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From 6 a.m. to 6 p.m., dozens of workers at a production facility on the west side of Milwaukee crank out and package hundreds of thousands of Vance cigarettes each day.
It’s not tobacco that they’re rolling. The cigarettes bearing the Vance brand are made with hemp and they’re sold as CBD “joints,” yet another new item in the exploding market for CBD products.
Vance cigarettes are marketed as “guilt free smokes.” You don’t get high as with marijuana joints, but customers enjoy a nicotine-free product with the benefits (anti-inflammatory, anxiety-relief) touted by other CBD products, according to manufacturer Vance Global Inc.
It’s a message that’s caught on quickly.
In just over a year, Vance Global has sold around 4 million CBD joints, said co-founders August Battles and Brandon Marhal.
“We were going to do it as an after-work thing to make money on the side,” Battles said. “It ended up blowing up.” The young founders, fueled by Red Bull and McDonald’s, think they’ve started the next Juul, the company synonymous with electronic cigarettes.
The Vance founders aren’t alone — Marhal’s dad and brother have both entered the market with competing brands.
‘One of the top players’ in CBD business
Vance Global had about $3 million in revenue last year, according to the founders. That’s expected to soar to $15 million this year, they said. Vance cigarettes are sold in 46 states at around 14,000 stores, Battles said.
At the production facility off South 38th Street in Milwaukee, workers decked out in teal lab coats and black gloves roll and hand pack the cigarettes into boxes of 10. They’re sold at smoke shops, convenience stores and gas stations across the country. A pack of their all-natural blend typically sells for $14.99.
The hemp arrives in monthly shipments — around 12,000 pounds at a time — from farms in Wisconsin and Oregon. The non-psychoactive marijuana plant is separated from its seeds, sifted and then stuffed into paper by cigarette machines retrofitted to handle the sticky plant.
Nearly all of Vance sales — 98% — are retail. Vance blends into the hemp lavender imported from France that the company says provides additional benefits to users.
Marhal’s father and brother are making their own brands of hemp cigarettes. Some smoke shops sell all three Milwaukee-based brands — Vance, Lifted Living and Alto Heights.
The U.S. market for CBD products is around $4 billion, according to estimates from market research company Brightfield Group. Hemp already rolled into paper and loose hemp flower is just a small segment of the overall CBD market but it is growing, said Virginia Lee, a CBD market researcher for Brightfield.
Preroll hemp and hemp flower was a $71 million industry in 2019, according to Brightfield. That was a 528% increase from 2018.
“Vance Global is one of the top players,” Lee said. Other top sellers in the hemp smokes field include brands like Hemptrance, Colorado Pure and Wild Hemp.
Brightfield forecasts the industry’s growth will slow, although it predicts 91% growth in sales of hemp cigarettes and hemp flower in 2020.
Products like hemp cigarettes are not subject to federal regulation. The Food and Drug Administration has not made a definitive ruling on the safety of CBD products.
The State of Wisconsin oversees and licenses companies such as Vance Global that grow or process hemp. Some states have outlawed smokeable hemp. Louisiana, Indiana, Kentucky and North Carolina have restricted the sale or production of smokeable hemp.
Overall, the lax regulatory environment makes it easy for new players to enter the market and quickly grow.
A nicotine alternative
At Knuckleheads Tobacco stores, Vance Global’s product is the top CBD cigarette, said Madison store general manager Landon Meske. It’s the No. 1 staff recommendation for a CBD smoking product, Meske said.
“I love that lavender,” said Meske, who smokes a Vance Global cigarette at least once a week. “It helps enhance that relaxing, anti-anxiety effect.”
The product is popular not just with people seeking the advertised benefits of CBD but also those who are trying to quit traditional cigarettes with addictive nicotine. Battles, who used to smoke tobacco cigarettes regularly, said he smokes around six of the hemp cigarettes a day.
Vance is run by 22- and 23-year-old friends who are trying to be taken seriously as young entrepreneurs. Battles and Marhal wear blazers to the office daily. It’s something Battles liked about his previous job as a legal assistant at a law firm.
Vance has grown to around five office employees (Battles’ dog naps on the couch) with another 28 production workers. It plans to add five more employees in the coming weeks.
The one thing they wish they had known before going into business: don’t work with family.
Vance Global started within the 10,000 square-foot warehouse of Allied Distribution LLC. Brandon Marhal’s father’s company, Allied Distribution is an umbrella company for the production and distribution of various lines of CBD and other hemp products.
Battles and Marhal said they invested around $26,000 of their personal savings to purchase machinery and raw materials.
Hemp cigarettes were being made by other companies but, Marhal said, he had ideas of how to rework machines typically used for tobacco to better process hemp. He worked in factories and learned how manufacturing lines worked before starting with his dad.
The co-founders made prototypes and started taking orders in January 2019. They sold more than $100,000 in Vance Global cigarettes within that first week.
“Me and Brandon have had dozens of ideas together,” Battles said. The pair also have a security company, Kevgex Inc.
“You get kind of used to it just kind of fading away and just being something that you’re excited about for a weekend. This turned into something that people shared that same excitement and understanding.”
How family members turned rivals
Within a month of launching, the co-founders decided to leave the Allied Distribution space in Wauwatosa. They moved into a 10,000 square foot office and warehouse in February 2019, signing a five-year lease.
Part of the motivation for the move was concern that the other family members were becoming competitors.
“We lost a lot of trade secrets,” Marhal said about the machinery alterations.
Mark Marhal Jr., Brandon’s father, added Lifted Living Bud HempCigs to his line of CBD vape juice, oils and other products in August. Hemp Living is now in around 5,000 retail locations nationally, Marhal Jr. estimates.
At Vance Global, revenue continued to grow around 40% each month. Brandon’s brother, Jason Marhal, left his job at an auto dealership to lead sales. But the relationship between the Marhal brothers soured around the time Jason was arrested for marijuana possession while on a business trip to Texas.
In October, Jason Marhal was let go from Vance Global. The brothers disagree on the reason.
Jason Marhal, 24, has now struck out on his own and launched his own brand of CBD cigarettes Alto Heights LLC in November. Alto Heights is now at 120 locations in 13 states, he said.
“It’s put a strain on family relationships,” Brandon Marhal said. “Everyone is kind of divided. There isn’t really much I can really do personally to bring everyone together. If one person’s goal is to end someone’s business, it makes it hard to have a relationship.”
All three companies have similar plans — establish brands in the hemp market and prepare to enter the marijuana market.
“I’m proud of them,” Marhal Jr. said. “I don’t bash them … we’re coexisting.” Marhal Jr. owns Urban Vape & CBD, a shop on North Oakland Avenue. It stocks Lifted Living Bud HempCigs but not the brands started by his sons.
“Overall, this is really a story of two brothers and a father who are all too prideful to have done it all together,” Jason Marhal said.
Sarah Hauer can be reached at [email protected] or on Instagram @HauerSarah and Twitter @SarahHauer. Subscribe to her weekly newsletter Be MKE at jsonline.com/bemke.
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