Los Angeles / Oakland, California
Industry: Cannabis & Hemp
Products: Cannabis-infused edibles and beverages
Founder and CEO Kenny Morrison has focused the longstanding edibles manufacturer on beverages.
From a two-car garage to 25,000 square feet of office, manufacturing, and warehouse space, VCC Brands has come a long way in a little more than a decade.
Morrison worked as an actor when he was a kid with a lot of success. He was on Growing Pains, Who's The Boss?, and other TV shows as well as the film, The NeverEnding Story II.
"My waiting tables job as an actor was being a photographer and creating early online content," he says. "My other little waiting tables job was selling pot."
After Morrison stopped auditioning for roles in the early 2000s, he says, "It was time to reinvent myself."
A photography gig for The Farmacy, an early L.A. dispensary chain, led Morrison to manage a dispensary. That experience opened his eyes to the potential for edibles manufacturers in the emerging market. "I realized, that with the same amount of employees to make the four different stores operate, we could run a manufacturer with products in hundreds of stores," says Morrison.
He launched the Venice Cookie Company in 2008 with cannabis baked goods, then moved into pretzels, bars, and other categories as it expanded into Washington. Some brands, like Not So Virgin Coconut and Olive Oil, have been retired, and a split between Washington and California operations changed the portfolio in 2017 as the cookie business became a brand under parent VCC Brands.
Ever since, Morrison has pivoted the products toward drinkables with the Cannabis Quencher and Subtle Tea brands. "We are beverage-focused," he says.
VCC's beverage brands now outsell Venice Cookie Company products, and he sees that as the beginning of a trend. "It's not the category of the present. It's the category of the future."
While the main office remains in Los Angeles, VCC started manufacturing at a 16,000-square-foot facility in Oakland in 2018. "The city is a sanctuary city for cannabis, very progressive, and they welcomed cannabis operators of all stripes to set up shop in their city, whereas other cities have been very slow to move and get the regulatory apparatus in place," says Morrison. "The City of Oakland allowed operators to come into the city and build the plane as they flew it, so to speak."
As it's grown, VCC Brands has brought in talent from food and beverage as well as biotech. "Absolutely nothing we do is unique," says Morrison. "We're taking fairly traditional manufacturing processes and adding a new, exciting ingredient. . . . To put it simply, we're a very, very traditional functional foods company."
The company is compliant with the Food Safety Modernization Act with PCQI-certified staffers, and employs the HACCP system to mitigate risks. Morrison has also served as president of the California Cannabis Manufacturers Association (CCMA) president since founding the organization in 2016.
It's clear the company -- and the industry -- have come a long way since the garage launch more than a decade ago. "Our original manufacturing team was my cousin, who was a trained pastry chef," laughs Morrison.
Challenges: "Overregulation and limited addressable market," says Morrison. "We're limited to the boundaries of the state."
He adds: "This is the third bullet point: The unregulated, or illicit, market is five times the size of the regulated market."
Not only are unregulated operators "undercutting" companies like VCC, they also helped perpetuate the ongoing health crisis with vapes with additives unsuited for human consumption. "It's shedding a light on the need for consumers to patronize regulated stores with safe product," says Morrison. "Hopefully, the silver lining in that tragic health scare is that hopefully it's educating the consumer on the benefit of going to a regulated store."
Opportunities: Growth in the cannabis beverage market. "It's a lot of hype, but a lot of people are calling 2020 'The Year of the Beverage,'" says Morrison, citing "rapid onset" of psychoactive effects and none of the respiratory concerns associated with smoking and vaping.
While "almost all" of VCC's sales come from California operations, the company is working with operators in Florida and Canada, with additional deals in the works. The company is also launching a hemp version of its Subtle Tea product, with a packaged THC beverage on the way.
Needs: "We need a more business-friendly climate from the state and the cities," says Morrison. "We need parity of treatment in the tax arena and the regulatory arena with other businesses."
He adds, "Over 70 percent of the cities and counties in California still ban commercial cannabis activity. Finding a city that's willing to work with you is still tough, and it's a seller's market from a municipal perspective. As cities lift their bans, tax rates will go down and there will be more competition between cities for manufacturers like us. The only people who think the cannabis industry is a get-rich-quick scheme are with the municipalities and the state."