Q (Grayson Mask): Before the concept of Cali Sober was even a spark in your imagination, had you been involved in the consumer industry or had any experience in product creation?
A (Flip Croft-Caderao): Yes and no. After college, I founded an advertising agency and worked extensively on marketing for consumer packaged goods (CPG) products, with AB-InBev being our largest client. This allowed me to do a lot of marketing for beer and their other beverage products. However, my experience was more on the marketing and advertising side, not product creation. Fast forwarding, I shifted from agency life to start Goodekind with my sister, focusing on organic hemp products. This was my first real dive into product development, handling everything from design to supply chain, though it still didn’t fully prepare me for creating a beverage product. So, my experience is a mix of relevant and not quite, marking my venture into beverages as my first real introduction to this area.
Q (Grayson Mask): Considering your background with hemp products, was there a specific moment or realization that led you to identify a significant need for a CBD and THC beverage?
A (Flip Croft-Caderao): Absolutely, there’s been a collective anticipation within the industry for some time about integrating cannabis into more accessible forms, like beverages. The growing interest among the “cannabis curious”—those new or returning to cannabis—highlighted the need for alternatives to traditional consumption methods like smoking. Edibles were an initial step, but the idea of cannabis-infused drinks always seemed like a natural evolution, offering a simpler, more familiar way for people to enjoy cannabis.
The technological challenge of creating a water-soluble THC emulsion that could be mixed into drinks was significant. It’s something that has only recently been overcome, particularly for the hemp-derived THC that’s federally legal. Around the end of 2022 and the start of 2023, we saw breakthroughs that allowed us to use Delta-9 THC from hemp in a water-soluble form, marking a turning point for the industry and for me personally. Around this time, I also decided to quit alcohol, which led me to explore what being sober in today’s market meant. The lack of viable non-alcoholic alternatives in social settings was apparent. This personal journey, combined with the advancements in THC beverage technology, was pivotal. It wasn’t just about creating a new product; it was about addressing a broader market need for enjoyable, socially acceptable alternatives to alcohol. That’s how Cali Sober came to be—a culmination of industry readiness, technological innovation, and a personal quest for meaningful alternatives to alcohol.
Q (Grayson Mask): Could you explain the CBD to THC ratio in your products, and whether consuming Cali Sober is more akin to a CBD relaxation or a THC high?
A (Flip Croft-Caderao): Cali Sober is focused solely on delivering a THC experience, as we’ve removed CBD from our formula based on consumer feedback from our soft launch. We found that while people weren’t particularly interested in CBD, they were very much seeking the mood-altering effects provided by THC. Incorporating CBD in significant amounts could potentially diminish the psychoactive effects of THC due to the way they interact within the endocannabinoid system. Our product contains 5 milligrams of Delta-9 THC, the same compound found in cannabis from dispensaries in states like California and Colorado, but derived from hemp to maintain federal legality. This amount of THC offers a moderated experience, akin to about half an average edible dosage but with a quicker onset and shorter duration due to its water-soluble formulation.
Drinking our THC beverage differs significantly from consuming edibles. The water-soluble THC leads to a faster absorption into the bloodstream, similar to the onset time of alcohol, making the experience more manageable and shorter. The high lasts about 45 minutes to an hour, unlike edibles, which can take longer to kick in and last several hours. This quick and predictable effect, along with the ability to microdose, provides users with a more controlled experience, mirroring the social and manageable aspects of drinking alcohol but with the unique benefits and experiences of THC. This approach also ensures that by the time you might need to drive or engage in other activities, the effects have likely passed, promoting a safer consumption experience compared to longer-lasting alternatives.
Q(Grayson Mask): During your initial launch and soft opening, did you encounter any other significant lessons besides the consumer preference against CBD? And how did you manage to pivot so quickly based on the feedback regarding CBD?
A (Flip Croft-Caderao): The transition away from CBD wasn’t as quick as one might assume. After our first run, which we test marketed in 30 stores, we did extensive consumer research and learned a great deal from direct customer feedback. Despite the success of selling out our first run, we had to make the tough decision to pull our product from the market for two to three months—a move that could have been fatal for most brands. This period wasn’t quick; it required us to go back to the drawing board, reformulate our product without CBD, revamp our packaging, and overhaul our entire supply chain, including finding a new co-packer and manufacturer.
We essentially started from scratch, armed with the knowledge we had gained but concerned that the market might move on without us. We relaunched in Nashville with new formulations and flavors, and despite the hiatus, we found remarkable success, partly due to forming partnerships with major distributors even when we didn’t have products to sell. This unique situation, where significant distributors like Lippman Brothers in Tennessee agreed to wait for our products, speaks volumes about the potential they saw in our brand and the rising interest in the THC beverage category.
Our experience underscores the challenges and opportunities of being a startup in a new and evolving market. We’ve been fortunate enough to navigate our startup phase with a measure of success, learning from our mistakes and capitalizing on the growing consumer interest in legal cannabis products. Our ability to secure shelf space and convince retailers of the legality and demand for our product has been a significant part of our journey, demonstrating the unique position and potential of our brand in the current market landscape.
Q (Grayson Mask): In terms of selling THC products, are there specific states where it’s more feasible, or can you sell anywhere due to the federal legality of your hemp-derived products?
A (Flip Croft-Caderao): The legality and distribution of our THC products are heavily dependent on the state you’re in, even though our product is federally legal because it’s derived from hemp. This distinction is crucial, as it means our product is legal at a federal level, offering a degree of protection against legal issues such as arrest or fines for possessing our product.
However, despite the federal legality, individual states have their own regulations and restrictions concerning products like ours.
For example, we have distribution in states like Texas, Tennessee, Massachusetts, and New York, each with its unique stance on THC products. Texas, surprisingly, has no restrictions on our product, while Tennessee is introducing regulations like age restrictions and requirements for how and where the products can be sold. Massachusetts and New York have their own sets of regulations, with New York currently under an injunction that temporarily lifts certain restrictions, allowing us to sell there.
This complexity requires us to stay updated on state-by-state regulations, which can be quite challenging. Despite these hurdles, we’ve managed to make our product available in 43 states, either through direct distribution where possible or by shipping directly to consumers and stores in states where we don’t have formal distribution. This approach includes educating stakeholders about the legal nuances, like injunctions that impact product availability and distribution strategies, making our job fascinating yet intricate as we navigate the evolving legal landscape of THC products.
Q (Grayson Mask): Regarding on-premise locations, beyond the legality, have you encountered any challenges in selling THC products compared to traditional alcoholic beverages? Do these establishments inquire about customer demand for THC products?
A (Flip Croft-Caderao): Interestingly, the reception to THC products in on-premise locations like bars and restaurants has generally been positive. Many see the potential appeal of THC-infused mocktails, particularly from the standpoint of offering a non-alcoholic alternative. It seems that for many consumers, the absence of alcohol in a product is as significant, if not more so, than the inclusion of THC. This positioning has served as one of our greatest strengths.
However, the primary concerns we face from on-premise locations revolve around legality and licensing. Questions like, “Is it really legal?”, “Will selling this product jeopardize my liquor license?”, or “Could I get arrested?” are common. Once reassured of the product’s legality and the lack of risk to their licenses, most concerns are alleviated.
We’ve also encountered some moral objections to selling THC products, with certain business owners expressing a categorical refusal to stock them, based on personal beliefs against THC. While these instances present a challenge, they are relatively rare. The broader market seems open to and interested in THC products as a viable option for consumers looking for alternatives to alcohol. Our experience suggests that while not every venue will embrace THC products, there is ample opportunity and interest among those who see the value in offering them.
Q (Grayson Mask): With the success of your brand being amplified through community partnerships, such as events with class studios, how do you select which partnerships to pursue? What qualities do you look for in potential community partners?
A (Flip Croft-Caderao): The selection process for our community partnerships is less about actively seeking out partners and more about attracting those who resonate with our brand’s vision and values. Having built several businesses and worked on numerous brands throughout my career, I’ve learned the importance of creating a brand that naturally pulls people in. This involves not just having a compelling product but also a compelling story and a position in the market that strikes a chord with people.
Our approach has been to focus on creating a strong brand identity and narrative that clearly communicates who we are, what we stand for, and why we exist. This strategy has led to a situation where event partners, employees, distributors, and others come to us, expressing interest in collaboration. They’re drawn to the vision and mission of our brand, seeing a natural fit with their consumer base or community.
When considering potential community partnerships, we look for alignment in understanding and embracing what we’re trying to achieve. It’s crucial that our brand and products fit well with their consumer base, and often, these partners reach out to us with a clear understanding of this synergy. For instance, class studios see the value in offering our non-alcoholic THC products as their customers are increasingly seeking alternatives to alcohol.
Our success has also been notable in non-traditional venues where alcohol isn’t sold, such as bodegas, delis, and yoga studios. This flexibility in where our products can be placed, alongside traditional on-premise and off-premise alcohol selling locations, demonstrates our unique position in the market. We’re a non-alcoholic option that provides a desirable change of state or mood, fitting neatly into various settings and meeting the diverse needs of consumers looking for alternatives to alcohol. This strategy of attracting like-minded partners and being open to collaboration across a wide range of venues has been key to our growth and the broad acceptance of CaliSover in the marketplace.
Q (Grayson Mask): As Cali Sober is relatively new to the market, what future goals or directions do you envision for the brand in the upcoming year or beyond?
A (Flip Croft-Caderao): Being only four months into our market presence, our immediate goal is to deepen our penetration in the states where we currently have distribution. Given our status as a startup and my approach as a practical entrepreneur, we’re focused on making the most of our investments and carefully considering our expansion. States like California, Chicago, and potentially Florida, depending on hemp regulations, are on our radar for future expansion.
We’re open to adapting and pivoting based on market demands and regulatory changes, including exploring new SKUs or product formats that might appeal to a wider range of consumers, such as stronger THC options for those seeking more potent effects.
Our primary mission is to get our product into as many hands and mouths as possible. This could involve expanding to new states, introducing new formats or SKUs, or any number of strategic moves. The overarching goal is to increase product accessibility and experience.
Looking further ahead, we’re excited about the potential of THC beverages becoming a significant market force, akin to the craft beer or hard seltzer trends. With the alcohol industry facing a gradual decline and the rise in health-conscious consumers across all demographics, we see a growing market for non-alcoholic alternatives that offer mood-changing benefits. The interest from investors and the industry, combined with changing consumer behaviors and the decreasing stigma around cannabis, suggests a promising future for THC beverages.
As the market continues to evolve, we’re prepared to scale rapidly and extend our national presence to meet the growing demand for THC-infused drinks. This vision includes staying attuned to market trends, consumer preferences, and regulatory landscapes to ensure that Cali Sober remains at the forefront of the THC beverage industry.