Hilary McCain: The Highs and Lows of Founding a CBD Startup

20
 minute read

An interview with Sweet Reason founder Hilary McCain


Once the purview of hippies and headshops, CBD has recently gone mainstream. CBD (aka Cannabidiol, a non-psychoactive element of the marijuana plant), can now be found in everything from bath salts to pet treats, with adherents evangelizing about its healing properties from reducing pain to treating anxiety. Throughout 2017, Hilary McCain – a Harvard Business school grad and a scion of one of Canada’s biggest food dynasties – watched as many of her mentors in the food world quit their traditional jobs to move into the emerging cannabis space, and she decided it was time to join the party.
 
McCain launched her beverage company Sweet Reason back in 2018, selling a line of beautifully-merchandised sparkling CBD beverages with no added sweeteners or artificial ingredients. Sweet Reason is now sold in over 250 stores in the U.S., and she recently raised a $2.5 million round of funding. We talked to Hilary about the misconceptions around CBD, managing her own anxiety, and how she navigated a legal nightmare that would send most startup founders running for the hills.
 
What are some of the biggest misconceptions around CBD?

Everybody thinks CBD is this very millennial thing and that it’s for yuppies and people that are really into kombucha and bone broth. But actually, there are a lot of people across many generations that are really interested in CBD and who have really felt its health benefits. I always joke that our target consumer might be a millennial woman, but we definitely have a strong fanbase of elderly men. I also think people are confused by the fact that CBD does not get you high. You’ll be talking to a very smart friend who you've told about your business five times, they still don't necessarily understand the fact that this does not get you high. And yes, product development is fun, but you're not all high at work all day. [Laughs].
 
Where did the idea for Sweet Reason come from?
 
In January of 2018, I basically became obsessed with the cannabis beverage space. That summer I had seen all my mentors and advisors in the food industry really moving into the cannabis world, and I started thinking about how the future of cannabis will change once the market is legalized in Canada. Beverages really resonated with me because I think they're the most social form of consumption. And then I learned about all the health benefits of CBD and that you could source it from the hemp plant; at the time there was this legal way to do that. And so I basically decided to start Sweet Reason, beginning with a line of CBD sparkling waters, but really with an eye on getting into every cannabinoid beverage that is science-based and regulated in the next five to 10 years.
 
Why beverages specifically?
 
Ten years ago I’d never heard of a cannabis beverage. You can always find edibles on the black market, but it's hard to make beverages in your kitchen. The fact that it wasn’t on the black market really and that most people have never experienced it is what really excited me. Also, I think that our society and culture revolves around beverage. Even if I need a break in my work day I’ll go for a walk and get a coffee – well, decaf coffee these days –  that I did not need, just to have a break in my day. Or I’ll meet a friend for a drink and have a meeting over coffee. Sharing beverages together is such an important part of our social fabric.
 
Also nowadays, a lot of people are abandoning alcohol, but they still want to be able to get together socially with friends. There are even alcohol-free bars opening in New York to accommodate for that. Maybe it could be like that with CBD beverages too. Is that something you could see Sweet Reason getting into in the future?
 
I would say I'm more passionate about integrating these types of products into our day-to-day lives and our already-existing social environments. I don't take as black-and-white a view on some of these things. I don’t think you have to never drink alcohol again, I think you can just decide to drink alcohol less – instead of having a bottle of wine on a Wednesday or Thursday night, maybe save that for the weekend. I’m more interested in the balance that everybody is after with this sober-curious movement. I think people want more balance. And interestingly, I think that's a consistent theme in our world right now, not just in the beverage space. You see it also in the meat industry with the rise of plant-based diets. It’s not that everyone wants to cut out meat entirely, they just want to eat more plants. I think it’s a symbol of how we’re becoming a lot more aware of our general consumption and trying to lead more balanced lives.
 
Having come from a more traditional food world background, did you face any stigma when you said you wanted to get into the cannabis industry?
 
No, not at all. My family are all pretty open-minded, liberal, and pro-legalization. If anything, it was more my American friends that were surprised. But I think in Canada, even in 2017 it was already becoming a big part of the Toronto job market. So it wasn't that crazy of a thing to do. And I think especially on the coasts, like New York and LA where we're based, there's not really much of a stigma around cannabis and people also understand that CBD is different in that it comes from hemp.
 
It seems like the popularity of CBD is part of this wider societal shift towards embracing non-traditional forms of healing and wellness. Is that something you’re interested in in other aspects of your life?
 
I've always been really into health and wellness. What that means for me is I just, I love to cook. I'm obsessed with all things food-related. I have probably tried everything under the sun in terms of food in my kitchen. Well, except make sourdough bread. I’m only 30, but I would say every year that I get older, life comes with more anxieties and responsibilities. Every year I'm more and more aware of managing my own mental health on a day-to-day basis. I definitely have had my fair share of daily bouts of anxiety. Ironically, since I started a CBD beverage business for anxiety, but I also run a beverage startup, which is the kind of thing that gives you anxiety. That’s the great irony of Sweet Reason. [Laughs]. And so I'm really passionate about creating products and helping people make lifestyle choices that help reduce their anxiety. Our beverages are really good for calm and focus. It just helps calm your mind and really focus on the task at hand.
 
Do you smoke weed still, and if so, how do you smoke it? 
 
I do, though I prefer an oil. I either smoke a good old fashioned joint or I use a Pax.
 
What's a time in your entrepreneurial journey that you felt really anxious, and how did you deal with it?
 
Raising money was pretty anxiety-inducing. When I was raising money for the first time I was drinking too much coffee. And the secret of coffee that seemingly nobody talks about is that it's really bad for anxiety. Which is so funny to me because everybody drinks coffee, but also a lot of people have anxiety these days. So now, I don't drink coffee anymore from Monday to Friday. I'm such a balance person so I’ll go to town on the weekend when I don't have stressful meetings, and stressful people to talk to. That has been pretty game-changing for me, and I think is something that nobody usually talks about when it comes to managing anxiety.
 
It’s completely the inverse of what a lot of people do, which is they don't drink coffee on the weekend so they can relax, and then they drink a ton of it during the week to get them through the hurdles of the workday. 
 
Yeah, it's just one of those things that we don't really talk about or think about that much. It's crazy. I feel like I should be the poster child for: everybody should stop drinking coffee. Another big thing I do to manage stress is I try not to go on my phone when I don't need to be on my phone. I'm on my phone for work all day, so I try to make all my personal time not on a phone or screen. I’ve started getting a physical newspaper, or if I’m going on a date night with my husband, I’ll try not to bring my phone. 
 
What were some of the difficulties of breaking into an industry that still faces so many legal and regulatory challenges?
 
We definitely lived through a lot of challenges. I started the business in Canada. We were supposed to launch in Toronto, and a month before our first production run, the whole business became illegal overnight. CBD was supposed to be carved out of the Cannabis Act, and the government just never did. And that meant that all of the sudden we had to completely start from scratch and launch in another market, or close the door.
 
What was going through your mind when all that was happening, like from an emotional and psychological standpoint?
 
It was crazy. I think I was in denial for all of July 2018. I was actually on a photo shoot in LA when it happened, which is probably the sexiest thing to do in our industry. And I got a call from our regulatory lawyer and he was like: Crazy news; the government was supposed to carve CBD out of the Cannabis Act, and I don’t think they did. It was shocking. We spent all of July 2018 getting second and third opinions and verifying this with all different types of lawyers. And then at the same time, the US announced that they were going to pass the farm bill, which would open up the CBD market in the States. So it was crazy, but honestly ultimately, it was probably a blessing in disguise. We ended up launching in New York and we were in 150 stores within six weeks. That would have taken a year to get into in Toronto. At the same time, it sort of breaks my heart because I would love to run a business in Canada. I’m a very patriotic Canadian.

What are some of the challenges of being a female founder in the male-dominated business landscape? 
 
The funny thing about sexism is you don't always really know when it's happening. You might suspect it, but at least in my experience, it's always been vague enough that you don't know if they don't like you because they're sexist, or if you're just an asshole. I haven't experienced it so directly that I would be able to point to it, and I'm really lucky to be able to say that because I know that's not the case for a lot of women. I think that’s the most dangerous part of sexism, it’s not the blatant stuff, but the more hidden stuff you can’t directly point to and often don’t even know is happening. I would say at the same time, it’s a huge time for female founders right now. I've had a lot of people, including investors, that are extra interested in Sweet Reason because there's a woman leading the company. 
 
Your family is huge in the food industry in Canada. Did you feel any sense of burden or expectation on you, in feeling like there was something you had to live up to?
 
Overall I don't feel any huge burden or pressure. When I was getting into it, I knew it was a risky endeavor and a wild ride, and decided to do it anyway. I think that the opportunity is big enough that it can outweigh the risk.


This interview has been lightly edited for clarity.

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