Biz offers monthly care package to weed users
HIGH OCTANE: The Hemper team sets itself apart from rivals by focusing on practical, quality products.
Hemper has nearly 8,000 subscribers to its cannabis-accessories box and expects to double revenue this year
In his last year in college, Bryan Gerber didn’t know he was doing market research for a business he would soon co-found. But as an information systems major with little time to shop, he found himself making frequent orders on Amazon for necessities: things like rolling papers and filter tips for the joints he was rolling. He thought there had to be an easier—and more economical—way to stay supplied.
His former George Washington University School of Business classmate Rayjot Bhasin had signed up for BirchboxMan, a subscription service delivering a curated box of bargain-priced grooming products every month. That gave Gerber an idea: create a Birchbox for cannabis accessories.
In early 2015 Gerber, Bhasin and their mutual friend Henry Kochhar decided to risk $5,000 each of their personal savings on their company, Hemper.
“We knew the industry was worth billions already and only in its infancy,” recalled Gerber, now CEO. “But we didn’t know how fast we would grow.”
The cannabis market has been expanding by leaps and bounds. Nine states and the District of Columbia have legalized sales for recreational use, and 29, including New York, have legalized medical marijuana. A recent Cowen and Co. research note estimated that, with federal legalization, cannabis sales could total $75 billion by 2030. This year the legal market is at $11 billion, according to Arcview Market Research. (There is no data yet for the ancillary market of cannabis accessories.)
But in 2015 Gerber and his partners were stretched just putting together the 1,000 boxes that they started shipping from a Long Island warehouse a couple of weeks after Gerber graduated. There were also half a dozen cannabis-accessory subscription-box offerings already in the market.
Hemper’s founders thought their rivals were depending on an outdated Reefer Madness marketing model that “screamed stoner,” Gerber said, and put out cheap items of little practical use. As customers themselves, they felt that they knew what subscribers wanted and could make Hemper stand out by emphasizing a modern aesthetic through bold graphics, clever names and quality goods.
“We went in as a brand instead of a box,” Gerber said in the company’s small Garment District office space. “That was the mission from the get-go.”
But first they had to build a subscriber base, without the aid of Facebook or Google ads, which are closed to cannabis-related businesses. Here was where it helped to have rivals: Gerber went on Instagram and engaged with thousands of followers of other box suppliers, which turned those followers’ attention to Hemper.
As subscriber numbers grew, Hemper began doing collaborations with celebrity YouTube influencers, who would curate a box, promote it on their channel and take a cut of sales. The company also stood out by offering free shipping, including premium glass pipes among each box’s dozen or so products, and avoiding filler items like lanyards and snacks.
Hemper would sell out of boxes within weeks. The subscriber rolls, which began doubling every month, now number around 8,000 paying $30 per shipment. (Unlike weed, accessories are legal in every state.)
“They created an allure to their boxes,” said Gregg Smith, founder of Manhattan-based Evolution Corporate Advisors, who gave Hemper its first outside money with a $1 million investment in March. “I’ve seen them listed by customers on eBay at big prices compared to their initial offering.”
To Read The Rest Of This Article By Matthew Flamm on Crains New York
Founder & Interim Editor of L.A. Cannabis News