Editors’ Note: This is the transcript version of the podcast. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below if you need any clarification. We hope you enjoy!
This week we are joined by Emily Paxhia Co-founder of Poseidon Asset Management to discuss
- Poseidon value add approach
- Undervalued assets in Cannabis
- A surprising state she has her eye on
- And so much more
https://www.poseidonassetmanagement.com/
About Poseidon
Poseidon was founded by siblings Emily & Morgan Paxhia in 2013, making their first fund one of the longest running dedicated cannabis investment funds. The Poseidon team has focused on a diversified strategy covering a range of company stages and industry subsectors across the capital spectrum. Now in the eighth year of conducting due diligence, deploying capital, and serving on multiple company Board of Directors, the team is considered a leader in the cannabis industry. This recognition, in conjunction with Poseidon being a first mover in the cannabis investment space, has led to a level of trust with industry insiders. Poseidon has forged a positive reputation in the cannabis industry by helping companies when others would not, resulting in proprietary deal flow.
This show is presented to by 8th Revolution:
At Eighth Revolution (8th Rev) we provide services from capital to cannabinoid and everything in between in regard to the hemp & cannabis industry. Our forward-thinking team can diagnose, analyze & optimize every detailed nuance of your company to keep your business safe, smart, and profitable. Our flexibility and experience combined with ongoing research create unique insights into how to best grow your market share. Contact us directly at [email protected]
Bryan Fields: @bryanfields24
Kellan Finney: @Kellan_Finney
[00:00:00]Bryan Fields: What’s up guys. Welcome back to another episode of the dime. I’m Brian Fields. I’m with me as always as ke Finn. And this week we’ve got a very special guest, Emily Pia, managing director of Passid and partners. Emily, thanks for taking the time. How are you doing today?
[00:00:15]Emily Paxhia: I’m great. And thank you so much for having me.
[00:00:17]Bryan Fields: I’m excited diving in Kell. How are you doing? I’m doing well.
[00:00:20]Kellan FInney: I’m excited to, to talk to Emily and I’m even more pumped that it’s another west coast. Isn’t that
[00:00:25]Bryan Fields: right, Brian. Yeah, I guess Emily can, can officially say she’s on the west coast, but I also think Emily does a lot of time out here on the east coast.
[00:00:33] And I know she’s got her eyes on New York. So again, I would say that’s more 50, 50 or 80 20. Depends on how you wanna split that.
[00:00:40]Emily Paxhia: Oh yeah. By coastal, but yeah, presently living and based in San Francisco, but every year we, I, I spend. For the last few years, the one exception being 20 and 20, of course. Um, we’ve been spending about a month back in New York, one, one to three months back in New York in the summertime.
[00:00:57] Cause I’m one of those, uh, people who actually loves [00:01:00] the summer of New York city, which might , might be crazy, but I just think it’s the best time to be there. It’s so fun.
[00:01:06]Bryan Fields: So awesome. So for our listener that are unfamiliar with you, can you share a little bit about your background?
[00:01:13]Emily Paxhia: Yeah. So I am a co-founder and managing partner side, inter managing director of both titles exist in my life.
[00:01:19] Uh, I co-founded the firm of my brother in, we put it together over 2012, officially stood it up in 2013 and started investing with outside capital in January of 2014. Right when Colorado opened our door. Um, so now Passid has multiple strategies under its. Umbrella and all dedicated to investing in cannabis.
[00:01:40] And, uh, kind of an interesting thing is when you wake up one day and realize that not only have you been investing in cannabis, but your invest reach across the investments in us, Canada, Western Europe, and Latin America. So it’s pretty exciting to see how this is so quickly developed into a, a global phenomenon.
[00:01:59]Bryan Fields: Before you [00:02:00] got into this space, were you always interested in being in cannabis? Was there something that kind of led you to that? Can you kind of take us before you hopped in?
[00:02:07]Emily Paxhia: Yeah, uh, no. I was not always interested in being in cannabis. Um, it, it’s funny. I feel like. Um, you know, there’s that expression of like, there’s no, there’s no such thing as luck.
[00:02:19] There’s just knowing, having the awareness to recognize an opportunity when it comes along. And, you know, I do spend a lot of time focusing on mindfulness. I have been, I have studied to become a yoga teacher in the past. I’ve done a lot of things to try to, you know, increase my consciousness is an awareness of what’s happening in my.
[00:02:43] Circuitous route, um, the way that it first became, uh, clear to me that there’s an opportunity in cannabis. Well, a way to think about cannabis was unfortunately back when our parents both were sick with cancer first, our father, and it came [00:03:00] up as a palliative care option. That was still illicit, but it was just one of those things that came up and it was brought up by a hospice nurse.
[00:03:08] And then the next way it came to me was by way of when I moved from New York to San Francisco and saw the legal, the semi-legal market, it was a gray medical market that had been around since 1996. Um, but you, you know, there in this day and age, it’s a lot of retail locations that you see people lining up outside of the doors to get in.
[00:03:28] And that was. One of the first times, it really kind of like went off like a light bulb. And I remember one time I was riding in the back of my friend’s car. We were going over the golden gate bridge and I was flipping through the SF weekly and there was, um, advertisements for brands of cannabis. And I was like, what is going on here?
[00:03:44] And so I started looking more into what had been going on from a market stand. It started studying up on the history of medical cannabis. In California and, um, and that’s kind of how it came to be. But, um, you know, I personally did not have a [00:04:00] lot of relationship with cannabis because, and this is one of the reasons I’m so pro the legal market, I feel like access to was illicit market cannabis being, you know, in New York state, we didn’t of a legal market and.
[00:04:15] A lot of times when I would consume cannabis, it was way too strong for me. It wasn’t what I expected. And, and I didn’t always have the best experience. And now I’m a daily consumer of cannabis in different forms and fashions, like, be it a CBD tincture or a wonder beverage or a can, or, you know, um, Something from my ed Parker, cute little rolling papers or blow, you know, there’s just all these different ways I can interact with it.
[00:04:38] And my experiences are totally different. Um, now, because I understand what I am consuming, which is all about having a quality consumer experience. So, um, did I think I was going to ever be a cam. Cannabis investment manager. No. Um, but I just feel like it was one of those things where those opportunities come up and I still remember, um, I [00:05:00] live actually right around, this is another, it, it all ki when you pay attention things line up.
[00:05:04] So I live around the corner. Um, Right by hay Ashbury. And, um, I walk right by it all the time. And I remember I was on the phone with my brother, who’s my co-founder and business partner in 2012 when I called him. And I said, I don’t know. I feel like cannabis could be the opportunity of our generation. And that’s when we started talking about putting it together.
[00:05:27] So there’s a lot, lots of ways that we got into this. Uh, I
[00:05:31]Bryan Fields: love that you shared, and I think there’s so many important parts, you know, everything ranging from the personal history side also to like a. Finding the products that were beneficial for you, cuz I think there’s so many people, especially here on the east coast that have that same kind of challenge where they’ve had certain products that didn’t kind of fit for them.
[00:05:45] And then there’s this huge opportunity for them in the future where if they can get kind of back into the industry and try, you know, regulated products, it can really make a difference for ’em. So I wanna stay back in, in 2012, 2014, what was the cannabis in industry like back then?
[00:05:59]Emily Paxhia: Um, [00:06:00] What was it like?
[00:06:02] Well, I mean, it was interesting because it was everything from you had the APO stores, the spark stores, beautiful retail experiences that look like boutique hotels or high end cafes. And then you get in there and there’s a brownie with a business card stapled on a plastic bag, you know? And it’s like, yes, by the way, California was a leader in lab testing products.
[00:06:24] And I feel like that’s all been a very important aspect of how we’ve gotten this. To where it is today is by when you look at the cannabis industry, the operators are the ones who hold themselves to the highest standards in the legal market. So they were like, we have to be lab testing our products. So we know the potency of the product what’s in the product, making sure it’s safe for consumers.
[00:06:45] And they, they were always on the front end of that. So you’d have like a lab tested edible, but the packaging was very kind of rustic around it. And so. It was very different. Um, also, you know, when early days of investing in [00:07:00] cannabis, there were, um, serious limitations. So for example, in California, they were, you know, nonprofits or mutual benefits.
[00:07:08] Corporations. And so you can’t really take equity, stakes and businesses like that, but you can lend money to them. And so there are ways you can start to think about participating. The same thing was true with, for example, in Colorado, unless you were a resident, you could not invest on the equity side into those companies.
[00:07:25] And so you have to get really creative and thoughtful about how you participate it. But when, for example, if you do participate as a lender to a business, , there are certain covenants that exist in place, such as reporting and, and having access to the financials. And it was becoming lenders to operating cannabis businesses that gave us incredible insight into actually how interesting the profile of these businesses are.
[00:07:52] And so back when we first started investing in cannabis, there were other firms that started to pop up and they would invest in cannabis, but they wouldn’t. Do quote [00:08:00] unquote plant touching operators. We would actually invest in plant touching operators because we couldn’t ignore the business potential of these businesses.
[00:08:08] And now we all know because we see the earnings calls or hear the earnings calls and see the reports that come out of these operators. And But I mean, when you’re looking at gross margins, some of these companies in the 60% you’re looking at EBIDA margins above 30%. I mean, these are very interesting business profiles and by the way, Experiencing massive growth year over year.
[00:08:29] So that was how our conviction around investing in cannabis was at strengthen. So it’s interesting how these limitations actually create opportunities when you, when you pay attention.
[00:08:39]Bryan Fields: Yeah. And especially early on in the process, right. You’re able to kind of see from just a small, small picture, if it’s just California, imagine what happens, you know, at, as you know, it grows out from the United States and then potentially globally.
[00:08:50] Yeah,
[00:08:51]Emily Paxhia: exactly. It’s really crazy. Pretty
[00:08:53]Bryan Fields: nuts. So let’s talk about beside partners. Can you share a little bit about the value it brings to the space? .
[00:08:58]Emily Paxhia: Yeah, so, [00:09:00] uh, paci was co-founded by my brother and myself. Um, so we came from a line of family, business and entrepreneurship. So I think it was just kind of in our blood.
[00:09:10] And, um, we’re both, we think similarly, but we also approach things very differently. And I think that’s really important when you’re in business together, especially in invest thing, cuz we. Look at it from different angles and test each other on it. Um, and then the firm has expanded from there. And you know, this year we had a really, or I guess technically 20, 21, we had a really exciting thing where we had Patrick Raya from canopy Boulder.
[00:09:34] And he was the, he was, we met him in January of 2014 at an arc view meeting. And I remember, or we were watching a pitch kind of competition and, um, we just hit it off with them and, and. Became pretty close and have worked together with them. We’ve co-invested with them. And I think his experience of launching and running a business accelerator in this industry gave him so much access to how these early stage [00:10:00] companies start up and run and, and the way that you can kind of help them to navigate through those stages and make connections.
[00:10:06] And it was something I always really admired. And then we decided to come together to launch our, our newest strategy. So. That’s been really great. And then we’ve got Andres on the team. Andres comes from an interesting venture and MBA background and he’s actually dual citizen, Columbian, United States.
[00:10:25] And so he actually spent a good chunk of the pandemic INTA, and, and now he’s actually based in Miami. And then we have, uh, Colin. Joining a team who comes from a background of doing research and an analysis on cannabis companies. So he’s got a really interesting background. And then we’ve got Tyler who, um, is running, helping to run our ETF.
[00:10:48] And he’s based outta New York comes from like Goldman background and, and has done a. Phrase of, uh, investment, um, processes along the way. So, you know, the whole team has built out and [00:11:00] it’s really exciting to see that we’re kind of spanning the us. We’ve got California, Colorado, Florida, New York. And I, I think there’s some great tent poles for for the firm, but, um, it’s been really great to grow it to wa how everyone comes.
[00:11:15] To the table with the same level of enthusiasm and passion for the industry, but also the same dedication to really delivering on our fiduciary responsibility of driving returns for our investors. And so, um, beside in our thing has always been. To be value, add investors. We don’t just typically we don’t just write checks.
[00:11:36] Although sometimes you just have to, uh, know where your attention is best received. Sometimes when you do invest into a company, they’re not as interested in having an active investor at the table, if they’re running their business as well, we tend to just say you’re. Good to go. But a lot of times we are actively involved and it’s something we set as an expectation at the outset of the investment for our founders is that we’re here.
[00:11:59] We’re [00:12:00] partners. Um, you know, at the beginning of the pandemic, we had an all hands meeting for the entire portfolio and brought on insurance people, lawyers. Accountants, just everything. So everybody had resources at hand for what appeared to be a black Swan event, a Sequoia capital called it. Um, you know, we may, we’ve been talking about maybe doing something again.
[00:12:21] If, if this, um, unfortunate situation with. The Ukraine escalates. I don’t know how much more can ask. I mean, there’s only a couple things and you don’t even wanna bring it up of what, where this could go, but it’s not good. Um, and we know that the inflationary impact of this and the supply chain issues are going to only be further exacerbated.
[00:12:39] But anyway, all of this goes by way of saying PSID is very actively involved. Um, you know, we out there a lot, um, but the way that we think about it is. The portfolio companies are the things that make our firm a success. So if they perform well, then we perform well. And, um, you know, we’re just here for them.
[00:12:57]Kellan FInney: I wanna say. And a good question. I have. So [00:13:00] you mentioned the accelerator program. Yeah. As well as being a value added investor. Is that kind of what led you guys to start the mastermind program?
[00:13:06]Emily Paxhia: Mm, the mastermind brand is a work in process. Yeah, that’s exactly right. So it’s kind of a. Inventing of the concept around accelerator programs and the idea of it is to be kind of more nimble and to formalize a process of mentorship and network support.
[00:13:24] Is it
[00:13:25]Kellan FInney: targeted at just your portfolio companies or are you guys opening it up to all kind of cannabis founders that meet specific
[00:13:30]Emily Paxhia: criteria? Yeah. So I think we are going to be opening it up and that’s something we’re endeavoring into in, in 2022. Um, you know, we still are, um, you know, we’ve got our actively managed funds, but, um, I think that we will be looking to open that up because we do think there’s an opportunity.
[00:13:49] To work with some companies. Like, for example, I think that the, this program could be helpful to those who are not necessarily in need of doing a full venture round of [00:14:00] financing, but they want to be able to kind of quickly get their businesses ramping and then maybe they can bootstrap them and do, um, more, um, You know, finite Ron’s of financing, where they take some money, maybe it’s in debt, or maybe it’s in equity with a way that they can dividend it out.
[00:14:17] But, you know, not everybody is a, a perfect target for a venture style of investment, but I do believe that there are small businesses that, that want to get started up in this industry that can benefit from that program. So of does that make sense?
[00:14:31]Bryan Fields: That does a hundred percent, especially with the experience your team brings to the table, because as we’ve seen cannabis is so hard in, in every other area.
[00:14:38] And having a, a valued partner like yourself kind of avoid those landmines could probably save companies, not only substantial capital, but also time and likely success or death given the variable. So I wanna stay with the value add, is there a certain strategy aspect? Is it more operational guidance? You know, what, what role does your team play in?
[00:14:57] Expanding on that. Are there kind of nuances that you can [00:15:00] share that you’ve learned from one company that you can kind of bring to the other? Or are they kind of separate entities that you don’t really wanna mix and match the
[00:15:05]Emily Paxhia: information? Yeah. Um, well the, you know, okay. So yeah, there’s, there are many areas where we try to be value up, so I’ll just.
[00:15:14] Start and run down. So we do try to be value add in terms of, we do a lot of, we spend a lot of time vetting and evaluating service providers. So maybe we can make great introductions for legal, for insurance, for outsource accounting support F P N a support. So those are certain things that, I mean, if you can save time as a founder and get good girls for good service providers, you’re already starting with a leg up, um, The other thing is that our team will also kind of vet and stress test financial models as we’re investing.
[00:15:45] And so we become an ongoing sounding board on that. And so, and like Andres on our team is really good at helping to model different things, including if a company is evaluating M and a or anything around that, he will be very. [00:16:00] In terms of modeling the outcomes of those different transactions or opportunities.
[00:16:04] And so, um, he’s done that countless times and it’s been very great value add. Um, the other thing we, I would say is that we really try to help set up these companies with good. Corporate governance, uh, not just in cannabis, but more broadly speaking. I think there’s been a real absence of strong corporate governance.
[00:16:22] You can see how it’s played out, for example, with Theranos or, uh, WeWork. Um, some of those really big companies that, I mean, when you saw the board of directors at Theranos, I mean, it was basically like write a check, but did any of those people actually really know what they were doing from like, Okay.
[00:16:40] It’s time to get the firm audited. Where are those audited financials? What’s, let’s establish a budget. What are we doing in terms of the diligence process with fundraising? Like those are all things that are really important. Same thing with, I don’t even understand what was going on with WeWork. The fact that the IP was not even held correctly by the company and they were IP.
[00:16:56] I mean, there’s just like. A myriad of things that have [00:17:00] happened when people are moving FA like I look, I, I love Silicon valley. I think the innovation that comes out of there is, is critical. And it’s how we stay as a, an economy that actually grows and flourishes rather than becomes stagnant. and shrinks.
[00:17:16] Uh, but there are things this notion of move fast and break things. I do think creates a little bit of a challenge and I think we have to be a little and, and in cannabis, we I’ve said this before, we don’t have that luxury. Like we can’t move fast and break things. You can look at how, um, ill elicit operators move fast and break things and, and break things for the industry.
[00:17:36] For example, like the vape hysteria thing of 2019. That was just people really trying to move quickly, selling a lot of vape products, not getting them appropriately lab tests, et cetera, et cetera. Um, so we try to provide support on like Bo good board composition. We try to lend insight in terms of, um, diversity in teams and inclusion in teams, especially in upper level management [00:18:00] and recruiting.
[00:18:01] Um, and then we also, as a firm do. There’s a VC who I have a lot of respect for his name is and he always said his number one job as an investor is to be also be recruiting talent for his companies. And so we always spend time trying to make introductions and connections, even if it is just as an advisor.
[00:18:20] If it is. And so some, and even some of our, our investors have actually gone to work with some of our portfolio companies because they had expertise. They could translate from their existing experiences into these portfolio companies. So those are some of the ways that we try to add value.
[00:18:36]Bryan Fields: What area of the industry do you think is currently overlooked by a majority of the space?
[00:18:45]Emily Paxhia: Overlooked. I think the tech aspect of the industry doesn’t get enough attention. Um, I think what I see is there’s a lot of piling in, on technology where I think there are some founders that are really good at raising [00:19:00] money and that’s necessary for success because you know, the main way you fail is if you run out of money.
[00:19:08] But I do think. Again, that there should be prudence around how, when and what structure you raise money and the true use of proceeds for that. Um, but I do think that a lot of folks don’t truly understand just how much value is contained within these tech companies that are serving the industry because every operating company, meaning plant touching operator.
[00:19:33] It’s like, you have to stand up a whole new business in every state you go into. Right. But the technology platforms. Can much more quickly scale across these markets. And they’re the ones who are sitting at that 30,000 foot view of what this industry looks like. We’ve invested in headset data. We love the data.
[00:19:51] We use it all the time. And that is like, who, how could you have a better ringside seat to what is happening in this industry and the trends that we’re seeing in different [00:20:00] product categories, consumers, states, market by market, all of these things. But I just think that they’re, it’s just been a bit of a lag for people to realize that this.
[00:20:08] Technology is really, it holds a lot of value and, you know, I’ll just give a couple examples of analogs, cuz some people are like, oh, why can’t you just use Salesforce? Or why can’t you just use square? And we all know that there are the regulatory limitations around that, but there’s also optimization limitations around that.
[00:20:25] So if you tried to use that your business is not going to be as efficient as it is with a tailor made, um, cannabis platform and. You can see, like mind, body is a good example of a platform that was built for the wellness sector. That was absolutely exploding and it’s very similar to cannabis. So my body is a platform it’s like a point of sale platform, a booking platform for spa’s for yoga facilities and mind, body was launched, right?
[00:20:53] When. The yoga business was exploding when people were starting to realize they needed to get into [00:21:00] these alternative wellness solutions like acupuncture and massage. And so my body intelligently, what the cannabis guys have done and gals have done is like, oh my God, this is a rapidly growing underserved sector.
[00:21:15] And so if we can create a platform that’s meant for this and then capture the growth of that sector alongside of it. Then you’re going to have tremendous growth. And so some of our technology companies are going it over a hundred percent year over year. And so it’s very interesting.
[00:21:29]Kellan FInney: One technology company I think is interesting is packs, right?
[00:21:32] Mm-hmm . And so I have have a couple questions associated with packs. So my first question is, did you guys invest in packs prior to them launching the actual vape pen? Because originally they were just like herbal vaporizer hardware. Right. um, and so just getting in before that, and then they’ve also been interesting as like a technology platform, because they’ve recently.
[00:21:51] Became a pseudo plant touching business with their now like branded through a doit. Right. Or, uh, I can’t remember exactly [00:22:00] who they partnered with, but they is, it DOCI right. That they’re actually launching their own, uh, oil pen now as well.
[00:22:07]Emily Paxhia: They’re doing, I can’t remember what the relationship with dos is, but they are doing well.
[00:22:12] I mean, packs. Right. I like to joke that they named it after us, but that’s a whole other, I like the
[00:22:19]Kellan FInney: name. It’s good brand.
[00:22:20]Emily Paxhia: It’s really good brand. I did actually. That is how I got my first, uh, packs, uh, herbal, uh, product as I was like, uh, You do realize what my last name is? I deserve the product, right. Or CCS.
[00:22:34] Yeah. I was like, I’m coming for you. Um, no, we invested in pack at a really interesting time. They had gone through a bit for a long time. They did not associate themselves at all. Period, full stop with the cannabis industry. They really carried the party line of like we are or herbal and dried tobacco inhaler or, you know, breath, whatever product, um, vaporization product, um, But I always admired their branding.
[00:22:59][00:23:00] I always admire, I mean, it showed up everywhere. I remember I was at a comedy festival in Austin and there was a big packs display. So, and I’m like, yeah, we’re at a comedy Fest and you’re talking about, or. Verbal inhalation. Okay. Um, but you know, they, they’ve always had a really good looking technology, really effective technology.
[00:23:20] I actually still think my packs too is one of my favorite ways to consume flour because you can actually taste the profile of it. You should try the packs three. I have it I like my packs too, cuz it’s a pretier color. Okay. It’s a whole thing. Um, but the, uh, what was I gonna say? But, so we invested right when they were launching the era and at that time,
[00:23:44]Bryan Fields: why’d you invest at that time?
[00:23:46] Like what, was there something that you felt in that calm conversation? Did you feel like they had a us P like, what was it about it?
[00:23:53]Emily Paxhia: Uh, you know, the vapor category was growing rapidly. Uh, the pod aspect of it, I thought was [00:24:00] very interesting and I liked the, that they were kind of doing the razor razor blade model, which is that they were going to be able to work with partners.
[00:24:07] So they weren’t gonna take on the capital. Intensive aspect of cultivating processing and infusing the pods themselves. They were gonna work with some of these well known brands like jet extracts in order to do it. Um, and the razor razor blade model is great because it’s, it’s a light touch, but then you have a pretty strong impact and a great, um, brand experience.
[00:24:26] The. You know, and I thought the technology was really strong. I also really liked the CFO, um, in the cannabis industry. And I think in all industries, you really try to make sure there’s a financial controls group at the table that are going to help to shepherd this. They’d also gone through some supply chain issues early on in, in the company and they had righted some of those challenges So we were pretty excited about it. Um, The, you know, the, an interesting aspect to it was that at that time, Juul was a part of Paxs I think a lot of,
[00:24:57]Kellan FInney: I was gonna ask that cause it’s, the technology is [00:25:00] identical, you know? I mean, I’m like there has to be some sort of IP overlay
[00:25:02]Emily Paxhia: between the two of, and there is, and, um, That has been an interesting experience to have been invested in that as well, because they spun ju out.
[00:25:13] Um, but a lot of people, because Juul became so huge so quickly because of the fact that it’s the total dressable market is the entire United States and, and also it’s nicotine. So it’s addictive. So it’s a very different, um, but, um, you know, they obviously had some missteps, but, but Juul was born out of Paxs And so that’s. That’s something. I think not everybody quite realized is you guys seem like you’re. I thought it was the
[00:25:39]Kellan FInney: other way around. I thought packs was born from Jules, but that’s good. Oh, no learning right there.
[00:25:44]Emily Paxhia: So appreciate it. There you go. um, so yeah, so it was a number of things at that moment of why we wanted to invest into the company.
[00:25:51] And then we ended up following on and I think two more rounds after two rounds after that, um, I think PACS faced some challenges [00:26:00] just like everybody did after the VA hysteria. Um, but I do think it made them. Really examine how they did want to participate in the ecosystem. And that’s where the live ROSN, uh, products have come from.
[00:26:12] So they’re going to be getting more vertical in terms of how they’re doing their own brands, but they’ll continue to have partners. Um, so. I’m pretty excited about the new direction of the company. I’m glad they’re more explicitly leaning in as a full blown cannabis company. And I think that I, I, I don’t know if you’ve tried the new era, but I love it.
[00:26:32] And I think the new, the new pen, um, the new what’s it called? The new live Rossen product is really good too. Um, it’s all very smooth and, um, the profiles are great. And I think, um, it’s, to me, it’s really interesting cuz I look at the categories through my headset data that are growing and I’m very interested in gen Z and gen Z is very, um, there’s a lot of affinity [00:27:00] for vape products and also for, um, the ones with the pod systems.
[00:27:05] So that you can have different, so you have the hardware and then you have the different pods you can plug in depending on your different needs states or what your interests are at that time. And so I’m very interested in gen Z as a market, uh, as a market segment. And so, yeah, I think it’s really cool what they’re doing.
[00:27:21] I’m excited about it.
[00:27:22]Kellan FInney: I think it’s good too, for the industry from like, uh, just a stigma perspective, cuz they were like kind of like. Hands away. We’re not gonna touch it now that they’re actually like willing to take a, uh, a foot to take a step and put a foot into the actual industry. I think it kind of speaks volumes to where the industry is going and where it’s been.
[00:27:38]Emily Paxhia: You know what I mean? Yeah. I it’s, it’s interesting too. And I can’t say specifically, because obviously it’s like sensitive information cover course, but there are massive financial institutions in that company.
[00:27:50]Kellan FInney: Awesome. That’s good for the industry.
[00:27:53]Bryan Fields: It really is. It makes sense too. Like why they’re taking the steps into the space a little more, right.
[00:27:57] They’re getting some data sets from what is [00:28:00] selling and they’re like, wow, if we can kind of expand our offerings in different areas, we’re diversifying our, our interests in the space, but we’re also utilizing, you know, sales from our partners to understand maybe market trends and then leaning in those direct so that maybe we’re not kind of.
[00:28:13] Capturing other market share all of our partners, but we’re kind of splitting that difference and, and maybe capturing new market share. And gen Z is very interesting also, especially as they kind of come up through the ranks and they’re consuming more of that with booze. I think there’s a lot of categories that we can kind of talk about in a little bit that might lean more heavily towards them.
[00:28:29] So I wanna stay and I wanna talk more about challenges right now. What do you think is a common challenge? One that’s over overlooked by majority of the space.
[00:28:38]Emily Paxhia: Um, I think what is overlooked? That’s a good question. Recruiting talent is a definite challenge and it’s been made harder by this whole great resignation thing.
[00:28:50] And the fact that the workforce has been disrupted. So there’s, there’s a lot of pain points around that, but even just yesterday, I was I in park city and I was getting a ride [00:29:00] from an Uber and the. Fellow had owned a chain of, um, suit stores along. It’s a third generation chain of suit stores in the area.
[00:29:10] And he was saying, hi, his son just took it over from him. And now he’s in retirement, driving Uber for fun, uh, nicest guy. But he was saying like, even them, they’re having trouble sourcing people to work in the, in the stores, just a tough time to hire and attract talent. And, um, you know, some of the companies I work with are now these big.
[00:29:30] Billion dollar companies in cannabis, and they’re having a hard time recruiting talent into the C-suite. Um, cuz they are really trying to make efforts to attract people from consumer products, companies or other companies or wine and spirits companies. And um, And it’s just very competitive and you know, the cannabis stocks have been down and they’ve been down for a while.
[00:29:53] And when one of your biggest recruiting potentials, and, and this is, this is where psychology comes into [00:30:00] play on. All of this is if I were getting recruited into one of these companies and my Stripe price of my, of my, um, in, so in my compensation package at the stock at this price were at this price, I would be like, this is a steal.
[00:30:14] A steal, like you don’t wanna be getting the stock at $20 when you could have gotten it at four. Right? So, I mean, it’s just one of those things where, but I, but this is the psychology of buy high sell low because people panic and they can’t see what, you know, what’s happening next. Um, but anyone who’s a conviction person that would be really great to be hired into one of these companies, be able to get your stock packages at these levels.
[00:30:36] It’s really an, um, you could realize enormous potential upside on
[00:30:40]Bryan Fields: that, but. Yeah. And as we’ve seen, maybe even pretty quickly, right. We’ve seen the market move pretty fast. I mean, unfortunately in both directions, but yeah, you’re right. It is an enticing sum. So I’m, I’m wondering, why do you think the outside industry C-suite is hesitant to kind of dive into the space?
[00:30:54] Is it the regulations? Is it the unknown aspect? Is it the federal legalization? What, what areas do you think is the biggest [00:31:00] deter for them? um,
[00:31:02]Emily Paxhia: yes. I think that’s a good answer. Perfect. All of the things that you just said, um, it’s the unknown aspect of it. You know, when you recruit from corporations, you have to find someone who’s kind of like the entrepreneur in a corporation to come over to these companies.
[00:31:18] Cuz even if you look at the biggest ones in the industry, they’re still startups. They’re just startups doing. Over hundreds of millions of dollars a year, hundreds of millions of dollars of EBITDA a year. And so, but they’re startups. I mean, they really are. I mean, that’s, they are so young in the, in the arc of businesses.
[00:31:37] And so, you know, you do have to find them more entrepreneurial people from corporations, otherwise. A cor of truly corporate person is going to struggle in this industry because the infrastructure is not there. And, um, which I actually think is great because it’s like, if you can find somebody who’s helped to shape these businesses and is ready to dive in and do it again, that’s the kind [00:32:00] of person you want.
[00:32:00] You don’t want somebody that’s going to. Look to their left and look to their right and be like, well, where are the 400 people who are going to do my job for me? You know, and make me look smart. Like you want these people to be people who are rolling up their sleeves and diving in. So I think that’s, that’s one of the tough things is just getting the right profile of, of a human being.
[00:32:19] And then I do think that it’s incredibly intimidating and the let’s face it. It’s. It’s been, we went through a 25 month bear cycle on the stock market, and then we had a brief, a very brief run up of a bull cycle. And then we’ve been right back in this bear cycle since the end of last February. And, um, It’s tough.
[00:32:43] It’s tough to, it’s tough to tell somebody that emerging market cycles like this are condensed and they’re tight and they’re difficult and are exacerbated by the political theatrics that we’re watching, especially by the Democrats. But it’s, and [00:33:00] gosh, it’s so tough, but it’s like, so it’s tough to debunk the fear that these folks might have.
[00:33:04] So you just have to be high conviction on the fundamentals of the business.
[00:33:09]Bryan Fields: What is one idea, fact or statistic that most individuals who work in the cannabis industry wouldn’t know
[00:33:23]Emily Paxhia: that they wouldn’t know. I think one of the statistics that people wouldn’t realize is how that there’s like really one to two to three actual insurance center writers. That’ll touch the industry. And that out. Yeah, the hard . Yeah. And I, I think one of the biggest issues that was gonna be one of the, and I think what people don’t realize is how that affects the cost of doing business is when you can’t have ordinary business services, like a or normal insurance, I mean, we talk about banking all the time, but the insurance piece is, is one of the UN on fortunate side effects.
[00:33:55] So I would say that, and that like our insurance premiums are, I mean, what we [00:34:00] pay for insurance has gotta be at least like 300. X, what other people pay in other businesses in many instances more?
[00:34:08]Bryan Fields: Yeah, that one, that one hits a, a sore spot for us. Uh, pretty pretty recently. All right. Let’s, let’s do a quick, rapid fire, one guest from your high rise podcast that wowed you.
[00:34:21]Emily Paxhia: Andrea cabal from ascend. I mean, obviously I’m in, I’m on the board of ascend, but Andrea cabal was the sheriff in, in the Boston area. Um, and she came, I mean, to see a law enforcement person come over to the industry, I feel like I, I can never hear her story enough. It’s totally inspiring. And she. Really stepped up and, and made a difference in the community.
[00:34:45] And, and she also has illuminated, um, me a lot of things around, um, micro lending in ways we could think about providing more support to equity applicants, other than just handing out licenses or, [00:35:00] or talking about handing out licenses. Holding up the process, which is really what happens at each state level.
[00:35:06] But, um, yeah, she is somebody who really has always wowed me
[00:35:10]Bryan Fields: favorite under the radar cannabis company or brand that you think will explode over the next two years. Mm-hmm um,
[00:35:19]Emily Paxhia: Well, so I full disclosure, I’m an investor, but I think this company called wonder the way they do their beverages is my it’s my favorite beverage.
[00:35:27] I actually, um, not only am I investor I’m also a client. No, but I, you know, I keep, I keep ’em in the, in the cupboard. I, I keep ’em in the fridge. I think. The way they’ve approached their taste profile and everything. I think it’s, it’s about to have a moment. They’re seeing great growth in California, where they are.
[00:35:44] So
[00:35:45]Bryan Fields: would you trade no cannabis consumption for 10 years for the Buffalo bills to play in the super bowl?
[00:35:52]Emily Paxhia: sorry. Bills. I gotta keep my endo cannabinoid system cruising along here. I feel it what’s another 10 years. [00:36:00] right.
[00:36:03]Bryan Fields: your state that you have your eye on?
[00:36:07]Emily Paxhia: Alabama.
[00:36:09]Bryan Fields: Ooh, that is an interesting answer. I like it.
[00:36:11] Why?
[00:36:14]Emily Paxhia: Uh, Alabama has a deep culture of, uh, agriculture, a deep history of agriculture. And I think there are some amazing, uh, enthusiasts who are multi-generational humans who are there. And I think, um, they’re thinking about it in an interesting way. So, and I like, I like the idea of doing something in Jeff’s session’s backyard.
[00:36:39]Bryan Fields: take that, Jeff. Yeah, I was not anticipating Alabama. Were you killing? No, not at all. I thought she was gonna say New York. I thought she was gonna say Florida. Ooh. All right. That’s where I thought you were
[00:36:48]Emily Paxhia: gonna say. Uh, I mean, obviously I, I mean, New York, I cannot wait for, but I just thought I’d bring in a different one for
[00:36:56]Bryan Fields: yeah, no, no, for sure.
[00:36:57] I mean, New York, we can have another conversation about [00:37:00] that, but it’s been, it’s been, it’s very sensitive topic for that. It’s been, it’s been disappointing, it’s been disappointing. Um, and I think we can all agree that
[00:37:07]Emily Paxhia: not as disappointing as New Jersey so far.
[00:37:10]Bryan Fields: Good point. I assume they would be kind of hand in hand disappointing.
[00:37:13] If we’re gonna be honest, I’ve been on the record for a bunch of times saying that I think the two of them will, will come online, closer together. And as we get into it, I’m getting, it’s been so long that I just
[00:37:22]Kellan FInney: feel bad taking shots at you now
[00:37:24]Bryan Fields: that’s fine. So let’s talk about east coast. What can east coast operators learn from California?
[00:37:33]Emily Paxhia: Uh, that competition will come more quickly and more fiercely than you can ever imagine. And it will come from every angle. But, um, so I would say you gotta level up your, your game in terms of your retail experience, your quality of product, your offering of product and your quality of branding.
[00:37:52]Kellan FInney: That’s well, that’s well
[00:37:52]Bryan Fields: said.
[00:37:53] Thanks. Based on your experience with operators in the space, what is one concept or idea you think up [00:38:00] majority of the individuals who operate in cannabis are not thinking about that should be thinking about
[00:38:05]Emily Paxhia: cannabis is a commodity. cannabis is a commodity, just like coffee. Beans are a commodity, but we all pay a lot of money for coffee.
[00:38:13] Don’t we? And I think that that’s the thing that we have and, and the same way as like a grape is a commodity, but a wine is. Very special and unique product. So I think the faster people can figure out how to build legitimate. Okay. So everyone, I, this is, this is a personal gripe. I have, I have a background in consulting on, on brand building.
[00:38:35] And so when I hear people just say the following, it’s all about brands I cringe because. Building brands is harder and more expensive than anyone really realizes. And that’s why there are big conglomerate consumer products companies, because they have the time and the, and the resources to build brands or to buy them.
[00:38:54] And you saw this massive consolidation in beer. You’ve seen it in wine and spirits. You’ve seen it in even [00:39:00] cereal for God’s sakes. So. This is not something to ignore, but you, but I think every company is going to have to level up a more sophisticated and, um, segmented brand strategy, and then really stand behind the quality and what those brands represent.
[00:39:16] So if it’s a, supposed to be more of an affordable and accessible product, Then get really clear on that. If it’s supposed to be a more premium and unique product, then get behind that. If it’s targeting a certain gender, get behind that. So, um, I think that everyone’s gonna have to level it up because, um, you know, CA California absolutely inverted this year on the very fact that cannabis is a commodity and without, um, better brand and retail strategies around it.
[00:39:44] I mean, California, to be fair though. We have less than a thousand legal retail locations in a state that is the fifth largest economy of the world. So that is a joke and that’s a regulatory challenge. [00:40:00] Um, so the things that happen in California, you can’t blame. I, I, I can’t blame on the operators. All I can blame it on is the fact that we have a very, um, complex and sophisticated illicit market.
[00:40:11] That’s very competitive. And not enough, uh, ways to get the product to the consumer. But all that being said, cannabis is a commodity. Whether we like it or not. And the way that you get around commoditization is to create unique experiences in brands.
[00:40:26]Bryan Fields: What’s your feeling on the cannabis consumption lounges.
[00:40:31]Emily Paxhia: you know, from an investment standpoint or from an, a person who would attend , um, from an investment standpoint, if it’s an, if it’s a part of existing infrastructure and you’re kind of funneling it as a additional sales channel and additional way to, it’s almost like marketing that generates revenue, then I’m very for it as an investor.
[00:40:52] When I. See an individual, uh, consumption lounge. I get nervous cuz it feels to me like hospitality or restaurants, which [00:41:00] have an enormous rate of failure. Yeah, yeah.
[00:41:02]Kellan FInney: Like a bar, you know what I mean? It’s hard to franchise, something like that,
[00:41:07]Emily Paxhia: you know? Yeah. But I mean, again, getting back to the coffee thing, if you can figure out how to use yeah, exactly.
[00:41:16]Bryan Fields: Favorite product, favorite product category over the next two to five years.
[00:41:22]Emily Paxhia: I am into beverage. I’m watching beverage I’m into it. Um, I think vape I’m very into vape and I think there’s ways we can continue to grow and evolve around vape and technology that can be invented that can or improved upon.
[00:41:36] And I think it’s, it’s, it’s a great category. And I, I hated when we threw the baby out with the bath water on that, um, because of the hysteria around it, which. Misguided and the media blew it out of proportion and it was really too bad. Uh, I mean, I even hated on the e-cigarette side because I know people went back to smoking cigarettes more than ever, and that’s a terrible outcome.
[00:41:56] Um, if you just look at the health data, so I’m very pro for [00:42:00] vape, and I think you can do a lot getting back to the point about building kind of a moat around pricing and, and avoiding commoditization. I think that that’s one way you can do it.
[00:42:09]Bryan Fields: Speaking of vape. So REPI, is that how you say
[00:42:12]Kellan FInney: that company?
[00:42:13] Yes. They’re aerosol, right? It’s like, uh, the same technology that you would use for an inhaler, right? Mm-hmm . I understand that right now they’re targeting it as a medicine, which they should, but is that something that’s ever gonna be released as like a commercially viable way for a consumer to inhale cannabinoids?
[00:42:31] Uh, I mean, for right, you wouldn’t even have to worry about any of these negative side effects and like it’s gonna take a special machine to make the, the, the aerosol version of it. So like, there’s gonna be like, at least kind of like a paywall there from bad actors,
[00:42:44]Emily Paxhia: right. Yeah. So it’s funny you say that because when I was giving that answer, REPI was in my mind a hundred percent.
[00:42:51] I’m very excited for that company. , I’m very excited about that company. So for tho for those at home who do not know, um, REPI has a [00:43:00] technology platform where it’s a. Really a no heat, uh, product. And yes, there are multiple ways that this technology can be applied from everything from vitamin, um, intake to certain medications.
[00:43:14] Um, and of course cannabinoids. And so, um, it’s a very cool platform and you’re absolutely right. It’s not just the device, but it’s also the technology that goes into the form factor that would go into, like, for example, if it was like, Just for easy analog. If it was like a PAC era type device, you’d have a, a device with a pod system and the what’s in the pod.
[00:43:37] So there’s technology in the pod, there’s technology in the formulation for the pod and there’s technology in the product, the actual hardware. So it’s all really interest. Thing. And I think, um, you know, as somebody who does like consuming by vape, but would prefer it to be even healthier, then I think that that’s a really great thing.
[00:43:55] And you know, I am a vegan, so I get B12 shots. But [00:44:00] from what I understand an absorption through a device like that, a B12 could be. You know more by, because you, a lot of people can’t absorb, this is a total tangent, but you can’t absorb B 12 by like vitamin form, um, by like sublinguals or even capsules.
[00:44:15] But, um, through obviously injections, you can, but maybe they’re thinking through inhalation, things like that would be more available and I hate needles. So if you know, I could have available through that, it would be a real game changer. Um, so. I’m really excited about rara, great team. Um, the COO the founder is a really inspiring, um, C he’s just an inspiring innovator and love working with him.
[00:44:40] And then the COO actually came from S. Smokeless tobacco division from, for like 20 years. And so he’s a really incredible human I’ve known him for years. And, um, actually he was part of our diligence process to invest into that company. And, and it’s so great to see them working together as a pair. So that is cool.[00:45:00]
[00:45:00] Great team. Yeah. Sounds like they nice
[00:45:02]Bryan Fields: up. They have a nice IP stack. Also. It sounds like, yeah. I mean like their technology
[00:45:06]Kellan FInney: and I’ve always like, you know what I mean? I heard about that maybe at a conference, like three or four years ago, they were talking about it, this pharmaceutical, uh, Monica, Val, I always messed up her last name, but she was talking about it and I was like, that is
[00:45:19]Bryan Fields: definitely the future for sure.
[00:45:21] So
[00:45:21]Emily Paxhia: yeah, it’s, they’ve been in stealth mode for a little bit, you know, while they continue, which is smart, right? Yeah. Like. Yeah, but I, I love that one. I’m really excited about it. Can’t wait for that to be in the market. So
[00:45:35]Bryan Fields: since you’ve been in the Canna industry, what has been the biggest misconception?
[00:45:41]Emily Paxhia: um, that the people who work at cannabis companies are quote unquote stoners.
[00:45:45] Um, and so first of all, I’ll start by saying, I, I love stoners. And I think that the word in a pejorative sense is misused terribly. And I think all of us should honor and respect the people who built this long before we felt safe [00:46:00] enough to get involved. And so I have a lot of respect for the people who came before me.
[00:46:04] Um, and I think that. The people I know in the cannabis industry are some of the most dedicated, highest achievers and like, seriously, I mean, Rosie mad and I are texting from like 5:00 AM my time on the Pacific coast till like, God, I feel like almost midnight her time on the east coast. And it’s like who’s up and working and working out out and doing, I mean, everybody I know is just like push, push, push, push, push, and you know, I’m based in San Francisco.
[00:46:33] And if anybody thinks. That, uh, there’s not a ton of cannabis consumption going on in these technology companies, then they’re out of their minds. I mean, one of our shops was right around the corner from Twitter and Uber and every day at lunchtime and after work, it was just like mine’s out the door. And it was all people who worked in technology.
[00:46:53] So I think that’s one of the big misconceptions. And I think yes, in our industry, people consume cannabis, but I [00:47:00] think that we all have to shift the way we think about what that means.
[00:47:03]Bryan Fields: Yeah, just really well said before we do predictions, we ask all of our guests, if you could sum up your experience in a main takeaway or lesson learned to pass onto the next generation, what would it be?
[00:47:16]Emily Paxhia: Uh, It’s going to be harder for longer than you could ever imagine. And you just have to really stay focused in order to get through it because, and you, you kind of have to love what you’re doing in order to get through it or else you’re not going to make it. I know there’s been a, quite a few fund managers who have come in and out of the industry.
[00:47:35] And if you’re in something that’s early and emerging for a quick. Turn, you’re not going to enjoy it and you’re not going to last. So you’ve gotta, you’ve gotta guard your lines and, and just be able to hang in there.
[00:47:50]Bryan Fields: Prediction time. Emily it’s 2027. What outside industry? Titan is the power player in the cannabis space.[00:48:00]
[00:48:08]Emily Paxhia: This is a good question. And I should have thought about this in advance. Um, I think it will be outside. Can, okay. Could we, could I give two answers? Yeah. Okay. Want. I just wanna give context. I do view the cannabis industry as it’s going to bifurcate where part of it is going to go very pharma. And I think that’s, I’m thinking 20, 27, is that far enough out?
[00:48:32] But I would say let’s go ahead and say it’s Pfizer because of some of the research we’re seeing on the positive benefits of cannabis with COVID. So I say on the pharma side and their
[00:48:42]Bryan Fields: acquisition, right? Yeah. And all their patents, which I don’t know why people don’t see there are thousands of them that they own.
[00:48:49]Emily Paxhia: so I’m gonna say Pfizer on the pharma side, and then outside player, I’m gonna say Diagio. Because I think that [00:49:00] beverage, and I think with gen GenZ, they’re going have to pay a lot more a gen tube. And I know they already are. We already know this, but I’m gonna say they’re going to get involved in a, in a big, big way.
[00:49:15] And they’re based out here in California. So they’re watching it. Definitely.
[00:49:21]Kellan FInney: I take care. I just think that by 2027, I think that it’s just a no brainer. I mean, they’re already heavily involved with the industry from shipping packaging and equipment and everything else. I mean, I, when I was an operator, like we would have an Amazon order. Every single day show up at our door. Right.
[00:49:38] It’s just cheaper to buy things there. And I think that like, so they’re already technically involved as like a supporting player in the industry from like logistics. Right. And I think that it’s just gonna be so easy for them to, to just turn the, it’s just a switch right. Where they can now put cannabis in a box and ship it instead.
[00:49:55] Right now they can’t put cannabis in box and ship it knowingly at least. Right. So that’s [00:50:00] my guess. I think that they’ll like 20, 27 be shipping weed across at least. In in states for sure. Personally,
[00:50:08]Bryan Fields: Brian, see, those are good. This is gonna kind of put me in like a little, I like that. That was good. One.
[00:50:13] Amazon is a, is, is obviously good one, especially with their announcements. And they’ve been pretty vocal about their backing of cannabis, I guess for me, I’ll have to take Altria. Right. And I’m. Trying to take like a similar route where we’re close enough to the space where you can kind of see them moving in, obviously with their technology and their relationship with tobacco.
[00:50:30] And maybe if they make some more moves into the pharmaceutical space, they can kind of blend the two different spaces we talked about and they could be a big player given their infrastructure in the space,
[00:50:39]Kellan FInney: pouring a bunch of money into their aerosol vape, the development in Israel. So
[00:50:44]Bryan Fields: something to watch for sure, for sure.
[00:50:46] For sure. So Emily, for, for those who are interested in getting in touch or wanting to learn more, where can they reach you?
[00:50:53]Emily Paxhia: Uh, dot partners is our website. So you can send in inquiries through that. And then, uh, [00:51:00] you can follow us on Twitter at. Passid and invest, wait, ,
[00:51:05]Bryan Fields: I’ll link them all up in the show notes.
[00:51:06] It also on Twitter spaces too.
[00:51:09]Emily Paxhia: Yeah. Twitter spaces, Morgan and Tyler are doing the closing bell with Passid CC WP, uh, twice a week. So tune in it’s obviously at one o’clock Pacific four, o’clock Eastern. And, um, you, you can follow me on the high rise with SI Scott. That’s always a fun thing. And I’m PACS one at.
[00:51:29] Twitter. I’m pretty active on there, so. Awesome.
[00:51:31]Bryan Fields: Yeah, we’ll link all up in the notes. Thanks so much for your time. Thank you.
