How Alex Halperin built WeedWeek, a B2B outlet that covers California's cannabis industry

His revenue is split pretty evenly between sponsorships and subscriptions.

When Alex Halperin launched WeedWeek in 2015, he was entering an industry that had nothing but growth ahead of it. But what he didn’t expect was that the fragmented legalization across states meant that it’d be difficult to build a national audience. So a few years ago he pivoted to just covering California’s weed industry, and WeedWeek has since built a robust business monetized through both sponsorships and subscriptions.

In our interview, Alex walked me through what got him interested in the topic, why he built a customer publishing platform, and how he recently decided to team up with the LA Times on an investigative series.

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Transcript

Hey Alex, thanks for joining us. 

Happy to be here. Thanks so much for having me.

So we're here to talk about a media company that you now run that you founded called WeedWeek. But before we jump into that, what was your entry into journalism? What were you doing prior to launching WeedWeek?

Sure. So I've pretty much always wanted to be a journalist. That has coincided with a time of depression and chaos for the industry. But I held reporting jobs at Dow Jones and Businessweek.com after graduating from Columbia Journalism School. I got a fellowship to spend a year traveling around Africa reporting on business development. And then I came back, I worked for a little while at a consulting firm, and then I was news editor at Salon where, I guess it's fair to say, I was justifiably fired for insubordination.

What year did you work at Salon? 

That ended at the end of 2013.

And that was kind of back when Salon was still kind of limping along. I think it's even less healthy than it was back then. So after Salon, you went and did like freelancing? 

So I was freelancing. And one of the main stories I was freelancing about was was fracking and sort of what happens when the frackers come to town and the economic boom that that comes, and how it causes pollution and some other kinds of disruption and stuff like that. And I reported on that from upstate New York. And I went to North Texas and North Dakota. And I was really fascinated with the idea of a boomtown. I'm a business reporter. And a few months after I left Salon, Fast Company sent me to MJBizCon, which then as now was the marijuana industry's largest trade show, which is every fall in Las Vegas. When I went in 2014, it was about 3,500 people. Last year it was probably about 10 times that.

So when you went in 2014, there was a weed industry, but I'm guessing it was mainly like medical marijuana. 

So Colorado and Washington had voted to legalize recreational and the only state where it was open was Colorado. But at the same time, the market had been open for almost a year and it seemed more or less to be working and the industry had a lot of momentum. And I thought it was just a great business story, the way that this fast growing illegal industry that operates essentially by rules that no other industry plays by was among the fastest growing industries in America. Marijuana wasn't a part of my life at the time, but I was instantly fascinated and pretty soon started making plans to move to Denver. So I moved to Denver in 2015 and started WeedWeek a few months after that. It was the early days of the newsletter revolution.

I think my first provider was Tiny Letter, which was a variation of MailChimp. It was two years before Substack.

Was your thinking like, okay, these states are starting to legalize, it's going to be a very rapid growth industry, there's probably not a lot of beat reporters that have been focused on this one beat and if I catch the wave early I can grow [a media outlet] in parallel to this rapid growth industry?

Yeah. And it had a lot of momentum. So in 2014, the sort of general prediction among people in the industry was that California would legalize in 2016 and then federal legalization would be inevitable. Now, that hasn't quite happened, but few predictions from 2014 have held up that well. So right now, recreational is legal in about half the states. Medical, which can mean very different things, is legal in 10 to 15 more states. In the time I've been covering weed, the market has grown from roughly – in the first year of Colorado sales, it was probably less than a billion dollars. Now it's about $30 billion..

You moved to Denver specifically because you thought you were moving into the epicenter of a burgeoning industry?

Yes. A company that I was pretty interested in invited me to embed with them. Initially, I planned to write a book about the industry, but I started WeedWeek as well. I now have a book proposal that I'm looking to sell. It'll be a much better book proposal than the one I pitched in 2014. But my plan was always to move to California after California legalized in 2016, which is what I did. And I've been in Southern California since 2016.

So with WeedWeek, from the very beginning, that wasn't like a side hustle? You thought of yourself as a startup entrepreneur who was starting a weed-focused media company?

I mean, I guess so. I was very naive and I made a lot of mistakes. And essentially I had inherited some money when my father died and I invested it in WeedWeek and I blew all of it. Because I knew so little about how to run a media company. But now eight years later, I have a functioning media company.

What did the early days of the website look like and what was it publishing?

One of the interesting things about the weed industry is that there's no no form of legal interstate trade. So the weed industry is effectively 30 or however many separate industries, each of which are sort of going through the same issues and addressing the same problems in their own way. It makes it incredibly unwieldy. And even though sales are huge, it's one of the reasons why it's very hard to turn a profit in this industry. So one of the main things I was doing at the beginning was sort of bringing in what was going on in all the different state markets, which at the time was maybe four or five relevant states. 

Probably the biggest mistake I made was once I was in California, I hired somebody to do some more writing. Not that the person I hired was necessarily a mistake, but we were reporting on stories from around the country. So there wasn't enough focus to attract a reader because maybe something interesting was going on in the Maine market, but that wasn't really of too much interest to the Colorado market or the California market. Occasionally it was, but not, for example, certain federal court decisions or something like that. So the mistake I made was trying to go too broad, and also maybe trying to appeal to too many people, like having a little too much culture coverage, which isn't really my forte. And because that kind of stuff is consumed by consumers, there's just a huge amount of it. And it's very hard to stand out. I don't think we've published very many strain reviews, but that's something a lot of sites do.

It's a bogus exercise for the most part. Not that there isn't good weed and bad weed, but I'm not sure strain reviews merit as much attention as they got. But what interested me was essentially the business and politics of the market, as well as sort of the social justice angle, which is to say that one of the main themes of legalization is the idea that the largely black and brown communities who got the worst of the war on drugs should be able to benefit from the new industry.

2020 was sort of my businesses annus horribilis where we tried a bunch of different business things with selling ads and stuff like that. And really none of it worked. I lost a good deal of money, let's say, in the six figures of money. And after that, essentially, what I understood was that this needed to be a much leaner, more focused operation. So basically, the only person who I'm still working with from that time is a tech developer, a very brilliant guy. And we built out a WordPress system, and we launched WeedWeek California Pro, which is our paid product, and that's me focused on covering the $5 billion California market,which is sort of a showcase for everything that can go wrong in the weed industry.

And so just to translate, so everybody's up to speed who might not know about this industry, is because all these states, they're regulating at the state level, and so many different ones are approaching it a different way, a story about something that's happening in Colorado might not be relevant to someone who's also running a weed business in California. So in the early days, it was just too fragmented and you were finding that you just could not cover the full spread and build like a cohesive audience because you were just kind of torn between too many states. So you started focusing –  California is a huge state. It's going to have its own economy around weed. So you decided I'm going to focus just on being a B2B publication that focuses on the cannabis industry in California.

Correct.

And as you kind of alluded to, a lot of these states are trying to do some form of –  I don't know if this is a loaded word– but like some kind of form of reparations for the people who were prosecuted for weed possession. And so a lot of states, including California, are trying to basically prioritize their permitting and funding process so that people who were formerly incarcerated are first in line to receive funding and or regulatory approval. But as you kind of mentioned, it's been kind of a shit show. 

Yeah.  mean, what has happened is that basically cities and states aren't really in a position to invest in these businesses that they're prioritizing, and the only willing investors are the large companies, and some of them have set up predatory deals so that the people who are supposed to benefit really aren't seeing anything but the companies benefit from the advantages that were supposed to go to small individuals. So they're signing a contract with the person who might not have a college degree or something and can't properly vet the contract. And so they're getting some tiny equity stake, whereas the investors are reaping the full rewards and everything like that.

So it sounds like your publication is a coverage of the intersection of. this kind of social justice, but also the business side as well.

I would say that social justice is one of several categories of things I cover. There are all sorts of lawsuits. I just co-published story with Paige St. John in the L.A. Times about pesticides, which we found in California's weed supply, which has led to some recalls and some lawsuits. The cool thing about the weed industry is it's like its own economy. And in terms of aggressive reporting, there's just no end of problems to cover.

Yeah and so you said that you were struggling from a business point of view because you originally tried to sell ads but you didn't know how to sell ads, and you didn't have someone to really sell ads, so that's why you were losing so much money. And starting about a year or two ago that's when you started getting serious about the subscription side.

So, yeah, basically because I'm a reporter and I'm sort of averse to selling ads. I spent many years paying people to try and sell ads for me. And one thing I learned, I was never in many years able to find somebody who was able to sell ads for me. However, as a B2B publication, ads are an important source of revenue. So I ended up eventually selling the ads and I've figured out how to do it. And I've managed to – or at least I've never been accused otherwise of catering to my advertisers. And one of the reasons that works. is that most of the companies I cover are operators. They're growers, they're manufacturers, they're testing labs, retail stores, et cetera. And most of my advertisers as a B2B publication are what's known as ancillary companies that are selling support to those companies. So things like industry events are a big advertiser, certain financial services which cater to the industry's specific situation. So look, there are occasionally times when things have been a little more uncomfortable than I would like, but my policy has always been to be as transparent as possible. And so now we do about equal revenue in subscriptions and ads.

So what's your publishing cadence today? Is it still mainly you doing most of the reporting?

Right now it's just me.

And do you have a regular cadence of a certain number of newsletters you send a week or something like that? Or is it more just like when you finish a story, that's when it's being published?

Sure. So I write a free newsletter every Friday. And that sort of does what it has done the whole time, which aggregates news from around the country, just to give a picture of this week in weed. And then I try to publish one story for my pro subscribers every week. And sometimes it's a little bit more, sometimes it's a little bit less. But for those stories I want to break news or really add value in some way. So it's like one story. a week.

And is that like long form reporting or it's just anything where you're reporting original news?

It varies. You know, right now I'm working on a story I hope to publish this month. That'll be about 4000 words. But, you know, most of my readers aren't interested in reading 4,000 words unless it's on something really interesting to them. Sometimes there's just an important lawsuit that can be covered in 300 words, but if I'm first to report it, that really adds value for them. So it varies.

Yeah. And so you're publishing then mainly two pieces of content a week, the free newsletter, then the one piece a week for the pro subscribers.

Right.

Yeah. How much are you charging for a subscription?

$120 a year or $20 a month.

Okay, cool. What's your conversion strategy? How do you alert your free audience to what they're missing out on if they're not a paid subscriber?

So typically, when I publish a news story, I'll send it out to the whole list. So I'll say, here's a story for pro subscribers, and tease it with a few paragraphs. And then I'll present it again in the top of the newsletter, which is where I also have ads in the newsletter. And then if people unsubscribe, they get a ‘what you missed’ email with last week's story and a promo code for a discount to come back. And then so in terms of social media, the two main weed social media platforms are Instagram and LinkedIn. And this has something to do with sort of the permissions. Some of them are friendlier to weed than others. 

And so, so just to translate what you're saying is like when you finish one of the pro articles, you'll send out two versions, one to the free list, which is just maybe a few teaser paragraphs and then some kind of link to where they can sign up to become a paid subscriber to read the entire thing. 

No, I'll just send out one version and  pro subscribers can click on it and get past our paywall.

Oh, okay. So the pro subscribers can't read the entire thing in their email. Everybody has to click on the link and go to the website. And then if you're a pro subscriber, then you get to read the whole article, but yeah. Okay. I get what you mean. 

Ao how long ago did you launch the paid subscription? 

Like two years ago? April 2022. 

And you said now it's generating about half of your income. 

Yeah. 

Interesting. And so do you create any other content besides written content? Do you do any podcasts or anything like that?

I had a podcast for a while, but I couldn't figure out how to make money with it. And the distribution still gives me nightmares. I think there are probably better ways to do it, but I couldn't figure it out. There are also just a lot of weed podcasts interviewing the same people.

And it's really hard to add value there. But it's not something I'm doing right now. We did create sort of a virtual events platform, my brilliant tech guy, and we've held a few panel discussions there. I've struggled to sell ads for it, and I spent too much money on it. But we've got a really great virtual events platform, which I haven't used as much as I planned to.

And do you get a lot of earned media, like from local reporters in California whenever they're reporting on the industry? Are you kind of the go to phone call to explain the importance of some new ordinance or lawsuit or anything like that?

Sometimes. I mean, certainly the most earned media I've gotten was co-publishing a story like an L.A. Times and WeedWeek investigation, which was the lead story in the L.A. Times a couple of weeks ago. I've been quoted by lots of different media publications.

Is that something where you approached the LA Times or was it vice versa?

I had been talking to the LA Times about us, sort of just trying to get a foot in the door and I brought up the pesticides issue and Paige St John who covers who's based in northern California had been doing some reporting on the pesticides issue more as it applied to the grows and the farms and so we had pretty pretty complimentary familiarity with the issue. She's the best reporter I've ever met and we put together a really good story.

And so when you look at the business today or like just the media brand itself, what's kind of your interaction with the audience? Like how much brand recognition do you feel like you have within the industry? When you're going to events, does basically everyone know who you are?

A lot of people know who I am. The world is very fractured. But I certainly have a following. The free newsletter has about 11,500 subscribers. And I've been around long enough. I'm not the only aggressive reporter covering the industry, but there are a couple of us. But yeah, I'm pretty well known.

And going back to that original insight about how every single state's weed industry is different, how much interest has your newsletter received outside of California? Like, are there a lot of people who work in the industry in other states following you, or is it mainly just California?

Well, right now I'm working on a story about a tech company that operates in many states. And so I'll cover the California angle, but their activities will be relevant in many states.

So you said that you made a lot of mistakes. How do you feel about the business now? Now that you say you've gotten to a point where you're generating 50% of your revenue through subscriptions, another 50% through sponsorships, but you're still having to sell all the sponsorships yourself, it sounds like it's mainly you just working there. Is this kind of the sweet spot or do you feel like you still have a long way to go before you've reached kind of your ful ambition?

Good question. So if I had the money right now, what I would do would be to hire somebody to cover another important market and launch another facet of the business. Let's say WeedWeek New York, and then that would be probably a separate product. Separate paid product, but there would be synergies.

So I've been trying to have a job board for a long time and it hasn't worked for a couple of reasons. I went with the wrong vendor once, then I went with a free vendor that sort of discontinued the service. So to set up the right job platform would cost me $2,000 to my tech guy, plus the $200 a month fee for the job board. And if I had somebody writing a paid newsletter in New York, that would obviously compliment it and generate passive income.

So look, the question is how long do I want to cover the weed industry? And I don't know. Let's say I've got about a couple more years of covering the weed industry and then maybe I want to cover something else. You know, right now I have five straight quarters of year over year subscription growth and generate roughly half of my revenue from advertising. Those are two pretty healthy metrics. One of the main reasons that I'm not on Substack is that advertising was important to me. And so I had to build this system myself or with the help of a technical person. And as a result, what I have is a system that is far more powerful and modular than Substack, but which is grossly understaffed by me. And I don't have the bandwidth to fully take advantage of it. But I do see an opportunity to start a new company, which would effectively be adapting our system for newsrooms. to essentially franchise an effective newsroom business model. So I want to continue writing WeedWeek. I want to write a book about the rise of the weed industry. And I'm starting this new company that aims to provide a software platform for local newsrooms, where I think there's a huge opportunity and where I think the existing providers of software to newsrooms are leaving a lot of money on the table.

So you're not specifically talking about franchising it to other weed publications specifically. It's just you feel like over the years you've developed a pretty good customized website specifically for news publishing that other media companies might want to license from you to publish their own content. 

Yes.

Have you started the process of talking to potential clients or is that something that's still in the future?

Not quite talking to clients but I'm starting it with my CTO and we've sketched out how to adapt it and some of our ideas, so I think we're moving on it. The timing is still a little tricky. But the basic idea is, I think some of the existing providers, it's basically like franchising a business model. And I think a lot of the newsrooms out there, the people running them have a lot of the same blind spots that I had, and they don't have the eight years to spare that I had. So I think we can add a lot of value. And I think some of the existing options for them, the way I compare it, it's like with a McDonald's, you know, obviously a lot of McDonald's restaurants are franchised. They're not owned by McDonald's, the McDonald's corporation or McDonald's Inc or whatever it is. So they get the building, so the existing software providers provide them with the building for a McDonald's and they provide them with all the equipment, but they don't teach them how to source and prepare a Big Mac. And I think we would be much more involved in ensuring that they know how to make money and our interests would be much more aligned with them being able to make money.

But unlike the McDonald's analogy, you wouldn't have brand control over them or some kind of partial ownership over how they do things. It sounds like it'd be a mixture of a SaaS licensing fee and a consulting fee. 

Yeah. A lot of it would be built into the software and the website we build them. For example, real estate ads, selling houses. That's a big opportunity. It's a high value opportunity that I think a lot of these newsrooms aren't really taking advantage of. So we would say, OK, we're going to do this, but you are expected to publish one piece of journalism a week focused on the real estate market. And that will appear next to the real estate ads. And most of them aren't doing that right now. So that's just one example.