How I Started A $350K/Month Cannabis Subscription Box

Michael Berk

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Published: May 19th, 2020

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Michael Berk

Founder, Cannabox

$350K

revenue/mo

Founders

Employees

Cannabox

www.cannabox.com

from Phoenix, Arizona, USA

started

$350,000

revenue/mo

Founders

Employees

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Hello! Who are you and what business did you start?

Hi! My name is Michael Berk, and I am the founder of Cannabox, a monthly themed subscription box for essential cannabis accessories. A box includes a glass piece, rolling papers, wraps, gear, snacks, and other accessories an everyday cannabis user needs. We also retail products online as well including our own brand and other popular brands.

Cannabox is currently at an MRR of $350,000 and we have 11,000 subscribers to our box.

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What's your backstory and how did you come up with the idea?

As a daily cannabis user, I found that there were some things I needed the most that I honestly didn’t feel like going to the shop and purchasing once or twice a week. It was time-consuming, and frankly, I wanted a better solution to this problem.

This was in 2013, and as a subscriber to LootCrate (another subscription box), I searched for a subscription box for cannabis products. Turns out, this didn’t exist at all. I was doing insurance then and had free time after work to start doing research on this subscription box. I began by advertising it through my friends and social networks, and from then on it just kept growing and growing in subscribers.

I’ve learned is to stop looking at your competitors, and to just stay humble. Competition is good when other people search for your competitors, you’re bound to come up somewhere. This is something that is completely out of your control, but what is in your control is how hard you work.

Take us through the process of designing, prototyping, and manufacturing your first product.

There really wasn’t much of a “prototype” phase, as we just kind of launched that first month and hoped for the best. Our first box theme and products used were very bare minimum compared to our current boxes, but being a pioneer in this industry, people loved the idea of getting their products monthly in a fun way. That first month I went to my local smoke shop and bought the products at a retail price while making the boxes in my own garage, and we barely profited, but this was more of a market test to see if this was even feasible.

Back then we weren’t even designing our own glass and had been buying it from a local blower whom I had been friends with at the time. Our startup costs were around $1,000, including products, the domain, server time, and paying my friends for help.

Over time, our process has evolved into a full-scale multi-warehouse operation with 10-20 people packing boxes during our shipping time. The actual process of how the products are designed and curated has never changed however, it’s just what we feel would fit best according to the time of year, that particular month’s theme, new products being released in the marketplace and products we think everyone needs.

One big thing that goes into picking products is I ask myself, “Would I use this as a regular person?”, and if the answer is no, then I wouldn’t add it to the box. As of recently, we added a suggestion board to our page if anyone has something they feel deserves a spot for a month, and for people to discuss what they like and don’t like.

Describe the process of launching the business.

At the time there were a ton of people who came to me asking if they could make the site for me, and as someone who is extremely conservative with their money, I decided to do it all myself. I created the site myself, I designed the logo myself, I designed the box contents myself, and almost everything from the beginning was just me. It was a difficult decision but that became my full-time side-hustle and I really enjoyed it.

We’ve been profitable from day one, but we didn’t start seeing real traction until about a year into it when we started popping up on local news channels and national news sites. I felt like this industry was seriously validated when I saw competitors also popping up monthly. Some would go out of business within a couple of month’s time. I could tell that they were doing it wrong when their first boxes were full of products they couldn’t afford to put in a box, then customers expected these huge boxes every month from them.

One of the biggest lessons I’ve learned and have witnessed since the beginning is to always do it yourself because no one else will be able to make it as perfect as you want it. Every person I’ve outsourced for something has never been exactly how I like it until I just end up doing it myself.

Since launch, what has worked to attract and retain customers?

I take a lot of inspiration from other successful entrepreneurs and businesses while applying it to our own philosophies and strategies. I think our best trait is being able to adapt and accept that we have to be progressive in this new world of business. Changing up our branding, our box formula, and being genuine with our customers.

Our first 100 customers were through word of mouth and were all local. This really helped with shipping times and knowing what to put in the box, plus I was literally doing everything from my garage, with a friend. I would ask local smoke shops what’s hot for them right now and just kind of see what other people were purchasing. After the first few boxes, customers just kept coming back.

We are a business made by cannabis users, for cannabis users. I like to hire people that I could see myself hanging out with or just being friends with, and expect them to treat our customers the same way. When I check out our social media or just look at how our customer service team is doing, I expect them to talk to our customers like they’re our friends, because they are. I like to think everyone that subscribes to us and orders from our store is a part of our family and anyone is welcome.

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Besides keeping a cool relationship with your customers, I think SEO, email marketing, and social media are extremely critical in seriously adding revenue to your business. By strategically partnering with other social media accounts that already had a large following, we were able to start growing our own social media as well, which turned those followers into customers.

SEO, on the other hand, is more important than social media, where social media is like politics, I believe SEO is solely based on your strategy and understanding of the Google algorithm. I didn’t clearly understand search engines until 4 years after starting the business, so I was definitely behind. After studying everything about the topic for over a year, I’ve grown our monthly visitors 4 fold.

I’d say 90% of people just want the money. I can’t blame them, but it’s much more than that.

Lastly, the third most critical point in bringing in customers is via email marketing. When you are getting people to your website through social media and search engines, the most important thing is capturing their emails as soon as they get to your site. This way, even if they don’t end up converting there, you have a chance to win them back with an incentive. After growing our email list to over 300,000 users, we’ve brought in massive traffic from emails alone.

How are you doing today and what does the future look like?

As mentioned previously, we’ve been profitable since day one. Many Silicon Valley businesses funded by private equity and venture capital have been in business for 10+ years, and haven’t made a dime. Not to say that they aren’t extremely successful, but that’s just not my thing. I think there are entrepreneurs, and people who like to say they are entrepreneurs. The latter are not fiscally efficient and enjoy being around the money in the industry, but the business is just for show.

I’ve put my blood, sweat, and tears into this thing and wouldn’t be here today if we weren’t profitable. I’d never spend $30k+ on a fancy advertising campaign (billboards, paid news stories, etc) where there’s no way to measure your ROI like you see some businesses do. You never know what’s happening behind the scenes.

Today, we’re looking at raising capital to further ourselves in the cannabis space. After years of figuring out what works and what doesn’t, I’ve come to a point where I’m no longer unconfident in what we’re doing and excited for what the future holds. We have a ton of ideas in store that we are slowly launching in boxes, like our own line of accessories or even brands under the Cannabox name. We’re in two different warehouses across Phoenix and are fulfilling thousands of orders weekly.

Through starting the business, have you learned anything particularly helpful or advantageous?

I’d say the best thing I’ve learned is to stop looking at your competitors and to just stay humble. It may seem off-putting to see others copying your original idea, but if you just keep doing your thing, everything will work out. Competition is good when other people search for your competitors, you’re bound to come up somewhere. This is something that is completely out of your control, but what is in your control is how hard you work.

On the other hand, there are many forces of nature out of your control that you just have to work with. One example being delayed shipping, which is currently happening due to COVID-19. While we have upset customers about their box, they understand that we are in a global epidemic and we have as much control as they do. In situations like this, your best move is to adapt or die. We’ve done everything we possibly can to get customers their products in a timely manner, but during times like this, sometimes it’s impossible.

Lastly, the only thing you can do in times of stress is, once again, just keep doing your thing. That’s what people like you for, right?

What platform/tools do you use for your business?

Cannabox runs on a 100% free platform, WordPress. As a subscription business, running on Shopify means giving away a piece of your revenue, just to even run your business. WordPress is difficult at first, but once you get the hang of it, it’s just as easy.

What have been the most influential books, podcasts, or other resources?

One of our favorite podcasts is Naval Ravikant’s podcast series. A true serial entrepreneur, he’s pioneered multiple platforms for VC and explains life in a different way.

Advice for other entrepreneurs who want to get started or are just starting out?

To anyone getting started now, my first piece of advice would be to question everything. Even yourself. Are you ready to work every single day? Are you ready to give up your weekends and free days? Are you ready to lose potentially everything if you fail? Are your competitors really as sustainable and successful as they seem? Most people don’t think of these things when starting a business, I’d say 90% of people just want the money. I can’t blame them, but it’s much more than that.

The business is really a reflection of myself, and I’ve come to realize that it's an extension of my life and everything I’ve done. It helps me understand how to cope with things and has definitely helped me meet new people and new experiences. Which I feel is the most important part of a business, overall growth within yourself.

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Are you looking to hire for certain positions right now?

We are always looking for new graphic designers and dope artists to collaborate with on our latest glass pieces, shirts, stickers, or pins. If you’re interested in working with us, please send our head marketer a message at anthony@cannabox.com :)