Owen Martinetti.
When Owen Martinetti and Chris Abbenda started taking a deeper look at the cannabis space, they noticed a multitude of brands that were trying to do a little bit of everything. It seemed every brand was producing multiple varieties of edibles, multiple flavors, multiple purposes and multiple categories of cannabis products, from topicals to edibles to vapes to beverages. The result was that each brand had dozens upon dozens of different SKUs, complicating the processes of sales and marketing for everyone involved in the supply chain, from the manufacturers themselves all the way to the consumer.
Chris Abbenda.
Martinetti and Abbenda wanted to take a vastly different approach. They wanted to simplify everything.
In 2021, the two co-founders launched Snoozy and kept their products as simple as possible. One form. One flavor. One function.
“We’re trying to brand Snoozy as the sleep brand,” Martinetti says. “When someone thinks of a cannabis product that helps them sleep, we want to be the brand that people go to, and that budtenders are recommending Snoozy as the go-to product for sleep.”
The sleep-focused gummies hit the market in August 2021, and though the company has expanded its product lineup slightly since then, it continues to be focused on a simple menu for retailers and consumers and a highly targeted marketing plan. However, the company’s business model is becoming increasingly complex as it expands from hemp-based products into state-legal marijuana products, while hedging its bets on the future of the entire industry.
Diversified model
Snoozy essentially operates in two different markets. The company’s flagship product is its hemp-derived delta-9 gummies that are available nationwide through the Snoozy website and about 400 brick-and-mortar retailers, mostly in states where marijuana remains illegal. Meanwhile, Snoozy produces an almost identical product specifically for New York’s adult-use market, where the marijuana-derived product is available in five state-licensed retail stores — and, like hundreds of other companies in New York, anxiously waits on the state to pick up the pace on its recreational roll-out.
Having two products for the two different markets gives Snoozy some breathing room that many brands do not have. The hemp-derived product keeps the company afloat while New York goes through its painfully slow licensing process. Having the New York license gives the company room for growth and some protection in case the federal government steps in to regulate or outlaw products containing hemp-derived delta-9 THC.
Martinetti and Abbenda also have a cannabis retail store in Pittsfield, Massachusetts, called Potency, which opened in the spring.
“We are arguably in one of the better positions for a supply chain like this, because we are essentially just a brand,” Martinetti says. “We have minimal overhead and input costs versus, say, a cultivator who has to pay for all their seeds and labor costs, and a processor, who needs the facility and has the electrical costs, the staff and all their operating expenses. We are operating in multiple different states with our hemp products, so we have the cash flow to keep the business running without any real disruption from New York. We know we’re invested in New York long term, because it’s our home state and we want to see it work through all these problems.”
Hemp explosion
When Snoozy launched in 2021, the company struggled to consistently make sales, dealing with the glut of CBD-focused products on the market and the gauntlet of challenges related to social media marketing for cannabis companies.
“We pivoted that business to wholesale, and it kind of just fizzled out throughout the beginning of 2022,” Martinetti says.
But with the advent of hemp-derived delta-9 products that are not federally illegal, despite having similar psychoactive properties to marijuana, Snoozy launched a reformulated product in October 2022. The new product contains a combination of delta-9 THC, CBD and CBN, as well as chamomile and L-theanine.
“Within the first month, we went from like 10 stores to 60,” Martinetti says. “Now we’re approaching 400 stores that we sell directly to.”
Snoozy has enjoyed massive success since launching its THC products, but the specter of increased regulations looms over companies across the nation that are making hemp-based products with delta-8 or delta-9 THC.
Will the federal government impose regulations or an outright ban on hemp-derived products? Will individual states take a heavy-handed approach to regulating or banning these products? Nobody knows for sure either way. Some states have already taken restrictive efforts to protect their state-legal marijuana industries. Others have taken a hands-off approach that has allowed the relatively new sector to grow.
It was the passage of the 2018 Farm Bill that legalized hemp nationwide and, perhaps unintentionally, legalized a variety of psychoactive products that come from cannabis plants with less than 0.3% THC. The next Farm Bill could be pivotal for the entire cannabis industry.
“This next Farm Bill is, I would say, arguably the most important thing for what the future of cannabis is going to look like,” Martinetti says.
New York woes
Although New York currently accounts for only a fraction of Snoozy’s overall business, the company’s founders are committed to its long-term success.
But the state’s recreational launch — following years of having one of the most restrictive medical marijuana programs in the country — is off to an inauspicious start.
“It’s been incredibly slow,” Abbenda says. “It’s purely bureaucratic from the Office of Cannabis Management and the Dormitory Authority of the State of New York. From what we’ve been told from some of the current licensees, there’s clearly just inefficient lines of communication between these two entities.”
While the state has been slow to issue retail licenses, licensed operators have been even slower to open their shops, due to a wide range of complications. Six months after New York’s first adult-use shop opened, there are still fewer than two dozen stores open — competing against hundreds, if not thousands, of unlicensed cannabis businesses.
Martinetti says the thing that would help accelerate the New York market would be for the state to move forward with general retail applications and not just social equity businesses, to get those stores licensed, open and buying products from hundreds or farmers who are watching their 2022 crops gather dust.
The state, he says, was looking at a timeline from the very beginning that was “practically speaking, impossible,” due in large part to the nature of zoning laws.
“It’s sad how little insight the people making the rules had into the timeline of getting a retail store open and how impactful zoning laws would be,” he says. “It’s really a brick wall. If you talk to any of the cannabis attorneys or real estate brokers in the cannabis space in New York, it’s the number one thing they immediately go to: there’s not enough real estate and they’re zoned out, or the zoning is a headache.”