Bryan Gerber used cannabis in college, but unlike the stereotype, his drive to succeed didn’t go up in smoke. Instead, a frustration with ordering rolling papers on line gave him the idea to start a business shipping boxes of smoking accessories to subscribers.
Gerber and two college friends found a combination of products they liked, made them easy to order and marketed them outside of the typical selling channels. Within a year the team had sold more than a million dollars’ worth of the accessory boxes. Their company, Hemper, based in Hauppauge New York now has 8,000 subscribers for its monthly boxes and has shipped more than 150,000 boxes to date. Gerber is chief executive, co-founder Ravjot Bhasin is the chief financial officer and co-founder Henry Kochahar is chief operating officer.
The three young entrepreneurs just recently received a $1 million investment from a New York-based independent venture investor, Evolution Corporate Advisors.
They’ve also got competition. Other subscription boxes on the market include Goody Box, Stashbox and Cannabox.
Like many who enter the world of cannabis, Gerber has found the on-the-ground realities of operating in the industry challenging. “Payment processing has been an unexpected thorn in our side,” he said. His company has been dropped by multiple banks and five payment processors over the last three years he said, because they are considered high risk, despite the fact they do not sell cannabis and there is nothing illegal about selling cannabis accessories. “We operated under the payment processing radar for the first few months after launch, but we set off red flags when we went from selling $10,000 worth of subscription boxes in July 2015 to $50,000 the following month,” said Gerber.
With the current payment processor, the company’s sixth, “looks like we’ve finally found a keeper,” said Gerber. Still, he prefers not to offer the institution’s name.
While the banking has been frustrating, the company’s biggest hurdle has been marketing. “We can’t use Facebook or Google ads because both platforms prohibit advertising by cannabis-related businesses, so we’re forced to use other channels that cost 5 to 10 times more in order to reach our target customers.” Gerber says he uses influencers, niche ad networks and other less conventional marketing techniques to get the word out.
With the new investment infusion of $1 million, the company is diversifying its offerings and increasing its reach. New $50 subscription packages are being added to the existing $30 per month subscription boxes. A customization option enabling subscribers to personalize their boxes by choosing preferred products in different categories is being added, and the company is developing custom-designed celebrity-curated products. “We also continue to develop new products ranging from dab rigs (pipes used for inhaling vaporized cannabis oils) to doob tubes (odor-proof glass storage cases for joints),” Gerber said.
Working with brick-and-mortar stores, Gerber hopes to quadruple retail distribution channel from 700 outlets today to 3,000 by the end of 2019. He says the company is also beginning to white-label products for other companies, and exploring other avenues like pop-up shops.
Gerber says they never wanted to have “box” in the company name because “our vision was and is bigger,” than subscription boxes.