Lars Miller (
00:00.91)
Welcome back to the free spirits podcast where we dive into the functional and THC beverage industries. We will be exploring the brand stories and operations that redefine how we relax, connect and socialize. I'm your host Lars Miller here with my co host David Gonzalez. But before we jump in, a quick reminder, be sure to check out our YouTube channel, subscribe and follow us on whatever podcast platform you use. You can find us in all of them and please rate and review us. It helps us grow. Joining us today is Lisa Hurwitz, president and co founder of Happi
a low dose THC beverage brand that's redefining the Happi hour experience. Lisa brings a wealth of experience from her time leading marketing efforts at grassroots cannabis where she scaled the company into a multi-state operator before its acquisition acquisition by care leaf for $130 million. Since launching Happi in 2021 Lisa has been at the forefront of innovation in cannabis beverages blending cannabinoids like THC, CBG, CBN and THCV with functional ingredients such as LinesMain to craft drinks.
that are wellness focused as they are social. Welcome, Lisa.
Lisa (
01:04.35)
That was a mouthful. Thank you, Lars. You did that perfectly. I know it's hard to talk functional beverages and ingredients. So thank you for that intro. I'm excited to be here with you and David.
Lars Miller (
01:05.331)
Hahaha
David Gonzalez (
01:15.177)
Awesome, well Lisa thanks so much for joining us. So Lisa, last time you and I got a chance to connect, you were calling in from somewhere I imagine not a lot of our listeners have ever been before. Where was that?
Lisa (
01:29.65)
If I had to guess David, I would guess Nicaragua, Central America.
David Gonzalez (
01:32.794)
That's absolutely correct. So Lisa, my first question for you is, as somebody who is leading this brand, what is it like to work from a place like Nicaragua, but also have this burgeoning new brand in this US marketplace?
Lisa (
01:48.436)
That's an awesome question. And actually, I'm probably giving this away a little early, but I am going to start a sub stack newsletter to be able to sort of write about and hopefully launching that in January. So more to come for your followers. But.
David Gonzalez (
01:56.038)
wow.
Lisa (
02:02.386)
to write about both my experience as sort of an expat and my experience running Happy because they actually were born around the same time. it's ironic today I'm sitting talking to you guys on December 2nd. We left for Nicaragua on December 5th, 2020, kind of in the height of COVID, working remotely, remote school. I think we all remember that time. And the idea was I was trying to get Happy off the ground with my business partner, but also trying to keep my family sane.
during COVID, and we said, hey, let's move from Chicago to a warm weather place for three months. Three months turned into six months. Six months turned into basically four years. Sold houses in the US. Became really more full-time residents down here. So I'm back in the US quite often. What I would say is this lifestyle down here keeps me really honest, and it keeps me in touch with.
sort of nature and plants. And it reminds me of like the root of Happi, to be honest with you. I'm always sort of thinking about new flavors. Like right now we're talking our spring, summer, seasonal and tropical flavors. I live in the land of pineapple and watermelon and guava and papaya. And so it provides David a lot of inspiration. And what I would say,
Personally, as I spent my whole career in the corporate world on airplanes and traveling a lot, and I like to call this experience like the Happi effect. When I found a lot of joy and happiness in being in nature, being in Nicaragua, learning to surf, being in the ocean, it's when Happi started to get really exciting and be born. It's when it felt like it kind of became alive as a brand and those two things coincided. it's a lot of fun to be able to gain
inspiration being down here and then bring that to consumers and into our processes and ingredients and formulas that we manufacture Happi in the US.
David Gonzalez (
04:01.006)
that. So basically you have immersed yourself in an environment where the flavors are kind of ingrained in a culture and you can use that experience to help with a product roadmap. That's pretty unorthodox but impressive nonetheless. Thank you.
Lisa (
04:15.966)
Thanks. Yeah, it's fun. One of the ones I like to talk about, we drink a lot of passion fruit down here. It's one of my favorite flavors. I don't know if we'll make it into a Happi, but stay tuned, maybe. And it's called calala in Nicaragua. Passion fruit, for some reason, the Spanish word here is calala, not maracuya, which is in other places. And I'm always playing with it without the THC, but I'm always playing with different botanicals and different fruit flavors and just trying to really lean into sort of the plant-based
Lars Miller (
04:16.684)
you
David Gonzalez (
04:21.997)
Yeah.
Lisa (
04:45.932)
nature of what these drinks really are, which I think is the root of what makes them so exciting is there's so much you can do with these beverages that has not yet been tapped. That's what keeps me really excited.
David Gonzalez (
04:59.609)
Absolutely.
Lars Miller (
05:00.338)
The tropical flavors are definitely some of my favorite passion fruit, dragon fruit, and mangoes, especially down here in Florida, we get a lot of mango tree thieves, if you will. So, know, leading Happi, you're among some of the few women leading a THC beverage company in the industry that remains pretty male dominated. What has your experience been like navigating the space as a female leader and have you seen any positive shifts in the landscape?
Lisa (
05:31.23)
I'm really glad you asked that question. I feel like we don't get to talk about sort of the gender differences in this category. And what I'll say is it's disappointing, Lars. I think I feel the same way I did when I left the regulated cannabis market four years ago. So when I left grassroots, I joined forces with some of the most amazing women in the cannabis industry. And we formed a women's group called Wink, Women in Cannabis. And for four years, we met monthly. The group still very much in touch.
a big group of them are getting together at MJ Biz this week.
But I would say more women have fallen out of the cannabis and hemp categories than have come into it over the past four years. And I think that's just a testament to, again, lots of other factors, lack of funding, lack of support for senior women in a lot of these lack of board seats. Even if you look at the MSOs, I think their boards have shrunk in terms of the number of women on those boards. And so it's just, I think it's frustrating from a diverse
And the other piece to it is I know, you know, know Hapy's consumer base is very, very strongly women consumers, in addition to men, but we tend to really reach women with our flavors and our branding and marketing. And I've seen so many of these hemp beverages, you know, try to reach women. And I think what makes Hapy different and special is like buy women for women, right? I often think of, you know, my peer group and my friends and my
family as we're designing beverages and what would I want to drink in this occasion, right? And I think, you you see this a lot, but if you're a high dose stoner man, trying to design for that target audience is harder than it looks, right? So I think there's an authenticity and Happi that makes it feel a bit different. And I think my experience is I'm kind of used to being one of the few. And I like the challenge. like it. There's a bit of an underdog mentality.
Lisa (
07:33.872)
And I actually enjoy being in that position. Of course, I wish there were more women around me and at HAPI, 80 % of our team is female, 50 % of our cap table is female. So we make a big effort. But I think it's just systemic in the industry right now that there isn't enough funding and there aren't enough female leaders.
Lars Miller (
07:55.43)
Yeah, so you mentioned a few things there around your branding as well as your team being 80 % female-led there. So how are you actively shaping the messaging and creating that inclusive environment both internally as well as your consumer-facing messaging?
Lisa (
08:15.528)
Yeah, mean, internally, you know, we just have a lot of support overall for the team. But in terms like we have a mission vision, mission vision values for Happi, that's very inclusive, very much about, you know, we kind of walk the talk, right. And I think that's really important. And my business partner, Joe, who's a man and I have been very clear about wanting diversity. We believe diversity breeds the best ideas. It breeds the best cultural internal
There's a lot of healthy debate amongst our team. We get together at least weekly. We have a Slack channel for our sales team. We communicate a lot and we share lot of ideas.
And I think it's just a very supportive, inclusive environment, which feels inclusive to women and men. We, of course, have many men on our team as well. So it's really sort of living the values of who we are as a company and believing that there really is a Happi for any occasion and that we bring happiness. I mean, we deliver happiness. That's really who we are as a business and a brand. And I think in terms of consumers, too, we get a lot of feedback, Lars. We get a lot of reviews. We get a lot of people writing.
in and saying, I had no idea that just cutting alcohol for a month or substituting Happi, you know, for my weekly wine before bed would help. And I think what comes across and what attracts women is it's low calorie, it's all natural, it is functional in nature. So we are not how high can you get as a beverage, we're a microdose beverage. And we were, you the three of us were talking about microdose earlier, right? It's
Lars Miller (
09:52.489)
Mm-hmm.
Lisa (
09:54.098)
I think it's important that this is a drink that's sessionable, that you can have several of them over a period of time. And I also think HAPPY has aimed to be part of multiple beverage occasions, not just social drinking, not just that wine replacement, but also, could I have a HAPPY before bed and it helps me sleep? HAPPY dance, could I drink it during the day and it keeps me feeling kind of focused and upbeat and engaged, right? So our goal is to design products
for every drinking occasion and make those products as healthy, as effective, as delicious, and as accessible as possible, right? So I think that really appeals. We seem to be replacing wine more than any other beverage is the feedback we get.
David Gonzalez (
10:43.555)
I love that response. so they said, you guys are doing a ton to help elevate women in the space. At same time, you're also just leaders yourselves, regardless of whether it's for women or just in general across the category. does a phenomenal job of pushing the category forward. Testament to your work at the US hemp round table, as well as all the work you do behind the scenes. And so to me, that's a big testament of who you are and where you came from.
And so I know you had a conversation with Lars during the Founder Spotlight a bit where you talked about your time at Kimberly Clark, you've talked about your time working for recreational cannabis.
As this category evolves and move forward, what kind of lessons do you think you'll be able to take or that you've taken already from both CPG and from adult use cannabis and applying that to hemp? And do you see this marketplace gravitating one direction or the other? Do you see it playing out more like recreational? Do you see it becoming more like CPG? How has your back on your experience kind of helped you find this new niche that skates somewhere down the middle?
Lisa (
11:50.57)
That's an awesome question. And by the way, thank you for the kind words. feel like this is, yeah, it's nice to be with you guys.
David Gonzalez (
11:53.571)
Of course.
Lisa (
11:57.694)
Get to talk shop. think, know, God, the number of times I wish I had a crystal ball and could look into it and say, I'm this whole category does, right? Regulated cannabis has been a tough road for the past few years. It's just been a challenge with all the setbacks. And I would say your analysis, David, is very astute. I think this category is straight down the middle. It's somewhere between. It's a highly regulated CPG category. I think what is challenging is there is no clear regulatory framework.
So we're not fitting in where alcohol and tobacco fit, but we're also not as regulated as regulated cannabis. So it's a gray area and it's holding the industry back. I personally see signals since the election that there is more concern, you know, just from the investor community and the regulators around regulated cannabis than there is hemp beverages. I think there is a clear sense that
hemp beverages could be slotted into a regulatory framework that looks more like alcohol. And so I think what's challenging for me from my CPG background is like, you know, there is no concern about toilet paper. There is no concern about Kleenex or, you know, those things are fairly.
routine and have been manufactured in the US for a very, very, very long period of time, right? And I think what's tricky is we're already in a highly regulated category because these are, you know, this is THC and we're talking alcohol and there are regulatory bodies in the US. Hemp is squarely sitting in the middle. And I think if I had to, you know, look at the future, I think it's going to move towards alcohol and I think it's going to move towards, it's much more like a CPG category overall.
because a dispensary is kind of a weird retail environment. It's like the cannabis industry had to create their own retail stores because of the regulations, right? And it's kind of weird. Like, I don't know, 10 years ago, how many people knew what a dispensary was, right? Nobody. I mean, very few, maybe in some small states.
David Gonzalez (
13:48.719)
Hmm.
David Gonzalez (
13:55.78)
Right.
Lisa (
14:06.224)
This, in where hemp is going, there isn't as much change. We're not creating new retail. We're going into Total Wine and Top Ten in Minnesota and Binnie's in Chicago.
And so while each state is different, and that's where it mimics adult use a little bit, or it's moving more towards adult use, and that each state is putting their own regulations in place, there isn't as much of a drastic change as away from traditional retail and traditional distribution and all of the sort of infrastructure and supply chain you see in traditional CPG. Hemp is following that more. Cannabis is a whole different beast because it's so
David Gonzalez (
14:36.698)
Mm-hmm.
Lisa (
14:48.33)
everything has to be obviously grown, manufactured, and sold in the same state, and that just really, you know, cuts off any ability to scale. There is scale in hemp. It's just not quite as open as toilet paper.
David Gonzalez (
15:04.68)
Of course. Yeah, I think that's great call out. think the two things that came to mind were on the recreational side, have each market looks, operates, feels different. And you see that same parallel on the hemp side, even though there is interstate commerce. But what stood out to me was that if you look at where the customer actually is and the infrastructure and points of distribution, you're right. It's not where recreational cannabis is. It's at these different
types of retailers and you're right, there probably will be a day where we see the big box retail hop in here. But it's refreshing to see it sold alongside of alcoholic beverages, seeing it at gas stations, convenience stores, et cetera. It's much more ubiquitous, therefore, out in the open than your traditional cannabis, which has been relegated to these dispensaries, absolutely.
Lisa (
15:56.81)
Yeah, and I think from a consumer perspective, just to add on to what you said, dispensary is a very odd.
experience because you're walking into like a weed store and if you're if you're not comfortable that is a challenging retail experience like what is the what is flour what are vapes what do i ask for what's a strain there's i mean i my backstory is i had a medical card in illinois and i kind of self-taught myself cannabis in 2017 and that's what really got me into the industry i had no idea i got fingerprinted and
like background check just to get a medical card in Illinois at the time. And it's really intimidating. So I think what's so exciting about the hemp beverage space is if it sits on a shelf right next to your favorite beer or seltzer or wine, it just feels more like something you would want to drink. Even if it's the same as what you were selling in a dispensary, that environment and that sort of social proof that it's right next to alcohol
I think is a much easier sell for consumers. that makes this category really exciting.
David Gonzalez (
17:05.065)
episode.
Lars Miller (
17:07.3)
I am very much looking forward to the day where I can walk into a Target and see some happiness up on those shelves. So Happi positions itself as both a wellness product and a social beverage you've mentioned, you know, the natural products or ingredients I should say, and you know, bringing happiness to the table. So how do you manage the messaging around these somewhat dual?
Lisa (
17:14.634)
You're Lars.
Lars Miller (
17:32.774)
purposes and do you see any potential conflicts or synergies appealing to both the wellness focus customers and those seeking a social drinking experience?
Lisa (
17:44.008)
Yeah, I think it's one and the same. think consumers change their mindset for different drinking occasions. mean, I'm one, right? Sometimes in the morning, I'm having a protein shake or a smoothie or something that's more workout focused. And then in the evening, I might want a Happi cocktail or to socialize, a mocktail. So I think consumers change their beverage habits throughout the day. And our goal was to own
The the beverage occasion, right? There's a Happi for every occasion and we have kind of the ability to be there so I think again that same consumer is very consistent in in who she is like throughout the day and She likes to have a different Happi for different purposes. And so we are seeing For our consumer, for example, relaxation is the number one reason they drink Happi period full stop They like it at the end of the day to relax
We're also seeing some insights, which I find this is really fascinating, that a lot of our consumers, and this is okay, I want to make this point, like alcohol is not all bad. If people want to have a glass of wine on the weekend or a cocktail, that's great. Just...
You know, we believe that that HAPI and hemp-derived beverages can help you be a little bit healthier. And what we're seeing is HAPI is actually being consumed more during weekdays and replacing the weekday drinking occasion more so than the weekend drinking occasion. And I think that's really interesting. And I think it's...
a of a stepping stone and we're going to see that trend continue where instead of having a glass of wine at dinner, you know, when I'm just home or instead of watching Netflix and having a nightly glass of wine, I'm now drinking a Happi. But if I want to go out and socialize and go to bars on the weekend with my friends, it's OK to have a glass of wine or a margarita or a Negroni because that's a special celebratory occasion. And once consumers get more familiar with cannabis, the way they're familiar with
Lisa (
19:50.46)
alcohol, I think those social drinking occasions are going to start to shift. But what we're seeing shift first are the weekday drinking occasions. And I think there's actually more overlap, Lars, in the weekday drinking occasions between wellness and functional and social, and that sort of alcohol replacement, I guess I would say. And so that is where Happy Sweet Spot is now. And we're really excited to be there, because I think that's where we want to be.
Lars Miller (
20:06.339)
Mm-hmm.
Lars Miller (
20:18.511)
I love that you mentioned the weekday replacing the weekday drinking. It's a message that has kind of echoed through some of our previous conversations of it's not that alcohol is the problem. It's the alcohol abuse is the problem. And it's not that these beverages want to take on the entire alcohol industry, but just kind of be there for more mindful experiences for the consumer.
Lisa (
20:45.575)
Exactly.
David Gonzalez (
20:47.065)
So Lisa, you've mentioned that Happi, you're straddling this functional, this wellness element, and I think that really stands out in the formulations and the ingredients that your team uses. You were the first drink where I saw both CBG and CBN in the same cocktail. It's also obviously THC. We talked about the THCV drink, your newest one, which I am beyond excited to try out. I'm a huge fan of THCV.
Lisa (
21:13.598)
No, you need to give me your address, David, and I'll send you some right after this. Yeah, for sure.
David Gonzalez (
21:15.454)
I will. I would love to try some. And even Lion's Mane, which is obviously kind of a tangential ingredient in and of itself. So there's this blend of psychoactive components, therapeutic components, even anotropic effects, if you will. So how did your team come up with these different ingredient profiles? You know, the first drink you're coming out with, might be...
I don't know if it's confusing at all for the consumer to see these kind of different cannabinoids all in one drink, if there was some education involved, but how did your team decide to come out with something like this, given that everybody else is, you I'll just have 10 milligrams THC, call it a day, and pat myself on the back. How did you guys decide to switch it up?
Lisa (
21:59.772)
It's a great question. And again, I think this is some of my regulated market and CPG experience coming out is I've always seen cannabis not as a one-to-one with alcohol. So just so you guys know, and I've spoken about this, Lars, you and I talked about it. I got into cannabis to actually replace pharmaceuticals. I got into cannabis to help me sleep.
because I was taking a lot of Ambien. And so I actually personally didn't even have alcohol as sort of the frame of reference. I had more of a wellness, occasion-based sort of mindset around what cannabis could do coming out of the regulated market. And the dispensaries, and Grassroots owned 70-some plus dispensaries when we sold to CureLeaf, we used to see pain, sleep.
anxiety, like that's why people were in the dispensaries. They weren't in there to get super, super high, right? And so that sort of health, know, starting in the medical market and that health mindset actually drove a lot of how we've developed HAPI and the formulation. So what we do is we sit and we say, what do we want to feel like?
What do we want? How do we want to make ourselves and thus our consumers feel? And it's like with Happy Glow, for example, relaxed. OK, so you're going to get, how do you find a formulation that's relaxing? What kind of minor cannabinoids? What kind of ratios? What kind of ingredients can contribute to that? We're actually in the process of
upgrading our nightcap formulation, which is our sleep one. And we actually surveyed our top nightcap consumers who are all on subscription and we said, would you guys like to see melatonin in there, which we don't have? Would you like to see L-theanine? Would you like to see something else that's just helpful with sleep? And we get feedback from our consumers. So I think it's a little bit of, it's how would you like to feel?
Lisa (
23:48.882)
what are the different ingredients, but also the different cannabinoids that we can put in there for that formulation. And then we're willing to say, OK, how can we improve on something? I think Happy Nightcap is one where it does fine. And there's certainly a consumer that loves it. But I think it could be better. We all think it could be better. And so we asked our consumers, what's going to make it better? So that should give you a sense of just, you know, and we like to involve our consumers. we survey them at least twice a year.
as a total big survey, and then we, you know, for feedback and ideas and new flavor ideas and things like that. And then we all, and that's how dance was born. We had a lot of relaxing drinks, but none that were more energizing or uplifting. And we said, okay, THCV, it can be energizing. It can be for focus. It can be an appetite suppressant. It can help with creativity. Like that got us really excited. So that's how we think about it.
David Gonzalez (
24:43.828)
Absolutely. Yeah, I was going to ask the follow-up question if you've been able to learn from customers by having these different experiments, meaning there's a lot of people who try to do a...
an energy THC drinker who want to do a nighttime beverage. What kind of responses have you gotten from the market? there people who want both? Is it somebody who comes in for a specific reason? They just want sleep. Maybe they want something stronger. If you put melatonin in a drink with CBN, THC and the other components in there, like that's going to put you on your ass. So is that people coming from like a NyQuil type of replacement or I guess what kind of feedback have you gotten around these different functional effects that your team
engineering through beverages.
Lisa (
25:30.182)
So far, it's been wildly popular. mean, our Glow and our Now, so just to give you a sense, like Happy Dance is our third best selling product in four weeks on drink to consumer. Yeah, only it is our top selling five milligram product right now. It has surpassed everything else because I think what we look at to David, and it's a great question, is effect and how is this drink going to really function? And again, we look at people's days. So just
David Gonzalez (
25:41.662)
wow.
Lisa (
26:00.076)
This comes from my consumer marketing background to a degree, working with P &G before Kimberly Clark and really thinking consumer centric. If you take a consumer's beverage journey, it often starts, and I'm so guilty of this, the first thing I do is go get a cup of coffee in the morning. I can't function. You guys are both nodding and David, I know you have a nine month old, you're probably, if you're a coffee guy, you're probably rolling out of bed and getting a cup of coffee, right?
David Gonzalez (
26:17.846)
yeah, I do.
David Gonzalez (
26:24.134)
A pot of coffee, yep.
Lisa (
26:26.428)
And my husband and I fight like, who drank more? I didn't get enough today, you know? So like...
David Gonzalez (
26:30.244)
Yeah, Mm-hmm. Mm-hmm.
Lisa (
26:33.011)
So if you think about all the beverage occasions you have throughout the day, it starts with coffee and it can often end with something before bed. And think about all the different opportunities. And you as a single consumer are consuming different beverages at different times of the day for different need states. And that's how we think about it. I mean, the beauty of cannabis is you can use all these plant-based ingredients and all these minor cannabinoids to elicit different effects. And I think we may be a little
early in the market. Sometimes I still think we're a little early, even though we've been doing this for like two years now. I think you're going to see more and more companies come out with functional. It's just a little harder to do and it's more expensive because you're extracting minor cannabinoids and they're harder to find and things like that. But I do believe this is what's going to set cannabis apart from both other functional beverages and also from alcohol because you can put ingredients together to get special effects, which I think
It's the same consumer throughout the day that may want to feel energized in the morning by coffee, but relaxed in the evening to go to bed. And I'll tell you, that's me. I absolutely am drinking my coffee in the morning, and I'm having my Happi glow right after I get off the phone with you guys, and then having a nightcap closer to bed, right? So.
David Gonzalez (
27:49.921)
Mm-hmm.
David Gonzalez (
27:54.623)
Yeah, Lisa, when I first heard about THC beverages, my immediate reaction was this is the antithesis to energy drinks and the perfect complement to this radical, because everybody wakes up and has some sort of caffeine, but then everybody has sleep problems at night and there's not really a.
yin and yang, so to speak, or something that balances that out. And when these first came out, I like, perfect. Everyone will just have these before bed. It'll balance out those energy drinks. It'll be the perfect kind of complementary category to grow alongside. But now we're kind of seeing, well, there are parts of the plant that can also be energy-based as well. So you can replace those morning drinks with cannabinoid products and functional products as well, which is awesome to see.
Lisa (
28:36.712)
Yeah, and I think there are some brands that are doing things that are often not as talked about. But you take Off Field, for example. And I don't know those guys, so this is certainly me giving them little free marketing. like, I.
Like, it's for running, right? It's for energy. It's a runner's high. It's about really how do you know a drink and an option for exercising. And I think that's really interesting because I do think, again, if you go back to the core format and you think about all the different drinks we drink throughout the day, Gatorade and sort of we've been asked a lot about hydration drinks for Happi. And it's not a place we're going to go quite yet. But it's, again, they're so the best.
average category overall has grown so much in the past 10, 15, 20 years, just in terms of what's on the market, what's on the shelf of retail now. If you think about how THC can start to take share in some of those places, it's a massive opportunity.
Lars Miller (
29:37.503)
So also, I love off field personally, I'm a big runner myself. So I'll also give them a little free marketing as well. So you know, you mentioned earlier, you guys have HappyDance, which is strictly DTC. And then you have, you know, some wholesale accounts out in the United States as well. So as you're managing the distribution there,
And obviously the different states have different requirements. You're having complex supply chains and those various state by state. So how have you structured HAPI's supply chain operations to remain flexible as well as, you know, comply across all those states and have you implemented anything creative or innovative from a logistics solution to address those issues?
Lisa (
30:27.017)
I mean.
you know, in terms of supply chain, again, just keeping our costs as low, our everything as efficient as possible. We have multiple co-packers. So I would say in terms of, you know, co-packing, we're trying to get as close to both our D2C warehouses as well as some of our core markets as possible, just to be, because obviously freight, mean, these are the biggest challenge or one of the biggest challenges, one of the biggest costs, both from a D2C perspective, shipping, and then from a, you know,
Lars Miller (
30:55.165)
Mm-hmm.
Lisa (
30:57.644)
great, obviously, moving pallets on trucks and moving it all around the country to different distributors. the closer from a proximity standpoint we are in terms of warehousing to either where we're shipping and to direct to consumer or to distributors. So just looking at diversification of our manufacturing, where we're manufacturing, how we're thinking about it. And then we recently did a bunch of testing on our DTC in terms of shipping rates and things
like that to really understand where our consumers see the value. Obviously, shipping drinks is more expensive than going out and buying it in your local store. But we've learned that a lot of Happi consumers would like to pay for the convenience. And they also appreciate the idea of a subscription. And it's going to land on their door. And they get a discount as a result of it. And I think there's something to be said for that. So is it perfect? No. We're still, we're always working on it. The more this, I would say, Lars, the more this category
matures, the more co-packing options there are, the more freight options there are, the more warehousing options there are, all of the above. And just being more efficient. We're not trying to reinvent the wheel. think alcohol obviously has a model that does this really, really well. And just trying to be more efficient in how we're doing it.
Lars Miller (
32:16.441)
Yeah, the DTC component, whether it be subscription or just a one-off order, is definitely something that me as a consumer, I value highly. I hate going to stores. Literally every time my wife and I go to a store and we're standing there waiting in line to pay, I'm like, this is why I shop online. I cannot stand waiting five minutes to just pay for my products. So I definitely understand that as well.
David Gonzalez (
32:45.917)
It's an interesting thing you mentioned. So Lisa, you've talked about the distribution, the wholesale model. You've talked about D2C as well. I would say there's a third model that I was surprised but delighted to see, which was the Wanderers Marketplace. And so I was wondering as well, and there also, think Boysan just launched a marketplace too.
What is it like for a beverage brand to be sold in a marketplace as opposed to direct to that consumer or to retail spot? Is there some net benefit of being placed amongst these other products online? Is every sale kind of created equal for your team? How does being in a place like Wanderers, is that sale still something that you guys want to push? Is this more of a discovery engine?
And how did that all come to be? That's a lot of really powerful brands that all just came together and partnered up and fascinated to hear about the story.
Lisa (
33:43.688)
Yeah, thanks for asking about that. We get a lot of questions about WANA, and we're in the process of of relaunching our gummy offering with them on the Happi sites, so the Happi R &R. Yeah, which is exciting. I think the challenge for marketplaces, and we're about to be on another one that's coming out first quarter of next year, is they have to drive as much traffic.
David Gonzalez (
33:53.671)
Awesome.
David Gonzalez (
34:07.87)
Right.
Lisa (
34:08.356)
and get as much visibility as a single brand site, right? So I think for us, to be honest with you, we started Happy from a D to C perspective. It'll be almost two years in February. So.
We were able to build a following, and we have a really good product, right? So people drink it, they tell friends more. And we have 65,000, almost 70,000 consumers in our database. And so for us, it's actually now a lot easier to run our own DTC. And we know what works, and we can email, and our CRM is really strong, and we're about to launch SMS, and we're about to launch some other things. I think the challenge for these marketplaces is they're not
David Gonzalez (
34:47.347)
awesome.
Lisa (
34:51.462)
It's not like a bill. It's not Amazon, right? Which I know some of our competitors are on and doing really well, but you can't sell infused beverages on Amazon. it's not a place consumers go anyway. And so the challenge is it's expensive to drive media, and I don't think they have as much traffic as they.
David Gonzalez (
34:53.884)
Right.
Lisa (
35:12.102)
would like. I'd love to see that model work because I think it could be a great to your point third channel. So we're very supportive of Juana's strategy and what they're doing. I think it's just it's a expensive model until you get enough eyeballs on sites or repeat traffic on those sites. As far as our partnership with Juana,
David Gonzalez (
35:27.388)
Right.
Lisa (
35:32.86)
I adore, and Nancy Whiteman is a close friend of mine. She founded Juana. She is recently sort of retired and on the board. But we had always wanted to do two strong female brands together. So back to your conversation about women, I see Nancy as.
the leader in the, certainly in the edible space, but in she's one of the top and most inspirational women in all of cannabis. And to be able to partner with her and lead with Happy and Juana together was just an opportunity we couldn't pass up. So sharing Juana's hemp-derived gummies with our consumer and having two really strong female-founded brands was kind of our vision from a year ago. And we brought it together in two ways.
David Gonzalez (
36:07.466)
Absolutely.
Lisa (
36:18.384)
one is sold on Happy and Happy is part of Wanderers.
David Gonzalez (
36:21.727)
Absolutely. I don't think people stop and realize just how impressive the Juana and Nancy exit actually was. It's historic and like that's a huge feather in the cap. So to have you two partner up on, you know, products that complement one another so well was was refreshing to see. So I did want to just highlight that and then just ask on.
And what's that like for a brand? Because you're right, the unit economics get tricky if there's not enough eyeballs and impressions to help facilitate all these kind of net new customers. But I'm very curious to see how that all shakes out.
Lisa (
36:55.774)
Yeah, and I think, you know, in terms of gummies, again, we surveyed our consumer. It's tricky because gummies have been around for a lot longer in dispensaries. So there are quite a bit of, you know, even Hapy's current consumers are like, we're really Happi getting gummies and dispensaries, but we buy our drinks from you. And I think I think that is more surprising to us than maybe we thought. I think we we believed our Hapy consumer early on was just kind of curious. They had never tried cannabis or were not regular users. And what we're finding is
they maybe you know love their gummies and love wanna their 10 milligram Juana's from the dispensary But they want a five milligram Happi or they want to order Happi on the site. So You know our wanna Gummies that we sell are five milligrams Juana's hemp derived gummies on wondrous are also five milligrams And so I think for those consumers that are a little more experienced They're more some of them are more comfortable buying gummies and dispensaries
Lars Miller (
37:52.058)
I also want to make a comment about Nancy and Juana as well. think last time we spoke, I told you I'm a big fan of both Juana as well as everything Nancy has done as well. And then I'm also a big fan of their gummies. just wanted to kind of echo David there. know, with hemp companies technically having the option to pursue an IPO and everything like that, what does a dream outcome look like for Happi
call five or ten years from now.
Lisa (
38:26.258)
A dream outcome is you open every one of our fridges and instead of beer and seltzers and all that, you see a Happi there. It's just part of, and there's one for, you know, your morning, your afternoon and your evening. I think it's going to be really interesting, Lars, in 2025. I think we've got a lot of stuff going on. It has to be the year the farm bull gets decided, right? They've kicked it now for two years. I think we have a new administration that's a complete wild card in place. We don't know where things are going to
or how they're gonna go. So I think a dream outcome for HAPPY is a really strong strategic partner in...
You know, in the alcohol beverage universe somewhere doesn't necessarily need to be an alcohol company, but somebody that's able to help facilitate speed and scale. think that's where we win. I think that's where hemp beverage companies can win because they're not held back like regulated cannabis is. You have the ability to scale. The challenge is distributors that have scale, not just single state distributors,
distributors across multiple states are really jumping in. Larger alcohol companies are really jumping in. So I think 10 to 15 years, I think we'd like to be part of a larger beverage company with distribution certainly in all 50 states and really just thriving. way I think, like take a High Noon, for example, the way they changed the seltzer market. think obviously White Claw was the first, but I think
came in with a really strong brand and some great flavors and I think I'd like to see Hapy be in the same category.
Lars Miller (
40:12.834)
Yeah, is there any ideal partner that you have in mind already or anything like that? Like is it an AB partner or multiple cores or someone more like a PepsiCo or Coke on the non-dial beverage side?
Lisa (
40:31.722)
really open. And I think what's kind cool and exciting in this category, too, is distributors are also not conflicted out, whereas they are in alcohol. So I think there's a lot of, I think some of the MSOs are starting to do some smart moves. I think tobacco is coming in. So I see this category as having, we want to work with awesome people and we want to have a partner that's going to provide not only growth capital, but also a growth catalyst in terms of resources,
Lars Miller (
40:37.773)
Mm-hmm.
Lisa (
41:01.716)
in terms of distribution and in terms of like really, really understanding the beverage space. So we're just looking for a strong partner and could come from a lot of different places that again can help with scale and rapid growth.
Lars Miller (
41:16.856)
Follow up there on that is, you you have someone like Tilray, which obviously started as only cannabis, but has now evolved into like this massive beverage company, not just cannabis beverages, but beverages in general. Is that potentially around you guys would want to go and if you had the right financial partner to kind of acquire additional brands or do you really would just want to stay focused on the wellness and health aspect with Happy?
Lisa (
41:48.33)
So what I will tell you is we're open to, we're a beverage company through and through. We will not do other forms. So some of our, you know, my other HBA board members and other US hemp round table, you know, beverage committee members, like they sell smokable hemp flour, they sell hemp vapes, they sell hemp gummies. Happy is a beverage company through and through. We want to have a beverage for every occasion. How?
Lars Miller (
41:52.695)
Mm-hmm.
Lisa (
42:16.522)
we get distributed or who we partner with, I think, still open. think watching what Tilray has done is fascinating. think watching what GTI is doing with AgriFi and Seniorita is super interesting. think watching what some of the bigger distributors that are now getting in the game are starting to do, like a Johnson Brothers is coming in, others that have multi-state, they're not just a single state distributor, is really exciting. I wouldn't be surprised if retailers start taking equity stakes in brands for private
Lars Miller (
42:27.81)
Mm-hmm.
Lisa (
42:46.476)
label as house brands. Like, this is where, back to David's really interesting question earlier around CPG versus regulated, this is where it starts to lean much more CPG. Because you can, you know? Technically, a top 10, and John Halper, who I think is, he's at MJ Biz this week, and I love, love, love.
David Gonzalez (
42:48.499)
Yes.
Lisa (
43:07.816)
that he's so passionate about this category, I could see them wanting a house brand, right? I mean, a private label brand. And that is straight out of the CPG playbook. I mean, that is not obviously regulated cannabis. So I think there's just, I think 2025 is gonna be a big year and we're gonna see a lot of different business models. We already are.
Lars Miller (
43:17.397)
the
Lisa (
43:30.538)
And I think we're going to see brands start to become parts of those business models in unique ways.
David Gonzalez (
43:30.611)
Mm-hmm.
Lars Miller (
43:38.432)
Well, Lisa, thank you so much for joining us today. It's been a pleasure getting to learn more about not only your journey, but what you're building with HAPI.
Lisa (
43:46.282)
Well thanks guys, I appreciate it. for all your followers, you can put this in the notes, but happyFF20 is our friends and family code on D2C, so for all your listeners, we'd love to share that. And happyhourdrink.com, and thank you Lars, and thanks David, it was really fun to talk to you guys, I appreciate the time.
David Gonzalez (
44:03.652)
Thank you.
Lars Miller (
44:04.407)
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