Interview with A Cannabis Business Consultant

Hi.  Big Bud here.  A couple of weeks ago, I sat down via Skype with Emily Seelman of Tetra Growth Systems.  She is one of the most knowledgeable people you can talk to if you want to grow your cannabis business from just barely making it to a potential  target for a buyout by Big Pharma.  She knows how to identify investors and raise money, how to structure your company and how to handle all the issues around getting permits to operate legally.Due to technical glitches, the first part of the interview is not transcribed, but never fear; we will certainly have Emily back with more great advice on how to get the cash to grow your business.

Here’s Emily Seelman:

Emily Seelman: … that Big Pharma’s gonna come in and try to buy out all these facilities. So they either wanna survive it or they want to get bought out by Big Pharma, so in that aspect, we do have some major players who are ten, fifteen people who are trying to put their money into producing a good, quality product and get nationally known.

Tetra Growth Systems and Marijuana Investors

Big Bud: I’m gonna maybe try to start over a little bit because I’m not sure that this recording is working. So let me ask you the name of your company, again, is Tetra Growth Systems? Is that right?  And you’re a national company that puts businesses that are investing together with people that are growing, I guess, is the best way to put it. Is that right, Emily?

Emily Seelman: Yeah, people who are growing, people who are selling in a dispensary, they’re seeking funding, maybe people who are just in the midst of applying to the state and just need to hit a threshold, maybe 1.5 million, or who have gotten their permits but need fifteen million dollars in a raise in order to be successful. We act as that intermediary where we can help these people get that type of funding, get that type of investment.

Big Bud: And you have sources you can go to to help people find that kind of money to invest in growing their operation, is that right?

Tetra Knows the Cannabis Business Space and Players

Emily Seelman: Yeah, and I think the thing we pride ourselves is in trying to connect high-quality groups and high-quality people. There’s a lot of people who aren’t necessarily good people. They’re not good players in the cannabis space, and you’ll find that a lot in this space. There are people who have no idea what they’re doing but just have the money, and that’s fine. They wanna get invested into it.

There’s people who don’t have any money and love the product, and we try to maybe combine them. Or, there’s people who have the money but maybe aren’t trustworthy, don’t have a good record, just really don’t care about the product, don’t care about the people. So we really take pride in matching … making those types of connections that are right for both parties and truly acting as an intermediary and making sure it’s a good connection.

Big Bud: Now, in terms of licensing, have you found that there’s been a lot of confusion and difficulty in various places? I’ve read, for instance, that California is basically a mess for licensing, right now.

Get Your Licensing Right From the Start

Emily Seelman: California, their regulations seem to change on a daily basis. It’s interesting, places like California you feel like you got the green light once the state opens up use to recreational, but then you realize very quickly that on a very local level you are battling local politics. You could, essentially, be able to apply anywhere. Effectively, you are, but when it comes down to local politics, they’ll zone it so that you will never win a permit. They’ll zone it in certain ways. They’ll modify local laws, local issues, so that you will, effectively, never be able to open up a dispensary or a lab or a micro-business there.

So it’s challenging. There’s a lot of red tape in places like California. It’s interesting, I think the East Coast is learning from the hiccups and the mistakes of the West Coast, which is nice.

We learn from each other. That’s what makes a great community base. But my hope is that California straightens up a little bit because, ultimately, most of the people are trying to get their product out there to heal and to help, and it’s hard to do that when you can’t even get a facility or a permit. So it can be a mess in some states. It’s pretty crazy. California is the worst, I think, of all of them.

How to Price Recreational Weed

Big Bud: Let me ask you about something that has been puzzling me for a little bit. I know that there’s a very large recreational market that is illicit, illegal. Supposedly, the legal recreational market is many times smaller than the illegal selling. How does the person who wants to be a legal seller of recreational find a way to price his product fairly and get a good price for what he’s selling?

Emily Seelman: Well, I think there’s two parts to that. One, you’re kind of at the mercy of the state you’re in. California, for instance, there’s so much regulation and red tape, there’s so many issues going on as far as taxing and everything, that the prices are gonna be, naturally, higher than getting it on the black market. To get it legally, a customer’s going to pay more.

On the flip side, though, you’re also included in that cost of the product … I would say, to the first point, I would try to choose a state that is a little friendlier so that you can start to lower your prices as soon as you can. Obviously, there’s gonna be a natural honeymoon phase when it comes to pricing product. Every time a state opens up a new dispensary to the market there’s always that initial, I think, heightened price for the cannabis, but it’ll naturally go down in like three years with every state.

People Pay Up For Quality Cannabis

But on the other end of it, customers, I think, need to be cognizant of the fact that you are also paying for much higher quality product that is held to a lot more rigorous standards, that testing has to be done on these products. You have to ensure you’re not putting bad things in it. When you go to the black market to buy products, you have no idea, really, what you’re getting. That, to me, is the biggest difference.

I would buy something that costs three times more from a dispensary knowing that the prices will drop eventually. Or, I could price shop and go to a brand that’s cheaper, knowing, though, that my product that I get from the dispensary is gonna be way more high-quality, I could trust it, it’s tested, than I could ever do on the black market.

How To Market Your Product

Big Bud: Okay. Tell me a little bit about how small growers find a market for their product, assuming they have a legal growing permit. What do they need to do to find a market for their product?

Emily Seelman: Well, I think that the wave of the future is, certainly, vertically-integrated. Vertically-integrated meaning a winner of a permit for a cultivation facility will also apply to the state to get a dispensary permit or anything you can do … basically get all the permits you can possibly get that you can do everything in-house because economies and scale are at work. You’re gonna be able to keep all of your costs low. And so, you can sell more competitively priced products.

I think, in that sense, if I was a small grower, I would try to first go vertical and get, maybe, a dispensary permit. I would try to do as much of it in-house as possible. I would, obviously, be working on my branding and making sure that I am the highest quality product out there. There are products that aren’t necessarily the best on the market, they are just the best branding on the market. They just have a killer looking product that looks high quality, and they stand out, and people will buy it. I would definitely look at that.

Efficiency is Key to Success in the Cannabis Business

Third, I would say just produce in such a way, partner with dispensaries in such a way that you can grow your cultivation facilities. There’s no reason why someone who’s small will fail, at this point, unless they’re inefficiently run. You can grow and grow lean, as lean as possible, and grow as efficiently as possible.

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Take a Course

I always recommend this course. The company’s called Anton Jay, and I took their 12-week business course. They also come in and they do deep dive, and they will take four days and just analyze a small company, a large company, whatever, and help them grow and set themselves up for success. I think, sometimes, these cultivators, these dispensary owners are just artists. They love cannabis, they love to produce a good crop, a good strain, but they don’t necessarily know how to run a business. If that’s the case, if the cultivation is small because of that, I would say get in front of a good consultant that can help you grow your business. I recommend Anton Jay strictly because I took it, I know it, I know how they helped my company, and they help every company out there, every different type of segment, sector out there. I highly recommend something like that.

[Big Bud also suggests these courses.]

Find a Consultant and Find a Partner

I guess it’s just, ultimately, to summarize all of that, it depends on the reason why you’re small. If you’re small because you’re just small, you applied for a small cultivation permit, then if you are capable of doing it, grow efficiently, grow lean. If you know you’re just not a good business person and you’re small, and you just love to produce a good strain, your sweet spot is the art behind cannabis, then partner with good business people, partner with people who can grow your cultivation facility, get a good business consultant that will help you grow well.

And then, like I said before, get your branding right. If you can partner with good dispensaries and get your name out there and get your product into more dispensaries, definitely do that. Or, get vertically licensed. Get as many … the “unicorn licenses”, they say, in Pennsylvania. It’s that magical license where you can really get everything under one roof and keep it as lean and efficient as possible as you grown.

Small or Large–Talk to Emily

Big Bud: Tell me, how small are the companies that you deal with? We’re talking, maybe, what, one or two people at a company that want to get big, or is that to small for you to even talk to?

Emily Seelman: No, no, no. In fact, I just had a conversation with a CBD company. They were a husband and wife team. They started in their basement. Their product got really good. They moved to a warehouse. The state they’re in now is they’re in a warehouse, they’re paying for testing, but there’s such a demand for their products because it’s so good, they want to expand their operation. And in that sense, maybe they can’t pay for … I can help them with the testing side and everything, but my recommendation would be if they’re that small, maybe pay for a course that you can learn how to grow your business effectively and efficiently, because if you can’t expand your operations to meet demand, then your business will fail.

But the problem is, is that this couple, they were artistic. They didn’t like the business side. To them I would say, “Get someone who’s business-minded, like manager, leader type, and get yourself into a growth course, whether it’s the Anton Jay course that I took, which is called The G-Spot Growth Seminar, if you could do something like that, or do a different one, it doesn’t have to be that one. I’m not paid to promote them, I just took it and I know it, I like it.”
If they’re that small, I can certainly help them with permitting and things like that to expand as they need to, but they have to get their operations straight. You can get all the permits in the entire country, but if you can’t get your operations running to match, then it’s gonna be a fruitless endeavor, in my opinion.

Big Bud: Can anybody call you and get that kind of advice from you, or is this something that you charge for, generally?

The Cannabis Community Helps

Emily Seelman: Yeah. No, in those types of situations … I think there’s just so many people who just have basic questions and just need started. And I started in this industry, I had so many questions. I still have questions. I mean, that’s how you grow, right? To me, this is all about community. That’s why I love the cannabis sector, it’s because it’s very community-oriented. I’m always happy to help people. I’m always happy to talk to people. If they need my services, I will, certainly, be happy to help them. If they need other services, I’m happy to tell them that.
I think people, sometimes, just need guidance. The biggest thing I’ve found in this industry is that there’s a lot of artists. There’s a lot of people who love cannabis, who can grow it better than anyone I’ve ever met, and they are like the Picasso of plants. They just don’t know how to run a business, and that’s okay. Stick with your sweet spot, and then hire out what you’re not good at and get your operations going, and you’ll be successful.
I’m happy to take calls, emails, whatever, if people have questions or need some guidance on how to do it. I’m certainly not in it to just try to take everyone’s money or say everyone needs to hire me. But, to me, honesty’s the biggest thing. And I had people that just helped me for free, and that was essential to my growth, so I’m happy to give that back.

Big Pharma Will Be Looking For Cannabis Companies

Big Bud: Tell me, what do you see happening in the market for cannabis as time passes in the next couple of years? I mean, it seems like we’ll probably have a lot more states that are legalizing it, maybe even the feds, but in terms of the market itself, selling and buying cannabis, what do you see happening?

Emily Seelman: I’m hoping that it becomes less fragmented. I think, at this stage, I think that the education is so far behind the production of cannabis that I’m hoping in three years that evens out. And that might only occur once it’s federally legalized, which I’m hoping, like you, will happen. If that does occur, I think there’s gonna be a huge shift in the market. I think when that happens Big Pharma’s gonna come in, the pharmaceutical companies who have not been able to really do much with it, who’ve been, actually, inhibiting its growth in the market because it’s against their interests. Once it’s legalized, they’re gonna try to come in, is my suspicion, and buy out growers and dispensaries and pharmacies and take part in the monetary benefits of it, and that’s just a reality I think people need to be aware of. Some people don’t think it’ll happen, I absolutely think it’s gonna happen.

Start Now to Survive the Coming Competition

And when that does occur, you’re gonna see a lot of smaller companies who aren’t prepared die. They’re going to lose everything because it’s hard to compete against huge manufacturers. But your goal should be become a dominant player in the market or stay a very unique player that stands out so that when Big Pharma hits, you’ll survive.
I think that’s gonna happen. I’m hoping that that also results in a lot more education. There’s gonna be a lot more studies on the plant. There’s gonna be a lot of better product to study, because studies have been very limited because it’s federally illegal. Which means any studies that have occurred have been limited to the really bad crop, I think it was in Mississippi or something, which has resulted in really poor results in these studies. That’s not fair. It’s not right. So I think in three years, we’re gonna see a lot more studies done. I think we’re gonna see a lot more medicines produced. I think we’re gonna see a lot of alternatives to opioids and to other pharmaceutical-type drugs, so I think I’m encouraged by that.
But I also think as far as the market, it’s gonna get competitive. Pricing’s gonna drop. There’s gonna be a lot more options. I’ll be able to go to any state that I want, potentially, and get marijuana, so these state-run monopolies won’t be as strong. It’ll be more options for the consumer, it’ll be more competitive pricing. I think the free market’s gonna work it’s magic, like I believe it does, and it’s gonna mean producers have to produce high-quality product, they have to produce lower-price products, and they have to keep the customer happy.

Nationwide Cannabis Information is Needed

Big Bud: I saw, recently, something in a different field, but an idea that I think needs to be applied to the marijuana market. The idea was this: A scrap company wanted to start a market for recycling scrap, and they found that the market itself didn’t work. It couldn’t get people to come in and buy and sell recycled scrap. But what they could do, and what they do, is gather all the data on price of this recycled scrap in that town versus the price of another town and how you get it from one place to another. What they’re selling, then, is just the information. They’re not selling scrap. They don’t have an actual market. All they have is the information about the pricing.

I’m wondering, is there anything like that, that would help, where there’s information, a central repository that people could go to and say, “Okay, I know in California, in Humboldt County, the price per gram at the pharm is such-and-such,” and so forth. Have you ever seen anything like that?

Emily Seelman: Companies like Leafly and Weedmaps … and I’ve been following them for a couple years … I’ve seen them grow. I think the struggle with that is they try to provide as much information to the consumer as possible, but it’s so fragmented. As the market grows, obviously, more information will be available in these centralized hubs like Leafly and Weedmaps, I would think.

So I think I’ve seen it on smaller scales, but these types of things are fragmented, and I think there’s still opportunity in the market for there to be more of a centralized system, for sure. I think there’s definitely opportunity for that. If someone can follow the trends and continue to obtain that information all around the country, it’s certainly an undertaking, for sure, and the information would constantly change, but that’s just the challenge that a good, business-minded person could overcome and create a good system like that.

As far as a centralized hub for, maybe, patients who have certain ailments and are using certain products to relieve those ailments and heal those ailments, there are players out there that are also attempting to do that as well, because that’s also a huge need. I’ve seen multiple players start in that market as well, and I think the result is still up for grabs as who is going to be the best centralized hub for that type of information because I’ll tell you what, whoever is obtaining the information on just the geographical information on where to get the best marijuana and all that, as well as the player who’s obtaining the information on what products and types work for what ailments, those two people will just dominate. They’ll dominate the market.

I think there’s players out there that are starting into that, for sure, and have spent a couple years getting to that place, but I think once it’s federally legalized and it’s a little more unified in the market, I think the information will start to get easier to obtain and less fragmented, and we’ll see some big players come out of it.

Big Bud: Okay. Tell me, what’s your current project like? What is a project for you like, if you’ve got one that’s sort of a typical project?

Finding the Money to Grow Your Business

Emily Seelman: Yeah. I think our most common project is someone coming to us and saying, “Hey, I need funding. I got the permit, I need funding, and I need it quickly.” It’s helping them get their documents ready and their PPM and their pitch deck and all of that, and then getting investors onboard.

One of our clients right now has a license in multiple states and is seeking funding in each of those facilities, each of those states, and they are under time constraints, and they’ve got audits, and they’ve gotta start selling product, which means they need funding quickly. So we’re seeking investments for that, right now, for them. We’ve got a lot onboard, but we obviously need to get as much as possible. I think they’re raise is 15 million, I think, in one state, and like 10, 16 million in another state, something like that. I mean, those are big numbers.

So people who want to get involved, generally, have to bring the table $250,000, minimum. Obviously, not every individual has that, so we like to suggest that people come in groups, from an entity, and then bring a group of 10 people and raise two million, three million, and then come to the table and get some equity in a company, and then take part in the cannabis space, and jump in, dive head first, get involved.

Big Bud: Do you have a platform that you use to raise money, or is this a, I guess, a bespoke operation where you’re actually raising money one investor at a time or five investors at a time or whatever?

Raising Money By Knowing the Market

Emily Seelman: It’s the latter. I think we’ve found, at this point, that putting word out on big platforms can bring some really shady people. There’s a lot of people who want to invest, but not a lot of people we want to invest. And so, like I said, our goal is not to just bring money in. Our goal is to bring good money in, and good people. People who actually care about the product and care about the health of consumers, so we wanna make sure the investors are aligned in the vision and the values of the client, of the company. I would say it’s certainly the latter.

We have gone the route of the first one, the former, but it can bring some really … to put it lightly, to some bad apples, so. But yeah, I mean, if anyone is interested, they can certainly reach out to me. We vet people, we vet you, and we make sure that they’re good, you know?

Big Bud: Okay. Do you put these investments in some sort of an official vehicle, like a Reg C offering, or are they just even earlier stage paperwork than that?

Emily Seelman: We go both ways, depending on the state of the company, and it depends on what you’re trying to invest in, as well. Yeah, we can help people through all of that. We can help people through all … Like you’re saying, it is truly whatever stage. There are people who are just in very early stages and just need someone on board and say, “We need to apply to the state, and they’re requiring a 1.5 million dollar investment.” And then there’s people like the company I was speaking of that’s much farther along, so.

Big Bud: Okay. Well, Emily, from Tetra Growth Systems, Emily Seelman, it’s been a real pleasure talking to you. and I hope that we can connect again, and you can tell us more about some of the projects that you’ve been working on. Thank you very much, Emily.