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Interview: Nug’s John Oram on Building Brand Identity in Cannabis

May 21, 2019

California cannabis brand Nug stocks its product line—including flower, vapes, chocolates, and other items—in over 65% of the state’s dispensaries and is on pace for revenues of approximately $45 million this year. SND’s Danny Sullivan met recently with co-founder John Oram and chief revenue officer Nico Enea to discuss the California market, forthcoming cannabis beverages, and the company’s push to open its own retail locations.

SND: How has Nug fared in the transition to the recreational market?

Oram: In 2017, before the onset of state-wide regulations, our gross revenue was $27 million, with around 2,500 medical outlets in the state. That number dropped to 250 outlets in January of 2018 and is now inching back up again. Given that situation, we had a decent 2018, only dropping to $17 million. And now we’re back in a very strong way. We did $8.6 million in top-line revenue for the first quarter of this year. We’re on a run rate to get us to $45 million this year, and we believe we’ll double that next year.

SND: Nug already has good market penetration. What’s the motivation to open your own retail stores?

Oram: Brand control. It’s very hard to control your brand on a retailer’s shelf. It’s difficult to say how it should be displayed, how it should be talked about, how it should be priced. Education is so important right now. If we want to attract consumers outside our core demographic, which skews young, they’ll need to be educated. We decided we could educate most effectively by investing in retail, establishing a totally new paradigm around retail to experience the products in a totally different way, and build the expectations around the quality and pricing of our brand. We won’t be pulling our products from other retailers and our stores won’t be Nug-only, but the idea is to have a flagship store where people can experience Nug the way it should be—the way we want it to be. One store is already open in Sacramento; the next two we’re hoping to open by September. By this time next year we should have five stores open, including locations in Oakland, San Francisco, Redding, and El Cerrito.

SND: What are your plans for drinkable products?

Enea: We’re developing Nug Water and Nug Energy. Nug Water will be an eight-ounce drink. Nug Energy will be a two-ounce caffeinated beverage. Each one will contain eight different cannabinoids, but the majority will be CBD. Our drink stands out for its high bioavailability—typically, your uptake is only about 3% of any edible cannabinoid. We have a proprietary bioinfusion process that makes the uptake almost 97%. So that allows us to use, instead of five milligrams or 100 milligrams, only five micrograms of eight different cannabinoids in our drink.

SND: What’s the timeline for the launch?

Enea: In the next 120 days, we’ll be taking our formulation to bottling plants to produce approximately 250,000 units. Those units will go directly to distributors. Another point of differentiation is that we make it from hemp seed, not from hemp oil; there’s a huge differentiation in what you’re allowed to do with both of those. Hemp seed can be sold in 50 states and 17 countries, whereas hemp oil can only sell on certain markets. Certain other brands are skirting these restrictions, but we’re choosing the conservative route. This approach will make us a multi-state brand.

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