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Building a National Brand One Kanha Gummy at a Time: A Conversation with Sunderstorm President Keith Cich
Keith Cich

CBE recently spoke with Sunderstorm co-founder and president Keith Cich about the company’s ongoing commitment to improve upon its already popular Kanha gummy, plans to expand production and distribution into more states, and the inevitable addition of new SKUs to its portfolio of products, which currently includes Wind vapes and Nano5 tinctures in addition to the gummies. Based in California, where its products can be found in a majority of retail outlets throughout the state, Sunderstorm also has established itself in Colorado and Massachusetts using a flexible approach to how it sets up shop in each state. From the beginning, Cich and his partner and co-founder, CEO Cameron Clarke, have been sensitive to economic, political, and social forces shaping this new industry, and planned accordingly.

“Sunderstorm started in 2015,” said Cich. “My business partner and I were undergraduates in college and had done some business together. We looked at how the world was changing its attitude towards cannabis, particularly in California, and when we analyzed the future, we felt that adult use was going to get approved, and that the market was going to change from being dominated by 25-year-old males who were the dominant people purchasing and consuming cannabis. We thought that it would become more female friendly and be an older crowd.

“Of course, luck plays a part in every business venture,” he added. “We acquired a small gummy company in February 2016 that had about 20 clients under Prop 215. We operated out of LA, and it was a way for us to have a Rolodex of clients and roll up our sleeves and get involved with the business. We hired a branding expert and changed [the name] from C-a-n-n-a – everything was canna-this and canna-that back in what I call the Cannabis 1.0 days, and we wanted to give it more of a Whole Foods feel. The packaging now has an Indian mandala in the background, it’s very colorful and playful, and I think it’s the type of packaging that will be well received by women, who we believe are going to be an increasingly important part of the market. So, I guess we took a direction early on that went adult use compared to the marketplace at the time, which was very focused on the heavy male stoner and medical.”

I asked about a story I had read involving his partner and a chance encounter with an extraction machine that got the Sunderstorm ball rolling. “That’s when the light bulb went off in Cameron’s head, and when he and I really began to think about putting together a cannabis business,” said Cich, adding, “I’m kind of the business side of the equation. My background is Wall Street, and I handle finance, accounting, legal, etcetera. My partner is more of a tech guy, and he ran some software companies, but he also likes to tinker around. He was doing self-study molecular biology at the first place in the world where that happened, in Sunnyvale here in the Bay Area, and then moved to San Diego. A neighbor across the hallway from his apartment was having a small extraction machine delivered, and [Cameron was] like, ‘Is that an extraction machine?’ The guy said yeah, and he’s like, what are you going to extract? The guy said, cannabis oil, and that’s the beginning of Sunderstorm. At the time, Cameron was doing self-extraction of algae in his backyard, and when you think of extraction with algae, you think about going into Whole Foods and buying Omega 3s, some of which are derived from algae. Now, there is obviously ubiquitous plant material on the surface of the earth, and many of those plants have essential oils in them that are incredibly healthy and work well with the human body. Omega 3s happen to be one of them, and cannabis oil happens to be another, so basically that’s when the light bulb went off, and we began sitting down and kind of masterminding what we wanted to do in the cannabis business. Ultimately, we wanted to create branded products and do self-distribution, get them on the shelf in as many shops as we could, and really focus on clean, healthy products.

The emphasis on clean product was understandable considering the purity of cannabis in those days. “At the time, during Prop 215, there was an underground news show on one of the TV stations in San Diego that went to dispensaries and tested 44 vape and flower products and concentrates,” said Cich. “41 out of the 44 had an insane amount of pesticide. Before licensing there was no lab testing, no regulatory body making sure they weren’t using harmful pesticides in the cultivation, and of course, if you have pesticides on the flower, it gets concentrated into a rather intense amount when extracted. So, early on we decided that we wanted to find only clean, pesticide-free trim and deliver to our clients a branded promise of clean, healthy products, and that really was one of the foundations in launching our company.”

An early decision was made to focus on manufactured products. “We felt like there were already 10,000 growers in the state of California, and they’re doing a fantastic job,” he said. “We didn’t have anything particularly unique to add to that world, which is why we focused on derivative products – gummies, we explored topical creams early on, and we still have a sublingual spray and a vape line. We just decided to focus on the non-preroll, non-flower products, because we felt like manufacturers weren’t doing a great job making those yet, and that that part of the business was going to evolve and develop quickly as consumers moved away from flower.”

Of course, flower is always somewhere in the cannabis equation, and his commitment to clean meant Cich had to source untainted trim. “We started doing our own self extraction, and finding clean trim was nearly impossible, because eighty percent of it was pesticide-laden when we did lab testing,” he said. “I actually hired the guy that could deliver to me the cleanest trim. It was so unusual to get clean trim that I just brought him into our company and now he’s our third partner. Fast forward to today, and we stopped extraction in early 2018 because the market developed. As most industries develop, specialization occurs, so there are now people that do a great job of cultivation, and there are really big extractors that have massive facilities. Extraction needs to be done at scale; it’s not efficient to do it with just a couple of machines. Once the market became more developed and cannabis oil became a commodity, we stopped extraction and today we just buy cannabis oil, which is the beginning of our process.

“We’re a food manufacturing company and most of our revenue is gummies,” he added. “We’re known for Kanha gummies, and we’re really focused on what we do best, which is scaling up the gummy business and doing R&D to find new flavors and new ways to manufacture them. So, that’s really the focus of our company these days.”

It sounded as though Sunderstorm started out as a cannabis company touching the plant and then became a food manufacturer one of whose ingredients happens to be cannabis oil. “That is pretty much exactly on,” replied Cich. “I would say we’re consumer packaged goods (CPG) company. The number one task of a brand is to build customer loyalty, and we’ve decided that we want to build that loyalty on a promise of zero parts per billion in pesticides. We have evolved our recipe to where it’s all natural, so some of the natural colorings are beet juice and spirulina. Over time we keep wanting to make a healthier and healthier gummy, because we think that’s not only what the consumer wants, but Cameron and I believe in giving the best quality product. Those are the kinds of things that we’re focused on today compared to when we started.”

As the company strengthens its grip on the California market, the strategy appears to be paying off. “We’re a top 10 brand in California,” said Cich. “In the last 30 days, over 500 unique retailers have purchased from us. The market size is probably around 750-800. Some of our 500 clients are distributors, and maybe they own five or six stores, so we’re probably on the shelves in something like 550 to 600 stores, which makes us one of the largest brands in the state. And because we self-distribute, we’re also one of the largest distributors in California, shipping about 350,000 units a month. We use our own van and delivery service to get [our products] to retailers throughout the state, so we’ve got a strong distribution infrastructure, which makes Sunderstorm unique among the brands.

The company does not currently use any standalone third-party distributors. “We solely do it ourselves, and as of today, we don’t distribute any third-party brands,” said Cich. “We distribute our own brand portfolio, and we’re doing that with a substantial infrastructure; we’ve got a hub in LA and a hub that I manage here in the Bay Area. So, we’re touching every point in the state regularly. The only time we interact with a distributor is if, for example, Medmen has their own distributor license, where we ship a big bulk of gummies to them and then they parcel it out to their multiple locations.

I asked how many people are replicating that MedMen model. “It’s growing,” he replied. “What’s happening in California is that different individual shops are basically selling out and basically merging into a bigger entity. And so, as an entity gets big enough, they basically say it’s much more efficient to get a distribution license and control their internal distribution. So obviously, MedMen is a big one; Stiizy is obviously a huge brand and has a ton of shops. The market is evolving that direction, but with the majority, we still distribute directly to the retail shop.”

I wondered how the company maintains quality control as it expands. “In the old days, our partner Zack was running around trying to find clean trim, which was like finding a needle in a haystack,” he said. “Today, the licensed market has to have their product tested, so it actually gets tested multiple times. The trim gets tested to make sure it does not contain pesticides, the extractor than does a test after it’s been extracted, and they show us that label, and then we test the oil in bulk before we use it, to compare it with what they’re telling us and to make sure that everybody’s on the same page. If it turns out it has pesticides, we return it, and they give us another one to try. And then our product, our gummies are tested, or our vapes are tested again in finished form. There are actually four lab tests in the entire process for the cannabis oil itself, so I feel like the market has self-regulated in a way that has allowed it to really begin to deliver on that promise of clean healthy cannabis that did not exist in the Prop 215 days.”

If everyone producing gummies at scale starts from the same baseline in terms of the quality of the cannabis oil, is it Sunderstorm’s manufacturing process that explains why it is gaining market share? “I have two different paths of answers that I think are important and related,” said Cich. “We were the first gummy company to invest hundreds of thousands of dollars into automated machinery: a gummy depositor that deposits a perfect four-gram gummy every time it deposits. If you deposit into a mold by hand, one of them is going to be 3.8 grams, the other is going to be 4.1 grams, because a human being cannot inject into a mold with perfect consistency. We wanted to create the perfect gummy, so we invested hundreds of thousands and now millions of dollars into gummy making machines so that we can dial it in. What that means is that every gummy is identical in potency and quality. We won the award in 2019 from what was at the time the largest lab in California, CannaSafe, for the most accurately formulated gummy. They did 100 percent of our lab testing and they saw that on average, if a gummy was meant to be 10 milligrams, it was always between like 9.9 and 10.1; we were in a super tight range. And you can’t have that kind of repeatable success without having expensive machinery early in the process, and of course, our team following our SOPs and protocols exactly for each batch. So, I’m going to give our team a huge amount of credit for developing these processes.”

These were mainstream gummy machines, expensive but not out of the ordinary. “They’re for general gummy people, but we were just the first to really say, hey, this is the future, let’s invest in the future today, and get that leg up on quality control,” said Cich. “We don’t sell retail; we’re a wholesaler, so we sell to dispensaries throughout California and delivery services where you can find Kanha gummies at 500 to 600 retail locations, which is a vast part of the market today. When we ask our b2b clients why customers come in and ask for Kanha over the competitors, the answer is because they have the same repeatable consistent experience every time they take it, so they know what they’re getting. And I think that the first step in building a national CPG business and reputation is that consistency and repeatability. When you have a Coke on the East Coast, it’s the same as a Coca Cola on the West Coast. That’s what we’re targeting, so automation has been critical to the quality and consistency.

“The second leg of that stool is innovation,” he added. “We were the first edibles company in the nation to have a nano-gummy. What does nano mean? It means rapid onset, so instead of waiting 45 minutes to an hour for the gummy to kick in, our nano-gummies kick in in 15 to 20 minutes. That is a game changer for the marketplace and the product. We introduced the nanos around a year and a half or two years ago, and it is now a significant part of our business. When we expand to other states, which we’re currently doing, the nano is the differentiator. So, we not only bring the automation to dial in consistency, but we also bring the innovation so that people don’t have the old experience of eating a brownie, saying it’s not hitting, doubling-up on the brownie, and ending up on long journey they did not intend.”

Interestingly, Cich said the nano-gummy has characteristics similar to using a vape. “Obviously, everybody reacts to cannabis differently – my business partner and I have a completely different reaction to cannabis and THC – but what is I think universally true, the middle of the bell curve, is that nano has rapid onset, so it’s a little bit more like a vape, and then it doesn’t have that same five-to-six-hour tail,” he explained. “It also kills off quicker, so it ends up being more like taking a couple of vape hits rather than eating a brownie from yesteryear.”

The evolving nature of the gummy could in part explain its enduring popularity with consumers, who apparently gobble them up by the millions. “You want to be able to dial it in no differently than if you were going to take a few vape hits or smoke a joint, so that over time you can dial in the appropriate dosing for you, for the circumstances that you’re in,” said Cich. “The reason why gummies have had such amazing growth is because the people that have come back and tried the new gummies, like Kanha gummies, are surprised that you can eat a gummy and go hang out with other parents, where the young kids are running around and you’re completely sane. It’s like having an IPA (India Pale Ale) or two; it’s controllable and not overwhelming. So, gummies have now created that standard for being able to function in the world while eating an edible.”

In that case, I asked, how precisely does the company want to be known? What brand name does it want in people’s heads, because Kanha, which is clearly its runaway brand, is currently linked with the gummies only. “When we launched the three product lines, Kanha wasn’t at that time a dominant brand,” explained Cich. “We were kind of starting off with the three different products, so it made sense to have a different name. Now, we’re considering going back and rebranding the vapes as Kanha Vapes or Kanha Wind, so you’re absolutely right, we’ve developed a reputation for quality and consistency with the Kanha gummies, and we need to tie that level of brand awareness to the other product lines, and we are reviewing different ways of doing that today.”

That decision would appear to increase in importance as they move into new states. “I couldn’t agree with you more,” said Cich. “Now that Kanha is the crown jewel in the portfolio, we need to tie everything to Kanha. It’s interesting, because we’ve opened in three new states in the second quarter, and we are doing just Kanha gummies in those states for now, so we’re really leading with the Kanha brand, and the look and feel and the customer promise of Kanha gummies. We’ll see how we extend [the name] to other products in the future, but that is our bread and butter, and it really is the products that we focus on most.”

Regarding the challenges introducing its gummies into a new state, Cich said it depends on the state. “There are a couple of different models expanding into other states,” he said. “I think there are three models. In states that are more open, like Colorado and Oregon, you could go get your own license relatively inexpensively, set up your own operation, and control your destiny; hire your own salespeople, your own brand ambassadors. So that’s one model, and we’re doing it in Colorado, which is what I call a free market state. It’s easy there; we don’t have a partner, so we’re not at the risk of partnerships or joint ventures heading south, and that’s exciting.

“But we’re also entering Nevada and Massachusetts and buying or getting licenses in those states is extremely difficult or too expensive for a brand,” he added. “So, we have partners in both of those states. We are operating under their license compliantly, but we are bringing in our own machines and our own people, and we are also controlling the quality control, producing all the gummies, hiring our own sales team in the states, and managing the sales and marketing process. And then we’re using third party companies for last mile delivery, so we basically have a joint venture partnership with a company based in Vegas and one based in Massachusetts. The reason we chose those two states was more opportunistic. The opportunities came to us, and we really liked the partners and believed they were ethical and good to their word, and so far, so good. It’s worked out well in those states where we’re on the shelf, so definitely partnerships are different.

“The other way to do this is licensing, where you then are basically training a local partner who’s going to manufacture the gummy, and that local partner is going to use their own sales team to go out and sell it,” he said. “That is a little bit more challenging because you’re not controlling the quality of the gummy, and you’re not really controlling the whole sales process. So, we’re not as big a fan on licensing. Having said that, we have licensed our product in Canada because it was just too difficult to set up [manufacturing] in another country. It’s already difficult enough to set up manufacturing operations in every state we go into, because of course the product cannot be transferred between states. So, for the product we produce in Colorado, the flower is grown in Colorado, extracted in Colorado, manufactured in Colorado, and then sold wholesale to dispensaries that are only in Colorado. You can imagine how trying to create a national edibles brand means setting up an awful lot of manufacturing destinations.”

The idea, to replicate the Kanha gummy experience no matter where it is produced and sold, is easier said than done. “It’s not easy, because we based our SOPs on being in Los Angeles, close to sea level, and pretty dry,’ said Cich. “Whereas Boulder is a mile high, it can be moister there at times of the year. So, we had to go in, set up, and make gummies for a month or two, dialing in the atmospheric pressure inside the facility. We need to control humidity the best we can in these locations, so it’s actually much more difficult than you think.”

One reason U.S. companies like Canada is the prospect of otherwise inaccessible international sales. “We chose a partner that has a CGMP (Current Goods Manufacturing Practice)-certified facility,” said Cich. “If you want to export cannabis products to Europe, for example, it has to come from a CGMP qualified facility. That’s another decision that we made in finding a partner. Canada is very restrictive on edibles today. They can only be 10 milligrams, and you can’t really have much marketing. They’ve also really restricted what you can do on a package, so it’s kind of this odd situation with Canada leading the way on legalization, but to offset that a lot of regions choose partially undue restrictions, particularly on edibles. I do think over time that will change as we discovered that kids are not getting into them. The bags are not only child resistant, but half are also what I call adult-proof.”

International sales are not going to happen anytime soon, he predicted. “We’re in a dialogue with a southeast Asian country that has legalized CBD and is in the process of legalizing medical THC, so that’s something that we’re exploring,” said Cich, adding, “International trade between countries is something that I think is more futuristic and is not a significant event today. I think a lot of Canadian companies and their valuations were based on this idea of robust and thriving international trade, but these things take time to develop. There are so many regulations, every country has its own, and it’s hard to have normalization, where international trade occurs like it does with every other product we buy today. We’ll get there one day, but we’re not there yet.”

After talking for a while, it occurred to me that Kanha’s success must in part be explained by its sales strategy, and asked Cich to explain it. “We feel very strongly that we want our own sales team,” he said. “No one is as passionate about Kanha gummies as the Sunderstorm sales team. That’s why to date we have not really looked seriously at using a third-party distributor. We have a pretty large sales team; we have about 12 people, half and SoCal, half in NorCal, and I think when you ask what the reasons are why we’ve succeeded, it’s because our sales team has had very little turnover, and they’re very passionate about our company and our products. Our sales team has definitely been driving things, and based on the success in California with a model of having our own salespeople, we also have our own salespeople in other states. We have four reps in Colorado that are 100 percent working for Kanha Colorado, we’ve got two reps in Nevada that are working 100 percent for Kanha, and in Massachusetts, we share reps with our manufacturing partner. Because they’ve got a chocolate brand and a vape brand, the salesperson can go out and sell Kanha as well as the other products that are being produced under the same roof. So, we believe that you really need to educate the sales force, and you want them to go out there and not have a huge portfolio of products but to really be focused on our products. That’s the model that we’ve taken so far, and it seems to be working pretty well.”

With about 23 SKUs under the Kanha gummy brand, Sunderstorm is aggressively taking on the competition. “Of the larger gummy companies, we have a lot more SKUs than our competitors, which is sometimes challenging for production and distribution, but we love to give consumers great choice,” said Cich. “We have what we call our classics, which are our basic 10 milligram gummies, our highest selling. We then have the nanos, which are priced a little bit more and have their own unique flavors. And then we have various CBD ratios from 20 to 1 CBD; we have a 4 to 1 CBD to THC, a 1 to 1, and our bestselling product is a sleep gummy, called Tranquility, that has 5 milligrams of CBN, 5 milligrams of CBD, and 5 of THC. It’s got the most cannabinoids of any sleep gummy, and people are reacting because of word-of-mouth reputation, and they’re actually waking up from a night of sleep they haven’t had in decades.”

Will other edible non-gummy products be included under the Kanha name in the future? “We are exploring other edible products,” said Cich. “We’ve been doing R&D for almost a year on one product set. What I can say is that if you want to launch a product with the same quality and consistency that Kanha gummies have, it takes years to formulate a product. So, the answer is yes, I think in 2022, we’ll be introducing some other edible products, but we will only introduce them once we really dial them in as good as our gummies.”

What about sugar content? “It is in there,” said Cich. “We use cane sugar, the healthier version of sugar, but there’s no doubt that in our regular gummies, they are a sugar. We have a vegan line where we’ve swapped out pectin, that is an animal-based alternative. It took us years to develop that formula, and it seems to be selling well lately, so people also look in that direction.

Are other sugar alternatives being considered? “Yes,” said Cich. “We’ve been working on a no-sugar gummy for over a year. It’s not easy to get a gummy that’s going to have great flavor, great texture, and no sugar. Most gummies are coated with sugar so that they don’t stick together. When you remove the sugar on your coating, there are other alternatives, but they don’t have the same ability to keep the gummies from getting stuck, so it’s complicated. But it’s fair to say that we have been working hard on it, and we absolutely want to have that as part of our SKUs. You know, we’re always pushing to have the product be more natural, number one, and then healthier, number two, and obviously, reducing and minimizing sugar is part of number two. So, look for us to come up with something hopefully before the end of the year.”

Another trend among dab lovers is away from CO2 toward solventless extraction. Is solventless production in Sunderstorm’s future as well? “Yes, we are beginning to R&D solventless and live resin,” said Cich. The beauty of solventless, of course, is that no chemical has ever touched the plant, and there is a part of the market that is really interested in that. I recently started smoking the solventless vape and was extremely impressed with the smoothness of it. Solventless is still on the expensive side. Ethanol you could do at massive scale; butane you can do at significant scale, but solventless is really small scale, so it really needs the equipment, and the automation to improve the process.”

I asked if he thinks it can be automated for scaled production. “I do,” he said. “I think there is beginning to be some larger scale machinery that’s coming into the California market, so we’ll see. I’ve been told by someone that does solventless vapes that they think they can cut the price in half, which is going to be required for it to be adopted by mainstream. Otherwise, it’s going to be a true connoisseur market. But I do think it’s going to get more mainstream and we’re working on that as well today.

With no real processes or products to protect via IP, Sunderstorm will have to protect its business the old-fashioned way. “I think it’s all about brand building at this stage,” said Cich. “One of the reasons why we’re going to this national MSO strategy is that each state we’re in becomes an influencer in that region. So, we’re now in the northeast in Massachusetts, we’ve got the middle of the country with Colorado – and there’s tons of people from feeder states going into Colorado, and Massachusetts, because it’s not legal yet – so our goal is to build a network of influencer states so that we can put together a brand that can be accessible throughout huge chunks of the country. That’s our goal, and I think it’s an important feature of our business.”

To pay for its expansion, Sunderstorm is raising a preferred equity round and considering a bank line of credit, but according to Cich, whose previous experience in commercial real estate has come in very handy in his current role, funding Sunderstorm’s growth is not as Capex-heavy as one might assume. “We’re in the middle of closing a small raise of like $5 million, but for us, it’s not that expensive to go into a new state,” he explained. “If you’re going to build 100,000 square feet of cultivation, that’s going to cost tens of millions of dollars. Our equipment costs less than a million dollars, and then you need money for working capital to pay for an inventory of raw materials and finished goods, so it’s not that critical. For the three states we are going into this year, we self-funded from the profits we made in 2020, so we’re cashflow positive, and all the investment goes directly into expansion of the brand nationally.”

The Numbers Behind Sunderstorm Inc.

Year Founded: 2015

Management Team: Cameron Clarke – CEO & Co-Founder, Keith Cich – President & Co-Founder, Zach Michaelson – COO, Tae Chun – VP of Ops

Headquarters: Los Angeles, California


Current Markets/States Served: California, Massachusetts, Nevada, Colorado, and Canada

Current Number of employees: 234

Market Strategy/Goal: To be a top 3 national edibles brand

2016 Revenue: $420,347

2017 Revenue: $1,814,658

2018 Revenue: $5,132,951

2019 Revenue: $14,072,525

2020 Revenue: $27,968,181

2021 Projected Revenue: $40,000,000

Company Revenue/Product Mix: Primarily cannabis edibles (Kanha Brand)

Partnership/Expansion Plans: Looking to launch production in three new states in Q1 2022

Financing strategy: Raising preferred equity round currently, considering bank line of credit



Tom HymesTom Hymes

Tom Hymes

Tom Hymes, CBE Senior Editor, is a Los Angeles-based writer and editor with over 20 years’ experience covering highly regulated industries. He was born and raised in New York City. He can be reached at [email protected].

This Post Has One Comment
  1. One of the very best, deeply informative articles on key companies in the cannabis market. It was enjoyable to learn so much on Sunderstom’s Kanha product. Great appreciation for the breadth of information shared by Sunderstorm President Keith Cich! I hope to see Tom provide many more of these outstanding articles in the future!

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