Charles Jones has vape pens are selling in 6 states and starting on 4/20 they will be available in California. Why are dispensaries ordering his vape pens in greater and greater quantities?
Charles has stumbled upon the holy grail of cannabis enthusiasts that is his vape pens allow you to experience consistent moods consistently. The moods you can experience are; party, focus, bliss, focus, relax, and flow.
Enjoy this fascinating interview to understand where the cannabis market is moving.
[1:18] – Charles’ Background
[6:24] – What is Functional Cannabis
[8:45] – Moods available for vape pens
[11:57] – What was budtenders’ feedback
[23:30] – How to manage distribution and licensing
[25:20] – Functional beverages next big category
[27:34] – Books that had an impact on Charles
[30:44] – Roadmap for LucidMood
What are the five trends that are disrupting the cannabis industry?Find out with your free cheat sheet at http://www.cannainsider.com/trends
MATTHEW: The Holy Grail of cannabis consumption is to be able to elicit the same mood consistently so you can count on getting the same experience. The alcohol industry mastered consistency a long time ago, but in general, only allows for one type of mood. Our guest today has successfully and consistently dialed in several experiences with his product. I am pleased to welcome Charles Jones of Lucid Mood back to the show. Charles, welcome back to CannaInsider!
CHARLES JONES: Thank you, Matt.
MATTHEW: Give us a sense of geography. Where are you in the world today?
CHARLES: Beautiful Boulder, Colorado.
MATTHEW: Good. And what’s the temperature like there? Is it mild, sunny?
MATTHEW: Seventy! Oh my goodness, that’s pretty warm for March. Okay. And for listeners that are new, can you remind us of your background and why you started down this path exploring cannabis moods?
CHARLES: Sure. So, I had a couple careers. The first was in software and the second was an executive coach, and that’s what I was doing when I stumbled upon the idea for Lucid Mood, upon the recognition that if we were to extract the individual cannabinoids and terpenes from the plant and combine them very intentionally, formulate them according to our growing understanding of neuroscience, that we would be able to dial in very specific therapeutic and recreational effects, and dial out the negative side effects that keep so many people from benefiting from the mood-enhancing effects of cannabis.
MATTHEW: We had you on the show sometime back, and I’ll link to that original episode [link here], but give us a reminder of what Lucid Mood’s first launch was and what happened.
CHARLES: Sure. Our development platform, if you will, for experimenting with various combinations of cannabinoids and terpenes involved using hemp pucks that we would infuse with cannabinoids and terpenes and then we would have people place these hemp pucks in a dry flower vaporizer in order to consume them. And that turned out to be, actually a very good development platform that allowed us to very efficiently test a lot of different formulas. But when we attempted to bring that to market, we just found that it was too cumbersome for folks, so we pivoted, and put our formulas into vape pens, and that’s where we are today.
MATTHEW: Okay, and this is kind of an interesting thing. You make it sound like it’s such a smooth transition, but that’s a pretty big pivot. Tell us a little bit about the feedback you were getting from investors, consumers, and what made you ultimately decide to pivot.
CHARLES: People have always loved the formulas and the effects that they get from it, so that has been a win from the very beginning. In our testing, we would hold what we would call testing parties, and we would invite people to come to them, and we would make it extremely easy for them. We’d have the pucks prepared, and we’d hand them the dry flower vaporizer with the puck already in it, so it was quite efficient. Once people had the experience, they were very excited and were very willing to go through those steps in order to consume it. Once we launched that product in dispensaries, however, the feedback that we got is, that essentially we were in this catch-22, that until people actually experienced how differentiated our effects were from the other products that were in the dispensary, there were very few of them that were willing to go through the effort of that current delivery system. Some of our investors had anticipated this objection, that there was just too much friction to enable speedy adoption. We saw that right away. Over a long weekend, my co-founder, a brilliant mechanical engineer and production engineer named David Georges, he put our oils into vape pens, and then we brought those back out to the market and had an entirely different reception to it. In fact, since launching in November 2016 here in Colorado, we’ve been seeing just tremendous, month over month growths, very rapid adoption, and an extraordinary level of customer loyalty to the product. We kind of went from something that was very cumbersome to what’s the absolutely… what’s the path of least resistance? What delivery system would be incredibly simple for people to use, so we put the oils into ready-to-use vape pens. People just open the package, there’s no button, there’s no need to charge it, they just put it in their lips, take a few sips, and they’re having the Lucid Mood experience.
MATTHEW: I want to talk about that growth and the reason why you think that’s happening, but let’s back up a little bit and talk about a new category that it seems like you’ve created called functional cannabis. What does that mean exactly?
CHARLES: We certainly view our product as representing a new category, and in fact many in the industry do as well. New Frontier Data, for example, calls what we’ve done Cannabis 2.0. From their perspective, it’s where cannabis is going, toward being able to deliver, as you mentioned in your opening, very consistent effects. But the other place I see that cannabis is going is that up until this point, the mood-enhancing experience of cannabis, whether you’re using it to relieve pain or reduce your anxiety or help you go to sleep, on sort of the more therapeutic side, or whether you’re using it to get into a state of flow, or just chill after work, or watch a movie, or as a social lubricant as a replacement to alcohol. You can get those effects from cannabis, but you could get these other effects as well. You would get this feeling of being tired or lethargic after you’ve used it. And of course some people struggle with feeling paranoid when they use marijuana, or feeling socially withdrawn. So those impairments, if you will, reduce your functionality. So you get the mood-enhancing benefits but at the cost of some level of functionality. So for us, functional cannabis is one that delivers a very specific or therapeutic or recreational benefit while keeping you functional, while eliminating those typical side effects, which I think all of us need to admit are there in cannabis.
MATTHEW: Right. And you touched on a few of the moods that you offer there, but can we go over some of them, because you have some interesting ones, for sleep, party, bliss, focus, maybe you could just do a little overview of each and how to think and orient about each one.
CHARLES: Sure. We have what we call the Wellness line, and the Wellness line includes Relief, which is very good for relieving aches and sores and pains, reduces cramps, and is actually fantastic if you have a hangover. It really tends to relieve that as well. So that one’s called Relief. We have Sleep, that’s kind of obvious, it supports you getting to sleep, or if you wake up in the middle of the night, you can just sip on the pen to help you go back to sleep. And you wake up in the morning refreshed. You don’t have the dullness or a little bit of a hangover that you might get from going to sleep on say, a heavy Indigo. We also have in that same line, one called Calm, which as the name implies, if you’re feeling a little anxious or stressed you just suck on this and you’re going to very instantly calm. Then in what we call the Play line, our leading product there is called Party, and it is like alcohol, it reduces social anxiety, it reduces social inhibitions, but unlike alcohol, it’s very energizing, uplifting, you’re very alert and clearheaded. You can sip it all night long and it doesn’t make you stupid. If you do a party with Party, it’s really delightful. It’s really good for almost any kind of social situation. We have another one called Energy, which is marvelous for going on a hike. Going out there, it’s uplifting and motivating and energizing. We have another one called Chill, which is both relaxing and blissful. It’s really wonderful for just kicking back with friends, watching a movie, stuff like that. Then we are bringing out another one called Flow, which you kind of become immersed in whatever you’re doing while retaining this almost kind of witness consciousness about what you’re doing, so it’s wonderful for artistic endeavors, or any kind of flow activity that you might enjoy.
MATTHEW: The first time that you launched Lucid Mood, the budtenders gave you some feedback, and then the second time they gave you feedback too. How would you contrast that feedback? What were they saying? When they were talking to you, did anything surprise you?
CHARLES: When we launched with the infused hemp pucks, the feedback is, oh, this is too much trouble, people aren’t going to use this product, and that turned out to be quite accurate. Then when we launched with the vape pens, the feedback that we got was much more nuanced and varied among the budtenders. One of the pieces of feedback is that people just really loved the taste of the product. Now, we don’t flavor the product per say, but the terpenes that we use to dial in the specific benefits that we are seeking, are all of course very flavorful. Most people like most of our flavors. There will be some people that don’t like some of them, but it’s a consequence of the formula we’re using. We get a lot of feedback on the flavor. The other feedback that we got was, some of the budtenders just thought it was wonderful that we had this one to one ratio of THC to CBD which creates this very functional, mild experience, if you will; the elevation without the stupefaction associated with cannabis. Some of the budtenders thought that was amazing and great and could immediately see that there were people walking into the dispensary that were looking for something like that, that would like the mood-enhancing benefits of cannabis, but didn’t want something too heavy, or too disorienting. Then there were other budtenders who said, who’s going to buy this product? It’s too mild? Isn’t the point to dissociate and check out and stuff like that? People aren’t going to like this product. And of course over time, one of the most common things that I now hear, say a year after we launched in a dispensary is, a budtender saying, you know, I didn’t think the market for this mild high would be as big as it is, but it’s not just the elderly people and the middle-aged women and soccer moms and stuff. I’m seeing men in their twenties that are coming in and buying Lucid Mood Party and Lucid Mood Chill. I think they’ve been surprised. I think we’ve really kind of found an underserved section of the market, and we have lots of anecdotes and stories and people writing us that, a friend shared Lucid Mood with them, and prior to this they had tried marijuana a couple times and it was just too overwhelming for them. Really, they hate pot, they love Lucid Mood. So it’s a really different product.
MATTHEW: This is really interesting to me because I feel like, much like Apple hides the complexity of their products, you know. they have RAM in there, they have microprocessors, they have all these different alternating technologies that the consumer just doesn’t have to know about at all, but you’re scrutinizing and agonizing over the details of the terpenes and the ratios and all these things that elicit an experience, but you boil it down to, for the consumers, like, how do you want to feel? Do you want to feel like you’re going into a party, and that’s what you want? You want flow? And that just makes it so dirt-simple that it invites you in and makes the first step easy, I feel like. And I would say that’s where the market is going. Because how much do I really, do I really need to know everything? There’s always the connoisseurs, or the kind of craft market, where they’re like, I want to know all the nuances of how the cannabinoids are interacting with terpenes, and how that’s playing with my biology and neurochemistry, but most people just wanna know how this is going to make me feel.
CHARLES: Early after the release of the product here in Colorado, we got into a new dispensary up in the mountains. This was during ski season. They placed an order for a case of each of the moods. Two days later, they ordered two cases for each of the moods. Two days after, they ordered four cases for each of the moods. So I had to find out what was going on. I call them up and say, hey, what’s going on? And they say, well, it’s ski season, we have a line of people out the door, someone comes up to the register and they’re here to enjoy the mountains and skiing here in Colorado and they’re from some state that doesn’t have legal cannabis and they’re not that experienced. They look up at our board of strains and they say, what’s the difference between indica and sativa? And that’s just a cue for us. We could spend the next 10-15 minutes, walking through what the differences are, trying to find, do they want something energizing, do you want Blue Dream or do you want Durbin Poison, kind of go through all these distinctions, and that could take 10 or 15 minutes. Or we could simply pick up your point of purchase display, put it in front of them, and say, what effect are you looking for? And make the sale in a couple of minutes, knowing that they’re going to have a wonderful experience. It’s not going to overwhelm them. And they’re going to come back. If we sell them a string, and it’s they become overwhelmed, they become paranoid, it’s too much for them, they don’t have a good time, it’s just not a sure bet. They may never come into the dispensary again. So yours is the safe bet for someone is a newbie. That Baby Boomer that got high in the ‘60s and ‘70s, and now life’s a little bit different and they’re interested in getting back into it again. The soccer mom, the busy executive who wants something to relax in the evening, but they have to be 100% sharp at 8 A.M. the next morning when they start their day. For all those people, we just offer them Lucid Mood. And that dispensary has actually become our number one customer here in Colorado.
MATTHEW: That’s interesting. So your point of sale display has kind of a chart or just different categories of feeling, so the budtenders just say, how do you want to feel? Do you want to feel Party, Flow, Relax, and they just point to it and say, I want to feel Relax. And that’s how the conversation goes. Pretty important to have that point of sale diagram or supporting information it sounds like.
CHARLES: Absolutely. We were seeing an average of a 50% increase in sales in the dispensaries that keep that point of purchase display next to the cash register. What they tell me is that the customer will make their product selections, get to the register, and oh, this looks interesting, what’s this? And they’ll just add it to their order. So yeah, it’s been a very successful marketing strategy for us.
MATTHEW: Of course, vape pens also have the additional benefit of being discreet, which we talked about a little bit, but when you light up a joint, it’s like everybody in a city block knows what’s happening, what’s going on with you. But with a vape pen, it’s just so much more discreet. That’s why the market is just really gravitating to vape pens. Even more in California, it looks like, looking at some of the data.
CHARLES: And they’re so convenient as well as discreet. And ours have the added benefit of, since we’re not starting from the extract from a strain, we’re starting with the purified cannabinoids and terpenes with all active ingredients, it doesn’t even smell like marijuana. It smells like aromatherapy. It smells like the terpenes that are in the product.
MATTHEW: When I hear this story about how you pivoted and how that created success, I think about the Lean Startup methodology, of the build, measure, learn, and iterate. You did all those steps. You built it, you got feedback from the market, you learned what they were saying, and then you said, this is the market speaking to me. I have to adapt. And you adapted, and then boom. Product market fit, takeoff new category, which is great, and also, the one thing I warn about over and over, is that if you have a me too product, you’re going to eventually have to drop your price. Because you can’t defend a margin if you’ve got a me too product. And this is kind of the antithesis of a me too product, what you’ve developed here with Lucid Mood. Especially when people… Like you said, you created a category, so if they come to find that they like the Party mood with Lucid Mood, any competitor that comes along after you, they’re going to compare them to you. You’re the benchmark, where, this doesn’t compare to Party from Lucid Mood. It’s like they have something in their mind that you’ve created. You’ve got this category in their mind that’s very sticky and that’s hard to pull out just by virtue of being first and creating the category. It’s kind of like Coca-Cola. There might be other colas out there that people like better, but they’ve got this in their mind that this is the cola. It’s got the cola category in my mind, and it’s just so woven in it’s hard to take out. Any thoughts about that?
CHARLES: I’m wondering how you got ahold of our internal marketing plan. That’s very much how we think about this. We’ve got, at this point, 18 months of R and D into the development of these formulas and patent pending on them, so we’re very much looking for that highly differentiated predictable experience that people can only get through our brand for at least the time being. And become the benchmark against which other functional cannabis products are compared.
MATTHEW: So tell us a little bit about how this works when you want to go to a different state. Do you license the product, and then how does that work?
CHARLES: We now have licensing partners in six states, and essentially, the way it works is that we sell them pen kits. We will sell them 1000 of the Party device along with a slurry that contains legal ingredients in it. The packaging, the supporting sales and marketing collateral, and we’ll ship that off to our licensee. Our licensee will then add THC distillate to the slurry and use a filling station that we’ve developed to fill the pens. It’s foolproof, +/-2%, in terms of the volume of oil that gets in there. This helps… Consistency and the quality of our product in every market is hugely important to us, and this ensures that if you buy a Party pen in San Diego or a Party pen in Denver or a Party pen in Providence, Rhode Island, it’s exactly the same formula, the same ratio of cannabinoids and terpenes, the same experience each and every time.
MATTHEW: Very interesting. We talked about how you created a category here. Let’s pivot a little bit to where you think the beverage market is headed, because this is a huge, huge category, beverages. And there’s some interesting things happening there. How do you think about it? Does it dovetail with the cannabis market and what you’re doing?
CHARLES: Certainly, when I walk through Whole Foods, for example, and walk through the beverage aisle, I’m starting to see beverages that have some of the same names as our cannabis products. You know, Energize, Revitalize, Sleep, Calm. These names are beginning to appear. So the functional beverage market, which is a term that’s actually used in the food industry, is seeing tremendous rates of growth. I think that it’s not just beverages and not just cannabis where people are saying, I want my beverage to convey some health benefit or some mood-enhancing benefit. To date, it’s largely been, I want my beverage to convey some caffeine, or some alcohol, to modify my mood. But things, I think, are becoming much more nuanced now. And similarly, in the past it’s been, well, I either want indica or sativa, things are becoming much more nuanced as well. It’s no longer enough to get high. What benefit is this high going to convey at the same time? So I see this tendency everywhere. In fact, I was at a restaurant recently and looking at the menu, one of the things they had on the menu was an energy salad. And the promise of the salad? I’m looking at this and I’m like, okay, this functional meme, it’s a thing. It’s definitely a thing.
MATTHEW: Let’s pivot to some personal development questions, Charles. Is there a book that has had a big impact on your life or way of thinking that you’d like to share with listeners?
CHARLES: Well earlier you mentioned, boy, Charles, this sounds like the Lean approach to development, and actually, here on my desk there’s a book, Lean Thinking by James Womack and Daniel Jones. So that’s certainly a book that has influenced our thinking here. Another book that has influenced our thinking here is a book called Play Bigger, and it’s a book essentially on category marketing, and what it takes to become a category leader. One of the basic premises of the books is that, if you are the first to market in a new category, let’s say soft drinks, as Coca-Cola was, then in the mind of the consumers, you become identified with, Coca-Cola becomes synonymous for the soft drink category. It’s very difficult, then, for a competitor like Pepsi to ever unseat the king of that category. And becoming synonymous in the minds of consumers with functional cannabis, being able to deliver something which is dialed in enough to produce one very specific benefit that the consumer is looking for, and is mild enough that they remain sufficiently functional. That they can enjoy that recreational benefit, or go through their day and get their work done if it’s a therapeutic benefit. Making Lucid Mood synonymous with functional cannabis, that’s our next goal in terms of marketing. And we’ve certainly achieved that in the states we are already in, and we are launching in California in April.
MATTHEW: California, that’s great. I was going to ask you about that. So you’re just in Colorado now? You’re in six states, you said?
CHARLES: We’re on the shelves in Colorado, Rhode Island, Delaware, Maryland, and Oregon. The next state that we’re going to add is California.
MATTHEW: Wow, that California. You’re going to be busy.
CHARLES: Very busy.
MATTHEW: So back to your point about, like, you don’t want to compete with Coke. If you realize, that someone like a Charles has totally dominated a category, it’s best not even to compete, and if he’s got Coke, make Dr. Pepper. Because it’s better to start a new category than to compete on someone that has the higher ground and can keep on pushing you off the hill. That’s my opinion, anyway. So you’re in six states, you’re launching in California in April. Are you going to be all over California, or mostly starting in Northern California or Southern, or how is that going to look?
CHARLES: We’re going to launch in San Diego, and then make our way north up through the state.
MATTHEW: Is it difficult… How do you have the conversations? Do you work with a distributer, or are they reaching out to you? How do you get into a market like California, and what do you do there?
CHARLES: We had it happen every way. For instance, in Massachusetts, five different companies have contacted us to see about being, asking if they can be our licensing partner for Massachusetts. That happened in that way, and in the case of California, a dear friend of mine who had just met another person in the industry out there in California and just immediately realized, oh, these guys are a match, and put us together, and it was pretty much love at first sight. Just the perfect partner for us. Someone that shares our values, who looks for something where, the impeccability of the product, which has been so carefully and thoughtfully designed, with a real focus on having a very collaborative relationship with the distribution channel. We’re confident we’ve found the perfect partner for us for California.
MATTHEW: I just want to ask, too, about where you are in the investment cycle, if you’re looking for accredited investors, can you tell us where you are there? Raising capital?
CHARLES: Sure. We’ve been raising capital largely from Angel Investors. We had a friends and family round, and we are now finishing up our last Angel Investor round before we syndicate a Series A. We are pretty confident that we found our lead for our Series A. This would be more of an institutional investor that runs a large cannabis fund. So that’s where we are in that.
MATTHEW: Cool. If there are accredited investors that are looking to, they like what you’re saying and they want to participate in Series A, or invest in some way, is there a way they can reach out to you?
CHARLES: Sure. Absolutely. I’m CJ[at]LucidMood[dot]net.
MATTHEW: Okay cool. Well Charles, as we close, tell listeners how they can find you in dispensaries. Is there a way to do that? Is there a locator? What’s the best way to find a Lucid Mood that they can try?
CHARLES: They can go to LucidMood.net, and there is a dispensary button on the home page if you click on that and give it your GPS. It will show you nearby dispensaries where you can purchase Lucid Mood.
MATTHEW: Great. Well Charles, thanks so much for coming on the show, and well done. Good job pivoting to create product-market fit. That’s a really inspiring story, and we wish you the best as you expand into California and other markets.
CHARLES: Thank you so much Matt. It’s been a delightful conversation.