure and its translation into sales.

According to the article the fact that cigarette manufacturers can legally use over 500 different additives in their brands makes no difference-it’s the smoke itself-not the additives that makes smoking tobacco a health risk.

That’s not what my friend from that time- the late Robert Marion-one of the founders of American Spirit told me when he started the company.  It was the additives he said. If those studying tobacco risks weren’t talking about what happens when you burn these different chemicals in the tobacco than they weren’t presenting a true picture of the differences between his American Spirit approach and the standard industry practice.

I became a true believer while being part of the flotsam jetsam of friends and followers who so often surround a startup in its early days. I would go over to Robert’s garage and unpack 50 gallon barrel sized containers of tobacco that had been shredded (by the RJ Reynold’s facilities in NC) for packing into the pouches the company first began selling their tobacco in before they got into cigarettes.

To me it was obvious there was a difference. You saw it in the way American Spirit burned. It would go out after a moment while Camels and all other brands would continue to burn down.

Drum tobacco was one brand he signaled out as a perfect example of what he was talking about. “Drum has anti-freeze in it, that’s what keeps it moist.” I liked Drum at the time. I’d gotten used to it when I lived in Montreal in the 1970’s. There my artist and pirate friends would use it to roll their splifs  Euro style.

But I saw the difference with the American Spirit. Unlike Drum it didn’t stay moist. In fact it dried out very quickly so that as you rolled a cigarette it would be falling all over the place instead of allowing itself to be rolled like Drum.

Except for a call in the mid-80’s I fell out of contact with Robert as we’d moved to NYC for a few years before returning out west.

It was during the time in New York that I had to explore different options for my smoking needs as American Spirit had no distribution at the time out of the state of New Mexico. Even the Gem Spa-the famous newsstand and tobacco store in the East Village where we lived-didn’t carry them.


But the meme about additive free had taken hold. I couldn’t go back to Drum or Bugler and certainly none of the typical American brands.

What I ended up doing was buying foreign brands from Turkey and Egypt and occasionally some from Germany that used Turkish tobacco.  My reasoning was-and this is Robert talking- these countries couldn’t afford to use all the different additives nor did their traditional cultivation and manufacturing rely on them.


Occasionally I smoked Galois and Gitane-the dark tobacco made cigarettes favored by the French working man-but they just end being too harsh and probably laced with additives.

I did the burn test and found that the tobacco from the Middle East didn’t keep burning if you put a cigarette down. And the boxes themselves were beautifully packaged. I found some the other day and posted them here. Sometimes I can’t believe what I was spending on a pack of these in those days.  1986 in NYC I was paying $4.00 and more per pack of my Egyptian smokes. But they were sublime. So smooth. In fact one brand’s cigarettes were 4” long with half of it hollow-like a cigarette holder of old-so that the smoke arrived in your mouth like a breath..

They did have a pungent air. People around me would often  describe them as smelling like “ dung” burning.  Once during a stay in San Francisco-when you could still smoke in cafes-I was asked by the manager of a café in North Beach to put my Turkish cigarette out since people were complaining about the smell. But the smell was a “scent” to me and I never had a problem with them-the smoke was too good.

My favorites

My favorites-they had gold tips

But as attacks against smoking ramped up and higher duties (in addition to taxes) were added to foreign cigarettes they began disappearing from stores around the country. The foreign companies just weren’t making enough money in this country to justify selling them here while paying the increased duties.  So all those beloved brands like you see pictured  are no longer available.

And as they all were labeled “for Export Only,”  I’ve never found them overseas-not even in Cairo.

That said, one thing that will never go up in smoke are my recollections and admiration for some people who tried to bring a better quality experience to a habit that’s been a part of human culture for thousands of years.

R.I.P. Robert Marion.


THE ECONOMIST CORNER: Social Engineering and the Enjoyment of Wine

The Vinfusion machine. The future of drinking wine?

The Vinfusion machine. The future of drinking wine?

The Economist Corner: Social Engineering and the enjoyment of wine.

I felt like screaming. No it wasn’t about the election it was about wine-and the ugly shadow side to the  kind of social engineering The Economist preaches with all those wonderful virtues like “human dignity, nobleness, freedom,” it loves to promote in the context of its weekly survey of current events.

In an article about Vinfusion, “a wine blending machine that lets drinkers craft a glass specifically to their personal palate,” they pin this hope that: “the snobbery and mystique surrounding wine-whether blended in the vineyard or the restaurant-may disappear for good.”

What are they talking about? They’re extolling the virtues of a machine that basically takes a paint by number’s approach to the ancient art of wine cultivation and blending. In doing so they negate everything that’s made the art of creating and drinking wine what it is in the pages of human history and culture.

. The company that created this hybrid mechanical/digital machine says they did all kinds of research and narrowed people’s basic appreciation for the taste of wine down to four main generic types: A pinot and merlot from Chile, a shiraz from Australia and a Muscat-because of its sweetness-from France.

These four wines, which sit in vessels connected to the machine, are then blended together by the consumer using digital sliders on a screen allowing her to choose between extremes of “light” and “full bodied, soft” to “fiery” and “sweet” to “dry.” None of the usual kinds of adjectives used by those with an appreciation for wine are used.

There’s no mention of years associated with these wines or alcohol content or any other information concerning their origins etc.

In my opinion the final result is “swill.” The reductionist approach taken here is even more disturbing because The Economist is supposed to be representing the highest values of Western Civilization yet they support this paltry excuse for wine appreciation.

It’s a slap in the face to their core readership-all those people who have taken the time, spent the money, and otherwise educated themselves in the art of cultivating, collecting and drinking wine.

After reading the article I was reminded of Boardwalk Empire where, along with questions about which competitor should be eliminated next, one of the big questions was about product and the two main options. The distributors like Steve Buscemi and others could chose the real thing-Irish Whiskey, Canadian Mist etc. or go the way of regional concoctions mixing who knows what for the rubes and their new jack providers.

This invention is sacrilegious. I half-way expect Dionysus to smite the author. Is there any excuse for The Economist to support stripping wine of all its cultural, religious and social history just to please some hypothetical sensitive consumer who feels self-conscious about his lack of wine knowledge?

It almost feels like this article is a plant-a favor to some friend of The Economist-free publicity for their product along the lines of the way museums will cater to their directors by mounting shows of artists collected by their board members in order to drive up the value of their personal holdings.

There are alternatives though to this senseless trashing of wine’s legacy attributes. I saw one in action earlier this year on a business trip to Seattle. There’s a small French restaurant on an alley near Pike’s Place that I like to go to. This particular night I sat at the bar for dinner. About half way through my meal a couple of gentleman sit down next to me.

Space Needle Seattle

Space Needle Seattle

One of them, lanky, 40’s, a smooth talker- from LA was taking his larger, younger colleague from CT on a business trip from what I could gather. Smooth talker and I began conversing and I learned he had a French wife. We spoke a little in French. Then a little while later I heard him engage the younger French proprietor in conversation in French.

Then I saw the owner appear with a device that had a long needle like end to it. Smooth Talker had really wanted a glass from a more rare French wine that was sold only by the bottle. But the owner took this object and plunged the end through the cork without opening the bottle which allowed him to draw a single glass of wine for Smooth Talker.

The whole event became a ritual. There was a desire, a negotiation to satisfy the desire, a solution and satisfaction-an event that expressed the essential art of our connection and reverence for wine.  I’ll take this essential human connection with this gift from the gods over the reductionist swill anytime.


Billie, vintage record.

Billie, vintage record.

A Vinyl Perspective-including a look at Whole Foods and Urban Outfitters.

Vinyl just won’t die. Last year’s sales were the best since 1988, rising 32% to 418 million with this year on track to surpass it.

Magazines have been taking note of the industry this year.  Forbes from which the information above is taken, Bloomberg Businessweek and others have all had features on vinyl’s resurgence. For instance news about pressing plants here in the US having a hard time keeping with demand came from a Bloomberg article. Also Classic Rock isn’t the sole driver of sales-with Millennials the new force in the market-vinyl’s success across genres is growing.

What’s more- the industry’s growth is extending beyond just collecting. Over the last few years pop up venues dedicated to playing vinyl on great sound systems for groups of people who gather to drink, hang out and listen to records began appearing around the globe. Now Listening Clubs are opening especially in London that offer regular nights-with “menus” of up-coming selections for listening. From what I can tell this movement seems to be driven by people in their late 40’s/early 50’s.

Urban Outfitters correctly foresaw the younger demographics behind vinyl’s surge year ago as they’ve had dedicated vinyl sections in all their stores for at least a decade. Urban Outfitters and Whole Foods are the favorite retailers these vinyl articles like to name check. From Forbes:

“Meanwhile, vinyl is no longer solely the domain of independent record stores. It’s quickly becoming ubiquitous in retail stores everywhere. Chains like… , Urban Outfitters and even Whole Foods   now carry albums.”

But while named Whole Foods only has vinyl in select locations in Southern California- Venice, Ventura and Downtown LA-the Arts District area..

Whole Foods Downtown LA. A "static" set.

Whole Foods Downtown LA. A “static” set.


This past spring, while still working with the magazine distributor, I did an informal survey for the company of some of the Whole Foods locations in preparation for our proposal to do the vinyl sets in their stores.

This, and the fact I was  familiar with the Urban Outfitters set plus a vinyl listener already- inspired me to do some field notes on vinyl and how’s it merchandised.

Urban Outfitters-vinyl wall

Urban Outfitters-vinyl wall

                                                                                                                                                         Looking at the photos here of the Urban Outfitters and Whole Foods approaches it’s easy to see UO understands more about merchandising vinyl.  Looking at their wall fixture display you can see they’re  making use of the record’s sensual packaging-treating the covers like magazines-full facings, plan-o-grammed,  categories are  labeled-making use of everything at their disposal to draw the eye.

Urban Outfitters-med. shot of vinyl area.

Urban Outfitters-med. shot of vinyl area.

       Even the lighting whose powerful contribution is often either ignored or one of the last things retailers look at-is working pretty well in the Urban Outfitter’s case.

What Urban Outfitters understands here is, setting the stage for visual merchandising to do what it does best: set up visual ques.

Compare this to the static Whole Foods approach in the downtown LA store. Sitting on a small fixture next to elevator-it looks like a set piece you’d find in a furniture retailer where they create rooms.

Whole Foods -wine and vinyl-just have put them together with a listening night.

Whole Foods -wine and vinyl-just have put them together with a listening night.

        Going around the side is more of the same. Some wine merchandised along with some more records. But there’s nothing compelling here. No signage, no particular lighting, no energy to the set.

  In doing field notes for my surveys several ideas came to mind that I feel would help anyone wishing to sell vinyl-do it better.

A vinyl island

A vinyl island idea


in-store sketch doing survey.

in-store sketch doing survey.

 Some specific ideas along these lines are listed below.

In doing field notes for my surveys several ideas came to mind that I feel would help anyone wishing to sell vinyl-do it better.

  • POP UP Listening Nights-like mentioned above. Energize your vinyl areas by getting people to come in and-listen. Why couldn’t Whole Foods have a night or two a week –serve beer and wine-have a live dj playing vinyl-preferably on some of the Crosley turntables they’re selling. The same goes for Urban Outfitters-especially as now they’ll be putting in pizza restaurants in select stores-as a result of purchasing a pizza chain not long ago. If they’ll have beer and wine-it seems like a perfect thing to try.
  • Vintage Records. None of the articles I’ve seen mention the trade in vintage records. This is huge market with dedicated stores and gatherings catering to the market where older records are in demand. Why couldn’t either of these retailers do something around vintage? Have a dedicated buyer who would select and manage. It would sort of be like Buffalo Exchange. Or conversely hold vintage days-where people wishing to sell vintage could come and sell-with the retailer getting a percentage or just do it in an effort to stimulate a connection-a buzz with your clientele.
  • Lighting: More spots, more overhead direct lighting and neon signage that draw attention to the space.
  • In Urban’s case, why not move the book tables adjacent to the record area-they go hand in hand creating an opportunity for piggy backed purchases/add ons.
  • As seen here, both retailers-following some of the suggestions above could also work more with “island” displays. Set out on their own and allowing customers to walk around them will drive more sales just as in grocery stores islands have been known to work well for higher end cosmetics for instance.

If technology is a product of humans turning themselves inside out-then vinyl’s connection with recording and transmitting human culture must be our hearts and souls. We all have associations and moments connected with vinyl:

My parents making us dance with them post-martinis -Sinatra blasting.

Barefoot girls on the grass in white gauze dresses whirling incense at the Griffith Park Be-In.

The dude with the 4’ high speakers and a couple of decks we saw -scratching- on a random corner in Bed-Sty as we headed to that artist’s studio….that maniac  with the cane leaping and  darting between cars as a dj spun Egyptian House on the sidewalk off Talaat Harb that first night in Cairo.

And maybe that’s because The Record combines so many sensual ques for our psyches. It’s scale and medium hits all the bases when it comes to our appreciation of culture and our tribe within it.

Dean Balsamo