California Cannabis & Capital (Podcast Transcript)


Editors’ Note: This is the transcript version of the podcast we published October 8 with Marie Montmarquet. 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!

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Rena Sherbill: Welcome again to The Cannabis Investing Podcast, where we speak with C-level executives, scientists and law and sector experts to provide actionable investment insight and the context with which to understand the burgeoning cannabis industry. I’m your host, Rena Sherbill.

Hi, everybody. Welcome back to the show. Great to have you listening. Today, I’m very happy to be joined by Marie Montmarquet, who is a Co-Founder, along with her brother Allen of MD Numbers Inc., which is a family of vertically integrated cannabis brands, including MD Farms, Marie’s Deliverables and Legacy Coterie that provide really a range of services and goods to the California supply chain where they’re based.

And over the last decade, when Marie went to California to start her business, she has created a number of successful cannabis businesses. And she also gives back to the community and trains and advises and guides people as she talks about in our conversation today, ways for those who have received equity within the cannabis industry, are invited to tour their farms, MD Numbers’ farms, and learn more about the plant, but also learn from two black business owners, what it looks like to start your own business? What it looks like to start your own cannabis business?

A lot of inspiration there that she’s creating within her community and how important that is when it looks like the federal landscape is either more interested in other topics, quite justified in a lot of cases, but also even when they are pushing policy that is cannabis friendly, for instance, a number of social equity bills that are already on the books, and how they’re actually implemented or how they’re actually not implemented. And that’s something Marie talks about today, which I find very interesting and very frustrating. And it’s incumbent upon not just the business owners to give back but also consumers to buy from companies that are treating their employees well, that are treating their Board members well, that are treating their Co-Founders well, and that everybody has equal equity when they’re talking about partnerships.

And Marie and I get into a number of other topics. We talk about strategic partnerships, what to look for when you are pursuing partnerships, and what it means to partner with her brother, for good and for bad. And the notion of funding and how difficult and perhaps inevitable it is to very rarely get a friendly loan. And Marie talks about the numbers and the frustrations and the challenges and the opportunities and the guideposts that she would follow.

And she talks about that there. A great conversation and Marie’s family of businesses are located in California. And like I mentioned last week really important to if we can give back in some way a lot of devastation in the cannabis industry in Northern California in Oregon, a lot of devastated crops and devastated businesses out there many ways that we can help.

Also wanted to shout out, next week’s guest who is George Allen, a return guest to the show, a friend of the show and the companies that he’s the Board of Directors in these holdings, also a California company we talked to Marie today about some of the differences between LA and the Bay Area. These are California microclimates, California has a huge cannabis culture, a huge cannabis society really cannabis purveyors and producers and distributors and loyal listeners of the show and loyal followers of cannabis know that.

But these different microclimates within this large, vast area that is California, and I thought that was really interesting to hear about. George next week gives us also another Californian perspective. So good to get an idea of what’s happening in California, the most mature market on the planet I would say. I hope you enjoy this episode. I really enjoy having you listen, and thanks as always for doing so.

And before we begin a brief disclaimer. Nothing on this podcast should be taken as investment advice of any sort. And in my model cannabis portfolio I’m long, Trulieve, Khiron, GrowGeneration, Curaleaf, Vireo Health and Isracann BioSciences. You can subscribe to us on Libsyn, Apple Podcasts, Spotify, Google Play and Stitcher.

Marie, welcome to The Cannabis Investing podcast, super happy to have you on the show. Thank you for joining us today.

Marie Montmarquet: Thank you so much for having me Rena.

RS: So talk to us about how you got to the cannabis industry. I mean, you’re working on a lot of different levels in the cannabis industry. I’m interested how you got involved in the first place.

MM: Accidentally, I wanted to go to school and be an environmental lawyer. And I was in college, and I was a political science and psychology major, just doing all the normal pre law type requisites. And I started like, really like weed and smoking weed and all my interactions involved a good amount of weed. And I started to just look into like, the stigmas and the troops and the medical portions.

And I was like, I knew that weed wasn’t something that I originally wanted to do at all and I actually joked as I dumped my boyfriend in high school for smoking weed, and I was in there and I actually found my mom like a joint in my mom’s room when I was little. And like, I was crying and lecturing her, but really was like…

RS: Classic origin story.

MM: Oh, my god it was a mess. But in college, I was introduced to cannabis in the right way. And I definitely instantly had a love for it. And I am an entrepreneurial spirit, and commission sales was always one of my things that I was kind of good at and I figured, well, if I want to go to law school I can always go to law school.

And I wanted to see if I could start to make my way to California and get some legal cannabis businesses going because I just appreciated that the availability of something like that happening in California because that would never happen in Tennessee. And even in Tennessee right now, they’re still fighting over decriminalizing different amounts. And I just knew I needed to get to California if I was going to be successful.

RS: And this is before it was legal there or after medical but before rec?

MM: Yeah, Tennessee, it’s well I’m from Nashville — so I’m from Nashville, Tennessee, originally. And there, it is still illegal for medical and rec. So I got all my experience in the beginning, in a state where the stigma is, this is really bad. You’ll go to jail, you can still probably go to jail for small amounts of cannabis in Tennessee, if they want to arrest you.

So yeah, I was definitely in a weird space because the laws in the state that I was in were very anti-cannabis, and could lead you to jail or any sort of issue. And I wanted to get to California, because out here, I knew that if I could successfully get my business started, then I could pay taxes, and I could have a legal business and get a seller’s permit. And that was just like, mind blowing to me that I would have the opportunity in California.

So that’s basically where everything came together was in Tennessee, I was really, really researching and drawing and understanding the culture, and just the flower and the plant. But I knew I needed to get to California if I was going to actually make a business out of it.

RS: So talk to me, you get to California, I know you started MD Numbers with your brother, which I’m super interested in how that is working with family and starting a business with family… How, what was that process like? Like you wanted to go to California starting the cannabis business? How difficult was it to actually make that happen? And where did you first start?

MM: Yeah, I — so my mom used to send me to California when I was little, or to see my god mom. And I always wanted to live in California. And I always told myself when I was younger, if I just had a job in California, I would move.

So I was always like in this young idealism that I had. I love California when you get to California. And when I graduated college, it was ’09. So the recession was in full swing. It was really hard to find any good paying jobs. And I just went into a straight commission only sales job which was still in Tennessee.

And this company had the ability to move you anywhere in the United States if you had a team that was selling enough DirecTV inside of like Costco, we were handling all the connections inside of like Best Buy Costco, Sam’s Club, those large big box stores. And my whole goal, I started working up there in July of 2010. And my goal was just to build a team that would move me to California. And by October 10, I was in California.

RS: That’s awesome. That’s awesome.

MM: Yeah. So that was really like how I got here. Because if I didn’t have — I really wanted to make sure I just had a foundation before I got here, and a job of some sort. So that’s how it happened.

RS: And then how…

MM: Even though…

RS: Yeah, go ahead.

MM: Yeah, I was just like, that was another company that owned the connection service business. And I was in Tracy, California and I did not want to stay in Tracy, California, it’s like in the middle of nowhere cow town. And I left that company, and I started working for a wholesale plumbing company, which is crazy, because I had no prior plumbing knowledge at all other than your basic knowledge of what’s in the house.

And I took that job, this is on the Peninsula, and it was a better job, better opportunity. And the Peninsula is closer to San Francisco, and so I was just trying to making my way over to San Francisco. But that was my next venture out here. And I really appreciated that because I learned so much about this large scale supply chain movement, I was purchasing everything that we were selling, and I was selling it.

So I was really getting involved with like multipliers and understanding like how product is sourced and things like that, which really helped me in cannabis. And our POS system that we had back then definitely gave me like a lot of insight for before I started the cannabis company. So those two, those are two jobs slash careers in California first.

RS: Got you. And did that help set you up for kind of designing what business model like implementing vertical integration was that from learning, okay, this is supply chain this is how we can get things to people. Did that help solidify that for you? Or is that based on — did you set that up based on the regulatory requirements for a cannabis company?

MM: That’s a great question. I would say half and half. We at, like at my plumbing warehouse, we had counter sales, and we had delivery sales, and we had direct shipping sales. So I understood those revenue streams and how to run like delivery from our suppliers. The idea of the plumbing company where we’re loading up these large deliveries and taking them all around the Finland Peninsula, it was able for me — it was allowed me to just have a good foundation for understanding a lot of these movements in the logistics side and on the supply chain side.

But on the vertical integration, like we and I, I always look at two things that is, is the vertical integration a necessity for your business? And at what point is it going to be efficient for you to do it versus a sister, a partner or just a strategic partner that you can find that could do it for the same price or cheaper maybe because that’s all they do.

And for us, we don’t try to over vertically integrate like, I’ve seen a lot of companies that just because you can pull a manufacturing permit, you received a manufacturing permit and then you decided you’re going to make vape pens or you’re going to infuse different items or make edibles, and they’ve spent so much money on getting that product, bringing it to market.

It’s really a failure by the time it launches, or it’s going to require so much more money versus if you would have just outsourced that particular need that you had through a manufacture then 50-50 chance you’re not spending any of your own money, and you have the same type of success. So for us always just like to see like if we have a strategic partner that can do that, and making sure that it’s actually profitable to create that, that stream of business.

And then if it is walking the line of vertical integration, otherwise, it’s just all for me about like, if it makes sense and if the business can stand alone, because I’m all for companies that let’s say every other business crash tomorrow. Does this manufacturing business stand by itself? Does this cultivation stand by itself?

Because it’s the only thing keeping it alive are other vertically integrated businesses then that is a higher risk for me. And I would appreciate or like the way I like set things up with my brother, we just like everything to stand on so.

RS: Yeah.

MM: Even though we’re vertically integrating them, and we see the value of all these pieces, if it doesn’t stay in on the zone and it’s not something that we want to do.

RS: Yeah, that makes sense. So tell me how you come to start MD Numbers with Allen, with your brother, how does that start?

MM: Sure. It was in 2015, I was originally going around to all the storefronts trying to sell them some things and I realized I needed any more things to sell people because I only had one brand and this brand had a bunch of capsules. And capsules are probably one of the least popular items that you sell. So I was like, Alright, I need some more items. I need some flower, I need edibles, I need some other, different shape I’m making.

And while that was happening, I was getting deliveries in Redwood City where I was living at the time. And I was always disappointed in the deliveries. So I started doing a little research and I was like, I can open a delivery company and I have access to a lot of high quality products. And I have access to create an e-commerce or anything else that I need.

So I decided, All right, let me stop going to every single storefront in the Bay Area trying to sell them a capsule. And let me think about delivery. So I started our first delivery in 2015. And it was just small, called Marie’s Deliverables. Those are super focused on a really consultative experience and a lot of the wellness and healing products.

And once we started that company, it really opened up all the possibilities for us like, if they say if you build it, they will come I would definitely agree in cannabis permitting and businesses. Once you have a business you’re going to have a lot of opportunities to be sold things, to sell people things, to gain other permits, to learn about cultivation. And that’s exactly what happened to us.

So we started Marie’s Deliverables in 2015, the very end. And by March or April, we had expanded into Los Angeles. So we had ramped up pretty quickly, are doing well faster than expected. And we ramped up, we went to LA. And then LA was where we really learned the micro markets. This wouldn’t be like a micro market because it’s so far, but selling cannabis in California you have to be like, hyper sensitive to the geography.

It’s weird. It’s like every — and San Francisco has a lot of microclimates. The Bay Area has a lot of microclimates, we joke that in every microclimate people like something different, they have a different methodology towards smoking or the culture might be different. And you have to actually understand these to do well.

So, meanwhile so then we started in LA, and we just started learning about all the LA, LA-isms for smoking weed and what they…

RS: Like, tell me some differences between LA and at North and the Bay Area.

MM: Sure. So I was mind blown in LA that any flower that was highly sought after had to be OG. So even if it was like something that we would call banana, banana up here or a fancy banana name, they would call Banana OG, or let’s say it’s like Apple fritter. If you’re going to sell down there’s got to be Apple fritter OG, like it is something I never saw before.

And I was coming from a place where we really like to have like tons of exotics and like triple A flower selections that were not OGs, more of like the cookie strains and the gelato strains early on. And it was just weird going to LA because we got feedback and the customers would just say like, we’re not really smoking cookies. We don’t really like cookies, we want OG. And we’re like what? This is, okay all right, they want OG.

So then the true caveat of going down there that allowed us to start the farm was how cheap the weed was. Because a lot of and LA has always been the wild, wild, wild, wild west like far more unregulated than Northern California. So we had opened down there, and we were looking around at all the competition and a lot of competition had $35 caps on the menu, meaning that there was nothing on the menu more expensive than $35 an eighth.

And we were coming from a place where we $50, $60 eights were most popular menu items. So my brother and I were like, this isn’t going to work unless we can start a farm. And we had a friend in Salinas, who was walking into a pretty large cultivation situation where he had found a master grower, and he found a property. And my brother started learning more about it and going there and visiting. And then we decided we wanted to raise money and get a farm.

But that was about the beginning of — well, towards the end of 2016 is when we finally secured all the funding for the farm. And then we were able to start a farm in Salinas, California, which is mixed light, so it’s got lights and it has a, its greenhouse. That’s 50,000 square feet. And we have a nursery there, and we have a cultivation permits, processing permit, distribution permit.

And, that situation has been — we probably learned the most in cultivation than anything else because my brother and I came from retail experience and wholesales experience, but we were never cultivators. So it was quite interesting going through all the learning. Learning pains, growing pains, no pun intended, a lot of growing pains with cultivation, and we just stayed the course.

I mean, we used all of our other businesses to supplement, putting more money into the farm and more money into the farm, we used to joke that it was our money pit. And we just, we knew what we needed to do, we just needed money to do so. And we finally were able to get another investment into the farm to completely revamp all of our processes that we wanted to, to get us to a profitable point.

So that happened about a year, a little more than a year ago. And we filled up it like we had out of our 50,000 square feet, for a long time, we only had about 60% full. So we were like, oh man, like we just have an underfunded cultivation, like we’re basically harvesting enough every month to pay the bills and keep everything afloat usually.

But we didn’t have enough money to and reinvest into filling the house and getting more pots, more plants, more dirt and the whole nine for a while. So we definitely had a lot of growing pains, we learned a lot. And now we have a full house. And once we were able to just get that last investment and put all those monies in the right places strategically, it was allowed us to have the farm really like on a far more efficient and actually like giving us the yields that we need to be successful.

RS: And how is it running a business with your brother?

MM: It’s an interesting process for sure. We’re very, very similar. And we’re very, very different. So I joke that, I know him better than anyone, who knows me better than anyone. So it does make things easier for sure. Because even if we’re odds about something I know exactly why he feels the way he feels. And he’s also the type of guy that is a very, like when I was starting the delivery business and he was just supporting me in whatever I needed.

And like I’m like telling him like, bro law of averages, I come from commission sales, I could do this all day. But if we’re doing X amount this week, we should be doing X amount next week, and then the next week and the next week. And I extrapolated the business growth like based upon all of our — just based upon the sales growth that we had seen.

And like I showed him like, Man, this is going to be a real business. It’s going to be a big business, and he’s like, no way. Like what? I don’t know, like, there’s no way you know, this isn’t going to be doing that much a month in the first three months. And I’m like, watch. Boom, three months later, we’re doing more than that.

So I’ve definitely been like, I appreciate him in all of the like, have to have the devils in the details, right? So you have to have that person like digging into all of your details and telling you, no, this isn’t going to work. And then if you can prove to that person, yes, this is going to work, and you have every single rebuttal, you overturn all the objections, then clearly, you have something a lot more viable than if you have a bunch of Yes men or women around you, that are just stamping anything that you want to do.

And my brother and I are not necessarily like that for each other. And I think that that’s one of the things that’s also allowed us to thrive together just because we like to poke holes and everything. And we like to make sure that we have a viable profitable business far before we launch it. And it’s, of course, it has its challenges, but it’s much, much, much easier, and we have a much higher chance of being successful, because it’s just the two of us.

And I say that because like if we want to make a decision, we don’t have to call the Board, we call each other. If we want to sell a business, we don’t call the Board, we call each other. I mean, we have an advisory team around us. But essentially, we don’t have anyone that can do any like, corporate predatory activities towards us inside of our business, of course, outside of our business that always happens.

But it’s much easier, even when I’m — even if I’m not in agreeing with something, it’s so much easier to negotiate with just him and I then a lot of other people that want to control your business. No one else controls any of our businesses except him and I. And I think out of everything that we’ve done, that’s probably the best thing that we’ve done.

And we’ve had, like crazy things happen where we really needed money, and we almost took different deals and partnered on the farm and like, those deals were very predatory. And we would not own our farm anymore. It was, it would be like a sliding scale, a lot of them are just sliding scales. Like, if you don’t produce X amount by X day, then our equity increases by X percent.

So it was a CATCH 22 of all sorts. And we’ve had a lot of different crazy deals, but it’s hard to work like so closely with one person. But I mean, we’ve definitely worked together really well for a long time. And I think if you can maintain control of your business and have it be a family business, then that’s going to be something that your customers feel.

And right now in industry, customers feel the over corporatization of cannabis, they feel like the call center tech like, I won’t say like they feel the call center. They feel like that they don’t want you to engage too much. They want you to order online. They don’t want you to ask too many questions. They want you to just read on the internet, and figure it out yourself.

So I think that there are a lot of different things that are advantage for him and I having like a small family run business. And we’ve moved three of our friends from Tennessee, out here Virginia, out here. So we just we have very like committed, hardworking like loving family environment. And it definitely helps on the vertical integration side, like when we went to LA and we found how inexpensive the flower was down there.

That’s really where our first vertical integration took place was when we came back out up into California, Northern California from Southern California, and started the farm. And then from the farm, I just want to add this we have a distribution company because you can’t sell anything without a distribution company. You can’t transport without distribution. So we have a distribution license as well.

And a couple other pieces that have been created off of distribution, just out of the necessity of like advocacy or hoping equity or some of those different scenarios but we definitely are — we do not try to overintegrate that…

RS: I got you. Let me ask you, how have you maintained capital throughout from starting? Have you just reinvested profits back into the business or what was the capital that you started with or that, like you said that you haven’t taken on any onerous deals, which is very unique in the industry and very like impressive that you didn’t end up doing that and that you stayed true to that, how were you able to make that work?

MM: A combination of those things, so we were self-funded, we definitely had a decent amount of capital that we could infuse ourselves. And delivery, back when I first started delivery for about 30 grand, you could open it, have a good menu, be compliant, that is certainly not the case anymore. So as much cheaper just get in the game back then, so to speak.

And for our farm, we raised money from family and friends. So we had not, not enough money in one time. We opened with raising just like, I guess we could call it our series A, but that farm is probably on series E, F, G, H, I, J, K. And the way that we’ve been able to do it, honestly, the first loans that we took, we have not taken a friendly loan ever, ever.

And it makes me almost sick to my stomach to think about some of the loans, but I mean, we have nor like in order for someone to give us money. Especially back in 2017, when we didn’t have a lot of cultivation experience, we have a proven delivery service, we’re definitely entrepreneurs are going to figure it out for you and make it successful. But, that’s a super risky investment for anyone. And we were getting close to basically doubling everybody’s money, if not more by the time we had paid everything back.

So we took no friendly money. We just had so much faith that we would figure out the farm, that we would double your money, give us the money. Anyone that would literally, there would just be points where like, ah, we need to come up with a $160,000 by the end of this month. Okay. Geez, how do we do that? Let’s get on the phone. Okay, boom, we had actually taken it back.

I had one friendly loan, I think that was at 20%. I call that friendly, ha-ha. Yes, extremely relative. So, most of our — most of the funding that has come in has been unfriendly. It’s been 50% as needed. We try to find that type of investment in the past when things were quite hairy on the farm, and the delivery couldn’t fund everything. We definitely would go out and just beg for some more money from anyone and everyone that we knew.

And it was not, it was — that’s probably one of the most difficult things for sure that, that we did, because especially on the farm, because we worked so hard on that particular endeavor and to lose it would be unbelievably travesty for us. So it’s almost like we would just do anything like anything, anything that we could to survive, we would make sure to do that.

And anyone that gave us money, whatever terms they wanted, we weren’t really in a place to negotiate. Or, of course, we can’t go to the bank yet and get any loans back then anyway. It’s a little different now. But yeah, we just used personal funds, we used delivery funds, and any other income coming in would go to the farm for a long time.

RS: It’s impressive and we’re an investing podcast focused on the cannabis industry. So I talked to a lot of people that are heads of huge companies or working in funds that are funding different companies. So I feel like I spend a lot of my time talking to people that are either providing the capital, definitely are taking capital on it onerous rates, but have easier access to capital, I would put it that way.

So I think, first of all, you’re giving a lot of inspiration to the smaller cannabis company owners, where I feel like it’s definitely easy and inviting to give up sometimes because it’s so tough to get that capital and at the rates that you’re talking about it. So first of all, just kudos and I think you’re probably spreading light to people that are listening to this.

MM: Thank you, thank you.

RS: But some — but something else I wanted to talk about and it’s definitely talked about more. But I don’t think it’s really addressed enough in a meaningful way, which is how difficult it is for smaller companies to get access to capital and primarily, minority business owners to get access to that capital? Kind of how frustrated are you by the state of the industry in terms of how difficult that is? And do you see kind of any — anything on the horizon that gives you cause for being a little bit more hopeful?

MM: Yeah. That’s a great question. I — it is utterly frustrating for sure to find capital, especially for a small business, especially for a startup, which is one thing a lot of people don’t really consider is, in my eyes, much more difficult to raise money for a new co, non-existing business, non-existing profit, and then a company that can show you some money on the books.

So that’s one challenge, just like that, a lot of people that I interact with face like this is their first cannabis company. And the irony, of course, in California and a lot of other places was to get certain permits you have to prove that you were doing it illegally, to then be able to do it legally. So that’s fun. And as we know, if you were doing this illegally, you’re accounting or bookkeeping, your reporting maybe even your compliance was not stellar.

But you still need to raise money. And the only way you can raise money is by giving your investors or potential investors a full financial forecast then a business plan, a nice executive summary, all your financials together, a nice $50,000 pitch deck that somebody made for you I mean, there’s just all these different elements.

And there’s not a lot of avenues for small minority businesses or small businesses anywhere or even minorities anywhere, not in cannabis to go and get friendly investment and financing is very difficult. So, that is still a fact I would say. I had a call the other day with a really good investor for we are expanding our footprint right now for cultivation.

And like, even with our farm we weren’t profitable until this year or cash flow positive we’ll say. So this year, and we know what we’re doing. If you come to my farm, it’s you can see that our processes are top tier, it’s extremely clean, the flower looks amazing, blah, blah, blah. But if I can’t whip my financials out from 2016, 2017, 2018, 2019, and show you something that you believe in, then the chances of me being able to raise money are still very small, even with an existing business.

So it’s all of these different moving pieces. And then of course, we’ve tried to get traditional loans in the past and it’s just we don’t have a lot of the things required to collateralize some of these opportunities. And yeah, like we just we — and my mom is like my biggest supporter for sure. And like, when the farm — when things are really bad at the farm, she’s like, do you want me to pull equity out the house? Like, what do you need and I’m like, No, just wait, like, I think my brother’s going to figure it out.

Like I think Allen’s going to get a different investment or something blah, blah, blah, but it’s so difficult to get an investment and then at the end of the day, like a lot of the things that I think about and tell like, I am a nonprofit advisor for Success Centers for their cannabis program, and we help all the equity applicants that come through San Francisco. And that’s definitely what I see the most when I tell the most is that, both back up a little bit.

If a company is going to invest in you, they’re most likely want control of your business. If the company is going to invest in you and you have no legal experience so if you’re like, hey, I want to open up a cannabis shop, but you’ve never run a shoe shop, you’ve never run any retail, they’re done want to maintain control of that business, right.

So if you are okay with that, that then leads you to the possibility of being manipulated, pushed out of your company because I mean, essentially, that anything could happen to the company if you do not have control over it. So these are a lot of the hardships I would say that new companies and equity companies then minority companies are facing during this process, because even if you do find, let’s say find a fund, or group, or hedge fund of sorts that want to invest in you, they want to control your business.

And that’s definitely the ultimate CATCH 22 because their interests might not be the same as yours. And they might not be honest about that. And if you don’t have the control to be able to take the most important elements under your authorization, meaning buying and selling the company shares, dilutions, anything, really, I mean, if you don’t have control of that and a lot of these contracts in California are currently written in a way where the investors have full control of the business.

Sometimes they have experience, sometimes they don’t. But if you are looking at this in that nutshell, it’s very unhealthy for the business owner, because then a lot of ways they’re set up to lose control of their business, if they ever had it.

RS: Yeah, yeah. So do you think the answer or part of the answer is in kind of what you’re doing, which is advising the next generation of people coming in? Or maybe not generation, but the next wave of people coming in and kind of advising them how to do it?

And but also in terms of — I mean, I think that’s one way but also in terms of advocating for better change in terms of what they have access to, like, is that solely reliant on just getting rid of the 280E tax code or better banking regulations? Is it really mostly about that?

MM: That’s a great question. That is going to change the industry in a lot of ways. Let’s say when 280E is removed. Yes and no, like it will allow a small business to get easier investment, I believe in hope. But at the same time, it’s going to allow really large businesses that have been waiting to get into cannabis literally, like a football team just sitting on the bench, like ready to run into the game, like Marlboro or Miracle Gro, or a lot of these alcohol, large alcoholic.

We’ve already seen, of course, alcohol investment in cannabis. But it’s a CATCH 22. Because when that happens, I don’t want another extinction of small businesses in cannabis, because we’ve already had one major expansion for small businesses when we went from Crop 215 to Crop 64. How I said, I was able to start a delivery service for about $30,000. Now, if I wanted to start that same delivery service, it probably cost me about a half a million.

So I mean, and that is one element. But like I was saying, with the larger companies coming in, when Amazon decides that they want to get involved with weed, what does that look like? Are more small businesses put out of business or will there be an opportunity like craft beer almost where we have a lot of small businesses that are thriving.

But, I am concerned, I do — I would love banking to open up and we do have a bank on our farm. And there are some banks now that will link into your metric and verify your purchases and your sales and they will accept your money. And they’re starting to do some lending as well, which is extremely great.

But for — and I would say, yes, the number one thing that I feel like I can do for anyone or a lot of people can do for themselves is just educate themselves on all of the rules of how to play the game and how the investors are going to play the game. And yesterday, actually at the nonprofit that I work with, Success Centers we had a workshop on how to analyze investors almost, like how to understand what type of partnership you’re getting into, and what role you will be playing in this partnership.

And issues, how to mitigate issues that she foresees and has already dealt with herself with equity partners because in California right now, the only storefronts that are being opened are equity storefronts, but these, the equity permit holders are being screwed if that was a better word, or there are literally cases that you can read about, like one for instance, with High Times recently, where High Times acquired 13 storefronts, and they acquired a storefront in downtown San Francisco, that belonged to an equity owner, and he never even signed off on the sale.

And it’s like, how am I the CEO? And I own 51% of this business and these executives just went behind my back and sold my company.

RS: And that’s because he’s not in charge of that anymore.

MM: Right, yeah. Right, it’s a lot to do with the way that they write these contracts for equity like, they know that you’re at a disadvantage, because you have this equity label for whatever reason, just meaning that you’re looking for partners, and you need investment, but you’re one of the only people that can open. And they take advantage of that scenario.

So these are the exact cases where people don’t have a key to their own building that they’re supposed to be operating. They’re not allowed to see the books, like in LA, if there’s a lot of Tier 2 applicants that are 33.3% owners of these businesses, and they’re not even allowed to see the financials, because they’re just a minority partner. And that’s exactly how they treat them.

And so what I try to do is prevent a lot of these issues by just educating on what they should have in their car on track and the powers that they should be able, so the case with High Times, of course, was interesting. And it should be getting more interesting in theory, because I believe, if I was remember the article correctly, even eight or nine out of the 13 pending storefronts that High Times just bought are all equity storefronts.

So it’s super contradictory to the point of why we created the program like, it blatantly disrespectful in every way. But there’s — that’s where I just really think it’s so important for the aspects of education. And even people that, I had a case yesterday we were listening to a compliance expert that happened to also qualify for equity. So a company was hired there for all of their compliance. And then when they realized that she was equity, they pitched her on being their equity partner.

So, she was super excited, sounds great. And long story short, they also lied to her, took advantage of different things. The whole time, she thought that the business that she was running was attached to another business. And in reality, it wasn’t attached to that business. And it was valueless. And she — I say that to say, she comes from a super educated background, she’s a compliance expert.

And if they do that to the compliance expert, you can only imagine what they do to anyone that’s just fresh eyed, super excited entrepreneur just ready to get into cannabis, and will do anything that you need. The market is full of these types of bad actors.

RS: Yeah. It’s interesting, I feel like so much of this time where so much has been exposed that I feel like was previously swept under the rug in terms of women’s rights, in terms of civil rights, in terms of racial equality.

All of these things, I feel like so much of the answer, obviously, not all of the answer, but much of the answer is found in empowering people and educating people and shining lights on things that it’s not fearful to talk about these things, it doesn’t make you a bad business leader to know, to not understand how nefarious these contracts and some of these actors are in the space.

But it’s imperative. And I feel like bringing light to that, it seems, would at least empower the people to be aware of how kind of entrenched the problem actually is. Like, I think for a lot of people looking at the industry, they’re like, Oh, these social equity programs, and that’s great. If that passes, well, that’s great.

But it’s like they can pass and they’re still terrible policies, which is I think so much of what we all on some level but especially as business owners, you have to grapple with in the industry in terms of dealing with these crazy regulations, and then even the regulations that seem like they’re doing something to better the industry are not, in fact, necessarily doing that.

Would you agree with that a lot? I mean, I suppose you would, because you work so hard in accomplishing those things, and empowering and educating people. Would you feel like that if more people were empowered and educated, it would solve much of the problem? Or do you think that there’s something inherent in the regulations that we should be also fighting for on the policy side, just as much as on the education side?

MM: Absolutely. I feel like you hit the nail on the head, if more people were empowered and educated amongst all of these rights, back to your saying women’s rights, racial, oh, man, all the prejudice that exists in the world, right.

So at the end of the day, it’s like, well, we know that people are also there’s woeful element of ignorance. And then there’s willful ignorance, and there’s a lot of willful and woeful ignorance in cannabis. And there’s also just the greed point of it all, which I would say is the number one driving factor with a lot of this is that, these corporatized companies that came in and they invested in your business, or they invested in 10s of businesses, most of them haven’t made any money.

Most of them to-date, have not made money. The med men’s of the world, a lot of these large conglomerates, they are acquiring permits and they see the value in acquiring permits, but they’re not making money either. So you have an environment that is ripe for corruption. You’ve got a lot of money coming in, you’ve got a lot of unprofitable businesses.

Then we layered this equity situation in between it and we said, oh, no, you have to be an equity storefront holder, or an equity permit holder to get these first priority permits. And we didn’t educate those people. Actually, I don’t even really think that it was about like, in this moment, in this point, like education, I think that the policymakers failed to write policy that protects the people that they were trying to involve and half participate in this process.

So, if we know a contract should look a certain way and board seats should look a certain way and we don’t want these companies to be bought and sold underneath our equity permit holders, we should have wrote a contract that said that. We should hold people to contracts that say that. And instead, like in San Francisco, we pay permit analyst after permit analyst to go over all these individualized contracts, because they’re all different with every single equity person.

And I guarantee you most of them are not in favor of the equity permit holder. So there’s a lot of just small changes that could have been done on a policy or from the policy side, that I think would have alleviated a lot of the predatory contract and predatory just negotiations that have turned sour with a lot of these equity permit holders.

But I also think that, one thing about the government is if they want the people to feel like something has been accomplished, then they’ll create a committee or they’ll create something like equity, this program. But if they don’t fund the program, then it’s all just kind of like smoke and mirrors at the end of the day. And that’s what happened in California.

It was not only did we not fund equity, but we started equity late, so all — January 1, 2018, all the conglomerates already had permits. Yeah, they already transition throughout the course of 2017. Everyone transitioned. And now when 2018 compliant adult use cannabis opened up, they were already positioned to be successful, and to have stores and businesses and manufacturing permits, destroy permits everywhere.

We as of like today, in the state of California, Oakland is the only city that’s given any money out towards equity applicants, San Francisco is still figuring out how they want to give this money, but the money has hit from the state. So I say that to say, it’s October, next month and it’s 2020 and it’s almost three — two and three quarters years into this process. And we’re just now giving a dime to equity business.

RS: Right.

MM: So it’s not just educating. It’s not just like empowering, but I would say it is empowering, right but it’s like, how can we empower with no money?

RS: Right, right.

MM: How can we empower when a jurisdiction like local jurisdictions all over California are allowing big business to come in and take over before they even fund an equity program or an equity applicant, which is very asinine to me and backwards to the point of why we are legalizing cannabis in the first place, which is ignored by most of the masses.

At this point, we’ve just like, Oh, it’s gone too far. If you want to support the war on drugs sure, if you want to give cannabis to three large businesses like in Florida, sure, we’re not going to stop you. The people aren’t going to really do too much. They’re just happy that cannabis is coming to their state, I assume.

But in reality, like me, personally, I believe that if you’re not doing anything to change and impact and empower those that were affected by the war on drugs in that area, and specifically, like people are still going to jail for weed every day in a lot of places.

And if you’re going to not fix that, before you allow the corporate companies to come into cannabis and just reap all the profits and you have an extension of small business, and you’re not going to empower equity then we’ve basically taken a plant that’s for healing and we’ve just dragged it out to dry.

And we corporatized it and now we’re just going to have a corporate boot flower that we call it, but in reality is to just over corporatized, they’re going to have no very low standards of production and very high volume of production. And that’s the way that a lot of these companies that have come in and taken over our modeling and forecasted to grow.

Of course, they’re all growth, growth companies. But yeah, it for me, it’s just insane to think that the government did not help fund equity or protect the contractual agreements with equity prior to allow in corporate America to just come in and monopolize everything.

RS: Yeah, yeah. Is it like, are you hopeful in any way that there is change or do you think that this is like, just the nefarious business of politics and greed? And I would say, some racism thrown into boot?

MM: Right, of course. I am like a little bit of an idealist, a lot of a realist. If it was that easy to change, I think we could look around the world and it would be a different place. Right. But I do think that there should like, out of all the things, I’m 33 I feel like in my life, there’s not a lot of — I wasn’t here necessarily when Martin Luther King was alive or when a lot of these large social justice changes were made.

And I do believe that like, when my generation in this time hope — I’m hopeful that cannabis will be one of those large social justice changes that I would be able to witness. And I think that I am witnessing it in California like we are fighting in California for a lot of things. In Illinois, I would say Massachusetts, Maine, there’s a lot of equity programs that have been written all around the nation, some good, some bad.

So there’s definitely hope and I am idealistic. I would say, on a macro level, I’m not super hopeful, I’m not really hopeful that the federal government is going to fight for the war on drugs, when they de-schedule or reschedule cannabis. Like, I’m not very hopeful on that. But I am super hopeful in like the community, and in the groups that have formed, especially in California, for helping equity.

And we have touched the lives of so many different people. And I see that, and I feel that when I’m there and I’m with the program. And I have just for free I advise three different people right now that are opening up storefronts or brands in San Francisco. And it definitely makes me feel like I’m empowering them, I’m educating them, they’re educating themselves, they’re empowering themselves and as hard as it is to try to change these policies, especially when they’re not funded I see it, I have seen it.

I see the people that no matter what they’re going to be successful, it doesn’t matter what the law says, it doesn’t matter the struggles that they face, they will find a location and open up and they’re going to make it happen. And that’s super empowering. And I also think, like it’s kind of sad thing probably it was. As long as we have empowered those that have come through, let’s say, 500 people come through the program, maybe out of those 500, 25 might get a building lockdown.

And out of those 25, maybe 12 might open up some sort of business manufacturing distro, (sorry it’s loud), manufacturing distro of some sort. And I think, boom, that’s really empowering, like, it’s not going to be everybody. But it is really empowering that at least we do get some people all the way through the program from concept to forecast to business plan to actual viable open business, which is phenomenal.

But I see how hard it is for that to happen. And I also see that it’s harder to happen without partnering with a conglomerate. So it’s almost the ultimate CATCH 22 because you want to run this business, maybe you want to be a family business, you want to be your business, but they basically gave — it’s almost like the Willy Wonka golden ticket. And once you have the golden ticket, now you have to go find your corporate partner.

And so, we definitely set up a lot of these people for even if their business is successful, their business will be sold. It’s not here for long term. As we know a lot of the investors of course, they want their money back plus 10 times or whatever the multiplier is that they want. And this business for you is not going to be a lifetime business.

Hopefully, you’ll make enough money throughout the process to create some sort of generational wealth in your family, but the reality is to have this piece of paper then authorizes you to go find partners that are in a very greedy, greedy place usually, or may not align with your particular goals. Maybe you want to keep the business, they want to sell the business, a lot of issues like that.

RS: And where do you see yourself like as the ecosystem grows and in some ways, as you say, it’s going to grow in ways that maybe people like you and I think that it could grow in better ways. Where do you see yourself as your place with MD Numbers and your businesses within this growing ecosystem?

MM: Sure. So, we want to exist in that growing ecosystem by growing more cannabis. We have an expansion going on right now and cultivation on our mixed light facility. And we also have a couple contracts on the table for some indoor facilities. So my goal and my brother’s goal right now is focus on production because we want to control production.

I would say if your business is going to be successful no matter what it is, you have to control some point of production, maybe not all points of production, but some points. So for our — our delivery is still operational, we are anticipating being able to get some sort of a brick and mortar retail in the future, which would be extremely amazing. And continue to expand our cultivation footprint.

So for us controlling production and being able to grow a very high quality niche product is what we do well. And we’re super focused on quality. And what we produce being. It’s not just for — we don’t just grow to yield as much as we can, of course, we want to yield as much as we can, but we have to have products that are next level top tiers triple A flower, because that’s the background that we come from. And that’s, that’s what we would want to put for the customer — put out to the customer.

So for us right now, things are looking good, things are looking great. We’re definitely in a place to be able to get out of debt, and do really well in the oncoming 2021, 2022. Expand our cultivation footprint, and then hopefully be able to open up a couple other vertically integrated retail businesses, so we can get a more of our product or flower from the farm sold at that higher price point, at the retail level instead of at the bulk distribution level.

So we have the farm and then the delivery, and then we’re hopeful for some other retail opportunities. And then for other current projects, a lot of this stuff is just all surrounding how we are looking at equity and what we can do with equity in San Francisco. And our farm offers a monthly tour, working with Success Centers, which is actually how I met Zoe was through Success Centers. And she works with some of the program managers there which are just like phenomenal.

And we offer a monthly tour to our farm for equity and anyone in the program that is interested in horticulture, and they can come to our farm and my brother gives them an amazing tour, top to bottom and they get to ask any question that they want. And so, for us, like I just like to use everything that we have, our farm especially as a live experience for these types of groups and programs.

So they can ask all the questions and educate themselves and see something real and see it from two other black minorities, that we were able to build something like this. So I think like for me because I’m not a grower, I actually am not — I’m not a head cultivator or anything. I’m definitely more on the retail side and the distro side and the advocacy side.

So I just want to be able to advocate more for these groups and see real change that can affect not just California, but I do think that we have a very small timeline to get ahead of a lot of these issues federally. And we have to do so before the federal government also turns this into the next money grab, which is what it will be.

And by that I also mean just like, I feel very passionate that every city that wants to make money from cannabis should make sure that those that they’ve been arresting for decades and decades have the opportunity to participate. And that’s so important. So that would be the number one thing that I would hope to see over the course of time and hope to even be a part of effecting change in that process.

But I definitely think opportunity is there and we definitely have time right now to change what will happen. Like being from the South like, it means a lot to me that the South would do the same, like also give participation to those that have been impacted by the war on drugs before they give cannabis to Koch Brothers.

RS: Definitely. Could not echo or agree with your words more, super inspiring. I think also it’s like, so much of the change begins in our community around us. And I think much of what you describe how you position yourself as a business leader and as a community leader, just really inspiring I think to kind of build the people up around us.

And I think as despairing as the laws are and as the policies are and as some people’s behavior is, I think the more people like yourselves, keep doing that and keep showing up as a woman, as a minority, as a business leader I think that we can, hopefully push some things forward.

I’m wondering, as an advocate, what do you advise people I think, I guess, for people listening as consumers or as industry people or for some people as that are providing capital how can those people help kind of further and improve the industry and support the things that you talked about in terms of social equity and writing so many wrongs that have come to the industry?

MM: Totally. I think that if I had just, if I could make a perfect world, right if I could think about how all my best friends would be lobbyists, they’d all be the lobbyist. And in that meeting, in that lobbying, we would change how a lot of these rules were and are written. And I mean, what can be done happens.

The sad thing about politics, especially in America are, usually everything is done before we even hear about it.

RS: Yeah, that’s true.

MM: Like in Tennessee right now, I’m aware through one of my best friends he’s an attorney there was telling me all of this certified hemp seed sellers, they’ve already got it’s not even a backdoor deal, it’s a written contract, a written phased approach that they are going to phase cannabis and when they do through the hemp seed sale.

So you have to be a certified hemp seed person to or seller to even be able to take advantage of this in the future. But if you don’t know that, then you can’t change that. And there’s a lot of like good old boy activities, of course that are taking place. And if I could change it, I would just go straight to the source. I would rewrite the laws in a lot of ways.

And I say that also because what does Amazon do? Like, what does Amazon do? Like, who do they pay the most? The lobbies — the lobbyists, how did they manipulate tax incentives? The lobbyists, how or anything, and even we could throw the lobbyists out, but we could just say the politics.

And one thing that I preach heavy a lot are as we have these reinvestment tools available and these tax incentive tools available, we give them to the S&P top 500 companies all around California, and the state in the world and the nation rather, but we don’t give it to anyone in cannabis. We act like, there’s not any incentive that we could give people to help rent spaces to equity business owners, but there are, we just don’t use them.

And I always like to reference the Banking Reinvestment Act, because in order for all these banks to prevent redlining or open up in certain communities, 10% of all of the money goes back into these communities. Same thing when if Amazon wants to open up a new headquarters in the States, by like I mean, I don’t have to tell you, they’re over here bending over backwards, or anyway to give tax incentive or tax break or build a free way for some large company to come to town.

But when we look at cannabis, and when we really look at like the people that were impacted by the war on drugs and cannabis, we act like there’s nothing we can do. Oh, we can’t help these people. They don’t have any money. Oh, we can’t help these people. They don’t have properties to open up these businesses. In reality, neither did a lot of these corporations that we give these tax incentives to and these tax breaks to and we hold certain industries accountable but we’re not holding cannabis accountable.

And I say that on both sides, like we’re not where the politics needs to be held accountable to say, no, we’re not going to let this be modern day slavery. You’re not going to continue to arrest certain people for weed over here, while the rich are allowed to get richer from weed over here. And we also have to just look at the current policies that are available for helping to structure like the future.

And what’s done is done. I don’t know if a lot of can be changed in California per se, but a lot can be changed in every single state that has not opened up cannabis. And even when the federal government comes in, a lot could be changed as well.

And I’m hopeful that now especially with the current temperature of the United States of America being just up in arms, with all of the over racism and everything going on around here, I think that there is a chance for this to have more legs than it’s ever had at the federal level. And it’s just, it’s the world is the way it is. We don’t have to sit and wonder, we all have to do is look around.

If you look around, you see the challenges, you see the obvious struggles that minorities face, and one of them is access to capital, and the other one is access to real estate. And those are the two necessary things to open any cannabis business because it’s tied to the real estate.

So if it was that easy, we would just be able to fix it. It’s not that easy. And it really has to come down to the politics and the policies. And we as equity or minorities, we don’t have lobbyists lobbying for us. There’s nobody lobbying as extensively I will say for making sure those that were impacted by the war on drugs get to make money in this industry or have a lower barrier to entry than we currently do.

But it has to be changed from the top down. And it’s both sides though, because I’m super grassroots. At the same time you I say that I’m like, well, I mean, everything that we do is grassroots, which is why I feel like we have more of these micro impacts instead of macro impacts, because we really do need it to come from the top and we need it to be funded from the top.

RS: Absolutely. Parent should be raising their kids to be lot well, should be raising good kids, and then those good kids to be lobbyists. I think it’s…

MM: That would be amazing. That would be amazing. I think that, I did an internship at the state capitol in Tennessee when I was in college. And a lot of people that I interned with, they left and they went back to school and graduated and became a lobbyist for Exxon or a lot of the oil of the Koch Brother companies in Tennessee, and I was just like, man, they’re so young, and you already sold your soul.

RS: Yeah, yeah.

MM: It happened so fast.

RS: Yeah. But then there’s people like you out there doing the work and effecting change on the micro. I mean, I know, it’s not the macro. But a lot of that micro, I think adds up and like you said, there’s only so much that we can do. And I think we’re not going to solve the problem. But I think as people that are like yourselves that are putting your focus on the smaller problems, on the more local problems, I think that’s the best we can do. And I feel like the more people doing the best that they can do is sometimes…

MM: … all we can ask for.

RS: Yeah, yeah. Sometimes all that you can ask for, but Marie, this has been super inspiring and educational and edifying and I hope for our listeners to certainly for me, I’m always really encouraged to talk to people that are focused on change and doing things to back it up and inspiring other people to change. So, kudos to you and what you’re doing out there. And I hope to talk to you soon down the line and see where you’re at.

MM: Yeah, this was really fun. Please keep me posted on anything interesting in Tel Aviv.

RS: Definitely will, definitely will.

MM: Super, super cool, pleasure to talk to you. Thank you for having me on the show. I can talk about this for the rest of my life.

RS: I am also super interested. Tell listeners where they can find your brand of companies.

MM: Yeah, we just finished our website relaunch mdnumbersinc.com. And you can learn more about us on there. And we also have Instagram.

RS: And I love that you do tours on the farm, I bet people like are seeing cannabis in a whole different way than they ever have. Can people can just sign up for that on the site?

MM: So yes, you can sign up through Success Centers. That’s the nonprofit that we coordinated through with Miss Angela White. And they’re also nationally recognized for just doing the work in the community. And it’s a great program, a great team over there. And so we do have once a month tours that they coordinate to the farm.

And it’s really mind blowing, like, I’ve only seen grow since regulation that mimic our growth. But I’ve only seen a couple. And it’s truly mind blowing. Like, every time I go down there, I’m like, man, we have changed the process or increased production or just it’s always something new and interesting and plenty, plenty to learn.

And I really think the best part about the actual tour is one thing that I see from people that look like me, traditionally, sometimes we’re just very close off, whether it’s to minorities or to white people or doesn’t matter. We just, we believe that there’s something about what we’re doing that we shouldn’t be telling people about because it’s secretive.

And my brother and I believe in the complete opposite. The secret is in the work. There’s no secret that I can tell you about what him and I have done to sell weed. I’ll give you every secret that there was. The only secret is the work and the time and the dedication and just the good and the bad and the ugly that you deal with every day.

And I truly feel like the farm tours, like the only place that you can just get some true transparent information. And you have people with no motive, and no skin in your game, just want to see you be successful. And we’ll give you every single tool that we can to help you.

RS: That’s awesome. That’s awesome. Marie, thank you so much for coming on. Really a pleasure to talk to you and I hope to talk to you soon maybe in Northern California, maybe in Tel Aviv or maybe online, but hope to talk to you soon.

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