“We know more about how cannabis is sold than any other organization out there.”
— Cy Scott
Market intelligence matters, for product manufacturers, and ultimately for consumers. When companies really understand what consumers want, based no real-time sales data, they can offer better options. This idea is the basis of Headset, a cannabis market intelligence firm serving manufacturers and retailers across North America. Cofounder and CEO Cy Scott is our guest, and he shares insights into how:
- Headset gathers and analyzes sales data from dispensaries that in turn can help businesses optimize customer retention.
- Cannabis is not just a recession-proof product, it’s pandemic proof.
- Banks, hedge funds, venture firms use this data in deciding what products and companies to back financially.
- Cannabis beverages are a product category that is gaining popularity.
- Federal decriminalization is coming sooner, rather than later.
Transcript of Podcast Episode with Cy Scott, CEO of Headset.IO
Copyright Kannaboom © 2021
The cannabis industry is growing up fast, which means there's lots of metrics to measure. Cy Scott is co founder and CEO of Headset, a company that gathers and analyzes sales data from dispensaries around the country, so their cannabis industry clients can map business strategy with real time trends and business intelligence. Cy is our guest for this episode, and it's a conversation I found fascinating, and I hope you do too. If you like the podcast, please subscribe at Apple podcasts or Stitcher or your other favorite podcast player. And please leave a review so other people can find the show. And if you liked this episode, please share with friends so we can help grow the movement. And here is my interview with Cy Scott.
Cannabis is booming, and Kannaboom is on it. Welcome to the Kannaboom podcast where we interview experts on the changing story of humans, health and health from San Diego. Here's your host, Tom Stacey.
Hey, welcome back to the Kannaboom podcast. Our guest this week is Cy Scott, CEO of Headset. Hey, Cy, how are you?
Cy Scott 0:54
I'm doing great, thanks.
Headset is in a really interesting space where there's an old truism, you can only manage what you measure. That's your specialty, right? It's data about the cannabis industry.
Cy Scott 1:05
That's right. That's right, at Headset, where data and analytics are primarily market intelligence for the cannabis industry. So we really help people understand, you know, what's going on, what the opportunity looks like, what's the competitive landscape look like? And if they're a brand operating in the space, really measuring their overall market position.
It's so interesting, because it's such an explosive moment in this industry where all that demand was pent up over so many years. And now the industry is just rolling.
Cy Scott 1:33
Yeah, that's right. I mean, that's one thing. We're a technology company, you know, software as a service company. And it's interesting. And we have a number of investors that come from the traditional tech investment world. And what they really like about the cannabis opportunity, as opposed to just traditional tech is that, you know, this is a product, you know, cannabis that's had demand for as long as anybody can remember, right, 1,000s of years, probably. And there's finally a legal framework being developed around it. You know, where traditional technologies are more of a kind of inverse of that some technology comes to market, you have to create the demand. So definitely exciting, an exciting category to be a part of.
How did you guys get started? How long have you been in business?
Cy Scott 2:18
Well, I've been in the cannabis industry for a decade at this point, which is just wild to say that doesn't feel like that long. But maybe that's a testament to just how fast now, you know, continuously interesting spaces. So I started with Leafly. So I co founded Leafly with my same cofounding team at Headset. We started that back in 2010. And for those that don't know, Leafly is a consumer resource to really help demystify cannabis strains for a mainstream audience. Back in 2010, we're in California at the time and saw an opportunity with the proliferation of dispensaries and people were getting more access to dispensaries more dispensaries were opening up, more strains were available and there really wasn't a lot of good information on you know, the different strains, you're really at the mercy of the budtender you'd walk in and, you know, you're confronted with strains that, you know, were sourced from, you know, wherever untested, and so on. So we created a platform where people could share their experience with the different strains rate and review. And we aggregated that up and made that available to the consumer. So that's where I got my start. And we ended up selling Leafly a number of years after that, and we stuck around with the new acquires a group called Privateer Holdings, which, for those may be familiar with Tilray they started Tilray and they're now essentially Tilray. And at that time, with Privateer, you know, we built up Leafly into something pretty substantial. And it continues to do really well today, but we saw an opportunity on the data side and it was really driven by a couple of factors. I think one, the maturity level of the industry was growing. So you know, again, going from the early days where you'd walk into a dispensary and you'd be confronted with you know, dried flower and jars sourced from you know, whatever grow you never really knew for a lot of these locations to more of a packaged goods world where you started to see you know, things like edibles and vape pens and even packaged flower with brands starting to appear. And that was one trend, more money coming into the space attracting, you know more people that with diverse backgrounds, often people with backgrounds in you know other consumer packaged goods industries and kind of coming to the market and really starting to ask, you know, data questions, and then the other. The other factor is just thinking about cannabis as any sort of fast moving consumer goods or consumer packaged goods which in inevitably or arguably already is you know any CPG company leverages data to drive decisions, you'd be hard pressed to find any successful company out there that decides to make a new product without looking at the numbers without really looking at, you know, what is what is the opportunity to jump into a category so you know in our world it's saying, you know, I want to get into edibles but I need to understand should i be making a chocolate should I be making a gummy and if I do want to make a chocolate you know what milligram of THC should I target, should it be a 10 milligram chocolate, should be 100 milligram chocolate and when I do jump in what other brands are there and how well are they performing and what kind of consumer does that brand resonate and do I want to take away their consumers with my competitive product or do I want to expand the category the chocolate category by bringing in new consumers or attracting a new audience so all those questions we knew were inevitable and that really is what drove us to start Headset.
Wow what a journey, those are some of the biggest names in the industry. When you talk about Leafly, I think you guys did a superb job of sort of modernizing access to information, as you say, that people really needed ratings and reviews. I mean the old High Times, they certainly had an audience of aficionados and enthusiasts but you guys brought some data science to just presenting product.
Cy Scott 6:18
Thank you. Yeah that was really important and we really made it for ourselves, you know, we wanted a resource like that and it was a great way to kind of understand our pain point as a cannabis consumer. And something that, you know, we enjoyed much like, you know, I enjoy beer or wine you know not necessarily the defining factor of who I am but something that that I like, you know, from time to time and it was really hard to get good information. And I think most outlets at the time, to your point, you know, really were focused on kind of the stoner stereotype, which is, you know, certainly a segment of the market. You know, there are a lot of enthusiasts out there that, you know, push the market forward and a lot of ways but there's a lot of, you know. just general mainstream consumers that needed a platform to kind of understand what was going on and so that's that's really what we set out to solve. We've thought like we did a good job and kind of solved that problem and gave people the consumer a lot of information and Leafly continues to do a fantastic job of education you know going even further where we started with kind of the sativa - indica - hybrid conversation into things like helping people understand, you know, terpene profiles helping people understand, you know, alternative formats of cannabis as it is so much more than just dried flower, and so yeah we were really happy with where we got it and then it very similar story on the data front you know really just saw a massive gap in the space. You know, there wasn't a lot of good comprehensive information around what is resonating with the consumer, what types of products are selling at retail or at dispensaries, what type of categories should businesses be investing in and what's trending with consumers and that was really you know was the impetus to start Headset.
Real market intelligence, so that you're taking the guesswork out of it for entrepreneurs who are coming into this space and trying to serve customers
Cy Scott 8:17
That's exactly right and you know all of our data starts with dispensaries and retail so we work with the dispensary or operators, you know, across a number of markets pretty much every legal market whether medical or adult use and we hook into their systems of record systems of record include things like their point of sale software their e commerce software and so on and we give the retailers and dispensers — and sometimes I use them interchangeably it really depends on if they're in the medical market, often, you know — dispensary if they're an adult-use market, often considered retail, but essentially the same thing obviously, nuance in the different markets types of products they sell. But you know we work with the retailers integrating with their systems of record and we give them business intelligence so that's data about their data so analytics on their own data so that they can really understand their operational efficiencies their sales trends, you know staffing trends in discount planning or customer retention, just everything about the business that you really want to understand beyond kind of top line reporting we give that back to the retailers based on their own data. But we also bring in what's considered benchmarking data so that they can really understand, you know, how they fit in the market and it's really important if you put yourself in the shoes of a retailer and you're really dialing in your operations, you know, you're making efficient purchase orders for your inventory and you're you're running the right promotions and you're bringing those loyal customers back efficiently and maybe your sales are up or maybe they're down and then you can actually look at, you know, the benchmarking data to really understand, you know, is that just overall market trends like our sales up in general because it's summertime and you're in a market that has a sizable amount of tourism? So you know, you're your sales rep, but everybody's sales are up or your sales up more than the market because the work you're putting into your operational efficiencies are really paying dividends. So that's how, you know, we source our data. So working with retail and dispensary cooperators, and then we do this process of what's considered product coding. So this data normalization, and it's really looking at all these disparate retailers and looking at the products they sell. And you can imagine they're all entered differently in their point of sale. You know, there's no common thread across these products. There's no UPC, for example, like you'd see at grocery. So we have to normalize all this data, we've got a pretty sophisticated process that does that. And once we do that, we can say, you know, a certain product that's sold across the California market, that's part of this brand, and this category performs this well. And we feed that data into our market intelligence product, we call Headset Insights. And that's really, you know, where customers come to really understand that competitive landscape to really find the opportunity and measure their brand position. So it's a very rich set of data, it's very different from even traditional market intelligence. And, you know, for those that are close to market intelligence world, you know, you may be familiar with brands, like Nielsen brands, like IRI, you know, these are big, you know, market data, brands that do a lot of what we do, but for the traditional grocery industry, for example, one of many industries they do this for, but we really have a different lens into the data, because of the integrations at the system of record, we can see some really compelling information like the receipt, so we know, you know, co purchase behavior, loyalty data, so we know demographics, information, and you know, how often do these consumers come back and purchase the same products or purchase the varieties of products, you know, pricing, you know, wholesale, pricing margins, and so on, and we feed that in aggregate back into our market data. So it's a very compelling lens into the industry, I think it's the best lens possible, I like to say that we've, you know, we've got where we know more about how cannabis is sold than any other organization out there. And for me, you know, as a CEO of the company, you know, and just being so invested in the cannabis industry, I find it, you know, just a really compelling position, because this is an industry that is being built today. And we're going to be seeing brands that are developed today that will, you know, be brands, you know, decades from now, much like, you know, alcohol or like you had Anheuser Busch, you know, 100 years ago developing, we're seeing those brands being built today. And you know, with Headset and our lens into that data, we get to see it happen right in front of our eyes.
The parallel I think in the content world is like SEO, you probably learned at Leafly that what you anticipate the consumer looking for isn't always what they're looking for. Have you seen any big surprises in terms of the retail channel and what people might expect? And what the reality is?
Cy Scott 13:02
Absolutely. I mean, it really varies market to market. And that's another, you know, interesting thing about the cannabis industry is that it's very fragmented, you know, products sold in California are going to be very different than those sold in Illinois, or Michigan or New Jersey's MediCal program. And so it does vary market to market. But I think it's some general trends that are pretty compelling. Our, you know, categories are what we considered categories, so format, so flower, edible pre rolls, vape, pens, and so on. You still see flower dominating a lot of sales and flower is what is synonymous when people think about cannabis in a traditional form, is really that the flower format, the flower for a new consumer can be quite challenging. If you think about it, like if a new consumer was to come into the cannabis category and want to purchase products for the first time and walked into an adult use store in California. You know, flower may be tough, because you need a lot to consume that flour, you know, you need a grinder, you need to be able to, you know, create a pre roll out of it or maybe have some device to vaporize it or to smoke it. And that's, that's quite challenging. I think for you know, consumers with experience, it's a little easier to go into that. But for new consumers, and even experienced consumers that are looking for something different, I think the other formats and the rise of those other formats is pretty compelling. Then the vapor pen category, you know, didn't exist 10 years ago or barely existed. It's very, very early. You know, the edibles category have always existed in the sense of you know, the edible that the brownie, you know, that's always been around, but not in like a package good sense, you know, where you really can go and, you know, you're confronted with all these different types of packaged products with different flavor profiles, different positioning and so on. So really seeing the rise of some of those categories. You know, right now, it seems that there's a lot of talk about beverages and there's some interesting things going on in the beverage category and it's still a small percentage of overall sales. You know, sub 2% you know, even 1% in some markets go to beverages, but people are really excited about beverages. Beverages are a format that is something that consumers understand, you know, from, from just the beverage world or the beverage alcohol world. It's a nice, easy parallel. And there's a lot of innovation that's happening in that category. So we're starting to see some growth there. Continued growth in categories like you know, vapor, pens, edibles, but flower still dominates, about, you know, 40 to 50% of sales, depending on the market that you're looking at. But that's kind of just just averages. So there's still a large share of sales going there. So I think that's an interesting story. Just what does the category landscape for cannabis look like? And, you know, what is it gonna look like 10 years from now are beverages going to be, you know, 5 or 10 percent of the market is flower going to continue to dominate? Or is it going to become, you know, smaller as people are looking for, you know, consistency, you know, used to a certain type of product, not something sold in, in bulk. So that's one interesting thing. I think another kind of unique aspect is, like the demographic and the generation profile. So Millennials are the majority of consumers and Millennials are actually getting older. I think the oldest Millennials are just turning 40 this year. And it's amazing time flies, because I always think of millennials as, as a bit younger. But they do command a sizable percentage of, of category sales. But that's being also taken over by Generation Z. So Generation Z, this is an interesting story Generation Z in America, you know, where you have to be 21. And over to consume adult use cannabis generation Z's already accounting for over 10% of sales. And when you think about that demographic, or that generation, in the legal markets, it's really 21, 22, 23 year-olds, you know, that are considered Generation Z. And so three years of age, and they're already accounting for 10% of the market, and they're aging it every day. So someone's turning 21 every day, right, so more and more access. So you're starting to see that grow and taking a larger percentage of the category which is, which is really exciting. And when you put yourself in the shoes of a Generation Z individual, you know, they've been born into a world where cannabis has been legal in some format. They're born into a world where maybe, you know, cannabis has been legal medically in California since the 90s. Right? So you know, to them, it's not as stigmatized, it's, it's much more normalized. And you're seeing that reflected in category sales of cannabis in general, they're, they're coming to the category, they're purchasing cannabis. You know, they're purchasing different forms of cannabis, or they're paying different rates, or they often have a smaller wallet share. So you know, they're, they're spending less, but they're also younger, right? So as they grow, they'll continue to spend more as they have more purchase power. So it's really an exciting trend. And great to see, you know, when you look at the traditional CPG world, the worlds of Coca Cola, worlds of Dannon and General Mills, you know, when they, when they talk about Generation Z, it's really disruptive to their business lines. You know, these are, you know, the Cheerios, you know, from General Mills, you know, generations, he's looking at alternative cereal brands, right? Not just the same old, but in the cannabis industry, you know, a new demographic like this is actually really driving, it's an accelerant to the whole space. So that's pretty exciting to be able to see from Headset as well.
Yeah, boy, what you're talking about, there's a whole matrix of usage happening between demographics and regions and stuff. And, you know, we talk about this often on the show where the generalizations about cannabis are, well, you people use it to get high, but there's not one single thing you can say about it. That's true all the time, people are using it in many different forms for different purposes, their usage is going to vary quite a bit.
Cy Scott 19:03
That's absolutely correct. I mean, you know, from the medical consumer, who may need, you know, high-potency products, to help with whatever, you know, conditions that they're suffering from, all the way to recreational consumer who wants to consume socially, and wants to have you know, a low-dose two-milligram mint, or maybe a two milligram beverage that they can have a few of in a social environment and not, you know, get get to high. So there is a spectrum of consumers. There's a spectrum of kind of purchase intent, you know, what are they using it for? There's also, you know, formats and availability in different markets have restrictions on certain types of formats. It really varies. It really varies. And I think that's, you know, in some ways, what is so interesting around this, this industry is that, you know, we don't really know what the future will hold and how this thing will look, you know, decades from now we have we're starting to see some patterns and some trends but it's it's still wide open, like the book has not been written, it's being written, you know, while we're talking here and that's really exciting to see and, you know, keeps me engaged. You know, it's something that's compelling and I think other people are recognizing that coming into the cannabis industry looking for opportunities to join and now they recognize that, you know, high-growth category compared to many consumer categories out there and just have some some of those natural tailwinds and will only accelerate even further when we see some federal changes here in the U.S., sooner than later.
So tell me who your typical customer is. Is it a brand coming to you saying we need some intelligence?
Cy Scott 20:43
Yeah that's right we kind of segment our customers into into two types of audiences so we have what we call consider you know cannabis license holders so that would be a retailer, a dispensary, product manufacturer or distributor anybody with a license you know in an illegal market to either you know produce a product or retail a product you know that's our largest customer base right now and thereby buying different types of services, whether it's from the retail side, some of those operational efficiencies really better targeting their customers, better optimizing inventory and so on all the way to the brands that are looking at, you know, when they want to innovate or move into a different segment of the category, you know, how do they how do they make those decisions those through, you know, Headsets Market Intelligence data, that's one line of our business, is kind of the operators but what's really exciting is we sell to what we consider ancillary or non-endemic cannabis customers. And those those types of customers vary from financial institutions, so banks, hedge funds, venture firms, you know, there's a lot of capital that's looking at the cannabis category you know as an opportunity and so they want to know what's going on they want to understand, you know, what what brands to be investing in, you know, what does the industry look like in the years ahead, so they leverage, you know, Headset data for that consumer packaged goods companies so companies like beverage alcohol or traditional CPG are buying our data. You know, it's pretty exciting to see some of these bigger names kind of looking at the space as an opportunity, you know, also looking at it as a competitive competitive assessment kind of understanding, you know, what is the risk of my business. You can imagine an alcohol company, maybe a beer company in California might say, 'Well my sales are down, is that impacted by cannabis legalization and you know should I jump into the category to help support that?' We've seen some beer brands create some products you've seen you know Lagunitas which is a kind of craft brewing company has a cannabis brand, Pabst Blue Ribbon has a cannabis brand in California so you're seeing more and more of that and they're used to using data so certainly you know that's a type of customer that's buying our product to so really the license holders and the kind of the non-endemic, the ancillary type of clients, whether it's financial services CPG hardware manufacturers you name it anybody who wants to know what's going on with the cannabis industry can come to Headset we'll help them out.
You mentioned something that's going to be huge, federal decriminalization. Do you see some players coming off the sidelines as that evolves?
Cy Scott 23:24
Oh absolutely, absolutely. I mean you're just seeing it happen now even with federal prohibition you know like in Canada for example you know last week and getting Canada is a country with federal legalization and so you know they're in a world where there's no federal overhang like we have in the U.S. You know just last week there was a big announcement between BAT which was formerly known as British American Tobacco and Organa Graham, a Canadian lP and BAT is looking at you know the the cannabis category as a beyond nicotine opportunity and they're really trying to push a large percentage of their consumers away from combustible products so you know with traditional you know cigarettes and you know the the cigarette industry I think is challenging and you know they're going to run out of emerging markets where their growth has seemed to be as you know less and less consumers are smoking in markets like the U.S. and in Canada so they're looking at opportunities there and you see him making pretty sizable bets, I think that was a couple 100 million dollars they put into Organa Graham and they're bringing some of their vapor technology that they've been experimenting with some of their vapor brands which is great for Organa Graham because they get some great innovation probably at a significantly cheaper price then maybe having to innovate on their own so that is certainly happening and then you know the trends with those beverage alcohol brands that i was just mentioning earlier is also happening but I think it's going to get even bigger and when you think about Canada, federally legalized, I mean, it's great. But Canada as a country, you know, is relatively small compared to the U.S., I think you know, about a 10th or so of the U.S. So when you have a market like the U.S., which is 10 times the size, where many traditional CPG type brands have their headquarters or have a majority of their sales, I think it's going to be wide open, and you're going to see more and more of them coming into the category. And federal legalization, you know, is right around the corner. I mean, we, we've seen those signals, you know, from the new administration, I think they're, they've got some aggressive policies. I mean, just this morning, actually, I was reading about a number of bills that are being introduced or reintroduced to Congress. So you know, something is certainly going to happen. And then you have markets like Mexico, which are just on the cusp of adult use as well. And it's going to create the largest adult use cannabis market out there, at least until the U.S. and you know, federally legalizes but you know, you've you've got the situation where the United States has some progressive policies, and as those signals that they're going to be making some changes in the momentum in the States, the momentum with these large operators, businesses are really getting their, their feet under them. It's not, you know, as fragmented, where it's just small shops, you kind of what it used to be, you know, 10 years ago. So getting kind of more lobbying efforts are getting more, you know, voice out there. And I think people also recognize that we're in the situation where a majority of consumers, you know, approved cannabis approved cannabis legalization, and also a lot of states have it, you know, a number of states, you know, have adult use, a majority of states have medical, and it's just untenable, the situation we're at, with the federal government. So it's finally going to be taken care of, which is very exciting. And I'm really excited to see, you know, what that means for the future, I think, you know, there are going to be a lot of these, you know, ancillary kind of non-endemic groups coming in to the category, I think they're going to be, you know, probably doing a lot of M&A buying, you know, brands that have been establishing themselves over the last handful of years, they're probably gonna be doing a lot of innovation in the category, I think they're gonna continue to push the normalization aspect of it. And then there's a lot of economic opportunity for everybody involved. And then finally, you know, there's the social equity component as well. And hopefully, you know, with federal legislation, we can kind of include that, you know, a lot of different states have that we try to do things that have been said, to support that it is a problem that prohibition has had. And so hopefully, with more organizations, more capital coming in, there's more opportunity to fix a lot of the harms that prohibition has caused over the years.
Yes, and data can certainly help give you a clear picture of that. You know, you mentioned Mexico, I know their house and senate are, are moving it forward, as we speak, and Canada's already there. So well, you guys throw the analysis across the whole of North America data as data, right? Are you looking at those regions as well?
Cy Scott 27:58
Absolutely. We certainly are. And that's, we showed that with Canada, so we've got a sizable footprint. In Canada, we have an office in Toronto, a number of Canadian employees. As soon as Canada rolled out their framework, we invested pretty significantly to be able to capture that data, because it is, to your point, you know, data is data, every market kind of has the same needs, every markets gonna have different different operators, different dynamics. And so it while you can, you know, make some assumptions around, you know, what is what is Mexico going to look like. And we certainly do that with some of our projection work. And we kind of try and we try and look at what we've seen other rollouts look like, and we look at what you know, Mexico's legislation looks like as far as licensing, and we look at their their population and kind of per capita consumption, and we make some assumptions around the size of the market. And that's fantastic. And I think it's where you start, you really need to understand the opportunity of the category, but to really drill in and to go all the way down into a specific product and understand, you know, how well does this SKU or this product sell in, in a given market, you know, you need to do the type of measurement that we do. So it is very important for us. And we're looking very closely at you know, what does Mexico look like? And can we reproduce what we've done in the U.S. and what we've done in Canada, in Mexico, you know, as they as they roll out their legal framework, and you're absolutely correct, it does sound like it's all occurring, you know, right now, and I think, you know, any week now we're going to see a presidential signature and that go into law, and be pretty exciting to see and I certainly could use you know, once the we're out of this pandemic, it'd be nice excuse to get down to Mexico for a week or two as well.
Sure. Get down to Cabo. Speaking of the pandemic, the word 'unprecedented' gets tossed around a lot for the last year, a lot of things that nobody saw coming, including, you know, the designation of cannabis as essential. What did your data tell you were there any surprises that came out over the last year.
Cy Scott 30:01
Yeah, when the pandemic happened, and it's pretty insane to think that it was about a year ago, right now when, you know, we as an organization, and many organizations, you know, enabled remote work policy and shut down the office. And there were a lot of if you, if you remember those times, there was a lot of stockpiling, somewhat panic buying if you remember things like toilet paper sales from a year ago. And we saw some of that same purchase behavior happening in cannabis, we saw a very large spike in cannabis sales. And this was a time when we didn't know if cannabis, retail cannabis dispensaries were going to be allowed to stay open. It was still an unknown, you know, much like restaurants got closed, you know, many businesses were forced to close and deemed in non essential services, there was the fear that, you know, cannabis would be classified as such. And so there was a lot of stock buying behavior. So consumers kind of flooded into the category buying a lot of cannabis products. And then it dropped off after that, as you can imagine, you know, people had a lot of supply, you know, maybe spent a fair amount of money and didn't have the resources to purchase more. But then it started to level back off. And actually, you know, sales were higher. Even during a pandemic, I mean, every year sales are higher in the cannabis industry, even in markets like Colorado, which have had, you know, illegal, illegal market for six, seven years at this point, you know, we still see growth, which is amazing. But even in a pandemic, it's amazing to see that, you know, consumers are still, you know, purchasing cannabis, especially when so many people, you know, are losing their jobs or struggling, you know, have Have you had challenges that are the result of the pandemic. So, I think it really shows that, you know, cannabis is a very resilient product, the consumer demand will always be there. You know, it, which bodes well, for those that are in the industry, I think, because, you know, when you think about, you know, future potential recessions, you know, I think it will show that cannabis is a very much recession-proof product, if it's a pandemic-proof product. So that's, that's certainly, you know, something we've we've seen, also, I think it's just good to note that, you know, to the legalization question, the fact that cannabis dispensaries were considered essential services, if the federal government, you know, still considers, you know, cannabis Schedule One drug illegal, I think is a good signal again, that, you know, we're gonna see some change here, nationwide, sooner than later.
Some of us make suppositions about what's happening. You know, it seemed to me that during the pandemic, a lot of people want to relax and they go into euphoria. And, and maybe people were drinking too much. After a while, they realize this isn't good. Maybe I'll try cannabis. Do you guys make judgments about what might be happening? As you extrapolate the data? Is that a theory? Or do you just let your customers make those suppositions?
Cy Scott 33:07
Yeah, we, through our integrations at the retailers, we don't necessarily get purchase intent from the consumer. So we can infer some things around that. It's kind of like if you're a elderly consumer, and you're buying, you know, things like capsule format products, we can assume it's probably for pain mitigation, maybe you're looking at, you know, trying cannabis instead of some prescription, some prescription drugs, just based on the profile of the consumer, the type of products that they're purchasing and how those products are positioned. But to really understand, you know, is this, you purchasing this because you want to, you know, move away from alcohol and switch to something that might be a bit safer? You know, those types of questions we get from, you know, qualitative surveys, you know, which often we leverage through partners to be able to kind of access that information, we actually have a partnership with Nielsen, you know, the leader in market intelligence, and they're able to run a number of surveys to that point, so we can round out kind of our quantitative data. So knowing that what's happening with some of the qualitative data to really understand, you know, what's, what's driving those consumer purchases, and it paints a nice holistic picture, you can imagine that, you know, if you just have qualitative data, the self-reported data, it's kind of like, if someone went to the grocery store last week, like let's say, you know, you picked up some groceries last week, and I asked you, you know, when you did that grocery run, and you spent $200 at the grocery store, can you tell me what you got? By memory, you know, or what drove you to the grocery store and there's some self-reporting bias that that often happens. Maybe you might say you bought some things that are healthier, maybe you would not tell me that you bought, you know, a lot of chocolate chip cookies or a lot of you know, something that doesn't look great. And so sometimes it's great to have both where you get the quantity. If you can actually see the receipt, you can see that you know the source of truth of what was actually purchased. And then you kind of round out that data with, you know, asking those questions. You know, what, what drove you into the category? What? What made you buy that brand over another brand? What do you remember about that decision that you made? And that's a very powerful story, right? For anybody that was really trying to understand, you know, what, what actually is driving this, because we all have our assumptions. And we all kind of have anecdotes and our own personal experiences. But when you look at it at scale, and really try and follow these trends, I mean, that's what everyone wants to know. So certainly, we do that, by bringing in some of that survey data out through some of our partners.
Sort of a nuts and bolts question. I don't know if this is proprietary, but what is in it for the dispensary to report their data to you? What are they, what do they get back?
Cy Scott 35:49
Yeah, so they get back business intelligence, so analytics on their own data. So we provide a lot of services to them, so that they can really understand you know, what, what is going on, and really make informed decisions about their own business, a lot of these stores carry a lot of different products, and some sell better than others. And really managing that you can imagine, you know, if you had a retail store, you would rather have your capital tied up in inventory that's moving, then stuff that you have to have in the back storeroom, that's maybe getting old and starting to expire, maybe have to discount heavily. So you really want to optimize things like inventory turn, you know, you really want to optimize bringing new customers in the door. And when you spend marketing dollars to do that, are you getting the ROI on the marketing spending, you know, we help our retailers and dispensaries measure that. And a lot of that is what we give in exchange for being able to leverage their data. And when we leverage their data, it's an aggregate and it's anonymized. And so there's nothing that is identifiable about the data. So we cannot help anybody who wants to know, you know, how well does this particular dispensary perform? All our data is down to the product in the product across a market. So we can tell you, you know how well a particular paper pin from a particular brand is selling. But we can tell you that because it's sold at a large number of retailers. But you can't really know, you know, how well that product sells in a particular retailer. And so that's kind of how we protect retailers or protect their data. And we also help them leverage their data in more effective ways to be just a more efficient business. The retail channel for cannabis is growing quickly, and it's getting more and more competitive, it's getting competitive for the brands that want to get shelf space. You know, it's harder to just walk into a store as a brand and say, you know, preparing my product, that's a great product, retailers are being pickier about that they have a lot of optionality there. And then for retailers themselves, it's also getting very competitive. Even in limited-license markets, you get some larger, you know, venture-backed or publicly traded, you know, multi-state or multi-store operators, the MSOs that are there that are very competitive. And it can be tough. And so data gives you an edge, right? If you're looking at the data and you're really optimized, you can find some sizable ROI there and save money and optimize that inventory and optimize your customer retention. And that's that's where we come in. You know, we're beyond kind of what a like a point of sale might do from a reporting perspective, which is very important kind of your top line metrics, but really understanding what's driving those top line metrics and where you need to invest in the business is where we come in for the retailers to really just hauling their their operations for them.
I also saw something that might be of interest to listeners in this space at all. And yesterday on LinkedIn, someone had a link to your monthly insights where there were several markets where you just had some interesting tidbits of what was happening in Alberta or California. I'm in California. So I noticed that you called out Kanha gummies, which is one of my favorites. So we recently interviewed Cameron Clark of Sunderstorm. That's a fantastic product. So it's really interesting to see what's doing well in the various markets and listeners can access that.
Cy Scott 39:08
Yeah, absolutely. We've got a number of things that we make available at no cost through Headset. So we do have a high level Market Report that you're talking about. We publish this on a monthly basis and the markets we're in. It's just some interesting takeaways that we noticed, we usually mentioned a particular brand that's moving, you know, in a positive direction, we'd like to highlight those brands, because it is an interesting story. Yeah, and so, so that's, that's kind of our monthly Market Report. And you can get that as a subscriber to our newsletter. We publish that out. We also publish that on our blog. So if you follow us on any social media, and you'll get notified of when that lands, you know, one thing that's really compelling about Headset is you know, how we source our data and we talked about that at the top of the discussion, but, you know, we see everything as it's happening. And so you know, you and I are having this conversation and stuff is selling in, in Los Angeles or stuff is selling in, in Detroit. And, you know, it's being funneled into Headset, so we see it as it happens, and we're able to report on it in a timely manner. So, you know, we consider real-time market intelligence. And so when we publish a report, like our March industry report, you know, it's on a full February's data, and we publish, you know, right away at the beginning of March, as a subscriber, you can get even timely data if you want it. But it just really emphasizes, you know, how, how powerful it is, this industry moves quickly. And you don't want to make decisions on data that's a few months old, you know, you don't really need to know what's going on, you know, a few weeks ago, frankly. And so that's something that's important to us. So that's one of the reasons we published this cannabis market overview on a monthly basis at the beginning of the month. And then some other, you know, things that your listeners may enjoy is on Headset.io, which is our website, we publish a bestseller list, and that gets updated daily, of the top 10 products in each category. So you can go and take a look and just see who's who's selling well, it's based on a trailing 90 days of total units sold, so not total dollars sold, but actual units that move through retail. So it's pretty interesting to watch this top 10 list across the different categories, different markets that we report on at that level. And then we have another service, what we call Insights Polls. And so it's very similar to our Insights Premium, which is our top-tier market intelligence platform. But it's a bit higher level. So you can get a sense of you know, market overviews, a sense of category trends. So those numbers, you know, I was talking about, you know, vapor pens versus edibles versus pre rolls, we make that all accessible to everybody at no cost. You know, it's a great way to, you know, help everyone just kind of understand some of the dynamics, it is a delay on our insights poll. So it's not real time. So you have to wait about a month to get access to the data, where our premium services are real time. But it's a very rich set of data and pretty compelling. And I encourage anybody who's interested in what's going on in the cannabis space to kind of just head over and sign up and take a look, it gives you a sense of exactly what we offer in our premium services. But it also gives you a sense of just general market trends. So a lot of types of services like the market overview, blog posts that you mentioned, that we make available at no cost to our consumers.
Are CBD products included? Or are you just kind of looking at THC products?
Cy Scott 42:36
Yeah, great question. We include CBD products that are sold at licensed retail. So the regulated channel, the channel that we measure. So the types of dispensaries and retailers that sell THC-based cannabis products, but also CBD, you see a lot of the overlap. There's a lot of formats like capsule formats that have a lot of CBD edibles that have a lot of CBD, even flower, you know, have high CBD flower. So we do track that, we do segment that out within Headset itself. And then for the non-regulated channel, so the type of CBD products that might be sold, you know, in more traditional retail or direct-to-consumer, we work with Nielsen on that. So our partner Nielsen measures that because those types of products show up in the channels that they're measuring. And so it's a great way to put the two datasets together to really get a sense of what's going on in the CBD world. As a CBD brand, it isn't important to look at both channels. You can imagine in a market like California where you're at that, you know, as a consumer if you wanted to buy a CBD-based product, you could make the decision to go to maybe a traditional retail maybe to a Walgreens or similar type of outlet that sells just CBD only no THC or you might be able to go buy that same topical but with a little bit of THC, at a dispensary or retailer. And so that's that's a you know, interesting, dynamic and I think a brand needs to look at the whole picture. You know, what does it mean? You know, the different channels to buy CBD dominant products. And with Nielsen we're able to provide that holistic view.
I ask everybody and I'm really interested in your answer because that's one of the founders of Leafly and running Headset. You are aware of every cannabis product out there, but do you have a favorite cannabis product or service?
Cy Scott 44:20
You know, I'm pretty easy. I guess the thing I probably use most are vapor pens, primarily like the Pax Era. I enjoy it just kind of my go-to. You know, one of the reasons why I like that type of product is it does give me the ability to try a number of different brands. The way they license their Era cartridges out is it's pretty interesting. So you know a number of different license holders will produce products with that type of cartridge and it's just pretty convenient. So that's kind of my go to but I do I really enjoy You know, trying new formats, trying new types of products whenever I can, you know, I'm from California, I'm up here in Seattle now been here for a number of years. And so whenever I get back down to California, I'd love to try, you know, some of the low-dose beverages that are out there things like the Lagunitas, High Hops, or the Can, you know, beverages, just anything that's kind of new and different. I think that's, that's what drives me. So I kind of have my tried and true staples. And then I really like just all the new formats, all the new brands, and trying as much as I can, you know, any innovation in the category, I think, is really exciting. So whether it's, you know, moving towards more fast-acting edibles, you know, or different, you know, vapor formats. You name it. I mean, it's, there's just so much. And that's what's so exciting. I think about this. So I kind of kind of jumped all over the place, but I guess I do have kind of the daily driver, so to speak of just kind of vapor pens for the convenience aspect.
If anyone has their finger on the pulse of the industry, it's you. So is there anything we haven't covered that we should?
Cy Scott 46:08
No. I think this is great. I would encourage listeners to just visit us at Headset.IO
Take a look at our insights, service insights pulse I mentioned, we also publish industry reports on a monthly basis. There's a lot of good information, whether you're, you know, active in the industry or just interested in the industry, I think it's great to kind of be able to watch what's going on, on in what that means from a product brand category perspective. And that's what we're here to do. So check us out. And looking forward to seeing you there.
Yeah, definitely. It's fascinating and you provide a lot of value for free, so people can really get a look at the monthly scorecard and see what's happening. So I urge everybody to check out your blog and subscribe to the insights and really know what's happening. So thanks so much for making time. I know you're super busy, and we'll get this out there and maybe we can do it again down the road and see what's what's happening in a year from now.
Cy Scott 47:03
Sounds great. You know, in one year, it's gonna be a whole different world. I'm sure we'll have tons to cover.
Thanks so much. You've been listening to the Kannaboom podcast with host Tom Stacey. If you like the show and want to know more, please check us out at Kannaboom with a k.com. And please leave us a review of Apple podcasts or wherever you listen. See you next week.
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