Brands, Beverages, and International Expansion

All right, uh, welcome to the, uh, July Cannabis Business Key webinar. I see the attendee room is sort of filling up and, uh I'm going to give it a minute here for everybody to shuffle in, and we'll get started in a minute or two. All right, looks like we've got good attendance here. The room's just about filling up, so let's, let's get going. I'm your host, Jason Klein, partner in the cannabis business group over at Ramone Law. Welcome to everybody who's jumped in live here with us and who's watching on the recorded version. This is the Cannabusiness Key Webinar Series, a cannabis thought leader speaker series that has been running for almost 6 years now on a monthly basis. We are very excited to welcome Travis Tharp our guest here today to talk about entrepreneurship in the cannabis space, specifically in the edibles and even more specifically in the cannabis beverages sector. So we're going to have a great sort of far-ranging conversation with Travis today. Welcome to those attendees who have been on our Cannabis Business Key webinar series in the past, you know how this works. And for those who haven't been here before, this is a fireside chat type format. Okay, so we want everybody to be engaged, to sort of have an opportunity to ask Travis your questions and to hear his responses, you know, based on what you're interested in hearing. So the way we accomplish that is by using the features in the Zoom webinar platform, specifically that Q&A feature down there. If you're not familiar with it, just scroll your mouse over the, the control bar and type in your questions on the Q&A. I will be monitoring that, and I'll be tossing those questions as they come through, sort of as the conversation allows, over to, uh, to Travis so that we can so that we can have him engaged on the things that you want to talk about. And we're going to be sharing Travis's contact information, the way you get in touch with him and his business, you know, on social media and electronically afterwards too. So this is going to be recorded. It is being recorded. We're going to be posting this up on YouTube and sharing a link if you'd like to send it around to your, to your colleagues, your friends, your families. People who you think may be interested in hearing some more about this topic, which is, it's, you know, I'm really excited about this one because Travis has an awesome, interesting background in entrepreneurship in general and has seen some great success with the expansion of Keef Brands over the last couple of years, really over the last decade. So we're gonna have a great conversation today. I'm gonna do one more piece of information here for everybody. Coming up in August, we're going to be skipping and doing a bit of an August recess, summer recess of the Cannabis News Key. We're going to be back on September— let me just pull the date here— September 28th, which is the last Wednesday in September. We've got a couple of great guests lined up through the end of the year, and so we'll be back on regular scheduling, regularly scheduled programming, uh, in September. And looking forward to seeing you then. Keep an eye out on your email and, um, of course on Cannabis Business Executive newsletters for more information about that, or the Ramon website. And if there's anybody that you think would make a good guest, or you'd like to be a guest on the Cannabis Business just go ahead and reach out to me and send your information through. We'd love to, love to consider it. Okay, so let's jump right into an introduction about Travis and Keef Brands, and then we'll welcome you here into the conversation, Travis. He is the President and CEO of Keef Brands. This is the top-selling cannabis beverage brand in the United States. In 2022. That's according to BDSA. They're headquartered in Colorado, and I think Travis is sitting in Boulder right now, but they are currently in 11 different markets, and they have plans to expand to at least 3 more by the end of 2022. We're going to be talking about that process for them. Prior to joining Keith Brands, Travis was in, in the tech space and startup space with a couple of different really interesting companies called Handy, which is now part of Angie's List or Angie now as they go by now, and HopSkipDrive, which is sort of the Uber for kids that you may have heard of too. So he's led international operations team and integration of multiple acquired marketplace companies. He's got background in economics from Northwestern University. So we're gonna be talking some macroeconomics, I can't help myself. and, uh, he's got an MBA from, uh, from UCLA Anderson School of Management. So welcome, Travis.

Start, Jason, thanks so much. First off, I really appreciate you guys having me on today. I'm thoroughly caffeinated and ready to rock.

This is going to be fun. Well, good, because we've got a lot to get through. Uh, so, so Travis, let's sort of start back at the beginning. You came out, uh, fresh out of business school and you jumped into a couple of interesting companies. Maybe you can just tell me a little bit about how you got into the tech space and, you know, a little bit about Handy and HopSkipDrive and where, what, you know, some of those lessons you learned while you were there.

And this actually ties into my genesis of joining Keefe. Even though I joined Keefe 5 years ago, I've known Erik Knudsen, the founder, since we were 3 years old. And when I came out of business school in 2009, it was all doom and gloom. The economy was terrible. And so I was trying to do a— the opportunity cost for bootstrapping a startup wasn't that high. So went out there and while I was trying to go and do a bootstrap startup in the VR and golf world, which is another story, if you want to target a luxury good in the middle of a recession, it's probably not the best idea to do it. But my friend Eric came out to Santa Monica and he said, "Trab, I'm going to put weed in a soda." I'm like, "You are so dumb. What are you doing? Like, what is going on here?" But he started explaining it to me. I'm like, "This actually has a lot of legs to it." but there is no way that I can jump in and join you right now. It's way too early. But we kept in touch over the years and after we got our butts kicked doing the Scrappy startup and the 360 golf stuff, I found that I was glutton for punishment and really liked building companies. And so I joined in with a couple of companies that had gotten Series A funding. The first one was called Wheels. It's now a part of Turo, which is peer-to-peer car sharing. So it had hardware, software, operationally intensive, an insurance system that was an understanding how an 18-year-old who couldn't drive very well wanted to rent his car to another 18-year-old who couldn't drive even more. So learned a lot of tough lessons on operational pieces of two-sided marketplaces and then ended up joining this company called Handy to really start building out operations in other markets. And it was a wonderful, wild, crazy ride. The guys who founded Handy and ran Handy are now running all of Angie. Wonderful team, wonderful people, smartest folks I've ever met. And it just taught me a whole lot about scaling a marketplace startup. And while I say all this, in the background, I was talking to Eric, and it's around 2015. He said, we're doing really well in Colorado. We're thinking about going to other markets. And I started thinking about it. I said, these actually, they don't, on the surface, they don't look like they're analogous, but these marketplaces and the cannabis industry are actually very similar. You've got non-fungible markets where you've got to build markets on a local level and stack them on top, super highly regulated. So you're always trying to figure out how to do that. And you've got an opportunity with, if you can do it right, where this is a once-in-a-generation type shift in developing an industry. So as I was building all these things out in the two-sided marketplaces, I kept talking with Eric, and I was living in LA at the time. We all grew up in Boulder, and I had looked at wanting to come back and possibly joining in, and now Keefe had gotten larger and it made sense. So we started really talking seriously in about late 2016, and I, Came back out here about 5 years ago. And like I said, I'm glutton for punishment. This has been— I thought two-sided marketplaces and tech startups were hard. This is 10 times harder. It's been a wild ride. Every day is a different adventure. And I think anybody that actually operates in this space will know that it's good, bad, and the ugly every single day. And it fluctuates mainly between bad and ugly. We get a good little win every now and then and just try to hold on for dear life while this thing unfolds in front of us.

Yeah, you used a really interesting term there, non-fungible markets. I like that idea that each one of these sort of, each one of the new markets that you get into, just like these sort of, you know, ridesharing, you know, or tech startup components are unique unto themselves. And everybody who's been in cannabis for more than 5 minutes recognizes that you may be able to break through in one market in cannabis, but that doesn't necessarily mean that you'll be able to get your product or get your foothold in another market. And it could be for all different sorts of reasons. But I guess let's sort of just dig into that idea a little bit more. When you think about non-fungible markets, you obviously have to think about places that have established cannabis sort of regulations, programs, What are you looking at when you, when you think about suitable marketplaces for a company like Keef?

Sure. And I think I sat on a panel with a couple other brands a few weeks ago and someone said it really well. They said you have to treat each market as its own country and you have to understand the intricacies. There isn't really scale efficiencies in this market yet. Eventually there will be, but there's not. So you have to understand where a market stands in its development. And that's not just on the development of is there enough supply and does it have regulations? Regulations. Like, is there infrastructure in place to even test for edibles or beverages? I mean, I think we've had examples in other markets where the infrastructure just wasn't ready and we were trying to pull them along. It's been difficult. But I think over the years we've been able to see a couple key facets. And I think some of the earlier markets, Colorado, I always give a shout out to it. It wasn't perfect, but they've done a lot of things really well. And people look to it and they're starting to implement certain things. There's starting to be more standardization across regions. What I love about this business is you can test all of these different ways. Like, the, the tech nerd in me goes, okay, I can look at a limited license market like, like Missouri and have right next door you have a laissez-faire Oklahoma market, and you can see the different dynamics that are going on there. And you know that every single market, no matter what it is, has its own life cycle of You have the initial euphoria of everybody coming in, and the price of buying puts is really high, uh, and it continues to get higher until more, more entrants come in. And then, um, the price of the, of the flower drops to the floor, and there's a freakout moment, and there's a consolidation moment. And but then it finds an equilibrium, and you really start to see a market develop. And no matter what these types of markets are, whether it's a laissez-faire one or a limited license market, they all have this similar trajectory. But, um, so it's— I think of it like an accordion. Some of them, some of it happens really fast, some of it doesn't, and we just need to be mindful of where the development is and, and where the market is at that point in time. I think one of the things that's really benefited Keef, uh, being a legacy brand from Colorado that's 10 years old, is we started on the medical side. And so the people who were raising their hands to join the industry, who typically have a much higher tolerance than your, your new consumer we had products that addressed their needs, and so they became evangelical on the front line about pushing our brand. And, and that really helped us when we switched into the, into the rec markets. And so we, we follow that strategy in a lot of different markets where we're able to come in on the medical side and establish some credibility. And I think there are other brands that are taking a different approach where they're starting the low dose and building up, and I don't think that there's a right way. I know that for the products that we have and the product set that we have, this has worked well for us, and it's something I think we're going to continue to do.

Let's dig into those products for a little bit and just talk a little bit about sort of, you know, how your products may differ. Obviously, you just sort of talked about your Genesis as a, you know, a little higher dose sort of medical background, and then looking to find ways to make this product suitable for more recreational markets over time. But, you know, obviously edibles have been a product in general, sort of a sector that has been growing in popularity over the last decade. And, you know, this in part has to do with the consistency and the reliability of the products that are available out there. It also, I'm sure, has something to do with the fact that there's a lot of new consumers coming in, and edibles are a you know, sort of a low barrier product for them to try out and to first be, you know, be familiar with. You know, how do you think about beverages specifically within the edibles marketplace and who are your typical customers? You know, are these experienced consumers or are you seeing sort of more growth of more novice consumers coming in.

Yeah, I mentioned our founder Eric Knudsen. He— one of the things that he said to me in the first time that we met, he said the two most, most common forms of social interaction throughout human history have been smoking and drinking. And he says everybody's been tackling the smoking aspect of this. I'd like to tackle the beverage side because it is something— it's a form factor that people are very comfortable with. And if this is going to be a mass adoption of a segment or a form factor, Beverage is going to be it. So, so that's how Keef was really started. And right now we have, we have a couple different lines. We have our core line of soda flavors. So we have a root beer, orange, original cola, and we have those at the 100mg level for the high dose user. I personally can't, can't drink the whole one there, but I'm, but I know there are a lot of people who can. And, and then once it flips to rec, we mimic those flavors at a 10mg dose, which has been the standard piece. I think in other states, people are trying to get a little bit lower. We think of ourselves just sitting slightly above it. Once someone tries a 2.5 milligram, if they have a couple, tolerances get a little stronger. If to use just a booze reference, being more like an IPA than a light beer is where we try to sit. One of the things that's really interesting about beverages is its sublingual uptake. And so you start to feel the effects much sooner than you otherwise would if you had to eat a gummy or a brownie. And you're always trying to guard against that, that terrible brownie story that every single person seems to have. And beverage is a really interesting way to, to bypass that and be able to, to session yourself and, and really start low, go slow, and, and do what you need to do to have an enjoyable experience. So we've always been on the carbonated side, and, and then a few years ago we, we decided we wanted to try something different and do some non-carbonated. It was driven by wanting to have a lower calorie option for some of our medical patients. And so we developed a non-carbonated option. It's the LifeWater, and it's in a 12-ounce bottle, but it also has a dosing cap, so you can tincture— you can tincture it out to your dosage level. Some people like to drink the whole thing, but others just put a little bit in there, and it really works for them. I use— to use just booze analogies for, for just general simplicity— it's like a bottle of hard alcohol or a bottle of vodka, and you, and you can pour some in. You can decide how much you want to do and how much you want to mix. So we started with the, the low-calorie LifeWaters, and we started to add some minor cannabinoids in there to make them more functional. And then we have a mocktails line that has a fruit punch and a lemonade, a couple different flavors that can, that can be mixed with, with any type of beverage that, that you want to, want to try. And, and that's really opened it up. And from just a product mix standpoint, it allowed us to have a product that was 100 milligrams with a bunch of different doses that could go head-to-head with the gummies, the chocolate bars, all that. And that really opened up a lot of adoption for us over the past few years.

Do you find— I'm going to get a little too specific here, probably. And I, you know, for the audience here, I invite you really to use that Q&A feature and sort of type in some questions so I don't have to be asking all the dumb ones here. But what about shelf stability? That's got to be a difficult problem to sort of maintain temperature, you know, refrigeration, shipping. You know, these products probably need to be able to sit on the shelf unrefrigerated for a decent amount of time to be able to ship around and maintain their flavor, maintain the carbonation, maintain the potency. How do you think about those issues?

All of our products are shelf stable for a year, and we've had to do that out of necessity. There are— I think that's something that has really hindered the development of beverages as a category. If you think of the early dispensaries, they didn't have a lot of square footage. They were bodega style. No one was thinking about putting a refrigerator in on the floor. I do need to give a shout out to, to all the evolution that's going on in the retail sector right now. They're starting to intentionally incorporate beverages and refrigerators in, and that's a really good, good thing for the industry. But you don't have cold storage, you don't have cold trucks. And so that limits some of the products that could be available. And over the last 5 years, we've seen so much growth in just capabilities across all these markets to do it and a willingness to try it. Because if you've got a distribution company that is— that can deliver 1,000 pre-rolls in a Prius or something, that's very different than 100 cases of soda.

Right. Right, yeah, absolutely. Well, let's talk about that, um, sort of the, the, the, the growth and expansion model. I just want to, um, maybe start the, the, this part of the conversation along with how you think about growth and the difference between, say, healthy and unhealthy growth. Um, you know, when, when you're thinking about growth, you obviously, your company is sort of pursuing a, you know, an expansion into new markets, new states, or new countries, whether real countries or, you know, state countries as we're thinking about them. But there's also expansion of the product line itself that you've been talking about, and there's growth within your markets, I'm sure, just getting into new stores and getting out to new consumers. So how, you know, what's the primary way that you think about growth and sort of what is it one more than the other? And, you know, just what's the healthy form of growth that you're looking to accomplish versus, you know, an unhealthy form of growth?

Yeah, I mean, I'll start this with saying that we have messed up more ways than anyone possibly can imagine in doing this. And being one of the first brands to try interstate expansion, we've definitely put ourselves in the vanguard and in the way of making some pretty rough mistakes. But like, we actually wear that as a badge of honor. And we said, as long as we don't make the same mistake twice, we're good, we're learning. I would say right now you've got a healthy tension between market expansion, product depth in those markets, and then also innovation. And we look at it, we wanna make sure that we're pushing the ball forward on all three, but knowing that all these markets are opening up, we're in 11 markets now, 38 medical markets that we could be in. And we have to stop every now and then and say, there's still a huge section of the country that has not tried our core products, even though they've been in the market for about 6 or 7 years. And they're, and they're good core products. So it's how do you find that, that initial set to give exposure? And, and sometimes it's, it's different if it's a medical market or if we're coming in after in a recreational market, that launch set is different. And it really— we try to use market data and see where, where people are at. I've tried to be prescriptive in the past and said, no, it's going to be this way, and I've been proved wrong time and time again. And I think you just have to meet the market where it's at right now with an eye towards where you think it can go. And so when we go into a new market, we try to launch with a core set of carbonated and a core set of non-carbonated so people have their different abilities and their choice. And then as we, as we grow in a market, we start to launch about 3 or 4 months later, we drop a few more flavor offerings, a different, maybe a low-calorie option, really trying to see what works. Because what works in California doesn't necessarily work in Oklahoma and Missouri. There's, there's very huge differences in regional tastes, and, and I love seeing that. I think it's really cool. We've got operations from all the way from LA out to Maine, and we want to make our products be consistent there and focus on quality. So if you're having one in LA, you're having it taste just like the one you're having in Maine. But then you also get to dive a level deeper and see what really moves the needle at a local level. And that's really exciting for our team.

Absolutely. They do have a couple of questions here in the Q&A box. So thank you, thank you to those who put those in. And go ahead and put yours in if you haven't yet. Ian's asking about specific branding and messaging challenges as you move from sort of medical, your medical brands into recreational brands or recreational marketplaces, and you know, what lessons you've learned in, you know, finding the right message that resonates with the different consumers in those markets.

One of the toughest things that we have in each of these markets is you're beholden to the market forces of that specific region. And so you may have a state that's right next to another. I'll take— I'll use Missouri and Oklahoma again. There was a glut of product in Oklahoma, and so the price of the raw materials and the active ingredients were much lower. And so you've got people that are looking between markets, and what the same product essentially has a $4 or $5 price difference. And being able to have that consistency at a regional level and scale up marketing practices is really, really difficult. I think we're finally just getting there in our more established markets of having some price consistency between Colorado, California, and now Arizona, where you can really start to implement some of those CPG tactics that you've seen BevAlp do and start doing pricing and promotions that in a more traditional way. I mean, in some of these, you just have to be scrappy and figure out what works. And we always try to be testing different channels, and those channels are limited. They're opening up, but we always try to test a couple different channels. One of our core facets of Keef and one of our core key just pillars is we wanna welcome everyone to the party. Really the first person to ever try a Keef Cola was Eric's 85-year-old grandmother. Grandma Keef. And she took a sip and looked back. We take this to heart. She looked back, looked at her husband and said, "You just said I couldn't smoke it." And then she took another sip. And so you think from the cannabis noob to the hardcore, medical consumer, if you have an open brand that's got a little bit of fun to it, isn't intimidating, that's really where we sit and that's what we try to translate when you go from medical into a recreational piece. It doesn't always work right away and you're constrained by regulations and packaging and you're constrained at a local level, but you figure it out and you can see where it's going. It's really interesting to see what's happening in our more established markets and what we're able to do. Versus what we could and could not do 2 years ago.

Well, let's, you know, you mentioned it, so let's sort of shift over into this idea of the current economic environment and the supply chains and how that impacts your products, you know, how that impacts the pricing of your products, the availability of your products in various markets. Anybody who's been awake for the last 6 months or so has been hearing every day about supply chain issues across the economy, across the United States, across the world. Everybody is experiencing it in their own lives. But as somebody who's running a business which is very much relies on an enormous number of input, inputs in order to deliver that end-user product onto the shelf. And each one of these inputs is changing in price rapidly, changing in availability rapidly, but also within each one of these markets. So like the price of cannabis, for example, in Oklahoma, what you call a laissez-faire market, is going to be very different from Missouri in a limited limited license market. You know, can you just sort of talk for a few minutes about how you think of these supply chain challenges and how you really— what I'm also really particularly interested in is how you maintain those relationships with your suppliers, how you work with those suppliers to help ensure that you have, you know, pricing that is going to work for you and availability when you need it. Sure.

I wish I could say that we could blissfully operate in a bubble unaware of all the things that are impacting other parts of the market, but the beverage category is 1 to 2% of the overall market right now. And like, while that's really exciting and you've got a lot of room for growth, we have to be cognizant of the fact that some of our partners that we work with in local markets have exposure to the flower markets that are rapidly coming down. All of their cost inputs are going up, but the price of cannabis is going down. And this is this really strange confluence of events that's taking place right now that's putting people in a really difficult situation. So we have to be very mindful of that with all of our partners, 'cause a lot of our partners in these states do have exposure and do have assets where they're building up some cultivation or they are selling pre-rolls and flower and they're taking a margin hit there. I think everybody in cannabis would say every partnership is its own soap opera and you just have to work through it and you need to be upfront with expectations and dialogue is key. Where we've had difficulties with partners is when communication has shut down and we always try to be proactive in getting that dialogue. How can we be helping? How can we help sell? How can we help move some more velocity? Is there something that's going on that's going to impact us and how do we get ahead of it? I mean, I spend a lot of my day trying to figure out creative solutions with partners in this challenging environment because it just is the nature of the beast right now. And unfortunately, this isn't going anywhere anytime soon. And I think companies are having this realization that they have to strap down and batten down the hatches and get ready. We run very lean and probably too lean most of the time, but it helps us in times like this. Where we're able to stay nimble, we're able to work with partners, and we're still trying to continue to grow and expand into other markets. Because I really believe that the companies that can survive this and come out stronger on the other end are ones that are going to survive and really have an opportunity to do something special.

Sorry, here, let me just pull up the Q&A here again. Travis, you've, you've talked mostly about expanding within the United States, but I know that you dip your toe into Canadian provinces and maybe looking internationally. Can you just sort of talk about some of the challenges you might find there? Are there particular international markets that, that are drawing your attention now? Mm-hmm.

Yeah, it's definitely working with Health Canada was, was definitely a change. Working with the provinces, the way that they have their, their system set up in each of the unique provinces is, is different than where, than where we have in some of our states. It's been, it's been tough. I mean, you have a lot of labeling and marketing restrictions there. You have a lot of— it's, it's a fascinating market because it's, it's encouraging the, the 2.0 products and it's encouraging beverage and all these edibles. And so you're getting to see a lot of choice and you're getting to see how you can compete in an international market. We've really enjoyed getting to see how we do versus some of the MSO and Canadian brands that are, that are up there. And but everything, it's always, it's always two steps forward and one step back. And it's been like that for a few years, and it's a, it's a difficult lift to get into it. And so I give all the credit in the world to our team for their intestinal fortitude to get, to get through all of this. But it is a really fascinating market, and we're starting to see some really cool velocity increases with our— just, we've only got 3 products available out there right now, and we're going to load more in. But it is definitely not for the faint of heart. You got to know that it's going to take 3 times longer than you expect it to, and you better have, you better have the cash to survive in that because it's— it comes hard, and it is not as fast as you ever think it's going to be. If you look at the other side of the coin, other markets that I think are really fascinating, I think Mexico's going to be really fascinating. I don't have any crystal ball predictions as to when it's going to be up and running. And I think if you ask 15 people that seem to have insight into it, that you'd get 15 different answers. But just the sheer volume of population and everything, I think that's a really interesting mix for us. Some of the, some of the South American markets are really interesting and like Europe is going to open up eventually, but I think it's slower than a lot of people anticipate. I think that you're probably picking up a common theme. Everything here takes 3 times longer than you think it's going to. And we just need to plan for that and hope for the best, prepare for the worst in all of these. But we're really excited about where we go on this and we're excited with the Canada launch. We think that this brand can translate across states and countries and all other different markets. And we just gotta keep banging our heads against the wall and eventually we push through.

Travis, you mentioned having the resources to stick with it as you're building into marketplaces and you have a plan at the beginning and then of course real life happens and nothing's as, expected at the beginning. There's always obstacles, and especially in this space and what you're talking about, we know there's going to be Donald Rumsfeld version of unknown unknowns, things that you don't even know you're going to have to know at the beginning, but you don't even know what you're going to need to know yet. You sort of have to build in these into the game plan. And this sort of goes to the macro conversation that I mentioned, and certainly a theme that has been a common thread throughout the Cannabis is Key over the last 6 or 8 months, the tightening of the credit markets in cannabis. We've got a big FOMC meeting announcement coming out later this afternoon, about an hour and a half, 2 hours, where Chair Powell is going to be talking about the latest increase in interest rates. What's it going to be? And everybody's watching that. And obviously, you know, the, the macroeconomic situation in, in the United States and around the world has, has people spooked right now. And cannabis being on the edges of of that has, in my estimation, seemingly taken the brunt of it first and harder than many other industries. Can you just sort of talk about how you think about financing your operations and financing growth in these— you can say the R word, recession, or whatever it is that we're in right now and we're dealing with, but certainly not the availability of liquidity like we had even last year for cannabis. Can you just sort of speak to that for a few minutes? And feel free to geek out with your background in economics.

This would be good. I think we've been fortunate. We've taken an asset-light approach to to building this. And so in our total, we've only raised about $6 million in total, the history of the company. And we've been able to finance a lot of our expansion through cash flow from operations and that growth. We turned the cash flow corner in 2020, right in the middle of COVID by just battening down the hatches and focusing. And that has allowed us to really open up some doors. I mean, I think if you ever want, it's impossible to get financing in cannabis anyway, and if you throw in a recession, it makes it even harder. So there's, there's a lot of options out there. We typically look at possibly get a line of working line of credit, which is difficult to do and it's expensive. So we try not to use that too much, especially in this, in this situation. We were lucky we don't have any debt and we're cash flowing. So it's a unique position that we're in. And I know a lot of people that have raised money and are growing, they're struggling out there. And I feel for folks, I think everybody is is dealing with this challenge in a different way. I think as an operator, it's a, it's a tough time out there because I think a lot of investors are probably looking for distressed assets. They're looking for deals. And even if you're a healthy company, you're probably going to get, get hit with that type of market forces discount. And so it's, it's something where we try to be self-sustaining during periods like this and not have to need any capital for it. And that, that comes into a lot of our planning during this period of time. And again, I think the companies that, that are able to make it through here will come out stronger, leaner, tougher, and actually have a chance at some real success. And so that's, that's what we, we try to focus in on. There's so many things that you just can't control, and the ground shakes and moves from under your feet every, every 3, 4 weeks. And so you have to focus on a few things that you can control, uh, and then be malleable enough to to adapt to as the earthquake shifts you every month.

Absolutely. So it sounds like the idea here is to stay above the fray or out of the fray entirely. Let the other businesses struggle with continuing to find ways to finance and find those willing lenders.

It's not as sexy. Yeah. And Jason, it's not as sexy as when you're in a when you're in a frothy cycle where it was like, we're gonna grow, grow, grow, grow, grow. But we have to be pragmatic and we have to be realistic about where everything stands right now. Because the last thing you wanna do is get way out over your skis and then be in a situation when you otherwise have a strong business, these external forces are forcing you to make some irrational decisions.

Absolutely, absolutely. You find ways to be protective in the long run. Well, let's talk generally a little bit more about the beverage. Sector and where you see this going over the next couple of years. You know, a lot of cannabis is sort of operations-wise has experienced some consolidation over the last few years. You know, it was all moms and pops 5, 6, 7 years ago. And obviously we've seen the growth of MSOs, larger and larger MSOs, consolidators coming in on the operation side, a lot of going public transactions between 2017 and 2020, 2021, that's obviously cooled off to a great deal, but the consolidation is still ongoing. In the beverages sector and the broader edible sector, do you still see sort of more new entrants coming into the market, or are we, you know, are we sort of on the backside of that accordion as you described it, where we're, you know, maybe in a, in a cycle here where we're consolidating?

I think the answer is C, all the above. I think you're going to continue to see new market entrants. It's becoming easier to enter because of some of the scalability, especially on beverage, with some of the emulsion companies and emulsion partners starting to get some scale. One of the things that has always constrained beverage is the fact that we basically have to build a tiny brewery in every single market that we operate in. And that's capital intensive. It's difficult to replicate. It's nice, you can build a moat and you can build a competitive advantage once you get in there and do it correctly. But you're starting to see some really novel technologies, both from the emulsion side as well as different ways to approach scaling. And some of the new entrants, Wink's doing a good job with that and being able to scale quickly. We love like locking arms with all the other players in the market on our form factor side, because again, we're still 1 to 2% of the overall market. And it's more important for us to be evangelical about the form factor and the category because we're still so early in the growth of this. And there's going to be consolidation eventually, but you need to be able to establish a brand that can translate across markets before you even have those discussions. I mean, I think you need to be able to see that you're starting to see a rise of recognizable brands. And we've been fortunate because we were born in Colorado that a lot of people in the early days came out and had a positive experience with an edible brand or had a beverage keep. And so in the subsequent markets that we go into, we see the adoption accelerate, which is what you really wanna see as a brand. There's going to be more entrants. It's still regional and fragmented, but you start to see that coming down. And I think over the next couple years, there's going to be more consolidation on the brand side. I think retail and cultivation were the first wave of consolidation. Now you're going to start seeing some brand consolidation over the course of the next 24 to 36 months. That's just my estimation. And we just need to be prepared for it. Know that there's people sitting on the sidelines that have extensive CPG experience that are waiting to get in. We have the ability and the advantage of being small and scrappy and able to test things out. But you don't want to just be bleeding edge all the time so that somebody can come and wipe you out down the road. We want to be smart enough where we have enough points of distribution in all of these different markets where it makes more sense for them to partner with us than to try to race to the bottom.

I like that. I like the game theory on that. Travis, you're talking about these sort of folks who are sitting on the sidelines now and do have these resources and capabilities and experience. You know, it was Constellation Brands that made a big splash investment in some Canadian companies a couple of years ago and obviously sees, you know, as an enormous beverage brand, you know, Constellation obviously sees cannabis as a— oh, whether it's a threat or an opportunity or a little bit of both, you know, as worthy of of a multi-billion dollar investment. Do you see sort of the other, you know, booze, beverage companies in particular? I don't know, maybe the water companies. Obviously, there's a lot— there's a big world of beverages out there. Soda, water, you know, booze, all these sort of things. It's an enormous global marketplace.

It's a trillion-dollar market.

Absolutely. So, you know, where do you see this sort of— how do you think the broader beverage, global beverage market views cannabis-infused beverages? And is it an opportunity or a threat for them?

Well, they're, number one, they're all very much paying attention, whether they are saying they are or not. Like, I know they have teams that are monitoring it, and that's just, that's a responsible business practice that they should be doing. And to see what might be a substitute or a potential threat or opportunity. I think from our perspective, we see that there are a lot of players on the BevAlc side that are leaning into it, but they're being cautious because they're large corporations. And if you don't have true guidance at a federal level, I can see why they're reticent to jump in with both feet. But at the same time, I think they're monitoring how it goes. I think they're looking to see what works, what form factors work. Is this— is the beverage category something that can really drive considerable volume? We tend to think yes, and we're a little biased, but it's one of those things where I think everybody's paying a lot of attention to it. And I think it's been overhyped in the past. There have been a couple of false starts and the industry wasn't quite ready. To handle that moniker of the next big form factor. But I think we're getting to a place where I'm cautiously optimistic that the growth of the category is starting to show, and you get more and more people coming into it and more and more people trying beverage and understanding that beverage is a unique form factor because of the sublingual uptake, the sessionability, the ability to be social, the ability to be at a barbecue and you've got a beer cooler and you've got a beverage cooler for Keith. And you don't have to go and ostracize yourself by going out into the back and having a joint or smoking something. It's a really interesting, comfortable form factor for a lot of the mass consumers. So I think that's what everybody's really paying a lot of attention to. And for us, we want to make sure that we're facilitating that discussion, that we're facilitating the education of what's the right way to do it, what's not the right way to do it. And make sure, because if there are crappy products out there in the market, like, that crushes the whole category. So we always want to, like, lock arms with anybody. If you're making a good product, like, we don't have to have every single niche in the, in the freezer. Like, we can have our 3 or 4 that we know we compete really well with. And if you can, if you can have an array of, uh, or portfolio of a bunch of different, um, products that are quality, that just helps everybody.

I love it. I love it. So, Travis, we are getting to the end here, and, and I want to make sure everybody has your contact information, has, you know, sort of give you, give you the floor for, for any final, you know, ways to direct the audience here. What's the best way to find you? What's the best way to engage with you, to engage with Keith, to to find out where it's available, uh, and to, uh, stay in touch with you?

Oh, uh, the best way— so keefbrands.com, K-E-E-F-B-R-A-N-D-S dot com, that's our website. And there's, there's a way to enter in information and, and get a request there. Um, our, our handle on Instagram is @keefbrands. My email is just travis@keefbrands. Always happy to chat whenever. Like, I love doing this. And Jason, I really appreciate you guys having me on. This is cathartic for me. So I think everybody cooperated and understands.

Absolutely. I mean, and I hope, you know, it's a very genuine offer and much appreciated. For those of you who are watching, I know I've got a couple of comments and questions in the, in the Q&A about when you come into my state, when are you going to be here? I'm doing this. I'd love to partner with you may not be appropriate for a full conversation right here, uh, recorded, uh, for everybody's full view. But certainly go ahead and send, you know, Travis an email and reach out, you know. And, and it sounds like, um, you know, there's, there's, there's a lot of interest in sort of exploring all these exciting ideas. And, and there is such a large addressable market out there that, um, you know, hasn't that hasn't yet been touched, that hasn't yet been explored both in breadth and depth, which really makes this exciting. And I'm really appreciative you took some time today to sort of talk through and share some of your visions and philosophies with us.

Of course, Jason. Thanks again. I really do appreciate it.

Well, this has been great. We really do appreciate it. We'll stay in touch. Of course, everybody, we're going to be— this has been recorded. We're gonna be sending out a link. It's gonna be on YouTube, easily shareable with that investor, colleague, friend, or family in your life who you think might benefit from hearing some of Travis's story here today. Travis, thank you again, and hope you have a wonderful summer. Great.

Thanks, Jason. I really appreciate it.

Take care. All right, we'll see everybody in September. Thank you again. Bye-bye.