Cannabis company implements business model based on boutique wineries

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The Bohemian Chemist retail store Philo California

(This story is part of the cover package for the May-June issue of MJBizMagazine.)

Post-Prohibition, the alcoholic beverage industry had a head start of nearly 80 years before voters legalized the United States’ first regulated, adult-use marijuana markets in 2012.

In the years since, cannabis companies have leaned into the similarities between alcohol and marijuana, with some manufacturers creating THC-infused beers, seltzers and wines.

Jim Roberts, owner of The Bohemian Chemist in Philo, California, adopted a different angle when applying lessons from the alcohol industry to his small, vertically integrated cannabis business, which sits in Mendocino County at the junction of wine country and the Emerald Triangle.

“When I talked to small wineries, there were always different silos that would make their businesses work,” he said. “One would be direct sales to consumers in a location like a tasting room. The second would be having their wines either served at a restaurant through their distributor or on shelves in a bottle shop. And then the third was their club. If they got the right combination with those three things, they had a pretty successful brand going.”

After spending the past several years building out the first two “silos,” Roberts checked the third item off his list this spring, when he debuted 300 inaugural membership boxes for The Bohemian Chemist’s cannabis club.

Building the brand

Roberts, a microbusiness license holder, learned about cannabis cultivation from his mother, who grew medical marijuana in the famed region. Her flower was sold at dispensaries mostly in Southern California; she also created balms and salves to treat her rheumatoid arthritis.

Less than a half-mile away, Roberts developed a Mediterranean-style compound called The Madrones. After closing the design business he ran on the property, Roberts started renting tasting room space to local wineries.

When California voters passed adult-use marijuana legalization in 2016, Roberts realized that a cannabis brand would complement the businesses already occupying The Madrones, which over the years had grown to include several tasting rooms, guest accommodations, a restaurant and a gift shop.

“I followed so closely, having so many wineries on the property – at one time we had four wineries – and I said, this is the perfect thing for cannabis. Let’s do it like a small family boutique winery, where we actually cultivate our own cannabis and then we’ll have a place where we sell it.”

What’s for sale

In addition to its own branded products, The Bohemian Chemist sells “mainstay” brands such as Papa & Barkley and Mary’s Medicinals at its storefront in The Madrones.

“We don’t carry a lot of flower, just because we’re in a very small town, and (foot traffic is) very seasonal. So, we concentrate mostly on our own flower, and then we’re also trying to support other craft brands,” Roberts said.

While he was cognizant of how his winery tenants would respond to the store, Roberts knew a lot of winemakers use cannabis, which he describes as part of Mendocino County’s culture.

The reaction of tasting-room patrons and guests at the inn, however, have been surprising – sometimes even to the guests themselves.

“A lot of people will come in and they’ll say, ‘Oh, my gosh, I’m not interested in that.’ And then the next day, they’ll peek their head in and they’ll say, ‘My shoulder’s hurting,’ or, ‘I used to do this in high school.’ It’s in the way that we have it set up, it’s very approachable,” Roberts said, adding that he recently opened a consumption lounge at The Madrones.

“They’ll come in maybe thinking they don’t want to have anything to do with this, and by the end of their trip, maybe they’ve purchased a gummy or some pre-rolls or an ointment. And they’ll load up before they go. It’s been a really interesting journey for us.”

Benefits of membership

In addition to welcoming guests to their tasting rooms, boutique wineries often cater to out-of-town customers through wine clubs, which give members access to exclusive offerings and events for a recurring fee.

Roberts had long planned to create a similar program through The Bohemian Chemist, and the club’s debut box – The Alchemist – launched in April at select retailers and through California-based delivery services.

Going forward, Roberts plans to ship three boxes to members per year: The Alchemist, which focuses on rare cannabinoids, landrace varietals and genetics; The Summer Solstice, which will arrive in June and contain his favorite products; and The Harvest, which arrives in November, after harvest, filled with the company’s latest offerings.

For cannabis enthusiasts, Roberts said there are multiple benefits to membership: “One is that they are going to get a preferential release of something.” With just 5,000 square feet of cultivation space, yields of some cultivars can be 5 pounds or less, he said, adding, “They’ll probably get things before anybody else does.”

Additionally, The Bohemian Chemist plans to include extra items in the boxes, driving their value above the $190 sticker price. Members will also be eligible to receive perks when they visit the Philo-based store in person.

Roberts said he looks at the box as a sampling of products intended to drive customers back to The Bohemian Chemist and its retail partners.

The company’s branded products currently are available in fewer than 20 stores in California, and Roberts says he tries to reward good retail partners with geographic exclusivity.

“If we get into a really good retail partner in a certain area, we’re not going to sell to a store that’s really close to them,” he said, adding that avoiding two retailers trying to undercut each other on the price of his brand helps cement its value.

“Right now, we’re going to be doing straight wholesale (on The Alchemist boxes),” Roberts said, “and then we’ll do a drop through some of our retail partners. So, basically, the retailer will be able to get their full markup on it, with the thought that maybe, eventually, this will be something that customers could get from us directly.”