Debra BorchardtCalifornia is full of cannabis companies that have flamed out, but edibles company Kanha is on fire.
Launched in 2015, Kanha is a top three brand for edibles and a top 15 brand overall in the state, according to cannabis analytics firm Headset.
But the company’s success isn’t limited to California. According to Cameron Clarke, co-founder and CEO of Sunderstorm, Kanha’s parent company, the company is the fourth-largest edible brand in the country and can be found in four states: California, Illinois, Massachusetts and Nevada.
And the company continues to eye expansion in the U.S., with sights on Michigan and Missouri.
What’s behind the success? A big part of it, according to Clarke, is that he was able to use his science background with a dash of molecular biology to build the company on rigorous quality. Kanha self-tests all its products so that its consumers can trust they are clean, safe and have reliable potency labels.
Clarke wanted consumers to have access to a consistent experience over many months.
While Kanha is primarily known for its gummies, the company recently introduced a vape product and a chocolate edible product called Minis, which received the same attention to science as the company’s other products. Clarke said it took two years of research and development to achieve the right product, which is a candy-coated chocolate that resembles an M&M.
Thailand
On top of that, Cameron tapped into his international trading experience – particularly in Asia – to expand internationally. Kanha opened in Thailand three months ago and owns its manufacturing facility with a Thai partner.
“We are currently selling all over Thailand, which is going very well. We have announced our first distribution deal from Thailand to Japan, which will launch in the coming months,” Clarke said. “So we have gone from being a California-only brand in 2019 to being a national brand by launching our MSO strategy. And now we are a global brand.”
A key benefit of creating a business in Thailand is the ability to manufacture in one place and then sell all over the entire globe.
“That is something that we cannot do in the U.S. We have to set up separate manufacturing facilities with separate licenses in every state, which means that the cost of setting all that up must be recouped by the sales in that particular state,” Clarke said.
In Thailand, it’s a different landscape. The country is a low-cost producer and exporter of all kinds of food products and nutraceuticals and has all of the infrastructure to manage that exportation.
Clarke said that the company just announced its first deal to export hemp-related products from Thailand to Japan, but the company plans to also export cannabis or THC-type products to other markets in the coming years. It also plans licenses through the joint ventures.
Key to success
The science and focus on quality may have been one step to success, but Clarke said, “I think our success is based on a few different things. Number one, we invested heavily in technology, infrastructure and systems in the very beginning.”
He said he knew that the industry would go through some kind of bust at some point and wanted the company to weather such a storm.
“We’ve invested heavily in (infrastructure systems technology) to keep our cost structure low, because we knew from the very beginning that it was going to be very competitive, very difficult to navigate, and we absolutely had to be able to have a low-cost infrastructure to be able and to understand that cost structure in order to make money and be successful,” he said.
He added, “(It’s) a system that we know the cost of every single product, every step of the way through the entire process with full cost accounting, which I don’t think anybody I’ve seen in this industry, even the MSOs don’t have. So we’re very proud of that.
“Another leg of the stool is just rigorous attention to quality and quality control and consistency. If we make sure that wherever we manufacture, wherever we sell, we also manufacture. We do fall under other people’s licenses and we do partner, but we do the manufacturing.” Clarke said it’s hard enough to make perfect products themselves much less rely on a third party.
That’s not to say that Kanha has been immune to the issues facing other operators, notably the widespread challenge of getting paid by vendors in California. However, Clarke said, their success secures their payments. If consumers specifically ask for their products in a dispensary, then that owner will make sure the bill is paid in order to continue placing those orders.
Despite the challenges, Clarke said he got into this industry because he wanted to help people heal. “You cannot help people heal and manage their conditions if you poison them with toxic chemicals.”
