Q&A with Micah Tapman, CEO of BDSA
Micah Tapman describes himself as an entrepreneur and investor with a passion for innovation and “kick-ass companies in the cannabis world”. As CEO of BDSA, a company that provides a unique perspective on the cannabis marketplace through data-driven insights, market intelligence, and a deep understanding of the consumer, he has a front row seat to the industry’s growth and acceleration. Tapman made the time to sit down with Scott Hammon, head of the MGO Cannabis Practice, to discuss how his company can help the industry grow, the challenges it faces, and a timeline for some of these changes.
MGO: What do you see as some of the newer opportunities for the company? Can you tell us what BDSA is looking for next?
Micah Tapman, CEO of BDSA: The next innovative opportunity is going to be in Europe, with the more immediate turn coming from the U.S. With California’s share, the U.S. will, by far, claim the largest market for the foreseeable future. For us, it means balancing the company, focusing on the long-term, innovative growth in places like Europe and Latin America, with more evolutionary growth in the U.S. as it expands state by state.
MGO: Does your portfolio of services evolve and change by geography?
Tapman: Absolutely. We cover over 35 countries with our global market forecast and most of the U.S. with our consumer research and our retail sales tracking data, which is often referred to as “Stand or Scan.” Because this is constantly evolving, we generally enter markets with our market forecast and then fill in with consumer research. When there’s enough activity and the market is developed enough, we perform retail and sales tracking.
MGO: For Europe are you in the research phase or have you moved to Phase 2?
Tapman: Right now, we’re in Phase 1 of market forecasting and looking to expand into consumer research to better understand the consumer profile across Europe. Obviously, it’s more complex in Europe than what we’ve seen here. Across Europe, there’s diversity of culture and national proclivities, but in the U.S., it’s far more straightforward to look at consumer behavior in, say, Ohio and Pennsylvania and see it’s pretty similar. France to Germany, for example, will yield completely different results.
MGO: When you look at the product evolution, do you ultimately see yourself becoming more of a price optimization software tool or always more of a research and data gathering resource? Or am I making a distinction that doesn’t exist in your world?
Tapman: In a way, we’re covering both. When you’re looking at the value a company like BDSA brings to the table, we span from a Gartner to an “IRI” to a basic research company. At the end of the day, our mission is to remove uncertainty from our clients’ decision-making process by providing insights based on data. That way, these important decisions don’t rely on anecdote and opinion but rather fact and hard logic.
MGO: The world is evolving around data mining and data analytics. How much of what you’re doing is traditional market research vs. research driven by data mining and analytics. As things evolve, how do you navigate what seems to be a rapidly changing area?
Tapman: It can be difficult to draw a line in the sand. Using a sports analogy, baseball was revolutionized by cybermetrics, advanced metrics, and machine learning. But at the end of the day, it’s still the player, on the field, hitting a baseball. All the analytics in the world don’t create that home run. What they do is increase the probability of hitting that home run.
Our focus as a company is combining the machine learning and data mining approaches for efficiency, while keeping the human element and analysis that’s critical to business insights — this is particularly important around cannabis, where there is not enough data to create a “perfect pitcher” via data learning because things are chaotic and often moving too quickly. Humans are still better at pattern recognition and insights, and given limited data, we have the ability to move quickly with the right people, which is one of the biggest differences here at BDSA.
For example, Google Analytics presents a ton of data and they’ve done a great job mining, but all they’re presenting at the end of the day is more data. We take it to the next level by posing questions like, “Okay, how would you actually implement this,” or “Which software does this indicate you should purchase to run your dispensary?” That’s real insight that dives into helping the business move forward.
MGO: When you look at the datasets available to the industry, what are your clients’ biggest wishes?
Tapman: One of the biggest things is just getting an apples-to-apples comparison between two different states, or even market to market, because medical markets in most states are different in terms of laws and regulations. For example, Colorado has different potency limits for the medical and the recreational sides, which can be a big deal for a company trying to get to the bottom line.
To analyze this, you want to build a common denominator across markets, and that’s really challenging, especially since cannabis is different in every state. You also have to consider the challenge of different form factors having different denominators. For example, you measure a beverage differently than a chocolate bar, which is different from pre-roll, which is different from flower.
MGO: Do you think the biggest driver building a common denominator is the legislative environment? Or as there’s consolidation, do you see more quasi-national brands being able to navigate that issue, even without legislative change?
Tapman: Absolutely. I think the larger companies, the MSOs, are really pushing for better standardization and normalization. It can take months to pull acquisitions together in different markets. BDSA works with clients to provide normalization support because we have to be good at it for our own business.
MGO: Is that work recent? Or has it been there from the beginning?
Tapman: We started last year. Clients approached us saying, “We’re struggling to get a certain report, from three different states in the same format with all the data cleaned out. Can you help?” For us, it’s relatively easy because we can look at it and think, “Oh yeah, we already do that. We’re cleaning up that data ourselves.” It’s been a natural evolution of the services we provide.
MGO: Is that a major growth focus? Or more of a bolt-on to add value to existing customers and clients?
Tapman: It’s a pretty big area of growth for us. It’s not that surprising in hindsight, but our ability to manage a data pipeline is stronger than many of our clients. Of course, that makes sense because it’s our core business, just like they’re better at retail than we are. Ultimately, we save them tons of money in building out their own warehouses, platforms, and machine-learning algorithms.
MGO: You talked about the data pipeline and BDSA is sitting on a ton of data. I’m curious what sort of emerging consumer behavior you’re seeing and how does it evolve into new products and new channels.
Tapman: There are two major areas of consumer evolution. The first is simply consumer penetration of cannabis. Currently, we’re north of 40% in established markets like Colorado. When you look at that and think, “Okay, we’re estimating that more than 40 out of 100 people in any group of Colorado adults could be consuming cannabis,” that’s impressive. If you ran that analysis a couple years ago, it was in the low 20%. This leads to the second area — the improvement of consumer education. Some think the cannabis industry is about converting illicit consumers to legal consumers, but that’s an oversimplification of a very complex ecosystem. In the case of Colorado, it’s new, more educated consumers coming into the market. They now understand the concept of trying to use fast-acting edibles for one type of use versus normal edibles for another.
We’ll learn to consume cannabis the same way we learned to consume other products. Most of us in this country didn’t grow up eating sushi, but now it’s a common part of most people’s cuisine. I didn’t know what kale was when I was a kid, but now I’m surrounded by kale fields in Boulder.
MGO: You shared some new products and services you’re offering. What’s the one misconception you’d like to clear up in the marketplace of what BDSA is and how it operates?
Tapman: That we just provide data. What we actually provide is insight and confidence in decision-making. It’s one thing to say the temperature outside is 70 degrees, but it’s another to say it feels like a nice day and you don’t need a jacket. Those are two different things, and BDSA is much more about telling you if you need a jacket.
MGO: Make some predictions for us. What would you like for the industry in 2021 and beyond?
Tapman: We’re expecting the addition of over three million new consumers to the cannabis buying population. This will drive product innovation, brand development, and market expansion. Three million new consumers — that’s a lot. The industry will soon be too large to ignore with an expected $27 billion plus in global sales in 2021. We’re approaching the size of traditional industries, like candy. This is no longer a micro-industry. The best part is, our predictions don’t even factor in potential anomalies that we’re monitoring, like Texas legalizing sooner than expected.
MGO: While we’re on the subject, any predictions about Texas?
Tapman: As a company, we don’t believe Texas will legalize in the next couple of years, but there is a minority chance that the state could end up moving a lot more quickly.
MGO: That would be a huge cultural change and impact to the industry.
Tapman: It’s one thing for New York to legalize cannabis. But when Virginia does it, it’s harder for the Texan to say, “Well, Virginia is so progressive out there.” No, that’s Virginia. I wouldn’t be surprised if they move quickly.
MGO: You’d think that Oklahoma alone would be enough to motivate them.
Tapman: Absolutely, absolutely. Of course, each state needs tax revenue, and Texas has its own energy crisis to deal with now, so we’ll see.
See more about BDSA and the rest of the Cannabis 50 nominees here.