2019-06-01_Market_Watch

70 MARKET WATCH | MARKETWATCHMAG.COM | JUNE 2019

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rinks industry veteran Smoke

Wallin transitioned to the canna-

bis business early last year, becom-

ing president of Vertical Companies., a

vertically integrated producer and distrib-

utor of cannabis, hemp, and CBD prod-

ucts with operations in California, Arizona,

and Kentucky. Danny Sullivan of

MARKET WATCH sister publication

Shanken News Daily recently met

with Wallin to discuss the parallels

between the beverage alcohol and

cannabis markets, as well as Verti-

cal’s brand portfolio and distribu-

tion operations.

SND: Where do you see Vertical’s

place in the cannabis industry?

Wallin: One big difference in

cannabis, compared with beverage

alcohol, is the allowance for verti-

cal integration. We’re able to grow,

cultivate, extract, manufacture,

distribute, and—if we want to—

retail. But our company strategy is

focused on building brands, not

becoming a big retailer. We have

35 brands of cannabis that have

either already launched or are

launching in different categories,

as well as hemp and CBD separately

under our Vertical Wellness

company. In the licensed system,

California is so much bigger than

everywhere else. We believe the big brands that will become

national brands are going to start in California.

SND: How are you approaching the brand-building process?

Wallin: If you win in California, you have a real brand. It’s

pretty open, and the marketing tools we have are similar

to those in the alcohol world. We have celebrity brands

and events, and we can do live tastings or their equivalent

at events. We have billboards in Los Angeles. We have

some restrictions—social media companies won’t let us do

a direct spend, for example. But we’re partnered with rapper

The Game on his brand, Trees, and he’s talking about it on

Instagram, where he has millions of followers. We’ve also

partnered with brands that are working in Colorado and

Nevada, where the markets for adult recreational use are

more mature than California’s. When we

see a winner there, we’ll take it to Cali-

fornia and look to expand it.

SND: What are some examples in Colo-

rado and Nevada?

Wallin: In Colorado, one of the major

retailers is called Starbuds. They

have 13 stores and sales of about

$100 million. They have a brand

called Kaviar, which is an extract and

high-end pre-roll brand. In Nevada,

the No.-1 edible brand is called Ever-

green Organix, a premium product

sold in about 40 stores, that is also

the highest-priced edible. Evergreen

does approximately $30 million a

year on its portfolio. So we’ve exclu-

sively licensed that brand for the

state of California, and we’ll start

producing it this month.

SND: How has the transition from

beverage alcohol to the cannabis

world been for you?

Wallin: I’ve been involved in

cannabis for 15 months now, and

it’s moving so fast that it’s like

drinking out of a fire hose. The

similarities between the beverage

alcohol and cannabis markets

include the state-by-state regula-

tory framework, a licensed system

of producers—in some cases distrib-

utors—and then the retailers or dispensaries. In terms of the

differences, in cannabis there are so many different forms of

product. You start with the flower, but can also extract the

oil to vape or to create edibles, beverages, patches, tinctures,

lotions, and medicines. That was probably the biggest learn-

ing curve for me. And we’re still in the very early days of the

business, so the possibilities are huge.

SND: What’s happening with Vertical’s CBD arm, Vertical

Wellness?

Wallin: We invested pretty significantly in Kentucky last year

and set up a hemp operation. We harvested 100 acres the first

year. We have a 90,000-square-foot manufacturing facility

where we’re extracting CBD from hemp, and we’ve started

putting brands together. When the Farm Bill allowing commer-

As its name implies,

Vertical has a

presence at all tiers

of the cannabis

industry

Interview: Vertical Companies

Smoke Wallin leads a cannabis venture with 35 brands in the portfolio

A longtime presence in the drinks sphere, Smoke Wallin

(pictured) transitioned to the cannabis market last year,

joining producer and distributor Vertical Companies.