In this series, Aaron Green sat down and interviewed many integrated cannabis companies and flower brands. In Part 1, Green chatted with Connected CEO Sam Ghods to learn more about how he uses cannabis and Connected's product and brand strategy.
Flowers remain the main product category in U.S. cannabis sales. In this "Chat by the Flowers" series of articles, Green Interview interviewed cannabis companies and flower brands that are bringing unique business models to the industry. How these businesses stand out in the rapidly changing regulations, supply chain and consumer needs, is of particular concern.
Connected is a vertically integrated cannabis company headquartered in Sacramento, California, and is one of the most popular brands in California and Arizona. Since its establishment in 2009, Connected has become a company with a long history. In the past ten years of business development, it has aroused a cult-like following. According to analysis by BDS Analytics, Connected Cannabis and its acquired brand Alien Labs now have the highest flower wholesale prices in any major legal market-their average indoor flower wholesale price is twice the CA average-and the highest flower retail revenue s country.
We spoke with Connected CEO Sam Ghods to learn more about his transition from technology to cannabis, how Connected views the product and his vision for future growth. After getting to know the founder, Sam joined Connected in 2018. Before joining Connect, Sam was the co-founder of Box, and after their successful initial public offering, he worked for the company for three years.
: How did you get involved in the cannabis industry?
: I originally came from the technology industry. I co-founded the cloud sharing and storage company Box in the mid-2000s with three other friends. From the four of us to the multi-billion dollar public offering in 2015. I stayed for a few years after that, until I spent some time trying to decide what to do next. I have inspected many different industries and companies, but personally, I have always had a real passion for handicrafts and handicraft consumer products. This is a big hobby of mine. Whether it's going to Napa or learning about different kinds of high-end consumer goods, I love it deeply. I never knew that cannabis would be like that.
When I first met Caleb, the co-founder of Connected, he immediately caught my attention. He told me that they sell their products for millions of dollars a year, more than twice the sales of others. . That really piqued my interest, because creating a product with consumer enthusiasm and level of demand may be the most difficult thing to build a consumer goods business. For them, it was very difficult to achieve such success in a very difficult and gloomy market at the time, because I was talking to him at the time, and he started this company in 2009, which was in the middle of 2018. It's really impressive.
Therefore, I started to spend time with Caleb and the Connected team and learned a lot about the business. Everything I learned made me more interested and excited. The way they think about the product and the way they treat the product are both high awe and complexity that I don't know.
I am very happy to learn about this space. Honestly, I mean it feels like the Internet of the 90s-unlimited possibilities and excitement. The only difference is that the market has existed for more than 100 years: the gray and underground markets for this product are actually very mature. Now, we are boosting the multi-billion dollar trade that has already taken place, and trying to legalize all of these transactions in one fell swoop, which presents a series of interesting challenges.
I initially participated as a fundraiser and strategy consultant. Then a few months later, they were looking for a CEO, and I joined full-time as CEO in September 2018.
: What are the industry trends you are concerned about?
: This seems very basic, but I think the quality of products in the broader cannabis market domestically and internationally is indeed underestimated. Because the regulatory framework is so important in so many different markets, many products are produced and sold only because operators can do so. In many markets, they count the number of producers by a few, not by hundreds or thousands like California or Oregon. In this environment, you don't actually have competition, and you can't really see the quality that has existed in this category over the years.
This is one thing that really sets us apart-quality is above everything else, innovation and time investment are paramount, and few of the existing brands in the legal market can say that. With some "premium" brands on the market, it is equivalent to jumping into the wine industry one day and thinking that you can become a premium brand without having to understand the history of the product or the industry itself. At Connected, we have a team that has been working for more than ten years. We made the final calculations: there are more than a thousand lifetime gains between our teams. We also hired experts from Big Ag and other industries to supplement this experience.
Cannabis is a very difficult and difficult plant to grow. It is more like high-end wine or spirits than other fruits or agricultural products. I think this is generally accepted in the cannabis community, so we profit at the highest price in the legal market. This is our reason. I think that in the wider investor and financial world, this has not really come home because the limited licensing market is not mature enough, and many of them are not sufficiently competitive.
The focus of our work is to continue to manufacture the best products to bring our brand [Connected and Alien Labs] to the market and develop it to this day. This is our first priority. We believe that this is not only the field of growing high-quality products, but also the uniqueness of the breeding field. This can be done more and more in plant genetics.
How do you choose a test laboratory?
: Therefore, the primary criteria are responsibility and compliance. We must be fully confident that they are conducting accurate, safe and accurate testing according to state regulations. Then from there, a partnership is really being cultivated. There are many nuances in the relationship with the testing laboratory. We noticed similar things: Are they responsive? Are they sensitive to our timetable or requirements? It does depend on time and cost to a certain extent, such as who can provide the best service at the best price, but it is really a partnership where you can work together to provide excellent products. Reliability and consistency are also important.
The industry’s estimate of illegal market activity accounts for approximately 60% of the California market. From your point of view, how can we solve it?
: I think this may be attributable to the funding of efforts to suspend these activities and open up barriers to entry and encourage “illegal” operators to make cross-border investments. In my opinion, the most effective attempt is to allow traditional growers to truly enter the "legal" industry after organizing carefully planned and well-funded measures. You cannot start an industry with such strict regulations, set a thousand-mile high entry barrier, and then punish traditional growers to continue operating as they are. If the illegal market continues to be stimulated by rejection, then you will not be able to achieve the expected taxation that we all hope to see. An attitude must be adopted to return many times the tax to state citizens for every dollar used to transform the illegal market into a regulated market.
: So, I know you sell wholesale. Do you sell directly to consumers?
: We own and operate three retail stores, so we do sell products directly to our consumers, but currently, most of our products are sold through third-party pharmacies.
: Do you want to freeze it fresh?
: We are indeed. In terms of farming, we have indoor, mixed daylight and outdoor. Every year we freeze a portion of the fresh frozen harvested outdoors, and then use the fresh frozen for our active resin products, for example, our recent active resin cartridges. It creates a kind of vape experience, which is really different from any other experience, because we are using ordinary marketable flowers, but in fact we are deflorating and extracting, not just using distillate and putting a Batch terpenes are mixed with it. We fully extract the content of the entire plant, from cannabinoids to terpenoids and everything in between, and then you have our active resin cartridge.
: How do you view the brand image and how to use the brand to command higher prices?
: The cycle we have effectively created is that every time we release a new strain or a new batch or harvest, the quality usually improves. The quality is published under our brand, and then customers can associate the improvement of quality and reputation with these brands. Then, for our next release, we have a larger platform to discuss products as well as ship, distribute and sell products. Once they are on the shelves, we will shock people again, which exceeds their previous expectations. The continuous cycle continues to strengthen the brand and products. From our point of view, the brand is 100% built on product quality. Products will always be our top priority, and brands will fall downstream of us.
Tell me about Alien Labs.
: Alien Labs was acquired. This company has successfully established its own brand in the gray market in 2017 and California's Prop 215 on the gray market, and has an incredible level of quality, a truly loyal and loyal fan base, not to mention Instagram With its huge influence and followers, this is where 98% of cannabis marketing is carried out today. We really like the spirit brought by the founder. In 2018, we decided to fundamentally work with them and join them to establish a partnership to enable them to use our infrastructure and the systems and processes we have built, but still maintain their training methods and product vision. To this day, one of the founders, Ted Lidie, continues to serve as the chief brand director of Alien Labs.
Where do you currently operate?
: Our main office and facilities are located in Sacramento, California, but we have facilities throughout the state. Last year, we started operations in Arizona, NSW for the first time. As you know, cross-state purchases of cannabis products are not allowed at all, so if you want a consistent product across multiple markets, you have no choice but to rebuild the entire infrastructure in each state you want to open .
There are many brands that are rapidly expanding and launching in more markets, but they do so by buying products that already exist and putting their own brand names on them. This is something we decided not to do strategically. We have spent many years building a high degree of trust with customers, so we will only put our brand name on products such as genetics, cultivation, style, product quality and so on. When we were established in Arizona, we used facilities that we leased and took over, which are now operated by our employees. We are copying the same products that you can buy in California, Arizona, which is really exciting.
We launched this product in November last year and it was incredibly successful. Our dispensing partner, Harvest, saw dozens of people outside.
Can you talk about any new geographic areas on the horizon?
: We are always evaluating new opportunities. I don’t have anything special to announce right now, but I will say that we are looking for states where we believe that product quality will truly stand out and be appreciated in a highly competitive environment.
Have you noticed a clear difference in consumer trends between California and Arizona?
: Not many. We don't have a retail store in Arizona, so we don't have that many direct contacts. However, we have always heard that the demographic information that connects customers (as you are most interested in our products) are those who seek to be special, unique, distinctive, and have truly superior quality to everything else. We finally launched flowers in Arizona at the highest flower price in the state, and we said this is just the beginning. Domestically and internationally, this market is still young and immature, so that this category will develop into a truly taste-oriented category.
What's next for California?
: Continuous growth and product development. We hope to attract customers through more and more incredible products, different product types and categories. For example, the cartridge is a big launch for us because we don't consider ourselves a vape company. First of all, we consider ourselves to be a flower company, so for us, this is a very planned strategic move. We only intend to launch this product if we can fully replicate what consumers get from the floral experience. For example, it is extremely unlikely that we will release a distillation pen.
: Are you personally interested in learning more?
: We, as a society, don’t know much about cannabis plants. Almost all meaningful research on cannabis was banned in the early 1900s. At the same time, we have conducted millions of dollars of research on almost all commercially grown plants. We know these plants very well. Cannabis science was limited to agriculture in the early 1900s. My most interesting conversation is about how the factory works, how it doesn't work, and how it is very different from all the other factories we are familiar with. Our planting leader is from Driscolls, the world's largest berry company, and he is often surprised by the way hemp plants respond to substances commonly understood in other plants. Therefore, the way the actual factory responds to different environments is really fascinating, and I think we will learn this in decades or even decades.
Okay, great. This concludes the interview. Thanks, Sam!
Dr. Aaron Green (Aaron Green) is a popular technologist and entrepreneur. He is a partner
It is the California cannabis consulting company he co-founded with Dr. Anatoly Chlenov. Together, they have combined more than 30 years of rich experience in analytical chemistry, product development and brand marketing in a regulated environment. Iridium Consulting helps top brands increase sales by applying science-based marketing strategies and developing educational materials centered on pharmacies.
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