Marketing a Major MSO: David Spreckman of Verano

Heading up marketing for a major cannabis MSO has got to be either a dream job or a walking nightmare, or maybe it’s a little bit of both. In cannabis, of course, most decisions depend upon a multiplicity of factors that you can either see coming or not. With a company like Chicago-based Verano, the variables competing for attention must seem to multiply exponentially as the company adds states and stores to is growing portfolio, which currently includes active operations in 13 states with more pending upon the completion of its $413 million acquisition of Goodness Growth Holdings. For David Spreckman, Executive Vice President, Head of Marketing at Verano, managing the chaos inherent in such an operation is more of a dream job, albeit one he had to grow to fully appreciate, as he explained during a recent call with CBE.

“I came to Verano after the better part of a decade working in advertising agencies in Chicago,” he explained. “I worked at a very large agency for a couple years and then a smaller independent shop for seven or eight years on the strategy and account side, mostly doing brand development and brand building. In 2018, Verano had put out an RFP looking for some help, and the agency I was at met with the Verano leadership team to talk through our capabilities and what Verano was looking to do. We had a great conversation, and we did not end up working together, but I got to meet some of the leadership and about a year later Verano started thinking about building out an internal marketing function, and I got a call and went through some meetings and just felt that the opportunity was ripe.

“I myself had been a big cannabis fan and advocate for a lot of my life,” he added, “and at the time, in 2019, I had a sense of where this whole thing was going. Although I don’t think I really understood the magnitude of the rocket ship that I was stepping on to, but the stars aligned, and it was an amazing opportunity to get in pretty early in an industry that I found very compelling and was also personally meaningful to me.”

This was only three years ago, but Verano was a much smaller company in 2019, and Spreckman was indeed onboard a rocket ship about to take off. “When I joined, we had six dispensaries,” he said. “One in Illinois, one in Nevada, three in Maryland, and one in Michigan, and we had three cultivation facilities that were much smaller relative to what we operate today. So, from three to four states and three small grow facilities and six dispensaries to 12 or13 cultivation facilities, over a million square-feet, and north of 120 dispensaries. Mathematically, that growth is a little hard to comprehend, and as a marketer, it’s been a whirlwind of the best variety. But thinking about these kinds of things relative to marketing strategy, to SKU counts and brand strategy, it’s very difficult to summarize in a macro sense, especially in the way that we’ve done it.”

Spreckman’s own journey at Verano – four titles  in three years – has in some ways mirrored the evolution of the company. “When I came here, I started as the director of retail marketing, and my primary charge was growing our retail brand and our retail marketing platform,” he said. “We had a much smaller team at the time. My degree is in journalism and public relations, so I’m a writer by educational trade, and at the time, we were a pretty lean, intimate team. We did not have a comms department, so it organically fell into my lap, and it was something I ran with for a couple of years, and I thoroughly enjoyed it. As we’ve grown and expanded our team and our capacities, we’ve developed an internal communications team, and I’ve since offloaded that, but I was very much a part of it through our ‘go public’ and the myriad acquisitions that we did in our first year as a public company. So, as a professional and a human, that was an amazing learning experience to be so close with the leadership group and to really understanding the dynamics, the corporate strategy, and helping deliver those messages across a variety of stakeholders, both internally and externally. That’s an education you really can’t pay for, and I’m grateful for that.

“It’s been fantastic to be able to focus all of my energies and attention instead on marketing,” he added. “You mentioned stores and products, and that’s something very unique to the cannabis space. In my own experience, having worked through the agency on just about every category and sector of products there is, it’s a very rare opportunity and rare in business in general to be able to work on product development, manufacturing, distribution, as well as retail and the direct-to-consumer end. So, there’s a lot there and then as you split it apart state by state and understand that there’s really no economic activity across state lines, given that everything is siloed, there’s a lot to do with respect to managing brand portfolios, product roadmaps, pricing, packaging, positioning, promotion, just the fundamentals, and that’s before you get into growth, marketing, and acquisition.”

Had his education at the retail level, learning about cannabis consumers and cannabis products, been as important to him as it had been at the C-Suite level? “Absolutely,” said Spreckman. “The key piece for me is that in the early days with a very small team, running retail marketing meant opening up a store every couple of weeks across 5, 10 states depending on the day, week, month, which meant spending a week, two weeks at a time in market, in the stores, setting them up, talking with our teams internally, talking with patients and consumers, meeting with local media, local community leadership, and so on.

“And that is another educational piece that you really can’t pay for find elsewhere,” he stressed. “To the extent that it’s easy to get lost in the macro world thinking about national strategy, you truly cannot forget that these transactions take place inside dispensaries in all these states and all these towns and cities and municipalities, and just spending time there speaking with patients, understanding what it is that’s brought them in, what it is that they like and don’t like, there are insights in those 5-10 minute conversations that you really can’t get anywhere else.”

Stores and Brands

Operationally active in Illinois, New Jersey, Pennsylvania, Connecticut, Massachusetts, Maryland, Florida, Arizona, Nevada, Ohio, Michigan, West Virginia, Arkansas, per a company fact sheet, the Goodness Deal adds marquis states like New York and Minnesota to Verano’s portfolio, but also the smaller market of New Mexico as well as supplementary assets in Arizona and Maryland, where Verano already operates.

One of the industry’s largest publicly traded companies, Verano is carrying a lot of debt, but revenue grew 12 percent in Q2, and as one analyst, who recently called Verano stock “crazy cheap,” opined on its position relative to the competition, “The U.S. cannabis market returned to growth in April with the official launch of recreational cannabis in New Jersey. Verano is one of the best positioned MSOs with licenses in key Northeast markets opening up recreational cannabis in New Jersey, New York, and Connecticut.”

While Spreckman was not able to speak to company finances, the company has demonstrably invested not just in the infrastructure and operations necessary to open new states but also in the internal support needed to support that growth, to the tune of “$11 million on additional SG&A expenses in the quarter to cover the higher costs in the corporate office … along with beefing up staff in New Jersey with the recreational cannabis launch,” per the analyst. For a marketer, that sort of support has to be a godsend. I asked Spreckman about how one goes about devising a marketing strategy for two dispensary brands – Zen Leaf and MÜV – and its portfolio of consumer brands: Verano, Avexia, Encore, and MÜV, and now Savvy?

Having recently moved from California to Connecticut, I also mentioned how much the retail experiences vary in terms of consumer outreach and engagement. Fewer stores seem to directly result in less need for a shop to market to the consumer/patient. In Massachusetts, not one shop has asked for my email address in order to send me notice of future specials, a mandatory act in Los Angeles.

“The reality is it’s all evolving, and it has to be,” said Spreckman. “California is always a very interesting analog. I just spent the last three days of this week in San Francisco and L.A., just doing some reconnaissance along the West Coast, where a lot of cannabis culture is driven from, and what you have out there is this very different market dynamic where there are a ton of stores, a ton of brands, and licenses are not limited, which actually increases competition and creativity in a big way. And what you find are market leaders that have brand equity derived largely from, to put it diplomatically, legacy tradition, heritage. They used to be black market operators, they built a following, they’ve since become legal operators, and they have the admiration and respect of cannabis consumers for a lot of reasons, but that being a large one.

“In the states that we’ve developed our business in, these more tightly regulated limited-license markets,” he continued, “it’s a very different landscape, at least over the last five years. Although over time I do expect to see more similarities across the board, because states will continue to develop these programs and issue more licenses and allow for more growers and more retailers, which is great because more diversity and opportunity in the industry is a wonderful thing. So, I do think there will be more similarity in the very long run between the West Coast and other areas than there is today.

“For Verano, at retail, it’s a lot of what you described but it’s been in situations where in certain states – Illinois, for example – there were only 55 dispensaries for the first five years or so of the program, and many of our other states have shorter caps and limited-license numbers. So, it’s the level of competition, and you just view it very differently. What we’ve tried to do is build a sustainable and efficient marketing stack that makes it easy for customers and patients to find us, to engage with us, and then to keep shopping with us. So, there’s the full-funnel approach of acquisition, activation. retention, and then, taking it one step further, the actual transaction and referral on the retail side.”

What does that mean in terms of desired percentage of brands on Verano retail shelves? “I hate to default to the same answer,,” said Spreckman, “but it’s really going to vary state by state. The idea that variety is a positive at retail is pretty obvious, at least to me at the moment, to cater to as diverse and wide an audience as you can. And just back to my previous answer, historically, in our limited-license states, we built a lot of marketing around retail, because there was sort of a fixed number and an easy opportunity for us to capture market share through geographic moats, if you will. But in the long run I think it’s CPG brands that consumers connect to, and I think that’s true across most consumer products. You think less about the store that you buy it at and more about the product that you’ve got an affinity for, and to that extent, I think our focus has shifted quite a bit into our own brand and product portfolios.

“As an example, over the last year we’ve completely top-down rebranded all of our legacy brands – Verano, Encore, and Avexia – and we’ve adopted and began to implement more of a tiered portfolio strategy,” he added. “Where we used to focus on Verano at the real high end of quality in flower, vape, and concentrate, we’ve since split that into a couple of varieties that are the top-shelf and middle-shelf between Verano Reserve and Verano Essence. And then, most recently, on Labor Day weekend, we launched our value tier, Savvy, to round-out the good-better-best in the flower, vape, concentrate categories, with the idea being that the consumer base is growing, the industry is growing, and where things are today and where they should and could be headed over the next 5-10 plus years, we want to be able to capture consumers across the value spectrum as well as the wellness to the recreational axes of this portfolio chart. We’ve gone from focusing on the strictly premium to adopting a much broader portfolio strategy to be able to reach as many consumers as possible.”

How does one go about distinguishing their brand from other similar brands? It could be any product; in this case, it’s cannabis. That’s a great question,” said Spreckman, “and that’s the beauty and magic of brand strategy. I try not to view it as commoditization, because I think there are things that are very different from state-to-state and from company-to-company and brand-to-brand. But that’s really where storytelling becomes seminal, particularly among the largest companies in this space today, all of which share many states, have similar footprints, offer similar products. It comes down to the fundamental pricing, packaging, positioning, promotion, things that oftentimes are overlooked in discussions about marketing and brand strategy, because I think there’s a tendency to focus on the things that are big and colorful and noisy rather than the things that are fundamentally critical to establishing and developing and growing brands.”

Verano is developing new brands, including with celebrities. I asked Spreckman if he thought celebrity wins out over quality, and asked him if, as I am being told, cannabis consumers in general want the new product. “In my mind, price, flavor, potency still maintain their influence over consumer decisions,” he said. “New is good in any category; that’s sort of an age-old trick across the board. But with respect to the celebrity thing, we’ve seen more than our fair share of squandered examples in cannabis, and of late we’ve seen a couple things that at least on initial read seem to be proving out concept. I’ll give you an example. We have started to do some work with the team at Tyson 2.0, as well as their Ric Flair Drip. So, Mike Tyson and Ric Flair have both launched cannabis brands, we are doing some manufacturing for both of them, and at least in my view, I’ve seen some of these things rise and fall very quickly because everything is great when it’s new, and as the newness fades away what becomes the USP (unique selling point); what makes that stuff special other than having somebody’s name or face on it.

“And I view the Tyson and Ric Flair brands as really experiential in orientation,” he added. “We’ve done this in a couple of states now where we produce some products, we have Mike Tyson come out, he visits stores, we do pop-up photo booths, he signs autographs, and we see 1,500 or 2,000 people show up at a dispensary and wait in a line down the block and around the corner and down the next block for a chance to take a photo with Mike Tyson. Does that speak to efficacy of product? Not specifically, but what it does speak to is that, if leveraged properly, the strategy is sound, and you’ve got a real plan in mind beyond just make a product, put somebody’s name on it, and put it on shelf; that there is a way to leverage for growth.”

Was there something along those lines to learn from the development of Cookies as a national brand of sorts? “It speaks to the potency and influence of true cannabis culture, and I really mean legacy producers in an illicit context,” said Spreckman. “You see it with the leaders on the West Coast. There’s something to be said about those that are really cannabis people – not the casual consumer who will come into a store every few months to try a gummy or get something to bring to a friend’s house – but a cannabis consumer who shops a couple of times a month and wants to try the latest and greatest and is interested in genetics and understands terpene profiles and is really into cannabis.

“There is a credibility with those types of brands that you can’t manufacture,” he added. “As much as you would love to be able to, you can’t manufacture history. So, I think for sure there’s something to be learned, or at least appreciated. I don’t know that it’s necessarily something that anybody can just adopt and embrace, but there are certainly elements of it that you can look at and try to not emulate but figure out if there is a fit for it with your model. Now, everything that we’re talking about is in a broad sense dependent on your objectives and who you are and who you want to be, but certainly, when I look at the Cookies of the world and the Jungle Boys, and some of the big names in California, you can appreciate that they’ve built that brand in the most organic way possible, and I think any time you see that you have to be slightly impressed, and try to understand if and what you can tap into given the very different nature of your business or situation.”

How does Verano self-identify, given the seemingly growing chasm between the legacy and corporate sides of the industry? “One of the reasons for my visit out west – and I go as regularly as I can to all the regions, and try to touchdown in each of our states – is to take the temperature on the ground, because it’s so important to never lose sight of exactly who it is that you’re serving and how the dynamics are shifting because they move fast, especially of late, and in light of broader macro-economic trends and headwinds that are certainly making things more interesting to the question.

“It’s about understanding your strengths and weaknesses and opportunities,” he added. “There are things legacy operators have that others don’t that they can leverage and maximize, and there are things that we have that others don’t that we can leverage and maximize. It’s figuring out that balance and making sure that the end-result is ultimately a value proposition for consumers. And it’s going to continue to evolve, and we have to look at it on a state-by-state basis, because how we’ve crafted our offering and experience in Florida looks very different than it does in Arizona, and very different than it does in Massachusetts, and Pennsylvania. But the thread that ties them all together is what is our strength, and how does that translate into value for our consumers.”

To that end, one day the walls between states will come down. I assumed Verano’s aspirations for its retail and consumer brands when that happens are large. “They are,” agreed Spreckman. “The pie-in-the-sky scenario would of course be that we develop powerhouse national brands. The reality is that they are cultivated in more geo-specific areas over time, and to the extent that – unlike traditional CPG and other consumer categories – we’re not running national advertising campaigns, we’re not on television, we don’t have access to paid Google products, including YouTube, and we don’t have access to Meta – the largest, most efficient advertising platforms in the world are unavailable to us, so everything is sort of siloed into more specific campaigns.

“The idea is that you build really strong brands that are effective, that perform, that connect with their intended consumer base, and that they should be somewhat transferable across state lines,” he added. “But things are going to get changed. Some states don’t allow the use of colors, some states don’t allow certain form factors, so you can’t just build something and say this is what it looks like nationally and run with it. You’ve got to have that vision at the national level, and then you’ve got to have the tactical know-how to make it work in 10 or 11 different states at one time.”

Does that mean being flexible in terms of the types of partnerships Verano is open to entering into? “Our preference is to be vertical, and for the most part we do not have manufacturing partnerships or co copackers or anything like that,” he said. ‘The numbers are a little fuzzy, but I think we’re in 13 states and in 10 of them we’re vertical. Our preference is to control a decent sales pipeline, to be able to influence exactly what is made, how it’s made, when it’s made, to be able to be aggressive and assertive with product roadmap, to be able to react to trends, and to hopefully influence trends, all the way down to price points and direct consumer engagement.”

Did Spreckman have anything to add on that subject of lagging federal legalization of cannabis? “It’s a whole subject on its own,” he said. “Federal legalization is such a dynamic concept with so many moving pieces, and there is a lot left to be sorted out. Certainly, banking reform would ease burdens not just on us but the industry as a whole. It would provide an opportunity for companies to continue to grow, to hire and develop careers, and find efficiencies and do things without such hurdles, things that other industries are not are not burdened with. Without getting too deep into policy and what federal legalization might look like, I will say that some level of banking reform would do tremendous things for the health of the industry and for existing operators, as well as everybody else that’s going to be coming online over the next handful of years. And particularly with the social equity licenses across some of the states that we’re in, it’ll make things a lot easier and more efficient for everybody trying to make way.”

Regarding any news or product releases he wanted to add, Spreckman reiterated the company’s most recent announcements, plus a tease. “By name, the Savvy launch,” he said. “It’s a volume value brand – flower and vape – that we launched across seven states over Labor Day weekend. We’ve got a couple other exciting things in the work that should launch end of October that I won’t call out by name except to let people know we’ve got a lot more coming that we think will be very exciting.”

Any other new states or markets coming online that he could mention? “We’ve certainly got a pending transaction that’s public information – it has not closed – that would bring New York and Minnesota into the fold, which I think presents some very compelling opportunities for us. And as well as the Connecticut adult-use transition, which is probably relevant to you.” It was.

Before we rang off, I asked Spreckman if the prospect of New York had him salivating as a marketer. “Just based on the scale, it absolutely does,” he said. “A lot to be done with respect to the closing of transactions, but at a very high level, to say I think New York is exciting would be somewhat of an understatement.”

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