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This week we are joined by Jason Wild Chairman of TerrAscend to discuss :
TerrAscend is a global cannabinoid company that delivers new and innovative products, formulations, and brands focused on the needs of patients and consumers. In New Jersey, we are working to maximize positive impact through our cannabis cultivation facility and medical cannabis dispensaries. Our focus is to improve access to quality medical cannabis and education for patients in a welcoming, non-judgmental environment.
About Jason Wild:
Jason Wild is the President and Chief Investment Officer of JW Asset Management, LLC, and the advisor for five investment partnerships with over $2 billion in assets under management. Mr. Wild received his license as a pharmacist in 1997, and subsequently founded JW Asset Management, LLC in 1998. The firm has a strong history of finding opportunities within the healthcare sector. He is a graduate of the Arnold and Marie Schwartz College of Pharmacy. Mr. Wild is the Chairman of the Board of TerrAscend Corp. and Arbor Pharmaceuticals. He is a board member of Vensun Pharmaceuticals and Vitruvias Therapeutics. Funds managed by JW Asset Management, LLC are the largest shareholders in TerrAscend Corp. Mr. Wild is also a board member of NETA NJ LLC where he will be actively involved in planning and directing the organization’s strategic and long-range goals.
At Eighth Revolution (8th Rev) we provide services from capital to cannabinoid and everything in between in the cannabinoid industry.
8th Revolution Cannabinoid Playbook is an Industry-leading report covering the entire cannabis supply chain
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 that episode of the dime I’m Brian Fields. And with me as always is Kellen Finney. And this week we’ve got a very special guest Jason Wilde chairman of Terreson. Jason, thanks for taking the time. How are you
[00:00:13]Kellan Finney: doing
[00:00:13]Jason Wild: today? Good. Good. How are you guys doing this morning?
[00:00:17]Kellan Finney: Doing well, Carolyn, how are you doing dude and wild dude.
[00:00:19] Well, looking forward to, uh, talking to Jason and pull down the west coast. I think it’s two east coasters
[00:00:24]Bryan Fields: we have today. Yeah. Jason, for the record, your location.
[00:00:29]Jason Wild: I’m in New York. Nice. So another
[00:00:31]Bryan Fields: coast there let the record state. So, so Jason, usually when we start, we ask our guests how they got into the space and kind of a little background about them, but I prefer to kind of switch it up today and ask more about, take us through a week, the different hats you wear and the different conversations and ideas that are going through that are on your, your plate.
[00:00:51]Jason Wild: Yeah. So in a given week, I mean, I, uh, so I run a fund, uh, I a spent probably a good amount of my time on, [00:01:00] on the fund. And then our largest position is where I spend another large percentage of my time. And that’s, uh, uh, by being the executive chairman of terror center. I mean, I look at it that, you know, that I look at it as, uh, that it deserves Harrison deserves, you know, 50% of my time because it’s about 50% of the fund.
[00:01:18] Uh, and that’s just sort of the. That it, uh, that, uh, plays out, uh, you know, on any given day, it might be, uh, you know, uh, more of one than the other, but I would say on the whole that’s, uh, that’s how I’ve been spending my time for the last, uh, the last few weeks. And what that means in terms of working for the.
[00:01:34] Uh, is, uh, talking to, uh, investors, uh, working on, uh, uh, bringing in some potential new investors, you know, in terms of marketing. Although I probably spend a lot less time on that than most other fund managers do. And then the other time on the fun side is just, uh, uh, dealing with and keeping up with and interacting with, uh, with the management teams at, uh, at, uh, the, [00:02:00] uh, the companies that we’re invested in or companies that were looking at investing in.
[00:02:04] Uh, and then as it relates to, uh, terrorists, then, uh, in any given day, it’s going to be, uh, talking, uh, multiple times per day, talking to our PR our new president and CEO. Oh, uh, uh, Ziad got him, uh, just about, you know, things that are going on in any given. Uh, for the last five days or so, I’ve been actually going down and spending a couple of hours at our, uh, brand new, uh, or newly open for rec dispensary in Maplewood, New Jersey.
[00:02:30] And I’ve actually just been like helping, you know, work the work, uh, you know, the lines and, uh, and, and, and help out there. Uh, and I just, uh, th that’s a great way to, you know, see the business in action and, and, you know, uh, just know, know a lot more about what’s going on. Uh, other things that I do for terrorists and.
[00:02:48] Uh, I’m very active on the M and a and business development front in terms of talking to new companies, uh, finding new companies for us to, uh, potentially acquire or, or partner [00:03:00] with, uh, and that there ends up being some, some, uh, connectivity, uh, between there’s a lot of companies that, uh, that I meet through the.
[00:03:08] Uh, and, um, if I think that they’d be an interesting partner or acquisition for a terrorist center, I will usually, um, flip that over and, uh, you know, sort of, uh, put on my, uh, my terrorist on hat and see if there’s something that we can, that we can do there. Um, so it’s, uh, a lot of it is, uh, you know, sort of, uh, borders over into, uh, you know, sometimes I’m doing two things at once, I guess.
[00:03:34]Bryan Fields: I love it. So let’s stay with terrace. And can you kind of take us like an overview about the company and kind of value brings to this space?
[00:03:41]Jason Wild: Sure. So the company I originally, uh, invested in the company back in 2017, they were actually a Canadian LP, you know, like the canopies and co rays of the world. Um, we let a $52 million investment private placement into the company, uh, which, uh, [00:04:00] actually canopy growth co-invested in that deal with me.
[00:04:04] Uh, and I became the, uh, the chairman. This was back at the end of 17, uh, at that point. Uh, on the fun side, we were only comfortable investing in, uh, in Canada. Uh, so we assumed that, uh, Sarah Stan would be, you know, that we would run it and just look for deals in Canada and everywhere, essentially, not at the U S because it was illegal, uh, you know, federally in the U S uh, about seven months later, or so we decided to pivot the company into the U S it was right when John painter went on the board of acreage.
[00:04:31] If there are, you know, if they’re going to rust anybody that could fill the rest of him before they, before they arrested. So, so we, uh, you know, we decided to move into the U S uh, our first acquisition was the apothecary dispensary chain in San Francisco, which is considered by many to be, you know, sort of the first of the really nice dispensary’s and, and, you know, out there in California, uh, and still, you know, some of the nicest dispensaries.
[00:04:56] So we acquired. Uh, in the spring of [00:05:00] 19, that’s when essentially terrorists then entered into the, uh, entered into the U S a few months later, we acquired one of the largest, uh, operators, uh, cultivators and manufacturers and retailer, uh, in, uh, Pennsylvania called Elara healthcare. Um, also around the same time or a little earlier, we had applied terrorist and had applied for a license in New Jersey in the summer of 18.
[00:05:23] Uh, and we actually came in number one or number two by score out of 150 applicants. So we got a license for the Northern region of New Jersey, which is, you know, uh, believed by many, to be the best region of Jersey. Cause it has the most people and the biggest part of the economy. So that is, uh, those are the main, uh, states where we are now.
[00:05:43] In addition, uh, recently, uh, terror center acquired gage county. Which is one of the top operators in Michigan, and that was about a $450 million, uh, deal. Uh, so that is another, uh, large, uh, you know, uh, asset of ours, uh, you know, [00:06:00] our approach, which has been different. And I think, uh, most of the other, uh, multi-state operators.
[00:06:07] We decided, you know, three years ago or so that we didn’t want to just have lots of flags on the map and be able to say that we’re in, you know, 25 states or, or 20 states. Uh, our belief was always that the, the best way to build the best business, uh, is to. Be, uh, focused and only, uh, really, uh, enter a state.
[00:06:30] If we think that we can be one of the top, uh, you know, two or three players in that state over, you know, some short time period. Uh, and we felt that that would, uh, afford us the best margins because we build more scale in less places. Uh, and also it just give us the best chance of being a successful. You know, if we’re ever in four or five states, uh, which you know, where we are now, or we’re in five states, uh, and we’re competing with another, uh, operator that’s in 15 or 20, we think that there is a, you [00:07:00] know, an inherent advantage.
[00:07:02] Uh, the other thing, the other reason we, uh, do it this way is because our view is that, uh, if and when, uh, these states, uh, get more competitive, uh, especially if the limited license states where, you know, where we have most of our operations, uh, Our view was that when they got more competitive, uh, there might be a price at which, uh, a 20, uh, a grower that’s only in 15 or 20,000 square feet.
[00:07:27] Uh, they can’t, uh, turn a profit, but if we’re one of the most skilled operators in the state and we have more like a hundred thousand square feet of canopy, that we will still be able to have a sustainable profitable business. So that’s been the main, uh, I think that’s been the main difference. Uh, we’ve also been.
[00:07:47] You know, very, uh, what’s the word? I don’t know, picky in terms of, uh, acquisitions, uh, we’ve stayed away from the acquisitions that are, uh, you know, like of all the other say multi-state operators, uh, guess [00:08:00] I guess that would just. Go against the whole strategy that I, that I just mentioned of trying to be focused.
[00:08:05] Uh, and our view is that we’ll do best and we’ll be, we’ll be able to build out the map for ourselves over time, uh, the best way by going in and trying to pick, you know, uh, from the best operators in each specific state, like more, you know, essentially, uh, by, uh, different single state operators. And we feel like that’s the best way to build the strongest, the strongest.
[00:08:27] Yeah, I want to get into a little bit of the
[00:08:29]Kellan Finney: nuts and bolts of the business. So Tara center is vertically integrated,
[00:08:33]Jason Wild: meaning that it, uh,
[00:08:35]Kellan Finney: operates in every sector of the supply chain from seed to sale, if you will. So what aspect of the cannabis supply chain do you believe your organization is
[00:08:43]Jason Wild: the strongest at right now?
[00:08:45] Jason? Good question. I mean, you know, I look at it as, you know, pretty much there’s cultivation, manufacturing, and then there’s. Uh, and I, uh, I don’t want to come off sounding like, uh, arrogant, but I, but I, I feel like we’ve really focused a [00:09:00] lot on making sure that both of those sides of the business or, uh, the strongest that, that they could be, that they don’t sort of depend on the other side of the business.
[00:09:07] Um, so I mean, I think. Apothecary in a dispensary chain, which is now, you know, we have a five in California and six, uh, in Pennsylvania and, uh, two going on three in New Jersey. Uh, I think, I truly believe that they are amongst the best dispensaries in the, uh, in the country. Uh, and when it comes to cultivation and manufacturing, I feel like.
[00:09:30] Very strong there because, uh, I guess we’ve focused on it. And we really, really, uh, you know, uh, have a, uh, w we, we placed high importance upon, uh, making sure that we produce the highest quality, uh, flour that, that we can. And that is, uh, that’s easy to say. Uh, it’s a lot harder to actually do, uh, growing cannabis, especially when you’re trying to grow amongst the best cannabis in the.[00:10:00]
[00:10:00] Uh, it is a very, very difficult, uh, and, uh, you know, there are, you know, there’s, there’s tons of powers that were out there of, uh, of different groves that have had, uh, you know, different, different issues. Uh, I can tell you firsthand that it is a, uh, it’s a really, uh, it’s a really tough, a tough thing to do to grow, uh, you know, the cannabis that sort of the, the, the true kind of soars, uh, think is great.
[00:10:28] Uh, but we think that that is the most important part of the market. Uh, in my view, like the 20, 80 rule as it applies to cannabis is 20% of the people buy, you know, 80% of the cannabis. And I would say that the majority of them. High-quality uh, you know, they’re kind of stores of high-quality, uh, indoor, uh, flour.
[00:10:49] And that is really, uh, the consumer that we are looking to, uh, uh, appeal the most to, uh, because, uh, you know, I guess they’re probably 80% of the products, right. Um, so [00:11:00] that’s what we’ve done on the cultivation and manufacturing side. And I think that we. Uh, where, you know, uh, amongst the best at that, but always, always looking to get better.
[00:11:10]Kellan Finney: What’s your favorite portion of the supply chain?
[00:11:12]Jason Wild: What’s my favorite. I love the, I love the cultivation side. I just love, you know, I remember the first time I ever went to out to, uh, grow up in Canada, back in 2014, just like the, the smells just like hitting me like a ton of bricks when I walked in and ever since then, I still get, I mean, I go out to our Rutgers, you just sell them.
[00:11:31] Uh, I’m not there at least every week. And every time I walk in the door, it like, uh, I still get the same feeling when that, when that smell hits me in the face. So I love that. That’s incredible.
[00:11:40]Bryan Fields: I want to stay on Jersey. I saw you say that when there was a pause between the announcement that tariffs on one, the license, I want to know what that feeling was like in that pause.
[00:11:51] And then what you felt emotionally after they announced Harrison and then expanding on. What’s the next step. Take us [00:12:00] inside that room. Is it, how do we deploy New Jersey and get everything ready to go? Or are you focused on Maryland, Michigan and other states for expansion?
[00:12:09]Jason Wild: Sure. So, yeah, I’ll tell you inside that, uh, uh, or on that call, it was, it was interesting.
[00:12:15] They had already gone through like the other six operators that they are, that they approved. And the process was, I believe that the chairman would, uh, would, you know, uh, state the name of the operator and say, buy, have a motion to approve. And then somebody would come on. It must have already been chosen.
[00:12:31] Who was, you know, which other commissioner would say a motion to approve and then they would vote. And then they got. to TerrAscend And we felt really good about, uh, you know, getting approved, even if it was a smaller number than seven, uh, you know, ended up, uh, getting there. Uh, and they said, uh, uh, the TerrAscend end and, uh, the chair woman said, uh, do I have a motion?
[00:12:51] To approve and nobody like said anything and it felt to me like, you know, it must’ve been like, you know, 10 seconds. It felt to me, [00:13:00] like, I was like, like, I don’t know, everything, everything froze. I went through all these emotions. I was like, you know, did my line just die? Uh, you know, like I wanted somebody to jump in and say something, but then it meant, you know, at some point, if they said something, then it meant that it wasn’t just my phone that died, which I was almost hoping that.
[00:13:18] Uh, and it actually even took me to tell you the truth, you know, this, uh, you know, it might be a little insight, uh, or, uh, you know, it feels like a little bit of a therapy session here talking about it, but it actually took me back for some reason to like high school and feeling like everybody, like. Went out and went to the party and like, they left me at home and I was still alive, you know, sitting there waiting by the, waiting by the phone or something like that.
[00:13:45] And all of that happened in 10 seconds or so. And then, uh, and then, uh, the chairwoman repeated it again. And somebody came on and said, uh, you know, I make a motion. Yeah,
[00:13:55]Bryan Fields: it’s gotta be just overwhelming joy, knowing, you know, the types of [00:14:00] investments that went into it, the emotional investment and knowing that obviously the east coast is, is a massive opportunity.
[00:14:05] And then exactly like you’re saying, if everyone else is kind of planting their flags, that’s definitely where you want to compete. So staying on that after, after it’s approved, are you looking for other opportunities, like take us through the strategy for you and the role you play with.
[00:14:18]Jason Wild: Yeah, absolutely.
[00:14:19] So New Jersey. I mean, what I was so excited about is that we have been spending, you know, we’ve spent, uh, you know, about $40 million of the last, uh, over the last three years or so building out our facility, uh, we didn’t know originally that it was going to go, uh, that wreck was going to be on the ballot, but that was obviously a huge positive for us, uh, when we, uh, when that happened to a year and a half or so ago, uh, and we had been ready and we thought the program was going to launch, you know, in the second half of last year.
[00:14:46] So, and. You know, we were building up supply and getting it’s like every time it got delayed, uh, even though we, you know, Sort of intellectually, we knew that it was going to come at some point it’s like, it [00:15:00] almost felt like it was, it was never going to come her. I wasn’t going to believe it until it actually happened.
[00:15:04] Um, so having, you know, having that phone, uh, was just a huge relief, uh, and it ended up being, it was, it was a little bit, you know, I guess better than expected because we, uh, we were going to be able to launch within like, uh, uh, like after that vote, we launched, I think like eight days later or something.
[00:15:23] Originally there was supposed to be a 30 day notice period. And that’s when we were going to go be able to tie up all the loose ends and be able to, you know, manufacture at you. Don’t want to manufacture everything. I guess if it gets delayed, then the product, you know, could expire and all the rest. So, uh, we originally thought we were gonna have 30 days to, you know, run a hundred miles an hour, but it ended up that it was going to be seven or eight, uh, and you know, uh, Ziad our new president and the team really pulled together, uh, that digital.
[00:15:49] Daily, uh, daily meetings about, uh, what they needed to do to be ready. Uh, and you know, we opened up, uh, we opened up last week, last, uh, last Thursday. [00:16:00] And it’s been as you know, uh, it’s been as amazing as we thought it would. Uh, we had worked on lots of, uh, different scenarios and things that could go wrong.
[00:16:09] And we knew that some things would just pop up that we hadn’t thought of, uh, necessarily, but it actually knock on wood, everything. Everything went really well and came off without a hitch. And I think part of it was, you know, and being out there w which, which is, what’s been so amazing, is like, like, I dunno, who’s more excited.
[00:16:27] Uh, our staff out there, or the customers that are coming to this. I guess it’s not like, you know, on the west coast, you know, so tons of people have already been to legal dispensaries. They’re on the east coast. The majority of people have not, and you just see them, you know, they can’t see into the dispensary from the outside.
[00:16:43] So you see them walking through the door and they get through the doorway and their eyes just sort of get big. And they’re so, uh, and they’re just so excited and everybody is like, everybody’s been in a great mood. We’ve been able to get these long lines, but we’ve been able to get. You know, through the doors, uh, and you know, [00:17:00] uh, past the registers and all that really, really quickly.
[00:17:02] I mean, I think we were pumping through her, like, uh, you know, uh, like a thousand patients, not patients, I’m still thinking a medical, a thousand customers per day, uh, at the dispensary where, where I was working over and over a Maplewood. So I’m going to keep, that’s a huge opportunity for tower San, because we don’t have, you know, back to our strategy of not wanting to go deep.
[00:17:24] You know, we wanted to go deep in that. We don’t have a big footprint. And so New Jersey where, you know, we aim to be one of the, one of the top one or two players. Uh, it has so much more of an impact on our numbers and we’re so much more leveraged to Jersey than, you know, all of the other, uh, uh, operators that are, that are.
[00:17:44] So definitely I have definitely been focusing, uh, even after the approval focusing a ton of my time and attention there. Uh, but you know, like being in this business, you gotta, you have to keep a lot of balls in the air and certainly Maryland. We are building a large-scale [00:18:00] facility down there that should be.
[00:18:02] Uh, or it should be operational at least, uh, in, um, you know, uh, the late summer of this year, uh, hopefully, uh, rec will be on the ballot in Maryland. It looks like it will be. So that could be a state that turns a wreck, say, you know, sometime, uh, next year, uh, Pennsylvania, where we have, uh, uh, our largest power facility, uh, there is, uh, a lot of talks that that will be.
[00:18:25] Going, uh, go rec next year as well that that’ll be done legislatively. Cause I think they can’t do it with ballot. Uh, but you know, um, you know, you got to, uh, w you still have to focus on, uh, all aspects of the bit of the business, even though New Jersey is now generating, you know, many multiples, uh, uh, per day or per month versus what it was.
[00:18:46] Uh, you know, we still, uh, we still have to be able to, uh, uh, pay attention to, uh, to the other places. And we’re still, and that’s what we’re still, we’re still doing. I think, uh, I think that it’s going to be, you know, our portfolio. [00:19:00] What, what, what excites me overall about our portfolio is that it is, um, it’s sort of like if you look at it like a, uh, uh, uh, MBA basketball team we at, because we have all of these states that are medical going to.
[00:19:14] Uh, wreck and in Michigan we have, uh, you know, Detroit still hasn’t gotten, even though the state of Michigan has gotten a wreck, uh, Detroit has not. And we have, uh, we have, uh, stores there. Uh, but in terms of. PA and Maryland, it’s like, to me, those are, those are all states that are, that are medical or in the case of Jersey was, uh, where you can eat while you dream under the medical program and, you know, make good money.
[00:19:39] And then when rec comes, you know, your, your business, you know, hopefully goes up, uh, you know, four or five X. So I started looking at it. Uh, our portfolio folio is like a team of, uh, first round draft picks, uh, that are, uh, you know, you know, that they’re going to have a huge future and they’re awesome now, but you know that they’re going to be even better in, uh, in five years.
[00:19:59][00:20:00] And you compare that to, you know, a lot of the other footprints that most of the other operators, they have more, uh, you know, assets or they’re in more states where it’s already gone. Which means that, you know, sort of by definition, there were already a, the most mature, a mature markets. So, um, that’s, uh, that’s very exciting to me when I feel like we have a very, a long runway of growth for, for many years.
[00:20:22] So from
[00:20:23]Kellan Finney: a strategy standpoint, the medical dispensary, uh, aspect of entering a state has to be huge from a. Managing manufacturing and production. Right? Because I was just thinking of like the dialogue that goes on with the state, when they’re, they have to tell you exactly the date that they’re going
[00:20:39]Jason Wild: to let recreational sales.
[00:20:42] Go through
[00:20:43]Kellan Finney: because I mean, cannabis doesn’t grow overnight, right? Like you guys have to take weeks and weeks to grow it, to prep it, to get a tested, all these other things. So like, what is that dialogue like and how beneficial is it to be in a medical state operating to manage that
[00:20:58]Jason Wild: manufacturing aspect [00:21:00] before it turns rack?
[00:21:01] Yeah. So, I mean, I think being either being in these programs on their medical certainly gives you a bit. A big, I think leg up because also it must have these states that, you know, they let the first ones that they let operate as, as reca cultivators or stores or the medical operators. So, uh, so that’s definitely the best, uh, the best position to be.
[00:21:24] Uh, I mean, in terms of Jersey, I mean, we had, uh, I think we had like four or 5,000 pounds of flour, you know, uh, in our fall off waiting for, uh, waiting for. Uh, and you know, the, uh, we, we have, uh, we have companies here. We have our , which is our California brand. We have them out in, uh, in Jersey. They’re actually called, we’re not supposed to call them commies.
[00:21:45] I think they are called soft last inches medical programs.
[00:21:54] Then there’s differences between. Rec, uh, uh, I think those could be called companies. The new [00:22:00] rec gummies have to have like a, an imprint of like a warning sign in the gummy. So like, that’s actually why we haven’t launched the, our gummies yet. Uh, because, uh, you know, we just got that imprint, uh, you know, a couple of weeks ago we had to go get the mold made.
[00:22:15] I think it was made in China. Uh, and I believe it’s, uh, uh, at a port in, uh, maybe a new or something like that, uh, being taken that supposedly is going to get delivered today and we’ll be able to launch with our gummies, but you know, the whole thing with all of these, uh, you know, these are super complicated, uh, operations and the timing is, uh, has to be just right in terms of scheduling when you’re, uh, you know, uh, production.
[00:22:40] But that’s, what’s, that’s, what’s exciting to me because, you know, if you’re, uh, you know, if you care more about that than your competitors there, where you have, you know, uh, better people who are good at navigating complicated, uh, processes, then, you know, that’s what gives the better operators, uh, uh, You know, if we have, [00:23:00] uh, you know, hopefully we’ll have, uh, we’re going to be launching our, our concentrates line in Jersey, uh, hopefully next week.
[00:23:06] So that would be live resin babes and butters, batters shatter and all that kind of stuff. Uh, we think we will be the first ones on. Uh, if we do that will be, uh, that will be huge for us because we’re only going to really sell them in our own, in our own stores in Jersey. And that’s going to pull people from, you know, from all over the state.
[00:23:26] Uh, those are the kinds of things that, uh, that sort of get me, get me excited because. Uh, it’s just a matter of like, uh, everybody doing their job the right way. Uh, and you know, then things come together and put you at a, at a big advantage out in the market, especially in, uh, you know, uh, the overall the cannabis space has, uh, you know, our growth in cannabis has had, you know, slowed down a little starting last June when people started leaving the house, you know, and they had other things to had other things to do other than sit at home and you’re not smoke weed and they added other things then that like going to, you know, [00:24:00] restaurants and things like that.
[00:24:01] Um, so in a, uh, in, what’s not as easy of an environment as it was a year ago, uh, you know, when all the companies now don’t have the, the wind at their backs, uh, you know, what excites me is, uh, you know, if, you know, if, and when, when we’re, when we do things, uh, uh, when we can do things a little bit more efficiently, uh, you know, like that’s the, that’s the way that you felt the great brands like.
[00:24:29] Like, uh, you know, uh, great. The great things happen when you’re going through tougher times. Not when everything is easy for, for everybody, if that makes sense. Right. Fuels innovation too.
[00:24:41]Bryan Fields: So staying on Maryland, right based on the location is, is that like a key strategic move and understanding its location to the other east coast markets and the demographic kind of resembles similar Pennsylvania.
[00:24:51] So is there a interest to speed to market to get there, or is it more placement in the opportunity? Can you kind of shed more light?
[00:24:59]Jason Wild:[00:25:00] Sure. So Maryland is, we bought a smaller grow. A Cara leaf had to divest a cultivation facility because they bought a grassroots and you’re not allowed to have two. So we believed.
[00:25:12] Um, it was a good deal based upon, you know, the revenues and profits that were coming out of there, but it was, uh, not the size of, you know, I mentioned earlier that we always, we want to always aim to be the top in the top two or three in a market. And this facility is a small issue, but we got it for a good.
[00:25:32] Uh, in terms of the business that was doing, and really, uh, we also looked at it like we were buying a piece of paper that we can take and, you know, go out and build a much larger facility and, uh, you know, have it attached to that, to that license. Uh, and we entered Maryland, uh, last year through that acquisition with, uh, cultivation and manufacturing only, not with retail.
[00:25:51] So we, we we’re, we’re not, we’re not a verdict we’re not currently vertically integrated in Maryland. Uh, and our view was, uh, the, you know, there’s a four [00:26:00] dispensary cap. Uh, Maryland’s a little bit more over dispensary than other states. Like they have a, I think they have like around a hundred dispensary’s for 6 million people, uh, you know, compare that to Pennsylvania where there are like, I want to say 135 dispensaries for over 12 million people.
[00:26:19] So little more over dispensary, meaning an average dispensary does, uh, you know, probably three or 4 million in sales versus, you know, seven or eight and some other states. And we felt like we didn’t need to be in a rush to get to own the dispense. ’cause uh, the real prize was going to be wrapped when that came and we just felt like we wanted to be there by then.
[00:26:37] Um, so that’s, that’s what we, uh, that, that was the approach we took when we entered there. We just announced a few weeks ago that we’re buying our first dispensary, uh, in, um, it’s called the Allegheny medical it’s. It’s cool. I hadn’t really looked at the map of the U S uh, I dunno, closely, I guess, or understood that Maryland has a weird shape, like the Northwest corner of Maryland.[00:27:00]
[00:27:00] Super super skinny. Uh, and that’s where Allegheny medical is. I believe it’s within six miles of three different states. So if Maryland goes rec when we think it’s going to, uh, and we think it’s going to be before most of those other states that we border on, we think that that’s, uh, an amazing location, uh, and you know, we’re discussing.
[00:27:19] Multiple other dispensary acquisitions, uh, in Maryland, uh, so that we can get ourselves to that, uh, that cap of four. And we think that we’ll be there by the time that, um, that rec, uh, kicks in. So that was, that was the approach we took in Maryland. Um, I guess, you know, I guess the point is we will, we want to be vertically integrated, but you know, it doesn’t always work out that way where you can get it all in one place.
[00:27:42] And we will enter with cultivation and manufacturing first, but we will not enter with retail first because if you’re a retailer in an under-supplied market, you’re always going to be at a disadvantage because you’re only going to get products from the, uh, you know, from the other, the other players that are vertical.[00:28:00]
[00:28:00] If they have extra product they’re that they’re willing to sell you. So during like the, during the best times, you know, when the market is sort of, uh, earliest on, and there’s the most demand relative to. Uh, you’re at a major disadvantage, if you only all retail and you’re also at a disadvantage, if the market gets more mature and you’re competing with these vertically integrated operators that can afford to make less margin at retail because they’re making, you know, they’re making money on the manufacturing.
[00:28:29] If you’re, if you only have retail, you know, it’s really hard to compete, you know, from a price perspective, you and I think manufacturing, you can.
[00:28:37]Kellan Finney: Create more revenue streams
[00:28:39]Jason Wild: from like totalling and other opportunities to that create a better, like a more stable business from a
[00:28:44]Kellan Finney: startup perspective.
[00:28:45]Jason Wild: Diversified business. Yeah. Oh yeah. A hundred percent. What is one
[00:28:50]Bryan Fields: factor statistic that would shock 90% of the people who work in the cannabis industry?
[00:28:57]Jason Wild: Shit. You put, you’re putting me on the spot here. [00:29:00] One factor specific or a
[00:29:22]Bryan Fields: off? I think I’m in the 90%. I think that’s why I’m asking you what, that, that other 10% would know when the industry becomes global. Do you see overseas being a challenge?
[00:29:33] Let’s say for, for mass production.
[00:29:37]Jason Wild: Uh, no, I don’t think so. I don’t see that happening anytime soon. And I don’t think that. Like high quality flour. There’s no, um, there’s no reason to grow that or there’s no cost advantage. Let’s, let’s just talk about us, you know, people ask about, you know, interstate commerce and all that.
[00:29:54] Right. Um, and that a lot of this stuff’s going to come from California, but there is, uh, [00:30:00] you know, that’s because California has, you know, sort of perfect weather conditions and all of that, but there’s no advantage to growing super premium indoor flower in a warehouse in California. And. Shipping it Say to the east coast.
[00:30:12] So I, you know, our view, uh, for, you know, and for a lot of other reasons that we think, you know, high quality, premium flour, uh, is the way to go. Uh, but our view on interstate commerce is that that would be the least impacted, uh, by, uh, you know, interstate or, you know, sort of global, um, you know, commerce in, in, in the, uh, in the cannabis space.
[00:30:36] I think, I don’t think it’s going to happen anytime soon though. Uh, product coming in from, from overseas. I mean, even in terms of, uh, uh, pharmaceutical prescription drugs, like any controlled substances, uh, generally I need to be made in the U S you can ship in the API or the active pharmaceutical ingredient, but, uh, you can’t ship in, um, you know, [00:31:00] manufactured, uh, product, uh, into the U S and I think that that will probably, uh, remain the same or be similar.
[00:31:06] Uh, if cannabis was really.
[00:31:09]Bryan Fields: With your pharmaceutical experience, what can cannabis operators learn from? Let’s say the technology for a real-time process control to let’s say ensure a clean product to avoid recalls and other, other concepts like that in the future.
[00:31:23]Jason Wild: Yeah. I think that overall people from pharma, that what I find about, uh, when I, when I run into where, when I work with people that came out of pharma that are in the cannabis space, uh, Often a little bit of, uh, or there’s more of a focus on quality, uh, and safety.
[00:31:42] There is, uh, you know, like if somebody comes in from real estate or something like that, they don’t, I find the often there, those companies have less of a culture of, uh, of compliance, uh, and, and of quality. So I think that, I think that [00:32:00] overall, you know, there’s, there’s tons of things that having, uh, you know, more.
[00:32:04] Um, experienced people, uh, in cannabis, uh, where, where, where it helps, because these are essentially, you know, pharmaceutical manufacturing, plants. It’s just that they’re, you know, also a growing, uh, live, live, uh, plants. Um, but there, uh, there’s a ton of advantage to having people. We have, we have multiple people that are, uh, you know, uh, at all of our facilities that came out of, uh, that came out of pharma because they just understand the science, uh, uh, Um, but you know, I think that that varies from company to company.
[00:32:38] I have a quick question. So traditionally from a manufacturing
[00:32:43]Kellan Finney: perspective, pharma has a different set of guidelines. They have to follow, right from a CGMP perspective and nutraceuticals kind of have their own
[00:32:51]Jason Wild: rules that they follow. Yeah. Do you think that
[00:32:53]Kellan Finney: there’s going to be that hard line in cannabis from a recreational and medicinal standpoint?
[00:32:59] Um, [00:33:00] or do you think that they kind of should all follow the same
[00:33:02]Jason Wild: manufacturing guidelines? Yeah, I think they’ll all fall under the same guidelines for as, as long as the FDA doesn’t take control. You know of regulating, which, you know, I don’t see that happening anytime soon. Uh, but in the meantime, I th I think that they will stay the same because the biggest, the states are going to be the ones that are in control of the licensing.
[00:33:24] And these are the programs that they’ve already laid out, you know, whatever the medical program is. I mean, that was, uh, that’s, you know, you’re, you’re following, uh, uh, the state, uh, rules and it will, uh, my, my view is that it will remain that way in the future, even if we have, uh,
[00:33:41]Bryan Fields: When you started your journey in the cannabis space, what did you get?
[00:33:45] Right. But most importantly, what did you get wrong?
[00:33:49]Jason Wild: What did I get? Right. I got right that, you know, that there’s a huge demand for this product, that more and more people were going to be consuming it, uh, over time. [00:34:00] Uh, and you know, therefore this industry, uh, you know, had to win that it’s back from a gross perspective, especially relative to regular pharmaceuticals.
[00:34:09] But I guess I got wrong was, I mean, we did really well on the, you know, for the first four years we only did Canada. Uh, and my view was that that was going to be the. Uh, place that would be able to attract institutional investors and therefore, you know, the stocks would, uh, the stocks, you know, should, would do better than the U S ones.
[00:34:29] And that works really well over that period of time. Say from like 14 to, uh, to 18, uh, I guess I, uh, maybe in Canada, we outstayed our welcome, uh, a little bit too long. Like once I, once I realized that the Canadian market and the structure of the Canadian. Uh, was, you know, not conducive to being able to, you know, have a strongly profitable company.
[00:34:53] I probably stayed a little bit too long. Um, but you know, that was probably a mistake that we made, you know, as I mentioned, we [00:35:00] did, uh, we did pivot into, uh, into the. Uh, you know, starting in, uh, in 18 and 19. And I think, you know, I think that was definitely right. I mean, it’s like the us is the best market and practically, you know, every, every, every market, the U S is the best in terms of, uh, uh, the revenue potential and things like that.
[00:35:19] That’s definitely the case in, uh, in cannabis. And I think that, uh, you know, the fact that we were the only Canadian LP that pivoted, uh, fully into the U S. Which, you know, we had a choice to make, you know, some people thought we were crazy because we were going to be giving up, being able to be listed on a us exchange.
[00:35:38] You know, if we were, uh, actively involved in the U S uh, but to me that was a no brainer. It’s like the whole, uh, I told everybody that was on the first day after we made our fifth to $2 million investment a couple years earlier. Uh, The, uh, I think it’s a Warren buffet quote, uh, you know, long-term, the market is a voting machine and, uh, I’m sorry, short term, the market is a voting machine [00:36:00] as long-term, it’s a weighing machine.
[00:36:01] And the only way that we’re going to get paid is if we built something that weighs a lot. And to me, going into the U S that was built building the company, weighing machine and knowing that we can build the best business that we could. Uh, and we were giving up the voting machine. It’s.
[00:36:23] so all of these other companies that stayed up there, it was like, uh, they just sort of, uh, most of them had sort of died on the vine. It’s uh, it’s been an extremely, extremely difficult market up there.
[00:36:34]Bryan Fields: Yeah, it absolutely has. We’re sitting here a year from now. What has your team accomplished
[00:36:42]Jason Wild: or what has
[00:36:42]Bryan Fields: the modern, sorry, what has your team accomplished in let’s say one year.
[00:36:47]Jason Wild: Oh one year from now. Okay. Um, New Jersey will be, you know, uh, the, a huge driver of our business one year from now. Hopefully we have three stores that are, you know, run rating [00:37:00] in Jersey at over $40 million, uh, in re. Uh, and, you know, we should have a strong, uh, uh, wholesale business selling to the other, uh, uh, operators in the state as well.
[00:37:11] We will, uh, have, uh, uh, finished our, uh, expansion, uh, in, in New Jersey in terms of our cultivation, uh, expansion where we’re going to, uh, we’re going to over double our footprint there. Uh, so that’ll be in Jersey, Maryland, uh, you know, rec will live a. Started or be about to start and we’ll have that completed that facility and the, uh, be fully ready to be one of the top players, uh, uh, there in that market and Pennsylvania will be ready for, uh, we’ll be ready for, for rec as well.
[00:37:40] I mean, we have like three huge, huge drivers coming up, uh, over the next. You know, uh, Gage will, will be much larger than it is now. They’ve, uh, there’s some amazing deals out there for small to buy small mom and pop dispensary’s for like low single digit, uh, uh, EBITDA multiples. So we’ll be, we’ll go from 17 [00:38:00] dispensary’s right now to, I dunno, closer to closer to 30 or so.
[00:38:04] Uh, and you know, we just, the, the main thing is to just continue to. Uh, one of the best companies in the space from, from an operational perspective, uh, our view is, uh, we want, we don’t necessarily want to be the biggest cannabis company, uh, in, in the country. We want to be the best, uh, cannabis company in the country.
[00:38:26] And if we’re the best, there’s a good chance that at some point we’re going to be the biggest. Not necessarily by next year, but, uh, you know, I gotta, you know, I got like a 10 year, 10, 20 year, uh, you know, time for us.
[00:38:38]Bryan Fields: Let’s do a quick rapid fire product category. You’re most bullish on over the next five years.
[00:38:44]Jason Wild: Flour
[00:38:46]Bryan Fields: psychedelics as a medicine, yay or nay under the radar state, you have your eye on.
[00:38:54]Jason Wild: I can’t, I can’t, uh, if I, if I talk about[00:39:00]
[00:39:01] figure, uh, all the states sort of, uh, east, from Michigan going east towards New York and then up and down the east coast, there’s a bunch of good opportunities there.
[00:39:09]Bryan Fields: That’s fair. What mega policy causes more disruption in the cannabis industry, federal legalization or interstate commerce.
[00:39:18]Jason Wild: Ooh. Uh, federal legalization.
[00:39:24] That one’s tough because I don’t think interstate commerce will, interstate commerce would be phased in if we have legalization from the people that I’ve spoken to, uh, interstate commerce would be phased in over a three to five-year period. It makes sense
[00:39:37]Bryan Fields: with your experience in relationships, in this space, what is one area of the industry you think you think is completely untapped that eager entrepreneurs should consider to enter?
[00:39:49]Jason Wild: Hm, uh, cannabis, you know, the, the technology. Of, uh, of cannabis, you know, whether it’s, uh, you know, uh, software or, uh, or hardware in terms of gross [00:40:00] systems, things, things like that, you know, things that, uh, are actual, you know, major improvements and that are best in class products that, that, you know, can, that can help the industry be more, uh, more profitable.
[00:40:14]Bryan Fields: The biggest misconception since you’ve been in the cannabinoid.
[00:40:18]Jason Wild: Uh, biggest misconception just overall that like, uh, you know, I think this is all changing, but that like that people that are cannabis consumers, that they’re, you know, lazy and unmotivated, uh, you know, the people that I know that are in the cannabis industry and especially the ones that also consume cannabis, I find them to be, uh, you know, some of the hardest working, uh, you know, most, uh, you know, some of the most principled, uh, people, uh, that, that I’ve ever met and, and extremely.
[00:40:47] You know, uh, creative, uh, as well
[00:40:50]Bryan Fields: before we do predictions, we ask all of our guests, if you can sum up your experience in a main takeaway or lesson learned to pass on to the next generation, what would it be? [00:41:00]
[00:41:01]Jason Wild: Not around cannabis, just overall like life, lesson, uh, patients. You know, you don’t need to go at, you don’t need to be in your job.
[00:41:11] You don’t need to be a huge success within a one year or two years or five years. You know, it’s a long road I’ve been doing, you know, I’ve been running my fund now for 22 years, we started with it with 80 grand. Uh, and. You know, we D we didn’t hit a billion dollars in AUM and told, you know, like 20 years later.
[00:41:30] So I think the more patient that you could be, uh, you know, the more successful that you’re going to be in a sort of, one thing I would add to it, it’s sort of like, you know, don’t be focused on that. You need to make a lot of money, be focusing, be focused on being great at whatever you’re doing. And then the money is the by-product of that.
[00:41:48] That’s really
[00:41:49]Bryan Fields: well said. All right. Prediction time, Jason. The cannabis industry is fighting battles across multiple fronts between banking, stigma, and regulations. What negative [00:42:00] scenario or event keeps you up at night?
[00:42:03]Jason Wild: Oh, what keeps me up at night? Nothing. Uh, I, I, I think things can’t really be worse than they are right now in terms of, uh, things that, uh, sort of act as roadblocks all the time.
[00:42:16] Like. You know, having to do everything within the state and, uh, and all of these different regulators and, and things like that, like where we’re at a we’re at maximum, maximum level of difficulty right now. And I think that, I actually think, I think the thing, you know, get better in the, uh, in the coming years.
[00:42:35] Uh, so, you know, back to what I was saying earlier about tough times, Uh, making you stronger. There’s a, there’s a quote that I had read a few weeks ago that I thought was really good. I don’t know if I can get it right, but it’s, uh, something to the effect of, uh, hard times make strong men, strong men make good times, good times make a weak men and weak men make hard times.
[00:42:59] Uh, and [00:43:00] I think that we’re right now in the, you know, it’s all a cycle, I guess. Uh, I think we are in the right now. Hard times, you know, are going to make strong, uh, company. Uh, and then, you know, there should be some good times ahead, I guess, before, before things get, uh, before we screw it up. But yeah, that, that over the course of 20 or 30 years, uh, I think that we’re, uh, nothing, nothing really keeps me up at night other than just like, you know, sometimes I’ve gone to bed and I’m like, oh crap.
[00:43:26] I forgot to call back, you know, XYZ, like just have a million things to do, but there’s nothing that keeps me up at night from a, uh, you know, anxiety point of view. Uh, that’s a tough
[00:43:37]Kellan Finney: question. I would probably say
[00:43:39]Jason Wild: just, uh, global events that
[00:43:43]Kellan Finney: deter the attention of our politicians from pushing like federal legalization and baking through from a legislative standpoint, they have other things they’re worried
[00:43:53]Jason Wild: about, unfortunately right now.
[00:43:55] Yep. Yeah. I agree with that. I agree with that. I mean, it’s that sort of, I don’t know if that’s [00:44:00] what keeps me up at night, but it’s just sort of, it makes me sad that so many you. Americans are supportive of cannabis and that we just can’t, you know, in this country, we all seem to be able to get anything done federally.
[00:44:10] That, that definitely makes me sad. It’s crazy. Um, I’m, I’m more
[00:44:13]Bryan Fields: fearful, like another vape gate opportunity. I think something like that with like the negative stigma that comes with it, it’s just such a nother challenge to an industry that’s kind of. Like challenges on all unprecedent levels. So concepts like that kind of gave me concern because it kind of hurts the industry as a whole, even if it doesn’t have anything to do with, let’s say some of the bigger operators or some of the players that are doing things the right way in this space.
[00:44:36] And I think what we need right now is less of those like, uh, distraction techniques that hurt the politicians on the concepts and less of our friend, governor Rick is saying that if you legalize cannabis, it’ll kill your kids. And more people like yourself, Jason, that are champion like the industry and then the positive benefit.
[00:44:52] And hopefully some more of this research that comes out that allows people to kind of remove that,
[00:44:56]Jason Wild: that stigma. Yeah. I agree with that. [00:45:00] I absolutely agree with that. I guess the offset of that is, you know, there could be another vape gate or something like that, but I also think that. That in the coming years, we have data start to come out that, uh, about, you know, even more of the benefits of cannabis.
[00:45:14] Like, like I believe that that, that not only is say for, uh, for cancer, not only is it good, uh, for palliative care, but, but that, I think there’s going to be some studies that come out that, that show that CA that cannabis actually has. Anti-cancer anti-tumor. I think if we start seeing more of that data that, uh, you know, like, like I almost feel like there’s a better chance that that happens then that we have another vape or I hope, I hope that’s the case.
[00:45:40]Kellan Finney: I mean, that’s what the clinical trial and Israel is for. Right. They they’re showing that that one strain is very effective against a specific type of
[00:45:47]Jason Wild: cancer. Um, so yeah, absolutely. That’s a glioblastoma. I
[00:45:53]Kellan Finney: was, I was trying to think of it and I was looking to fumble over it. So I’m so glad she
[00:45:57]Jason Wild: remembered the name.
[00:45:57] I was like, well, is it again? [00:46:00] Yeah. Yeah. And that’s, uh, I mean, that is like at the drug company that I, that I mentioned earlier that we sold, we had one of the only, uh, approved products for glioblastoma and because it’s such an unmet need, it was the, you know, there wasn’t a, a real high, uh, hurdle that we had do.
[00:46:16] Uh, get past, I think we had a show that we extended life by like, you know, 30 days or something like that, which is not the best, but the, I mean, at least what I saw, I haven’t seen any data recently, which concerns me, but a couple of years ago I saw some, the data from the phase two trial, uh, that, uh, what’s the company in the UK that got sold to jazz.
[00:46:35] I’ll think of it as a second. They had a glioblastoma trial. We have THC. And, um, compared to the standard, the standard of care was a 350 day average. You know, life expectancy and the cannabis arm was 550 days. Oh, wow. That’s pretty powerful. Huge, especially for such a tough, tough, uh, type of cancer to treat so [00:47:00] TW farm and that’s how it was.
[00:47:01] Exactly. Yeah, yeah. Yeah. But they’ve been I’ve I haven’t heard much from how did it a couple of years. So sometimes when that happens to me and said, uh, you know, the phase three, didn’t go quite like the face to tip. Uh, but we’re going to, I believe we’ll start to see, uh, uh, other data, uh, in other. You know, uh, disease states that that shows, uh, you know, the benefit benefits as well.
[00:47:21]Bryan Fields: So Jason, for our listeners, they want to learn more and they want to try some Metayer sense products. Where can they find.
[00:47:27]Jason Wild: Sure. Cal in California, in Northern California, we have a three, three dispensaries in San Fran, one in Berkeley and one in Capitola. Uh, and PA we have, uh, six, uh, scattered. I’m not, I can’t, uh, uh, name all six locations, but scattered around Pennsylvania, uh, and in New Jersey.
[00:47:48] One dispensary and Philipsburg, which is on the Western edge of PA. And we’re actually like, like less than a hundred yards from the bridge that goes over to, uh, Bethlehem, Pennsylvania. So amazing location for rec or for anybody. Then you [00:48:00] get a PA that would want to come over. Uh, and, uh, our other location is in a.
[00:48:05] Uh, and we’re going to be opening a third location Jersey is we share the parking lot with the bot of being from the Sopranos. So we have very high hopes for that. Uh, for that site, it gets like 220,000 vehicles per day that, that drive by and everybody. Pretty much, you know, remember the bottom of being from the Sopranos and everybody’s sort of remembers it that’ll be our third location.
[00:48:27] And then in Michigan we have 17, uh, we have 17, dispensary’s pretty much covering, you know, uh, practically the whole state. Uh, so those are our locations. Those are, uh, the ones that Michigan are branded as either gage or cookies dispense. Uh, and then all the other ones are apothecary AMS, and we also have a cookies dispensary that we own in Toronto.
[00:48:49]Bryan Fields: I visited that facility. It’s an awesome facility and the people there are. Awesome. So appreciate you taking the time. Thanks so much, Jason.
[00:48:56]Jason Wild: Thank you. Thanks guys.
Action-Oriented problem solvers ready to go
As it stands today, the cannabis industry is incredibly challenging. Operating in the cannabis industry requires a skilled understanding of how the game is played and the foresight to balance how it is played today vs. in the future.
Given its current federally illegal status, large outside titans have taken on creative partnerships when placing bets on organizations within the business.
We’ve seen it with Molson Coors & Hexo, Anheuser-Busch & Tilray, and Altria & Cronos group.
Recently, we had Troy Datcher, CEO of The Parent Company on The Dime Podcast to discuss the industry and legalization.
When asked about federal legalization and how the status alters the viewpoint of the cannabis industry for large titans like Clorox, Pepsi, etc, he said:
“They’re going to acquire companies. Look, they want the benefit of owning it, but they’re not going to integrate. So, they’ll leave them on the sideline.”
He added: “I think none of them will integrate these companies into their portfolio right away.”
Why do they hesitate to integrate them into their portfolio? Is it because of the “cannabis stigma”?
On the flip side, the longer cannabis operates in a bubble, with limited licenses in key markets with massive potential, the longer the big fish continue to build their current moat without the potential fear of new, big challengers to the space.
Think about that… The way cannabis operates today, Curaleaf, Trulieve, Green Thumbs and other large MSOs are the biggest fish in the pond. Like the rockstar athletes at small private schools, they mostly compete amongst themselves with limited capacity. The markets they are expanding into are completely untapped. On day one, they are growing market share with massive upside. Some seem to believe that the leaders are working towards the greater good of the industry, while others argue that it essentially makes more business sense to work against it. For example, what may be best for the Curaleafs of the world may be counterintuitive to what is best for the cannabis industry.
When federal legalization occurs, their small private school will be sucked into the public school system with all of the biggest/strongest forces that run global empires with endless resources.
Some seem to believe that the leaders are working towards the greater good of the industry, while others argue that it essentially makes more business sense to work against it. For example, what may be best for the Curaleafs of the world may be counterintuitive to what is best for the cannabis industry.
Boris Jordan, Chairman of Curaleaf, doesn’t work for the cannabis industry. He works for the Curaleaf shareholders. Same idea applies to Kim River, Ben Kolver, etc. They likely want to improve the industry and right the wrongs of the war on drugs, but they also want to grow their moat and organization.
At the end of the day, aligning with those interests isn’t necessary. This is exactly how all other industries operate in which the CEO of a publicly-traded company doesn’t work for their respective industry. Instead, they work for the shareholders.
Do CEOs of vertically integrated cannabis companies want federal legalization? We know for certain that they want to continue to expand operations with limited competition, leveraging their advanced understanding of the industry’s nuances.
The next time that you go on Twitter to reply to one of them, as you are frustrated with their share price, or to respond to a question about federal legalization, remember they work for their shareholders and no one else.
“Does this drive shareholder value?” is likely the question that they are thinking when lobbying for a change in this industry.
Bryan Fields can be reached at @ [email protected]
Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.
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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 Vince Ning CEO & Co-Founder of Nabis to discuss :
Vince C. Ning, Co-CEO and Co-Founder, Nabis
Vince is Co-CEO and Co-Founder of Nabis, the leading licensed cannabis wholesale platform, supplying half a billion dollars worth of products per year by retail value for over 150 brands to thousands of retailers. With expertise forged at Microsoft and in his prior company later sold to Amazon, Vince is a world-class technologist and entrepreneur who has turned his focus to accelerating cannabis industry growth operationally and compliantly. Vince’s prowess in technology, finance and data analysis have made him an invaluable partner to top-tier cannabis brands across the state of California, where he has helped hundreds of businesses launch and scale. Through his leadership, Nabis, a Y Combinator-backed company, is poised to become the largest national cannabis B2B platform.
Vince, a 2021 Forbes 30 Under 30 executive, currently holds a position as a Board Director of the Cannabis Distribution Association (CDA) to help shape regulations for the betterment of the cannabis supply chain. He graduated from the University of Virginia with degrees in Computer Science, Economics and Statistics.
Nabis is the #1 licensed cannabis wholesaling platform in California, supporting over 150 exclusive brands and supplying the entire network of state-licensed dispensaries with top-tier products. Nabis offers clients lightning-fast fulfillment, warehousing, payment processing, financing, data analytics, sales and marketing services to enable more brands and retailers to innovate, launch and scale. Founded in 2018 by serial tech entrepreneurs Vince C. Ning and Jun S. Lee, Nabis is fueled by cutting-edge technology designed to support cannabis wholesaling between brands and retailers. Nabis works directly with its partners to streamline the regulated cannabis wholesaling process by leveraging actionable, industry-leading sales data and insights to help brands and retailers scale strategically. Learn more: nabis.com
At Eighth Revolution (8th Rev) we provide services from capital to cannabinoid and everything in between in the cannabinoid industry.
8th Revolution Cannabinoid Playbook is an Industry-leading report covering the entire cannabis supply chain
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 the episode of the dime I’m Brian Fields. And with me as always is Kellen Finney. And this week we’ve got a very special guests, Vince Ning, CEO, and founder of Navis. Vince. Thanks for taking the time. How are you doing?
[00:00:14]Vince Ning: Good. Thanks for having me, Brian. It’s been doing well.
[00:00:17] I can’t complain.
[00:00:18]Bryan Fields: Kellan, how are you doing?
[00:00:19]Kellan FInney: I’m doing well, looking forward to talking to Vance and enjoying another west coast conversation for our listeners, is that where you’re located pans
[00:00:26]Vince Ning: out on the west coast. I’m calling in from San Francisco today. I’m in New York. Okay.
[00:00:33]Bryan Fields: I think we’re going to get into it today, but I think that Navis has some aspirations for the east coast as well.
[00:00:38] It’s going to take us a little while to get us up to speed, but we can dive into that. So Vince, for our listeners, can you give us a little background about you and how you got in the candidate?
[00:00:47]Vince Ning: Yeah. I, my background professionally comes from tech and so that’s where, I was trained in college, studied computer science, economics stats pretty quantitatively driven and same with my co-founder actually.
[00:00:58] And when we first moved [00:01:00] out to the west coast, it was actually to join. Tech companies. And so from there, we actually, all, we started out in corporate work in Microsoft, Facebook, just big tech run of the mill. And then from there started doing startups enterprise software as a service companies.
[00:01:13] I sold my last company to Amazon from there, wanted to work on something that was a bit more interesting than just software cannabis was just coming out of the fold in terms of recreational legalization. 2017 or 2018 was when first legal sales happen. So I was looking into the space had a friend who had a cannabis brand and I was just picking his brain one day.
[00:01:36] And I just wanted to meet more and more people in the industry because it was so fascinating to see such a huge industry. Com transition from the illicit markets at the legal market. And of course both my co-founder and I are we smoke weed and we, we were actually best friends growing up.
[00:01:50] Knowing him from high school, we would bond over and it just smoke a Wade. And so it was a kind of a fun passion project of ours to just do some [00:02:00] exploratory market research. New industry that just made a ton of sense. And we want it to just apply our tech skillset to the industry to see how we can help grow it.
[00:02:09] Just knowing how much the market was going to grow, how many operators there were going to be. We just felt there was going to be a lot of complexity and a lot of mess. And so what we wanted to do was get right in the middle of it, into the distribution side of the sector and try to streamline as much as possible.
[00:02:24] And so from that one friend who became our first customer as a brand through just word of mouth referrals, we just grew now to. Servicing over 150 exclusive brands on our platform. And we list them all on our B2B marketplace for retailers to be able to buy products from, vendors and suppliers that we work with.
[00:02:45] And some of our largest new, more notable brands include raw garden Amber valley plus ganja gold bloom. And one of the main values that we like to drive into the market is, of course, while we like to have, the big well-known brands on our platform, we also [00:03:00] really like to help the small operators as well.
[00:03:01] Major difference that you see. In our business versus in, another traditional distribute distributors businesses, we serve five times more brands than any other distribution platform. And it really, we have a strong motivation to helping out a lot of the smaller operators out there to help them be able to launch and scale and sustain.
[00:03:22]Bryan Fields: I’m fascinated by you and your co-founders background, especially with the big tech, right in Silicon valley. When you’re working for those big firms, you’re pushing innovation. And now in the cannabis industry, you’re chopping down the trees and really starting the path forward. So any hesitation to go from, let’s say, big Silicon valley tech to the cannabis.
[00:03:40]Vince Ning: Yeah. I In the beginning it was a lot of just I felt because cannabis, in every way in the back of everyone’s mind is just felt unsafe and insecure. That was definitely my initial, personal hesitation reservation coming into this space. When I, that’s why I started with just like a friend of mine who was in the space since I, we had trust and he [00:04:00] introduced me to more people and I trusted his introductions.
[00:04:02] And a lot of our business today as an infrastructure, as a service business is built on that customer trust. That lifeblood is. What else, what gives people more confidence to refer more customers to us? And that’s what makes this wheel spin. And apart from that, I we honestly thought it was a really cool space.
[00:04:16] The people in the industry were really genuine and real and authentic. The problems were very tangible. Coming from tech, you’re always staring at a screen. I can’t say I, I don’t always stare at a screen today. It w when you’re delivering products, like I started to doing the deliveries myself for better part of the first year of operations you get to touch and feel what your service is doing in the industry and how it’s actually helping.
[00:04:40] Move products from point a to point B safely and securely handling cash collections and processing that it’s a real business. Sometimes, I feel like software lives in the virtual realm and it’s hard to, it’s hard to I guess like it’s hard to touch and feel it.
[00:04:56] So that was something that was really fascinating to us just coming from. Yeah, that’s
[00:04:59]Kellan FInney:[00:05:00] super cool. I want to get into some of the nuances associated with taking the concept from inception, to actually like a fully functional platform. So in other Startup kind of software based industries.
[00:05:12] It’s, there’s not a ton of regulations. So how did you guys tackle all of the regulations and compliance and all of that associated with cannabis while designing the software platform to fit into that very complex environment, if
[00:05:26]Vince Ning: you will. Yeah. It’s almost the a, it’s almost the opposite, right?
[00:05:30] Like now tech is moving towards this whole web three trend where. It’s centralized and there’s no rules. And cannabis is the most regulated. I think fundamentally we came into the space and we honestly, there were people who said they were experts. We’re not experts because the regs had just come out.
[00:05:46] And everyone was on the same playing field. And we actually just had to read the regulations ourselves to interpret it. There were no, there was no court precedents or legal precedents or any rulings on how, various [00:06:00] phrases in the regulations were interpreted. And so we just had to go with our gut feeling understand that there were obviously risks and just be okay with it.
[00:06:08] A lot of that mentality back then, I think was just, we were small time. No one’s ever gonna really, turn the rock and try to get us out of the industry. Cause it’s not worth anyone’s time. But then as we got larger and larger we obviously had to get some lawyers involved and get a couple of additional opinions before we made decisions.
[00:06:25] I think though, when we still a lot of. Regulations and interpretations or and I guess, the decisions you make against those are judgment calls. And w when it comes down to it, it, for us we really just think about our main stakeholders. It’s what do our customers want?
[00:06:42] What makes sense? As, as a, from a business standpoint and then how does it affect, our team? How does it affect our shareholders, our own profitability? And then we just make a sound decision based on those main things, but it really comes down to, what the customer wants.
[00:06:55] Just because I think we. Th that’s like our golden compass in terms of how [00:07:00] how we prioritize decisions.
[00:07:02]Bryan Fields: It’s very smart. So let’s stay in like the early days, take us through what the business plan looked like, and then pitching those initial customers to get them on board with the service and then the iterations and the scaling process, because the complexity of what you’re doing is really challenging.
[00:07:15] And I think some people don’t understand how many variables are being handled at the same.
[00:07:20]Vince Ning: Yeah. The first customers, it, again, it comes back to just what the customer needs. And back then we didn’t have our, B2B marketplace. We didn’t build like a Navis capital solution.
[00:07:29] We didn’t build analytics tools. We just built a website to help people enter orders in that we would deliver and fulfill. And we’d collect payments for and that’s what people needed. Like they didn’t need some fancy software to tell them like, oh, these like cool analytics, they didn’t need AI. They just needed some way to deliver their products from point a to point B compliantly and get paid.
[00:07:51] And and we came in as those trustworthy guys. We’ll do all of that and not steal from them and deliver just a good quality of service for [00:08:00] fulfilling their products. That was the initial pitch. We would do the deliveries ourselves just to give that sort of high touch experience and build a relationship directly with the execs at these companies.
[00:08:10] And through that, one brand at a time, we just pieced this whole thing together. And, we were learning from them just as much as they were. They were using our service and that’s it, when, whenever we ran into snags, we would just, build features to cover the cover, all the, edge cases that came along and logistics.
[00:08:28] And over time. As these businesses and small, like startup upstarts on the brand side or on the retail side started. They started telling us, oh, we need financial solutions. We need analytics tools because my team’s getting too large. I don’t know how to, I don’t know what’s going on in my business anymore.
[00:08:46] And they just needed more more tools that help them at scale. And so that’s how we started to build out and flesh out the rest of our platform. And that’s what currently exists today. And, it makes sense when you look at other industries, I [00:09:00] would say the business that we have.
[00:09:02] Similar to the fulfillment by Amazon business. And that exists in a very mature market in CPG. And, as the cannabis industry evolves into a more mature market, that’s the solution that will likely apply here as well. I think we’re moving in the right direction in terms of how we’ve built that platform and how we started out piecemealing it to.
[00:09:24]Bryan Fields: Yeah, I think it’s so smart that you use customer feedback in order to build those additional features and tools because right, let the customer tell you what they need and then build it around the support them, because you’re right. The more you support your customer more, they’re going to come back and rely on you.
[00:09:36] And the more you’re an integral part of the value chain. So let’s talk about some of those tools. There’s gotta be some really incredible data insights you got on those tools. So what data insights can you share and what insights should operators be thinking more?
[00:09:50]Vince Ning: Yeah. I think especially in this day and age, I would say cashflow is everything.
[00:09:55] I think people have, more or less figured out and people are really smart about how they build their [00:10:00] products what categories they want to invest in. I think right now on the product trend side of things, people generally are on the same page that, infused pre-rolls are really popular.
[00:10:09] I think beverages are on the rise, obviously there’s still infrastructural challenges. And so there’s general trends that people are aware about. And, I think our data is definitely suggests that as well. I think the main thing that people really need to pay attention to right now is Getting paid on time because ultimately that’s the lifeblood of their business and ours too, for that matter.
[00:10:28] And a lot of the tools that we’re building that we’ve built recently and in the near future are targeted towards understanding credit worthiness of who. With suppliers are selling to on the retail side so that they can make the best call in terms of, how much to sell to that store or what terms to give to them.
[00:10:46] And whether or not to use Navis capital to help provide liquidity for them, for their business. And, A lot of that falls within the backdrop of, the capital market environment really shutting off, public markets are down, not even just within cannabis, [00:11:00] but just in the broader economy, tech stocks are down 30 to 50% and it’s really a, yeah, it’s a bloodbath out there and it’s hurting private markets too.
[00:11:09] So with a dearth of capital coming into this space businesses just really need to survive on their own. And for us it’s we don’t, we’re a platform, so we don’t own our brands, any brands, we don’t take equity, stakes and brands. We it is also our job beyond just fulfilling and the, the I guess like analytics and all that sort of stuff.
[00:11:25] Our job is also to help keep our customers alive too, because we’re nothing without the operators on both sides of our market. And those are, I think that’s the current trend in terms of our feature development, as well as what we like to share in terms of how we’d like to shape the market and their decision-making when they make sales from an analytics perspective, I want to stay
[00:11:44]Kellan FInney: on the capital service offering that you guys is put together.
[00:11:48] What was what was the biggest challenging challenge putting that whole kind of department together in your guys’ organization? Because. Hey, it’s not easy raising capital for any startup let [00:12:00] alone in cannabis, especially with all the risks associated with now. Now you’re pretending to be a bank almost in that
[00:12:07]Bryan Fields: same
[00:12:09]Kellan FInney: like gray area marketplace.
[00:12:11] What were the conversations with some of the backers and the entities providing that, that capital for liquidity in the marketplace? What were those conversations like?
[00:12:19]Vince Ning: Yeah, I think for creditors, for that business, Yeah, I, I think everyone see saw the opportunity because of the fact that banks can’t actually touch the space in broad a, from a broad, broader perspective.
[00:12:31] And so as a result, our business, because we do the fulfillment because we do. The payment collections on behalf of all of our vendors and suppliers, we had this any problem arbitrage, or rather like we had unique insights into how credit worthy or retailer was.
[00:12:46] And it was very constant feedback because of our day-to-day collections activities. Like we knew. How timely this payment was going to come from this particular retailer versus the next. And so that was something that, that’s where the data really helps [00:13:00] in terms of our underwriting and our ability to minimize credit risk.
[00:13:03] And beyond that, In cannabis, people are people really just need cash and they don’t necessarily want to take out a huge loan against their business since many businesses aren’t profitable. And so this was a way, so we have a, basically a factoring business and it’s a way for brands to be able to really get liquidity on a more granular basis.
[00:13:25] And when you call it
[00:13:26]Kellan FInney: micro, like almost like Microsoft.
[00:13:28]Vince Ning: Yeah, in a way, it is very like, each invoice average is about three to 4,000 bucks and that’s how small the little transactions are, but, and then brands can use it on a case by case basis. So they don’t necessarily have to encumber their entire balance sheet with a huge term loan and not be able to pay it back.
[00:13:45] Run the risk of losing ownership of their business. This is a way where they can also just use their existing fulfillment partner to also help with their financing too. Becoming more of this all-in-one platform for them made it easier to yeah, made it easier for them to just have basically just [00:14:00] work with one party to get all these things done.
[00:14:01] And launching the product was really just a, we thought about a lot of different ways to do it, but we just. Having it be done in line with the order and collections lifecycle. Like a unit level life cycle was just the best way because ultimately for it, it just streamlines the payment side for us rather than having to underwrite every single brand every single time.
[00:14:22] Invoice, regenerated, this is cookie cutter. We could generalize it. And we found like a scalable, repeatable way to do it. So yeah and, we basically just, I had a so some of our investors invested in other factoring businesses and, put me in touch with them. I got into calls with them, just gleaned some advice that they had and some of the initial infrastructural setup that was required and, basically just set the same thing up.
[00:14:43] And it took about a few months and we launched in market with a couple of customers. And before you knew it when people sign up for distribution, now they immediately turn on this financing service because at the end of the day it cost them nothing to have it on. It’s only if they decide to use it.
[00:14:57] So it’s always like a, it’s always an added. [00:15:00] Are most of the
[00:15:01]Kellan FInney: customers on the retail side? Sorry.
[00:15:03]Vince Ning: Currently not yet. Currently. Not yet. Each transaction, includes a brand and a retailer. But right now we basically we underwrite the retailer because they’re the ones really paying.
[00:15:14] Yeah. Yeah. But then the brands are the ones who pay the fee for the for the oh, okay. Yeah. That’s like both sides are going to get. Yeah, exactly. Yeah, because the brands are the one that’s getting immediate liquidity on
[00:15:28]Kellan FInney: and the retailer is taking the risk. Because now they have to pay back.
[00:15:31] So each
[00:15:32]Vince Ning: everyone’s got skin in the game. Yeah, exactly.
[00:15:36]Bryan Fields: It’s got to be such a challenging process. Can you lay out like a little more of a scenario for that for our listeners to try and understand like exactly how that works? Because I think it’s such an integral part, especially given like the cash capacities in this.
[00:15:47]Vince Ning: Yeah. So the sort of a example would be brand a, would sell, let’s say a hundred thousand dollars worth of products in an order to retailer a and their [00:16:00] outcomes, like an invoice. And that a hundred thousand dollars. Might be sold on, let’s say net 30 terms, which means the retailer has 30 days to pay it back.
[00:16:08] After they have the product, they get to sell through the product, they’ll probably have the cash to pay it back. The brand, oftentimes these are very small businesses who, a hundred thousand bucks might be all the money they have. And so they put it on the inventory, they shipped it off.
[00:16:22] They don’t have the money to go start producing their next batch of inventory. And so that’s not a good way to build a brand. And so for, because ultimately what would happen is after the 30 days, perhaps the retailers sold through ideally it has sold through the product that shelf space goes empty.
[00:16:38] But as a brand, you don’t want gaps in product availability on the stores of shelves. And they want to be able to start producing their next batch of inventory before that product sells through. And so what they’ll do is they can take that invoice. It’s an asset, it’s an account receivable.
[00:16:54] They can sell it to Navis. And that is we’ll underwrite and say, Hey, okay. As long as it’s retailer, we know we’ll pay on [00:17:00] time. We will basically buy this invoice and then give, and then basically pay the initial. In advance on behalf of the retailer first, but we would pay it out at a discount. And that, that’s where we make our money.
[00:17:10] So we pay it out 97 cents on the dollar. The brand gets their their 97 cents. And they can start doing whatever they want with it, running their business, paying payroll started producing the next batch of inventory. And then we will wait the next 30 days to collect from the retailer and then we’ll make that spread that difference between the 97 cents and the whole dollar on that invoice.
[00:17:31] And so that’s, one life cycle of the transaction, but it helps provide a lot more like liquidity in the market, as well as improve the life cycle of the sort of like velocity of inventory through the supply chain. It’s such a
[00:17:45]Bryan Fields: critical piece of the puzzle. And I’m curious to know, I, obviously you can’t share from a business perspective, how much as a percentage wise of your business that’s become, but I’d assume that’s probably a really, that’s becoming bigger and bigger as we continue, because that has to be such a massive need on a day-to-day basis.
[00:17:59] Because [00:18:00] obviously what we’ve seen in California is challenges across the board and that just being one of them. So let’s stay on California. Can you describe some of the challenges that, that California operators or.
[00:18:10]Vince Ning: Yeah. There’s tons. And we feel it our customers feel it. I’ll say the, I think the biggest one, the biggest challenge right now is just incredibly high taxes.
[00:18:19] And and the problem is it’s actually starting. At the top of the supply chain with cultivators. So right now there’s, ever since the inception of the California market, the record recreational market, there’s been a cultivation tax and an excise tax and cultivation taxes were charged based upon the weight of flower that was produced.
[00:18:38] After last year there’s been this overproduction over supply of flower That’s coming into the world. The average price per pound has fallen significantly, but the weight is still the same, if not more. And so what ends up happening is the taxes don’t fall in line with the average price per pound.
[00:18:56] And because you’re still paying the same taxes, but making less money we’ve [00:19:00] heard cultivators that saying that they’re paying up to about 40% of what they have their revenue in cultivation tax alone, not to mention. All the labor costs and, the actual cost to produce this product.
[00:19:12] So you know the state, I get it, while they’re trying to make their cut of revenue from taxes from operators also can’t smother the economy and, kill the goose that laid back, and right now there’s been a huge coalition and lobbying effort to actually get the cultivation tax removed.
[00:19:28] And make adjustments to the excise tax portion as well when products are sold at retail so that, operators don’t get squeezed. And it’s, I think in the near term operators being squeezed is obviously a problem in the longterm, I think for the overall collective of the cannabis industry.
[00:19:43] The legal cannabis industry, it just, what operators will have to do is just increase pricing to make their ends meet and who ends up bearing the cost is actually the consumer. And so when the consumer goes and buys weed they will choose to buy from the illicit market because there’s no taxes being, being applied to their own and [00:20:00] costs.
[00:20:00] And it’s oftentimes, the same quality product. And at the end of the day, I think what the, what the government can do in the long run is just lower. Some of their taxes keep the business alive and grow, keep the supply chain alive and sustainable and growing, which will ultimately help combat the illicit market.
[00:20:14] And that, that’s the, I think that’s the biggest challenge right now in the California. I agree. And I think another
[00:20:20]Kellan FInney: thing too, we’ve some of our partners and clients we talked to out in California, they were like, we’re not even gonna, not even a harvest this year. I’m not even gonna cut my crop down because the moment they crop it, cut it down.
[00:20:31] Then it goes into that metric system where now it’s taxable. And they’re like, we’re not even, I’m not gonna make any money if I cut it down. So they’re just letting their plants, they just let their plants die in the soil because they literally were going to lose their business if they harvest it, which
[00:20:43]Vince Ning: is wild to me.
[00:20:46] Yeah, there’s tons of patients out there that need this plant. And to let it just go to waste because of taxes no government reform, it just it’s silly. And I think a lot of the problems like this didn’t really flare up or [00:21:00] till now, because there, there’s obviously the market forces of over supply of product.
[00:21:05] The other is just, there’s a lack of funding coming into the space. As mentioned earlier around, public market evaluations and investors being a little gun shy these days in terms of making writing those big checks. And so those big checks were the ones that were masking the problems before.
[00:21:18] Cause people were just running on profit businesses, but as long as they were getting money from investors, they could keep their business alive. But now that, that, pool of money is siphoned off. You really just have to run a sustainable business. And they’re seeing that this is, this is just a major cause of heartburn for a lot of lot of businesses.
[00:21:37] It turns
[00:21:37]Bryan Fields: out it’s really hard to run a profitable business on the government is just absolutely
[00:21:40]Vince Ning: destroying you with their taxes. Yeah. Yeah, no, it’s crazy. It’s crazy. And overregulation is just a, it’s not helping anyone.
[00:21:48]Bryan Fields: And I wonder too, right? Like when you have those conversations with them and you tell them, if you continue to taxes at this level, we’re going to let our products dine. You’re going to kill you in. There’s gotta be some thought in their mind where if we kill the industry, you’re not going to get paid [00:22:00] on those fronts. And then all that tax money goes away either way.
[00:22:02]Kellan FInney: Other companies decided to leave California because of the taxes, to Texas or something like that. Okay.
[00:22:09]Vince Ning: Yeah. Yeah. It’s true. It’s true. Th the cost of running a business in California is probably the highest in any state in the us, just from a tax perspective, but also like labor costs cost of supplies. Yeah, it’s just, it’s it’s something for
[00:22:23]Bryan Fields: your personality to,
[00:22:24]Vince Ning: yeah, exactly.
[00:22:25] Constant living,
[00:22:27]Kellan FInney: probably the best access to talent though.
[00:22:28]Vince Ning: Enforced. That’s true and great weather.
[00:22:34]Kellan FInney: That’s right. There’s gotta be something good about California.
[00:22:38]Bryan Fields: No. So slightly switching gears. How does the distribution work and what type of paperwork goes in on the, on those distributions? Is there tons of paperwork for all the products?
[00:22:47] How does.
[00:22:49]Vince Ning: Yeah, there, there actually is. And that it’s actually like such a really annoyingly like a small but major, but like really impactful problem. For our fulfillment platform, what we [00:23:00] do is we’ll intake products from cultivators manufacturers to always final package products.
[00:23:05] Some most often. Cannabis like vapes, flour, edibles, whatever. And then, there’s also like batteries and like ancillary products to and merge. And so we will store and centralize all of that inventory in our warehouses, across the state. We have over 71,000 square feet. We’re actually launching a new 86,000 square foot facility.
[00:23:21] So we’re going to be able to service about 30 we’re right now we’re about 14% of the California market that we serve. And we’ll be able to serve about 30% with this new facility from a storage pass perspective. But what that will be able to do is after we, we’re, we hold more and more inventory.
[00:23:37] We, all those products are listed on our marketplace. Retailers can purchase from our brands directly and or, through our marketplace or by contacting a sales rep. And once that sales made. Pick pack, ship the products on a two day turnaround time to retailers across the state.
[00:23:53] So we really try to provide this, like two day shipping, Amazon prime type of experience for the cannabis industry. So that way [00:24:00] stores don’t have to store products for too long. Oftentimes they have small backrooms anyways. They can get fresh or product because products moving faster. And they sell through the product.
[00:24:09] They pay. We, you brands can choose to factor it or not. And on a weekly or bi-weekly basis, we’ll pay out the brand. And we’ll manage all the taxes, the packaging compliance, all that sort of stuff goes through rigorous checks in our system to make sure that when products get released from the wholesale market into the retail market.
[00:24:25] There’s utmost consumer safety and compliance with the regs so that, no one has any sort of legal issues with respect to their products that they produce. So that’s like the unit level life cycle of an order and cash getting paid out and we came up with this model as a result of just, we want it to just build a lot of efficiencies and economies of scale.
[00:24:43] Prior to us existing, pretty much brands were just doing their own distribution. And thinking about thousands of brands working with thousands of retailers that N squared problem people, if everyone delivered their own products, the number of deliveries that would occur in the state would be insane.
[00:24:59] And so we try to [00:25:00] bundle up. Yeah, orders and brands as possible into a single order. So it saves everyone time. That’s the fundamental value of our logistics business.
[00:25:09]Bryan Fields: Yeah. California doesn’t need any more traffic than
[00:25:11]Vince Ning: it already has. Yeah. Oh, I was going to mention that the small button knowing problem is the the fact that the compliance paperwork, you need everything from a shipping manifest that’s wet ink signed.
[00:25:20] And then you also need like the cos like the testing results oftentimes and I’d say those are probably the two main things, but those testing results are oftentimes dozens of pages. The manifests could be pretty long too. And we have to, we, our system integrates with metric, which is the state’s track and trace system.
[00:25:37] And we input all the order information to there before we make the transfer in the delivery, but the manifest has to be printed out in wet ink signed and the state ever audits you for those records, you have to scan it back in to send. And so it’s just, the amount of paperwork that gets printed and reprinted sign and rescanned in is just a hugely burdensome.
[00:25:59] I would say as a [00:26:00] business, we spend hundreds of thousands of dollars a year on just paper and printing. And so from an environmental perspective, or just a cost perspective in general, it’s that, that is something that I would love to change. There’s larger problems than that right now, which is the sad part, but that’s like an obvious low-hanging fruit, in my opinion, to just get, to just be allowed to do signatures and electronic paperwork for the compliance side of things is a metric working on a
[00:26:23]Kellan FInney: software platform that should be able, at DocuSign, right?
[00:26:26]Vince Ning: Yeah, exactly. It’s when ups and iPad, right? Yeah, exactly. Like when ups comes to your door, deliver a product, you sign on that little pen with their little stylist and their and their little tablet and cannabis.
[00:26:37] Can’t do that. Because the regs say you have to print these things out and get weddings.
[00:26:43]Bryan Fields: Are there any limits when you’re picking up product from someone that like, is it total volume limit? Is it total number of limits? What, like what sort of constraints are there?
[00:26:50]Vince Ning: It’s really just a capacity in our vehicles on the wholesale side.
[00:26:53] There’s no limit to how much product you can have in your vehicle for delivery on the consumer delivery side. [00:27:00] However, I believe it’s right now, maybe like $3,000 that you can have in your car at any given time before you have to go back to the facility to pick up more product. But yeah, on the, for the whole, for wholesaling there’s no there’s no limit on orders.
[00:27:13]Bryan Fields: What happens if a police officer pulls over one of your wholesale vans? That’s gotta be just an all day incident of the paperwork. So how does that
[00:27:20]Vince Ning: work? Yeah, I think it’s happened in the past for us and. The paperwork definitely helps. They generally just let us go.
[00:27:27] They see that we’re professional. We have binders, we have iPads. We have, everything in the car, GPS, locator, security cameras. It’s not really, it doesn’t look like. Some cartel driving around products at all. And we w th the driver will call our dispatchers are in our team back at the warehouses and get further information verification as needed.
[00:27:49] But generally, as long as we show our Distribution license and we show the invoices and manifest or I’ll in order they, they usually just let us go your drivers
[00:27:58]Kellan FInney: aren’t just drive around with a safe, they don’t [00:28:00] have to go to, so they blow over and he’s I can’t open
[00:28:02]Bryan Fields: it.
[00:28:03]Vince Ning: Yeah. And that is exactly how to have safe, that are bolted into the floor.
[00:28:08] And it’s a, drop-in only safe. So once it’s in, can’t come back out until get back to our facility and. Only a couple of key folks at the facility know codes to exactly how it is. So even if people get robbed, drivers get robbed on the road, they actually can honestly say they cannot get into the safe.
[00:28:28]Bryan Fields: Yeah, it’s probably a very interesting interaction with the police officer. I can’t get into it and I’m just really sorry about. I don’t know the,
[00:28:34]Kellan FInney: and they’re like, ah, I don’t believe you.
[00:28:38]Bryan Fields: What is the biggest challenge setting up your business that most wouldn’t.
[00:28:42]Vince Ning: I would say a big part of it is recruiting cannabis while everyone sees it as a huge opportunity.
[00:28:49] And a lot of people smoke weed, but two thirds of all Americans support cannabis for them to kind of change gears on their career and work full-time at a cannabis [00:29:00] company. I think it would still raise eyebrows for a lot of people. And this industry amongst any new industry or amongst, any other new industry needs that good talent coming from other industries who have experience in logistics, supply chain in CPG, in product creation, branding.
[00:29:17] And a lot of those people just won’t join the cannabis industry because it’s still federally illegal. And whether it’s moral or not, or if it’s just a legal thing some people, America was built on the backs of immigrants as a melting pot here, and, immigrants are oftentimes afraid of.
[00:29:32] Being a part of cannabis because it hampers their ability to get a green card. It’s, there’s things like that really restrained good talent from coming into the space and we need always constantly our job is, and I think I’ve built companies before. This is the first time I think I’ve done.
[00:29:45] I well, not the first time, but I think I would say this is the company I’ve done the most, education about the product on in terms of not just our services, what we deliver. Just because I think it’s important that people who work at Navis and people who are thinking about even [00:30:00] investing in the space understand that this is a product that’s worth having around in society.
[00:30:04] And it’s it was wrongly put in a box. Back in the eighties,
[00:30:10]Bryan Fields: Amazon used their data inside trends to release products, any future roadmap, ideas of nevus releasing consumer facing.
[00:30:18]Vince Ning: No, not really. It’s always been a thought and people always ask us about it, the, one of the big things, one of the big reasons we’ve been able to scale our platforms, to the extent that we have today is because we’re grounded in the sick Gnosticism, where we have a balanced portfolio.
[00:30:33] We have competitive brands shipping on our platform, we don’t do the sale. For them. So we’re not picking sides. We don’t have our own brands. We don’t compete with it. We don’t create conflicts of interest amongst the customers we we fulfill for. That’s, for some other distributors who might do that they can pretty much just fill out a menu space of, one brand in each category and at each price point, and then you’re pretty much maxed out on your menu.
[00:30:55] And then you just have to basically keep pumping. Same 20 brands. For [00:31:00] us, we want it to help out that longer tail of the market. Cause we wanted to give everyone an equal opportunity to get to market because we also believe that given how early days it is in the industry and how much R and D still has yet to come for the cannabis plant.
[00:31:13] There’s so many more products that can be created and commercialized that why limit the market now in terms of consumer choice. And so we. Continue to have this open platform for small business operators to try their hand and experiment with new products,
[00:31:27]Bryan Fields: building out the technology stack, what was one concept or fact that surprisingly was overwhelmingly harder than you initially.
[00:31:37]Vince Ning: Ooh. I would say it’s definitely the inventory management side because it has to abide by compliance standards and there’s, unique skews and batches and COIs, and there’s different ways, depending on the product category you could have. Various different it’s to define one unit, it actually requires so much metadata to actually to to describe.
[00:31:58] And so that part, I think [00:32:00] we built our inventory, rebuilt our inventory management system, like three different times just because the regs kept changing and we needed to add more and more fields to our database. But I think we’re in a good place now with our location-based inventory system and there was very little inventory fidelity issues.
[00:32:16]Bryan Fields: Since you’ve been in the cannabinoid industry, what has been the
[00:32:18]Vince Ning: biggest misconception? I would honestly say it’s just a, how harmful the product is. It’s I think so many people in other generations, even my parents will still question whether this thing is legitimate or not, and whether it’s harmful to your body.
[00:32:32] Studies have shown. Just so much better than what people drink day, eat everyday, like alcohol. And yeah, I think people just don’t believe that it’s still,
[00:32:41]Bryan Fields: before we do predictions, we ask all of our guests, if you can sum up your experience in a main takeaway or lesson learned to pass onto the next generation, what would.
[00:32:51]Vince Ning: I would honestly say despite what kind of business you’re building relationships are key. They spout getting out there, meeting people in the industry, [00:33:00] hearing what they’re about how they view the industry and how they want to shape it. And if that sort of informs you on how to.
[00:33:05] Bro and build your business to, to serve them as potential customers as well. And that’s definitely, always served me well, even as a tech guy who, you know who I guess for all intents purposes, likes to just build a website and hope the customers will come. I think it’s important to actually learn from them in person.
[00:33:20] And see what their goals are. So that’s been invaluable as an entrepreneur, I think just to still continue to do. That’s all
[00:33:28]Bryan Fields: set. All right. Prediction time. Vince will the cannabis industry follow the same distribution model as the alcohol industry? And if so, when?
[00:33:36]Vince Ning: I think it will be different.
[00:33:37] Mainly because, when the alcohol industry started. That was before the invention of this thing called the internet. And I think with modern tools and technologies, you can actually build a much more sophisticated and efficient supply chain especially for distribution. And so while the regulations might shake out to be similar yeah.
[00:33:56] There’s obviously, I think there’s ways in which those regulations [00:34:00] can be adapted today. That with people who are making those regs, their thinking has the, modern technology baked in mind. I think it’s, it’ll be a much more efficient and cost-effective supply chain.
[00:34:10] I think then the alcohol Carolyn.
[00:34:14]Kellan FInney: Oh, that’s a good question. Pardon me, says it pro it might not follow the alcohol industry distribution standpoint based on what the United States postal service is like technically allowing, right? They’re actively involved in like these hemp shows and stuff for shipping like hemp.
[00:34:32] And so they just say, put a COA in it and you can shift your hand. And so if the us postal service is allowing you to ship your own hemp, flower, cannabis flower with a COA in it, that’s significantly different than the alcohol industry. Because if I go to the postal service with a bottle of liquid.
[00:34:48] They tell me to go kick rocks because it’s illegal for me to send like a bottle of whiskey to my dad in a different state, like completely illegal for me to do that on my own. So I think that it could potentially [00:35:00] be handled significantly or it will be handled before. And I also think that goes with my prediction, that Amazon will be involved in the industry as well.
[00:35:09] So I think that, yeah,
[00:35:12]Vince Ning: cause there’s
[00:35:12]Kellan FInney: delivery services for I can get cannabis delivered to my house and that’s not as robust in the alcohol space. Yeah.
[00:35:20]Bryan Fields: What do you think? Obviously Amazon’s coming, right? Like they’ve made pretty, pretty aggressive ways. And from a logistics standpoint, they’re as good as anyone.
[00:35:28] So I don’t know. I think it all depends on what ends up happening, right? What’s the easiest to regulate and what’s the most profitable for the government and what’s the least amount of effort in order to get started. It’s really hard to even make those sort of assumptions on that. So I’ll go ahead and say, yes, just to be different.
[00:35:46] so Vince for our listeners, they want to get in touch. They want to learn more about you and your company. Where can they get.
[00:35:52]Vince Ning: Yeah. So go to navis.com and ABI s.com. You can find out all about our services, what we do, what we’re all about there, and then know, if you [00:36:00] look at whether you’re looking for a job or you’re looking to use us as a platform the other is we have an Instagram Navis underscore HQ and you can see in real time what our team’s up to all the time.
[00:36:10] Cool. Yeah. We’ll link those
[00:36:11]Bryan Fields: up in the show notes. Thanks so much for taking the
[00:36:12]Vince Ning: time. Yeah. Thanks so much. It’s been fun.
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