Joe Bayern’s ‘Day 2’ strategy: Build products, not canopies

This is the first in a regular series of MJBizDaily interviews with major players in the THC industry. To be considered for an interview, contact editor@mjbizdaily.com.

Seasoned marijuana executive Joe Bayern’s path to the legal marijuana industry didn’t begin with a passion for the plant.

It started with water.

While an executive at Voss Water in the late 2010s, he began looking for new products. At that time, the “next big thing” was CBD. But as he looked deeper, he discovered a hidden world that traditional consumer packaged goods managers didn’t know about: legal THC.

“I’ve never been a big user, but I saw the potential in the market,” Bayern said MJBizDaily.

Now, after becoming the president and CEO of a major multinational cannabis company, Bayern is trying to get several major cannabis products off the shelves – and put them on the shelves of mainstream stores.

Joe Bayern’s c-suite journey from water to weeds

Bayern, whose CPG experience includes serving in the C-suite during a major recovery at beverage giant Snapple, jumped from Voss to cannabis in 2019 to become president of Indus Holding Co.

During his tenure at the California integrated vertical operator, then in the first phase, Indus raised $40 million before the IPO and subsequent acquisition spree.

From there, Bayern joined Curaleaf Holdings in December 2019, serving as president and CEO, a position he held at the multinational cannabis company until May 2022.

In January, when Denver-based investment firm KEY Investment Partners spun off Colorado MSO BellRock Brands without acceptance, Bayern was tapped to lead the newly formed MM Brands, whose portfolio includes well-known names like Mary’s Medicinals and Dixie Elixirs.

While market opportunity and curiosity about how he could apply his CPG skills to the budding cannabis industry informed Bayern’s vision, he says the medicinal potential of cannabis has turned him into a believer in the plant to see beyond profit.

“We must continue to educate the consumer about marijuana and remove the stigma associated with it,” said Bayern.

How cannabis can learn scale lessons from CPG

Bayern said he will use “the culmination of all my experience” to lead MM Brands as the government’s cannabis restructuring creates more opportunities.

His time at Curaleaf will serve as the foundation for his approach. Curaleaf was a quick scaling lesson, the biggest takeaway being the art of deployment.

“If you’re going to grow at that level, you have to trust the people who work for you,” Bayern said.

At the same time, Bayern believes that the industry has a critical talent gap.

Although cannabis attracts strong managers and enthusiastic entry-level employees, there is a shortage of middle managers with the experience of using complex supply chains and marketing teams to promote the product.

“People think it’s going to be easy to go from a CPG to a cannabis company, but it’s complicated,” Bayern said.

The ideal candidate is not someone who lives a business life, but an entrepreneurial spirit who understands structure.

Joe Bayern’s Day 2 model for cannabis companies: Asset-light and product-focused

As he takes over from MM Brands, Bayern says he is moving away from industrialism and farming. The MSO model, which focuses on “land acquisition” and initial profit, has taken off, and those assets are less important, he said.

His idea is what he calls the “day 2 model.”

“It’s focused on asset-light, product-focused growth,” he said. “We don’t have to grow marijuana.”

Instead, the goal is to create an omnichannel distribution platform. That is the network that brings products to dispensaries, but also brings money through direct channels to consumers – and, finally, puts cannabis products in traditional stores, such as pharmacies and convenience stores.

Marijuana science and research on dependence on THC potency

The key to strategy is to differentiate through science and use research to create products that work. He has the opportunity to capitalize on this through the acquisition of Mary’s Medicinals, which Bayern sees as a unique asset poised to become a truly national brand, using wellness to shine.

“We are not a flower or vape brand, but we have products that deliver and serve consumers,” he said. “We want to expand that to address the needs of consumers in all states such as sleep and depression.”

“It’s about science – it’s not just about growing the strongest THC flower or finding the strongest distillate.”

Using his 25 years of beverage experience, Bayern is very strong in THC drinks.

He predicts they could eventually capture 30 percent of the marijuana market as Gen Z rejects alcohol in favor of healthier alternatives. The alcohol-free movement, which includes everything from functional and social drinks to non-alcoholic beer, is a major economic force, growing 7% annually and expected to be worth an estimated $2 trillion by the end of the decade.

“Marijuana is a much better option than alcohol,” he said. Alcohol poisons your body. That there should be a Dry January is proof that there is a need for alternatives.

Navigating the legal maze

Reinforcing his optimism, Bayern said that the reform of the regime is still a major obstacle for the cannabis industry.

The possible removal of marijuana from Schedule 1 to Schedule 3, mentioned in President Donald Trump’s December 18 executive order, and the subsequent passage by Congress of other reforms such as the SAFER Banking Act will protect the future of the industry.

The industry needs legislative changes to remove capital restrictions and allow interstate trade. And that change may favor the big players who can step up and do their jobs, he said.

“Marijuana is going to be a $100 billion industry, and you need money to get there,” he said.

For companies that get the model right, Bayern said there should be a big increase.

He envisions a future where Walgreens and CVS stock their shelves with prescription cannabis products, just like regular pharmaceutical products.

“We’re here for a reason – to help improve people’s lives every day,” Bayern said. “If one can find the right model, that will separate the winners from the losers.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.