Marijuana Business Magazine October 2018

require CBD manufacturers to comply with current good manufacturing practices (GMPs), which are quality- control regulations for human phar- maceuticals to ensure products are safe and effective. With products already manufactured in a facility registered with the FDA to manufacture and process pharma- ceutical and over-the-counter drugs, Green Gorilla is well-positioned to survive a sudden shift in federal policy, according to company officials. Facili- ties registered with the FDA are subject to inspection to verify they comply with GMPs. And Green Gorilla said it already adheres to the FDA’s strict GMPs. In addition, Green Gorilla’s facility: • Is registered with the U.S. Department of Agriculture’s National Organic Program. • Provides product traceability, batch reporting and quality assurance and control testing. • Is certified by the International Organization for Standardiza- tion (ISO), which means it meets global manufacturing standards for quality, safety and efficiency. Not many labs obtain ISO cer- tification because it’s an added operating cost, DeForest said. The cost of manufacturing products at an FDA-registered facility is higher, but it is worth the cost, according to DeForest. “Does it come with a little bit higher cost? Yeah, but I think that’s the only way that you can actually make sure that it’s done to the standards it needs to be,” he said. “Any percentage it adds to our cost is going to be made up in the long run.” Align Products with Your Brand Product development should be consistent with your brand and its current lineup and also meet a need in the market, DeForest said. Don’t develop a product as a response to competitors – particularly if it doesn’t meet your standards for quality or align with your brand’s values. “I’m not going to jump into anything (and say), ‘Hey, let’s slap a label on the front of it or buy it from someone else,’” DeForest said. Green Gorilla has strategically and rapidly expanded its product line, consistently releasing higher-dosed oils and developing topicals and pet products. Its release of pet products in 2017 – oils for house pets and horses and dog treats – is a response to con- sumer demand. Despite demand for vape cartridges, DeForest isn’t convinced such a prod- uct jibes with Green Gorilla’s position as a health and wellness company. “I struggle to see the connection between (those products) and our position,” DeForest said. By contrast, soft gel capsules, edibles and additional topicals are more in line with Green Gorilla’s brand – and equally in demand by consum- ers, according to Brightfield Group research. That’s why the company is actively exploring those new product opportunities. “The way to do it right and the way to make sure it’s within our frame is to do it (strategically),” DeForest said. “And if we’re going to launch an item, it needs to be better than, it needs to be different than (rival products). It needs to have our particular Green Gorilla efficacy, quality and purity.” Vary Price Points Fighting price wars is a losing strategy, DeForest said. Rather, focus on segmenting your product offerings and price points as well as educating consumers about the efficacy of your products. Green Gorilla’s signature line of Hemp & Olive CBD-infused oils ranges in price from $25.99 for 150 milligrams to $599.99 for 7,500 milligrams, and the prices for its line of products for house pets and horses range from $39.99 for 150 milligrams to $599.99 for 7,500 milligrams. At the higher end, consumers may feel sticker shock, but steeper prices reflect larger doses and 30-day supplies, versus lower doses and 15-day supplies for lower-priced products. They also are designed to appeal to a wide range of consumers – from those integrating CBD into an everyday wellness routine to customers needing more sustained pain management. Part of the company’s price-setting strategy is to create lower-priced products that work as an introduction to CBD in addition to higher- priced items that offer a pain-relief alternative to prescription drugs. The lower-priced products – a 15-milligram, single-serving dose EXECUTIVE SUMMARY The market for hemp-derived CBD products is poised to explode. Green Gorilla, a Los Angeles- based manufacturer and online retailer of CBD oils, topicals and pet products, is maneuvering to be a global brand name. Here’s what you can learn from the company’s strategies: • Manufacture in facilities that are registered with the U.S. Food and Drug Administration (FDA), a move that will position your business to survive a sudden shift in federal policy. The hemp industry broadly expects the FDA eventually will regulate the manufacturing of CBD products. • Align product development with your brand’s values while responding to consumers’ needs. • Don’t fight price wars. Instead, segment your product offerings and price points and focus on educating consumers about the efficacy of your products. • Vertically integrate and develop strategic partnerships that give you more control over the cost and quality of your products. 94 • Marijuana Business Magazine • October 2018