After 10 years of distributing its humidity-control products to the premium-cigar industry, Boveda, a manufacturer based in Minnetonka, Minnesota, saw the opportunity to increase business by selling its moisture-regulating packets to cannabis companies.
In 2007, Boveda President and CEO Sean Knutsen received a call from a California man who in the 1980s had run one of the largest illegal marijuana operations in the United States. Recognizing the value that Boveda’s humidity-control packets (then called Humidpak) could bring to the legal cannabis industry, the man asked Knutsen whether he could become a distributor.
Moisture accounts for much of the mass of marijuana, which is sold by weight, and the man had been losing thousands of dollars because when evaporation occurred, the product weighed less.
“He had seen the product in a cigar store and thought, ‘Where in the world was this back in the ’80s?’” Knutsen told Marijuana Business Magazine.
Boveda is designed to prevent the evaporation of terpenes—one of the biggest unmanaged problems in the cannabis industry. When cannabis is fully cured, the flower is at its peak potency in terms of terpenes, flavonoids and cannabinoids such as THC. Left unprotected, the terpenes begin to evaporate and cannabinoids start to degrade, both in storage and after the flower is packaged for resale. Cultivators who have recognized the problem use Boveda inside their retail packaging to create a coating of purified water molecules around the trichomes that act as a shield to prevent the evaporation of terpenes.
Boveda was founded in 1997 and started marketing its humidity-control packets to the cigar industry just as cigar lounges were starting to pop up and Cigar Aficionado magazine was taking off, Knutsen said.
“Even back then, in the late 1990s/early 2000s, we would have people tell us this was good for marijuana,” he said. “It wasn’t legal then, and we didn’t realize it would be an industry that would take hold in the United States the way it has.”
Pivoting to the Cannabis Industry
The two-way humidity-control packets, which can be placed inside packages containing marijuana, are made with all-natural salts and purified water and allow moisture to pass in and out as necessary through a semipermeable, vapor-phase membrane. They’re engineered to ensure that moisture-sensitive products are maintained at their optimal moisture content. That results in preserving trichomes, which degrade when exposed to oxygen, as well as terpenes, which evaporate.
“Once you cultivate and then you harvest your plant and go through the curing process, that final step is where Boveda really needs to be introduced,” Knutsen said.
Cannabis retailers use Boveda packets in their bulk storage in an effort to maintain the economic value of their inventory. Many sell the packets to consumers buying flower to protect their purchases from moisture and terpene evaporation, which degrades the taste and aroma of the flower.
“Even though the need is so enormous in the premium-cigar market, the need in the cannabis market is even greater,” Knutsen said. “No. 1 is just the economic and weight part of it, and No. 2 is to protect terpenes. You need to stop that terpene evaporation.”
Company executives worried early on about the stigma attached to cannabis, but they also worked to ensure Boveda didn’t alienate its existing customers in the cigar, musical instrument and food markets. Rather than use generic, one-size-fits-all collateral on its website, social media accounts and other means of communicating with its customers, Boveda distributes targeted material to each industry it serves.
Cannabis, cigars and music each have their own sections on the company’s website as well as separate social media presences. Boveda trade-show booths are different for cannabis than they are for cigars or musical instruments. And the company has sales and marketing teams specifically focused on cannabis. Those practices ensure the information provided to its customers is 100% focused on what they are interested in and not diluted by messages for other uses, Knutsen said.
It also doesn’t hurt that there’s a crossover of customers in the cigar, music and cannabis industries, Knutsen said.
“People like us for what they use (our product) for and don’t care about the other industries we serve,” he said. “It doesn’t matter what the trade show is, people come up to us and say, ‘I use your product for cigars, I use it for cannabis, or I store my guitars with it.’ All three are considered mainstream at this point. We believe our purpose is to maximize the enjoyment people get from their passions.”
Fastest-Growing Market
Knutsen’s advice to mainstream companies considering a pivot to cannabis?
“Don’t try to be all things to all people,” he said. “If your company stands for everything, then you stand for nothing. We believe in the law of focus—not just for a brand but for a company as well.”
While the cigar industry still accounts for the largest share of Boveda’s business, cannabis is the company’s fastest-growing market. For the past 15 years, the company has realized average year-over-year revenue growth of more than 30%.
Ramping up to serve the cannabis industry was relatively easy because Boveda already had infrastructure such as production capabilities, supply-chain logistics, customer-service representatives and IT in place to handle the expansion.
“Our production continues to grow with less effort in (the cannabis) market because we have the infrastructure in place,” Knutsen said. “Now we’re able to reach the market, because we have people dedicated to it.”
