How do you successfully market your product when regulators are breathing down your neck? On this 119th episode of The E-Comm Show, Andrew Maff interviews Chris Fontes, CEO and founder of High Spirits, a pioneering cannabis beverage brand that’s quickly becoming one of the biggest in the business.

In this episode, Kevin will discuss the trials and tribulations of selling and marketing a highly regulated product, explain his role as an advocate for his industry, and explore the science behind High Spirits’ products. Additionally, he offers insight into how his company balances modern marketing tactics (from geotargeting to influencer partnerships) with old-school social engagement.

Watch the full episode below, or visit TheEcommShow.com for more.

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Andrew Maff and Chris Fontes

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Chris Fontes

Chris Fontes, the Founder and CEO of High Spirits Beverages, is a dynamic individual with a rich history of innovation and leadership in the cannabis industry and beyond. His entrepreneurial journey spans several successful ventures, including Trojan Horse Cannabis, Project Hemp Flower, and Hemp Exchange, all of which played pivotal roles in shaping the US hemp industry. Chris's visionary leadership led to the development of the industry's first hemp-derived D9 THC products and the launch of Trojan Horse Cannabis and High Spirits Beverages.

00:03

It's a tricky spot because depending on what you're targeting Google will actually penalize you for having those keywords that you're trying to actively target because Google does not like cannabis just in general Hello everyone and welcome to another episode of The E-Comm Show. I'm your host, as usual, Andrew Maff. And today I am joined by the amazing Chris Fontas, who is the founder and CEO over at high spirits beverages, Chris, how you doing right for good show.

01:20

I'm so excited about this. Thanks for having me on.

01:23

I am so excited to easily one of my favorite topics or favorite industries to have on the show because of the complexities. But let's I digress, I have to do the standard the usual let's pretend no one know who you are. And give us a little bit of insight into your background where you started where you're at now in high spirits, and we'll take it from there. Okay.

01:42

Yeah, certainly. So I was the I was the first guy to figure out that you could use THC from hemp and shipped through the mail. So my background in this space starts a little bit before that, for the sake of this show, I'll skip some of the precursor of me being in the industry. But suffice to say I'd entered the space had a couple of false starts with some other business models and some bad partners transition into consumer packaged goods was selling hemp flour online. And at the time, this is where I'll maybe start my backstory a little bit at the time hemp flour online was roll the dice if you got what looked like hay or what looked like cannabis. And very few people were properly curing their flour and taking a good job and telling you what that what you're even buying where it came from COAs etc. So we created an online direct to consumer marketplace, where we work with farmers across the country, we would vet their product to make sure it was high quality, it was cured properly. It had that traditional cannabis flower smell, taste feel, then we get it independently tested ourselves to make sure it was legal and it was clean. There wasn't heavy metals, arsenic you know garbage like that in the product. Then we would brand that product in that farm that grew that product on their own page and talk about this as greenhouse grown. It's done by these folks. This is their ethos and philosophy. And so they could get brand awareness around the farm itself and get excited about hey, I really liked this farm stuff, anything they do, I'm gonna buy. We did that for a while. And delta eight came on the market. And I'd known about delta a little bit beforehand because of how entrenched in the industry I am. And excuse me, Delta eight wasn't for us. Ultimately, I talked to a couple chemists this was very early on in Delta eight no one had really consumed it really in any considerable amounts. And for us, I was like we're just not going to it's too iffy for me there's too many unknowns. It's I'm not willing to put humans through human trials so I can make revenue off of it. And no, no you know, I'm not throwing shade to any da company just where we were at the time and the time and the industry it wasn't right for us. So previously, my exposure to hemp had me really understand the regs and the in the legislation etc both states and federal. And so I identified the point 3% Delta nine option early on and now finally had an opportunity to execute it. We were getting a lot of calls about DEA flour and we weren't going to do that and so we said we got to do something we're losing revenue because people aren't buying just hemp flour anymore unless it's covered in DEA. So we thought let's make a gummy. Let's make a D nine gummy that can actually be shipped and D nine for audience members who may not know is regular THC. But if you go into a dispensary in Colorado and you get products, it's going to be d nine THC. That's what cannabis has always been. So we figured out point three allows you plenty of milligrams to have a 10 milligram edible and a regular size, slightly bigger than regular sized gummy. And we immediately got that product tested, was certified in the state of Utah because we figured if Utah will approve this as a hemp product and certifies it than anyone will think it's okay. And then we got USPS to whitelist us and say yeah, this is a legal hemp product. We can't stop you from shipping it and they added this tool weightless illiquid, seizing our packages. So they have lo and behold Trojan horse cannabis was launched. It was the first Delta nine THC company in the space. Now, obviously, Delta nine is everywhere. And we're really proud to be the pioneers in the spearhead on that movement. Follow that up. About a year and a half later, I read the book, The Power of Habit. And I realized that gummies are great, but people that are currently alcohol consumers and not cannabis, consumers might not switch to gummies because it's a totally different thing. They might not switch the flower because it's a totally different thing. And a lot of people that don't currently smoke cannabis are nervous about inhalation in general. And I thought, You know what, instead of trying to change their habit, I'm just gonna replace an item in their habit and I'm gonna take the cat out of their hand and put a cannabis can in their hand instead. And thus we launched high spirits beverages, one of the first hemp derived THC beverage companies in existence. So that's our primary focus, we do still have Trojan horse as a brand we do still run and sell gummies off Trojan horse cannabis.com We also sell our high spirits beverages off of Trojan horse cannabis.com And we've been in space a while additionally, just for the reference here. I'm the co chair of policy for the National Industrial Hemp Council co chair of policy at hemp beverage Alliance co chair policy, cannabis beverage Alliance or association and I'm on the director for the Colorado hemp association. So I'm pretty pretty locked into regulation you

06:29

don't know what you're doing it all I know what I'm doing I'm just guessing. I mean, the truth is none of us really there's gradients of how much we do or don't know but but yeah, so that's so so the overall concept of the product is your goal to go after people that are traditionally you know, maybe they are more like a more of an alcohol guy. But if I want to give this a shot, you're kind of going after the people that enjoy drinking and going after them with the high spirits beverage Correct. Generally speaking Yeah, so Trojan horse is more we'll say stoner centric high frequency higher tolerance users we've got a live resin a live resin gummy that's actually made with live resin from him. That's 30 milligrams of D nine per gummy, right. So that's, that's a that's a more high frequency, high tolerance, consumer product. High spirits is being distributed through beer distributors, to bars, restaurants, liquor stores, C stores, these sorts of things. As such, that demographic doesn't exactly translate very well. So beer distributors are not going to be comfortable selling 50 and 100 milligram cans, they just won't, liquor stores will begin to be really nervous about it. So that market is a five and 10 milligram market right now. And so inherently we're limited to a psychographic of an individual that's more curious or more occasional. And we find a lot of our consumers are alcohol drinkers who are looking for a different option or they haven't drinking alcohol in a long time but they're still will say addicted to alcohol and they crave it constantly and they're it's a daily fight for them right? And so for those people they jump on and all of a sudden they get a can they feel impaired but it's not addicting like alcohol doesn't have the negative side effects. And all of a sudden they're like oh my god, I can drink again this is amazing. And they can go out and have a have a good time with their friends and go to the bar and have a drink without you know suffering the consequences. How many milligrams is in each camp? So we have four skews two of them? Well, we actually have five skews one is 50 milligrams that one we don't sell through beer distributors it typically goes to smoke shops and direct to consumer the tent we have 210 milligram and two five milligram cans. Both of those are direct to consumer as well as through distributors and direct also. Now if you go into a shop, the usual and obviously correct me if I'm wrong here but aren't they usually sold like you know, 510 milligram gummies for the most part, then you can get a little bit higher for you know, someone with a higher tolerance so you you still are each can really is still kind of catering to like it'll, you'll feel it. It's not gonna be like you're not crushing a bunch of these with the boys kind of thing, right? It depends on the person and their own tolerance. Everyone reacts a little different. But with the five milligrams especially something that's unique about drinks versus other cannabis products, and this is gonna go a little sciency so pardon the boring speak here, but when you inhale through flower combustion, or through vape, or dabbing when you inhale THC, you're inhaling Delta nine THC and it goes into your lungs as delta nine and it stays Delta nine in your blood by the time that binds to your CB one receptors, it's Delta nine. When you ingest meaning you eat an edible and it goes into your stomach. Anything that goes into your stomach is processed just like all other food is, which means there's enzymes and there's reactions and things convert. So you eat Delta nine THC, but your liver converts it 211 hydroxy Delta nine THC. That is a different compound and it feels different. And for, I'd say the vast majority of people, they can't really tell the difference in high between inhalation or edibles. Some people it's a drastic difference though, like my wife, for example can hit my live resin vape cart, no problem and take a good couple of reps and be fine. Two milligrams is her Max from edibles, otherwise, she has a horrible time. And so we find some people have these weird reactions to edibles. And in drinks, in order to get the cannabis oil to homogenize, break apart evenly and stick to and not move in the beverage itself, we have to emulsify it and in the process of emulsifying, it We're also just making the particle size much smaller. So it's called Nano, essentially, the comp the molecule the THC molecules go from like 1000 nanometers to like 40 nanometers. And what that does is those molecules are small enough that they bypass phase one metabolization, meaning they go right into your bloodstream as delta nine and it kicks in faster. So instead of taking a gummy and waiting an hour and being like, I don't feel anything and taking a second one, then that first one kicks in and I just Oh, sorry. I don't know if springs Okay, on your on now you're good. It's yeah, you have that moment, you're like, oh, no, I just that first one's kicking my ass now. And the second one's an hour behind it. With drinks, you fill it in like 10 to 15 minutes, just like you would alcohol. So you can adjust your own experience a little bit easier. Additionally, going back to your concept of, of timing, you could crush a bunch of these five makers. Why? Because it kicks in fast, and it wears off fast. It's about two hours. So you can drink one. And then the next hour, you drink a second one and you're really only at like a 10 milligram at a time high. And every hour, you can drink another one. It's the same thing like one one beer one hour, right? That whole concept of when are you drunk when you're not drunk? You can have like one five milligram an hour and probably be relatively okay. And if you want to go harder, maybe you pick it up a little bit, maybe up to an hour. But you can map monitor your own experience, and you can still crush 60 drinks in a night, even if you don't have a high tolerance. Nice. Yeah. So Alright, so let's talk about the thing that I always find most interesting about, you know, this type of industry, you can't really do anything, they don't really let you do much shit. market this product. So it's always very interesting to me, specifically, and like, you know, the CBD THC world is definitely even more highly regulated, and of just annoying because every state has their own rules. So obviously, someone like yourself, who knows policy inside and out is very beneficial to have on the team. But what has your approach been? You know, getting it off the ground? How are you marketing it? What's working the best? What's not working? Like? Give me a little bit of an insight into that? Oh, man, it's a it's a wide open question. Okay, so what doesn't work, most traditional paid channels don't work. You can't run paid ads on Google. You can. But you get caught eventually. And you're at risk of losing your ability to ever run Google Ads again. So I really stay away from Google ads, Facebook ads, Instagram ads, there is a method to do this. And essentially, what you have to do is have a landing page. That appears to be an educational information landing page that's been scrubbed of keywords that meta would flag like THC, CBD cannabis, stuff like that. And you run an ad, your ad has to be free of all that as well, then that ad goes to that landing page that doesn't actually have anything for sale that is scrubbed clean. Then when someone clicks like shop now or buy now, it redirects to your website, where you actually have actual ecommerce transactions taking place, and you're properly marketing the products. Yeah, even in doing all of these hoops, and these jump arounds, the return isn't great right now, unless you throw a lot of money at it. A lot of our competitors are spending between 50 and 100 100 grand a month on meta ads to make this channel work for them. And for if you have that kind of cash to goes right to one channel, it can work. But if you don't, you're kind of throwing money in the garbage. And so it doesn't make a lot of sense for most smaller e commerce folks to play this game because it's just too expensive with not enough return. So there's an option YouTube has some options. I don't know how many people in your audience are familiar with traffic junkie, but they're an adult website, ad platform. They will take anything basically. I'm sure everyone's aware of but the return there has been garbage. And I think it's kind of obvious as to why people aren't there to buy gummies they're there to do other things. And that's what they do. So there are options but not a lot of great ones. What's what has seemed to work a little bit more consistently one is good old fashioned social engagement. Like physically putting in the time to get your Facebook account, Reddit account, Instagram account, interact with other people, be part of the community, answer questions, engage with your customer base, and you will pick up customers that way better than most other ways. There's a couple other options out here with really complex geo targeting, and mobile ID targeting and things of this nature that we've played with. We haven't had great success yet. But one thing that's promising for us, which is really super interesting is we were tied to two different companies that can do this for us. And what they do essentially, is they buy access to these massive databases that are basically full of mobile IDs and geo and geo cash or geo location information. Then they have other databases that are massive that have those same mobile IDs, tied to actual information, email address, phone number, etc. And these are all opted in things, right? Someone does a survey on Facebook, oh, what kind of cat Are you? Right, and they put in their information. And they don't realize they bumped it into one of these mega aggregators, where all their data goes out in this database. Well, we can use those multiple multiple databases to do cross reference targeted email lists. So for example, one thing we did was I want I put a geofence, around a couple of dispensaries in a marijuana legal state. And then I filtered that out by anyone that's been in here in the last 90 days, but their home address is in a state where marijuana is not legal, then we were able to direct target those email people as Hey, tired of flying out of state to buy your gummies, you can buy online, right? And we had some success with that. I think we need to tweak it a little bit. But it's very promising. And you can just imagine, I'm sure everyone listening to this that that either knows about this already, or is just learning about it has their wheels turned on like, oh, yeah, I could use that for a bunch of cool stuff. So that works, direct mails, emails through other In fact, all of the folks that own ecommerce businesses that are listening to this right now, we're always looking to partner with other e commerce businesses that have large volumes of customers that often promote other products for fees that we found that works with us pretty well, especially if it's non competitive, but adjacent to our category, and vice versa. We've used direct mailers through like men's interest magazines and women's interest magazines and stuff like that to direct email campaigns. And we're pretty good influencers work well. They're kind of difficult to work with sometimes I'm sure everybody listening has dealt with influencers in one shape or another that that we could probably do a whole show just on how to properly leverage influencers and how not to, but that's worked out pretty well. So have you tried trying to think all the stuff you just listed? What about couple of things, I didn't hear anything from an SEO side, or I guess you would refer to as like content, add content, paid marketing, so using like a Taboola or something like that, or Outbrain like Edie tried anything in that direction? Not a ton. And it's kind of embarrassing because I used to run a marketing agency. You know, I'm old enough that the turn inbound marketing was created when I was in adults, right. HubSpot coined that term. They had this whole concept of s like SEO existed before that. But this concept of inbound marketing really solidified around HubSpot. And I started an agency that basically would do what HubSpot did. But on a WooCommerce platform. I'm previous software engineer, so built a plugin. There's a light CRM, drip campaigns, lead scoring these sorts of things. And then provided a service to also as an agency, like physically will create your content, you know, whatever you want. So I know a ton about SEO. Although to be fair, I knew a ton about SEO five years ago, and the move the space moves so fast, I'm probably out of touch. But I know a lot about it, but we don't leverage it a ton. And it's a tricky spot, because depending on what you're targeting, Google will actually penalize you for having those keywords that you're trying to actively target because Google does not like cannabis just in general. So there we have, for example, in Project hemp flour, we relied on SEO really heavily. And we were doing at the time, not a lot probably like 15 grand or 20 grand a month, just on organic SEO sales. And then one month that went to like two grand, and it was just dead. And we did a bunch of digging, we found out in an algorithm update. They started penalizing cannabis companies and throwing them to the bottom of the SERPs. So it was like Why put all this SEO effort into it when Google's gonna act that we fight against us? And I think that's I think that's eased up a little bit now, but we just haven't reengaged Yeah, it's I mean, from the restricted brands kind of thing like we've seen that we definitely saw that happen. A big drop in. I think it was March of 2023. Actually. Big one that just knocked everyone out. And now it's already like you can see it's already starting to come back. Um, but now the approach is like, how do we, how do we focus on keywords that are for the solution that this specific product provides not the actual product. So it's like, you're still like kind of on that fine line of trying to figure it out. I mean, the whole concept the whole industry is very catered towards anything you can do towards or traditional organic, like content marketing, whether it's social media and engaging with people and influencer marketing and creating articles and becoming a thought leader in the space and just getting on as many podcasts as you possibly can. Like, it's it's a, it's a serious hustle of creating a ton of assets to get it out there. Now, the thing that I love about this industry as well, which, you know, you already kind of alluded to, in the beginning, everything really comes down to word of mouth, in this industry, more so than anything else, because you really can't rely on anything. But it's also very clear that people like yourself that stand out in the industry, because the like the just obscene amount of research that you do to make sure like it's a quality product. And there's a reason it's made the way it is, and you're not getting dealt anything horrible, because that's how it's just an immediate, like, no one wants to use that brand anymore. And the only thing you can rely on is word of mouth. So it makes a lot of sense that you would focus so heavily on the product side. So going into the new year, like what, what is the thing that you're like, Alright, we're gonna pour some gas on this and see what it does. We are creating more content that the contents tricky though, because, you know, like you said, focusing on what it does for you, as opposed to what it is, is really beneficial in this style of marketing and work the workarounds in the space. But it's also tricky, because the FDA says, Well, you can't say it actually helps you. Right? Don't say that, because then we're gonna come after you for that. So it's like you're trying to sell the value proposition without talking about the value. So it's more like, you're gonna have a great day, right? Just you have had a stressful week, this is going to help you. But you can't say anxiety, use the term anxiety on your website, FDA is going to take you and put you out of business. And so you're always walking this tightrope of, you know, there's, there's what the product is, there's what it does for you. And we're like somewhere in between, right, writing this razor thin edge, we want to tell you what it does for you without telling you what it does for you. So we are we are experimenting with a better copy in multiple different channels for that. But this year on the E commerce side, which I'll focus on for the intents of the podcast, we're really focusing on influencers, more social engagement and some of these direct mailers. Because I think that's going to produce the fastest ROI. While SEO is a little slower, but it's it's evergreen, and it's more stable long term. But the end of this, these industries are exploding. And right now it's a game of how fast can you grow before you get left in the dirt. And so it's high, high return potential is what we're pushing for primarily right now. Yeah. I love to hear the direct mail part. Because I know there's so many people that are gonna listen to this podcast, and they're just gonna be like, Oh, I can't believe like, who's the people are sleeping on direct mail? I actually think it can work. It works so well. Because no one does it. There's so little competition now that even in q4, I was shocked I got like nothing in the mail comparative to what I've gotten in years past like, and now they've got a there's several different platforms. A couple which we use that like integrate with stuff like a Klaviyo. So it's like you can do like abandoned cart mailers, and like best win customer win back mailers and just automate some of that stuff. Who's that? Do you mind? One of the ones we use as postal addicts. Okay, they can integrate and there's another one. I'll look it up and I'll put it in the show notes and stuff too. I can't remember their name. It's another like, I'm pretty sure it's another like post something. I'll look it up. I'll put in the show notes. But yeah, it's that type of stuff I love because it's just it's hitting them at the right time. You know, you've got email that automates obviously, you've got SMS that started to pick up over the past few years. And then now if you actually factor in like automating direct mailers, I love it. I think it worked great. Yeah, I agree. And it's it is slept on, it's fairly inexpensive to people don't realize how cheap it is actually. It's, it's pretty cheap. I mean, you end up doing sort of like a spray and pray. So it can get expensive if you're not careful. But you can test markets out for real, real inexpensive. You mentioned SMS, I'll mention this as well. A fun part of our industry is when you just randomly don't have access to something you had access to that morning. So for example, I we were using PayPal and we were trying to be really discreet about how we were using PayPal. We use it for about a year and a half. And then not only did they catch on, but it was not even a warning. It was hey, you were doing this you're permanently banned from ever having a PayPal account ever again. Thanks to my social so I can't ever use Pay Pal ever again. I'm no longer allowed as a person to ever run a Facebook ad ever again. So I have to have other people do it for me because I can't physically do it myself. The most recent one was SMS. So we were using RingCentral for our VoIP provider, an SMS provider. And our website is Trojan horse cannabis.com. Cannabis is in the name. So people would say to our sales reps, hey, what's your email address? And they'd reply on, you know, Eric Baca said Trojan horse cannabis.com. Well, that happened enough that the FTC or FCC got involved and told RingCentral to shut us down. So we just didn't have SMS one day. And we couldn't get it back. There was no appeals, there was no like, Hey, this is all legal products. We're not selling marijuana. It's hemp based cannabis. And they're like, yeah, it doesn't matter. The FCC says you can't say this, and you said it. So that's all there is to it. So I had to completely change providers to get a second shot at SMS sending. And that's that's not just like, Clay vo you know, this is like integrated in our salespeople. It's our it's our customer service line that people call and it was a big deal. So we had to drop everything and completely poured our numbers over and shipped over over the course of a month. And it affected our business in a huge negative way. Because we had people texting in orders that weren't getting we weren't getting the text and we didn't know who was texting us they didn't they didn't get any replies saying this person is no longer receiving texts or anything like that. It just went to a black hole. So yeah, things are things are complex stuff. That stuff is so frustrating, ridiculous. Like, I know sometimes like I'll you know, wake up, we'll sit down and be like, God, this collapse this broke or something. It's like, Oh, I gotta work on fixing this. And like, within a day or so you get it fixed. And it's fine, and is what it is. But in your industry, oh my god. It's like every week, something new is taken down, and you can't get back and getting it back is a nightmare. It's not like a quick fix, like, oh, I every time I have anyone in this industry on this podcast, I'm always like, man, so much power to you. The brands we work with in this area, it's so like, every day, it's just like, oh, this is broken Nast, we got to fix this and see if we can get back on. If not, we got to figure out another workaround. And it's, it's definitely a challenge. So that makes it interesting. But it is also really is sort of a crucible of marketing prowess. Right? Because there's, there's the tried and true methods that you just don't have access to. So you have to get like gorilla creative and go, Well, what can I do? There's humans out there, I'm a human, how can I get my product in front of those humans and get them excited about it? Without all of the traditional tools that normally people do use? And I tell you, if you can run a successful business in this space, there's pretty much any you can run any business because it doesn't get harder than this. Yep. I even think with firearms, adult toys. Those are difficult to but they have clear cut rules, or at least they're nationwide. And they're nationwide know what the rules are. You know, if you cross the line, you're in trouble. You don't cross the line, you're fine. Cannabis is more gray area. Like we don't really have direct rules three to follow. But if we don't like what you're doing randomly, we're going to shut you down. And so there's no playbook even to try to avoid getting shut down. Very complicated. Chris, thank you so much for being on the show. I don't want to take up too much more your time. I know you're super busy, but I'd love to give you an opportunity. Let everyone know where they can find out more about you and of course more about High Spirit.

28:26

Yeah, check me out on LinkedIn. That's where I'm personally the most active and I share lots of tidbits of regulatory and industry stuff all the time. So LinkedIn, Chris Fontes, separately Trojanhorsecannabis.com we can find our products highspiritsbeverages.com is our sort of clean landing page for high spirits. And I look forward to catching up with some of you offline.

28:47

Beautiful. Chris, thank you so much for being on the show everyone who tuned in, of course, thank you as well please make sure you do the usual rate review, subscribe all that fun stuff on whichever podcast platform you prefer, or head over to ecommerce show.com to check out all of our previous episodes. But as usual, thank you all for joining us. We'll see you all next time.

29:06

Thank you for tuning in to The E-Comm Show head over to theecommshow.com to subscribe on your favorite podcast platform or on the BlueTuskr YouTube channel. The E-Comm Show is brought to you by BlueTusker, a full service digital marketing company specifically for e-commerce sellers looking to accelerate their growth. Go to bluetuskr.com Now for more information. Make sure to tune in next week for another amazing episode of The E-Comm Show.