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Denver-based cannabis brand The Honeybee Collective has partnered with New York cultivator Hepworth Pura to launch the Colorado brand in the Empire State on Nov. 1.
The Honeybee Collective, which currently employs five people, put its first products on Colorado’s legal market in April of 2022. Right now their brand is on shelves in 45 dispensaries across the state, and is earning $32,000 in monthly wholesale revenue, and growing.
In a Q&A with NY Cannabis Insider, Honeybee Collective co-founder Chris Becker answers questions about how the legal market in New York differs from Colorado, how the company found New York partners and how to build a brand that appeals to customers in multiple states.
This Q&A has been edited for length and clarity
How did you end up partnering with Hepworth Pura? What were you looking for in a New York partner that made them a good fit?
David Hernandez from Happy Munkey introduced us to Hepworth Pura. If you know David, you know how meaningful his endorsement is.
We were looking for a partner in New York that aligned with our values. The Honeybee Collective curates earth and people-friendly cannabis products for impact-minded consumers. When we met the partners at Hepworth Pura, we found a team that cares immensely about having a positive impact. And they grow some amazing cannabis too!
To go deeper, the Hepworth sisters are a powerful duo – they’re kind, insightful, and effective. Amy is one of the best growers I’ve ever had the pleasure of meeting, her connection to the plant and the earth are incredible. Gail leads with empathy and an ambitious vision to do good for her people and the community. We are incredibly lucky to have them as partners.
New York has some pretty tight regulations on packaging and marketing. Are there aspects of how the state is regulating this that will be challenging to navigate?
New York’s cannabis packaging and marketing regulations have a lot of nuances that are unique to the state. Companies will have to be mindful and creative to compliantly get the word out about their products.
There are many prohibitions in the marketing regulations that don’t apply to any other industries or products. Cannabis companies in New York can’t advertise a sale or discount, aren’t allowed to give out free products or swag to consumers, and can’t use traditional forms of advertising like billboards or handing out flyers in public. I think cannabis deserves at least equal treatment with alcohol, which doesn’t have these marketing restrictions.
The packaging regulations are pretty straightforward. There’s more required information and warnings than in other states, but only one difference that has any real operational impact: requiring companies to test products after they’re packaged versus in bulk lots. This means manufacturers have to apply potency labels after packaging, which usually requires inefficient hand labeling instead of using an automated solution to direct print potency information on the packaging.
Compared with Colorado’s packaging and marketing rules, do you think New York’s are stricter, more permissive or about the same? Why?
New York’s packaging and marketing rules are definitely stricter than Colorado’s.
Compared to Colorado, New York requires packaging to have more information and more warnings. For instance: New York requires potency labels to have a QR code that links to a products COA, and all packages need to have a phone number for New York’s addiction helpline (1-877-8-HOPENY). Colorado doesn’t require either of those.
It seems like New York is building on the learnings of other markets. It makes sense. Colorado was the first state with legal cannabis and by no means is our regulatory package “perfect.” I think Colorado regulators would agree, as there’s over 300 lines of rule revisions they’re considering this year.
How do you think social equity efforts in New York compare to those in Colorado?
New York started with much bigger goals for social equity in cannabis than Colorado did. Colorado’s social equity programming has all been reactionary in response to data showing women and people of color are underrepresented among industry ownership. New York has a proactive equity mandate built into its legalization law.
Unfortunately, both states have struggled to implement programs to support a more equitable industry.
In Colorado, social equity licensees have been limited to difficult business models like delivery (can’t own the inventory so little margin to be made) and hospitality (high barrier to entry and low average transactions due to statutory sales limits). And only recently did the state begin providing (a small) essential funding for social equity licensees to get their operations up and running.
New York’s noble goal of issuing the first round of dispensary licenses to people impacted by the War on Drugs through the CAURD program has been stymied by the Fiore/ CARSC lawsuit and associated injunction.
I think the biggest challenge to implementing equity initiatives inside or outside of cannabis is powerful individuals and corporations that are threatened by anything that challenges the status quo. We’ve seen it with recent legal challenges to affirmative action college admissions and venture capitalists explicitly funding Black founders. Those who currently have money and power are reluctant to give any of it up, and they use lobbyists and courts to protect their privilege.
Cultivators in New York have strict limits on indoor growing, and a large amount of the growing has to be done outdoors or in greenhouses. What do you think are the pros and cons of this?
I find sun grown cannabis to be superior to indoor grown cannabis in almost every way, particularly in terms of quality and environmental impact.
Sun grown cannabis tends to be sticker, more aromatic, and have more unique cannabinoids than indoor. The carbon footprint of outdoor cannabis is significantly smaller than indoor. And sun grown flower can be produced at a fraction of the cost of indoor, so the prices are better for consumers.
Indoor grown cannabis beats sun grown on just two measures: bag appeal and THC potency, neither of which have any correlation with a user’s enjoyment of a product.
Indoor growing has its place, but I think it should mostly be reserved for craft cultivation. Growing acres of cannabis indoors is bad for the environment, leads to rapid price compression, and often doesn’t pan out even for large, well capitalized companies (look at Canada or New Jersey for recent examples of public companies reducing cultivation capacity because they were out producing demand).
Based on your experience in Colorado, what do you think are the most important things people/groups applying for cannabis business licenses in New York should be thinking about when planning their businesses?
The most important things for aspiring cannabis entrepreneurs to think about are realistic expectations and specialization.
Many cannabis companies have been built based on unrealistic expectations for wholesale prices and speed of getting operational.
Companies big and small have made bad projections about pricing. I suggest basing projections around very conservative pricing, that way you’ll be pleasantly surprised if prices stay high (which they won’t).
I know of companies in Colorado and Massachusetts that took over two years to get their licenses, and longer to actually get products grown, sold, and invoices paid. Assume that licensing, construction, and inspections will take a long time. Don’t set yourself up to run out of money before you ever open your doors.
Bigger picture: I think success in the next phase of cannabis will require specialization. Legalization inevitably leads to commodification, which translates to lower margins for producers. With slimmer margins there’s little room for inefficiency. Licensees can be more efficient by being experts in their craft and outsourcing what they don’t excel at.
Part of the reason we started a private label brand is we recognized many growers have a need for dedicated branding and marketing teams, but don’t necessarily have experience in those realms. By licensing our brand growers can sell more products at better margins and with less upfront cost than if they built a brand themselves.
What are the most important aspects of building a brand? Is there an added challenge in bringing an existing brand to a different state, or does the fact that the brand already exists make it easier?
Everything matters when you’re building a brand, it’s hard to say any one thing is more important than another. I’d say the three biggest factors that have contributed to our success are: being consumer-centric (building the brand based on consumer feedback), selling a great product in a growing category, and having a team of workers that treat the business like owners (because they are – The Honeybee Collective is an employee-owned company).
Bringing an existing brand to a new state has some pros and some cons.
Having existing sales and brand awareness makes licensing our brand less of a gamble for manufacturing partners, and likely causes dispensaries to be more willing to give our products a shot on their shelves.
To be blunt, the biggest challenge with bringing an existing cannabis brand to a new state is avoiding the perception that out-of-state brands are extractive middle-men hawking shiny packaging and mid-grade herb.
We want to have a positive impact on the communities where we operate, and make it easy for everyday cannabis consumers to choose sustainable cannabis products. Ten percent of our profits are set aside to be reinvested into local non-profits, and we hope our success in New York will encourage more employee ownership throughout the cannabis industry.