Founded in 2010 by Kristi and Scott Palmer, San Leonardo, California-based Kiva Confections has over the years become not only the foremost edibles brand in California, but with a footprint in ten states and Canada by years’ end, a company well on its way to national and international prominence, joining a club with very few members. In addition to its prowess as a house of brands, Kiva also operates a leading distribution operation in California, Kiva Sales & Service (KSS), which boasts a statewide reach that offers, per its website, “next-day deliveries on orders placed before 4:20 pm to ensure that our 600+ partner dispensaries are always fully stocked.” Of note, however, Kiva told CBE that “there were 915 doors served in 2022.”
The Kiva brand portfolio includes several well-known products ubiquitous on retailer shelves, including Petra (mints), Terra (bites), Camino (gummies, sour gummies), Lost Farm (gummies, chews), and of course, Kiva (chocolate), with each category offering various flavors, or in the case of Kiva, mouth-watering options such as S’mores, Raspberry & Cream White Chocolate, and Everything Bagel Seasoning Munchies Bar, to name a few of the available bars. Similarly, Kiva Sales & Service, which was created to both distribute and curate best-in-class cannabis brands, carries Jetty Extracts, Pacific Stone, Nasha, and Autumn Brands, to name a few. KSS also has expanded its offerings to include “next-level support and expert logistics services” such as customer planning, full-service sales, testing, partner logistics, and payments.
Despite encountering some hiccups due to a lack of licensed retailers during the transition from Prop. 215 to Prop 64, Kiva’s growth in California has been steadily exponential, driven by a reputation for quality, consistency, and variety, as well as the growing reputation and reach of KSS. Building on that momentum and a loosening regulatory environment in many states, Kiva’s move to expand beyond California was initiated last year with the announcement in late August of an “Ambitious Multi-State Expansion within Illinois, Massachusetts, Nevada, Oklahoma, Michigan, And Ohio.” Hawaii and Arizona were subsequently added, as was Canada this May, with Missouri and Maryland slated to be incorporated during the second half of 2022, according to the company.
The story of Kiva’s founding, its first chocolate bars lovingly made in the Palmer home kitchen, is now company lore, and dates the endeavor back to the early years of edibles production in the state. It was a time when the market was flush with infused foods lovingly, if not scientifically, made in the private kitchens of people’s homes. Most are no longer for sale in shops or at events, but there was a time when one could go to, say, a Cannabis Cup and be confronted with literally hundreds of small booths many hawking edibles of every variety. It was out of that exciting and chaotic time that Kiva rose above the pack not just because of its quality and consistency, but a business strategy and commitment to excellence that supported the company’s long-term growth.
With so much going on, we wanted to get up to speed with Kiva’s progress and plans. Due to Kristi Palmer’s maternity leave (Congratulations!), we were not able to chat in person, but as our email Q&A reveals, Kiva is as focused and determined to own its space as it has ever been.
Considering how successful Kiva has been establishing itself as a ubiquitous presence in California, will you follow a similar approach to growth as you expand state to state? How many shops are you currently in in CA?
We have grown our presence in California dispensaries for over a decade and consumers and budtenders know us very well here. In California, we reach as many stores as possible. At last check there were 915 doors served in 2022. In other states, we have to start nearly from scratch. The secret to success is simply to give each market some love, meaning individualized attention, including really understanding what’s unique about each market and their consumers. The Operations, Sales, and Marketing teams are all needed to share the Kiva story and our edibles in a way that will resonate.
Kiva has the feel of a lifestyle brand as well as an edibles brand. Did that happen organically over time or was it always in the back of your minds to create a brand with many facets to it?
In the beginning, we only talked about Kiva as a product and highlighted its product features. Today, those product components are still important, but the consumer is now better educated and ready for more than product knowledge alone. We have made a shift recently to richer storytelling, with a little more of the science highlighted, to help people find the product that best suits them.
How do you decide whether to enter a state or not? Do you have a preference as far as having your own license or partnering with people who do, or some combination?
There are pros and cons to both models – having your own license vs. licensing. Capital is often a determining factor in how to approach a new state. It’s incredibly costly to own a license, a building, and run the operation from start to finish. But if you don’t own the operation, you have less control and don’t capture top line revenue. It’s definitely a balancing act. Here are a few questions we ask ourselves before entering a state: How big is the addressable market? Can we find a partner whose goals are aligned with ours? Is there a strategic reason to have more ownership of a certain market?
What has your experience been sourcing the necessary ingredients you need to maintain the level of quality control you demand? Is each state different? How has your sourcing evolved over the years?
Yes, each state is a different ball game. Some markets have plenty of supply with legacy cultivators and extractors, whereas others have scarce access to raw materials and extraction expertise. Material availability generally increases as a state becomes more established. Over the years the types of extractions we source have changed. It used to be all about cold water hash for chocolate. Now, it’s all about live resin for gummies. Sourcing strain-specific live resin is no easy feat in California, and this is our stomping ground, so finding material that meets our specs for Lost Farm outside of California is a pretty serious undertaking.
Of your brands – Kiva, Petra, Camino, Terra, Lost Farm – which need the most attention in terms of their stickiness in the marketplace, and which need the least? Do any of these products have lower overall sales but larger margins? Do you have a favorite child?
Camino and Lost Farm are the highest maintenance in the Kiva product family right now. And that’s totally okay because Camino and Lost Farm are also the shining stars since gummies and chews are dominating over chocolate in the edibles space. The team also has the most fun in developing these brands because there is so much to do in terms of innovation and marketing. We really love these two brands, and it’s clear that consumers do too. Petra was created for entry-level edibles users, casual consumers, and those seeking to find their perfect dose. To this day, it remains my favorite Kiva product. Though it has strong margins and is relatively easy to manufacture, it is a small piece of the overall pie. It dominates the mint market in California, Michigan, and Ohio and helps introduce new consumers to cannabis. Petra really caters to low-dose edible fans and helps solidify its place in the Kiva product lineup.
As you have expanded your national footprint, have you discerned any differences in consumer preference or brand loyalty that you can incorporate into product placement, etc.?
Some notable differences in consumer preference still lie in potency. Newer states with less regulation, like Oklahoma, demand potency that is equivalent to what Californians wanted ten years ago — super potent products that contain 500-1000 milligrams THC per item. As a brand who built itself on a 5 mg THC piece size, we have had to adapt to appeal to that consumer. For instance, in Ohio we have High Dose Camino Gummies that contain 25MG THC per piece and 500MG THC per package. That’s a far cry from our standard 5MG THC per piece potency with Camino!
Do you think there is a natural limit to the number of SKUs a brand should carry?
It’s important to keep your fans engaged, but also to keep your operation efficient. We love to introduce new skus, and we get great feedback from the market when we do. But we’re also not afraid to cut stale and dusty products from our menu. Innovation is in our blood- and that means continually optimizing our offerings.
Any interest in expanding into the world of infused-beverages?
Absolutely interested. Beverages will be something amazing in the future. Currently, regulations don’t allow the consumer to find cannabis beverages where they most need them, for instance at bars or convenience stores. When regulations change, the beverage category will be super exciting, and we’ve got some ideas we’d like to bring to fruition.
What are the most urgent challenges to your business plans now and as we head towards 2023? Are inflationary pressures a factor, or the potential for a recession? How do you prioritize these challenges?
Looking ahead to 2023, many signs are pointing to a depressed economy. The market in California is shrinking, but Kiva has been able to maintain steady growth despite the challenges here. It has always been our priority to run a healthy and sustainable business, so we are prepared to batten down the hatches and weather the storm.
Conversely, what are you most excited about, and what are the qualities that you believe give Kiva an advantage in whatever marketplace it enters?
There are so many things to be excited about! Entering new markets and meeting new customers and consumers is a priority for us, as well as releasing new products, flavors, and implementing new, cutting-edge technologies. Kiva’s edge comes from our dedication to the craftsmanship of our products. Having integrity and conducting ourselves professionally is also important – this industry is really small, and life is really short, so it’s important to remember the basics – like being kind to people.
How have your individual roles changed as you’ve brought on new people? Can you share a brief snippet of your day-to-day, pre-baby, and what it might look like when you return?
I remember wanting a pair of noise canceling headphones so I could take orders from dispensaries while simultaneously making chocolate bars – there was no time to stop to take a phone call; Scott created everything from the formulations to the invoicing and delivery software to the cold water hash-making machine. In the beginning it was to do everything, all at once, and as quickly as possible. Today, we work with our team to ensure the business is running consistently with the vision of making world-class cannabis products and ensuring that Kiva is a great place to work and the company is doing good by the world, too.
A typical day pre-baby (and pre-pandemic) would have been to take a phone call on the way to the office, driving separately from Scott as we had different places to be throughout the day requiring two cars. Conference calls and meetings with the leadership team, trade associations, interviewing candidates for open positions in sales, marketing, or upper management, and answering media interview questions filled much of the morning and afternoon. Then we’d spend an hour or two at the end of the day to hammer out some personal work like correspondence with colleagues, planning and preparing for future meetings, follow ups from the day’s phone calls, and making a Door Dash order to meet us when we got home at 8pm.
When I return next month, it’s going to be vastly different. I have to get our daughter Ellie to preschool before going to the office… Neither of us are morning people so that will be interesting. I’m still nursing our son Julian, so I guess I’ll have to bring my pumping supplies to the office. Dinner should be on the table by 5:30 or 6:00, and I’m not sure how that is going to happen unless I leave the office at 4. I actually got my nails done today since I won’t be able to get another pedicure for probably a year! People have been having children for a long time so I know it is possible to work and have a family — people do it every day. That’s just how it goes in life, right? You just jump in the water and then figure out how to swim!
Can you please provide a brief summary of your progress and plans in each state?
California – Our home base! We have some exciting innovations happening in California as well as some unique partnerships. We just released our first Lost Farm collaboration with the musical artist SAINt JHN, who is a real edibles connoisseur. The Dragon Fruit gummies were a huge hit with both of our audiences, and we expect the same with the upcoming chews, which will be released in September. Lost Farm has two more collaborations in the pipeline before the end of the year, one with a major craft concentrates maker in California and the other with a respected and pioneering lifestyle brand. We recently released two new Kiva Bar flavors, Birthday Cake and S’mores, which are even more delicious than they sound. Finally, we have an exciting announcement coming for Camino soon, one that we think consumers are going to love.
Arizona – Our focus in Arizona this year is to roll out our Camino Sours and Lost Farm product lines. We’ve seen this market stabilize since they went Adult Use early last year, and as the market matures customers are looking for new innovation.
Illinois – Kiva launched our Lost Farm gummy line in February and it’s taken the state by storm! The success of these products have made Kiva one of the top edible brands in the state.
Michigan – Kiva continues to roll out innovation into Michigan, including Lost Farm (June 2022), and Camino Sours later this summer. We are the top chocolate and mint brand in the state.
Nevada – We’ve run into some hiccups in Nevada lately with manufacturing issues, but are excited to resolve those this summer and launch several new product lines.
Hawaii – Hawaii recently approved legislation to allow for wholesale sales. We are partners with the top cannabis retailer in the state and are expecting to see some nice growth later this year.
Ohio – Ohio recently awarded an additional 73 licenses for retail locations, which will more than double the current 58 stores later this year. Kiva already is one of the top edible brands in the state, dominating the chocolate and mint segment as well as being a top three gummy brand. There will also be more high dose products later this year for medical patients.
Oklahoma – Oklahoma has been an interesting market. Up until recently, they didn’t have a seed to sale system in place, and the barrier to entry was very low. The state recently implemented METRC and put a freeze on all new licenses being awarded until 2024, so we expect to see some seismic shifts in the retail landscape this year.
Massachusetts – Massachusetts is a fantastic market. Kiva has been rolling out new product lines throughout the year as we spin this market up, and plan on having Lost Farm and Camino Sours out this summer.
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