Inside Kiva's House of Brands: Building a National Edible Empire ft. Kristi Palmer

Inside Kiva's House of Brands: Building a National Edible Empire ft Kristi Palmer

Bryan Fields: What's up guys, welcome back to an episode of The Dime. I'm Bryan Fields, and with me as always is Kellen Finney. This week we've got a very special guest, founder of Kiva Confections, Kristi Palmer. Kristi, thanks for taking the time. How are you doing today? Kristi Palmer: I am so great, thank you so much for having me. I'm excited to dive in and talk Edibles today. Bryan Fields: Kellen, how are you doing? Kellen Finney: I'm doing really well, Bryan, thanks for asking. I'm really excited, Kristi. Really excited to kind of help the West Coast again bring the knowledge to the East Coast. So how are you, Bryan? Bryan Fields: Yes, yes, that is very true, and I'm very grateful to have the opportunity to sit with Kristi, because Kiva is one of my daily consumption products, so I am very, very fortunate to have that and kind of dive into some of the specifics today — some of the branding, some of the product differences. So Kristi, for our listeners, can you give a little background about yourself and how you got into the cannabis space? Kristi Palmer: Yep, totally. So I grew up in the Bay Area, California. Cannabis was very normalized for me — I had friends, boyfriends, family members who were kind of very accepting of the cannabis market back then. I think what drew my husband Scott and I in — we met in photography school, then we moved back to the Bay Area to start photography businesses. The economy was tanking, this is 2007, it was pretty awful, and we were doing whatever we could to make ends meet, picking up odd jobs and stuff. Scott had the idea: why don't we start growing weed in our backyard, in our garden shed, not just to make ends meet, but so we could buy a yacht and sail around the world. I haven't done that yet — I'm still sitting here at home in my office, but working on it. So yeah, our little grow shed was like 18 by 18, tiny. We had no experience and we thought we were going to get all this money from our grow in like a year — short-term, Green Rush style ambitions. That got us into the cannabis space professionally, for an income. We were cultivating, turns out we weren't super passionate or super skilled at cultivation, but we were in the dispensaries, so you could see: what do consumers need, where can we stand out, what is ownable. Branding wasn't really in existence at that time — all the flower was deli-style, and we were doing clones, because we couldn't grow great flower, but we could cut little plants off other plants and get them to grow roots. That was a great way to stand out at the time since there weren't many others doing clones, but that was hard to own — what is the brand name of a plant you buy? Very hard to attach your name to that, and very hard to make improvements. And Edibles just didn't have anything to offer that Scott and I would consume ourselves or share with family or friends — it was very experimental back then, scary labels like triple X, 10x, things that don't lend themselves to a predictable or favorable edible experience. Bryan Fields: So when was the transformation — when did the idea shift from clones to the brand? Was it experimental, or did you see the fit right away? Kristi Palmer: No, it definitely wasn't right away. We thought maybe we'd do retail, a Starbucks-kind of experience, to shape the consumer experience and normalize it more like a Starbucks or Whole Foods. Then Scott was looking for real estate for the dispensary and walked into a chocolate shop in Berkeley — light bulb moment — oh, we'll do Edibles. He came home and said we're gonna do Edibles, and I was like, oh my God, no, please no. I was not pro-Edibles, my mind instantly went to worst-case scenario. Thankfully he didn't listen to me and kept going with the idea. The vision was: let's make them taste better, look better, work better, test them, make sure they deliver a repeatable, measurable experience every time — not hashy bong-water brownies, but something delicious with the best, highest-quality chocolate we could find, and a brand that improves the consumer experience the way it desperately needed at the time. Bryan Fields: In those early days, walk us through the development of your first product that hit the shelves. Kristi Palmer: It took about 10 months from light-bulb moment to selling our first chocolate bar. A few foundational things happened along the way. Testing labs were just being born — Steep Hill was one of the very first, around 2008-2009, so you could actually test for THC content. Kiva would not have existed if there was no way to test. Then we contacted a branding and graphic design duo we knew from our photography world, fresh out of school, and they said you need a brand — a brand is going to speak to the consumer and stand for something. So we went through a branding exercise: what would Kiva stand for? We came up with words we still use today — professionalism, information-forward, putting the most relevant info right on the package, natural and holistic. Those two things — testing capability and the branding exercise — set us on a trajectory to separate from other products at the time. Choosing the right chocolate, the right medium, was also huge — it wasn't going to be baked, because it had to be ultra-consistent. You can't make each brownie or cookie exactly the same size so a piece would have the same concentration — homogeneity, getting the THC dispersed throughout. Baking also needs a big fume hood, a giant oven, all that equipment. Chocolate is scalable, easy to work with, safe, long shelf life. And finally, cannabis and chocolate are such a great match — who doesn't love chocolate? Ninety-nine point nine percent of the population loves chocolate, so what better way to welcome consumers into cannabis Edibles than with something familiar and approachable. Bryan Fields: I think that's so important — sometimes people forget you have an idea, you push forward, you realize the fit isn't right, you iterate. People jump into this industry expecting instant results, but it's far from that. So continuing on that chocolate path, take us through the stacking of the brands — introduce some of the brands under the umbrella today and the lineage of who came first. Kristi Palmer: I love the evolution of the different brands and formats. We had the Kiva bar for probably two or three years until we launched Terra Bites, and along with that our Kiva minis, which were like a single square. We got feedback from consumers making a little pinching motion — they wanted just one small square. So we came out with a small square, but paying attention to those hand motions, it was really about better dose-ability — people wanted exactly the amount they were looking for. We also did product development on chocolate-covered espresso beans — we went out to Ohio and got trained on "panning," the process of making a chocolate-coated bean, and brought that expertise back to California. We launched both around the same time; Terra Bites did way better than the minis — nothing really ever came of the minis. Getting feedback from consumers is important, but you have to read between the lines about what they're actually asking for. Terra Bites leaned into dose-ability, convenience, and pieces, starting Kiva's journey down microdosing. Next came the blueberries — same concept as the espresso beans but coated in milk chocolate, and oh my gosh, the blueberries were a crowd pleaser, a cult following. That gave us a huge lift and reputation boost. Next, around 2015-2016, we leaned real heavy into microdosing and came out with the peppermints at 2.5 milligrams of THC — this was pre-regulation, no California regulation whatsoever, and the most popular products on the market at the time were the 500 and 1,000 milligram items. So it was a real double-down on microdosing. Fast forward to 2018, regulations in place, we launched our Camino gummy. Gummies were already a category, so we had to fight our way to the top and make Camino different by leaning hard into the brand promise of terpenes and tailoring one's effect using terpenes. Camino came out at the end of 2018, a wave of relief after such a difficult regulatory year. Most recently we've launched our strain-specific live resin gummies and fruit chews under Lost Farm, which does the opposite of the peppermints — it doesn't appeal to the brand-new consumer, it leans into the cannasseur who cares passionately about strains and is always looking for the next best strain and flavor combination. Bryan Fields: I really enjoy the doubling down on the 2.5 when everyone else was going the other direction, because that's conviction — understanding what's happening today isn't necessarily best for all consumers. So is the different lineage of brands there so that if Kellen and I show up and I'm only interested in Camino and Kellen's a non-edible person, we can both trust it's under the Kiva umbrella? Kristi Palmer: Exactly. Our first foray into a secondary brand was Terra — we wanted to appeal to a different consumer. The Kiva bar felt very professional, very clinical, and we got feedback it felt very female-friendly, positioned to women. So we tried to go bolder, more masculine, with the Terra pack — a chew-like container you put in your pocket. That opened up the world to us of different strokes for different folks. It would be very hard to put a microdosed mint under the same communication style as your strain-specific live resin connoisseur product. So if we have a new concept for a new consumer, with a different brand promise and value proposition, we split it off into a different brand — a different personality. That strategy has been questioned a lot over our company's history because it is a hassle — I was on a call this morning for a new brand we're trying out. It's time-consuming, creating another set of communications and values, but I think it serves the consumer best — it's the best way to communicate without watering down what you've created. Bryan Fields: All these brands require cannabis and extract to manufacture. During this journey, do you guys still cultivate? Kristi Palmer: It has varied over the years, but it was a great day when we got to flip the breaker switch off on our grow in the garage. We didn't go back in there for probably two years. We've never returned to cultivation — we prefer to source our extracts from the experts. We know what we're good at, which is Edibles, and we've tried very hard to stay in our lane — no vape cartridges, no tinctures. Supply for us involves sourcing different extractions: our chocolate uses cold water hash, Lost Farm uses strain-specific live resin, and Camino uses distillate and natural terpenes. Supply chain has totally evolved — distillate used to be a thousand times more expensive than today, now people are practically giving it away. Thankfully it's begun to stabilize over the last six months to a year. We have a huge procurement and supply chain team deciding what we're going to make and when, then ordering all the supplies — not just the THC component but packaging, labels, everything. Bryan Fields: Does it vary state by state, meaning you need different suppliers per state? Walk us through some of the states you're in. Kristi Palmer: Out-of-state expansion is a beast. It's different state by state. Our first state outside California was Arizona in 2014, so we have almost 10 years of out-of-state expansion experience. We've learned a lot, including all the things that don't work, and we're still learning. Our headquarters team helps out-of-state partners with sourcing — we have someone specifically sourcing for Lost Farm in other states, because you can't ship or move product across state lines, and there's no central ordering like there is for sugar or chocolate or cartons. Packaging is another big one — endless variations, so we've gotten smarter, like our chocolate bar box being standard with all the variable communication on an over-label designed specifically so it doesn't feel like an over-label but still has a premium look while being more manageable from a supply chain perspective. Bryan Fields: When entering states, do you sit with a board and weigh regulations, supply chain, and product fit like a numbers game? Kristi Palmer: There are so many factors. Florida, for example, has no wholesale market and is very vertically integrated — if you want to play there you have to grow, manufacture, and sell all inside your own ecosystem. There are only a handful of license holders, so you have to pick one of those operators and they have to pick you back — that's been a tough market to break into, hoping to get there by the end of the year. Colorado had a residency requirement that held everyone out for about two years — a regulatory hurdle. Nevada required all-indoor cultivation, so it took years to accumulate enough THC biomass to justify putting it into an edible rather than a vape or flower, especially using something like cold water hash which isn't the most efficient way of capturing THC. In California we have huge supply everywhere, so when you go to another state you have to take that into consideration. There are a million considerations that make a state viable or not. Bryan Fields: New states might have supply chain limitations that push pricing up, meaning margins aren't what you assumed, leading to unknown challenges down the road. Kristi Palmer: Exactly — imagine launching a state with a chocolate bar at $42 retail when it's $18-25 in California; who's going to spend that much on an edible in another state? That's what spurs the unregulated market to be successful — take New York, our products appear there somehow, priced more affordably, and you have to compete with the unregulated and counterfeit market. Pricing is a huge, difficult nut to crack, with real ramifications if you don't get it right. Bryan Fields: Honestly, your team deserves applause for not jumping into cultivation — a lot of people think controlling that piece manages margins on finished goods. Would you agree that's part of why you've been successful? Kristi Palmer: I think for an edible we have a lot more levers to pull on price and more value propositions to offer consumers, so we have more insulation — not to say we "hide behind" it, but as Edibles we've got other ingredients, flavors, storytelling and branding opportunities that flower and vape just don't have. There's more forgiveness on pricing with Edibles. Bryan Fields: Are conversations with East Coast states more offensive — them courting Kiva — or 50/50? Kristi Palmer: Totally both. We get hit up by states and we're actively seeking states and partnerships. Vetting the state's regulations and the partner's capabilities and interests takes a long time — making sure interests are aligned and there aren't conflicts of interest. It takes just as much energy to launch New York or New Jersey as it does Hawaii, so you have to think about where your efforts are best used. Bryan Fields: Can you share the two-way partnership with Garden Society and why it made sense? Kristi Palmer: We recently entered a relationship with Garden Society — they're doing our manufacturing in New Jersey, and we're doing their distribution in California. It's unique because Garden Society is first and foremost a brand, which is a different dynamic than a typical MSO-and-brand combination. Because we both get it from a brand perspective, our interests are aligned. They're amazing at manufacturing and want to lean into that, and we do great distribution in California, so we offer each other side services key to growing in each state. Aaron Gore and her team are amazing — women-owned, women-founded, women-run, beautiful products, and they've been around a long time in California, so there's good ethos and feel-good energy. Bryan Fields: For our East Coast listeners, what makes Kiva different, and why should new consumers trust Kiva to overcome hesitancy with Edibles? Kristi Palmer: I think what we've done really well is make consuming Edibles not scary — we've taken an experience that can be unpredictable and unreliable and boiled it down to something predictable, approachable, easy, pleasant, and measurable. Taste and quality is something we take very seriously, so you'll always get beautiful flavors and great product quality — you'll want to eat way more than one or two, but if you're new, start small, you can always eat more. We love coming out with new stuff to keep people engaged — innovation is something Kiva takes seriously. And consumers want to support a company that does good — we try hard with company culture, how we treat employees, vendors, and retailers, conducting ourselves professionally and doing right by the world. Bryan Fields: Speaking of innovation, was there ever a product line you thought would crash and it flopped? Kristi Palmer: Not an absolute flop — nothing's jumping to mind, but boy, we tried a lot. I will say, back to that product line evolution, Petra — I love Petra, it's my favorite, the best, most user-friendly item we've ever created — and it has never popped off. I used to say it's two years too soon, now I think it's ten years too early, because it's made for the casual, light-use consumer, and that person is only in stores maybe once a quarter, eating one a week instead of one an hour. Petra's like the Little Engine That Could — it keeps trekking and has a following, but it has so much more potential than what it's actually done for us. Bryan Fields: How much do you notice a difference state by state in which products land? Kristi Palmer: Michigan actually buys more Petra than California does. It just depends — gummy remains the top of the pyramid overall in popularity. Michigan leans a little more chocolate, but you get out what you put in — if we innovate heavily on Camino and Lost Farm, we see more traction there. It's hard to say a state is all gummy or all chocolate because we put attention where we think results will come from, and lately that's been gummy. Bryan Fields: What's the easiest product line to manufacture, and what's the hardest? Kristi Palmer: Petra is probably the easiest once you dial in room conditions — it's made on a pill press that can shoot out a million a minute. The fruit chews are by far the hardest — expensive equipment, hard to make, which we love because it's hard to copy, but hate because it makes scaling and moving across the country not easy. We don't do things because they're easy, we do them because they're valuable to the consumer, and that's the perfect description of Lost Farm. Bryan Fields: Those 2.5s are the perfect "try this, you won't get too high" product — I've given them out countless times, and people are always surprised at how different the experience is from what they expected. Kristi Palmer: Yeah, and it's like a weight off your shoulders — that's what motivates me every day. Bryan Fields: Those consumers likely don't go to dispensaries, don't consume at all, or will convert from another category — which will accelerate the low-dose category into a hockey-stick moment. Kristi Palmer: So true — how do you get a cannabis product? You Google a dispensary, hop in the car, drive down there, there's a security guard with a big vest, it's intimidating, you can't bring your kids in, you'd need a babysitter. It's just way too hard — not ideal. Bryan Fields: Were you ever close to closing up shop, and what changed your path? Kristi Palmer: Early days, yes — really tumultuous. About nine or ten months in, mid September/October 2011, we were distributing out of the back of a Prius, very low-key, all over the Bay Area up to Sacramento — probably 60 stores there. DEA officials came in and shut down a bunch of the Sacramento stores, one by one, and it was really scary. We brought our team of about ten people together and said, this is probably the end, we're probably going to get raided. It was very somber. The next day, nobody came in and raided the facility, so we just kept making chocolate bars. We were so naive at the time — we thought a handful of raids meant the whole industry was over. But the cannabis industry perseveres — you have to continue some way, somehow. That was the closest we ever came; we were never actually raided, thank God, but we took note of every other raid after that. Bryan Fields: Dream smoking or consuming session, three people dead or alive? Kristi Palmer: I'll borrow this from someone else — Obama, come on, how amazing would that be, either of the Obamas. Then someone who's anti-cannabis — I'd love to sit down and consume with a hater, smoke a joint or have a mint, and see what it's like; I think it would really sway public opinion and policy. And lastly, I'd love to smoke a joint with my dad — we do that all the time already, and my mom and sister too, since my family is very cannabis-positive; it's fun, chill, relaxing, we reminisce and laugh. Bryan Fields: If you had to start another cannabis startup outside your expertise, what would it be? Kristi Palmer: Oh my God, I think I'd jump off a bridge — another cannabis business not in my expertise. It would definitely not be plant-touching, more cannabis-adjacent. I think it'd be fun to pick up where Women Grow left off — there's also the Dope Women's Network that just kicked off in LA, I spoke there a couple weeks ago — a women's networking, career-building, professional development organization to help people lean in and build confidence. I would never start another cannabis business right now, honestly — it scares me. Bryan Fields: When you got started, what did you get right, and what did you get wrong? Kristi Palmer: We went in with a fake-it-till-you-make-it attitude, trying to transform the way things were done for the better in cannabis — I think we got that right. What we got wrong — one day Scott and I were packing orders in the garage, running late for deliveries to San Jose, and there were chocolate scraps on the table, so I popped them in my mouth. Not the right move — maybe five or ten milligrams on a totally empty stomach before a full day of deliveries was not great. We made a lot of silly and important mistakes, but that's part of the journey — if you can push forward even when unexpectedly stoned and keep the ship afloat, you're doing yourself a service. Bryan Fields: Sum up your experience in one main takeaway or lesson to pass to the next generation? Kristi Palmer: Go with your gut, follow your heart — which is so hard to action, especially when you're young. I think deep down you really do know what's right and wrong, but allowing yourself to follow that advice is super hard and probably takes a lifetime to master. Bryan Fields: Prediction time — as the cannabis industry matures, do you predict a convergence between traditional food brands and cannabis companies? Kristi Palmer: I don't really think so. I don't think consumers want cannabis in their food — you eat food for a completely different reason than you consume cannabis, so where and why you buy those products is totally different. Plus regulation — cannabis isn't going to be delivered on the same truck as food, just like beer isn't. Take Hershey's — people always ask if they'd go into cannabis, but imagine the fallout, moms of America wondering if there's THC in their Halloween candy — too big a reputational risk. I think it's more likely the vices category — beer, wine, liquor — gets more interested in cannabis than food does, though tobacco doesn't seem like an overlap with Edibles either. But who the hell knows. Kellen Finney: I'll slightly agree, but I think there'll be tools supporting chefs who want to do infused dinners — buying an infused olive oil at a restaurant store, kind of like cooking wine, a hybrid approach. Look at Coca-Cola partnering with Jack Daniels — terrible, by the way, don't recommend it — but they're merging in that way. So maybe a hybrid, though I don't think you'll see cannabis Ritz crackers next to regular ones at the grocery store. Bryan Fields: I'll take the other side — if I go to a bar and get a burger, maybe I skip the beer, take a water, and get infused ketchup with my burger, which Kiva is probably pretty good at — that delivers an infused meal exactly how I'd want it. That's the unique intersection, on-site consumption, experiential side. Kristi Palmer: Definitely — grab a water, grab a cannabis edible or cocktail with your meal, the experiential, on-premise consumption side — so many fun things there. I cannot wait until that part of the industry has the kinks worked out. Bryan Fields: Do you think federal legalization happens first, or more consumption lounges? Kristi Palmer: Oh my God, consumption lounges. Federally, it's never gonna happen — we're going to figure out all the workarounds and loopholes before that train leaves the station. Bryan Fields: The next question was going to be alien sighting or federal legalization first. Kristi Palmer: I'm with you — that's exactly where we are. Bryan Fields: Kristi, for our listeners who want to get in touch and buy Kiva products, especially here in New York, where can they find you? Kristi Palmer: Our website's a great place to start, kivaconfections.com, also our Instagram at Made By Kiva, and we're on LinkedIn as well. We're carried in most dispensaries, and very soon in New York we'll be at most dispensaries — look for us in the legal, licensed market, and please help us out by buying the legal products; that's what the industry really needs. Bryan Fields: Awesome, we'll link it all in the show notes. Thanks for taking the time, this was a lot of fun. Kristi Palmer: So much fun, thanks guys.