When the Colorado-based founders of Spherex decided to move from a business-to-business extraction company to a lifestyle brand with its own line of products, they focused on building a sustainable business with the goal of eventually expanding into new markets . With a launch in California and planned entry into the medical cannabis market in Oklahoma, the company is quickly realizing this goal.
“People like the brand – they respond well to it,” Michael Green, chairman of Spherex, told the Cannabis Business Times. “People like our products. We want people to feel comfortable with our products. So we want to expand this in a smart way. … What you see [elsewhere] If people are just collecting money or running out of money and then have to collect money, we are slow and steady. It’s a marathon, not a sprint. We make sure that we can control our own destiny and make the decisions we want to make. We believe these are the best business decisions and the best way to get our products to customers. “
As Spherex expanded its brand to California, the team quickly realized how competitive this particular market can be and decided to take a different approach on their next expansion plans.
“We felt that if we were to expand again, we should look at markets that are growing fast but not quite as developed,” says Green. “It took us two years to bring our product from the first iteration to today, and we felt we could go into fast growing markets that weren’t quite as advanced and we’re bringing our quality product Then we have a really good chance of being successful and competing in meaningful ways. “
A friend of Spherex’s chief technology officer had moved to Oklahoma after running a laboratory in Colorado, which led the team to consider the Oklahoma market as a possible next stop.
“After the data confirmed that Oklahoma was the fastest growing state and model for deregulation, I think we were all on our way,” said Green. “We have to get to Oklahoma – let’s get it hit in a huge way.”
Photos courtesy of Spherex
With Pax Vaporizers, Spherex is the first brand partner in the medical cannabis market in Oklahoma.
Pax Vaporizers enabled Spherex to be its first brand partner in Oklahoma, an opportunity that is particularly exciting for Green.
“Pax is a completely different product and demographic, and I’m excited to bring this product and experience to users in Oklahoma,” said Green. “We have a great relationship with Pax and are a brand partner in Colorado, California and now in Oklahoma. Using our relationship with them to be the first branding partner in the state has been very exciting for us. … people are pretty excited about some of the features of Pax technology, a well known platform that is pretty exciting, and some people have never heard of it, … but we’re especially excited about Pax just because it’s a new experience that the market in Oklahoma has not yet seen. “
In addition, Spherex partnered with 1440 Processing LLC, a vertically integrated cannabis company, to bring its own line of products to the Oklahoma market. 1440 Processing is licensed to manufacture and sell Spherex products. The Spherex team has worked with the company to ensure that their formulations are consistent with Spherex products in other markets.
“[We need them to create] It’s a product we’re all used to and which is consistent with our product in Colorado, ”says Green. “We spend a lot of time working with them to make sure what comes out is what we want.”
Trust is the most important factor when Spherex is reviewing potential partners in new markets, he says. “At the end of the day… people have to do what they say. Cannabis has all kinds of characters, some good and some not good. I think first and foremost you want someone you can trust. “
The team also looked for companies that stood out for their performance.
“If you take the next step, you need people who are competent at extraction [and] competent in the laboratory with the formulation, ”says Green. “Even if you give someone your SOPs and say: ‘That’s how we do our things’ [they must be able to execute]. … Just having the manual that says how to do it doesn’t mean you can do it. “
After all, it is important to choose partners who have a good reputation in the market, he says. “You come in and represent your brand. The label says “Made by 1440 Processing LLC” and you want to make sure you choose a partner who has a good reputation there. “
While the economics of the partnership are also important, it should never be the deciding factor, says Green. “Of course the economy has to make sense, but it’s not about who makes you the best offer … because if it doesn’t turn out well, it won’t do you any good.”
According to Green, one of the challenges in any new market is finding a balance between involving your own sales team and hiring local staff to sell the product in a way that respects the local market. Companies should never act as outsiders, he says.
“Come on in the market and understand what this market wants,” says Green. “We’ll take our product and our quality, but we’ll make sure we do it that way [shows] We are one of them and not an outsider telling them what to do. I think it’s a balance of [our] sales [team] say, ‘Hey, we have a great product. We believe you will like it, but you will also be sensitive to the wants and needs of this community.
Creating a consistent product for a new market is always a challenge as the company works to find high quality biomass and the right source of biomass.
Oklahoma’s sheer size is likely to present another challenge.
“It’s not as densely populated as Denver [or] Los Angeles, so you really have to think about sales and how to get to the other end of state and what that looks like, ”says Green. “Part of the strategy is the basic game of getting people into stores, building those relationships with budget tenders, and giving demos of your product. I think running this team is a bit of a challenge to make sure we have enough boots on the ground in the state to get the job done. “
Spherex is working with 1440 Processing LLC, its brand partner in Oklahoma, to ensure that the products they make are the same as genuine Spherex in Colorado products.
Spherex also had to rethink what products to lead in Oklahoma’s emerging market. While the company originally planned to launch its half-gram vape cartridges, it has since opted to go with its one-gram carts instead, Green says, based on sales data. (One-gram cartridges sell seven times as fast as half-gram cartridges, he says.)
The company will continue to oversee Oklahoma regulations and ensure it is flexible enough to implement changes as the legal framework evolves, Green adds, and the Spherex team is also closely monitoring market growth.
“I’m just watching the number of patients grow, and I’m looking at the sales data in terms of how much the state is likely to grow this year,” he says. “Last year it was $ 250 million in 10 months, and this year the state is forecast to have revenue of $ 700 million. To put that in perspective, all of Colorado is making $ 1.1 billion or $ 1.2 billion. So it’s really phenomenal that Oklahoma is 65% to 68% of the volume of Colorado for its sophomore year all if it’s just med, and I’m very excited about the opportunity. “
The long game
Once Spherex officially launches its products in Oklahoma in the coming months, it should be in 70% to 80% of state pharmacies within six to eight months, Green says. The company also plans to launch its sparkling THC-infused drink in the state in the next few months.
“I think with a quality product and a quality team, that’s doable,” he says. “I think the market is hungry for more products – product variety [and] more quality products. So the goal is to be very present. “
The state has licensed more than 2,000 pharmacies, which has resulted in Spherex adopting a different strategy than Colorado and California.
“There are more [stores] In terms of population than Colorado, so I think you need to adjust your expectations, “says Green. “Shops don’t sell as much as individual shops. [but] That doesn’t mean you don’t have a good volume [cumulatively]. It just means that a good store in Colorado could order a ton of products, but there isn’t another store within a mile that Oklahoma looks more like the Starbucks scenario, where there are three on each block, considering how many licenses are issued for the number of people there. With that in mind, we want to be a branded brand and be present in many stores as quickly as possible, and we think that being smart is doable. “