How to Get Ahead in Cannabis Retail - Nicolas Guarino of Naturae on the Importance of Great Service

The right brand story, pricing, perfect packaging, the best genetics - there are all types of recipes for retail success in cannabis. 

For Nicolas Guarino, CEO of Naturae, the solution is simple. 

“It’s our relationship with the stores and the services we provide them. We deliver the next day, we do emergency drops and our distribution works very hard. I think that’s where it starts.”

He added “when you’re talking about this small market where there isn’t a lot of brand loyalty and we’re trying to figure out what we’re doing well, it’s the service that we give to the stores.”

By putting service first, the company, according to Guarino, can create a possible feeling around the brand with its partners. 

“All the budtenders and the store owners, have a positive vibe in general about the brand. Our guys come in with a smile, everything is delivered on time, and it's compliant.”

He added that he and his business partners “are just scheduling out constant visits to stores.”

Guarino said that if the company wants to replicate its success in other states, the most important thing to carry over is the service and product quality that it has established with its cannabis concentrates in New York. Pricing would depend on market factors in the individual states in question. 

“Closing the gap between flower and oil”

Naturae produces vape cartridges and gummies for the brand Jaunty, which accounts for 77.8% of all unit sales and 70.6% of revenue generated in the vape product category in New York in 2023, according to research from cannabis data and analytics company Headset.

According to the data, Jaunty ranked number one in units sold, revenue generated, and market share in New York in 2023, accounting for 21.4% of the market share for cannabis vapes in the state. 

The vapes are currently sold at 39 of the state’s 44 licensed adult-use retail stores. 

As of February 2024, Naturae produces four distinct house brands - Jaunty, Rezinators, Jumbodose, and Critical.

The company describes its mission as “to close the gap between flower and oil.”

As it stands today, Naturae has 30 employees and brought in $930,000 in sales in December 2023, its biggest month yet. The company hopes to have between $20-25 million in sales in 2024 as the state’s legal market expands, Guarino said. 

He said his cannabis journey can be linked to his family’s six generations of agricultural experience in Venezuela. A cannabis consumer since his teenage years, Guarino said he always wanted to work in cannabis and the CBD market was a way to get a foot in the door. 

The company began creating CBD extracts in 2017. When New York legalized recreational cannabis in March 2021, it allowed eligible hemp growers like Naturae to apply for cultivation licenses. The company then pivoted to recreational cannabis, paving the way to the market success of brands like Jaunty. 

Guarino said that the “holy grail” for the company will be when “we get a vape that when someone body that prefers flower hits it they say wow, this is no different than flower. They’ll say I’m actually fine switching over to this because the taste is there, the effects are instant and it’s full spectrum.”

The decision to avoid growing and selling cannabis flower or pre-rolls was made not only because the company believes in vapes, but also because it means they don’t need to have indoor grow houses, according to Guarino. 

He also said that the focus on extracts is because “we really believe that if we focus on that part of the market our oil-based products are going to take over combustible products, in New York at least. It’s the future, it’s where things are going.”

The cannabis market in New York 

Since New York legalized cannabis in March, 2021, the state’s market has been criticized by many for its slow rollout of licensing and the so-called “free for all” that has seen unlicensed dispensaries pop up like mushrooms after the rain. 

For Guarino though, while the state’s market may be hectic, he doesn’t put the blame on regulators. 

“Ultimately, I think everybody is doing their best and trying to represent a lot of different interests that want the best for the market.”

Regarding state regulators, Guarino said “I think they’ve done their best with a super challenging set of circumstances,” adding that “I think history is going to tell that they did the best that they could and they actually created the most equitable cannabis market in the United States.”

He also praised Governor Kathy Hochul’s 2025 budget proposal which includes a repeal of the potency tax on cannabis, which would be replaced by a 9% excise tax. Under the current cannabis regulations, distributors are charged a potency tax that is calculated based on the product’s THC content. 

According to Guarino, for a cannabis oil company like Naturae, the current regulations mean an effective tax rate of 25% 

“That’s 16% that we’re going to gain just from a stroke of her pen, that will be massive for pricing in store. Pricing will be a lot closer to the unlicensed market and it will allow us to compete better with the unlicensed market.” 

Do cannabis companies need to be Goliaths?

There is a common perception about the cannabis industry that only the big fish can find a way to swim in the water. For Guarino though, there is no reason to believe that only large multi-state operators can find success in cannabis. 

“I think that if you focus on a margin and a single market and you’re making money every year so that you have staying power and you’re not worried about expanding. If you can just exist for three to five years as a profitable company you’re going to have people with funding chasing after you to give you money.”

He did add though that smaller companies can’t compete with the big MSOs when it comes to marketing budgets.  

He said that as a smaller company, they’re able to make sure that the team stays on top of issues like compliance and safety because employees are invested in the company and its success. 

How can you make your brand stick out in cannabis?

As Guarino puts it, everyone knows how to make great cannabis distillates. To stand out, you need some sort of solventless offering, but you also have to have your own farm and build good, close relationships with your farmers.

Once these inputs from the farmers are flawless and extraction is done to perfection - and you put a focus on service - “you'll stand out from about 95% of the others.”