Raising Cannabis Capital 0074: SAKU Cannabis

Saku Cannabis CEO Nicole Connors joins Dan Humiston to talk about creating a vertically integrated cannabis enterprise in California.   Nicole shares stories of her journey from a soccer mom to owning and operating successful Washington State dispensaries.  Using her experience to make the dispensary experience less intimidating for new consumers will be the cornerstone of their California endeavor.

Produced By MJBulls Media

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Dan Humiston:
Today's show is brought to you by 3c comprehensive cannabis consulting helps clients design build and optimize their cannabis business from initial assessment and planning through operational nd ongoing management. To learn more about how their services are tailored to meet the unique goals and objectives of each of their clients. Go to 3C cannabis dot com and for a limited time 3C is giving all MJ bulls listeners an additional 10 percent off their fees just for mentioning that you heard it on the show go to 3 C cannabis dot com.

Nicole Connors:
And it was overwhelming this show overwhelming just there's such a huge learning curve there's so many things out there. And by the time I get up to the tender I've got a long line behind me. I feel like I have to make a decision immediately. It's just this shipper pressured and buyer and especially for someone who doesn't know anything about it. It's crazy.

Dan Humiston:
From Buminit media it's the MJ Bell's podcast a show about Raising Cannabis Capital. I'm Dan Humiston. And on today's show how this former soccer mom in Washington State dispensary owner is now doubling down in California to create a vertically integrated cannabis enterprise.

Dan Humiston:
Today in Raising Cannabis Capital we are joined by Nicole Conners CEO of the cannabis. Nicole welcome to every Bose podcast.

Nicole Connors:
Thanks for having me on.

Dan Humiston:
This is really cool. We've been talking a little bit before we went on about this project that you're involved in is going to be so exciting but before we jump into that this is talk about it a little bit about your past. I mean it's crazy but you're essentially a pure cannabis pioneer because you've been in Washington state went legal.

Nicole Connors:
Yes. So Washington state went legal guy back in 2013 and then you know obviously lottery winners started you know figuring out that they were winners in 2014. So yeah that's back in 2014 I was a stay at home mom with raising five kids and we had a hobby farm with oats.

Dan Humiston:
So a mother of five stay at home raising kids. How do you how do you get into cannabis.

Nicole Connors:
So my husband and I you know chase the American dream. He had worked a tiny off I had worked my hanging off. Now you know we've blended our family and staying home and raising goats and we sit down with our financial advisor after years of savings and we sit down and they go OK we'll just keep doing what you're doing for at least another 15 years and you'll be good you'll be ready to retire. And I'm like This is completely absurd. You did something wrong and I know. Just keep keep doing what you're doing. And so we had heard through the grapevine that cannabis was saying it was legal. And either my husband or I were users or even were aware of the industry. But we saw an opportunity and Washington state at the time only Washington investors could participate in the Washington market. And so it really pigeonholed these lottery winners into situations where if they didn't have the capital to kind of open their dispensaries and get the inventory and the security and everything that was necessary they have the potential of losing their license and a lot of them were starting to receive these notices out of you know you have 90 days or you need to let us know that we need to get the lottery to somebody else. And so God bless Craigslist actually was scanning Craigslist and I found my partner and he was looking for a capital investor and I was looking for a dispensary license holder and there you go.

Dan Humiston:
Oh my gosh that is crazy.

Nicole Connors:
I know to invest on Craigslist especially now.

Dan Humiston:
I mean those those licenses today would be so valuable. But back then it was going to last. Yeah. So yes. All right so keep going. So you make it you're an investor but you transition from investor pretty quickly.

Nicole Connors:
Oh yeah. Oh yeah. So we open our doors and just our sales numbers were lackluster. We had hired a business manager and they were great with business but not necessarily with know candidates. It's a different monkey. And so partner called me and he was like look you know I know cannabis that there's all this strategy and business stuff in it that I don't necessarily get. And so it's like well I'll handle that. You handle the day to day. And let's just get through this and it really again I'm a soccer mom. I've got goats and I live in a super conservative area. And I was closeted like no one knew I was involved in cannabis at all. It was tough. It was top secret. And so I told him I'm like I just I don't want my name on anything no I will do these meetings I will handle that stuff. But you know I want to be completely behind the scenes and really you know it it was the situation I do I do is this very hard earned money that we put in to stabilize the investment and show that in the end you did more than turn it around because you're dispensaries are one of the best or one of the most successful in Washington. We're very lucky. We've been consistently ranked on leaflets top 20 dispensaries and we've got a great following. People are very happy with with our stores and with the product. My partner is great at bringing in and and so we've been very fortunate in that way.

Dan Humiston:
Yes that's so great. So you're taking all this knowledge and all this experience in your doubling down in California.

Nicole Connors:
Well when we looked at Washington it was very limited enterprise opportunities in Washington. Washington You still have to be a Washington resident in order to participate in Washington and they have limitations on license and they don't allow vertical integration. So it really ties your hands in a lot of ways. And so my attorney at the time when California decided it's going legal she gave me a call and she goes. Nicole you guys got to come to California and you guys would kill it here and I'm like Lord. Why is that. And it's just you know our our number one motto that we've always had is protect the license. And so we understand the regulations very well and we know that that is our. Unity right. Cannabis it still can be very precarious as we're seeing with companies like Sweet Leaf and other operators that are getting violations now and they're getting raided because you know they're very specific laws. And as long as you operate in those laws you can enjoy the protection and the opportunity that is cannabis. And so that's kind of always been our motto. So when California opened up all the things that I called my lawyer to complain about. Why can I only own so many dispensaries and why can I not vertically integrate. Suddenly California took away those barriers exactly and said hey let's create an opportunity for enterprise. Let's create an opportunity to actually build a cannabis brand. And so after a few phone calls with legal and finally went Holy Hanna we really can build this monster that I've wanted to build for so long. This is this opportunity. And instead of having very limited avenues for bringing on investors California doesn't have those restrictions that you have to live in Washington or you have to live in California. It's now. No. You know it's August they're accredited investors bring them in.

Nicole Connors:
So it's very exciting.

Dan Humiston:
I want to take a minute to tell everyone about an exciting free opportunity. One of our former guests good harvest company is offering retail operators in cannabis brand managers in the adult use market. Good Harvest Company is preparing to launch a platform which uses customers buying and shopping behaviors to help brands effectively reach their customers for a limited time. Good Harvest Company will offer participating companies free access to their data in return for their feedback. To learn more. Good a good harvest.co

Dan Humiston:
Let's take it step by step because it's such an enormous project that I don't want to cut any aspect of it short but let's start off with the dispensaries. So what's the beginning. Game plan we'll do each profit center on its own but the beginning game plan for dispensaries.

Nicole Connors:
So dispensaries for me again kind of coming into the cannabis industry from being away from it. I walked into my first dispensary which was you know doing my research trying to figure out how to set up hours. And I was greeted by lights and I was greeted by lots of products like hundreds of products and menu boards and it was overwhelming it was so overwhelming. Just there such a huge learning curve. There's so many things out there. And by the time I make it up to the bud tender I've got a long line behind me. I feel like I have to make a decision immediately. It's just this super pressured environment and especially for someone who doesn't know anything about it. It's crazy. And so I remember I was just like I don't know what I want but I wanted to be strong. So I bought my first three rolls royce for thirty dollars which was what the market would you know. That's what we were paying. You know animus is flying off the shelves and we were selling out like in Canada. And so I walk out with this joint. That's their first cannabis I've had since I was like 19 and so my husband and I and we we enjoy our first joint and my husband hasn't smoked since the 70s.

Nicole Connors:
And so he inhales way more than what he should have. And so now he's just flattened and I'm feeling the same way because Holy Hanna cannabis is different right. And so you had a lot of this potential audience out there that hasn't participated in the world of cannabis. And so to have that first time dispensary experience to be so overwhelming it's such a huge learning curve. And then to have products that are just going to flatten you. It is not the best opportunity for us to present ourselves to potential candidates market. And so do your market studies and you look at that space that is California. You can identify that there are six million cannabis consumers in the state of California. And then there they've activated about nine point eight million potential customers for cannabis in California alone. And these are people that are saying hey in the near future I'm going to try candidates. And so when you look at a 7 billion dollar market that's based on 6 million people and you have this 10 million people potential you go oh my gosh I need to change the way we engage with them because that's substantial for way more than what we'd anticipated so far. And so how do we make cannabis simple. So that's what we've really focused on with stitcher cannabis is let's make the user experience and the purchaser experience simple.

Nicole Connors:
And so what we're doing is we're redesigning the dispensary experience where we actually zoned our stores based on your experience level. And so we've created a line called Curious we each create a line called adventurous passionate and relief and so curious obviously are for people that are new to cannabis that would like to try it. And so these are low dosing or micro dosing products that are easy to consume and easy to understand that you have your adventurous which is kind of like that next step up. The people who have tried the easier stuff and now they're ready to take the next step passionate it's pretty clear these are for the kind of sewers the 20 percent of the market that drives 80 percent of the revenue. Those guys that know exactly what they want site hey they're always willing to learn about what the new thing is super trendy stuff and then release it for people that come in with arthritis and they just want a topical or they much some CBD or they want a doggie treat or their puppies things like that and start off Google is twenty five locations twenty five locations in California over five years.

Dan Humiston:
So I mean the big state a big state.

Nicole Connors:
Yeah it really is a big state. When you look at the population numbers there are 25 million people in the state of California that are over 21. And so it's just a lot of people's right. Yeah. So yeah. So when you look at the possibility for retail stores. Two thousand or more potential retail stores in the state of health.

Dan Humiston:
Oh yeah. You're a drop in the ocean. If it it's getting it. Yeah.

Nicole Connors:
So we hope to be a really big draw.

Dan Humiston:
It will be if that model sounds like it's it's a sure thing. Let's jump to manufacturing.

Nicole Connors:
Ok so manufacturing again. Developing products within those same four categories of the curious adventurous passionate and released. And in this instance we have a manufacturer who is scanning the grey market in California for about 20 years. So he is what the Emerald Cup and he said a few things and so we're very excited to be bringing him on board. He is he's passionate about his craft and he is definitely one of those 20 percenters. That is just passionate about what he does and so he is going to be focused on concentrates and it tends to that'll be for that. And then we're also super lucky that are sneaky of operations as Michael Delucchi as she is a chef and a master chocolatier and he's classically trained in France. So we're excited.

Dan Humiston:
Last but not least interesting merchandising I very seldom hear anybody talking about merchandising.

Dan Humiston:
Tell us a little bit about what your plans are for merchandising you know and that is something where I feel like so many cannabis brands cannabis it you truly are building a brand. Right. A few for me I look at the trajectory of alcohol and how alcohol started small but then eventually now they have just this huge cult following where people want to identify with the thing that they consume on a regular basis it's such a part of their life that they want to wear that T-shirt they want to wear that hat they want to root for the NASCAR driver that drives around and Miller lighter but like car. And so that is something where we take a look at the opportunity not only to create stores and products that people identify with but now they have that opportunity to kind of purchase those ancillary items so they can buy their bong or their papers or those types of things that now they can also buy the city or the winning jacket or Campbell's notebooks the things in our mind that just make these two candidates lifestyle a little bit better.

Dan Humiston:
It's just all ties the brand gathers you like you said it rounds it out. So let's jump forward. An enormous project. So how do you fund this.

Nicole Connors:
Yeah. So that is something that we are just get started on. We are currently offering three million dollar investment for 10 percent equity stake in the company. And so with that initial three million dollars helps us get our manufacturing facilities kind of get the revenue we all started and get there and getting the money generated. And then once we have revenue generation and we can start showing our products on shelves and we can start getting a few of the retail licenses secured that's when we're hoping to go for a 10 million dollar debt financing.

Nicole Connors:
I'm looking at your projections in there just like I mean these are just they're just so exciting the opportunity we don't have time to dig into a money but for investors that are interested in this. The potential here is just off the charts just off the charts. If you said when you look at the pitch deck it's very impressive. Yeah. Thank you.

Nicole Connors:
Thank you. Yeah. Gross revenue I believe is projected at two hundred and twenty nine million per year.

Dan Humiston:
And a lot of a lot of that makes it to the bottom line. I can just tell this by looking at your number so if if an investor somebody is listening right now how do they participate.

Nicole Connors:
Well there's two different opportunities to how to reach out to us. Obviously our website is up. We do have an Investor page and accredited investors can click on the link and give us their information as well start sending them materials or people could reach out to me directly.

Dan Humiston:
Well we've been speaking to Nicole Conners CEO of CQ cannabis and we'll have all of their information on the MJBulls Web site.

Dan Humiston:
Nicole super exciting stuff. I can't. You're gonna be back on the show I hope.

Dan Humiston:
Dan it was such a pleasure. Thank you so much for having us on. We really really appreciate your time. Well thank you and good luck. Thank you.

Dan Humiston:
Let me take a second to think Trevett Hill for sponsoring today's show. Cannabis investors expect big returns from the companies that they invest in. Unfortunately not all cannabis investments succeed. Trevett Hill management team works with investors to help turnaround or in some cases purchased their underperforming portfolio companies to learn more go to Trevett Hill dot com.

Thanks for listening to the MJBulls Podcast. To learn more about today's guests or to become a guest. Visit our Web site at MJBulls.com. Today's show was produced by Buminit media with original music composed by Jamie Humiston. I'm Dan Humiston and you've been listening to the MJBulls Podcast.

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