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Interview, Part 1: Ben Kovler, Founder and CEO, Green Thumb Industries

September 17, 2019

Chicago-based cannabis company Green Thumb Industries has emerged as a player to watch as the legal cannabis business gains momentum across the U.S. In its fiscal second quarter ended in June, Green Thumb saw revenues triple to $45 million, while adjusted EBITDA reached $5 million. With brands including Rythm, The Feel Collection, and Beboe, as well as retail outlets under the Rise and Essence banners, Green Thumb is active in 12 states and recently acquired one of New York state’s 10 vertically integrated licenses. Founder, chairman, and CEO Ben Kovler has ties to the drinks industry—his great-grandfather Harry Blum was a driving force behind the development of the Jim Beam brand in the U.S. SND executive editor Daniel Marsteller recently caught up with Kovler to discuss the road ahead for Green Thumb and the U.S. cannabis business in general.

SND: What trends do you see among the various cannabis form factors, both at retail and in your own brands?

Kovler: When we started the business in 2014, flower was 60% or more of the sales mix, but now it has dropped to about 40%. We’re seeing a massive decline in interest for combustibles. Everything is following the trend of wanting something easy to use that appears healthy or wellness oriented, not a pipe or a bong or a joint. The dramatic areas of growth are outside of flower—they’re in consumables and in some tinctures and topicals, particularly in new markets and on the East Coast. And vaping remains very strong.

SND: Are you getting a clear picture of who’s buying each of your respective brands?

Kovler: We’re building a brand portfolio that’s targeting different consumers, different age groups, and different use cases. For example, our Rythm brand (including flower, vapes, and concentrates) skews about 70-30 male to female, with a target audience between the ages of 25 to 40. Compare that to The Feel Collection (tinctures), which is 100% female. It’s sleep- and pain-focused, and it’s an older demographic. We’re seeing the biggest growth in older female consumers who are new to the space. They essentially want two things: to have a better night’s sleep and to have less pain.

SND: What potential do you see for cannabis beverages?

Kovler: It’s an interesting segment. I think it’s currently hovering at about 1% of the market or a little less, with several reasons why. The first is the efficacy of the product. It’s difficult to determine if the efficacy of a cannabis beverage is the same as that of an edible or a concentrate, whether it’s a beer or a seltzer or something else. The second piece is related to distribution and the supply chain. Compare a beverage to a chocolate bar, for instance. Each beverage has five or 10 milligrams of THC, but a bar is typically 100 milligrams total, with each break-off square containing five or 10 milligrams. So one chocolate bar is equivalent to a 10- or 20-pack of beverages. People buy 1,000 chocolate bars from us all the time, but they can’t buy 1,000 20-packs of beverages. No one’s system is set up for it. That’s why alcohol distribution companies exist, but that business model isn’t established in cannabis yet. Nonetheless, we’re watching the beverage segment closely, and experimenting in R&D.

SND: What marketing approaches are you taking to bring people into the legal industry?

Kovler: Our best strategy is education. People don’t have a lot of facts about the industry, about the product, and about what it can do for them. Our marketing strategy is to build brands that are honest and deliver a consistent experience. We’re educating our staff—the patient care specialists, budtenders, and others—who are out there talking about the product with consumers every day.

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