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Interview, Part 1: Bill Silver, President, New Markets, CannaCraft

May 28, 2019

Bill Silver was formerly Dean of the School of Business and Economics at Sonoma State University, where he played a key role in establishing the Wine Business Institute and its Wine Spectator Learning Center as training grounds for the next generation of wine industry leadership. Early last year, Silver transitioned to the cannabis industry, joining Santa Rosa-based producer and distributor CannaCraft. As the company’s president, new markets, Silver is focused on growing the business as it navigates the complex landscape of the newly regulated cannabis industry. SND executive editor Daniel Marsteller recently caught up with Silver to get an update on those efforts.

SND: From a big picture standpoint, how are business conditions in California’s cannabis market? What areas are positioned for growth?

Silver: The regulated market in California fell precipitously in the first few months of 2018 as the state was slow to roll out licenses. By June, the market had grown back to 2017 levels in terms of dollars sold, and it has remained relatively flat since then. In 2019, unit sales are still below 2017 levels. For product categories, a clear picture of consumer preferences is emerging. Flower has dropped from 50% of sales to 33% of sales, while the concentrate and edibles categories have grown. Beverages are gaining in popularity as higher quality products enter the market, and we’ve seen big growth in our CBD product lines. As consumers become more educated about cannabis, these are the areas of the market that are primed for significant expansion. Also, I think real brands are separating from the rest of the pack, as consumers look for authenticity and products they can trust.

SND: What do you see as obstacles to growth?

Silver: Obstacles abound in the early stages of the emerging regulated market. Access is the biggest problem, as less than 40% of the municipalities in California currently have licensed retail outlets. Heavy taxation, over-regulation, and federal prohibition also remain as business challenges. California has released only a few new retail licenses this year, and there are now a total of about 620 statewide. Around two-thirds of those are actually in operation, and there are still over 1,500 unlicensed dispensaries operating. The authorities are slowly starting to shut them down, but so far they haven’t made a big dent.

SND: How is CannaCraft’s brand portfolio being received by consumers? Which products are most popular, and which consumer groups are driving them?

Silver: In spite of some of the business challenges, CannaCraft has experienced strong growth. Leading the way has been HiFi Hops, an IPA-inspired, hops-infused sparkling water created in collaboration with Lagunitas. We launched the product in January, and in one month it became the biggest-selling cannabinoid beverage in California. I’m excited about the consumer response. It has no calories and no alcohol, but packs all the flavor people expect in a craft beverage. It transcends demographics, because it can serve as a substitute to alcohol or as a complement—in that people will have both HiFi and an alcoholic beverage, or sometimes mix the two as a cocktail. Care By Design, our CBD brand, has grown steadily since we introduced it five years ago, and in the last 12 months it has taken off. Care By Design is a whole plant product, while many other CBD brands are made from CBD isolate. This means it has better efficacy and a broader range of health and wellness benefits. Because there are different CBD/THC ratios under Care By Design, consumers can fine-tune their experience. The brand’s growth is being fueled by Baby Boomers looking to cannabis for specific help with pain, anxiety, sleep, and general wellness.

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