By John Schroyer
Bruce Nassau doesn’t think of himself as a typical marijuana business owner. But the former cable television industry insider is doing something right.
Nassau partnered with his brother and another friend back in 2010 to purchase the medical cannabis dispensary Colorado Care Facility in Denver. Since then, the tightly-knit group has expanded to the point where their company, which will soon be formally known as Tru Cannabis, now owns five recreational marijuana shops, four of which were acquired after being started by other entrepreneurs.
Last year, those five shops brought in more than $10 million in revenue.
Marijuana Business Daily spoke with Nassau recently about acquisitions, industry consolidation and the strategies that have made his company a success.
What pointers can you offer other entrepreneurs to help them grow their businesses, based on your experiences?
You have to have a strong back office, for the purposes of accounting, payroll, tracking, etc. That is absolutely essential.
And many businesses fail because they’re not properly capitalized, and they underestimate how long it will take for them to get up and running, and they underestimate the cost that’s associated with that. So I always tell people, put your budget together, take your time frame and your costs, and if you damn well double them, you’ll be safe.
We’ve seen situation after situation across business in general, but specifically in the marijuana industry, where people are not really business (savvy), and they don’t have the kind of financing or the kind of back office that it takes. So they’re not sophisticated in budgeting and things of that nature, so invariably they fall on their faces.
To your point, there are plenty of people who get into the marijuana business because they’re enthusiastic about the cannabis movement, but they don’t have a business background. Do you think we’ll see these types of companies get bought out in the coming years by stronger businesses?
Yes. I was in the cable television industry for over 30 years, and what I observed and participated in was consolidation of the industry.
You used to have, say, 20 good-sized cable TV companies. Over the years, they start buying each other out, and it came to the point where you had a very small number of what I’d call real players in the business.
I saw an opportunity to do a consolidation play in (the cannabis) business similar to what I’ve seen happen in the cable TV business. So if you bring the expertise, if you have the financial wherewithal, you can begin to consolidate, which is precisely what we’ve been doing. That’s why we’re up to five (stores). And in the near future, we intend to be up to six.
That’s really the play here I see going on within the industry. Down the road, when it’s nationally legal everywhere, you’re going to have a small group of big players that are going to run this, similar to the cigarette business or the alcohol business. RJ Reynold’s, Seagram’s, Budweiser. This is absolutely for sure where this is heading. And that’s what I’m committed to, is to be a player in this consolidation. And to those who consolidate, there will come the upside.
What kind of moves do you think cannabis companies can make to position themselves as national players?
We are actually branding now, which is going to be a plus. We’re licensed for cultivation and production in Nevada. I’ve got a very strong group that I’m very confident is going to get licensed to cultivate in Illinois. We’ve done some consulting work in Massachusetts.
So what we’re doing is we’re reaching out, we’re helping people who will come to us and say, ‘Look, we don’t know how to do this, but our state, it’s going to be legalized. You’ve done it before. Can you help us get a license and build the business?’
That’s one of the ways we’re going about this to expand our focus and our footprint. Once these states get up and running, you’re going to have (people) who don’t know what they’re doing, they’re under-capitalized, they’re not real business people, and it’s going to create new opportunities to come in where you’re able to invest from out of state.
In states where we can actually buy, we’ll go in and look at buying distressed companies. That will inevitably occur. We really want to be a consolidator, not just in Colorado, but in states where that opportunity presents itself.
You’ve said your company raked in $10 million in revenues last year. How did you get to that point so quickly?
What really kicked things up for us was one of our shops opened up in Jan. 1, 2014, and it was just an absolute tidal wave.
Our revenue growth last year, and it was significant growth, was also predicated on being awarded recreational licenses in all those shops that we had. We were one of the few that were open initially, and that was a real boon to the business. As (other stores) opened, we were garnering a lot of people. Our location (is on the way to and from Denver International Airport), and we’re running a little ad saying, bring in your travel itinerary and we’ll give you a discount.
So we started marketing that way, and knock on wood, we were very fortunate and able to garner a good bit of activity for 2014. I’d say that our business probably almost tripled.
John Schroyer can be reached at firstname.lastname@example.org