Wana Brands CEO Nancy Whiteman knows the state markets as well as anyone in weed. She has grown the company to 15 markets including Canada since launching 12 years ago in Colorado. The company is profitable in every one she said.
Last year Wana landed a $300M payment from Canada’s Canopy Growth to be acquired once it’s federally permissible. But not even Wana, best known for its gummies, could make it work in California. The company recently said it was leaving the state after not turning a profit.
Wana arrived in California in 2019, just as price compression was kicking in Whiteman said when we spoke at Benzinga Chicago this week. “It came down to a pricing issue,” she said, calling California probably the most price-pressured market. On top of that retailers expect brands to pay slotting fees and offer BOGOs and other promotions.
- “If we had done that it wouldn’t have been a money making market for us,” Whiteman said.
- She said she is aware of situations where slotting fees exceed sales revenue. “I believe there will probably be a shakeout.”
- Of course Wana wasn’t immune to high taxes, the limited number of dispensaries, the rampant illegal market and other headwinds.
- “In general we try not to join the race to the bottom,” she said.
Looking more broadly Whiteman pointed to several factors for soft sales in several key markets:
- Consumers have less money and more places to go than they did during the pandemic.
- At the same time, Wana can benefit from falling THC prices since the cannabinoid is the most expensive input in their cost structure.
Wana uses the “asset light” model which involves finding manufacturing partners in each market. Rather than compete against dozens or more gummies in California, Whiteman likes venturing into newer, smaller markets like Montana and Arkansas where there’s less competition, and it’s often local.
- Since the Canopy deal, Whiteman also endowed The Wana Brands Foundation which partners with local charities on food security, domestic violence prevention, voter registration and other causes.
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