President Jason Klein’s white-label manufacturer is perfecting a business model tuned to an evolving market — and poised to scale nationally.
Prior to opening Inanna Manufacturing the company’s CEO, Raquel Origel, had set out to launch a cannabis gummy line. However, she encountered nothing but difficulties.
“When we started interviewing white label manufacturers and co-packers, we just kept hitting dead ends,” Klein recalls. “Either we couldn’t get pricing, or we couldn’t get samples. It was always something. We saw a huge gap in the market for us to fill, so we decided to form Inanna.”
The company has since grown to occupy two manufacturing facilities: a 9,000 square foot location in Los Angeles and a 2,500 square foot facility in San Bernardino. With 13 clients at present, the Inanna team is currently in discussions to bring on another six to eight white label accounts. “The total volume we’re producing any given week or month will depend on the products,” Klein notes, “because we can manufacture everything from gummies and hard candies to drinks.”
Inanna also co-manufactures tinctures, pre-rolls, topicals, baked goods, and chocolate, in addition to offering services from ideation and flavor formulation to packaging and market launch.
“We have house recipes that we can offer to clients or, if they just have an idea, we have a full R&D team to help them create the recipes and SOPs and bring it all the way to market,” Klein says. “So far, gummies have been the most popular product that we’ve been manufacturing.”
He notes that the company’s ability to scale is a big differentiator in the white label market. “We started off doing smaller batches in the beginning, just getting proof of concept, establishing our recipes and formulations,” Klein continues. “At that point we started getting bigger orders, so we scaled up our equipment. We went from using mixers that were in the 10- to 15-liter range up to 100 liters at a time.”
While Inanna Manufacturing started out with a single depositor, they’ve since added three more. “We’re working with four depositors to stagger our batches,” Klein adds. “We can do one of those 100-liter mixes and then use our depositors to deposit the entire mix before it sets while staggering to the next mixer. This cadence helps us manufacture products faster.”
Klein explains that scaling up from small to large batches requires precision. “It’s not as easy as just doubling or tripling a recipe. The ingredients have to be scaled at varying quantities. That ability makes us stand out from our competitors,” he says.
Another important differentiator is the company’s ability to add clients who don’t have cannabis licenses in the state of California as financial interest holders under Inanna Manufacturing’s license. In essence, they disclose to the state that they’re accepting revenue from a company that doesn’t have a California cannabis license, manufacture and sell the client’s product into distribution, and then remit payment for the profit to the client. “This is one of our bigger client bases,” Klein adds.
Challenges: COVID-related absences have been an issue, KIein says. “So far this calendar year, we’ve had at least a third of our staff out with COVID,” he notes. “It has created a little bit of a challenge from the manufacturing side to keep a full staff and get production on track.”
Other challenges include scaling up small recipes to bigger batches while maintaining quality, innovating new and unexpected cannabis products, and dealing with regulations. “The state cannabis bureau is always changing their rules,” Klein continues. “Staying abreast of that to make sure we’re in full compliance and are staying within the testing limitations in terms of cannabis and cannabinoid content is a big deal.”
Microdose products, in particular, are challenging to manufacture within regulations. “The state has a 10 percent variance threshold on cannabis content,” Klein explains. “In other words, if you do a 10-milligram gummy, it can be between nine and 11 milligrams and still pass. But if you’re doing a one-milligram gummy, that window is between 0.9 and 1.1 milligrams. If the variance was something like a quarter milligram either way, that would be helpful.”
Opportunities: Inanna Manufacturing recently started contract manufacturing beverages, and Klein says expanding the drink line is a huge opportunity. “It’s a big growing segment in the industry,” he continues. “And then, as we’re getting proof of concept here in California, we’re getting approached for expansion to other states where we could do a plug-and-play of our manufacturing facility. So, it would be a big opportunity for us to expand outside of California and start servicing some other states.”
Overall, Klein says that Inanna is expecting around a doubling of revenues in 2022 over the prior year.
Needs: “We always need good employees,” says Klein. “We love our employees; they are the heart and soul of our company. Getting good ones that we can trust and who want to seize the opportunity to grow with our company is something that’s big for us.”