After widespread success in California’s tumultuous cannabis market, Stone Road Farms has expanded to Massachusetts, Michigan, Oklahoma and, most recently, New Mexico.
Founded by Lex Corwin in 2016, the queer-led, family-run company produces sun-grown flower on a 57-acre, off-grid biodynamic farm in Nevada City, Calif.
For its fifth state retail market, Stone Road partnered with Oklahoma-based manufacturer and distributor Stash House Distribution to bring its products to New Mexico, which Corwin sees as one of the fastest growing markets in the U.S. in terms of retail expansion.
“They were somewhat liberal in the regulatory and licensing framework, and so there were a lot of retail outlets able to open,” he says, adding that the state is also a popular tourist destination.
New Mexico launched commercial adult-use cannabis sales on April 1, 2022, and on the market’s one-year anniversary in April 2023, data from the New Mexico Regulation and Licensing Department (NMRLD) showed that adult-use sales accounted for more than $300 million during the first year of sales.
In October 2023, New Mexico’s dispensaries reported more than $46.7 million in total cannabis sales, representing a third consecutive monthly record for the state.
Sabrina Wheeler, Stone Road’s chief operating officer, says that when the company performed an analysis on New Mexico’s market, it seemed the state’s product offerings lacked aesthetically beautiful and design-focused branding, which represented a gap Stone Road could fill.
“We found a huge opportunity bringing our beautiful packaging along with our value price points to that market and really expanding the offerings at retail shops in New Mexico,” Wheeler says.
Stone Road’s expansion to New Mexico marks its second partnership with Stash House; the two companies first collaborated on bringing Stone Road’s products to Stash House’s home state of Oklahoma in 2019.
Stash House is actively selling in more than 300 dispensaries in New Mexico, where consumers can now purchase Stone Road’s Infused Singles and Half Ounce Roll-Your-Own Pouches. Stone Road plans to launch its full suite of concentrates and preroll multipacks in early 2024 in New Mexico.
Executives from Stone Road and Stash House agree that a successful expansion into a new market hinges on finding the best people to work with.
“We really look to expand with the right partners,” Corwin says. “And because we had worked with Stash House in Oklahoma, we knew they were responsive and resourceful and just generally easy to work with. So, for us, it made a lot of sense. And the fact that they’re expanding into even more markets is great because now … that [New Mexico is] up and running, we can turn our attention to some other fun market.”
Stash House launched in 2019, transitioning from alcohol distribution to Oklahoma’s medical cannabis market, which voters approved in 2018.
“Our CEO saw an opportunity to get into the medical market in Oklahoma [and] offer the same excellent customer service and distribution and technology advances that we did in the alcohol industry, but on a medical-grade cannabis level,” says Trevin Hoffman, Stash House’s national sales director. “We got in pretty early, and Lex actually came on with us pretty shortly after our initial launch out here in Oklahoma. We’ve since become one of the pioneers and one of the largest manufacturers and distributors of medical cannabis in Oklahoma.”
In August 2022, Stash House began franchising in new markets, first expanding to Missouri before entering New Mexico in the fall of 2022. Since that time, Stash House has expanded to Mississippi, Arkansas and Montana through limited license agreements with its partners, including Stone Road.
“We learn their operating procedures just like they would do in California, [and we] source local biomass, flower and oil from their respective states,” Hoffman says. “[We are] really trying to create that same experience, [so] if you were to have a Stone Road product in California or New Mexico or Oklahoma, it’s going to give you the exact same experience regardless of where you come from.”
When it comes to vetting partners, Corwin says, perhaps part jokingly, that Stone Road is “just looking for mature adults.”
Collaborating with businesses with a deep understanding of the state market—and businesses that can be trusted—is also critical when establishing partnerships to expand to new markets, Hoffman says.
“As a manufacturing distributor, we have firsthand knowledge of the respective states that we’re in,” he says. “We see it on a daily basis. A lot of our vendors don’t get to see that. It’s kind of a 2,000-mile lens sometimes. So, [it’s important to have] our vendors trust our word and really believe that we’re trying to make the products for that state based on what the needs of that state are, because every state, it’s almost like a different country, really. Oklahoma is such a different market than New Mexico, which is such a different market than California. Lex has always been really understanding of our opinions on what New Mexico needs, what Oklahoma needs, and then working with us to adapt to his brand according to what that state requires. It’s just nice to have a partner like that that really does listen to us and work with us on multiple fronts.”
Consistency is also key when choosing a partner for a licensing agreement like the one between Stone Road and Stash House.
“It does come down to the experience,” Wheeler says. “If somebody who’s a California native goes and buys product in New Mexico, if the experience wasn’t up to par, that could sabotage their view on the brand. So, ultimately, choosing a group that has already produced our products, produces them very well and does what they say will ensure that people do have a great experience.”
Word of mouth is still the best advertising for Stone Road, she says, so it’s important for consumers to have a consistent, high-quality experience with the brand, no matter the market.
“We have a lot of people across the country who are fans of Stone Road, and so being able to continue to launch and serve in new markets just makes it more accessible for people around the country,” Wheeler says. “That’s where we’ll continue to see growth for the brands, both Stone Road and Stash House.”
The two companies took lessons learned in Oklahoma and applied them to New Mexico to provide that market with a more deliberate selection of products.
“I see a lot of threads in the New Mexico market right now from early times in Oklahoma—just the speed of which brands are coming on board in New Mexico,” Hoffman says. “It’s definitely an exciting time out there. I think I like it because of the competitive nature—the best brands are always going to win outright, … whatever state you’re in, but especially in a fast-paced market like New Mexico. We think that Stash House, and in particular Stone Road, [are] coming in at a really good time right now because … you’re starting to see a lot of subpar brands by the masses. It’s sometimes a price race to the bottom, but people are more than willing to spend a good amount of money for a good-quality product. And that’s where the great balance of Stone Road comes in, is you’re getting a top-tier product for a really good, fair price.”
Hoffman says this is where New Mexico’s market is heading as it matures—consumers are willing to spend maybe a little more on a product or a brand if they know it will give them a great experience. He says high-quality flower, hash-infused prerolls and solventless products are rising in popularity, paving the way for Stone Road’s success.
Dispensaries in New Mexico officially started selling Stone Road’s products Nov. 15, and the team is looking forward to launching its concentrates in the market next year.
“That’s an interesting SKU category because when we were looking at the New Mexico market, there wasn’t a single other brand that was doing one-gram concentrate jars,” Wheeler says. “We find that in our other markets, [for] the people who prefer to dab, they’re going through a half-gram very quickly. So, coming in with a full-gram option is really going to be a game changer for people who do dab frequently.”
Corwin says there is always a learning curve when expanding to a new market, but since New Mexico marks Stone Road’s fifth state launch, the team has some lessons in its back pocket to help navigate common challenges.
Potential pitfalls in any new market include launching with too many SKUs and not being in tune with what consumers want, Corwin says, but there are ways to mitigate the risks associated with a new launch.
For example, Corwin says packaging can be a pain point in a new market as operators create new packaging and labeling to comply with a state’s regulations. He says Stone Road could have probably launched in New Mexico a few months sooner, but the team took the extra time to ensure its packaging was compliant.
“I think we literally did 25 different revisions because we wanted to make sure that on the first time it was correct so that we didn’t have to turn it into some zombie packaging with a million different stickers over it, which we’ve definitely had to do in other markets,” Corwin says.
Hoffman echoes Corwin’s assessment that compliant packaging is one of the largest challenges for brands as they expand to new states.
“Every state has its own independent regulatory body determining what a compliant package looks like,” he says. “It is a big pinch point for brands like Stone Road and Stash House, [which] works with lots of national brands, to have to adjust and adapt to each state market you go to. You may have fully compliant packaging that works in four states for a long time, and then you open a fifth state, and now that fifth state has a packaging requirement that the other four states don’t, and now you’re going back to the drawing board and having to adapt.”
Wheeler says regulatory shifts are always a risk when operating in any market.
“It’s like when cannabis went recreationally legal in California in January 2018,” she says. “It was only in July of 2018 that they did a complete compliance and packaging overhaul in which so many brands who had spent their entire livelihood to buy all of this packaging, excited to launch in the legal market, just six months later, their packaging wasn’t usable. So, that’s always a risk launching into new states. Even if you cross all your T’s and dot all your I’s in the initial [phase], it’s always a risk that potentially the regulators will change things and then ultimately, you’ll have to pivot.”
Still, Corwin says starting Stone Road in California provided perhaps the best lessons for the company, as it’s one of the most competitive markets in the country.
“California has the most competitive market in the nation in terms of the amount of cultivators, brands, distributors [and] manufacturers,” he says. “So, for us, … if we can stand out and punch way above our weight in California, we know we’ll be scrappy enough to compete with all the people on the ground in New Mexico and all these other markets where it’s a market that’s much more in its infancy.”
As of Nov. 14, California has 5,628 active cultivation licenses, according to the Department of Cannabis Control. By comparison, as of Nov. 1, New Mexico has 396 producers and 465 micro producers, according to the NMRLD.
Stone Road and Stash House want to continue growing their footprint nationally, and Hoffman says Stash House is committed to bringing its favorite brands—including Stone Road—along for the ride.
“We have a few other states that we’re looking to expand with Stone Road in the future,” Hoffman says. “For Stash House as a company, replicating our distribution/manufacturing model in as many states around the country as we can in the coming years is our goal, without sacrificing any of our customer service or our quality to our brands like Stone Road.”
Corwin says one of Stone Road’s long-term goals is to enter as many markets as possible, applying lessons the company has learned in California and beyond.
“I don’t exaggerate when I say we’ve made millions of dollars’ worth of mistakes in California,” he says. “Taking those lessons and applying them to these new markets is just going to ensure we’re going to have a higher probability of success than a lot of brands who are getting into cannabis maybe with a more naive mentality. … When I started the brand, I felt we were going to be printing money after the first three years. How wrong I was. It’s a really tough business, not only when you look at the taxation and regulatory scheme, but ultimately, it’s a very finicky consumer. … [We’re] basically taking our learnings from California and applying them into every market we can.”