Podcast Episode: Retail Re-invigoration: Conquering California

Chris Walsh:

Hello listeners. And welcome to Seed to CEO, the podcast about making your way in the cannabis business. I am Chris Walsh, the CEO of MJBizDaily.

In today’s episode, I talked to Margot Micallef of Gaby. Margot shares how she has pivoted the company from solely a product manufacturer to one focused on retail operations and consolidation. The end goal: to become the dominant cannabis retail chain in California in the next three years.

But first, a quick word from our partner, Headset.

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Chris Walsh:

Hi, and welcome back to Seed to CEO, the podcast about making your way in the cannabis business. I’m here with Margot Micallef, the founder, chair, president and CEO of Gaby. That’s a lot of titles – kind of puts me to shame.

Margot launched Gaby as a health food and distribution company before eventually moving into cannabis, focusing at first on CBD products for the mainstream and then on THC products for the state-legal industry. Now she’s steering the company toward the operation of cannabis retail stores with the grand goal of becoming the dominant retail chain in California.

Thank you for joining us, Margot, and welcome.

Margot Micallef:

Thank you. I’m glad to be here.

Chris Walsh:

Where are you calling in from for this episode?

Margot Micallef:

I’m actually in San Diego, which is the location of our first dispensary, which is the Mankind Dispensary.

Chris Walsh:

I always like to ask that because you never know these days if people are in the boardroom or at the beach or the basement – or maybe in the bathroom. If you have kids at home, that’s the only place you can escape.

Margot Micallef:

I’m actually in a small unit on the beach.

Chris Walsh:

All right, there you go!

Margot Micallef:

One of the benefits of having a dispensary in San Diego.

Chris Walsh:

Yeah. Oh, I’m jealous. Cause it’s, it’s been snowing in Colorado where I’m at, so …

Margot Micallef:

Okay, I won’t tell you what’s going on here then.

Chris Walsh:

Okay. Well, we’re going to talk today about how you’re developing a retail strategy after focusing on the product side of cannabis. But first, can you just briefly tell us why you steered Gaby towards cannabis in the first place?

Margot Micallef:

Absolutely. So I’ve been an entrepreneur for most of my life, and I really solve business by my entrepreneurial instinct. My sister got diagnosed with stage four lung cancer a number of years ago and was told by her doctors that there was nothing that they could do for her. So we took matters into our own hands and decided to try alternative therapies. And we tried a whole bunch of things, cannabis being one of them. But the net result of everything we did was that she lived for five years, which was exponentially longer than what the doctors said she would live. And she had great quality of life.

So I did ultimately lose her. She was my best friend and my business partner, and so I just decided that I would honor her legacy by sharing the journey that she experienced in her quest to live with cancer and have great quality of life. So I started Gaby. Her name was Gabriela, Gaby was her nickname. And she’s been my inspiration ever since.

Chris Walsh:

Well, that’s a powerful story. And, you know, having been in this industry for 10 years, I’m always struck by the personal connections that a lot of entrepreneurs and business owners and executives have to cannabis. It’s not like any other industry where people get into it for pure business reasons.

Thanks for sharing that. I’m glad that you can honor her in this way.

Margot Micallef:

Quite frankly, cannabis is such a difficult industry that if you’re not passionate about it, you’d give up.

Chris Walsh:

I’d agree with that. Absolutely. There’s a lot of challenges thrown your way that are not there in other industries.

And speaking of that, your goal isn’t just to start operating a retail location or two; you want to build the most dominant retail chain in California’s market within three years. Now, this is a big, bold strategy and a big pivot for the company.

When you look at the history of successful companies, there’s always some milestones along the way, and they’re usually doing something markedly different from when they first started. And this sounds like one of those big pivots for you and your company. So when did you first start weighing when to get into the retail side of the industry and what did you see in the market that led you down this path?

Margot Micallef:

It’s actually been an evolution. When we decided to get into cannabis, we focused on brands, on product brands. And that’s what the value add is in, in building a loyal client, following. And brands is how you do that.

What we learned while we were bringing our brands to market was that there was a significant gap in reaching consumers of all walks of life. And so the market seems to be doing a relatively decent job of continuing to reach that traditional consumer, but we’ve really not done a great job of reaching out to that mainstream consumer. We saw that as an opportunity and we, we feel that with our experience and with the team that we’ve got, we’re primed to be that consolidator.

I’ve done three consolidations in a number of diverse industries. I’ve got quite a bit of experience in integrating companies that we acquire, running them strategically for the benefit of each of the different chains or stores within that chain. And we’ve got the team that knows how to run cannabis. So we see ourselves as primed to be that consolidator and to really dominate there isn’t anybody else who has expressed that kind of a focus just in California, that I know of.

Chris Walsh:

Now, your strategy is just to focus on the state of California at this point, is that correct?

Margot Micallef:

Yeah, it is. California is a significant market. It’s the largest cannabis-consuming market in the world. It’s a tastemaker market, which means that what happens in California is noticed in the rest of the United States and oftentimes the world. So it sets the trends, and it’s also a highly fragmented market with significant opportunity to consolidate there.

We have a lot of operators in the cannabis world that don’t have a lot of experience and know how to scale. A lot of them have had a really hard time during COVID and are looking to exit, and there’s, there’s no shortage of opportunities to help those consumers, those operators.

Chris Walsh:

Yeah. And this is a time when we see a lot of companies expanding, but they are going into a lot of different markets. So your sole focus on California is interesting. Obviously being the largest market in the world, there’s a lot of opportunity there, but can you talk a little bit more and back up to what you were saying earlier about this shift in strategy from really developing products? And then, moving to that retail side, when did that light go off that, Hey, I think we need to go in this direction and we’re going to start acquiring and launching our own retail operation?

Margot Micallef:

So in 2020 we saw things changing with the onset of COVID. And so we responded maybe more quickly than other companies did and really hunkered down and really decided that it was that we needed to solidify our foundation.

We had grown very rapidly in 2019, but it wasn’t a sustainable type of growth. So we just hunkered down, really scaled down the size of our operation, really went after a higher margin revenue and really improved our efficiencies. And so when we, after we did that, we started looking at where was the opportunity for growth.

We always knew that the opportunity for growth was going to be founded in acquisitions. And so we started looking at what is it that’s missing in the industry. What is it that has prevented the industry from really scaling and from really attracting a continually growing market? And we came to the realization that it was the retail vertical because of the inexperience of a number of the operators.

And because of the lack of a dominant chain, I don’t think that consumers get the same kind of experience going from location to location. And a lot of those mainstream consumers are just not coming into the industry at this time. So it just became obvious.

We were having a conversation as an executive team, and we started talking about some of the failures in the retail space. And I started expressing my point of view of what I would do differently. And somebody asked me, you know, why is it that you know so much about retail? And I just expressed that this is my background. I’ve done three retail consolidations over the course of the last 10, 15 years. And they’ve all been highly successful.

So we started talking about what would that look like in, in the cannabis world. And we started identifying what retailers we thought we wanted to partner with.

And Mankind was top of our list. We had done a lot of work with the Mankind Dispensary. They carried our product. We had done a number of joint ventures with them, and we approached them and they liked the idea of joining forces with us and expanding because they didn’t have the skill set to scale either.

We started getting really serious about moving into retail towards the end of 2020, and we just closed the transaction a few weeks ago. So we’re now focused on the integration.

The Mankind transaction is a really strong transaction to found our expansion into retail on. They’re one of the largest and most well-known dispensaries in the state of California. They’ve got a really strong operating management team, and we’ve got a pipeline of opportunities that we’re going to integrate into the retail fold, starting with Mankind.

Chris Walsh:

So that’s the cornerstone of this strategy?

Margot Micallef:

Absolutely.

Chris Walsh:

I’m wondering … lots of people in the cannabis industry. There’s a lot of opportunities out there. So they’re constantly trying to assess where to put their efforts, and it’s very easy to get distracted and jump in this direction or that direction. And then, you know, you can do it successfully, but many times you find yourself diluted and your focus is all over the place.

When you were talking internally about this strategy, were there thoughts or what were the arguments around, “Maybe we should just stay on the product side and really own that, and maybe take our consolidation expertise and path that way rather than broadening out.” And then you’re opening up a whole new door of potential challenges and difficulties. Can you talk a little bit about that part of the discussion?

Margot Micallef:

Yeah, absolutely. I mean, we have not given up on our brand strategy, our product brand strategy. We actually see it augmented by our retail strategy.

And what we found was that there was a lack of consistency in the way that the dispensaries were being operated. And it was hard to get our products on dispensary shelves at a level that would allow us to really build a consumer following. So that was one of the reasons why it made sense for us to own the retail vertical. Automatically, by virtue of owning more and more dispensaries, we’re going to own more and more market share.

One of the first things we’re looking at at Mankind is increasing the number of proprietary products that we put on shelf. And as we acquire additional dispensaries, our brands will automatically be put on those shelves. So it allows us to create a consistently available brand, a product brand in market to attain that loyal following, which then will allow us to get on more third-party dispensary shelves. So that retail strategy really brings the product strategy forward as well.

Chris Walsh:

So the true kind of vertically integrated model provides all those benefits.

Let me ask you, do you think that you would go this direction or that it would be effective if you did not have that background in retail? It sounds like it was your idea that you were leveraging your expertise from earlier in your career to kind of guide this, and that you know how to do this, you know how to acquire and run retail operations. I mean, how important are your personal skills to this bigger strategy? Because a lot of entrepreneurs out there may have not done that. They’re getting involved in areas of the cannabis industry that they might not have any expertise in.

Margot Micallef:

Yeah. I think past experience is actually absolutely critical. I think there’s two fundamental elements that we bring to the table that others maybe don’t have. One is the level of experience that I’ve had in, in retail consolidations and the level of success that I’ve had in retail consolidation. And I can talk a bit about that in a minute.

But also, we’ve got some great cannabis experience and what we’ve seen as we were observing the market and, looking to expand our business. What we saw was a lot of companies that brought corporate CPG experience with cannabis experience completely fail because they didn’t respect each other and come to a balance where they both felt that they were contributing some element of knowledge and experience to that equation of cannabis and CPG. And so we had our own challenges in, in coming to that balance, but we did come to that balance.

And I think we’re one of the few companies that did come to that balance. Certainly one of the few public companies that found that balance between cannabis, corporate and CPG. The team that we’ve got brings the right experience to the table.

So just by way of my own background, I’ve done four retail consolidations, three on my own. And one with a large telecommunications company. I helped a company grow from $200 million to $2 billion through consolidation. I started my own radio broadcasting business and grew from one station to 50 stations and grew our EBITDA margin by 500%. In so doing, I also moved into the food service space with two well-known food service brands and helped one get out of bankruptcy and grew that business at a 21% cumulative average growth rate year over year, and grew the second one to a 760% ROI to our investors.

So that’s over the course of the last 10 or 12 years. So pretty good experience in successful operations at the retail level. So not just consolidating, but integrating and growing those businesses.

Then we’ve got a team that’s got all sorts of experience in cannabis with Aaron Browe, who founded Sonoma Pacific, with James Schmachtenberger, who founded Mankind, with members of our board who have got experience in, in cannabis and tobacco, in finance. So, you know, we, we’ve got a well-rounded team that really does a good job of marrying corporate, CPG and cannabis, which I don’t think a lot of other firms have.

We’re also really focused as we’ve been talking about in the California market, which a lot of companies are not, and it’s, it’s much easier to share the goodwill from one location to another location when you’re highly focused and working within a smaller region. I know that there’s a lot of MSOs that will have 10 or 15 locations in different states. I think that’s going broad and shallow. And we really believe in going narrow and deep. We believe it’s a, it’s a better use of capital and we believe it’s it’s creates better and more goodwill from location to location.

Chris Walsh:

So you, you have a blend of what you think will be key to your successes of the cannabis industry, knowledge and expertise and experience the same thing for the California market. And then also the outside expertise of operating in other industries that lend themselves or similar to what you’re doing here. Can you talk about what you’ve seen so far in the difference between retail operations in the cannabis space and retail in other industries?

Margot Micallef:

So in other industries you can be focused on only one vertical because the other verticals in the supply chain are sufficiently well built out and reliable. What we found in cannabis is that the industry is so young that the verticals are not yet fully matured. So it actually makes more sense to be more vertically integrated.

We believe the cultivation industry is sufficient and there’s enough very well-run farmers and farms that we can rely on procuring from third-party farms. But beyond that, we’re vertically integrated from what we call harvest to consumer. And we need to be vertically integrated because the supply chain is just not as built out and as reliable.

The key to building brands is consistency: consistency in quality, consistency in availability, and being true to our brand promise. That’s what consumers expect when they, they buy a brand. One of the challenges is getting the brand in market and being able to fulfill and replenish, because if you can attract a consumer to pick up your product, once you’ve failed if you are not continually on shelf and in market so that they can pick you up a second, third and fourth time, which is how they build their loyalty to the brand.

So in order to have that consistency in quality and in availability, we felt that we needed to control those elements of the supply chain like manufacturing and distribution that would facilitate getting our brands into market. And then as I mentioned, realizing that the retail vertical needed some assistance, not just for the benefit of our company, but for the benefit of the industry as a whole. We decided that it also made sense for us to grow into the retail vertical. So now we’ve got consumers from harvest to consumption.

Chris Walsh:

So I’ve noticed that the change in wording on your website and in your press releases to kind of “retail first.” Most people enter the industry maybe thinking of opening one retail location or a handful. Of course, you’ve got others with grand plans, which, which is where you’re at. What is the strategy? How do you plan to get from here with the acquisition of Mankind Dispensary and your first foray into cannabis retail to being a, or the, dominant brand in California in just a couple of years?

Margot Micallef:

So focus is what’s required. We have five people that are sourcing deals for us. We’ve got a pipeline of activity. We’ve got a process by which we do a weekly report to the management team with respect to the progress that we’ve made in the M&A side and what deals we’re looking at and how we’ve progressed them forward. We’ve got a due diligence team that is deployed as soon as we are ready to start the due diligence process.

We’ve got a heavy focus on moving things forward, saying no quickly, if it doesn’t look like the transaction is going to fit. We’re clear on our parameters of what it is that we’re looking for. And if, if a transaction meets those parameters, then we move very quickly. We find that a lot of dispensary owners are happy to work with us because of our track record, because our shares – and we use our shares in part as consideration – they’re still undervalued. So there’s a lot of upside.

The Mankind transaction showed the Mankind vendors to have doubled the value of the shares that they acquired. So we gave them $6 million worth of shares as partial consideration. And those shares doubled in the time it took for us to close that transaction. So they did quite well in taking shares.

There’s an opportunity to partner with operators in that fashion. And they liked the idea of getting additional upside. A lot of the dispensary owners don’t want to necessarily exit the business completely. They want to be part of a bigger operation. And even though they may not want to stay and operate, they, they see the benefit of being part of a larger group. And we’re basically at the start of that expansion strategy. So they can ride along with us and benefit from the value that we’re generating.

Chris Walsh:

So a big part of the strategy here is to gain that dominance through well-timed and strong acquisitions. Let me ask you, when you talked about parameters and fit, what are some of those parameters? What do you look for when you say, OK, these are the things that we want in a retail store that we’re going to acquire and run that fit into our company ethos in the bigger picture?

Margot Micallef:

So they have to have the ability for continued growth. They have to have some level of profitability or a path to profitability that we can identify as part of our due diligence. They have to be in a market that has a good number of consumers to draw from. They have to be in a market that is not surrounded by the illicit dispensaries so that the competition is on an even playing field.

Let me think, what else … The way that we see it, is we walk into a location, and when we do our due diligence, we can identify opportunities for continued growth. We also feel that it’s really important that there be a balance in the operation, and we’ll bring that balance if the operation doesn’t already have it between the traditional consumer and the mainstream newer consumer, the less-experienced consumer.

We want to make sure that the location is in a place where mainstream consumers are comfortable coming into the location. We want to make sure that if there’s any kind of renovation that’s required to upgrade the facility that renovations are possible to be done, and the cost is not overwhelming.

So those are some of the things that we might look at in terms of whether the dispensary fits our parameters, but the continued growth is a big factor for us.

Chris Walsh:

Gotcha. And I know you’re recently embarking on this strategy, but so far based on your due diligence, how many, or what percentage of the ones that you look at or out there meet these requirements or these parameters?

Margot Micallef:

That’s hard to say. I’d say right now we’ve had fairly good success, and we’ve got a good pipeline of deals that we’re working on. I would say probably 30% to 50% of everything we’ve looked at are things that we take quite seriously.

We say no very quickly, there are some dispensary operators that count excise tax as part of their revenue. And they expect a buyer to pay them a multiple on that revenue. And some of them just don’t understand that that’s a passthrough that they can’t count. So we say no pretty quickly to those operators that are looking to structure their transaction in that way.

But generally speaking, we find that operators are willing to work with us. And if they are willing to take shares as consideration, that’s a plus. If they’re willing to carry financing, that’s a plus. If there’s opportunity for growth, sometimes we can structure the transaction as an earnout so that they’re not leaving money on the table, but they’re participating in the growth. So I’d say probably 30 to 50% of everything we’d look at has given us opportunities that we can take seriously.

Chris Walsh:

Well, you brought up an interesting point about getting to the no quickly. We’ve done our own acquisition due diligence in the past as we look at opportunities out there too, and we can kind of have the same approach. You mentioned one major area that leads to a quick no. Are there others that you see out there, whether it’s the personalities, the experience, look and feel? What else leads to that, that you look for that leads to a quick no?

Margot Micallef:

Well, firstly value. I mean, there are some operators that just don’t understand the market and, some operators that did well in prior years and maybe not so well more recently, but they are looking to sell at historical numbers. Can’t get over the fact that maybe their business has changed. Maybe competition has eaten into some of their results. So value’s really important. And right now, you know, we see the market as being anywhere between one to two times revenue. I’ve talked to some operators that are looking for five to six or seven times revenue, which is quite a high multiple. We’ll say no to that quite quickly. There’s no point banging your head against the wall if you can’t come to an agreement on value.

And then, you know, some people are of that mentality that if it’s a win-win, then there’s something wrong with the transaction. So if they ask for a price and we meet their price, then they’ll start moving the price forward because they’ll feel like they’ve left money on the table. So it’s a level of unsophistication that causes the inability to actually come to an agreement.

Chris Walsh:

When you look at California, where are the strongest operators, where are the most promising areas in terms of regions or cities or counties? Where are you most attracted to?

Margot Micallef:

We don’t have a particular region that we’re heavily focused on. I mean, we’re interested in the larger urban markets. We’re really interested in markets, even if they’re smaller markets, where there’s limited licenses being issued. We think that that’s actually a real opportunity because it gives the operators a chance to establish a market before competition really sets in.

We focus on markets where the regulatory bodies are taking the illicit market seriously and shutting down those illicit operators so that we can create a level playing field in the legal market. So those are markets that we probably are more focused on.

It doesn’t really mean that there’s a particular region that we’re focused on. I mean, we’re certainly starting in the south, but we’ve also got opportunities in our pipeline in the north. We’re not eliminating any part of the state, except for those parts of the state that might be challenging because of the things I just mentioned, but we want to be statewide in our foundation and in our operations.

Chris Walsh:

Well, a long time ago in a previous life, when I was a reporter at a mainstream newspaper, I covered a lot of different industries, but I wrote a big story on a publicly traded company in Colorado that ran gentleman’s clubs. And they embarked on a strategy, kind of a roll-up, and they bought a lot. The revenue looked great. They increased revenue through the acquisitions, but over time they encountered a lot of challenges with integration, with marketing and branding, and then with managing all of these different operations around the country.

I’m wondering with the acquisition part being a main part of your strategy here, this is a tried and true business model that you can follow that we’ve seen in other industries. But how are you going to do this effectively? Can you give us some insight – that integration piece and all the other things that come along with this, especially if you’re looking to become the dominant player in a couple of years, which I assume means you’re going to have dozens, if not more of locations. How do you plan to navigate some of these potential pitfalls?

Margot Micallef:

So our goal is to grow to 10 locations within the next 12 months and 100 locations in the next three to five years. So we’re going to do that through acquisition, as well as through greenfield licenses. Before legalization in California, there were over 4,000 dispensaries throughout the state. There’s now roughly 650 brick-and-mortar locations. So more and more municipalities are coming on stream and allowing dispensaries to open. So new licenses will be granted. So we’ll grow to that dominant number through new licenses, as well as acquisitions.

But you’ve hit on something really important. I quite frankly believe that once you sign the definitive agreement and close the transaction, the hard work starts. And that’s, the hard work is in the integration process. So part of our due diligence is also looking at the culture of the company, because if you have really diverse cultures, it’s really hard to integrate.

So that’s one of the factors, and we start the integration process really right from the beginning. We start while we’re doing our due diligence. We’re looking at opportunities for efficiencies, for ways that we can be doing things better. We look for opportunities to consolidate. We look for opportunities to grow. So we’re starting our integration process right from the due diligence process. So then when we close the transaction, what I’ve done in the past, and what we’re doing with the Mankind transaction, is we create an integration committee, which consists of a diverse group of people from different verticals. And we also, in this instance, are bringing on an outside advisor. But because I’ve done this in the past, I’m quite confident that we could do this with or without an outside advisor.

What we do is we look at every element of the business and you have to do it in a way that makes people feel welcomed and not threatened. So we don’t go in and look at a department from the perspective of what is wrong with this department, who are we going to cut? We look it rather from the perspective of what is working well in this department, what could be changed to be more efficient, what could work better? Who were the superstars that we could elevate? What are the changes that we might make in terms of the efficiencies and the process flow?

We map out an actual process map of everything that happens in that department. And we take it down to the bare bones and revisit everything so that nothing’s taken for granted. And then we rebuild it accordingly. And we do that from department to department. And then we come up with standard operating procedures that become the operating bible for that operation.

We’re starting with the Mankind transaction with the Mankind Dispensary, and it’ll be a harder and more challenging process because it’s our first one on the retail side. We did the same thing on the distribution and manufacturing side when we acquired those licenses. But then once we’ve got the SOPs for the retail, it will form the foundation for the SOP for the next group of dispensaries that we bring into our fold.

So there’s not an easy way to do this. It’s taking baby steps in front of baby steps and really doing it one step at a time. And you can’t rush the integration – although we’re in a hurry to integrate, and we will do it quickly, but you’ve got to do it properly.

Chris Walsh:

Yeah, well, it sounds like you have a great plan to do that. And again, I’ve seen that companies stumble in that area many times. So having a well laid out strategy ahead of time, blueprints, SOPs seems to be the keys to success. And it sounds like you’re headed down that route.

You know, the main goal of this podcast is to help those who are entering the industry chart their course in cannabis by extracting some of the lessons learned and the ideas from people who have been there and done that. So before we sign off, can you give our listeners one solid piece of business advice for navigating the cannabis industry based on your experience?

Margot Micallef:

I guess I would say there’s two bits of information that, you know, I think I knew, but really hit home as we were starting the business.

One was surround yourself with good people. And you know, that sounds so trite, but it’s really hard to do. It’s hard to do in any industry, but it’s particularly hard to do in the cannabis industry because there’s so many different personalities in the industry. I think if you’re a startup it’s really important to bring in people that are familiar with startups. A lot of people bring on very senior CPG participants, but who don’t have startup experience. We learned the hard way that that does not work because you can’t go from zero to a hundred without going through step by step. And, and the CPG players who have experienced it with the large national brands just don’t understand the startup world. And they tend to scale too quickly. They tend to scale in a manner that’s not sustainable. So you gotta be selective of the team that you bring on, surround yourself with the right kind of people with the right kind of experience – and the right kind of experience includes cannabis experience and startup experience.

And then the other thing I would say is everything ends up taking far longer in this industry than you think it’s going to. So make sure you’ve got the capital runway to see yourself through to your business plan.

Chris Walsh:

Great points. I’d echo that last one. We have to move really quickly in this industry. It’s a necessity for doing business, but it can be hard sometimes because it does take a lot longer than you expect.

So thanks for the insights Margot, and I can’t wait to see how this plays out and talk to you again down the road when I’m sure you’ll have a few more titles behind your name.

Margot Micallef:

And a lot more dispensaries.

Chris Walsh:

And a lot more dispensaries. Thank you very much.

Margot Micallef:

My pleasure. Thank you.

Chris Walsh:

That concludes my interview with Margot Micallef, the CEO of Gaby. What really stands out to me about our interview is the importance of constantly reassessing the market and opportunities after you launch your company, as it could lead you into a completely different direction than you initially planned or envisioned. Margot and her team realized a gap in the market and determined the ultimate route to success would be moving strongly and quickly into retail, which they also determined would better support their product side through a true vertical integration play. They were quick to re-examine the market and their business when the pandemic hit and the whole landscape changed. Difficulties with getting shelf space for products, the lack of expertise among existing retailers in scaling or even operating a dispensary, an increasing desire from some to exit entirely, the lack of a dominant retail chain and holes in how the industry is reaching consumers all factored into her decision.

This is really similar to MJBizDaily, where we started in 2011 with a focus on providing business intelligence to dispensary owners specifically, but we soon realized that wasn’t the best path forward. So we pivoted to news, analysis and market research for the entire industry, not just dispensary owners. And eventually we started running B2B trade shows where we really identified the larger opportunity.

Secondly, I think Margot hit on a great point about ensuring you have the right mix of skills for what you want to accomplish. Many companies lean heavily either on cannabis experience or mainstream experience. Others seem to have a team with a corporate background, but maybe not in startups. So it’s important to have a mix of all of these. In Margot’s case, that includes experience in retail consolidation and M&A and CPG as well as startups and corporate. So the key to success is really finding the balance in skill sets and making sure you have the right team.

Lastly, I think it’s easy to get distracted in this industry and try to seize every opportunity as Margot alluded to. And we see this with some larger companies that don’t seem to have a defined strategy in place, and they attempting to win licenses or acquire operations in every possible market. In Margot’s case, she is taking a very focused approach on one market, California, that she feels is ripe for consolidation and right for the strategy. And she’s choosing to go narrow and deep rather than broad and shallow.

Thank you all for listening and make sure to tune in next week, when I talked to cannabis pioneer James Lathrop, the CEO of Cannabis City, which was the first rec shop to open in Seattle. We’ll talk about the strategies he’s employed along the way to compete and operate as a single-license holder. Until then, make sure to check out mjbizdaily.com for the latest news, analysis and data on the industry.