Pyramid
Q&A Session with the National Hispanic Cannabis Council
Question 1: Can you give me a little background about yourself?
Answer 1: I am originally from Austin, Texas and I graduated from the University of Texas – Austin in 2013. During my time at the university, I became pretty interested in cannabis, both from using it and also learning about it. At that time the industry was very young, it was just getting started here in Colorado. My thought was that this could be something interesting to research and talk about, potentially creating a business plan for. In one of my entrepreneurship classes, I actually wrote a business plan for a dispensary. When I presented it and talked to my professor about it, he essentially stated that it was one of the best ideas he had ever seen in the time he had been teaching. That really convinced me I was onto something.
I knew I wanted to be in business for a long time, my father was an entrepreneur as well. I knew this was something I was interested in doing, and so I pursued it. After graduation in 2013, I moved out to Colorado and I worked in the industry as a budtender for about a full year – really wanting to learn as much as I possibly could and engross myself in the industry. After that, I realized ‘I think I can do this, I think I can start something up on my own’. At that point, recreational cannabis had been legalized in 2014 and I started looking into purchasing or applying for licenses. I applied for one with my business partner and we won the lottery here in Colorado. We began business operations in 2015, and since then we have opened another facility in Lansing, Michigan. We are also on track to launch in a couple other states, including Massachusetts, New Jersey, and New York.
Question 2: Can you speak a bit about your current business operations?
Answer 2: Our goals are a little bit different than others in the industry. We have a grow facility and a manufacturing facility in Colorado, and our main business is manufacturing. We are very good at what we do – sourcing cannabis, processing it into different products, and then launching brands. The overarching business is called Loud Labs LLC and under that we have different brands. So far, we have launched Pyramid, our biggest brand, producing vape pens, cartridges, batteries, concentrates and those sorts of things. We have launched a flavored blunt line as well and that brand is called Doinks, and we have launched that in both Michigan and Colorado. We are in the process of launching an edible line as well. Our main goal is to expand into a variety of different markets on the manufacturing side because that is what we are really good at, that is what we know. We also want to team up with people who are growing, have dispensaries and push our various brands into these dispensaries and markets.
The reason for this strategy is that we are not over-capitalized. A lot of these MSOs are highly capitalized, whereas Loud Labs and all of our sub-brands are independently owned. It is me, and my business partner, that’s it.
Question 3: Would you say that you have bootstrapped the company since 2015?
Answer 3: I would say so, yes. We have one institutional investor – my father – and he is not an incredibly wealthy person. But he essentially helped us kickstart our company. Since then, as we have expanded the expansion has been built upon the revenue generated from these businesses. We look into New Jersey and other states we are moving into; those will be funded from the revenue of our operations in both Michigan and Colorado. It has been bootstrapped and we have grown very organically.
Question 4: What were some important factors that helped you get where you are today without external funding?
Answer 4: Funding is definitely a big part of it. You have to at least be well funded to be successful in this industry. A lot of groups I have seen that have come and gone, just ran out of money. You have to be able to weather the storm when the going gets tough. My father did help us out by funding us but he also had some business experience. Being able to go back and talk to somebody when you have these questions was very beneficial. You need a mentor if you want to be successful. When I started the business, I was 24 years old, so it helped a lot.
The other part is just not overspending. A lot of companies in this industry are over-capitalized and they spend money like its going out of style. We have been very different in that regard. We have been very conscious about how much money we spend and what we are spending money on. As we have expanded into these other states, I am always focused on finding used equipment. Equipment that is in good condition, and equipment we will not have to pay full price for. You don’t always need the best stuff all the time, and you can get by with certain things at least until you become profitable. Bootstrapping, doing everything on our own, having someone there to guide us at the beginning, and not overspending have all been key factors.
Question 5: Did you have a formal financial plan developed when you started your business?
Answer 5: We definitely had a budget in place. You try to keep within that budget. You price everything out and try to figure out what things will cost. Once you have calculated how much money you will need before becoming profitable, you then need to realistically add thirty percent. Everybody makes a budget and has this beautiful plan, but what I have come to realize is that in this industry specifically, things change so quickly. With the amount of regulation you have to deal with, you are always going to spend more money than you thought you were going to. I have had a budget and have tried to stick to it as closely as possible, but at the end of the day you are going to overspend. You just have to be careful about it, you have to understand what is worth overspending on and what isn’t. It is about being frugal and intelligent about what you are doing, but you must realize that you are going to go over it.
Question 6: Can you touch on how your identity as a Latino has impacted your experience in the industry?
Answer 6: I have always perceived myself being Hispanic or Mexican. Growing up, my grandmother never spoke English. My parents were punished in school – they were hit – for speaking Spanish. So I am a fourth or fifth generation Mexican-American, and I cannot speak Spanish. But I have been surrounded by that culture since I was a child, and that’s what I consider myself to be. I consider myself to be American through and through, that is the nationality I identify with. But I am a Mexican-American, and that’s how I identify. For me, I have always viewed it as somewhat of a hardship in a lot of things. You don’t realize that when you are younger, but as you start to grow up you start to realize in a lot of ways it is a disadvantage in the world we live in. My father is half white, and I identify somewhat with that, but if someone looks at me they would never know that.
I would say you don’t really experience a lot of that negativity or those phobias because a lot of people are very down to earth in this industry. Although It is predominantly Caucasian, you are starting to see inroads with Hispanics, African-Americans, and other minorities. I have not experienced a ton of racism in the industry per say, where you really noticed it is when you are working with different municipalities, and different people who are in those positions of power. Whether it be the city councils or the building departments, that’s where you really see those discriminations come into full play. Not so much in the actual industry in my experience.
Question 7: How would you say discrimination manifests itself at this level?
Answer 7: It can really depend. When you are dealing with these building departments, you are dealing with people who often don’t want cannabis in their town ultimately. Because of the regulations in place and the barriers of entry, it can be very difficult. And then you add a layer of animosity towards minorities into the picture, it becomes harder to get certain things done. I noticed that I had experiences like that in Michigan, where you are dealing with building departments who don’t particularly want cannabis there to begin with, and then you have subtle tones of racism involved and it makes things ten times harder to get done. That is really where I have seen discrimination occur, at that level. It’s not an even playing field because you are going up against someone who has leverage or power over you. Being Hispanic and being a minority, it adds that thin layer on top that makes people less inclined to help you out and move you along.
Question 8: What is your vision when you think about this industry, specifically when you think about Hispanic involvement in cannabis?
Answer 8: I think if you look at all the industries in the country right now, what is growing? What do people want to be a part of? I think cannabis is up there. Cannabis, renewables, and space… you have all these cool and interesting things that are occurring in our world right now. The coolest thing about cannabis in my opinion is that minorities are the ones who have been the most disenfranchised than any other population regarding this plant. This is a perfect opportunity to help these people even up and maybe get a little bit of an advantage in the industry. What I really want to see is more minorities being able to get involved and make a difference in their own communities by receiving a little bit of help – some resources – to further their lives in this space. That in turn will help them give back to their own community. I cannot wait to see all the minorities that have been arrested for having weed on them get released from jail, this is something that needs to happen. Those are the types of things that can really change the dichotomy and the landscape in America between minorities and Caucasians. All you have to do is look at the most recent U.S. census data – Hispanics are going to be the majority of the population in a relatively short period of time. These communities and these people need to be getting involved in these industries to help their own communities. I think this organization that a lot of us are a part of, wants to see more participation from the Hispanic community and other minority communities in this space. A lot of us are a part of this group – we didn’t know any other Hispanics in this industry. I didn’t know any other Hispanics in this industry until I joined the NHCC. What I really want to see is this organization get more Hispanics involved in something that is growing, profitable, and that is going to help out their own communities. And I think this organization is going to do that.
Question 9: What would be some hurdles you think we need to clear so that Hispanics can fully capture this potential?
Answer 9: The first hurdle is education. I think that education is the biggest issue that America faces today, and that Hispanics face as well. Our school systems are crap – especially in Hispanic communities- and the schools are underfunded. Many Hispanic youth do not even know how to write a resumé or how to apply for a job. It’s about educating Hispanic individuals who want to get into the industry how to put their best foot forward. Especially in an industry that is dominated by Caucasians. Helping people figure out what they want to do, because there are so many different facets to the industry. The second hurdle is giving back to Hispanic entrepreneurs and minority entrepreneurs that have been affected by this issue. How many minorities or Hispanics grew up without a father in their homes due to the war on drugs? There are a lot of them. When you break up that family structure, it is definitely not a recipe for success. So how can we give back to these communities that have been disenfranchised by this war on drugs, and how can we get them involved in this industry? The biggest hurdle there is working with these new states that are coming online and making sure it is not just rich white men that are taking over this industry and are just getting richer. How can we integrate minorities into this country by giving them easier opportunities?
Another issue we face is capitalizing these individuals. Groups like the National Hispanic Cannabis Council can educate people and help them understand how to better themselves and get into the industry. States have to figure out how to bring these individuals into the industry at ownership-level positions. That is where the states come in. Private equity also needs to come in and help these people who do not have access to capital so they can be successful in this industry.
Question 10: What do you think about the trend in social equity programs? Are you satisfied with them or do you think they are missing items?
Answer 10: I think it is a very complex subject. I am not a policymaker; I am a businessman. I haven’t seen one state do it well. I think a lot of states are trying, but it is very difficult to make it where it is equitable for all. Some of these social equity programs are too narrow and a lot of them can be challenged because they are seen as unfair. How do we get around that? I don’t know. But we have to figure out how to include these individuals who have had their lives ruined from something that is now making a lot of people very wealthy. I wish I had the answer but I’m just not sure. In my opinion, the biggest crux of the whole issue is the private equity sector. A felony for marijuana possession cannot get money or loans to start these types of businesses.
Question 11: What is some advice you would give to young Hispanic entrepreneurs?
Answer: The biggest thing is figuring out what you want to do. What I would recommend to anyone interested in getting into cannabis is that you need to come and work in the industry and understand what it is about. You need to be in the industry and you need to understand all the different parts of the industry. You need to understand what makes a company vertically integrated versus someone who specializes in something. You need to understand those basic things and from there you can decide what you want to get into. Get your feet wet, understand what is going on, put your best foot forward, and just be confident. From there, start networking. There are lots of people who want to be involved and lots of companies that do want to sponsor minorities and do want to have minorities involved in their business.
Question 12: What kind of tools do you see today that are available to help Hispanic entrepreneurs that were not available when you started your business?
Answer: None of the tools available today existed when I got into the industry. Look at some of the groups on this board. Some of these groups are publicly traded companies now that didn’t exist before. These groups are willing to fund social equity applicants and willing to fund minorities. Those options are available if you have proven yourself and you have a strategic business plan. More people are willing to invest in the cannabis industry because they realize that it is here to stay. There are lots of different options for people, you just have to keep your ear to the ground. You have to reach out to these companies. I am an independently owned company, not a big conglomerate. But these corporations – while generally dominated by wealthy Caucasians – are working to diversify the industry as well. That is a great point of reference for people who really want to get involved.
Question 13: Is being a Hispanic entrepreneur still a driving force for you?
Answer: I would say yes, it still is. When I have children, I want them to have the same opportunities that I had. My struggles are small in comparison to those of my parents and their parents before them in regard to racism, but I don’t want my kids to have to experience those. Being a successful business owner in this space, I do feel like there are not enough role models in our community. In a lot of ways, I feel like I am not only doing this for myself or my family, but I am also doing this for my race and people that look like me. Because the more successful Hispanics and minorities we have, the more normalized it is going to become and I feel like I am a part of that. I don’t want these individuals who come from rougher circumstances to feel like they have no options besides a nine to five or government assistance. It is something that I do think about and is important to me.
Question 14: How do you feel like language plays a part in success in your industry? Is this something that could be improved upon?
Answer: Yes, definitely. I have not been to one state site that has the instructions and application in Spanish. Maybe there are now, but I have not seen anything like this in Colorado. I do feel like it is a prerequisite – you do need to know English to get involved in the industry. And this is something we should work on because it is not only Hispanics that have a harder time trying to get into the industry. We need to make it more inclusive. The states are making enough money off of people like me to be more inclusive in this industry. We could definitely set aside tax dollars to work on that, especially when you have a large portion of people spending money in this industry that are minorities. It is a big portion of this industry.