The dosist store off Venice Boulevard is age-gated, of course, and painted all white with a rock garden out back populated with cacti and couches. Guests are calmed by the sound of electronic beats. It’s five blocks from MedMen’s West Hollywood location and sells nothing but the six types of “need-states” that the disposable cannabis vaporizers aim to achieve: bliss, calm, arouse, relief, passion and sleep. (“Sativa” and “indica” are verboten at dosist.)
This month, the product will be arriving in legal stores across Canada, a year after the first cannabis bud arrived in stores and online, as Health Canada rolls out cannabis 2.0, which legalizes edibles, including vapes. The three-year-old company is privately-held and does not disclose sales numbers, but its 42-year-old CEO Gunner Winston created a multibillion-dollar hedge fund in New York before retiring from Wall Street at 38 and heading to California to become a weed pioneer. Since smoking at the store isn’t allowed, we stroll around the block to huff our dose pens – Gunner smoking calm; myself enjoying bliss – then sit down on his back patio to make sense of the cannabis world.
Ben Kaplan: You lobbied hard to be part of legalization back in 2018, and launched a very visible “Not Available in Canada” advertising campaign when you were denied. How ruffled were your feathers?
Gunner Winston: We knew cannabis was supposed to be legal October 17, 2018, and given the opportunity to export, we wanted to be there. When we figured out they weren’t going to allow 2.0 products like concentrates, vaporization and edibles and only allow flower and pre-rolls, we thought they were doing the Canadian citizens a disservice by not offering them dose-controlled pens.
BK: Sounds like you were really mad.
GW: In early 2018, we were lobbying Health Canada to explain to them the benefits of our products, to implore the government to understand they’d be depriving citizens natural methodologies for things such as sleep and managing anxiety.
BK: And Health Canada said... ?
GW: Wait one year.
BK: Does Health Canada have a good reputation in the U.S.?
GW: They’re doing a great job because they’re focussed on protecting their citizens and the standards they impose are very similar to what California does: some of the testing standards are painful, but if your goal as a brand is to bring the safest, best products to consumers, you should want responsible regulations.
BK: Can you make sense of our current Canadian cannabis market, which I’ve heard described more than once as a bloodbath?
GW: It’s challenging when people look at stocks as a proxy for success. Take your biggest Canadian cannabis companies. Maybe a stock was at $100 and now it’s at $50. People say, ‘Oh my Gosh, it’s a catastrophe!’ But what about if three years ago that stock didn’t even exist?
BK: What if three years from now it also doesn’t exist?
GW: I think you need to look at a lot of different data points and not just ride an emotional rollercoaster. Canada still has several multibillion-dollar cannabis companies, which is a tremendous accomplishment. I don’t know if these companies are appropriately valued, but I would say “bloodbath” might be an exaggeration.
BK: So you have faith in the brands you’re about to compete with.
GW: I can’t say I have faith in the brands. One of the challenges for Canadian brands, because of the packaging and restrictive advertising regulations, is it’s hard for brands to differentiate. That’s why we worked hard through disruptive advertising and through working with major retailers like Fire & Flower and Tokyo Smoke.
BK: The flower you source to make your oils is from Aphria. How did that relationship begin?
GW: It began about a year and a half ago, and when we were exploring partners we required a few things: we were going to control our brand. A lot of people license their brand for 20-cents on the dollar and hand their brand over, we weren’t going to do that. It’s important for us to control where we show up – you might choose to put us in an event with Snoop Dogg, but as a wellness brand we might not want anything to do with Snoop Dogg. And finally: we control the quality of the product. Someone else can manufacture it, but we oversee what we use.
BK: Aside from not liking Snoop Dogg, that all seems very reasonable. Did other LPs balk at those terms?
GW: They all did. People were going, ‘I don’t care about your brand. We can do it all ourselves.’ I think companies will see it’s hard to be good at all things, cultivating, processing, retail and branding. All we do is focus on our brand and our innovation. It doesn’t mean we’ll be perfect, but at least it brings focus to our business.
BK: Your brand is very beautiful, but will it look like this in Canada?
GW: No, but we’re not going to fight them on that because we’d lose.
BK: Let’s do a buzz check in. You took two doses of calm, which is two three-second inhalations from 2.25 ml of a dose pen with a 10:1 CBD to THC ratio.
GW: The intoxication is minimal because of the CBD, but it does help me relax, and I feel good, enjoying the day and the calm. When I use bliss, I’m probably having a good buzz and hopefully having a chill, fun dinner, but it’s 3 p.m. and I need to be careful because I have some work left to do.
BK: That’s funny, because I took bliss and this is the only work I need to do all day.
GW: How do you feel?
BK: Not intoxicated, but sort of stimulated. It feels like a sativa, like something is tickling my endorphins. I’m glad to be out in L.A. in the sun.
GW: There are times when I’m hanging out on the beach and I can have five doses of bliss when the kids aren’t around and I can fall asleep on the beach, and, yeah, I know you haven’t taken that much but I know how you feel – you are really feeling O.K.
BK: Had you stayed retired you could’ve existed in that state all day long.
GW: The hedge fund my partner and I started had a lot of success, we made it into a multibillion dollar fund, but it was time for me to do something else. And look, even now I’m not wearing socks, I have a scraggly beard – this look is much harder to maintain on Wall Street.
BK: Apply one of your Wall Street lessons to cannabis.
GW: Portfolio managers are somewhat analogous to CEOs – my job is to allocate capital. From the money we raise to investing appropriately, I allocate capital to the best ideas. My biggest take away from Wall Street? A keen understanding about risk vs. reward.
BK: When you’re stoned on the beach regaling friends with war stories from Wall Street, which deal do you like to bring up?
GW: When we owned a piece of Starbucks, that was a fundamentally important investment in my career because Howard Schultz is one of the greatest CEOs of the past 30 years.
BK: Besides the obvious, what makes him great?
GW: He took that business and made it astronomic, then retired in 2008 with great success only to come back and reinvent his company and that showed me the path to greatness contains many evolutions – greatness isn’t a linear path, and people forget that. The same thing happened with Nike. Part of my job as CEO is to mitigate the short-term for the long-term. We plan on being around.
BK: Who’s going to be with you, from a Canadian brand perspective?
GW: Who will survive? I don’t know, but look at anything. There aren’t 10 Nikes. There’s not 10 Budweisers, 10 Coronas. The cream will rise to the top and the companies that will win are the ones who innovate and put the consumer first. I don’t answer to shareholders. I don’t answer to the board. I answer to the consumer, that’s it.
BK: How long can you stay private?
GW: A lot of companies have gone public that are smaller brands than us, but we don’t wake up focusing on monetizing the business.
BK: You won’t share sales figures or margins but is there anything you can say?
GW: There’s brands three times bigger than us in terms of revenue making hundreds of millions of dollars and their brand isn’t close to what ours is. Sears is bigger than Chanel. But which brand has the staying power? When Coca-Cola comes into the space, will your brand be relevant? That’s what I fight for every day.
BK: How brutal has the vaping crises been?
GW: Awful, and it’s sad, scary stuff, but people are treating all vaporization products as equal: e-cigarettes, nicotine, cannabis and then there’s the kid dynamic, the bubble gum flavours, and it’s all commingled. We don’t have the federal government saying what the problem is and that makes the crises really hard.
BK: How disastrous has this been for sales?
GW: We were impacted. When Donald Trump sent his tweet in September and the FDA is saying, ‘Don’t vape,’ we’re not immune. dosist isn’t ordained to win. You need faith in your product to stay out there and talk to consumers. It comes down to consumers trusting your brand.
BK: Which is why you’ve always wanted to exert maximum control.
GW: We built this brand for this kind of environment. We were just caught off guard by the inappropriate communication from the government because it was all based on fear.
BK: Now that you’re finally coming into Canada, what are your goals?
GW: I expect us to win.
BK: And what does ‘winning’ look like?
GW: We’d rather do a really strong $15-million in sales than a crappy $30-million, where you had to expand to verticals you don’t want, cut your price all the time and roll out products that are less than quality. We’re coming to Canada and we’re excited, but we also know that winning takes time.