From Mainstream to Cannabis is an ongoing series that asks cannabis executives to talk about their personal and professional journey to the industry.
I debated whether to include Wana Brands CMO Joe Hodas in the new Mainstream to Cannabis series because he has worked in the industry for so many years, but quickly realized that his longevity was precisely what made him the perfect person to speak with about transitioning into cannabis. What had his experience been like, what had he learned, how had he changed, if at all, in the eleven years since making the fateful decision to move into a new, somewhat legal industry that came with more questions than answers; a move people always seem to make with apprehension, and which for Hodas turned into a long on-ramp into the industry.
“It was 2010 for me, and I was a partner with a small to midsize ad agency here in Colorado,” he recalled. “We had about 70 employees. This was the beginning of the transition here in Colorado into medical cannabis, which had been legalized a few years prior but was not implemented until 2009. A young lady who was on my team had gone to lunch with somebody and came back and said, ‘Hey, I have this friend who is starting what he called a pot soda company. Would we be interested in doing some brand work with them?’ I thought that sounded like a really interesting idea and said we should do it. I brought it to my partners, who said, ‘Yeah, that sounds like a fun project.’”
The resultant company was Dixie Elixirs and Edibles, soon to become Dixie Brands, a Denver-based producer of cannabis edibles that quickly became a leading cannabis brand with national exposure. “I got to do a little bit of research with my team in terms of dispensaries and talking to consumers and understanding what they’re purchasing, why they’re purchasing it, and a light bulb went off for me, like, wow, this is actually interesting,” said Hodas. “There are a lot of reasons why people consume and types of people who do consume, and it was different than I had anticipated. I had always been a proponent of legalization and had been a consumer myself. It wasn’t top of mind for me, but in hearing that information, I was like, there’s something here, so I kept in touch with the Dixie ownership over the next several years.
“They came back to us once adult use legalization had passed [in 2012] and said, ‘Look, this is going to blow up. We need more help. We want to grow this thing,’” added Hodas. “At that point in time, my partners and I had clients like Xcel Energy and Secure Health, very big conservative clients, and [my partners] said, ‘You know what; this is a little too visible for us now; maybe we can’t really pursue this any further.’”
But Hodas felt like he was already hooked. “I knew there was something here and I knew that it was not only a growth industry, but there was also the impact it was having on people in terms of their lives,” he said. “I knew that there was something sufficient for me to dig my teeth into, so I kept in touch with the Dixie guys, and in January 2014, the first week of adult use legalization, I became Chief Marketing Officer for Dixie, and that was my jump into the cannabis industry.”
Despite the lengthy gestation, Hodas had to dramatically limit his own expectations. “I didn’t know what to expect, and really no one knew, because it was the first time anyone had done it anywhere in the world,” he explained. “While there wasn’t really an expectation, I would say it was more being nervous about how the whole thing was going to shake out. There was a lot of discussion with mentors and friends and family about, okay, if I make this move into cannabis, am I potentially jeopardizing my future career if it doesn’t work out? A year from now, if I go back to a company and say, ‘Hey, I’ve been in the cannabis industry for a year? Does that mean I’m going to have issues with getting a job?’ And of course, at that point, in early days, I thought that was a fair question. I wouldn’t ask that question now, but back then I certainly did.”
A part of that trepidation was due to the fact that he was jumping into an alien marketing arena full of strange rules and unknown perils. “There were no rules of marketing in cannabis,” he explained. “There was no understanding of how you market to a cannabis consumer, and there were no specific channels and ways in which to do that. So, for sure, that was an unknown. I just made this remark I think yesterday on a conference call, that because of the challenges on the marketing side that we see in this industry, it actually forces marketers to be a heck of a lot more creative, and a heck of a lot more resourceful.
“I’ve seen companies and brands that will bring in the former CMO of whatever big company,” he continued. “These are people who might be great at figuring out how to take a $20 million budget and put it to work with mass media and all these other channels that you can leverage in mainstream, but you don’t have those options in cannabis. Not only do you not have the budgets, but you don’t have the channels in which to invest, so it takes someone who is scrappy and creative and looks at the things we can do and not at the things we can’t do, and that’s a different mindset than most marketers have.”
I mentioned a recent conversation with an industry professional who talked about MSOs making big marketing splashes at shows, but because they are not able to write those expenses off, they cannot afford to repeat them year after year, with the result that they struggle to gain the traction necessary to build a national brand.
“I see two things there,” said Hodas. “As it relates to being able to write off expenses, the rules on 280E are a little different for brands than they are for MSOs. When you look at an MSO that is vertically integrated, how they have to treat their expenses is vastly more complicated than it is for brands. 280E across the board hampers all of us, so it’s not as if we don’t have to deal with it, but it’s not quite the same in terms of our spend, and how that can look from a cost-of-goods-sold standpoint and what we’re able to deduct. It’s not easy, but it’s a little bit easier for us as a brand.
“The second piece, though, is this,” he added. “We look at MSOs who are vertically integrated, and they have their cultivation, a flower brand they have to support, and they have retail, which is critically important for driving consumer awareness traffic into the stores, and then they’re all trying to develop their own brands internally. I have yet to see an MSO that has figured out how to create a good strong in-house brand, because they’re spread out all over the place, and brand building is not an easy exercise. At Wana, we are singularly focused on one thing right now, which is Wana and gummies. At most MSOs, that would be one of 40 different brands they’re working on, so that’s another challenge that they face. Yes, sustained brand building is a challenge due to 280E and all these other inputs, but I think that for most MSOs, creating a unified brand and a way for the consumer to engage with that brand is much harder.”
The Road from Dixie to Wana
As choice a first gig as Dixie was, it was not to last. As explained by Hodas, the cannabis industry has always been both peripatetic and very intimate, but especially in the early days of legalization. He left Dixie at the end of 2017 and entered a period during which he held a series of “fractional CMO/CEO type of roles” within the industry.
“I worked for three or four companies in a quarter-time capacity that lasted for about three or four months, when one of the companies said they would love to have me come on as a full time CEO,” he said. “In 2018, I joined General Cannabis, which was a publicly traded company, and got some good public company experience from that. We had three subsidiary companies, each doing ancillary business in the cannabis industry. I did that for a year, and then in 2019 I moved over to become initially CEO and then president of Gofire, a startup technology hardware/software company focused on creating a metered dose inhaler, the first and only of its kind, really an amazing product. However, we needed about $15 million-plus in funding, and the market began to dry up in 2019, as you may recall. Plus, we had vape-gate, and even though our product was kind of the antidote to vape-gate, we still got lumped in with the crisis, and then we had COVID. So, we pared things way back in early 2020, and that’s when I went over to Wana, in February or March of 2020. And that’s kind of been my journey.”
I asked if he had been recruited by Wana. “Well, no,” he replied. “So, this is one of the things I’ve learned, actually, and it doesn’t apply just to cannabis, but it does seem to be more significant in cannabis. It’s still a small community, and people talk. Nancy (Whiteman, Wana Brands cofounder and CEO) and I met in 2014, when we were at the capitol here in Denver for various legislation issues, and even though Wana and Dixie were kind of the top two competitors in this market, we became friends, and we had great respect for one another.
“Afterwards, Nancy would tell me that she would watch Dixie and be envious of the brand building that we were doing, because they weren’t doing the same,” he continued. “I would tell her I was envious of the fact that they were building a real company with great products that was beginning to get this tremendous momentum. And the numbers didn’t lie. Their market share began to grow as Dixie’s began to shrink a little bit after a year or two. So, we kept in touch over all those years, and we’d spoken previously about her hiring a CMO, actually. She asked me that question went we went to lunch, I vividly remember. I was not available at the time, but she said, ‘What do you think, should we hire somebody from Red Bull or Coca Cola, one of these big companies?’ I said, ‘I don’t know if that’s the right person for you, because I don’t think that’s the right person for this industry right now.’”
It wouldn’t have been the right person at that point in time or still to this day? “At that point in time, yes, but even today, I’d still say I don’t know that it’s the right person,” replied Hodas. “So, anyway, our paths crossed at that point, but it wasn’t the right time for me, and it wasn’t the right time for her to hire me. But she didn’t make a hire, so there was this hole that she never filled, and it almost felt a bit like destiny. So, when I called her and told her that I was leaving Gofire, she was like, ‘Well, let’s talk,’ and it took a matter of a few weeks. She likes to say that usually she would have her exec team interview anybody she was considering, and it’d be a long-drawn-out process, but with me, she said, ‘I know Joe, he’s the right one,’ and it was really easy. I just slotted right in and have been so happy about that move ever since.”
As good a fit as Wana has been, Hodas has also had his marketing chops put to the test. In January, the New York Times published an article questioning the underlying science behind alleged weight-loss claims attributed to the Wana Fit gummy, claims Hodas says the company never made. The story had a shelf-life of a few days and then died away, but it seemed to exemplify the sort of situation any cannabis company could find itself embroiled in, and I asked Hodas how he assesses the episode in hindsight.
“Here is how I assess that situation,” he said. “It wasn’t our data. It was from a third-party company that we had partnered with to get THCV (Δ9-Tetrahydrocannabivarin) oil. It was sort of a value-add for us. We said, ‘We’re going to make this THCV product, and you guys have a study that goes along with it that we can tout.’ But there are 10 other studies out there that show the correlation between THCV and weight loss, so we still believe in THCV, and we still believe in the power of the plant to have an impact outside of getting high. We have our line of Wana optimals – our Fast Asleep and our Fit products – and we’ve got two or three more in the pipeline that are not THC-only but utilize other minor cannabinoids that were formulated for use-case specificity.
“But even the research that we do have is head and shoulders above anything else that’s going on in the industry right now, because we’re so hamstrung we don’t have the ability to do research,” he added. “People want to take potshots at cannabis for lack of research, but one thing most people don’t recognize is that consumers talk. If our sleep product wasn’t effective, if our weight loss product wasn’t effective, the consumers would let us know because they won’t buy the product. Also, I just went to the Natural Products Expo in Anaheim; there were 100,000 people there, every single product you’ve ever seen on any health food or vitamin cottage store was there, and they’re all micronutrients, macronutrients, Acai Berry, pine tar – making claims and assessments about their products and what they can do for you, and none of them have the scientific or pharma-level clinical trials to back any of it up. But we’re cannabis, so there’s extra scrutiny on there not being a clinical trial showing that there’s a direct correlation or a particular study was debunked. Okay, but there are 10 studies that do show a correlation, and again, it wasn’t our data and it’s not why we formulated the product.”
It sounded like an opportunity to begin a conversation rather than avoid one. “Oh God, yes,” said Hodas. “We would love to have more data, we’d love to have access, we’d love to have banking that would allow us the funding to then go to research companies and conduct some of this research. But again, many of them are so fearful, and the funding is not there, or they get funding from the feds, and they can’t use it to do this research, so there’s just a critical dearth of research in that area that we would all love to see increased.”
I noted that it cannot come soon enough as the FDA increases its scrutiny of the industry. “Well, CBD is under the purview of the FDA now, and claims are a real issue on the CBD side,” said Hodas. “On the THC side, we’re not [under the FDA], so there are companies that will make claims, but you won’t see that with any of our marketing related to the Wana Fit Gummy. We don’t point to that study. We don’t say, because of this study we make these claims. What we say about Fit, and the only marketing claim we make, is that it might help curb cravings. There are no claims made about weight loss. We even ran this by FDA attorneys to make sure they were comfortable with the language. So, even though we’re not beholden to the FDA at this point in time, we are thinking in those terms and making sure we’re not making those claims.”
Learning the Cannaropes
Hodas also had a few additional points to make on the subject of it not being the right time for some people to work in the cannabis industry. “First, I go back to the way this industry is structured from a regulatory standpoint,” he said. “It’s state by state, grassroots, and at the store level that these battles are being fought, and a lot of large-scale CPG marketers are used to their power coming from the ability to scale that just doesn’t exist for us right now in this industry. I’m not saying a few years from now, post-legalization, when interstate commerce is allowed and I can be in 50 states simultaneously, that that will not be the right person with the right kind of experience, which I don’t have. I’ve never done a multimillion dollar national spend. But for now, you’ve got to have someone who knows how to roll up their sleeves, get into each market at individual store level, and understand the nuances from market to market.
“I think it frustrates people,” he added. “As far as what I tell people looking at getting into this industry, you’ve got to be flexible, you’ve got to be willing to take risks. There is no short answer to any of this still today There’s no short answer to how do you market successfully, how do you grow a brand successfully in this industry. I think we’re all still trying to figure out the formula. We’re getting bits and pieces of it, we know a little bit more about the consumer, the products are getting better, and the overall focus on use-case specificity and understanding what the cannabis consumer wants is improving. But you should be okay with uncertainty, you have to be flexible, and you have to be willing to take risks. Those are things that if you look deep inside yourself and you realize that’s not who you are, then this isn’t the right industry for you.”
Had he had conversations with people about just those things? “Yep, absolutely I have,” he stated, “and I see a very distinct difference between the perspective of people who have come from those companies and the value that they can add, because there is that value.”
He added, by way of example, “We work with Canopy Growth right now. They’re the company that acquired the right to acquire us. Super smart people, with CPG backgrounds, and the way that they can analyze, and slice and dice market data is something. I don’t have that skill set, and we don’t have anybody on our team with the skill set for it. They’re amazing when it comes to that, but I think that what we can bring, having been in this industry for 11 years now, is the ground level understanding of the market and who the cannabis consumer is.
“I think when you get a nice combination of those two things, and the people who understand the value that each other brings, that’s when there’s benefit,” he summarized. ‘The negative version of that – and this does not happen with us or any partners we’ve run into – is that the traditional individual comes in and thinks they have all the answers and tries to implement something at scale that just doesn’t work. Then they get frustrated and leave and there have been a few companies in this industry – I don’t want to call out any specific examples – where some big, high-level names have come and gone.”
I asked Hodas if the breadth of his experience and the sheer amount of time he has spent in the industry had only helped to strengthen his value, and that he would not have been able to develop that value had he not had the time to learn the nuances of the cannabis markets, time that many of the MSOs have not had.
“I think so,” he responded. “It’s funny you said it that way because I recall a period, particularly when I was leaving Dixie in 2017, when I was seeing these MSOs that were really beginning to rise to prominence, and I actually interviewed with one of them. And I remember feeling, am I going to get leapfrogged here? Am I the guy who was early, but they look at me and go, he’s just the cannabis guy, we’re going to bring in this person or that person? I don’t have that concern anymore, and I think it’s because I’ve gotten comfortable with the value of my knowledge base and what I or others who are like me can bring, as someone who understands this industry from the inside out from the early days, and because of the relationships I’ve been able to develop over the years.”
I also wondered, when he first got in, if he thought to himself, ‘I’m a mainstream guy working in cannabis, and we’ll see what happens.’ Whereas now he thinks, ‘Yeah, I’m just a cannabis guy.’
“I think you characterized it exactly,” said Hodas with a laugh. “When I first came in, I was a mainstream guy. People would pat me on the back, ‘I can’t believe you’re making this big jump.’ And now, I’m definitely the cannabis guy in name and action. With all my friends and family, with everybody, any cannabis questions come to me, and there are a lot of them. But also, when I left Dixie, I did toy with the notion of getting out of the industry. I’d seen a lot of frustrations and things I didn’t like, but as I looked around at the various opportunities, boy, there was nothing that held a candle to the excitement and the satisfaction I get from being a part of this industry. I realized that I wanted to stay where I was.”
I noted that all of this could one day result in an offer from an even larger mainstream company precisely because of his experience in cannabis. “I don’t doubt it,” replied Hodas. “Particularly when more and more mainstream companies are going to get into this industry post-legalization, they’re going to want people like me – and I don’t mean just me – who understand this industry and where it has come from. I think it’s going to be valuable to a lot of companies.”