#109 - How Uncle Arnie’s Is Scaling from Cannabis Cool to National Brand w/ Theo Terris, CEO

We dig into the rise of THC beverages from dispensary side racks to big-box end caps, then peel back how Uncle Arnie’s raised $7.5M, built distribution state by state, and scaled a team while staying scrappy. Theo shares lessons on dosage, education, and why focused markets beat scattershot launches.

• Target’s Minnesota pilot and retail data signals
• Ohio’s 90-day hemp ban and policy risks
• Uncle Arnie’s Series A and investor sentiment shift
• Dispensary versus hemp channels by dosage
• Distribution selection and portfolio discipline
• Merchandising strategy for cans and shots
• Education programs for staff, retailers, and consumers
• Scaling leadership, hiring, and culture
• Predictions on national distributors and retailer pilots

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Chapters

• 0:00 Welcome From Vegas And Oktoberfest Story
• 4:10 THC Beverages Hit Target In Minnesota
• 8:50 Market Buzz At NBWA And Data Signals
• 12:55 Ohio’s 90-Day Hemp Ban And Policy Talk
• 16:40 Introducing Guest: Theo From Uncle Arnie’s
• 20:30 The Long Road To A $7.5M Series A
• 25:00 Brand Strategy: Legacy Consumer To Mass Market
• 29:30 Dispensary vs Hemp Channels And Dosage
• 34:05 Big-Box Retail Dosage Choices And Consumer Data
• 38:00 Distribution Philosophy State By State
• 43:05 Optimal Portfolios And Dedicated THC Teams
• 47:40 Go-Deep Market Entry And Minnesota Playbook
• 52:00 DTC’s Role Versus Wholesale Expansion

Transcript

Theo Terris: 0:00

In some states, you can have a two milligram serving size. In other state, you can have a five, a ten, a fifteen, a twenty. And I think in Tennessee that the serving size is up to 15 milligrams. So you the brand can define what the serving size actually is.

Ben Larson: 0:21

Hey everybody. Welcome to Las Vegas! I mean er episode 109 of High Spirits. I'm Ben Larson, and with me as always is Anna Ray Grabstein. Uh we're recording Tuesday, October 14th, 2025, and we have an amazing show for you today. One of my best friends in the industry, Theo Terrace, is going to be joining us from Uncle Arnie's. Find out where he's tuning in from. Before we get there, Anna Ray, our things back at home.

AnnaRae Grabstein: 0:52

They're so good. It was a super fun weekend. I accidentally stumbled into an Oktoberfest celebration and got volunteered by some friends to be in an all-women's stein holding competition. Um, which How many do hold? It's just it was one. The idea is it's like it's really glass stein. It's a liter of beer, and you have to lock your elbow and hold it out like at a right angle until you just can't hold it anymore. You know, I thought because I've been doing all this weight training that I was like, oh, I am definitely winning the stein holding competition. And um, it was actually a lot harder than I expected. I did not place in the top three. I think I was like number six out of about 30. Um, I did get an enormous free beer out of it, which wasn't really that meaningful to me. It did just kind of it was it was like a really fun beverage um inspired kind of celebration that got me thinking about kind of like what this space could be if we actually let ourselves have a little fun sometimes.

Ben Larson: 1:58

So yeah, yeah. The theme of our episode, beverage celebration. Wait, so how long must you hold a stein at 90 degrees to place sixth place?

AnnaRae Grabstein: 2:10

I I wish that I had kept track of the time. It felt like a really long time, but it was probably like three minutes. It was so it was at this place called Brewster's Beer Garden that's like this big outdoor space that has this big Oktoberfest celebration, and all the staff was wearing leaderhosen, and they had um like a pretty hilarious band called the polka geists, like poltergeists, but they were doing polka and um yodeling. And um they gathered all, it was like there was a women's and a men's, but obviously I participated in the women's one and they got a big circle, and we all faced each other in a circle and held out our arm at 90 degrees. And you know, what's interesting is within all the weight training that I've been doing, that my trainer always tells me not to lock my joints. So I'm not allowed to lock my elbow or lock my arm. But in the Steinholding competition, they forced us to lock our elbows. And I think that that was part of it is that like my muscles weren't attuned to having a locked elbow. I wanted to trick it a little bit. Um, it's um one of those things. I realize that I hate to lose. So entering a competition that I did not win was a real disappointment. But at the same time, I think that I won just by playing a lot. So did Rocco witness this or what um the family was there, friends were there, and actually my my friend was placed in the top three. So shout out to Becky Hagler, who yeah, placed in the top three.

Ben Larson: 3:46

Uh awesome.

AnnaRae Grabstein: 3:47

And um, you also, though, have been in a competitive place. You've been in Vegas throwing down gambling, right?

Ben Larson: 3:55

Yeah, that that part has not been too competitive. The house, the house has definitely been the all-star. But yeah, an October fest of sorts, I suppose. The National Beer Wholesalers Association conference. Massive. Old habits break hard. I'm staying at the Cosmo, but the the event's actually being held at Caesars, which is two hotels down, which everyone knows is about a mile away. But yeah, it's it's it's wild to see how far the hemp beverage category has come over the last year. You know, we were a glimmer of hope uh at last year's MBWA. Uh, my team attended last year, and this year it just seems that THC is on display. It was on the slide deck of the keynote. It's been the buzz of the show, and there are booths sprinkled throughout the three expo floor. So very exciting. We held a co-hosted event last night with the countermeasures corp team, and that was just a blast. There's just so many cool event spaces in in Vegas. We we had this speakeasy, you know, it just looked like it's called Caspians at Caesars. It looks like just a normal, normal hotel bar, and then you go through the painting, and then there's this whole speakeasy that's like 10 times bigger in the back. So that was a lot of fun.

AnnaRae Grabstein: 5:16

Awesome. I love that. I think this all ladders perfectly into our guest. Um, but let's quickly just run down two news stories that I think we'll we'll be able to weave into the conversation. There was big news in the THC beverage world this week. Target began selling THC infused beverages at 10 of their stores in Minnesota. Yeah, huge. And and the state even approved all 72 of Target stores in Minnesota to sell these products. But it's it's unclear what Target's plan is if they're gonna roll them out to all of them. But the state does require a registration. And there were there were 10 uh brands or so that were included um in this launch.

Ben Larson: 6:00

Those brands Birdie, Can, Giggly, High Seltzer, Indeed, Stigma, Surly, Trail Magic, Wonder, Wild, and Wink. So yeah, shout out to those brands.

AnnaRae Grabstein: 6:11

Yeah, congratulations. Big stuff, big news this week for sure. Were people talking about this in Vegas?

Ben Larson: 6:17

Oh, yeah. Oh yeah, definitely.

AnnaRae Grabstein: 6:19

Or were they talking about anything else? Yeah.

Ben Larson: 6:22

It's it's just a lot of excitement. You know, there's like I mentioned, there's a lot of beer wholesalers here. I was meeting with Top Brass at the biggest names in in beer wholesaler industry. This is the most exciting category that they've ever seen. Literally, like ever seen. And so anyone that's still discounting THC beverages, they just need their head out of the sand because the the people want it, the retailers want it, the distributors want it, and it's happening. So this was just kind of icing on the cake, just very uh indicative of of the times. And and interesting though, you know, there's a lot of turmoil in Minnesota in particular when it comes to shifting regulations. And so it's this dichotomy that we live in. Rules are changing, regulators are trying to wrap their arms around it, and it's two steps forward, one step back in a lot of cases. I think it only helps the conversation to draw more attention to it and make people actually put in responsible regulations instead of just knee-jerk reactions, like what we're seeing potentially in Ohio.

AnnaRae Grabstein: 7:27

I'm particularly excited from like the data perspective for a public company like Target to be doing this, so that we can really start to get clear insight over what the opportunity is. So, like when a store brings in THC beverages like Target, what is the opportunity there? How much volume can be moved, how much revenue can be captured, how many consumers are purchasing and coming back again and again. And and the more we get these uh really mature and experienced retailers to be selling the category, we're gonna be getting like all kinds of new consumer insight. So I'm I'm really excited about that.

Ben Larson: 8:01

Yeah, yeah, totally exciting. You know, we we've had the data for years coming out of dispensaries, you know, one to two percent was the the data that we were we're forced to hear year after year. And then dispensaries all of a sudden, like John Halper from Top 10 Liquors claiming 15% of his alcohol sales with 3% of the square footage. And now Target is a completely different landscape, so it's not a liquor store. So we're gonna see like what the sell-through is in these kind of mega store supermarket shelves.

AnnaRae Grabstein: 8:32

But what if Target could capture the same percentage of THC beverage sales as a percentage of their overall adult beverages the way that John Helper stores do? I mean, that would be really amazing. So yeah, we'll see.

Ben Larson: 8:47

And what if uh what if people maybe start to believe my crazy belief that we can get to $50 billion in in market cap?

AnnaRae Grabstein: 8:56

Hey, all you got to do is put the number on the board, figure out how to work backwards, right?

Ben Larson: 9:00

Exactly. I love reverse engineering.

AnnaRae Grabstein: 9:02

Reverse engineer it. Um well, so you mentioned Ohio. You also mentioned people that have their heads in the sand. I guess it could be argued putting those two comments together that Ohio governor Mike DeWine maybe has his head in the sand. He uh just issued a ban on um all hemp derived THC products, including drinks, gummies, and all other products. Um it's a 90-day ban on the sale of intoxicating hemp derived products, but it's unclear what will happen after those 90 days. So we're we're in a weird purgatory right now in Ohio when it comes to hemp.

Ben Larson: 9:40

Yeah, I think uh we need to make sure that we're having rational conversations in between now and that deadline. And when I say rational, I mean actually listening to the policymakers. Following on my little talk I gave last week at the Ignited conference, I actually had a nice follow-up conversation with Christine Dempsey at the DCC. Thank you, Christine. I really appreciate the the open conversation and the candor. You know, I can't talk about the details that we discussed, but all I gotta say is like come to the table, speak honestly, like hear what the regulator is open to, and I think we'll find some rational pathways uh that don't overreach the desire of the state, but maybe actually does create channels for for THC.

AnnaRae Grabstein: 10:24

Well, okay, more on that later, I guess. I've have biting my nails curiosity, but we'll we'll we'll talk offline. Okay, let's let's bring on Theo. Theo Terras is the CEO of Uncle Arnie's, one of the fastest growing beverage brands in the US. Before founding Uncle Arnie's, Theo built and ran successful video advertising business. He is known for brand storytelling, digital strategy, consumer engagement. He is a creative entrepreneur at his core and is excited to be building a brand with culturally resonant mindset and lasting impact. And Theo is a friend of both of ours, and we're just excited to come on and celebrate his recent announcement of his big series, A Rays, and all the growth that's ahead for Uncle Arnie. So welcome, Theo.

Theo Terris: 11:12

Thank you, guys. Thank you, Ben. Thank you, Anna Ray. Excited to be here. Yeah.

AnnaRae Grabstein: 11:16

Where are you? It looks like you're in the car.

Theo Terris: 11:18

Yes, I am currently in the car in Indianapolis, uh, Indiana. I was with Ben actually last night in uh in Vegas at that party. You're teleporting, man. Yeah, it was uh that's if I look a little tired, I was I was telling Ben and Anna Ray just before this. I'm running on about two or three hours of sleep. So hang hanging in there.

Ben Larson: 11:40

Life of a life of a CEO. Uh yeah, man, what's going on? I did just hang out with you in Vegas. It was a great time last night. Now you're across the country. Like, what's happening in your world? Why are you on the move? Yeah, what's on the schedule?

Theo Terris: 11:56

Yeah, it's been a busy couple days, a busy couple weeks ahead, starting a two or three-week tour where I'm going to like 11 states, I think, 10 or 11 states, starting California, went to Nevada. Um, the plan was actually, and Anna Ray just mentioned the executive order in Ohio. So I took a red-eye flight to Cincinnati where I was planning on being for a day or two, which doesn't make sense uh for the for the next 60 or 90 days in Indiana, headed to Illinois and Wisconsin, and then I'll be on the East Coast in New York, New Jersey, Connecticut, uh, Maryland, and then North Carolina as well. So excited for the next couple of weeks.

AnnaRae Grabstein: 12:37

What are you doing in all these states? Meeting with customers or your team? What does it look like?

Theo Terris: 12:44

Yeah, it's kind of a combination of meeting with our distribution partners, meeting with our sales team, being out in the market. So today I'm actually with one of our uh Ohio reps that came for a blitz for the next couple days here uh in Indiana. And then we've got two reps in the market in Indiana, one of which just started like a month, month and a half ago. So I'd never met her face to face. So just seeing the market for the day, spending time with them. Um, I was here maybe three months ago or four months ago, but a lot has actually changed. A lot more brands coming to the space, a lot. Some of the bigger retailers have started selling temp temp derived drinks. So just excited to see what's changed in such a you know short, short time frame. Awesome.

AnnaRae Grabstein: 13:27

So the reason I said to Ben about six weeks ago, we got to get Theo on here is because you guys had just announced a seven and a half million dollar Series A raise. And it was co-led by Mindset Capital and Delta Emerald Ventures. And you also through that brought on a strategic investor onto your board who is a founding partner of Boston Beer. And this just felt like such great news in the sector. And we often talk about that good companies can raise capital, which is a bit of a different narrative than what we hear people say all the time is that there's no equity capital for cannabis companies at all anymore. And you kind of proved us right. So thank you. And uh we're curious to just learn about that and and want to know like how you pulled off this raise and what is this raise gonna do for you guys?

Theo Terris: 14:19

Yeah, totally. So just to be clear, it took us almost five years to close our series A. It didn't happen overnight. And I probably heard, I don't know, a thousand, two thousand, five thousand no's before getting the yes, but super excited that Mindset, Delta Emerald, Harry Rubin, the strategic investor. These were actually all three existing investors or investor groups in Uncle Arnie's. Our first strategic investor was Harry Rubin and the Boston Beer kind of group, let's say, that came in about two years ago. So that was our first strategic round of funding. Shortly after that, both Ian and and Aaron from Delta Emerald and Mindset Global had invested in the company. And then about yeah, six or seven months ago, the opportunity presented itself. We've been growing quite quickly, both on the recreational side and on the hemp side as well. Um, so I think it just happened kind of naturally where we approached Ian, we approached Aaron, and vice versa. They were excited about our business, the growth that they're that we were seeing on both the rec and hemp side. And this was really just to fuel more growth across the country on both the rec and hemp side.

Ben Larson: 15:29

And Theo, let's let's talk about the growth a little bit, like the brand. Because we we had Avon a couple years ago, and we were talking about how you guys just swam upstream, and like we're gonna we're gonna cater to the the legacy consumer. We're gonna build a different brand, we're not gonna build for the soccer moms uh that pretty much every other brand is is building for. Has the sentiment changed around that strategy from the investment side of the table? Have people under finally understood what it means to to be addressing that that that consumer?

Theo Terris: 16:06

Yeah, I think for for us to begin with, and again, we started this company six years ago at this point, and we started in the recreational channel. And before we even jumped into the rec space, we wanted to understand who the consumer was that was going to a dispensary, what they were looking for, and we wanted to understand why beverage back in 2019 or early 2020 was 0.1% of the overall market and what we could do to change it. And it really wasn't rocket science. We kept hearing kind of the same thing that beverages didn't taste particularly good. There were no great emulsion providers out there like Fertosa. Shout out to Ben and his team. Beverages were overpriced at the time. And there was no brand that really resonated to that legacy consumer, the consumer that was going into dispensary. So we made it our concerted effort really just to come out with a really high quality product that tasted really good, that hit you well, that was affordable, that was accessible, and more than anything, was really fun. So we pride ourselves on, you know, being a fun brand, going to the dispensary, going to a wine or liquor store, bar or restaurant, seeing the packaging, seeing the branding, um, and really having it resonate with you. So I think that's applied nicely both across the dispensary channel. And then also as we've gone into hemp as well, people are looking for that. It's a kind of a crazy world that we're living in today. I don't think we're necessarily going after that soccer mom per se. We're just trying to go after, you know, someone that's looking to have a fun time, someone that's looking to enjoy the actual taste of the products, do it at a at an afford at an at an affordable price as well. So yeah, I don't think we're geared specifically to the soccer mom. We're not geared specifically to that legacy consumer. We're just trying to, you know, come out with a product that is fun, that's accessible, that's tasty.

Ben Larson: 17:52

Yeah, but to depress you a little bit on it, right? It was a barrier for investment in the earlier days. There were investors that would purely be like, Oh, yeah, that's not the future. Yep. And and but now, like Mindset, Aaron Edelheit, and and Ian Dominguez, uh, Delta Emerald, they're now getting behind this. So sentiment has changed, which is is great to hear. Yeah, you guys.

Theo Terris: 18:15

Yep. Again, the sentiment changed mostly because what's happening on the hemp side, just the total adjustable market, um, some of the the stuff that you were quoting earlier, like 15 to 20 percent of top 10 sales in a wine and liquor store is coming from hemp derived drinks just two years in. We've done well on the dispensary side, but Ben, you're in California. I'm mostly in California, NRA, you're the same. And it's grown from that 0.1% in 2019 or 2020, but it's pretty much capped at that 2%. And we're continuing to grow because we're coming out with other with new high-quality products. We're keeping the prices, you know, competitive and low. There's less brands coming into the the rec space, but I think what most investors are looking at and the upside is actually what's happening on the hemp side, which just didn't exist really in 2020, 2021, and the the first part of 2022.

AnnaRae Grabstein: 19:07

I think it's interesting. You're you're talking about kind of how you went from regulated cannabis into hemp. And a lot of the beverages that started in regulated cannabis with you abandoned the space altogether and have just decided to go all in on hemp because of of what was able to be accomplished there that couldn't be accomplished in the regulated space. And and you've you've continued to maintain your position in in some regulated cannabis markets while focusing on hemp. Tell us about what the opportunity is in hemp that is different, similar from from regulated cannabis. Like what's the difference that you're seeing?

Theo Terris: 19:48

How I see it is in the next, I don't know if it's gonna be three years, five years, ten years down the road, there's really gonna be two channels that you can buy hemp derived beverages or cannabis beverages. There's gonna be the dispensary channel, which by and large, the consumer that's still gonna go in there is that, or the consumer that's gonna be purchasing the most at a dispensary is still gonna be that daily cannabis consumer that's going. They're looking for affordable products, they're looking for flour, they're looking for vapes, they're looking for edibles, they're look maybe they're looking for beverages, but on the beverage side, still it's gonna be that high dose beverage. So to this day, 90% plus of our sales are still coming from that 100 milligram drink. I think around 10% or so are coming from 10 milligrams or lower on that side. And then the hemp derived channel, what we're starting to see in more and more states that are fully regulating hemp, they're putting a container cap of three milligrams in the case of Connecticut, five milligrams in the case of states like Rhode Island, 10 milligrams in the in cases like the state of Minnesota. So we really, really see the two like not really competing with one another, more low dose for hemp drive drinks and you know, higher dose drinks being in dispensaries.

AnnaRae Grabstein: 21:00

And and I know that with Target's announcement, they announced that five milligram is the most that any of their products that they're selling, at least with this initial launch, uh, is happening, even though in Minnesota, where they're operating, 10 milligrams is an option. Do you do you think that's that's a mistake? Like what what are you seeing with consumer behavior on the hemp drink side as it pertains to dosage?

Theo Terris: 21:25

Yeah, no, I think it's a smart move on their end to, I mean, the fact that they're even doing a pilot, to your point, even if it's 10 stores just in Minnesota, that is a huge, huge win for the category. I think it's a starting point. I think it's smart of them to start with something on the lower dose side. Do I think that they'll, as they've as they continue to expand either within Minnesota or outside of Minnesota, I think they will probably start to explore something a little bit higher. Probably in Minnesota, they'll they'll accept a 10 milligram drink. I don't know if it's going to be over the next six months, year, year and a half, but I think it would probably be a mistake on their end not to to at least allow 10 milligram drinks. From the data that we've seen that we have access to from our sales data as well, 10 milligram drinks still make up probably 80% of the overall Minnesota market. So um, they're definitely missing out on uh from a sales perspective. But they're a big, to your point, publicly traded company. They don't want to take some massive risk to begin with. Maybe the consumer that's going into Target isn't your typical cannabis consumer. So they want to, you know, low and slow to start, and maybe they'll expand from there.

Ben Larson: 22:36

With these these major retailers coming on board, conferences like what we were attending yesterday and today, the MBWA, what is your philosophy on distribution? Because THC Beverages is in this unique place where you have the beer wholesalers catering to the business, you have the wine and spirits wholesalers also supporting it, which is just a really unique opportunity. So how's Uncle Arnie's approaching this when there's so many options when you're when you're looking at each state?

Theo Terris: 23:07

Before we go into any state, we really try to understand the opportunity. We we try to understand if Uncle Arnie's will fit well into the market if we have the right products, if we have the right proposition, let's say, with to understand what competition looks like. In some states, like in the case of Minnesota, there are a lot of distributors on the alcohol side, on the wine and liquor side, and on the beer side, to your point. In some smaller states, you only have a couple small, mid-size craft beer distros that have entered the space. Um, so we're taking, I wouldn't say a little bit of a different approach than a lot of the hemp beverage brands that are just trying to pick wine and liquor distributor or more so like a beer wholesaler. We're trying to understand the market. We're trying to meet all the distributors, understand who's the best partner, who's buying into the category, who's setting up a dedicated THC sales team. We don't want to be one of the 20 or 50 brands that they're throwing at the wall and hoping that that one of them sticks. It's more trying to find with someone that really aligns with our values, that believes in the brand, that believes in us, that will work alongside us. Um, so it's really not kind of a one size fits all. So in some instances, we've gone with the A B network, in some instances we're with Johnson Brothers, like here in Indiana, in other instances we're with the Molson network. So it's it's it looks a little bit different in every state, but that's been our philosophy till now. But to your point, and you mentioned it before I jumped on, it seems like the larger distributors are getting closer to inching into the category. So I think that's probably gonna be the next big thing come the beginning or middle of 2026 when the the races of the world, the breakthroughs of the world, the sub-ins of the world dive into the category.

Ben Larson: 24:48

I'm gonna I'm gonna press a little bit on the um the portfolio size like strategy, you know. Not not that you're a distributor yourself, but do you have kind of a perspective on what the optimal portfolio size is for these distributors? Because we've always talked about it's like we we can't sit solo on a shelf because then we're not a category, it's just a single product. But too many obviously creates a ton of dilution. So like maybe 20 or 30 brands is way too much. Like, what's what's the sweet spot for really garnering the the consumer's attention but giving the brand the the optimal opportunity to shine?

Theo Terris: 25:27

I would say around 10 brands or so. Um, again, differentiated brands. Maybe you have one that's like we've got most of our drinks or all of our drinks on the hemp side today are non-carbonated, very fruity, either teas, lemonade, stuff of that nature. You want to have a couple seltzers, a couple sodas, maybe a brand that's focused just on shots or just on the 750 milliliters if the if the state permits. But yeah, certainly anything over like 15 to 20, I think it's there's no way for a distributor to a distributor to focus on that many brands and do it well. So I think the distributors, at least the ones that we've had really good success in thus far. One good example is in New Jersey, where with a distributor called Allied. Um they're one of the largest alcohol distributors uh in the state, actually, if not the largest, I think them and Fedway. They've built out a dedicated THC team, both on the sales side, on the brand ambassador side, on the merchandising side as well. We've worked really closely with them. I think we were the first brand that they launched back in May. So I think they're they're they seem to be taking things seriously more so than than most.

AnnaRae Grabstein: 26:40

What advice can you give to other brands that might be listening to this about getting into distribution relationships, lessons learned, things that you have figured out through maybe changes if you have changed, things like that?

Theo Terris: 26:54

Yeah, I would say our philosophy, and this was the same on the recreational side, where the first, and Ben, you know this, Anna, I thank you as well, for all of 2020 through 2022 into into 2023. So the first three plus years of our business were focused solely on the rec market, solely on California. As you guys know, California is the largest market, it's the most competitive market, it's where brands are born. We wanted to put all of our time, money, and energy into that market before even looking at any other market. And we took that same kind of philosophy into hemp as well, where we entered the the first market we entered was the the Mecca of Hemp Beverage, which is Minnesota. And we wanted to enter that market because it was actually the most saturated market, it's the most competitive, and we wanted to prove ourselves there. So we ended up partnering with the A B network on the distribution side. We found really good uh manufacturers. I think Ben and Ryan and the team over at Fertosa initially connected us with Surly. Um, they've done a phenomenal job on the manufacturing side. So for us, it was really like my advice would be pick one market, maybe two markets, really get to understand it, understand if you can win in that market, prove yourselves there before trying to spread into two, three, five, fifteen, twenty other markets. I'm saying there's a lot of other brands out there. The last I looked, there were like a thousand, you know, hemp beverage brands, but I think there's really only like probably 15, 20, maybe 30 that have really proven themselves across multiple markets. So I would say I would just advise to really pick one market and do that market really well before um before trying to spread into other markets.

AnnaRae Grabstein: 28:38

Even 12 to 18 months ago, it was still such an anomaly and exciting to just have an announcement that one of these distributors was carrying these types of products. And I think that the conversation at that time with hemp beverages, people were talking a lot more about direct to consumer because there weren't as many pathways to market, or it was harder to get these distributors on board. And now we have lots of distributors and some of the biggest distributors in the world that are talking about the category target is selling these products. Is this the the the slow, the slow death of direct to consumer uh beverage sales?

Theo Terris: 29:18

I wouldn't say it's gonna be uh a complete death, or I don't know what's gonna happen with D2C. Our philosophy was actually kind of the opposite, where we focus solely on the retail side, um, both on the rec side and also as we got into hemp for the first, really the first year give or take. So we only launched Unclearney's.com end of fall of 2024 give or take. So it's been about a year. Um, we didn't do it in the best way, we weren't taking it all that seriously. Um, it was only about two months ago that we brought on a VP of e com, a guy named Mo Hassan. He's done a phenomenal job thus far. He rebuilt the entire site. We've changed uh performance agencies, email marketing agencies. He's 3PL as well, kind of kind of starting everything from scratch. I don't think D2C is gonna uh necessarily go away overnight. And I think it's great for brand building, but definitely the focus for us, and I would also advise that the focus for any brand really entering the category is more so on the wholesale side than on the D2C side.

Ben Larson: 30:20

Yeah, yeah, we hear that a lot. I love what you were saying about going deep into states or regions. And you know, I've talked to a number of large brands looking at the space, potential acquirers, and what they're looking at in brands is is the ability to show like the resale power or the repurchase power of the brand. And so really focusing on that is an important aspect. When we start to talk about markets, I also start to think about form factors because again, THC beverages is one of those things that's transcending categories. We obviously have the canned formats, the ready-to-drink formats. We also have shots which you guys sell. Can you talk about that dynamic between just how they show up in the store? Are they next to each other? Are they in different spaces in the store? And then also, like, what are just the trends with distributors or different retailers in in various states? Whatever direction you want to take it.

Theo Terris: 31:20

Yeah, so for us, we've got two major products at the moment. We've got our cans, which are primarily in 12-ounce standards or 12-ounce sleeks. We've got our two-ounce shots as well. Um, generally speaking, they don't sit side by side. I was just in a total line before uh before jumping on this podcast. And it's actually amazing what they've been doing. So they have, I mean, multiple end caps at this point with the cans and with the 750s. And then most of the shots are sitting by the counter, which is great. It's more of that kind of impulse spy where, you know, next to the fireball, next to the patron shots, next next to the little nip. So I think that that's where those the the the two-ounce shots, you know, should should be sitting versus the the cans, which really are sitting in in in other parts of the store and then their own kind of dedicated end caps.

Ben Larson: 32:11

Amazing.

Theo Terris: 32:11

There's also the 750s, which at least in Total Wine, they kind of have their own dedicated end caps as well, but they're also scattered around the wine and liquor kind of departments as well, um, which is interesting.

AnnaRae Grabstein: 32:26

When you're talking about the store and being in Total Wine and what what's being merchandised next to you, it gets me thinking just about competition in general and who the customer is. Is a THC beverage brand like yours competing with the other THC beverage brands, or are you competing with the other beverages that are at Total Wine generally? And and I wonder, because I think that if I was going into Total Wine, I might be buying a bunch of different things and depends on kind of what I'm feeling, how how enlivened I am by some of the merchandising that I I might buy that fireball shot, but I also might buy an Uncle Arnie shot.

Ben Larson: 33:04

Please don't buy the fireball shot.

AnnaRae Grabstein: 33:07

Okay. Okay. I don't know if I've ever had a fireball shot.

Theo Terris: 33:12

Those things are flying still, believe me. The the total line that we were just in, more people were buying those fireball shots than anything else in the store.

AnnaRae Grabstein: 33:20

So you're competing with fireball then, clearly, because you you want those fireball customers to try your stuff, right?

Theo Terris: 33:26

Yeah, I I honestly don't see, at least with the brand that we have. And I think we've done a pretty good job kind of carving ourselves out from being that fun brand, very flavorful, very fruity drinks, very affordable, more on the more potent side of things. So if there's two and a half or five or ten milligrams in most of these stores, we're kind of sitting in at the 10 milligram spot, at least for now. Um, so I don't really see us as competing with most of the other hemp beverage brands out there. There are a couple competitors out there, but by and large, I think um we just need more consumers to gravitate towards hemp beverages.

Ben Larson: 34:05

So as people gravitate towards hemp beverages, Theo, beyond doing 11 states in 10 days or whatever you're doing, how do you stand apart like to be a top-selling brand that's attracting capital? Like what's the secret? Like how what do brand owners need to know as far as like building that traction and getting the backing, gaining the consumer, you know, whatever it is to get category leadership?

Theo Terris: 34:31

Yeah, that's a great question. I wouldn't pinpoint it to one thing. I think it's really a multifaceted answer where one, it's building out the right team across the entire company, whether that's on the financial side, the operational side, the marketing side, the sales side as well, um, having really differentiated products and very differentiated branding, um, making sure that you're working with the best in class partners on both on the product side and on the distribution side, um, making sure that the products are affordable, at least at this point. It's not easy to get consumers to uh to go in and buy something that's ultra premium if they, especially if they haven't tried a hemp beverage to begin with. So I think it's really a combination of the right sales structure, marketing, distribution, product, uh, consistency as well. The fact that, Ben, we've worked with you guys and the Vertosa team for the last six years. And I'm not just saying it because you're the the one hosting the podcast, knowing that we have very stable products out there that are consistent, that are tasty, that are affordable, I think goes a really long way. Um and really just forming good relationships with our distribution partners, making sure that our sales team is out actually out there in the market. I would say out of the, I don't know, 15 or 20 brands that I'm seeing in most of the stores here in Indiana, I haven't seen other sales reps around the market at all. The same thing when I was here three months ago. So I think one of the things that we're trying to do is just be a little bit more aggressive when it comes to HR, when it comes to sales. We've got two folks in Indiana alone, which I think is two more than most of the other brands out there. But it's it's making a big difference when you go and you meet retailers and they've sampled the product and that they know a little bit about the company. They know what the product tastes like. So they can advocate for it when consumers come in.

AnnaRae Grabstein: 36:21

You're you're talking about the ground game of really having a presence in the market, which is so, so important. But there's also so much talk in the category about the need for education so that the people who are working in the stores are able to explain the products to consumers that are coming in and that the consumers have the education that they need. What does that look like beyond sales reps? Are there trainings? Is like how do we educate the people who work in the stores in an effective way so that they can be the ambassadors of the products when you're not there to explain them to the consumer?

Theo Terris: 36:54

Yeah, that's a great question. So, one of the first things that we did as a company when we pivoted or when we went into hemp as well as on the rec side is we appointed one of our first hires, maybe the first sales hire that we had at the company named Gabby Vale. She was running our California sales. She's super, super knowledgeable on the cannabis industry as a whole. She lives in California. I don't know, Ben, if you've probably met her, NRA. I don't know if you've met her. Um, so she's actually running our education across the entire company. I think we're probably the, as far as I know, the only hemp beverage company or cannabis compannis beverage company that has a dedicated educational team that is with one, our own employees. So every new employee that starts goes through a whole training program on cannabis, on hemp, on THC, on the side effects, on the pros and cons, how to sell it, how to market it, everything of that nature. And we give that same type of education to the retailers, to consumers, to our distribution partners. Um, and we hope that you know that it doesn't happen overnight because I do think one of the biggest things that's lagging as a category, and probably the thing that can take this entire category down is if people aren't educated and they don't know how to consume these beverages. So we're taking education super, super seriously.

Ben Larson: 38:15

I love that. That is amazing. And I know how much work it is to consistently educate the community, especially the consumer. What I'm often surprised at is how much we have to still educate the the cannabis market, right? Like just really explain what is happening in this category. From your perspective, like what is one of the big misconceptions, or what do you run into that you're having to educate your own peers on about like what's happening in the in the THC beverage category?

Theo Terris: 38:49

One of the hardest things to educate people on is dosage. Also confusing because regulations across different states are extremely different. And we touched on that a little bit earlier, but in some states you can have a two milligram serving size, and another another state you can have a five, a 10, a 15, a 20. And I think in Tennessee, the the serving size is up to 15 milligrams. So you can the brand or the can define what the serving size actually is. Um, so I think from an educational standpoint, it's it's a it's a bit challenging to you know to recommend or to to advise you know what someone should try. You can't even say, oh yeah, try one serving size because one serving size in one state is different from a serving size in another state.

Ben Larson: 39:38

Well, and then you have a dispensary channel that will take the same form factor and have a hundred milligrams or two hundred milligrams in in some states.

Theo Terris: 39:45

Yeah. Yeah, yeah, yeah, yeah. So I'd say that's the biggest challenge around education, at least thus far.

AnnaRae Grabstein: 39:51

Well, so we would be remiss to not talk about leadership as we had you on. It's something that's important to both of us. And um, you've been going through some rapid scaling. And I think it is always interesting to hear about where that really stretches us as individuals and as leaders, and then how that translates into the way that we guide and lead our companies. And I'd love to hear a little bit about your approach, what you've been going through through all of these changes. You talked about it taking five years to raise a series A. Like that is a lot of focus and resilience that's needed to get over a finish line like that. So I yeah, how are you doing? And in turn, how do you take that and um and help your team? And what do you what do you guide them towards?

Theo Terris: 40:41

Yeah, I think one of the things that we kind of pride ourselves the most on over the last five years is the essentially how little turnover we've had in the business. So I think we've only had one or two folks leave Uncle Arnie's to go to other companies over the last couple of years. So we've done a good job creating a healthy company culture. In terms of my business partners, I've known them and been business partners with them for the last decade, well before we got into the hemp or cannabis beverage world. We're entrepreneurs, we're excited about this category, we're excited about building this category. I think one of the challenges that we faced this year, specific, specifically even before the announcement or before our Series A, is we've really kind of grown the company. We finished 2024, I think, with 19 full-time employees. We're at about close to 60 at the moment. And we've really tried to strengthen every single business unit of the of the company. On the operation side, Jimmy, my business partner, was just really just him for the first four years. And now he's got uh a national operations manager that deals with all of our manufacturing partners, a director of operations, a procurement manager, supply chain, quality control, uh, regulatory side of things, the same on the financial side, the same on the marketing side. That was something that we've had a great brand for the last, you know, four, five, six years, but we've never really had a proper marketing strategy. So we brought in uh a really seasoned marketer, a guy named Brian Meshzebsky, worked at Diagio for a bunch of years. More recently was at High Rise. Um, he was the CMO over at Sweetwater before they were sold to Tilray. So I think we've done a good job uh bringing in the right leaders that are you know managing their teams and building up the right strategies um for each individual division.

Ben Larson: 42:30

Wow. I talk to you guys all the time, and I had no idea you had gotten up to 60 people. That that's incredible. This industry really tests you. We we talk about the waves, the the unpredictability. How do you stay agile and and scrappy and balance out with scaling and growing your team like you have? Like that that that's pretty wild growth. But still, at the end of the day, this this category, this industry still very much feels like a startup.

Theo Terris: 43:02

Yeah, I think for us, just it's my human nature, it's the same with my business partners to get really involved. We don't like micromanaging at all, but we really want to know what's going on in every single market and what we can do to improve the market. That's part of the reason why I've been on this couple week-long tour to actually get in the weeds, go to the stores, speak with the retailers, speak with consumers, understand competition, try to figure out new SKUs that we should launch. I think it's super important to continue to be scrappy because although we've been at this for five or six years, I really see this as top of the first inning still. There's a long way for this industry to grow. So it's important for us to stay lean, to stay scrappy, to be deep in the in the weeds of it all.

AnnaRae Grabstein: 43:44

So while you're in this staying lean and scrappy place, I I know because I've helped and seen a lot of companies go through the fundraising process. Part of that is also about really putting some aspirations on the board about who you want to be, where you want to go, making some level of prediction about what the next couple of years might look like. And so I'd love for you to share with us what you're working towards at Uncle Arnie's over the next couple of years and where you think this is all going.

Theo Terris: 44:13

Yeah, I mean, our goal is to be the number one THC beverage company in the US. I think we're on a good path to doing that. As long as we continue to execute in the existing markets that we're in, as well as expand with the right distribution partners, continue to build, build out the right sales and marketing team. I think we're on a good path to being a market leader, whether we're the number one, the number two, that's that's our aspiration. So we've proven success both on the rec side and on the hemp side. I think in the kind of core markets that we are that we're in, both on the rec and hemp sides, we're either the top brand or within the top two or three. So we don't like to be number two, we don't like to be number three in any market. So it's really trying to work with our distribution partners, build out the right sales team, and prove that we can be a market leader in every state that we're in. So I think that starts with California on the rec side. It's proving ourselves in in Minnesota, in Illinois, and New Jersey, some of these other kind of core markets that we're in on the hemp side as well.

AnnaRae Grabstein: 45:11

I love the confidence. Number two is not good enough.

Ben Larson: 45:14

Yes, I love that.

Theo Terris: 45:15

Oh, yeah. We're we're yeah, the the the whole team is ultra, ultra competitive.

Ben Larson: 45:21

So yeah, I love it. More broader, I'm gonna keep pulling on this thread of predictions, anyway. I thought that was a great question. What about for the market as a whole, Theo? What do you anticipate some of the major headlines being in the in the next 12 months? Like what can the people not in the space look forward to to seeing happening?

Theo Terris: 45:41

Yeah, I think it's gonna be one on the distribution side, which we touched on at this point. Obviously, the Molsa network, the A B network has kind of jumped headfirst into the category over the last year or so. Johnson Brothers is like the largest wine and spirits distributor. I think they're the number four, the number five largest at this point, um, has jumped into the category. But I do think that we're gonna see Reyes, Southern breakthrough, RNDC, I think just jumped into a couple states as well. So I think that's gonna start with the distribution side. I think on the brand side, we're gonna see, you know, some major, major players enter the space um either with their existing brands or create new brands over the next 12 to 24 months as well. Um, so I think those between distribution between the largest brands. And then I know Anna Ray, you touched on the whole target thing uh to begin the the podcast here as well. I think it's gonna be domino effects. So I don't know who's gonna be next. I don't know if it's gonna be Costco. We're hearing stuff about Walmart. Um, Circle K is is is already in the game, and they're work we're expanding with them actually shortly in North Carolina, South Carolina, uh, and looking at a couple other states. So I think we're gonna start to see some of these major, major retailers get into the space, either with smaller pilots like like Target just did, um, or across as many states as possible.

AnnaRae Grabstein: 47:03

With those larger retailers, what have you found to be their appetite for understanding the compliance requirements and and the difference in the state by state kind of compliance, which at the beginning, when when hemp was first launching, people would say, oh, that's the big difference between cannabis and hemp is that there isn't a state-by-state patchwork. There is now. And so for a retailer like Circle K or Target to think about a multi-state strategy, they have to understand like what are the dosage requirements and in each of these states. It's not rocket science, it's just very reasonable. But have you found that as you're talking to those groups that they have that figured out or are they looking for you to answer those questions and explain it to them?

Theo Terris: 47:47

I think it goes, it's kind of twofold. Like one, they've got their own compliance teams and lawyers and they're looking heavily into it. Um, most of these larger retailers are only starting in states where there's a full regulatory framework in place already, such as Target in Minnesota. Um, if there's no regulations in place, then a lot of the retailers aren't diving headfirst in yet, or they're doing it on a smaller scale. And I think on the the same as on the distribution side, where a lot of these larger national distributors are either looking at states that are like green, gray, and red. The green states will be those, you know, the phase one states that there's full clarity in where they can go in with confidence that, yeah, the regs are going to keep changing, as Ben mentioned with, you know, Minnesota. Hopefully they'll be full-on regulations in Ohio over the next 60 or 90 days as well. But um, I'm seeing the same with distribution as and the same with retailers that they're kind of picking those green states to start, that there's full regulations in place. The grayer states, maybe they'll go in um with a little bit less risk. And then any state that's like fully banned, they're obviously going to stay away from for now. Um, both on the on the larger retail side, there's no point of these larger retailers risking out risking their overall business and the same with the larger distributors.

AnnaRae Grabstein: 49:02

Yeah, it it sure does make a good argument for why regulation is helpful. And um it it takes me back to just like, yeah, thinking about like my early days of even getting into cannabis and and how I understood pretty quickly that a legal framework created the stability that that was needed for businesses to be able to plan or figure it out. And yeah, without that, especially a very large company that has diversified business lines, it just isn't worth it for them to experiment in the same way as it maybe is more okay for a dispensary because they're focused in that one channel. So yeah, really, really interesting point. So thank you for bringing that up. It is the end of the hour and it's time for our last oh wow. Yeah, it just it went so fast. So, Theo, this is your chance. It's your final message for our listeners, advice, call to action, closing thought. Mike is yours.

Theo Terris: 49:55

Yeah, I would say, as I mentioned before, I entered this. I first tried a cannabis beverage about six years ago. I wasn't a huge cannabis consumer myself. I didn't have amazing experiences uh smoking or vaping or with edibles. And when I first tried a beverage, I was just shocked at how good it tasted, the onset time. And it was one of those moments where I was like, oh my goodness, this is the future of the future consumption method of cannabis. Not that smoking or vaping or other form factors were going away, but I just had this gut feeling, probably the same, Ben, that you had when you when you came up with the idea, when you and Harold came up with the idea behind Vertosa. And I didn't know if it was going to be in 2019 when I tried that beverage, 2030, 2050, or 100 years down the road, but I knew that this would be the future of cannabis. And after a lot of those no's that I mentioned that we kept hearing in 2020, 2021, 2022, um, I think five years in, six years in, we're really starting to see what this category can look like. And I I've never been as excited as I am now about one, about Uncle Arnie's, but two about the greater industry. So just super excited about where things are gonna go over the next 12, 24, 36 months and um happy to be, you know, working alongside such amazing partners like Ben and the whole team over at Vertosa.

Ben Larson: 51:15

Theo, uh, can't thank you enough, obviously, for the shout-outs, but also for taking the time on your road trip after being in Vegas last night, red eyeing and and now sitting in the car in Indiana. Of course.

AnnaRae Grabstein: 51:28

Um, were you like sliding him five dollar bills to get me on the show? We didn't talk about that ahead of time.

Ben Larson: 51:34

It's uh there may have been a couple drinks that were purchased for him last night, but uh you know for sure, for sure. No, but so much appreciation to you and the team, uh Roberto, uh software we saw last night, Jimmy, just uh your your whole team's amazing. All 60 of them.

Theo Terris: 51:53

Yep. Thank you.

Ben Larson: 51:54

All right, man. Well, take it easy. Good luck on the road trip, and and we'll we'll talk to you soon.

Theo Terris: 51:59

Thank you so much for joining. Great. Thank you guys so much for having me. Thanks, Anna Ray. Thanks, Ben.

Ben Larson: 52:04

Amazing. Anna Ray, wow, that that hour did go quickly. Uh still awesome.

AnnaRae Grabstein: 52:10

I want to do a Stein holding competition with some Uncle Artie. Yes. Uh can you set that up for me? Yeah, I'm ready to go.

Ben Larson: 52:19

Again, just not in Vegas. It's still not coastering casinos around here. All right, folks. Thank you for watching, listening, engaging online. Thank you to our team at Virtosa one more time. And Wolf Meyer, and of course, our producer, Eric Rossetti. If you've enjoyed this episode, please drop us a review on Apple Podcasts, Spotify, or wherever you listen to this show. Thank you, thank you, thank you. And as always, folks, stay curious, stay informed, and keep your spirits high. Until next time. That's the show.