2021: A Big Year for Cannabis?
Eric Ortiz, EVP at Magical Brands, discusses the challenges of cannabis and CBD product marketing and the likelihood of marijuana being decriminalized in 2021.
IN CLEAR FOCUS: Eric Ortiz, EVP at Magical Brands, shares how his marketing team navigates domestic regulations around cannabis, CBD, and hemp-based products on a state-by-state basis. Eric speaks candidly about the practical challenges facing the industry, and the importance of the MORE Act, which would decriminalize marijuana at a federal level. Eric offers practical advice for cannabis and CBD brands looking to engage consumers and remain compliant with social platforms’ advertising rules.
IMPORTANT: The views and opinions expressed in this podcast are not intended to be a substitute for professional medical advice, diagnosis, or treatment recommendations. Always seek the advice of your physician or other qualified healthcare provider with any questions you may have about a medical condition.
Adrian Tennant: In today’s episode of IN CLEAR FOCUS:
Eric Ortiz: How do I let people know what this product is, in a highly competitive CBD market, and also stay compliant within the ad space to make sure that my ads don’t get disapproved?
Adrian Tennant: You’re listening to IN CLEAR FOCUS, fresh perspectives on the business of advertising. Produced weekly by Bigeye. Hello, I’m your host, Adrian Tennant, VP of Insights at Bigeye. An audience-focused, creative-driven, full-service advertising agency, we’re based in Orlando, Florida, but serve clients across the United States and beyond. Thank you for joining us. The 2020 election saw marijuana legalized in all five States that had cannabis measures on their ballots on November 3rd. Then in December, the House passed the Marijuana Opportunity Reinvestment and Expungement Act – also known as the MORE Act – paving the way for federal decriminalization of cannabis. And with Democrats taking control of the Senate in the Georgia runoffs, it looks like 2021 could be a big year for the cannabis industry. Today, 15 of the United States, which also includes the District of Columbia, have legal adult use markets while 36 States plus D.C. have approved medical markets. It’s interesting to note how society’s views have changed over the past half century. The polling from Gallup first measured the American public’s views of marijuana legalization in 1969, when just 12% of Americans backed it. By 1977, support had more than doubled to 28%. It didn’t exceed 30% until 2000, but has risen steeply in the two decades since then. Polling by Gallup in October of 2020, just a month before the election, found that almost seven in every 10 Americans – 68% – believe that marijuana should be legal. Our guest today has to navigate the complexity of state and federal cannabis laws and the regulations around CBD and hemp on a daily basis. Eric Ortiz is the Executive Vice President of Operations at Magical Brands, where he researches, plans, and manages the growth of the company’s CBD line and edible-making appliances. Eric develops Magical Brands’ go-to-market strategies, and oversees manufacturing, marketing, and performance analytics. Eric started his career as an entrepreneur while still in college, then entered the advertising industry, becoming an Executive Director at McKay Advertising and Acquisition in Tampa, Florida. Eric also serves as VP of Operations with South Tampa Football Club. He’s active in the Tampa Bay Chamber of Commerce and is the immediate past president of The Emerging Leaders of Tampa Bay. Eric joins us today from his office in Port Richey, Florida. Eric, welcome to IN CLEAR FOCUS!
Eric Ortiz: Adrian, thank you so much for having me. I could not be more excited.
Adrian Tennant: Could you tell us first what Magical Brands is?
Eric Ortiz: Sure, I would love to. Magical Brands is our umbrella company that hosts a myriad of our companies underneath, but our most famous two being Magical Butter, our at-home kitchen appliance for cannabis edible-making consumption, as well as our CBD line, which is our finished product line that was just recently launched in 2020.
Adrian Tennant: The market for CBD and cannabis is highly competitive here in the US. What was Magical Brands’ founding story?
Eric Ortiz: Yeah, I couldn’t agree with you more. It’s a highly competitive sector, on a lot of different fronts. We’ve been in business in the cannabis industry for about eight years, which is longer than the majority of CBD companies that are out there. Our origin story actually started with our founder and our CEO, Garren Angel had a friend, a neighbor in fact, who was suffering from some issues on the medical front, specifically Crohn’s disease and Parkinson’s and he found out that through cannabis consumption he was able to ease some of his nausea, some of his pain, and some of the other symptoms that came along with these chronic diseases. He also has asthma so he wasn’t able to consume cannabis in the regular ways, via inhalation, smoking, or vaping. So Garren basically set out on a mission to help folks like his neighbor there that might be able to consume cannabis in a different way which then branched off into our at-home kitchen edible maker, the now famous Magical Butter Machine. From there, we’ve had quite strong growth over the past couple of years within the cannabis industry, developing our brand and our message, which is really about helping consumers find the best way to meet their own health needs. And one of the areas that has recently bubbled up within our cannabis space is CBD. It’s something that we’ve looked at as the market has continued to grow. And in 2019, we decided to engage and really go full in depth with some of our strategic partnerships in the space and decided to come out with a CBD line of our own.
Adrian Tennant: What is Magical Brands’ business model?
Eric Ortiz: So, we have a variety of different ways in which we sell the products. The majority is direct-to-consumer. So would that be directly through our website properties or through Amazon, we sell in about 17 countries at the moment, that’s for the Magical Butter Machine, and for CBD we’re in about four countries at the moment. Although we have some vetted partnerships, some with contracts, depending on kind of the territory is for a distributor play as well so that we can get into stores. And then most recently, we’ve actually been able to get into Macy’s and into Bed Bath and Beyond. So we’re really starting to bridge the gap into the mainstream big box market as well.
Adrian Tennant: Could you tell us what your EVP role in the company entails?
Eric Ortiz: I feel blessed and honored that I get a chance to really experience almost every part of the business. Whether it’s from marketing, from an operational standpoint, from an HR standpoint, from a finance standpoint. You know, what we’re doing as a business, as a whole, as we continue to move and create new structures. In different countries, find new partners in those countries, creating the proper processes and the existing markets that we have, to be able to promote them, and rinse and repeat if you will, in these other markets, as we continue to expand, globally.
Adrian Tennant: We’ll talk about Magical Brands’ edible-making equipment and CBD products separately. But before we do that, could you just explain some of the differences between cannabis and CBD?
Eric Ortiz: Sure thing. Cannabis is a plant and within that plant you have structures called cannabinoids. So there are several different cannabinoids throughout the cannabis plant. One of which is THC, which is synonymous with the cannabinoid that gets you high. And the other one is CBD. There are a few more – CBG among others, that are in less concentration, but these are kind of the big two, in terms of the cannabis plant and the effects that you’re going to get from it. And CBD, that’s actually where you get a lot of the soothing and medicinal benefits from the studies that have been done worldwide from the cannabis plant. So, let’s say you’re inhaling, smoking flower, right? You’re going to get all of those different cannabinoids at once. So you may get high, yes. But you also will receive some of the medical efforts and benefits that the plant provides. The CBD category, as we see it at Magical, is really an attempt to start to provide those medical and healthy benefits of the plant to them in an isolated variety. So that you know, people outside of the world that want to enjoy cannabis for its psychoactive effects can also enjoy its medicinal benefits without feeling like they are out of control or if they don’t prefer to use a psychoactive part of the plant, they don’t have to.
Adrian Tennant: Eric, what does a typical Magical Brands CBD buyer persona look like?
Eric Ortiz: We did research and worked with a couple of different agencies and providers that allowed us to take a look at our personas as a whole. I would say, the typical Magical Brands CBD buyer generally has some sort of ailment or condition that they’re using the CBD to help with. But then they also probably have some sort of preference towards kind of organic methods or finding things that I know the ingredients are within it. There is a massive move right now to be conscious about what we’re ingesting into our bodies. And I think the CBD market just provides another example for those people to be able to move away from opioids and things of that nature and start to move towards more organic products – one of which being CBD.
Adrian Tennant: Bigeye conducted a national research study in 2020, looking at the consumption and use of CBD-based products. It’s estimated that about 18% of US adults have purchased CBD products, and based on our results, it seems like the vast majority of buyers intend to continue using CBD long-term, which is good news for the industry, of course. What is your most popular CBD product so far?
Eric Ortiz: Our most popular product is the classic tincture. I think that there’s probably a couple of reasons for that. It’s probably the most popular in terms of methods and in which people ingest – you can drop it straight under your tongue, you can put it in your meal, you can put it in a drink. So I just think from the variety standpoint, there is a lot to be said about that classic tincture product. That being said, we’ve seen some really great success with things like our soothing gel, which people that still have kind of a stigma or they don’t want to utilize something that they’re going to have to ingest. Sometimes that form factor does make a difference in whether they’re going to try these particular products are not. And based on your research here, Adrian, it looks like it’s hopefully helping some of them because it seems to be that they are using it long-term.
Adrian Tennant: What’s your primary new customer acquisition strategy for CBD products?
Eric Ortiz: One of the things that I think Magical Butter has been extremely adept at over the years is combining our marketing department with various influencers in the space. Essentially, we have some pretty large influencers that we’re going to lean on to create content around it. It’s not simply about having one little mention or feature, but we really want to create a campaign with some of these folks. A lot of the people that we’re talking to some big names within the space actually have affiliation with our product and with our brand. Beyond that, we utilize the same types of platforms that we would for our Magical Butter product that we’ve seen so much success in. Whether that be our MBU group, our email campaigns, and then we also run some advertising around the CBD products, which can become difficult and the laws seem to change every day on that. So it’s important to be careful there, but, those are our basic strategies at the moment. And then thirdly, using marketing tools at our disposal to develop the proper flows and advertising that we need to make sure people know that Magical Butter has now moved into the CBD space.
Adrian Tennant: I’d like to return to something you said there about the rules around advertising CBD products – in what kinds of ways are you challenged by them?
Eric Ortiz: If you asked my marketing team here, they would tell you in every type of way, Adrian. It’s quite interesting, there are quite a number of rules on different products and different platforms that you might be able to use. Google and Facebook are very stringent on the words, even that you can use. They started to open up in the past year or so and being able to advertise some things. Like, for instance, I think Facebook, their official stance is that it can’t be an ingestible that you’re advertising, but then on top of that, you can’t use CBD in the ad. You can’t have CBD on the landing page or any of the associated scientific terms to talk about your product. So it becomes a tug of war, to be honest with you, Adrian, of how do I let people know what this product is and what it does and provide them with the scientific words that they’re quite honestly looking for when they’re shopping around in a highly competitive CBD market, how do I do that? And also stay compliant within the ad space to make sure that my ads don’t get disapproved? And, at least for Magical Butter, what we’ve found is that it’s kind of always going to be a tug of war. We’re gonna push where we can, but obviously we want to be respectful and mindful of what we can do on the various platforms. And I think we’ll start to see, you know, an emergence of more advertisers in the space, but right now it’s quite difficult unless you have a programmatic partner that is really lenient or something along those lines. The big scale platforms like Google and Facebook are really, really difficult to kind of get going on at the moment, just because of the product that we have.
Adrian Tennant: Now, do you have an in-house creative team?
Eric Ortiz: We certainly do. And we love them to death.
Adrian Tennant: What kinds of facilities do you have to support them?
Eric Ortiz: Yeah. So in our headquarters here located out of Port Richey, Florida, we actually have an entire section of our office dedicated to creative. We have a cyc wall that covers up about a third of the room, maybe with lights installed. We have a studio kitchen and that we work through, and to do shoots and bring in talent and things of that nature as well as we’re set up for all the live streaming that we do. We do Amazon streaming quite a little bit. We’ve had concerts in here. If we do photo shoots, we do videos, we use them. And for all kinds of things in our firm, our in-house creative team, and really get to do some fun stuff as a company, even from our own organic perspective. We quite literally walk through a door and we enter a new world in terms of a production space. So it’s quite convenient to have.
Adrian Tennant: Let’s take a short break. We’ll be right back after this message.
Dana Cassell: I’m Dana Cassell, Bigeye’s Senior Strategist. Every week, IN CLEAR FOCUS addresses topics that impact our work as marketing professionals, often inspired by data points reported in consumer research studies. At Bigeye, we put audiences first.
For every engagement, through our own research, we develop a deep understanding of our client’s prospects and customers – analyzing their attitudes, behaviors, and motivations. We distill this data into actionable insights to inspire creative brand-building and persuasive activation campaigns – with strategic, cost-efficient media placements. If you’d like to know more about how to put Bigeye’s audience-focused insights to work for your brand, please contact us. Email email@example.com.
Adrian Tennant: Welcome back. I’m talking with Eric Ortiz, EVP of Operations at Magical Brands. Before the break, we talked about your CBD line. Let’s turn now to your cannabis-related product, the Magical Butter Machine. Can you explain what inspired its creation and what the product is designed to do?
Eric Ortiz: So essentially, the Magical Butter Machine is a countertop kitchen extractor. So what that means is that it allows you to put herb into the machine and infuse, whether that be oil, butters, tinctures, salves, lotions, soups, a variety of different components. You’re able to then put your flower into the machine, put your oil in, hit two buttons, strain it, and now you have infused oil that you can use within your cooking. So it provided people not only with the ability to make consistent cannabis edibles to get the dosage that they wanted correctly, but to also then have a variety of different recipes that they can use, to actually consume their medication. So I think everyone has heard of their friend in college who was making brownies in their dorm room or whatever it was. So now it’s not just about brownies. You know, when I answer the phone here for the customer service side of things, what I hear on the phone generally is an older person who has some sort of physical illness and now they’re being prescribed this medication by their doctor. They don’t want to eat brownies every day. They want to look for a new way to consume that medication without being unhealthy. So if they can do that within a butter, or an oil that they can cook into a healthy recipe or a salad dressing, I think it becomes a much more mainstream part of society and really opened up the culinary landscape, I think, for cannabis enthusiasts as well as the patient providers.
Adrian Tennant: How, if at all, does the Magical Butter buyer persona differ from your CBD buyer persona?
Eric Ortiz: They are similar, in a lot of ways. I think maybe the Magical Butter folks tend to slightly be more cannabis enthusiasts, I would say. Whereas I think our CBD line tends to skew slightly more medical. So this may be someone within our CBD line category, that may not be able to consume cannabis in the real form, or they would not like to, but they still want the added benefits that they may have had previously from consuming the plant and some sort of other way, or they spoken to their doctor and their doctor has recommended that they try this plant for their particular needs. Potentially, the Magical Butter buyers may have more of an affinity towards DIY or do-it-yourself because they’re actually making the tincture themselves.
Adrian Tennant: Right. Well, we talked a little bit about the challenges around CBD advertising. What has been your most successful customer acquisition program for the Magical Butter Machine?
Eric Ortiz: I would definitely say it has been our digital advertising campaigns over the past year. I would add into that our new branding initiative, which I think spurred some of that growth. However, we have really found a stride, both in the programmatic space, on Facebook, on Google, and on Amazon, enable us to scale our marketing programs quite significantly without seeing that much of a reduction in ROAS. We also have another partner that we work with that assists us with the performance side of things but I want to give a huge credit to our team internally because the creative that’s developed, the copy that’s written, all of the advertising and all the monitoring really happens on the Magical Butter side and it has been a really massive catalyst this year for us, as we continue to grow on what has traditionally really just been organic growth from our social media efforts. Figuring out and dialing in our advertising to a point now where we feel we can continue to expand and grow that in other countries as well.
Adrian Tennant: Well, as we discussed earlier, prior to Magical Brands, you were managing digital advertising in an agency setting. Eric, what lessons did you learn from your agency experience that you’re applying to your current role?
Eric Ortiz: One of the things that I learned through my conversations with clients was really to find ways to lead with revenue. There may be 10 other really crucial, important marketing points that you and I know that we need to get to. And I know that we need to say that this is really important, and this is how it’s affected the brand. We’ve had unaided recall and, you know, a myriad of other different metrics that you can use. But what I’ve really learned is finding a way to weave in revenue first always made those metrics more actionable. So if I would say, “Well, we increased our unaided recall.” My client would say, “Okay, well, how much money did that make you?” And if I said “We had a great campaign, we did great from a sales standpoint. And also we increased our unaided recall.” Then we talk about unaided recall for 10 minutes. Now, as I kind of internalize that and I promote what I would like to do with advertising and where we go, I still think of it that way, even internally to my marketing department, or to our CEO or to our COO, when I’m presenting an idea to folks, I really try to look at it as, “How does this affect a business as a whole first?” Most importantly, because the decision makers, that’s the first thing that their mind is going to. And then once you get past that, then it’s your availability to talk about all the beneficial things that you’re going to get. But in order to get that buy-in, I just think you have to put it in a business context. And then once you do that, then you can open it up to a marketing context, because not all CEO’s and CEO’s in the world are marketing focused, but they know it’s importance. So putting it in a way they understand, I think is one of the most crucial things I learned.
Adrian Tennant: Well, staying with the dollars and cents, if you had zero budget or very close to nothing to spend on marketing, what would you not want to stop doing?
Eric Ortiz: Partnerships, partnerships, partnerships. Magical Butter, as a company, I think has done a tremendous job of cultivating partnerships. And making them ones that last, so instead of researching a bunch of different people that may be in the CBD space and sending them another tincture box, which by the way, they already got 12 of them. How do we start a conversation with someone? How do we say, “Hey, are you familiar with Magical Butter? Do you want to get to know us? Would you like to do an episode or a series of shows with us here in our headquarters under a nice camera under the production studio?” There has to be some sort of value that you can give to people that’s not monetary. And a portion of that is our reach as Magical Butter. A portion of that is the coolness that it comes with collaborating with the brand. But a portion of it is providing our resources. So for me, I think one of the most important things with the $0 is one to use your social media, use the ability to reach anybody that you would like to in the world as a brand, as opposed to, as a person, and then have a collaborative conversation on, ” How do we make the best project possible that sustaining? That’s not just about one post, but also that provides benefits on both sides, even though they might not be immediately visible from a monetary standpoint?”
Adrian Tennant: Well, on December 4th of 2020, the House of Representatives approved the MORE Act, a bill that could end the federal prohibition of cannabis. This is the first significant action since the passage of the Marijuana Tax Act of 1937, which federally criminalized all aspects of cannabis production, sale, and possession. The MORE Act will next move to the Senate. The results of Georgia’s runoff election earlier this month means that the Senate is now under Democratic control. What do you think the chances are for the MORE Act being passed into law?
Eric Ortiz: I think it’s much stronger now. I think we have a legitimate chance, with the Democrats being in control of the Senate of pushing this. It was also on a bill promoted by Kamala Harris, the Vice President. So there’s going to be support throughout the administration, I think through this. And there will be a lot of discussion around it. Like whether to deal with funding, the social justice program, as well as exoneration of folks who have had previous small cannabis convictions. I think those are where the contentious issues lie. Ironing out some of the kinks that are within the MORE Act that I don’t think Republicans and Democrats are totally aligned on just yet. However, I have to say we’re in a much better place than we were previously now, knowing that we have a Democratic-controlled Senate, I think you’ll see a lot more to try to push this through.
Adrian Tennant: Now, many cannabis-based businesses are hampered by a federally-imposed ban on banking, which reflects marijuana’s illegal status at the federal level. This results in restrictions that force many cannabis businesses to operate as cash-only enterprises, even if they’re located in legal markets. If the MORE Act becomes law, what could some of the implications be for the industry in general, and your business in particular?
Eric Ortiz: I think this is one of the biggest and most contentious issues right now for cannabis business owners. If you ask them, it is literally one of the biggest hindrances that the businesses have to deal with. You know, as a bank, you have risk analysis or assessments criteria, right? To see whether or not, if I’m a bank, am I going to give you money or not? So that could be on a variety of different factors. It could be on “you have too much short-term liability on your balance sheet.” Could be, “Hey, you know, there’s too much long-term liability. We don’t think you’re going to get out of this. I’m not sure that you have that contract that you said that you’re in place.” Or it could be “Because of the industry that you’re in.” In this case, the cannabis industry due to the schedule one listing of cannabis as a federally-prohibited drug. So I think as you start to open that up and you start to get banks with institutional capital that can start to assess and provide and deploy some of this capital to some of these cannabis companies that are doing a good job, that are managing their books, that are becoming profitable. That is really when you’re going to start to see the spur of the cannabis industry. So it’s really, really exciting to know that we have come so far, both in a legislation standpoint and an economic standpoint as companies, and that’s without the funding that every other company nearly has. I could not stress that enough. I think it’s going to be a massive shift to how cannabis companies address markets and how they expand.
Adrian Tennant: What does the immediate future look like for Magical Brands? Are there any new products on the roadmap that you can tell us about?
Eric Ortiz: Yes, there are a couple of new products that we are continuing to roll out consistently. We have our kitchenware line that will launch in both Q1 and Q2, accessory products to the machine. And we are currently prototyping as well for the brand new machine that will come out in 2022. We’ll have plenty of info on that. But believe me, , when it comes to designing and developing these things, Magical Brands takes as much time as possible because we want to release the absolute best product that we can. So there’s probably a hundred whiteboards in our office with different thoughts and ideas around what the new machine could be and will be. So as we work through that and figure out what are the features that we are definitely going to include versus not, and review through all the prototypes, we’ll actually have a better announcement for you hopefully in the late Q2 and the next year.
Adrian Tennant: Eric, in addition to your professional life, you are also very active in your local community, volunteering for a number of causes. How do you manage your time to be optimally productive?
Eric Ortiz: I’ll start with it’s a learning process every day. I don’t think there’s anybody that can tell you for sure that they have everything down pat. If they do, I’d assert that they’re lying. However, I think what’s important for me – I am involved in a lot. I run two adult soccer clubs. I obviously am very invested in the business, that I help run every day as well as some of the other extracurricular programs that I’m involved in and some board seats in the area, but to me, and what I say is the things that I do outside of work, fill my cup. And if my cup is not filled and I go into work and I’m annoyed and I’m like, “Oh, why am I doing this?” I’m just not going to be as productive as possible. So really what I’ve found from a time management standpoint is starting to really realize that being selective on what are the things that really truly make me happy. Not in for the moment, not for a week, but really I can look back on and say, “I am proud of this. I’m happy I did this. This was a great use of my time.” And what I really did was just double-down in those areas. So as opposed to trying to find everything in the world to go do and be constantly worried about being late for something or running to another thing or whatever it is. So if I’m simplifying my total number of the responsibilities that I do have and that I do keep, now I have more time and energy and focus and I can get the most out of those that I want to. And then the second step is figuring out what things you’re going to cut and how you’re going to continue to provide your hundred percent effort in those areas because nobody wants someone who’s involved in 10 things and only at 70 percent. I guarantee you people will have more respect if you say, politely, “No, I cannot do this because I won’t be at a hundred percent,” than saying, “Yes,” and then getting there and it’s only at 60% and now you’re struggling to figure out why you’ve accepted. It’s always, in my opinion, better to do the former.
Adrian Tennant: If IN CLEAR FOCUS listeners want to learn more about Magical Brands, where can they find you?
Eric Ortiz: I would tell them to follow us @MagicalButter. That’s MagicalButter on Facebook, on Instagram. You can also find us on LinkedIn or YouTube – we have a massive channel of recipe videos if you’re interested or wanting to learn more. Also our two websites, one for the Magical Butter Machine is MagicalButter.com. And then if you are interested in the CBD finished product category that we were talking about earlier, that is actually on our sister website, Magical.com, which you can find both linked to on nearly all of our social media stuff. And yeah, I hope you’ll follow us.
Adrian Tennant: Well, we will include links to that on the Bigeye webpage as well. Eric Ortiz, thank you very much indeed for being our guest this week on, IN CLEAR FOCUS.
Eric Ortiz: Thank you so much, Adrian, for having me. It was a pleasure and an honor.
Adrian Tennant: Coming up next time on IN CLEAR FOCUS:
Kevin Keane: Neuro is particularly strong in understanding non-conscious response – why do people not remember our key message? Why is our message not resonating as much as it could or should? Neuro cuts right through to the underlying motivations of consumers. It’s unbiased.
Adrian Tennant: A conversation with Kevin Keane, CEO of Brainsights, a neuroscience-based research agency predicting the effectiveness of communications. That’s next time on IN CLEAR FOCUS. Thanks to my guest this week. Eric Ortiz, Executive Vice President of Operations for Magical Brands. You’ll find links to the resources we discussed on the IN CLEAR FOCUS page at bigeyeagency.com under “Insights”. Just click on the button marked “Podcast.” And if you haven’t already, please consider subscribing to the show on Apple Podcasts, Spotify, Google Podcasts, Amazon Music, Audible, or your preferred podcast player. If you have an Amazon Echo device, you can use the IN CLEAR FOCUS skill to add the podcast to your Flash Briefing. Thank you for listening to IN CLEAR FOCUS produced by Bigeye. I’ve been your host, Adrian Tennant. Until next week, goodbye.