Jim Baudino - Breaking Down the Most Exciting Category in CPG

On this episode, we’re joined by Jim Baudino, the President of Iconic Tonics - a joint venture with Snoop Dogg - and Partner at Harmony Craft Beverages, an incubator focused on cannabis and hemp beverages.

Jim joined Shelf Help to break down one of the most exciting categories in CPG today. From velocity benchmarks and dosing trends to on-premise strategy, retail readiness, and the ever-changing compliance landscape, we dive deep.

We also talk about the state of the market, the misperceptions, what’s overhyped, and what’s actually working for scaling brands.

Episode Highlights:
🍹 Why Minnesota became the blueprint for national hemp drink growth
🏛️ How inconsistent state regs are shaping brand strategy
📦 Why high-dose drinks (10mg) are outselling microdose (2–3mg)
🎤 What makes a celebrity partnership actually work
🧾 What retailers want to see in your pitch (and what they don’t)
🍋 Why lemonade and tea are gaining on seltzers
📈 The future of infused beer, wine, and functional beverages
🤝 Why compliance + ops are your first two hires

Table of Contents:
00:00 – Jim’s background & Harmony/Iconic overview
03:30 – State of the THC beverage market
07:00 – Hemp vs Regulated cannabis channels
10:30 – Why high-dose SKUs dominate today’s sales
14:00 – Overhyped vs underhyped trends
18:00 – Retail distribution & buyer expectations
22:00 – Best-performing sales channels right now
26:00 – Demo strategy & retail tools
30:00 – On-premise + festival performance
34:00 – DTC marketing, Meta strategy, & sampling laws
38:00 – What flavors & formats are resonating
41:00 – Who to hire first & where talent is needed most

Links:
Iconic Tonics – https://www.instagram.com/drinkiconictonics
Follow Jim on LinkedIn – https://www.linkedin.com/in/jimbaudino/
Follow Adam on LinkedIn – https://www.linkedin.com/in/adam-martin-steinberg
Check out https://www.kitprint.co/ for CPG production design support

Transcript

Adam Steinberg (00:00)

Welcome to Shelf Help. Today we're speaking with Jim Baudino, who's joining us from LA. Jim has been on the forefront of the fast growing cannabis and hemp beverage space really long before it seems to be one of the most followed and exciting categories in CPG as of late. And Jim's doing a bunch of stuff in the space. He's currently the president of Harmony Craft Beverages, a hemp THC beverage incubator.

and the president of Iconic Tonics, a joint venture between Harmony and the infamous Snoop Dogg. Also a partner at Fiorello, creative agency focused on emerging markets, including the beverages, I imagine. prior way before that, Jim spent a good chunk of his early career at Toyota before really diving headfirst into the cannabis space.

Jim, really excited to have you here. think first off, maybe just for the listeners that aren't all that familiar with Iconic Tonics and Harmony and

Maybe just give us kind of the quick lay of the land in terms of kind of the origin story incubator model you've been working on and some of the brands in the ecosystem where the listeners can get their hands on some of the core brands, the portfolio and any other kind of notable things going on with the ecosystem as of late that you want to kick things off with.

Jim Baudino (01:07)

Sure. Well, first of all, good to see you. Thank you for having me. I appreciate it. I know we've known each other now for a number of years, going back to the cannabis days. It's been a decade, over a decade. And that's where I got my start in cannabis, actually working with Snoop on launching Mary Jane Media. And so I spent a number of years in the media side and then transitioned over to the product side, also in the agency, and then with the

Adam Steinberg (01:10)

Yeah, of course.

Feels like decades of cannabis years.

Yep.

Jim Baudino (01:32)

brand incubator and really looking at the beverage space. And founder of Armycraft Beverage is Evan Eniman. He spoke at the first BevNet in 2018 that talked about cannabis infused beverages. And so there was a lot of work that we're doing with dealkylization company and really dove deep into the non-alk space and then

the low and no space and really learned a lot about what was going on and then joined the Cannabis Beverage Association as one of the first members and board members there. And that's really where we understood, got a good understanding of the political landscape around beverages and infused beverages in the regulated market in California. so, fast forwarding a couple of years.

then Harmony Craft Beverages, was, we had several brands in the portfolio, beverage brands in the portfolio, then that we brought under that umbrella, the Harmony Craft Beverages umbrella, so that we could have a clear direction with the company. And then we had startup conversations again with Snoop's team. And then he had two brands in market and he joined the portfolio. So we have seven brands.

that we're now taking out to the hemp market. And also in the regulated. So we're also going to be in regulated markets, in the hemp markets. And then so that consists of two of Snoop's brands. And then we had four brands in the California regulated market and then one new brand with Love Your Brain, which is a partnership with Wayne Coyne of the Flaming Lips.

Adam Steinberg (03:16)

a lot going on, that's for sure.

Jim Baudino (03:16)

And

Adam Steinberg (03:17)

I'd love to just kind of get a state of the union on this beverage space in terms of, I it's multi-part question, but kind of where things got started and really kicked into gear. think there were some funny things that happened in Minnesota a few years back. Where we've come and where we are today, why it kind of seems like things are really kind of exploding right now.

Jim Baudino (03:31)

Yes.

Adam Steinberg (03:39)

We can start there and I have a few other questions on this front, we'll start there.

Jim Baudino (03:43)

Well, first off, let's separate out the hemp derived versus then the marijuana derived. marijuana derived must be sold in the licensed cannabis retailer. In the state must have a different supply chain. So a lot of restrictions, taxes, regulations. And then you've got the hemp derived, which falls under the 2018 farm bill, which legalizes hemp, therefore derivatives of hemp.

Adam Steinberg (03:46)

for sharing.

Jim Baudino (04:09)

under the 0.3 % THC. So you are seeing that hemp derived products can be illegal, even though it may be the same exact product with the same amount of THC. One may be legal, one may be not legal. One may have restrictions, and one may not have as many restrictions. And I know we can get into the politics maybe later, but I just wanted to set the stage that those two are out there so people have that base understanding.

Adam Steinberg (04:32)

you

Jim Baudino (04:40)

Minnesota was the poster child of what the industry could look like with a regulated, with a free market. If cannabis is legalized, that's what it would look like where you could have alcohol and cannabis sold in bars and restaurants, on-premise, in retail. Now, it was approved, they say accidental legalization.

There's a provision within the larger health care bill that went unnoticed by some lawmakers. And so they inadvertently legalized low-potency hemp-derived THC beverages. So with that, a lot of breweries and cideries that had the infrastructure jumped on board, and they experimented and were able to produce low-dose THC beverages and sell it at their locations and then add also other on-premise.

locations. so that's where that lack of clear regulations kind of made it a leader in the space where everyone jumped on board and saw that as the opportunity to test out this new industry, this new industry. I people have been in it for decades, but at least at this scale. where we come from there, Minnesota's

definitely been that poster child of what full legalization could look like in a low dose, with low dose beverages. But every state thinks they can do it better. And so you're seeing differences in regulations. it's really on the weekly basis, there's new regulations that are happening across the country with different states.

Adam Steinberg (06:08)

Mm-hmm.

Jim Baudino (06:25)

But it has been maturing. So people are learning, but it's still a lot of differences, differences of opinion between states and even local municipalities on where the direction should go for hemp-derived products. And I'm going to talk just really about hemp-derived beverages. I'm going to keep out anything with THCA, hemp-derived flour and gummies.

We don't focus on any of those at this point. We just focused on the beverages.

And so there's definitely emergence of more sophisticated production methods, better quality control, and also understanding of consumer preferences and who are those target customers. The regulated market is definitely a different buyer. And you'll see that a lot of it's higher dose products that sell in retail. And you'll have a

a different consumer that actually is focused on cannabis. Whereas if it's something that's sold in like a total wine, a low dose product, maybe someone that's buying some wine or beer, they see this, they're having a football, know, people over for a football game. So they may buy a low dose cannabis beverage. They may not necessarily be that consumer, but it's something that we wanna see. We wanna get a share of cart and then that opportunity is not possible when you're only sold through that.

the actually the regulated cannabis retail space. What else? So a lot more from hemp beverage trade organizations. I think you're seeing a lot more lobbying efforts. So everything from CABBA, which is the Coalition for Adult Beverage Alternatives. And that was kind of the evolution of the Cannabis Beverage Association and had a lot of

supply chain, alcohol supply chain partners that have been involved now. And they see this as a way to help supplement their revenues from potentially declining alcohol sales. And so it's great to have the partnership with the alcohol industry on how do you not only make the hemp beverages legalized, in a way, but regulated in a way that's going to be safe.

and compliant and safety and is definitely an important aspect. We want to make sure that it's not getting in the hands of children and it's being the quality. Everyone has COAs. So there are standards. There's a code of conduct that CABA has created. And then also you've got a couple other trade organizations that are doing a great job, whether it's on local levels or again in the lobbying efforts.

to educate politicians and they've had recent lobby days and really educating those who are making these decisions, these sweeping decisions that may be just maybe insignificant to the people doing the creating the bills, but very significant to our industry. So by educating, it's so important for them to have the awareness of.

Adam Steinberg (09:24)

Right.

Jim Baudino (09:29)

what the products are and how big of an industry this really is.

Uh-huh.

Adam Steinberg (09:35)

You mentioned

one thing you just called out, which got me thinking.

the regulated THC dispensary sector where

it's kind of the typical 80-20 where

20 % of their consumers are responsible for

80 % of the revenue. Roughly those are the people that are going into dispensaries,

once a week,

or every two weeks.

a lot of times it's

people that are,

not super high income spending a good chunk of their paycheck on cannabis. And most of them are looking for higher potency,

dollar per milligram type focus.

From what I know, think the alcohol space is also somewhat similar

in a sense,

I'm curious, in this kind cannabis beverage space, excluding the regulated THC market right now,

Do you think that this sector ultimately heads towards something similar or

Do you think it's going to be more like

the better for you soda category, like Olipop and Poppi where I imagine the different groups of consumers are more broad than those other two markets? Does that question kind of make sense?

Jim Baudino (10:24)

Yes,

it does. And what's interesting is what we're finding is the higher dose products are selling the most out of the retailers, the liquor stores and the sea stores. And the two and three milligram doses, those aren't selling versus the 10. When I say high dose, then it'll be like 10 milligrams, which we feel is going to be the cap for most states in terms of what you can have in a per serving or container.

Adam Steinberg (10:44)

Mm-hmm.

Okay.

Jim Baudino (10:51)

And so you're seeing a lot of the high dose products being sold now. And we're equating that to those are cannabis consumers that see it in their liquor stores. go, I can buy cannabis here. So I'm going to get the higher dose. And they also may be there may be a factor of cost per milligram of THC. So looking at that as well.

Adam Steinberg (11:05)

Right. Right.

Yeah.

Jim Baudino (11:14)

In the future though, we feel it's going to be similar to alcohol where if you want a low dose and you're going to buy a low dose, not going to be, know, the price won't be that deciding factor. But we do feel that it won't be that A20, but because when you look at it, how many sodas can you drink? Whereas with alcohol, the

The form factor is so you can have it sessionable and you can have several over the course of a night. And so that's where our philosophy with some of our products, high quality ingredients, things that are sessionable and that could be that potential replacement or to provide other options where you could have a few over the course of a day or night and not be worried about too much sugar or other potential harmful effects.

Adam Steinberg (11:41)

Right. Yeah.

Yeah, that makes a lot of sense. terms of just, again, I this space is getting a lot of attention, and I'm curious from your perspective,

What parts feel overhyped compared to how people are talking about it, and what aspects still feel underhyped?

Jim Baudino (12:20)

Well, I think the fact that as far as overhyped, I the idea that THC beverages are completely going to replace alcohol overnight, that's a bit overblown. You're definitely seeing the growth and interest, but alcohol is centuries of cultural dominance. And so it's going to be hard to get people to make that change, at least the majority of the population, to make that change overnight.

Adam Steinberg (12:31)

Yeah.

Yeah.

Jim Baudino (12:49)

And so getting to the celebrity-backed aspect of it too, can have a double-edged sword. You can have attention, definitely, but the product needs to be able to stand on its own. So that's where the quality comes in. Quality of product and the relationships with the influencers or celebrities is critical. The underhyped.

Well, I think the potential for functional cannabis beverages, it's untapped. Every time I talk to a new group of people, there's people that have no idea these products even exist. And so I think that's the huge opportunity also getting into more of the technical aspects. Right now, people are having...

questions about, well, what's the difference between CBD and THC? But soon, when you can start talking about the ratio of cannabinoids, now, whether the cannabinoids are legal or not, mean, hopefully you can have a CBG, CBN incorporated in, and so you can have the full spectrum. I know a lot of the regulations are blocking that out, but that's really where you're going to get the power of the plant. And that's why we like the regulated market, where you can have the live resin and

really the full terpene experience and all the different cannabinoids working together to create those effects that I think personally are enhanced beyond just a distillate that you'll get in the hemp regulated market.

Adam Steinberg (14:14)

Yeah, those all make a lot of sense.

who do you feel like are,

the top leaders in this space right now?

Jim Baudino (14:19)

Well, I think for different reasons. You'll see, obviously, Brez A lot of people are talking about them, very transparent in everything they're doing from a D2C perspective. And then also their transition into retail. Cheech & Chong he has a strong team. And they've had a lot of experience with their other portfolio products and how to leverage that from a digital perspective.

Adam Steinberg (14:28)

Mm-hmm.

Jim Baudino (14:42)

and some other relationships they've built there. And then you get Cann, of course, who is more of the leader in the beginning with the low dose beverage movement and seeing them stick to very, beliefs and keep that focus and bringing in.

the celebrities that aligned with the brand and really the advertising as well. And so they've done a lot and really helped propel the industry and ablaze the path. And so they've also been very active in all of the regulations and the lobbying efforts. So thanks to them for helping. And I guess even backing up a bit to your underhype.

I think it's the awareness of where the industry came from. And we're built on the shoulders of giants and all the people that have been incarcerated and the social equity. And so how do we continue to raise awareness of that as, because anyone can get in the industry right now and they have no idea about the historical efforts that people have made to bring us to where we are today. And so.

Adam Steinberg (15:32)

Right.

Jim Baudino (15:48)

definitely want to highlight that. And I've been in the industry for over 10 years. And that's just a very small part of what some of these other folks have been in and really dedicated their lives and livelihoods to.

Adam Steinberg (16:05)

Yeah, I 100 % agree with that. I think that needs to continue to be shouted from the rooftop so it doesn't get forgotten. What do you feel like, I know there's a lot of different ways you could probably answer this, but

what is the next, let's just say, five years look like in terms of market standpoint and or policy standpoint in relation to the farm bill, where things are going at the state level, that kind of stuff? anything that kind of jumps out.

Jim Baudino (16:27)

Well, anything can happen as we know. But definitely seeing consolidation in the market. I mean, you're seeing a ton of people, as mentioned, everyone can get in the market with low, there's low barriers to entry. But once you're in, you need capital. You definitely need capital and you're starting to see some of the larger players.

Adam Steinberg (16:30)

Sure.

Jim Baudino (16:49)

that understand that the door dashes that were very early entrants, they brought on a lot of brands. And now they're kind of thinning out the brands that are in their portfolio on the platform. And retailers are doing the same. There's a set level of expectation that you need. so while it's easy to get in, how do you sustain that? And there's so many costs that you don't anticipate.

And so how do you make sure you're accounting for that? And so if you're well-capitalized, that's going to be an important part as you come into the industry. And so the consolidation, as far as legalization, I am hoping that the states can have some sort of uniformity across the board on packaging and labeling, because a lot of that causes

Adam Steinberg (17:35)

Mm-hmm.

Yeah.

Jim Baudino (17:42)

lot of issues for anyone that wants to be in multiple markets.

Adam Steinberg (17:45)

Yeah, yeah, totally. On the topic of consolidation, are you hearing in terms of this example, Pepsi just acquired Poppi

what are you hearing in terms of some of these bigger operators

the Pepsis or Cokes of the World, what do you hear? Are they...

getting close to feeling they can start actually really looking at acquisitions or is that sense that,

the big companies outside of the industry are still feeling like there's too much uncertainty and liability from

a regulation standpoint?

Jim Baudino (18:13)

And that's what I've heard from several large corporations is that until it's fully legalized, they're not going to step into the space, which makes sense. The risk is too great. But for those that do, then they can start reaping the rewards and really helping driving the direction of the industry. it's going to be exciting. So once it starts happening, like Circle K and

Adam Steinberg (18:21)

Got it.

Sure.

Yeah, totally. Totally.

Jim Baudino (18:40)

and total wine, so all the quick trips and all the sea stores and once the grocery stores and some already doing it, woodmans and cub foods. so a lot of it has to do with insurance. And so they get that figured out. Then the fun begins. mean, we're still waiting.

Adam Steinberg (18:40)

Right.

Yep, totally. feel like insurance, so many

things come back to insurance, feels like. Shifting gears a bit, you talked about customer segments a bit, we circle around it a bit. I'm curious from what you're seeing from, you have so many different brands under your portfolio, I feel like you got a pretty good sense. What does it look like based on right now in terms of...

Are there clear segments?

Jim Baudino (19:24)

Yep. The sober curious and those alternative seekers, I think that's a big one. And they may still drink alcohol, but they're trying other things, reducing their overall consumption. And it's really, we want to look at occasion. And it just to be another option. And Snoop says he wants to give the people options.

because there is, he's got his wine, Cali Red, Cali Gold, and he's got gin and juice. And so this is an option for them with do it fluid and doggy spritz. And so that's what we see. If people go into establishments where they can have more options, then it's just better for the end consumer. so really the demographics are anyone that consumes a beverage. I mean, it's hard to...

Adam Steinberg (20:13)

Yeah.

Jim Baudino (20:15)

but it's really now up to the brand to focus on who do they want to have their target.

Adam Steinberg (20:18)

Yeah.

Jim Baudino (20:20)

And then you get, of course, the wellness and the functional, those enthusiasts, and that are really focused on their bodies and what they're putting into their bodies. And then the experienced consumer. But again, they may be looking for a higher dose product. And so the low dose may not be.

Although in conjunction, if they are at establishment where they would normally have an alcohol beverage, they may choose to have a cannabis beverage. Another big one, the older generation, 50 plus. mean, that's huge for functional beverage across the board. So looking at anything from adaptogens, neurotropics, and obviously with hemp and cannabis.

My parents, for example, I just gave them samples and like try it because mom you should not be drinking a glass of champagne before you go to bed every night. Try this. how it works.

Adam Steinberg (21:06)

Okay.

Right. Right.

Jim Baudino (21:15)

And then of course, people that may have never had cannabis and are looking just for another other options and just as the canicurious

Adam Steinberg (21:24)

what are you seeing in terms of the channels that are, that are working the best right now in terms of,

opening doors where you're seeing the least resistant in terms of the typical cannabis apprehensiveness and getting any ones that

specifically really jump out?

Jim Baudino (21:40)

So I want to qualify this by saying that depends on what state you're in. And that's a huge dictation, determination of what you can do and which channels are the optimal. So one thing is we're on DoorDash in 20 states and over 50 markets. And that really provides some insight to us of which markets are performing better than others.

Adam Steinberg (21:44)

Sure, fair enough.

Jim Baudino (22:06)

But you're seeing in Minnesota, it's much more open and where product can be sold. You're seeing a lot of the state shops that are getting the product. On-premise, so that's definitely more open. ⁓ On-premise everywhere else, I think you're seeing a little bit of hesitation. I think that's going to come in the second wave.

Adam Steinberg (22:22)

Mm-hmm.

Okay.

Jim Baudino (22:29)

So

they want to see how things play out. And this will be interesting as well with distributors and who covers on-premise or is off-premise. And then do you do the liquor distributors or the beer distributors? And who's the optimal rough-to-market? And who should you be partnering with in the different regions?

Adam Steinberg (22:52)

Yeah.

Jim Baudino (22:54)

But so there's also the C stores and grocery stores and then the smoke shops. Smoke shops are an interesting one. While it may work, unless you've got the sales staff to go in and constantly manage the channel, the volume isn't enough to warrant that, unless they're buying pallets at a time, which

Adam Steinberg (23:18)

Right.

Jim Baudino (23:19)

people aren't going into smoke shops to buy cannabis beverages at this point. There may be a few outliers, but just from, was that Champs in February, and you're seeing a lot more activity there, but it's still gonna be difficult to get the velocity that you would get if you focused all your attention on a total wine or some of these other convenience channels.

Adam Steinberg (23:23)

Right, now that makes sense.

Yeah. In terms of, you mentioned Total Wine and some of those bigger retailers. Are you seeing what,

experienced operators in the regulated THC space would call something like a cannabis upcharge in terms of maybe retailers are being less friendly they would be with the typical other brands in the shelf that are not in this hemp cannabis space in terms of maybe...

not as friendly payment terms or they're having more stringent

trade spend requirements or

compliance costs or, have you found that, I guess, yeah, first, are you seeing, are you seeing any of that or, is it, or is it no, that's great. That's awesome.

Jim Baudino (24:13)

Right? No, not really. Not really. I mean, for the

most part, yeah, even across the supply chain, we're dealing with partners that do large quantities for major brands. And so it's really a matter of economies of scale. And so whether you're going to do 100 or 100,000, that's really going to help dictate your price point. And in the retail, it's the same thing. Everyone's trying to figure out what are customers going to pay for.

Adam Steinberg (24:36)

Yeah.

Yeah.

Jim Baudino (24:42)

The main thing is we don't want it to be erased to the bottom in terms of pricing. But for the most part, distributors are going to look at it like alcohol. A lot of the alcohol distributors are looking at it want it to be comparable. And they don't want alcohol prices to bottom out. So they're not going to want THC prices to bottom out.

Adam Steinberg (24:47)

Yeah, totally.

For, let's just say, aspiring founders in the space that are really early in the stages, just launched their brand recently, are getting ready to, and they're thinking about which of these retail channels they should focus on. Which one did you recommend in terms of maybe the bigger liquor store chains like Total Wine or

C stores

Which one would you say you might you recommend?

Jim Baudino (25:20)

So a lot of it is how well are they capitalized and what their budgets are. If they are just starting off and don't have a large budget, I would start local and really focus on your target demographics. Where do they go? Try to do as many samplings as possible. And if you can do it or you're

Adam Steinberg (25:25)

Sure.

Jim Baudino (25:40)

your core team, that's where you're going to get all of those insights so you can help build your story and why are you different than any other of the hundred new THC brands that are out there. And so whether it's farmers markets, gyms or the liquor stores, wherever you can do samplings, let alone then where are you being sold? I think that's really what I would focus on is someone that's new and try to really own your own market.

Adam Steinberg (25:58)

Mm-hmm.

Yeah.

Jim Baudino (26:08)

and then have others go, how can I get them? And this is where the D2C comes in.

Adam Steinberg (26:12)

Yeah. You mentioned you touched on sampling

demos have really proven to be a key aspect and tool of driving velocity at retail in both traditional CPG, like any food and beverage brand, as well as the regulated THC dispensary channel as well. I'm curious, what is the?

What does the demo landscape look like in this, Let's just focus on the hemp THC beverage category in retail. Is that something that they're open to? Are you seeing success with those or what's the landscape look like right now?

Jim Baudino (26:37)

Yes.

Yeah, yes,

definitely important to have. So there are companies that are out there that can do this for you, but you need to have a good relationship with them and a very clear story for the staff to tell the customers with points of differentiation. But then also,

does the retailer allow those samplings, like dosed sampling? So dosed and non-dosed will be a big discussion. So if you are in the process of creating a batch, make sure you have some non-dosed samples because there are states that don't allow for those samplings and then some retailers will not allow dosed samplings.

Adam Steinberg (27:04)

Yeah.

Got it.

Outside of demos, in terms of just selling into retail and sell in, and then also supporting sell through in terms of retail tactics that maybe up and coming operators or founders should be thinking about, what are the core tools that a brand

should have in their tool belt to really pitch buyers and then achieve sustained success at retail once you're on the shelf in terms of sales decks for pitching them, sales sheets, one-pagers.

shelf talkers, aisle violators, end caps, that kind of stuff?

Jim Baudino (27:47)

Yes. I mean, well, first of all, having a brand story and what differentiates you, that's key because the story is really what's going to sell you to the end customer, especially in a market like this where it's new products, all our new products. And so what is the story? And then for the buyers as well is where are they going to put you and what's your pricing and

And so that's going to be key. having the one sheet, they don't want to look through decks. so how do you keep it simple? How do you keep your points very, very clear? And your partners, who are your partners out there? And we're fortunate with one of our products, have death row records. And so how do we leverage them so that benefits the retailer?

Adam Steinberg (28:33)

Yeah. Yep, that makes sense.

Jim Baudino (28:35)

And so

whether it's you've got the whole marathon or the running club, it could be anything, but how do you look across all of your network and see how is that going to benefit the retailer and to drive traffic? Because that's what they're looking for. How is that velocity going to drive velocity?

Adam Steinberg (28:48)

Yeah.

Sure.

Yeah.

Shifting away from the,

off-premise channels and these retail channels talking about on-premise, talking about

specifically bars.

music festivals, restaurants.

are you finding is working well here?

Jim Baudino (29:03)

Sure, customers want options, giving them that option. And first of all, what's legal or not based on the regulations. But if it is low dose on premise, I feel strongly about that, especially at festivals. We did a test with our Love Your Brain product at, it was a two day festival where the Flaming Ellipse were performing in Oklahoma City at the Oklahoma City Zoo Amphitheater.

for an hour and a half to two hours, they provided, we had 10 milligram dosed cans and those sold more better than water or anything else. 10 milligrams though, people got a little bit concerned that that may be a little bit high and which, looking back then yes, that would look at something like a three milligram to the five milligram.

for on-premise. And that just makes sense across the board on any on-premise, even with size of cans too, if they're going to do 8 ounce versus a 12 ounce, and what's going to benefit them the most. And can someone have three to five drinks across the course of an evening versus just one?

Adam Steinberg (29:51)

Mm-hmm. Totally.

selling more than water is, I don't know, that's quite a testament. That's wild.

Jim Baudino (30:13)

So there's so much opportunity with on-premise and festivals. I think they see it, well, I know they definitely see it as an opportunity. And it's really looking at what even Chi-Chen Chong did with their relationship with Rolling Loud and coming out with their own product, the Rolling Loud infused hemp infused product. You're going to see a lot more of that. I can't wait. I mean, that's really where.

Adam Steinberg (30:35)

That's super exciting.

Jim Baudino (30:37)

And that ties into our whole philosophy on music and lifestyle and culture.

Adam Steinberg (30:42)

does it feel like this is,

the most important channel in some ways or the best channel from a consumer education standpoint right now?

Jim Baudino (30:49)

Yes, consumer education is absolutely critical, but it's important to know that your, whether they're bartenders or staff, that they're trained properly. And that's going to be a key factor and where's the best option because if it's at a festival, figuring out, and they're just, it's a transaction, how are you educating?

Adam Steinberg (31:01)

Yeah, of course.

Jim Baudino (31:14)

the consumers on this. So that's where the caterers really need to spend that additional time if it is brought into it from a catering perspective versus just a sampling. We had a sampling and then it was also sold by the caterers. And so having that is going to be really important because then the consumers get to test it, taste it, learn about it, and then go and buy it.

Adam Steinberg (31:23)

Mm-hmm. Yeah.

Yeah. Yep. That makes a lot of sense. Totally makes sense. Shifting to another channel, talking about D2C. We haven't really talked about D2C much. I know there's some brands that you mentioned, Brez I think they're the founder in some of their team that's really been the running agencies on the D2C side. So it makes sense that they've been focusing on that. But it seemed like other brands are having a lot of success in this D2C channel, too. I'm curious, from your perspective,

What have you been seeing working well in terms of what's drive conversions, whether it's the programmatic I ad spend and figuring out ways to get around some of the meta restrictions, or is it more organic content? Is it affiliates? What are you guys seeing in terms of what's working the best here?

Jim Baudino (32:16)

Well, first with D2C, this is a big topic of debate across the industry. Some states are outlying it now where you can't have direct to consumer. think there were just two this past week in Alabama and Rhode Island or Connecticut for beverage.

Adam Steinberg (32:30)

Is that specifically for beverages or just all ⁓

farm bill related products?

Jim Baudino (32:37)

That's a great question. I was only looking at it for beverage. But that's a good question.

Adam Steinberg (32:38)

Yeah.

Yeah, fair enough. You're focused on beverages, so fair, fair enough.

Jim Baudino (32:44)

Yes.

And so that's going to be critical. Direct-to-consumer is important for any brands that are really starting out that may not have significant capital. Because even, like I had mentioned before, if you're starting in one demographic area, that's going to give you the opportunity to be able to sell outside that. And so all the work that's being done now and the testing and also the platforms that are allowing it, I think, has been

Adam Steinberg (32:53)

Yeah.

Jim Baudino (33:13)

really helpful in building the scale that you can have and not, like you had mentioned before, who's taking advantage of this customer. It's really not. You're on the same playing field as everyone else. If you have the dollars, then you can spend it. And just finding out what are those ways to drive that additional traffic. And this is where the partners come in. And this is where we have that unique opportunity with, obviously, Snoop Dogg, but also all the other affiliations that we have.

Death Row Records and the Death Row whole community. And then also like the Wayne Wayne coin of the world. And then also some of the influencers that we have in partners, the Warren Bobrow and Evans as well, who are the founders of Klaus and Urbasi.

Adam Steinberg (33:55)

without giving away too much secret sauce, is there anything you're seeing that's working best from specifically a meta and programmatic standpoint in terms of getting around some of the usual cannabis-related challenges, or are you not really seeing many of those anymore and you can kind of just do what you want?

Jim Baudino (34:11)

well, there, there are, some things that are working. It's getting, starting with the basic and the obvious don't have cannabis leaves and, and on, on your packaging, take off the word cannabis. You're taking hemp and off, the cans and, so being as pretty generic as possible that, and also if you want to drive to a separate landing page that

does not have any of that language. That works out well to help avoid some of those other concerns. I mean, it still is a numbers game. The more budget you have, and then what's your story. And there's a lot of tools that are out there and a lot of AI. And how do you leverage that in a way where it's not going to seem inauthentic? And so again, everything comes back to the story.

how you're telling your story. And you're seeing a lot of the CEOs being that story in the face of their brands, even through email marketing. so you're getting a lot. Maybe everyone's, I'm seeing this at least, where you're seeing the founder story. And that's telling you about the product and really introducing you to the brand.

Adam Steinberg (35:30)

Yeah, it seems like that seems to be working really well these days. People want to hear from people to a certain extent. Hearing the stories kind of gets them feeling like they're part of the journey to a certain extent.

Let's just say I reached out to you tomorrow and said, hey, I'm getting ready. I'm thinking about launching a beverage brand in this hemp THC space. Which channel should I, if I only have

you know, limited resources and I'm only going to focus on really put all my resources into one channel initially. if I, and I came to ask you which one should I focus on?

if you had a recommendation between the two, which would you say?

Jim Baudino (36:04)

Sure. Well, you can set up D2C fairly inexpensively. It's just how much do you want to advertise, do you want to push and how much paid. And so in the long run, it's going to be the relationships with the retailers. mean, that's really where you're going to get the volume and you're going to get the croakers. And so when everyone starts coming into the industry, but right now with a more fragmented

Adam Steinberg (36:08)

True.

Yeah.

Jim Baudino (36:28)

channels, then D2C is really can help leverage your budgets as much as possible. And again, if you start small, start local, and then leverage D2C, and then you can continue to expand into your key markets or continue into your one state and own your state. And you're seeing that actually with Minnesota, where a lot of the sales are going to the local manufacturers or local brands.

And so it's much harder if you have an out-of-state brand to come in unless you have boots on the ground and are doing a lot of samplings and promotions.

Adam Steinberg (37:04)

outside of the dosing aspect, I'm curious what you're seeing in terms of what's getting the best response in the market in terms of flavors. I don't know if there's actually you're seeing any differences in like infusion process

are there people liking carbonated versus not carbonated example or anything else along those lines? then the second question on that front is like any holes in the market that you see on this front?

Jim Baudino (37:27)

Well, it's all over the map. And as far as what you like to drink and where you live and what's the, as far as flavor profiles and also carbonation, I think everyone has had a lot of seltzers. And so how do you get more complex formulations? And I know there's a lot more RTDs and we've got Klaus, which is definitely...

one from master mixologist, Warren, and that's something that we feel is gonna do extremely well in on-premise. And really taking an approach of the quality cocktail. carbonation, a lot of people like the non-carbonated, so you're seeing a lot of lemonade and teas. And so that...

I know if it's but I'm seeing definitely a lot more of those. And then you get differences in flavors from, we have blood orange, raspberry, peach, and cherry limeade. And so what one person likes, another one may completely not like. And so it always blows me away that everyone's not like me. Because if you like...

Adam Steinberg (38:32)

Hehehehe

Jim Baudino (38:37)

spin drifts or La Croix, then you may like the waters, the THC infused waters. But if you're used to drinking Mountain Dew or energy drinks, then you may like an infused soda.

Adam Steinberg (38:54)

Right.

Totally. It sounds like it's just all over the map. There's a bunch of different things working.

there's opportunities everywhere. You just got to do it right. It's kind of what it sounds like.

Jim Baudino (39:02)

And

I guess, and when you're saying, are there any holes in the market? So that is the holes. And that's why we're trying to fill those with, we've got a cider. So mollusks is our infused cider, it's a DL Glide cider and then the wine with herbace. And then beer is another big hole. There used to be some beers that were on the market, THC infused beers. It's hard to do. And the non-elk is growing so much faster than the infused.

Adam Steinberg (39:29)

True.

Yeah.

Jim Baudino (39:31)

But there will be, I'm sure of it, and some that you can't call it beer in some states. But I think that's a big hole that we'll start seeing, the non-elk beer infused with THC.

Adam Steinberg (39:42)

I

from a team standpoint,

what do the first two to three people look like that you would recommend a founder hire in this hemp THC space that if they're starting to get a bit of traction, they've been kind of a one man show, leveraging contractors and freelancers or whatnot, and

they're starting to feel like they need to bring in some full-time in-house people. What would you recommend or what do you typically see as the first two to three people that that founder should hire?

Jim Baudino (40:04)

We need someone to do compliance. And so that could be a contracted attorney or.

Hopefully someone you can have bring on that has fulfilled two roles. So, but that's a big one, obviously, and finance, understanding cogs, beverage experience. But really, if you're looking at nuts and bolts, the operations. Someone that's working with all the distributors, your supply chain, your 3PL, that will take up a lot of time. And someone that is a perfectionist and

really lays out the process for doing that. It's been quite a learning for myself.

I mean, I had an industrial and operations engineering degree at Toyota and did some lean manufacturing. But this, yes, it can get complicated.

Adam Steinberg (40:53)

for people that are listening that are looking to jump in the space

what roles are you seeing are most in demand right now?

Jim Baudino (41:00)

Yeah, compliance tops the list. And then anyone coming from Bev Elk that has the experience of launching brands and running brands, scaling brands, maybe not necessarily has one specific focus, but someone that has been able to be part of an emerging brand and help scale it so they can get that breadth of knowledge.

And then really anyone that's been involved with events and strategic partnerships, I that's going to be key going forward. And how do you build those out and the correct people to partner with?

Adam Steinberg (41:33)

Yeah, that's interesting.

Yeah, that makes a lot of sense though. I know you were saying this, know, festivals and some of that stuff has been really game changing. So that makes sense. Well, cool. Yeah, Jim, this has been great.

where's the best way, place to, for people to follow along with, with you and what you're working on and as well as,

all the portfolio companies and anything else exciting,

about what's going on in the portfolio before we, before we close it out?

Jim Baudino (41:53)

Sure.

So drink iconic tonics on Instagram and LinkedIn iconic tonics. We've got a lot of exciting things that we're working on. Unfortunately, I can't share right now. But I know there will be a lot of movement in the industry and we'll be part of that. so it's exciting times, but it's also stressful.

Adam Steinberg (42:04)

All good. Maybe next time.

Jim Baudino (42:15)

We're cheerleaders for the category and we're in it for the long haul. And, you know, we're doing our best to uphold the transparency and across the board. And, and I think the brands that continue to do that and be the good players will make positive progress. And yeah, I'm excited for what the, what the future holds. Yeah. Thank you for having me. Good seeing you again,

Adam Steinberg (42:34)

Yeah, likewise. Well, awesome, Jim. Appreciate the time. This has been great. Mighty.