Raising Cannabis Capital 0057: C4 Distro and Trading Company

"Raising Cannabis Capital" C4 Distro & Trading Company's CEO Eric Spitz talks to Dan Humiston about creating a cannabis distribution company in Los Angeles with a hands-on sales team that works directly with it's customers.

Produced By MJBulls Media

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Dan Humiston:
Today's show and the following message are brought to you by a former guest cliintel Capital Management Group is a cannabis investment firm with diverse investments throughout all sectors of the cannabis industry. Listen to MJ bulls Episode 24 or go to Cliintel Cliientelcapital dot com. To learn more.

Eric Spitz:
Sure I would say that first and foremost we built this business through a design process with the end in mind. Meaning we knew in the beginning how big the market is how big it is going to be and the type of volume that we were ultimately going to move through our pipes.

Dan Humiston:
From Buminit media it's the MJbulls podcast a show about Raising Cannabis Capital.

Dan Humiston:
Dan Humiston. And on today's show we go to the epicenter of the epicenter to learn about this L.A. distributors unique approach to servicing one of the largest markets in the world.

Dan Humiston:
Today we continue our Raising Cannabis Capital series with Eric Spitz CEO of C$ Distro. Eric thanks for being on the MJBulls Podcast.

Eric Spitz:
My pleasure.

Dan Humiston:
Well I'm on the sea for destroyer website and it talks about how your California's Premier distribution and trading company. You tell our listeners exactly what you do.

Eric Spitz:
Yes we are cannabis distributors in the California supply chain and what that means is our business looks similar to a beer distributor. We wait at our warehouse for product to show up from our producer partners and we pick the products put them into the right containers. We pack them into boxes by store order and we deploy those out into the retail channel of dispensaries across Southern California. We get the orders from our sales team. So it's basically a two part effort. You have the sales team going out and soliciting orders from the various dispensaries. And then once the orders are taken the logistics team takes care of putting the products in the right boxes sending them into the licensed vehicles and up to the store.

Dan Humiston:
Yeah. And we spoke last you mentioned to me about the way you have your sales team set up where there's to ensure that your reps are really hands on they get to know the customer. What are some of the advantages due to a model like that or maybe explain a little bit more about your model in water and some of the advantages to that type of model.

Eric Spitz:
Sure. We have been around and designing our systems since 2016 understanding that we didn't operate the business until the regulatory infrastructure in California was in place in January 2008. But we built the business on three basic strategic principles. Number one is called the high touch distribution service. And what that means is we found an industry where the average rep coverage somewhere between 40 and 100 stores. We believe that that is far too many stores for a single rep to cover. If he wants to provide the kind of service that these dispensaries need. So we reduced the size of any territory to 12 to 15 stores in order that each of our sales rep gets to touch each of his or her store every week because we believe that there's a metronome that needs to go. The store owners need to understand that you're coming back and if they have questions and that someone is going to be there there's a mistake.

Dan Humiston:
Yeah I think that's the advantage that you have is that their relationship is more with you than it is with the brand.

Eric Spitz:
Well there's no question that the relationship is with us as opposed to with the brands because it's inefficient for a retailer to have a standalone relationship with all of the brand owners. They don't want that because it's too unwieldy. That's why in every business that is a product business there is a distributor layer. The cannabis industry outside of California and Nevada hasn't quite figured that out. The powers that be inside the cannabis industry determined a few years ago that they were better off without a distributor in Colorado and without a distributor in Oregon and Washington. And the reason being that they thought that they didn't want the middlemen and they wanted each of the operators to have its own relationship with the stores. And frankly it just doesn't playing makes sense in our 21st century economy.

Dan Humiston:
No. Well it really puts you in the position where you the distributor in this model in California's model really has a lot of influence. But you also have a lot of responsibility. You actually have to purchase the product from the manufacturer is that correct.

Eric Spitz:
That's correct. And in addition to responsibility we have capital outlay. So we need to come to the party with a lot more than a set of trucks. We also need capital. We need to be able to buy the product we need to be able to move it and we need to be able to sell it. So yes. But in addition to that we also play a regulatory role for the state of California because the state of California in their wisdom provided three exclusive jobs for a distributor to do. Meaning that only a distributor is allowed to test the product meaning monitor the test you send it to a testing company but it sits in a quarantined area and distributors warehouse the distributor taxes the product and then the distributor transports the product. Those three tasks must be done by a distributor licensed company in California.

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. And now back to the show.

Eric Spitz:
Also you have a lot of responsibility if you're collecting the tax and you have to submit a tax. There's a lot of responsibility from a distributors position I know you have a really experienced management team so that's I mean this isn't this isn't new stuff for you guys. Talk a little bit about your team and some other advantages that you or some other aspects of your company that set you apart from other distributors.

Eric Spitz:
Sure. I would say that first and foremost we built this business through a design process with the end in mind. Meaning we knew in the beginning how big the market is how big it is going to be and the type of volume that we were ultimately going to move through our pipes. So we built a team of experts. This is an organization built specifically to do what a distributor needs to do in council.

Eric Spitz:
And you're in Southern California. I mean you couldn't be a bigger market in the world and where you are right now it is the epicenter of the candidates industry hit. It is it is. And with all that going on you are going to have to do enormous amount of growth just to keep pace with the industry. Do you have any plans for funding this growth or how are you funding this growth.

Eric Spitz:
We do in fact we are sitting right in front of a significant capital raise we will be bringing 15 million dollars into the business starting early February we're starting to have early pre conversations with folks. There are investor groups out there that want to be involved at the epicenter of the epicenter. We are there.

Dan Humiston:
So OK. Well you just got everybody's attention. So what do they need to do. How they get involved or how do they get more information.

Eric Spitz:
They can send me an email. My email address some very accessible my email address is my last name. at C4 distro D I S T R O dot com and as soon as I get an email I will forward the information that we have available and we'll start the dance to see if this is something that is a fit between the investor and the investor.

Dan Humiston:
Well I can I can vouch for you Eric. You are the fastest person returning their phone calls or text messages. I mean you you are very efficient your organization. I'm sure if it's any reflection on that this is a really sophisticated and really well oiled machine over there. We've been speaking with Eric Spitz the CEO of sea for distro. I'm going to have all your information on our Web site as well Eric. So. So if people want to go to the MGM MJBulls Web site they can they can get this information in and follow up with you about investing or just fine find out more if they want to be a customer of see for distro. Eric anything you want to leave with our listeners before we sign off.

Eric Spitz:
Yeah I want to tell your listeners that they ought to be on the lookout for some world class brands to hit the cannabis space that we have spent the last 90 or 120 days in our own development process. Once we determined that we needed to seed the market with some more brands not just wait for all the brands to show up with us. We took ourselves through a development process. And in two weeks we'll be launching what we believe to be the first true cannabis brand with a back story. Your audience should start to get excited about it. Brand is called Glass worthy and it's a fascinating story. I'm going to tell you is that the brand motto is from a Latin phrase that starts next live near a tech home and then goes on to have the initials which is printed on each of our containers. But what it means in English is never arrives with the second best weed

Dan Humiston:
That's classic if we commit to being back on the show after the launch because I'd love to have you back on the show to talk to us about the launch if when you. Absolutely. Oh good good. Well everyone stay tuned for that. That will be really exciting. Eric thanks for being on the show and I really appreciate you sharing all this with us. Especially that last bit that's going to be the great teaser for down the road. Thank you.

Eric Spitz:
I appreciate it.

Eric Spitz:
Thanks for your time good luck. Just a quick reminder that you can become an MJbulls member for just four dollars and ninety nine cents per month and enjoy exclusive access to companies pitch decks and the mjbulls cannabis capital directory. Joined today at MJBulls.com.

Dan Humiston:
Thanks for listening to the MJBulls Podcast. To learn more about today's guest or to become a guest. Visit our website at MJBulls.com.

Dan Humiston:
Today's show is 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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