The Dime Episode 54 Transcript: Gage, Cookies, & Michigan Dominance ft Fabian Monaco, CEO of Gage Cannabis Company

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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!

In this episode, Bryan Fields (Twitter: @bryanfields24) and Kellan Finney ((Twitter: @Kellan_Finney) sit down with Fabian Monaco (Twitter: @FabianMonaco7), the CEO of Gage Cannabis, to discuss:

  • How the Gage & Cookies partnership came together
  • How to understand trends and insights in dispensaries
  • How Fabian has weighed growth vs optimization when scaling Gage
  • How Gage evaluates entrances to new markets
  • Which east coast markets they’re considering
  • The importance of relationships with vendors in the supply chain
  • Gage’s future product roadmap
  • Which product category will be the biggest by sales in 10 years
  • One of the most sought after markets in Pennsylvania and why MSOs are flocking there

Find Fabian at:

www.gageusa.com

Facebook: @gageusa

Insta: @gagecannabis

Twitter: @gagecannabisco

[00:00:00] Bryan Fields: [00:00:00] This is the dime, dive into the cannabis and hemp industry through trends, insights, predictions, and tangents.

[00:00:10] Bryan Fields: [00:00:10] What’s up guys. Welcome back to another episode of the dime as always have gotten my right-hand man Kellen Spinney here with me. And this week we’ve got a very special guests, baby and Monica CEO of one of the hottest cannabis companies out there.

[00:00:22] Gage cannabis, Fabian. Thanks for taking the time. How are you doing today?

[00:00:25] Fabian Monaco: Yeah, thanks a lot for having me on and doing great. Appreciate it.

[00:00:29] Bryan Fields: [00:00:29] So I think before we dive in, I’d love for our listeners to kind of get a little bit about your background and how you got into the game.

[00:00:35] Fabian Monaco: [00:00:35] For sure. I used to be on the investment banking side of things.

[00:00:38] I had joined a team that just brought tweet public. They had brought Tweed, which is obviously now canopy growth public, but five or six months before I joined, I was really lucky. I got to work on a lot of the firsts of the industry. You know, the first acquisition in the industry where a Tweed Bob bedroom can.

[00:00:53]The first IPO, the first a hundred million dollar financing. So I was really, really blessed with those opportunities. And then it kind of just led me [00:01:00] more on the merchant banking side of things. And we started gage a little over three and a half years ago with two of the pretty much the best operators.

[00:01:08] At least I saw I’ve been to. I can’t even, I can’t even remember how many cultivation assets that I’ve tutored and visited. And just was really impressed with these two operators. The two main co-founders engaged and you know, really, really took a liking to them and their thought process and their connection to the cannabis culture.

[00:01:26] And yeah, like I said, started at three and a half years ago and here we are today. Yeah. And I’m

[00:01:30] Bryan Fields: [00:01:30] excited to kind of dive into that and some of the concepts and the ideas that gates has brought to market and some of the amazing opportunities that you’ve done. So before we dive in, let’s start with some of the hardest questions.

[00:01:40] What is your go-to meal after consuming cannabinoids?

[00:01:44] Fabian Monaco: [00:01:44] I probably say a burger, so like I, you know, my background’s Italian, so I do love Italian food, but I, I would say hands down a good burger is this is really something I enjoy. Nice cheeseburger. You should go to the

[00:01:56] Kellan Fineny: [00:01:56] cheeseburger place in and out

[00:01:58] Fabian Monaco: [00:01:58] in and out is great.

[00:02:00] [00:02:00] I honestly, I try so many all the time. And really don’t have like one particular favorite, but in and out is most definitely that much the print at the bottom of our office, actually in Troy, Michigan, really like shake shack as well. Sauces, fire,

[00:02:14] Bryan Fields: [00:02:14] let’s dive into some of the questions.

[00:02:15] Fabian Monaco: [00:02:15] Bait. Can you share a little

[00:02:17] Bryan Fields: [00:02:17] bit about the backstory and the value they play in the industry, and then from there, take us into the cookies and the value they place.

[00:02:24] Fabian Monaco: [00:02:24] Yeah, so, so from a gauge standpoint, you know, we, we really wanted to focus on our brand right off the bat, focused on flour to start as well. You know, flowers, the queen of the industry still probably accounts for close to 60% of our sales right now in this quarter. And something we really put a lot of time and effort into, it’s not just about, you know, growing a good product.

[00:02:43] We also put a lot, a lot of effort and time and see the post production process. And I think that was what really helped us elevate the brand really quickly, that kind of focus on flower, that kind of category of the value chain of the industry. Again, really allowed us to jump to the [00:03:00] forefront of branding and Michigan.

[00:03:01] Our partnership with cookies, you know, that you brought up an illustrious brand. I, you know, out of San Francisco, California, we have a great relationship with them. They’re they’re the Nike of the space or the red bull, the space, whatever you want to call it, the Coca Cola space we’ve learned so much from them.

[00:03:15] It’s really also helped us elevate our brand to a, you know, quasi similar level in Michigan. And for us. You know, just focusing on the brand to start. And we saw a lot of our, you know, the majority of our product through our retail channels as well. You see a lot of the, MSOC kind of take on a more wholesale strategy, which again, I’m not trying to knock that strategy, but for us, we really wanted to control the narrative, control how our consumer was, you know, receiving the product, educate the consumer, how great our product is.

[00:03:43]And that’s really been beneficial for not only expanding the gage brand in Michigan, but also the cookies brand. Yeah, the branding on both

[00:03:50] Bryan Fields: [00:03:50] of your sides is incredible. So let’s talk about that partnership. How did the origin of that relationship start? And then was that a key decision when going forward

[00:03:59] Fabian Monaco: [00:03:59] with gage?

[00:04:00] [00:03:59] Yeah, so I think, you know, the two, co-founders had a good relationship with burner. I think they’ve been talking to him for, you know, probably a good solid four or five years. Finally minted a relationship officially about two years ago, signed a five-year exclusive agreement with the cookies brand for processing.

[00:04:15] Cultivation and retail. So really you know, that’s how it all started. They developed the relation being cookie has been around for, for many years, many years, you know, kind of nurture that relationship, show them who we were, show them the type of quality that we, we would bring to their brand as well, because it’s so important, especially for brands when you’re picking a partner, even for us, when we pick our contract manufacturing partners that we have in Michigan, we go through a painstaking process.

[00:04:40] We make sure that those partners are top notch is the last thing you want to do. You spend so much time effort, blood, sweat, and tears into a brand, and then you kind of give it to someone else and they tarnish it for you. So I think that, you know, we really developed or at least cookies developed that comfort with us as a team, as a company.

[00:04:57] Say, Hey, you know, we were their first actually [00:05:00] we were their first partner outside of California. They obviously have a whole variety of partners now across the U S but two years ago, we were the first one. We were the first ones to open a cookie store outside of California as well. So there’s a lot of trust involved there, and I think we’ve repaid that trust Quite a bit by being, you know, one of their best operators

[00:05:17] Bryan Fields: [00:05:17] agree with that.

[00:05:17] So let’s kind of dive into the day to day and understand industry is absolutely exploding. So can you take us through what a normal day to day is like for you and how you kind of keep up to date on all the trends and such a hyper-growth

[00:05:29] Fabian Monaco: [00:05:29] industry? Yeah. Look, I mean, day to day is, is pretty wild these days, especially, you know, we’ve been publicly traded now for almost two months.

[00:05:36] I’m actually a little over two months now, you know, a lot of the focus is on capital markets initiatives. You know, the two co-founders are really heavy on the operational side of things and because the industry is moving so fast. You just always gotta be at the forefront, you know, following other brands, seeing what they’re doing, what products they’re introducing, you know, what kind of flavors of flower your competition is coming up with?

[00:05:55] Funny enough, you know, keeping a pulse in the kind of culture of cannabis as well, you [00:06:00] know, like what are people enjoying? What are they looking for these days? Are they liking gelato strains? Okay. If they like gelato strains and those are popular, let’s have a bunch of more of those on our shelves or let’s start, you know, crossing some of our previous gelato strains.

[00:06:11] Together to create a, you know, kind of a new strand and a new flavor for our consumers to have. So it’s really multifaceted and for us, as well as we’re expanding so quickly, you know, move from two cultivation facilities to now eight, you know, soon to be nine that are in operations that are growing, engaging cookies, brand new product, or even five retail locations at the end of last year to now, you know, nine as well.

[00:06:33] And hoping to move that to close to 20. By the end of this year, it’s really just a whirlwind. We’re working on so many opportunities and so many things. And then, you know, I spend a lot of time to, like I said earlier, following other brands, especially on social media, I think social media is so important these days to really get your brand out there.

[00:06:49] We’re part of a great network, obviously with burner, Rick Ross, and a couple of the other partners of cookies. And we’re in that kind of ecosystem, but following some of the other brands, seeing, you know, what kind of cool packaging they’re [00:07:00] coming out with, how they’re presenting, you know, their product.

[00:07:02] And looking for, you know, new product categories to bring to the Michigan market as well. Really

[00:07:06] Bryan Fields: [00:07:06] well said. So Kellen from your side, how do you stay upstate and all the trends and kind of expand on some of the areas that Fabian mentioned? No,

[00:07:13] Kellan Fineny: [00:07:13] and I think that staying up on all the trends is so important.

[00:07:17] I mean, this industry changes so quickly. The only way I’ve been able to do it is just by networking, talking to people and. Actively going to dispensary’s different ones, as much as you can. I mean, I’m lucky enough to be on Colorado, a little different than New York. O’Bryan soon though, right soon. And so, you know, it’s like going to the liquor store these days in Colorado, it’s been around for a while, you know, and I always go in and talk to the budtenders.

[00:07:42] I mean, it’s wild, how much power those people have behind the calendar in terms of pushing product and, and understanding what kind of is trending this way. And that way it’d be. The other thing that I find so interesting is kind of that dynamic between, and you mentioned this baby and in terms of like gelato strain selling and trying to [00:08:00] increase that as a product that you can put on the shelves.

[00:08:03] I mean, that balance has to be so challenging because. Say it’s June and someone wants something that’s more attractive for the summer, like a mango or something, right. In terms of a strain and you react to that. But by the time that it takes a while to grow flower, by the time you can increase inventory in that specific strain, it could be.

[00:08:24] October and the consumer’s preference could completely change to, I don’t know, like a pumpkin spice or something. Right. Like, and so balance has gotta be so challenging. I mean, how do you guys tackle that in all the different states? Is it kind of like. Each state operates as its own entity, or do you guys kind of have like a, an overarching strategy where you’re like, okay, across the west coast, we’re going to kind of focus on these main strains.

[00:08:51] Could you kind of describe that, that challenge or that obstacle

[00:08:54] Fabian Monaco: [00:08:54] for us right now? We’re, we’re still a single state operators. So we don’t have those challenges per se. [00:09:00] We’re solely in Michigan, the brand’s available in Canada as well. I would say, you know, to your point again, it’s, it’s, it’s not something where Hey, Yeah, everyone’s really liking this type of strain or these types of, you know, flavors.

[00:09:13] Let’s all of a sudden throw something into production and next week we’re going get some fruits from our labor. Right. It, it, it’s more of a long process, obviously, especially when you’re growing cannabis from a, from seed the smoke. So again, it just, again, trying to stay well connected to the cannabis culture you know, talking to a variety of operators as well, even sometimes competitors, you know, it’s a very inclusive industry.

[00:09:33] I still find. And yes, you know, Yeah, you do have fierce competitors, but also it’s pretty much a family and you learn a lot from your competition as well. So I think also, you know, places like Colorado, especially also California, they kind of help drive the trends. So stuff you see in California kind of comes a little bit, you know, later on in, in some of the other states.

[00:09:57] And so we’re always, you know, watching what [00:10:00] cookies is doing in California. What’s popular there. Okay. Blunts are pocket. Okay. Wow. So. Sponsored really, really doing well. A lot of the cookie stores in Cali, let’s, let’s put a plan in place because we think we’ll do equally as well in place like Michigan.

[00:10:11] So, you know, that’s a product category that we hope to have introduced over the next couple of months here. And so it’s just things like that. Right. Really looking to the leader, being California, or even places like Colorado, where it’s a little bit more mature looking at those trends because you seem to have a little bit of a lag in some of the other states, especially in Michigan.

[00:10:31] Not a crazy leg, but again, enough time to, to really position yourself properly. This is my favorite

[00:10:36] question, because I think about this constantly. And from someone in your position, you were the ideal person, maybe. How do you balance kind of growing the organization in one state or even expanding to other states as well as optimizing what you’re currently doing?

[00:10:51] Bryan Fields: [00:10:51] How do you balance that relationship?

[00:10:53] Fabian Monaco: [00:10:53] It’s not easy. It’s not easy at all. Right. I’d say that’s the most, let’s call it difficult. Part of the [00:11:00] industry. We’ve had fluctuations in terms of access to capital for quite a few years. Now, I would say maybe in 2018 things are going pretty well. The 19 hint went through a little bit of a downturn first couple of months of 2020 by, you know, those are pretty scary as well.

[00:11:16]Then now we’ve had a little bit of a resurgence, especially into the fall late fall winter, and obviously earlier on in the year where, you know, cannabis was flying high, obviously on the back of potential regulation. So it’s hard because you’re trying to balance out your growth with also your access to capital.

[00:11:32] You know, whether you should be refining things within your own current operation in order to boost profitability boost margins. Or whether, you know, it should be focused on growth market share, etc Right. So it’s a fine balance. It’s something that you got to really keep your pulse on, especially from a, from a funding standpoint, you know, we’re well, capitalized really didn’t take on any crazy debt or, you know, sale leaseback transactions in a material way to potentially, you know, hurt the company in the future with, you know, tough payment obligations.

[00:11:58] So. Again, [00:12:00] we’ve positioned ourselves well, but it’s always something we keep our pulse on just to see, okay, what’s the access to capital looking like these days, how is the market performing? How’s their stock performing, you know, will we have the opportunity to access further captial or, you know, should we focus on again, refining our current operations once, you know, capital starts to open up again, then we’ll quickly change the focusing on growth.

[00:12:21] And again, it’s not as easy as changing that on the dime, but. It’s something that’s it’s, it’s really a fine balance. At the end of the day, we set the challenge

[00:12:29] Bryan Fields: [00:12:29] to have that dynamic flexibility in your conversations with your leadership team in your day to day with kind of positioning the team saying, Hey, you know, for the next couple of weeks, we’re going to focus here.

[00:12:37] And then for example, legislation start to discuss are changing and then there’s these new opportunities or states come online. So that balance must be really, really finite. And it must change kind of rapidly.

[00:12:49] Fabian Monaco: [00:12:49] Yeah, no, it, it does. Right. And it can be frustrating too, right? Because our organization where we’re approaching, I think 400 employees now, And obviously people wants want direction, right?

[00:12:59] And so [00:13:00] sometimes if you’re kind of flip-flopping too much or, you know, not staying focused on the grand plan, it can be frustrating. Right. And it’s something we try to avoid. It’s something where we try to stay true to our plan, talk, seeing how we’re going to progress over the next couple of months. And all of us have, you know, constant interaction with each other as a leadership, you know, amongst the leadership team and the founders to ensure that we’re making the best decisions for, for, for the company.

[00:13:24] But again, That’s not always as easy because at times you gotta make tough decisions to say, Hey, I know we’re going down this path, guys. I know you’ve been working really, really hard, but we’re going to have to transition quickly here. And sometimes, you know, it’s met with disappointment, but you know, people understand.

[00:13:37] And I think we’ve been around now for a couple of years, not as long as some of the MSO is, but we’re approaching, you know, two years of operation here over the next couple of months. And I think, you know, more and more. Just the culture, you know, it starts to get ingrained and people recognize, Hey, look, this is an exciting industry.

[00:13:52] It’s really, really fun, but it’s also a challenging one. And once you kind of accept the fact that it’s going to be challenging, It makes it so much better. Basically, if you get [00:14:00] worked up too much with the small little challenges that arise on a daily basis in this industry, it can really kill you. Yeah.

[00:14:05] All right. That’s perfectly said,

[00:14:07] Bryan Fields: [00:14:07] but let’s, let’s talk about one of those challenge I read in one of your investment reports that one of the goals of gage is to bring 90% of Michigan’s population within 30 minute radius. As well as opening one store every month. Is that still the plan? Can you update on us on that and how actually challenging is that to accomplish in an industry that is looking for people miss the global pandemic that thankfully we’re on the backend as well as in a really competitive landscape?

[00:14:36] Fabian Monaco: [00:14:36] Yeah, no, look, it’s a tough goal, no doubts and aggressive goal, but one that we think we can achieve by the end of the year right now with a, with a portfolio of retail that we have. Can reach, you know, 90 plus percent of the population within a one hour’s drive really gonna want to drive that down to close to 20 locations by the end of the year, and having, you know, those 20 locations reach 90 plus percent of the population within a quick.

[00:14:58]You know, 20 to 30 minute drive, [00:15:00] I think, you know, that that last part is important because in Michigan you have dynamic delivery as well. So it really gives you the opportunity to have a pretty robust delivery program. We haven’t introduced something like that just yet. We only have about one or two cars in our, in our portfolio right now that the delivery haven’t really advertised that much, but just really starting that program and, and trying to figure out what’s the best way to tackle the delivery program in Michigan.

[00:15:22] And so we’ll be rolling that out in Q3. And you know, if we can keep up with the expansion of our retail, you know, we don’t have to be someone like a Trulieve to open, you know, 80 plus stores in, in, in Florida. I’ve obviously Florida’s what two and a half size, two and a half times, sorry, the size of, of Michigan, maybe even three times nowadays.

[00:15:40]But you know, with that being said, we don’t need to open up that many locations in order to achieve, you know, same, same store grow sale growth in sales. And so, you know, that’s a pretty important factor for us and we’ve really tried to. No scatter our retail down to a science to say, Hey. You know, once we’ve established, you know, a good solid 20 to 30 locations, which we think is the sweet [00:16:00] spot in Michigan, let’s make sure we have them properly placed so that we can reach the majority of the population within equip drive and vice versa.

[00:16:07] The majority of the population can actually come to our dispensary if they choose. Within a quick drive as well. It only dream of being able to

[00:16:13] Bryan Fields: [00:16:13] drive to an hour, go get adult use. But soon, soon I have to just him soon enough. Yeah. Now it’s like Boston, which is a hike. Sometimes it’s

[00:16:23] Fabian Monaco: [00:16:23] worth it though. Right?

[00:16:25] The east coast,

[00:16:26] Bryan Fields: [00:16:26] largely untapped strategically. There’s numerous areas to plants, the gage flat. How do you evaluate each states strategically from a capital standpoint? And how do you know it’s worthwhile to say, go to Maryland or to try to get into New Jersey? Can you take us through how you evaluate new markets and how to think about entering those spaces?

[00:16:47] Fabian Monaco: [00:16:47] Well, it’s education first off, right? The, you know, the first thing we really, really try to, you know, not be confident with what we’ve done in Michigan or what we’ve done with the brand in Michigan. We truly try to educate ourselves. And so we’ve been doing that over the past couple of [00:17:00] months. I think people look at the licensing dynamic, taking a look at the players who the competition is, you know, what makes them special?

[00:17:06] What kind of quality that’s, you know, available within the various markets and in some markets, you know, surprisingly at least us it’s shocking that you know, the quality that they have relative to Michigan, Michigan, you have these phenomenal operators that basically have been in business since the 2008.

[00:17:23] Caregiver program. And with that, you know, you have good competition. So for us, it’s encouraging mainly because a. No we’re doing quite well in a quasi competitive market. Maybe not as competitive as a place like California or Colorado, but again, pretty competitive market. And then when we look to other states again, it’s, you know, we try to see how, how can we perform, you know, go into dispensary to take a look, see how they’re being run.

[00:17:45] How they’re performing based on how they’re being run to say to ourselves, okay. Like this is a really, really well-run dispenser. You know, we, we may not be able to do much better than this or the complete opposite where it’s like, wow, like this dispensary is doing exceptionally well. And [00:18:00] we know we can do two times better here.

[00:18:02]Cause they’re doing this, this and this not necessarily wrong, but we would change, you know, this, this and this. So these are the types of things that we look at to see, like what’s our best bang for our buck from a shareholder standpoint, you know, we really want to be prudent with shareholder capital.

[00:18:14] We have been for so long. And, you know, our first acquisition or the, you know, the first move we have into another state, we want to make sure it’s the right one. And again, back to my first point, just education, really educating ourselves so we can make the best decision possible. You have a

[00:18:29] Bryan Fields: [00:18:29] team of individuals or an, or a specific individual that goes and researches those opportunities to kind of provide like a scoring matrix for, for you and your leadership team on making those decisions.

[00:18:39] Can you kind of shed some light on how that thought process

[00:18:42] Fabian Monaco: [00:18:42] works? No, I’d say that, you know, the leadership team is pretty hands-on, you know, so the two, the two founders they’re really, really hands-on, they’re the kind of boots on the ground that are doing most of the the diligence work from an operational standpoint.

[00:18:53] And, and from a market standpoint, obviously we have a bunch of finance geeks, so let’s call them and lawyers on our team. And [00:19:00] they’re going to get really mad that I called them finance case, but a bunch of guys on our team to really, you know, obviously drill down into whether it makes sense from a financial standpoint.

[00:19:07] And obviously from a legal standpoint, we take that counsel. Very seriously to say, Hey, what is the path of least resistance to, you know, getting a deal done in state X or state Y. And so this is the type of analysis we do. You know, we do still have a decent amount of confidence in how we operate. It’s not going to be.

[00:19:24] Rocket science for us, right? Sure. There’ll be a couple of tweaks to the rules in each and every respective state, but we know how to grow cannabis. We know how to process cannabis and we know how to run retail. Yes. Again, there’ll be quasi different rules in each and every state, but we’re pretty confident that we can come into a state and at least kind of hit the ground running.

[00:19:40] No, and dive

[00:19:41] Bryan Fields: [00:19:41] into that side, right from the east coast standpoint, what Fabian was saying about making the decisions and kind of weighing the pros and cons. When you’re here on the east coast, obviously it’s very different in California and Colorado. So how would you go about that approach as well?

[00:19:53] Kellan Fineny: [00:19:53] And east coast is going to be, I think, a completely different beast to tackle than the west coast.

[00:19:58] I think just looking [00:20:00] at how a lot of the high value markets are structured, their license process. It’s, it’s a limited license kind of situation, right? Like New York and Florida. These are your high density population centers. Right. And so.

[00:20:14] Fabian Monaco: [00:20:14] It’s going to

[00:20:15] Kellan Fineny: [00:20:15] be, it’s going to require a lot more capital to kind of.

[00:20:18] Own a square if you will, on the east coast. And so I agree with Fabian and in terms of it’s, you have to have your executive team and the people that are going to be making those decisions. They have to go see it for themselves. They have to be boots on the ground. I mean, these kinds of decisions are going to cost a ton of capital to enter these high density markets from a population perspective.

[00:20:41] And in order to make sure that you’re making the best decision you possibly can. You’re going to need to go experience it and get your hands on exposure to those markets and see what the medical space has been doing and kind of make friends with that whole community there as well, because a lot of it has to do with the budtenders once [00:21:00] the whole thing gets up and going and kind of what products they push and kind of the culture of what’s being talked about.

[00:21:05] And so. It’s going to be a lot more challenging than kind of the west coast. And like, for instance, like Washington, right? State of Washington, if you will they gave out anyone that wanted a license could go get a license and you just saw so many brands that as a consumer, when you enter the dispensary.

[00:21:22] Three four years ago, even nowadays it’s there’s 2,500 different products on the shelf. Like how are you supposed to get brand recognition if you’re in a marketplace like that? But the barrier to entry was a lot simpler versus the east coast. There’s going to be significantly less brands on the shelf.

[00:21:40] So you’re going to have a higher potential to generate that brand awareness. Right. But they know that, so it’s going to cost more money. So I just think that strategically the amount of due diligence that’s going to be required to enter the east coast, I think is astronomically higher than something that should be approached on the west coast.

[00:21:59] At least from [00:22:00] my perspective.

[00:22:01] Fabian Monaco: [00:22:01] And relationship has to matter

[00:22:03] Bryan Fields: [00:22:03] in these limited licensed states, because if you have limited amount of opportunities, the relationship has to be Keith knowing, okay, this person’s interested in selling, but they’ve been approached by Cresco then have been approached by truly so paving it from that standpoint, boots on the ground.

[00:22:17] She has to be critical because you’re forming those relationships with these, these opportunities that might be limited in their

[00:22:23] Fabian Monaco: [00:22:23] opportunities for growth. Oh, no, it makes an incredible difference. I mean, having, having, even again, just the, the, the relationships with other producers you know, for us, we’re, we’re an inclusive brand.

[00:22:36] We don’t just have gage branded or cookies, brand new product within our store have a whole variety of brands. And so, you know, in, in, in a very, you know, tight market, it’s, it’s similar to how you said, you know, it’s going to be important to actually, you know, build these relationships in order to ensure you have supply for your stores.

[00:22:54] And so, you know, that’s pretty key as well because the last thing, and especially in a tight supply market, you don’t want to open a store and have [00:23:00] absolutely no product. So, no, it

[00:23:01] Kellan Fineny: [00:23:01] sounds like a complete disaster. So I had random thought has been kind of puzzling me recently and I think the best. Way to ask.

[00:23:09] It is so with Pennsylvania, it’s still a medical market. And all of a sudden, randomly two, three months ago, it got really, really hot from an acquisition standpoint. Right. You saw all these big MSLs coming in there. And, and me and Brian were talking to each other and we’re like, do they just know something that we don’t?

[00:23:26] Or is it like one of the big players was like, oh, I have a friend in Pennsylvania. Let’s go there. And then everyone else just kind of plays, follow the leader. Do you have any insights in kind of how some of these. Random markets, all of a sudden just become so hot from an MSO perspective.

[00:23:41]Fabian Monaco: [00:23:41] I think, you know, first off the, the, the opportunities are a little bit limited from a retail standpoint there.

[00:23:47] And then, you know, secondly, everyone has seen a 16 locations that they can open. I think that’s the limit in Pennsylvania. And so you want to make sure those 16 are as best as possible, right? So there was a little bit of a rush to go and get [00:24:00] those, you know, the best. The best, you know, located dispensers in that state.

[00:24:04] I think also to be totally honest with UK, if you look at the dynamic of Pennsylvania and look at the consumption habits, I’d say like similar to Michigan, you’re seeing what Michigan is doing. When it went from, you know a medical program to now an adult use program. And I think, you know, from their perspective, they’re looking at that and saying, okay, Michigan’s approaching a $2 billion market right behind Colorado and California, obviously never going to catch California, but you know, Pennsylvania very much so has the ability to be just as big, if they can get to adult use, that’s a big IF you know, I think if you kind of remain at, you know, simply medical only.

[00:24:37] Yeah, it’s gone really, really well for a place like Florida, but, you know, they have close to what, 25 to 30 million people, these days, Pennsylvania, a little bit more than Michigan. I think it’s, you know, 12 or 13 million there. It’s pretty key to make sure that that turns into adult use in my humble opinion, to really take advantage of some of the prices they’ve been paying for, for her dispensary for a single dispenser, let’s say a pack of three dispensary’s.

[00:24:58] So yeah, I think that’s, that’s [00:25:00] overall what people are thinking, or at least maybe at least that’s my thought process on that. You’re looking at Michigan, they’re seeing, you know, similar demographics, similar progression, you know, same with places like Maryland, where it’s medical potential to go to rec and you know what that inflection point will bring.

[00:25:15] And if you are limited in the amount of locations you can have. Hey, you know, you want to make sure you get the best top-notch locations possible because you really want to make those 16 as best and as big as you can.

[00:25:26] Kellan Fineny: [00:25:26] That makes a lot of sense, actually. Thank you. I was, I didn’t even consider that. So that’s good insight there for sure.

[00:25:31] And I think I was checking headset data last week and I think Michigan is bigger than Colorado. Now. I think they did more sales in April or in may than Colorado did so. Oh,

[00:25:43] Fabian Monaco: [00:25:43] right on. I didn’t know that. I didn’t know that. Yeah, I know we’re still not, I know headset has data, but sometimes it differs slightly to what we have from the state, usually MRA and Michigan posts post those numbers on a monthly basis.

[00:25:56]So those should be coming out soon. I’ll be eager to see how they do. Yeah, I

[00:25:59] Kellan Fineny: [00:25:59] think [00:26:00] headset does do a little kind of predictive analysis based on past sales if I remember correctly. So

[00:26:08] Fabian Monaco: [00:26:08] those numbers are, yeah. Yeah. That’d be a pretty big jump though. I mean, we’re, I think Colorado’s in and around close to 200 now, in terms of monthly sales,

[00:26:16] Kellan Fineny: [00:26:16] 1 49 in Michigan, was that like 1 54?

[00:26:19]I couldn’t. Yeah, they, they definitely overtook it. So I was like, oh no, but it makes sense because the, I mean, there’s like twice the population in Michigan than there is in Colorado. So it’s only

[00:26:30] Fabian Monaco: [00:26:30] my opinion. Totally,

[00:26:31] Bryan Fields: [00:26:31] totally. Is a question about that. Do you think that has to do with the fact that Colorado has been online a lot longer and the consumers are kind of a little more comfortable where in Michigan, the bus is still really hot and people are still, I think kind of curious with the term that I heard thrown around a lot yesterday.

[00:26:46] Do you think that has to plan to that?

[00:26:49] Fabian Monaco: [00:26:49] I honestly, I think it just, just, just, you know what counts said before, it’s mainly population it’s mainly black escalation, right? I think you have super strong consumption habits in Colorado and equally, equally [00:27:00] as high on a per capita basis in Michigan. And I’ve seen Michigan really does enjoy their cannabis, but it really comes down to two population, which is not always the determining factor.

[00:27:09] But I think when you compare two states that again, have strong consumption habits from a, from a cannabis standpoint. The larger population is going to win. It makes sense. So gage had done

[00:27:19] Bryan Fields: [00:27:19] a terrific job with their capital light strategy. Can you take us through what the future product roadmap looks like?

[00:27:26] So

[00:27:26] Fabian Monaco: [00:27:26] I think you’ll still see a huge focus from us on flour. As I mentioned earlier on this, on this podcast, you know, there’s there’s just still a strong demand for flower, especially in a place like Michigan. And we see it across, across north America. Flowers queen it’s a queen of the categories.

[00:27:40] When you include pre-rolls it’s soundly for the majority of sales, a counselor, the majority of our sales, I think, you know, in Q2, we’ll probably see flour be, you know, 60 to 65% of our sales went, including, you know, pre-rolls so overall you know, that will continue to remain our focus with our expansion, you know, with our contract manufacturers as mentioned the capital light model and [00:28:00] basically bringing our own product to our shelves, agent cookies, brand and product, sorry, from a flour standpoint on our shelves for.

[00:28:06] Essentially zero costs us. You know, we don’t pay for the cap X to these facilities. We don’t pay for the OPEX. They pay for our packaging or testing and our secure transporting and Michigan. It’s a great way to expand, you know, your flavor offering as well. Right now, we’ve jumped to, you know, in this quarter we had about 15 or so flavors in production in Q1 have now jumped to 30.

[00:28:28] So pretty big broad jump for us as a company. And that includes both gage and cookies, brand and flour. We want to continue to expand that. And continuing to expand that, try to get to as many varieties as possible. And yes, of course, you know, that does. Create a little bit of headaches when it comes to, you know, just supply chain and things along those lines, but it’s what the consumer wants.

[00:28:46] Right? It’s, it’s, it’s what people are looking for. Everyone’s always excited to, you know, try new flavor, try new cross or something. And it’s something that we’ll probably focus on in the near term now that we have the cultivation capacity to do it, you know, we’ll probably be. [00:29:00] When you include our, you know, our contract manufacturer, the number one cultivator in Michigan.

[00:29:04] And if we can be the number one producer of flour and ensure that we’re also, you know, the best in terms of variety, it’s going to be a really a big win-win situation, I think for both us and both for the consumer as well. Yeah. And to kind of pair back the

[00:29:17] Bryan Fields: [00:29:17] brand loyalty with the relationships and the awareness plus in the strategic positioning and being acceptable can really make that kind of a loyalty factor with the consumer long-term.

[00:29:26] And I think you’re

[00:29:27] Fabian Monaco: [00:29:27] really nailing that. Yeah, I appreciate that. So biggest

[00:29:31] Bryan Fields: [00:29:31] misconception in the cannabis space since you started working and then

[00:29:34] Fabian Monaco: [00:29:34] that cannabis is, is a commodity. I hate hearing that because it’s just so far from the truth, right. They try to a couple of, you know, have an investor call or questions from investors.

[00:29:46] Some, you know, some, so some will think, oh, it’s just a commoditized business. It’s like tomatoes. It’s so far from the truth. I mean, I think you guys will appreciate this analogy. It’s not exactly like the wine industry, but it’s quite similar, right. Especially if you’re like a true [00:30:00] connoisseur of wine, let’s say which I’m not, but what, from what I’ve been told, you want to know, okay, where was this?

[00:30:05] Where’s this wine from? What country? How was it grown? Where was it? The ground was that pronoun. The base of a volcano was a groan at a certain altitude. What grapes were used, what did they do with the grapes after. Did they crush them by hand, they crushed them with their feet. Did they crushed them through a machine?

[00:30:20] You know, how do they store the wine after? Was it an Oak barrel glass barrel steel barrel stainless steel barrel. So there’s so many facets to the wine industry and at least for me, Cannabis has quasi similar, especially for like the true Connor sewer, the true refined consumer and yes, not everybody’s, you know, to that point just yet.

[00:30:40] But I think the industry continues to grow. It continues to, you know, gain, gain a fan base across the country that people actually care about these small nuances. Right? Is it greenhouse grown? It’s a grown out tour. Has it grown indoor? What did the post-production process look like? If you grow, let’s say Brian, you grow a fan, you know, let’s call it.

[00:30:56] You are an operator. You grow fantastic cannabis. But you [00:31:00] trimmed it extremely poorly. You didn’t dry it. Well, you didn’t package it well, You gave someone a bag of eights, but you included a whole bunch of small little nugs in it. I think just generally that brand or that entity or that licensed producers not going to be well received.

[00:31:17] So I think there’s like so many little steps from the seed all the way to the smoke in this industry. That it’s just not commoditized. And maybe some markets where the supply is extremely, extremely tight. Maybe like a place like New Jersey or maybe a place like, you know, Pennsylvania, we’re still, you know, supplies, really not even coming close to the demand.

[00:31:36] Sure. You know, you can get away with producing just good product, obviously, but you don’t really have to focus on the details in a place like Cali and a place like Colorado. You know, Michigan, you got to really focus on those details and, and that’s where the industry’s going, because, you know, we saw in Canada what happened with, you know, people just growing the same type of flavors, the same type of, and really having no variety and [00:32:00] nothing special.

[00:32:01] You saw how the Canadian licensed producers are performing. And I think, you know, not saying that’s going to happen in the U S it’s a totally different piece, but again, I think, you know, us operators need to be cognizant of that as, as competition continues to increase. You really have to you really have to have a refined strategy.

[00:32:16] And again, I’d say that’s the number one thing that really annoys me when someone says that, you know, cannabis is a commoditized business because it’s just so far from it, the truth. And it

[00:32:23] Kellan Fineny: [00:32:23] goes back to exactly what you’re saying about the trends in California and how it’s going to kind of that ripple effect across the country.

[00:32:31] I mean, the job that California did and implementing the Appalachian laws and really kind of teeing the whole industry up to kind of Mir. Something like the wine industry, I think is exactly where, where the whole space is going to go. So I think you’re right on point with that.

[00:32:47] Bryan Fields: [00:32:47] How do we

[00:32:47] Fabian Monaco: [00:32:47] educate the consumer?

[00:32:49] Bryan Fields: [00:32:49] Like there’s so many variables. You were just describing Fabian, but how does a consumer who’s kind of curious, walks into dispensary for a bit of first or second time. He’s overwhelmed

[00:33:00] [00:32:59] Fabian Monaco: [00:32:59] by the 9 million options. Where do they start? Is it

[00:33:03] Bryan Fields: [00:33:03] on the brands is on the budtenders is a combination of both. How do they get educated on all of the characteristics of the plant?

[00:33:10] Because like you were saying, it is incredible, but there are so many

[00:33:13] Fabian Monaco: [00:33:13] layers to the product. You know, at least, at least from my perspective, especially for the new consumer, you know, edibles, you know what I mean are always a good introduction. Basically, you know, see how your body reacts, see how you feel.

[00:33:26] You know what I mean? When you consume that type of product, obviously drinks, not as popular, but you know, potentially another method for a new consumer. Pre-rolls is, you know, if you want to see have a choice, pre-rolls are obviously a perfect, perfect way to get introduced to the industry. Again, it’s something that you really need to cater to, to people’s tastes.

[00:33:45] Some people don’t want to smoke anything, right. So you have to educate them on the other varieties in terms of consuming. Some are, you know, totally comfortable with with smoking. And obviously you can introduce them to you know, that type of crowd category. And obviously [00:34:00] the, all the flavors that, you know, you have in a proper way.

[00:34:03] But I think overall it’s really just finding out, you know, what does the consumer want? What are they looking for at the start? And then catering to that consumer. And that’s how we approach, you know, our new let’s call it a fan base that comes to our brand and says, Hey, you know, I’m, I’m a new user, you know, w what can I try?

[00:34:19] You try to ease them into it, right? Because the last thing you want, especially, you know, for this industry is someone to get turned off right away. Right. We already have to deal with so much adversity, right. So if we can win over one person at a time and, you know, make sure that they truly, truly, and fully appreciate.

[00:34:36] And what this industry has to offer from not only a personal standpoint, but just generally the job creation. Taxes, et cetera. And, you know, just even just easing up on the, on the, on the, on the kind of let’s call it I even know how to say, even on the regulatory side of things, to just make things so much easier for this industry.

[00:34:53] So it can really blossom. We need all the positives we can get. I mean, it’s

[00:34:57] Kellan Fineny: [00:34:57] already a steep hill that we’re climbing as [00:35:00] far as a social stigma goes that. It’d be nice if they could throw us a bone, as far as regulatory aspects go as well. You know, it’s, it’s tough fighting that battle on both

[00:35:09] Fabian Monaco: [00:35:09] fronts.

[00:35:09] Totally. It’s not easy. You know, we already, we already have to deal with so much and, you know, grow in such a constrained environment and it’s such a cash heavy business still, right? Like I can’t wait for the day to, you know, kind of go into any dispensary you want them and really just put your Amex down or your visa down and just, you know, be able to purchase the product.

[00:35:27] I think that will even bring some growth to the industry as well. Just in terms of. Yeah. Again, someone comes to dispensary, you have a certain amount in their pocket and again, not, not to try to entice someone to spend more than they should, but again, they have a certain amount in their pocket that they see, you know, oh, wow.

[00:35:42] You have a new flavor there. I was just going to come here just for my go-to, but I see how this new flavor, if such a cash heavy business. So you’re like, okay, well I don’t have that much cash in my pocket. So the ability it’s just like anything else, right. If you’re going to. By a bottle of wine or, you know, some beer at the, at the corner liquor store.

[00:35:59] Right. [00:36:00] If you only had certain amount of your in your pocket, but you actually wanted to buy something else or try something new. To help, you know, expand, you know, w what you’re looking for you can do that easily, right? You can just say, okay, I’m just gonna put it on my card. So, you know, these small little nuances, people think don’t really, you know, affect the industry, but they do, you know, they weigh down on the industry, you know, the lack of access to banking not being able to list on a U S recognized exchange.

[00:36:24] Again, it sounds like it’s more of a stock and capital markets, single it’s like, well, no, not really. It’s, it’s an access to capital thing. Right. Get better access to capital for these cannabis companies. The more they can grow, the more jobs they can create and the bigger and better the industry gets.

[00:36:39] Everything

[00:36:39] Bryan Fields: [00:36:39] is harder and kind of, cause I think you perfectly said it. So before we do predictions, we ask all of our guests two questions. If you could sum up your experience in the cannabinoid space into one main takeaway or lesson learned to pass onto the next generation, what would

[00:36:53] Fabian Monaco: [00:36:53] that be? I work really, really hard.

[00:36:56] I work really, really hard because again, it’s not that [00:37:00] and be ready for the challenges, at least in this day and age. Right? Like we just talked about the, the challenges of, of, of regulations. You know, there’s, there’s a whole variety of operational challenges as well. It’s still, you know, still hard to attract good quality people to the industry.

[00:37:14] And I’m not saying that we don’t already have a good quality people in this industry from a climate standpoint, but to really attract, you know, top-notch quality people and people still have this stigma towards the industry. So it’s a little tough, right? So you gotta be prepared for the challenges you gotta prepared for the ups and downs because there are going to be plenty.

[00:37:29]But if you can stay the course, I think, you know, those that come out on the other side when hopefully things get a little bit easier for us as companies from a whole variety of angles. Those are gonna be the true winners. That’s for sure. The last time you consumed any

[00:37:42] Bryan Fields: [00:37:42] cannabinoids?

[00:37:43] Fabian Monaco: [00:37:43] Probably two nights ago I had an edible before I went to sleep.

[00:37:46] I find the, you know, edibles really helped me sleep. Especially these days where, you know, things are always high stress. At least for me being a newly, publicly traded company here in Canada, you know, just a, you got to gotta be on top of your game all the time. And sometimes like anyone else [00:38:00] it gets to you.

[00:38:00] So I have a nice, a edible 30 minutes before I go to sleep, but it usually means I’m going to have a nice sleep. At least for me. Yeah. That

[00:38:07] Bryan Fields: [00:38:07] U2 might go to and as a new father, Nan, do I miss sleep? So it’s nice to hear that you’re

[00:38:14] Fabian Monaco: [00:38:14] doing better there. Congratulations. Congratulate. Yeah, my kids are a tad older, but they still wake up bright and early.

[00:38:20] And my son he’s turning two. He You woke up at 6:00 AM today. So it was a little, a little bit of a rough start to the day. Listen, 6:00 AM is

[00:38:27] Bryan Fields: [00:38:27] like our fourth wake up. I’m 10 days in and it’s like a two hour hazing session. We’re going through this.

[00:38:32] Fabian Monaco: [00:38:32] Oh yeah. You got a big hill to climb still.

[00:38:35] Bryan Fields: [00:38:35] All I see is my, my sleeping cannabinoids on my desk and I’m like, man, what?

[00:38:39] I take one of these in our people, but then I don’t know,

[00:38:44] Fabian Monaco: [00:38:44] you’ll sleep for days

[00:38:46] Bryan Fields: [00:38:46] and that’ll be it.

[00:38:48] Fabian Monaco: [00:38:48] So prediction time, 10 years from now.

[00:38:52] Bryan Fields: [00:38:52] Which product category

[00:38:54] Fabian Monaco: [00:38:54] will be the biggest by sales. Okay. Years. I think it’s going to be [00:39:00] neck and neck between flour and edibles. Yeah. Neck and neck, between flower and edibles.

[00:39:04] I think, you know, edibles will continue to continue to gain ground. Not so sure on the drinks still not sold on the drinks and beverages, but yeah, no, I think edibles is. It’s a great category. It’s getting a lot of steam. It’s an easy way to consume as well. Very easy. It’s time, time efficient, obviously as well.

[00:39:23] I would say very, very, very close, but I still, you know, still love flowers. I’m going to say flower. That’s my final answer.

[00:39:31] Kellan Fineny: [00:39:31] I don’t know. And it’s either edibles or, or flour. Right. And I think the biggest variable in that prediction is going to be how the next generation that comes online views. Smoking right.

[00:39:46] Because I think right now, like our generation and the generation above us, we,

[00:39:52] Bryan Fields: [00:39:52] cannabis

[00:39:53] Kellan Fineny: [00:39:53] has always been something we’ve smoked. And so flower will, can continue to dominate as we are the main [00:40:00] buyers as consumers. But it’ll be really interesting to see how. The younger generation views smoking in general.

[00:40:07] I mean, is there going to be a resurgence, if not, and they really focus more on like the wellness aspect and really are health conscious. Then I think edibles will take the day, no matter what, just from an ease of consuming, but in 10 years, I don’t know. I’m going to, I’m going to stick with flour too.

[00:40:23] What about, what, what are your thoughts, Brian?

[00:40:25] Bryan Fields: [00:40:25] Obviously calling, you know, I’m very, very bullish on the beverage market. I think from a social standpoint, getting together with your friends, consuming an edible, it, it kind of isn’t that same feeling of standing around with like a white claw or a beer. So from a social standpoint, I think the low dose THC beverages are

[00:40:42] Fabian Monaco: [00:40:42] going to just absolutely

[00:40:43] Bryan Fields: [00:40:43] explode.

[00:40:44] I think it’s also easy to kind of like adopt the kind of curious people who are unfamiliar with cannabinoids, but are interested in trying, because it’s such a mild. Case. And I think edibles, why I love them personally. I think they get a bad rap because people sometimes associate bad experiences [00:41:00] with them.

[00:41:00] If they had a pony in college, which was made by their friend and they had a bad experience, they’re likely deterred from China again. So I think the fabric market will be really beneficial for people who are migrating and, or newly entrance into the space. But also I think people who are heavy alcohol consumer, who are sick of hangovers and are interested in kind of getting a light little buzz.

[00:41:20] If they gravitate towards that, it could be a huge growth area to ensure while it’s here to stay. I think that the troop Yurik will always do that. And I don’t think that category is going to get hurt at all, but I think the beverage

[00:41:30] Fabian Monaco: [00:41:30] market will

[00:41:31] Bryan Fields: [00:41:31] actually explode and obviously I’m very bullish on

[00:41:33] Fabian Monaco: [00:41:33] that side.

[00:41:34] Kellan Fineny: [00:41:34] A little mix of a cocktail, a little THC and alcohol cocktail at the bar. That sounds like a really dangerous thing.

[00:41:42] Bryan Fields: [00:41:42] Maybe before we wrap, where can our listeners get in touch? We’ll tag gage and all in the show notes, but if they want to get involved and learn more about your company specifically, where can they

[00:41:52] Fabian Monaco: [00:41:52] yeah.

[00:41:52] Look, I mean, follow us on social media for sure. On our Instagram page, you know, we have close to 30,000 followers have a big broad network. We put a [00:42:00] lot of time and effort into our social media. Really, it’s a great place to also see, you know, what we’ve come out with in terms of, you know, new flour, you flavors, et cetera, and new product lines so that, you know, just follow us like gauge cannabis go to our website, gage cannabis.com as well.

[00:42:14] Again, that’s gauged cannabis.com. If you have any investor questions, email [email protected] Again, that’s I [email protected] Obviously we trade on the Canadian securities exchange under the symbol. G a G E and on the OTC in the U S on the pink sheets for now under the symbol, G a E G F. We appreciate

[00:42:37] Bryan Fields: [00:42:37] you taking the time and looking forward to seeing you migrate to the east coast and continuing to dominate

[00:42:41] Fabian Monaco: [00:42:41] Michigan.

[00:42:42] Appreciate it guys. Thanks a lot for having me on. Thanks for the time. [00:43:00]

Thanks so much for listening to The Dime . Subscribe or follow us on Seeking Alpha, Libsyn, Apple Podcast, Spotify, Google Play or Stitcher. And we’d really appreciate it if you could leave us a review on Apple Podcasts. It helps others find our show.

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