Petalfast and the Evolution of Cannabis Distribution: A Conversation with Jason Vegotsky Karson Humiston had the pleasure of sitting down with Jason Vegotsky, the CEO and visionary behind Petalfast, a company that's revolutionizing the cannabis distribution landscape. Jason's journey is a fascinating one, and he shared insights into the challenges and triumphs of navigating the complex world of cannabis distribution, drawing parallels with the alcohol industry, and his own personal growth as an entrepreneur.
Petalfast and the Evolution of Cannabis Distribution: A Conversation with Jason Vegotsky
In this episode, CEO of Vangst, Karson Humiston, had the pleasure of sitting down with Jason Vegotsky, the visionary founder of Petalfast, a company that's revolutionizing the cannabis distribution landscape. Jason's journey is a fascinating one, and he shared insights into the challenges and triumphs of navigating the complex world of cannabis distribution, drawing parallels with the alcohol industry, and his own personal growth as an entrepreneur.
Jason began by giving an overview of Petalfast, a distributor that outsources logistics and warehousing in certain states. He explained the core functions of a distributor in getting products into stores, handling customer relations, and ensuring brands are presented effectively to retailers. Petalfast operates with a selling organization and a field team that represents a portfolio of brands in California, Arizona, Massachusetts, and is looking to expand further as legalization progresses.
The conversation delved into the three-tier system in alcohol, which separates producers, distributors, and retailers to prevent monopolistic environments and to facilitate tax collection. Jason highlighted the differences in cannabis, where vertical integration is common, but he believes that the breakdown of verticals is necessary for scaling and success.
Jason shared his background, starting with a brief stint at Goldman Sachs, which he quickly realized wasn't for him. He then moved into alcohol beverage distribution, leveraging his father's experience in the industry. However, his entrepreneurial spirit led him to partner with a beef jerky brand, where he learned valuable lessons in brand building and go-to-market strategies.
An unexpected encounter at a Wegmans store led Jason to pivot from beef jerky to butane gas, a key component in cannabis oil production. Despite his initial reservations, he saw an opportunity in the cannabis industry and took a calculated risk that paid off when a hurricane in Texas disrupted butane supply, allowing his company to capture significant market share.
Jason's success with butane gas led to a merger with KushCo, where he took on the role of president. At KushCo, he gained invaluable experience but realized the need for a better go-to-market strategy for cannabis distributors. This realization led to the creation of Petalfast, which he envisioned as a distributor that could sell to the alcohol industry without taking on inventory and accounts receivable risks.
When building his team, Jason focused on hiring individuals with a mix of alcohol beverage experience and cannabis industry knowledge. He values the lessons learned from failure and seeks out those who have experienced setbacks to help guide Petalfast away from similar pitfalls.
Looking ahead, Jason discussed the challenges facing the cannabis industry, including the need for consolidation and better regulatory frameworks. He emphasized the importance of being financially prudent, especially in the current climate where investment is scarce. Petalfast plans to pursue strategic M&A opportunities and continue to build its team with top talent.
https://www.linkedin.com/in/jason-vegotsky-138549102/
Timestamps
00:00:42 - Introduction to Petalfast
00:00:55 - What Petalfast Does
00:02:01 - Alcohol Three-Tier System vs. Cannabis Distribution
00:02:28 - Vertical Integration in Cannabis
00:04:59 - Jason's Background and Career Shift
00:05:25 - Transition to Alcohol Beverage Distribution
00:06:09 - Motivation and Entrepreneurial Drive
00:06:20 - Chance Meeting and Beef Jerky Business
00:07:23 - Learning from Business Failures
00:07:58 - Combining Food and Alcohol Go-to-Market Strategies
00:08:19 - Post-Beef Jerky Ventures and Cannabis Industry Entry
00:09:06 - Introduction to the Cannabis Industry via Butane Gas
00:10:10 - Summit Innovations and Hurricane Strategy
00:12:01 - Merging with KushCo and Leadership Challenges
00:13:07 - Jason's Preference for Startup Phases
00:13:35 - Identifying a Gap in Cannabis Distribution
00:14:08 - Petalfast's Business Model and Hiring Strategy
00:15:36 - Fundraising and Belief in the Business
00:16:01 - Storytelling and Investor Relationships
00:17:39 - Hiring Philosophy and Team Building
00:18:14 - Preparing for Alcohol Industry Entry into Cannabis
00:20:32 - Financial Prudence and Future Plans
00:21:52 - M&A Strategy and Self-Distributing Organizations
00:22:56 - Expanding Sales Forces in California
00:24:29 - Retail Relationships and Brand Support
00:25:17 - Technology and Order Management
00:26:05 - Industry Challenges and Future Outlook
00:27:27 - Credit Rating Tools and Collections Strategy
00:28:39 - Financial Management and Growth Plans
00:29:02 - Closing Remarks and Future Expectations
Quotes
"I think it is the single biggest problem in the cannabis space and why most people fail." - 00:02:39-00:02:49
"I'm not in alcohol beverage distribution. I'm in the tax collection business." - 00:03:32-00:03:43
"I quickly realized that wasn't for me. And I pivoted and got into alcohol beverage distribution in New Jersey." - 00:05:15-00:05:25
"I'm sure you have a similar experience of like, OK, I get up and I work every day, but am I motivated the way that I was motivated?" - 00:06:09-00:06:20
"I met him at Wegmans and got in the next day. And geez, I've failed so incredibly miserably." - 00:07:12-00:07:23
"I don't know if I or anybody else has enough money to be able to do each one of those verticals well." - 00:02:49-00:03:00
"I'm going to Colorado for a week to figure this thing out. Can you come with me? Because I don't know any of the lingo." - 00:09:49-00:09:59
"Hurricane hits Houston. There is no butane coming out of Houston for about three months. I had all of it." - 00:11:44-00:11:55
"I like to go from zero to 10. I'm not 10 to 100, somebody else can do that." - 00:13:07-00:13:18
"I specifically look for people that are coming off of failure." - 00:19:21-00:19:32
Karson Humiston: All right, everybody, we are back for day two, MJBizCon 2023. Have Jason Vygotsky, got that right?
Jason Vegotsky: You got that right. Good work.
Karson Humiston: The founder and CEO of Pedal Fast.
Jason Vegotsky: Correct.
Karson Humiston: Welcome. It's the first meeting of the day. Well, maybe your second meeting of the day. It's my first meeting of the day.
Jason Vegotsky: Thank you for scheduling me day two morning of MJBiz. I feel wonderful. Let me tell you.
Karson Humiston: You look wonderful. You really do look wonderful. So Jason, for people who don't know Pedal Fast, before we get into your background and your story, can you just give us the overview on your business and what you're building?
Jason Vegotsky: Yeah, I mean, Pedal Fest is a distributor. So we just happen to outsource our logistics and warehousing in certain states. But when you think about what a distributor does as far as get you into stores, get you placed in the right stores, handle customer relations, make sure that you have the best opportunity to present your brand into a retailer, we handle that with our selling organization. And then we handle merchandising and field marketing with our field team. So we represent a portfolio of brands in California, Arizona, Massachusetts, and excited to expand into more states that are, as legalization happens and as vertical integration breaks down, the distribution tier in every state seems to start to form. And that's the tier that we want to own. So we have partners that we lean on in the logistics and warehousing side. We have decided to focus all of our energy, all of our capital on what we think is the highest value creation, which is selling brands into stores and building the best relationships at retail.
Karson Humiston: And for people listening that may not be familiar, it's a very similar model that most states have taken with the three-tier system in alcohol. Could you just explain to people the… the alcohol three-tier system and how it's different from cannabis and it's not vertically integrated because when I think about your business, I think about where alcohol is and inevitably where cannabis is likely going and you're just very much ahead of the curve. So, could you explain the three-tier system in alcohol to people that may not be familiar with it?
Jason Vegotsky: I mean, it helps to start kind of with what vertical integration is when somebody is handling everything from growing to branding to distribution to then retail. Personally, I think it is the single biggest problem in the cannabis space and why most people fail. Hey, I want to do everything. Cool. That's nice. That's a nice pipe dream. I don't know if I or anybody else has enough money to be able to do each one of those verticals well. So what we see is all of those verticals start to break down as people tend to scale and struggle with that scale. So in alcohol, so we don't have a monopolistic type environment in a vertical tier. like we see in some of the limited-license states, by regulation, you cannot be a retailer and a distributor. You can't be a distributor and a brand. And each one of those tiers are separated into different business units, and if you want to play in one tier, you can't play in the other tier. So the distribution tier is also in place in the three-tier system in alcohol to collect the taxes. Very smart, Person in alcohol beverage distribution said I'm not in alcohol beverage distribution. I'm in the tax collection business And that that middle tier also allows brands to get access to the entire country and all these retail stores You know with with one relationship and one go-to-market strategy. I can't tell you how many brands we meet and they go, okay, so I have a little problem here. I'm in six states, but in six states I have six different ways of operating. Petalfast looks to solve that by having the same type of organization in every state so that you can build one strategy and go to market.
Karson Humiston: So, I have a lot of ways I want to take this, but I do want to get a chance to be able to talk about you and how you decided to build this. So, you went to Bucknell. I did. I almost went to Bucknell.
Jason Vegotsky: We would have loved to have you as a bison.
Karson Humiston: Yeah, I was going to be on the rowing team as a coxswain.
Jason Vegotsky: Nice! You went on a visit?
Karson Humiston: Yeah, I went on an official visit. Oh boy. For like D1 sports, you go on official visits.
Jason Vegotsky: I played basketball at Bucknell.
Karson Humiston: Okay, so you did the official visit. Yes. And I stayed in those, it was like a trailer.
Jason Vegotsky: Oh yeah, I think that was like the sophomores used to stay over there. So anyway, I did the official visit.
Karson Humiston: I had some fun times over there. So you went to Bucknell, what did you do right after you got out of college?
Jason Vegotsky: Well, I thought it was cool, so I was like, ooh, let me do the Goldman Sachs thing for six months. And as soon as I got there, I was like, hell no. I'm not going to be your slave. Anybody coming out of college, they feel like, ooh, finance, it's so cool, and that's the way to go. And I quickly realized that wasn't for me. And I pivoted and got into alcohol beverage distribution in New Jersey. My dad was a salesperson at a company called Fedway for about 45 years until he retired. So I knew that very well. And I also enjoyed kind of brand building and go-to-market strategy. Got into that to kind of cut my teeth as a, you know, geez, I was 23, and quickly realized that working for somebody, while I don't, I'm not opposed to it, it just didn't motivate me the way that I needed to be motivated to kind of live up to my fullest potential. You know, as a basketball player my whole life and going through and playing D1 college basketball, it was like, There was a void when I left that. I'm sure you have a similar experience of like, OK, I get up and I work every day, but am I motivated the way that I was motivated? And it was funny. I was in a Wegmans food store. Love Wegmans. Love Wegmans. And that was one of my accounts that I was handling on the alcohol side. And a guy came up to me, and he started pitching me his beef jerky company. And I'm like, dude. I'm doing an order here for alcohol. What are you even talking about? Beef jerky right now in a liquor store. And, you know, I was like, oh, I know a number of beer stores, alcohol beverage stores, and like, maybe I can help you. He seemed like a nice guy. And then I went to lunch with him that same day.
Karson Humiston: to sell beef jerky into alcohol stores?
Jason Vegotsky: Yeah, like in beer shops. And I went to lunch with him that day, and he goes, yeah, I went to Duke, I went to UCLA Law, and I'm a big time practicing lawyer, and I left it all to start a brand called Lawless Jerky. And I said, count me in. You're crazy enough to do that. I want to do something. And I partnered with him and we built a national brand that we had. Wow. And you met him like literally at Wegmans. I met him at Wegmans and got in the next day. And geez, I've failed so incredibly miserably. We ended up growing it into a national brand and exiting it. that sounds like very sexy, in between, like any part of a company that you could mess up, count me in, I did it. And I look back and it was probably the best thing that ever happened to me because number one, for what we're doing now, I understand the brand side, I understand the challenges, I built the brand.
Karson Humiston: You built the brand.
Jason Vegotsky: Went way too wide instead of deep. I also got to understand natural food. And I knew alcohol beverage go-to-market. I didn't really know the natural food go-to-market. And the way that food brands get on the shelves in Whole Foods is totally different than the way that an alcohol brand gets on the shelves in Wegmans. And when you think about Petalfast and what Petalfast is, we've taken bits and pieces, and we'll get into it, of the natural food go-to-market strategy, as well as the alcohol beverage go-to-market strategy. So after that, I was like, okay, what am I going to do now? I certainly didn't make enough money to not be, you know, immediately going to do something. And there was a guy, he's actually here, his name is Steven Christofferson. He was the CFO of that jerky company, lives in Santa Monica. He's like, what are you going to do next? And I'm like, I have no idea.
Karson Humiston: Where were you based at this time?
Jason Vegotsky: I was still in Philly. OK. Got it. I'm from Philadelphia. Go birds. And he's in Santa Monica.
Karson Humiston: They just beat the Buffalo Bills, right?
Jason Vegotsky: Yes, they did. Yeah. I'm from Buffalo. So you know Wegmans very well. I know. I love Buffalo.
Karson Humiston: That's what I'm saying. Buffalo.
Jason Vegotsky: They had them everywhere. It was a good game. Overtime. Exactly. Yes. Crazy. So he goes, dude, you should talk to my neighbor. He's a CPA and one of his clients has a contract for butane gas in bankruptcy. And I'm like, what are you talking? I don't even know what butane is. The lighter? I had no idea. And I'm like, you want me to sell gas? And no clue. He's like, dude, it's used in the cannabis industry. And I'm like, OK. So I was an athlete growing up, didn't really smoke anything. All my boys did, but I really didn't partake. So I had to. get myself around to the fact, so you want me to go sell gas into the cannabis industry. Like, this is going to be a disaster. So, anyway, I took my biggest stoner friend from Philly. Go from beef jerky to gas. Yeah. Took my biggest stoner friend from home, and I'm like, dude, I'm going to Colorado for a week to figure this thing out. Can you come with me? Because I don't know any of the lingo. I don't know anything about anything. Some weed lingo. Yeah, I went to see if there's a business out there, and I quickly realized that oil Especially back then, it was all produced hydrocarbons. And butane, propane, ethanol was the main source of creating oil. So ended up going through with it, partnered with a guy, and we got this contract for butane gas. And started a company called Summit Innovations. Summit Innovations was the first distributor of hydrocarbons in the cannabis industry.
Karson Humiston: I never knew that about you, actually. Because I don't think I met you until you were at Kush.
Jason Vegotsky: Yes, so fast forward, crazy, crazy story.
Karson Humiston: So were you commuting from Philadelphia to Denver?
Jason Vegotsky: Still in Philly. Just had my second kid. Oh. And like, oh, hey, I'm going to start a gas company. Like, whoa. This is a good life choice. So I'm out there. We bought gas out of Houston, moved it to different hubs, and we were doing it in Maine and Massachusetts, we were doing it in Colorado and California, and I saw, I'm like a weather nerd, right? So I see this hurricane that is gonna hit Houston. And I'm like, oh my God, if it hits Houston, this whole business that I've been building for the next six months, if I can't get gas out of there, I'm gonna have a problem. And I said, I don't think any of the large competitors that they don't look at the cannabis space at all. They're probably not going to get the gas out of Houston because they don't care enough. So I called all my friends, my family, every dollar that I had, every dollar that I could get my hands on. and I bought as much gas as I possibly could buy out of Houston. Next thing you know, Houston's under water. Hurricane hits. Hurricane hits Houston. There is no butane coming out of Houston for about three months. I had all of it. Heck yeah. And we took 100% market share out of that, and I sold the company three months later to Cushco Holdings.
Karson Humiston: Wow. That's how you met Nick and all those folks.
Jason Vegotsky: That's how I met Nick. Actually, Mitch Baruchowitz at Merida. We were about to close on a $2 million round, and he's like, dude, rather than me giving you $2 million, why don't you merge into Cushco? They need some leadership help, high margin gas business, ancillary, and we're like, vape cartridges plus the input to make the oil, one plus one would equal three, and moved to Orange County and then became the president of Cushco Holdings and worked with Nick and a person that had no business running a public company, was now running a public company, and I had to figure it out and understand how to do all these things, and made a lot of mistakes along the way, culturally and just business-wise, but running Cushco and building that from a public company, raising $150 million, really set the stage for, okay, now that my earn-out's done, I want to get back on the brand, go to market side,
Karson Humiston: And like the building of, you're a builder.
Jason Vegotsky: I'm sorry, I like to go from zero to 10. I'm not 10 to 100, somebody else can do that. As soon as you have to start managing people, I always laugh at people that work for me. They're like, you're really hands off. I'm like, well, you can't micromanage if you don't manage.
Karson Humiston: Yeah, you can't micromanage if you don't manage.
Jason Vegotsky: I like that saying. I'm going to use that one. But I know how to hire good people to do that for me because I don't have the patience for it. So in any event, at Cushco, worked with all the brands, all the big ones, all the small ones, and realized that there was a problem in go-to-market strategy from a distributor perspective. And I wanted to build what I grew up around, that alcohol beverage distributor. I also was talking to all the alcohol guys and realized that I thought they would be the ones to come into this lane and take over distribution, and decided to build PedalFast. I kind of had PTSD from Cusco. One of the biggest problems was, in the glory, accounts receivable.
Karson Humiston: Oh my god, AR and cannabis just in general, though.
Jason Vegotsky: Yeah, so the business model of PedalFast was how can I build the value of what a distributor does, right? retail relationships, brand portfolio, selling organization, but not take inventory and accounts receivable risks. So I went back to the beef jerky days, and there's a different business model in natural food. So there's companies called Acosta, Advantage Sales and Marketing. that are national brokerage houses, sales agencies, that overlay a distributor, or a logistics and warehousing organization. So we decided to, I wanted to build it at Cushco, and I was pitching the board on, hey, let's pivot the company into this CPG distributor. Couldn't get the board around to it. So I said, I'm gonna do it myself.
Karson Humiston: And it was funny, the guy who… What year did you, what year did your earn out end and you left to start PedalFast? 2019. Okay. So this is your like fourth birthday this year?
Jason Vegotsky: I'm four years out of Cushco. Yeah. And three and a half years into PedalFast. And you know, here we are. Now we're the only national distributor in the country. And knock on wood, I think we'll be the largest pretty soon.
Karson Humiston: For sure. So talk to us about 2019. You go out to start the company. Did you bootstrap? Did you raise a round? I know a lot of people that are listening to this podcast or working for tech companies, or I wouldn't even say just tech companies, but companies in general that require some level of venture capital. So people always like to hear people's financing stories.
Jason Vegotsky: Yeah. I feel like you've done a great job on the financing front. Raising money is no easy task. And if you don't believe, nobody's going to give you money. So you better believe more than anybody. And I think storytelling is super important. I mentioned Mitch Berukowitz at Merida Capital. You know, similar to me, somewhat polarizing, depending on who you talk to. But Merida and Mitch have backed me in all of the companies, from Summit Innovations to Kutchco to Petalofas. So they seeded Petalofas with $2 million. I then raised around it. To date, we raised about, with our new raise, about $20 million, $22 million. And you just announced a new raise. Yes, we just closed a $10 million round coming from all strategic and alcohol. Yeah, so thank you.
Karson Humiston: And that's a hard, you know, I think that that's a hard, that's hard anytime, but especially in this environment of cannabis. Yeah. Right? I mean, when I think about it, it's like the last, well, I guess last year was different, but 2020, 2021, every single time you open Twitter, it's this company just raised this many tens of millions of dollars. This year, it's like nothing. Yesterday, there was a slide at MJ BizCon, and it was like, raises are down like 98% or something. So to pull that off this year is just a huge testament to you and the business that you're building, the team. Congratulations.
Jason Vegotsky: Yeah, no, I appreciate it, I think.
Karson Humiston: One of the only people in cannabis with money.
Jason Vegotsky: It feels weird to be here. I don't even want to announce it because I'm like, now everybody's asking me for money.
Karson Humiston: Speaking of which, I want to talk about hiring and how you've gone about building the team because I know you're going to be doing more hiring. So in the early days, what kind of folks did you hire and how have you gone about building your team? Because you have a rock star team.
Jason Vegotsky: Yeah, we had a very clear thesis of not only what we were building, but who we were gonna sell it to. I mean, we're building a company to sell the alcohol beverage. We believe that alcohol beverage distributors, they can do the logistics, they can do the operations. You go into one of their warehouses and you're just blown away by the sophistication of that. But this is a different retailer, it's a different, the brands are different, and the culture is different of the industries. I don't believe that an alcohol beverage can come in and replicate that, so we wanted to hand them the ability to own that. And we have been building every single thing that we do in conjunction with what an alcohol beverage company would do. Why? A lot of these alcohol companies and big strategics, when they look at cannabis, it's very hard to understand. It's like, you're a retailer, and a grower, and a brand, and a distributor, why? And a bank? I don't get this. When people don't get it and understand, they're not going to rate you a check. And from the systems that we use to the people that we hire, we wanted to make it very comfortable for the group of investors that we're going to go out to. So when you look at our team, we specifically look for people in a leadership role that is 5 to 15 years of alcohol beverage experience plus three to five years of cannabis experience. I do not hire anybody without cannabis experience. Go learn on somebody else's dime, and come to me after you've learned, and I'm all about it.
Karson Humiston: You know, it's interesting, because for such a long period of time, it was like, people were like, we want to hire people without cannabis experience. And now there's enough people with legit, real, or sorry, cannabis experience. There's enough people out there that have worked at legitimate cannabis businesses for a number of years. And now I feel like, if you're in the industry and you don't hire someone with industry experience, you're going to spend three years ramping them up.
Jason Vegotsky: Not only do I want you to have industry experience, I specifically look for people that are coming off of failure. Yeah, I like that. If you just came out of a company that didn't make it, treated you poorly, whatever it may be, take those experiences, come here and tell me what not to do. And I think if we just continue to not to do the mistakes of others, we will be successful. So when you look at our leadership team, you will see a lot of companies on there that have had challenges, but we get to learn from those challenges by hiring these folks, but specifically alcohol beverage understanding because the tech that we use, the lingo that we use, the way that we manage salespeople, the reporting structure, it is an exact replica of what an alcohol beverage distributor would feel like.
Karson Humiston: So with this new round, we're going into 2024. What's on the horizon for you guys? What are you looking to accomplish next year?
Jason Vegotsky: Yeah, a couple things. Number one, it's OK to do nothing. Having money in the bank, we have one board member who's like, Dude, it's okay. We want to hit grand slams with the investment dollars that we spend. And to have money in the bank and to not make mistakes is as good as going fast, right? We're not raising again.
Karson Humiston: This is it.
Jason Vegotsky: I'm not raising again. And that's the way that we're treating it internally. And despite a balance sheet looking very healthy right now, we're going to manage the company from a P&L basis and make sure that we're profitable. If you want value and you want to raise it up rounds like we have, you need to have profits. Nobody even wants to take the meeting if you're burning money.
Karson Humiston: And I think that's such a huge shift over the last couple of years where it was growth at all costs was very rewarded. And then, you know, the party changed and people that have been able to get profitable are now in the strongest position. But we've seen so many companies that unfortunately weren't able to do it and they've just gone out of business.
Jason Vegotsky: Yeah, so I don't want to be in that position. As fast as the money comes in, I can spend it just as fast. And we're not going to do that. So we are looking at thoughtful M&A, specifically looking at organizations that are self-distributing. that understand that that is not a long-term business model. You cannot do that forever. Go talk to the biggest self-distributors. They might not say it to your face on camera, but behind the scenes, they're going to tell you, at some point, we're getting out of this. Why? Because that's one of the lower margin parts of the vertical. And they don't have enough money to do all of them. So from a cash flow perspective, they get very weary of continuing to invest in that piece. So we're looking at M&A of self-distributing organizations in other states that understand that distribution tier is coming. And we can take their vertical and spin it out into a distributor and keep their brands as an anchor. So we'll definitely be hitting the M&A side of things. Continuing to add the best talent in the space. And then in California- By working with Vangst? By working with Vangst and our other friends. No. But we're also going to be the first to have a second sales force in California. And a lot of people go, well how are you going to have two sales forces? That's how it is in alcohol. That's how we're gonna do it here because a lot of people if they have a gripe with pedal fast it is you have too many brands and and the way to counterbalance that is multiple selling organizations selling into Retail so that you can have you know kettle one and Grey Goose in the same portfolio obviously in kind of cannabis world and and represented by different organizations still rolling up to kind of the mothership, so you get the scale of the shared services of the business, but still have different representation.
Karson Humiston: For the sales reps that you hire to promote the brands, are you looking for sales reps that have a lot of retail connections, or what do you look for in those actual reps?
Jason Vegotsky: The best retail relationships. The way that we hire is we go to retail, we ask them who the best sales reps are, and we go pay whatever we got to do to get them. Right. There is no way to get around the fact that this is a relationship business. And you need to have the best and most loyal salespeople. And we're always looking for that.
Karson Humiston: You know, the beauty for a brand is that now you don't, the brand doesn't have to go and find the best sales person with the best relationships because they can work with you who's doing that all day, every day.
Jason Vegotsky: We want to take over the tactical side of things. We want to take over the day-to-day ordering, the presentations, the understanding of where to go. Like, not every retailer is a fit for every brand. Right. And then we ask the supplier or the brand, to overlay us and kind of guide the ship a little bit. Like, okay, we're looking at the data and we're down, you know, 5% in San Diego. What's going on, Connor, who is our sales rep down there? How about I come down with you and spend, you know, two days and let's do some ride-alongs to get that back up. So when we ask the brands to do what a Diageo would do or Pernod Ricard would do in the alcohol space, overlay the distributor and help guide the ship.
Karson Humiston: When you think about B2B marketplace like a leaf link, you don't replace leaf link, you integrate with the leaf link.
Jason Vegotsky: Yeah, in California we use a NavVis and they've been great to us and have been very good partners. Across the country where NavVis isn't, we use LeafLink. So yes, rather than having like your one brand, our sales team goes in and has a list of our entire portfolio and is able to utilize a portfolio selling organization within LeafLink or NavVis.
Karson Humiston: Got it, got it. Well my my final question for you which I've been asking everybody is for the space in general. What are your predictions for 2024.
Jason Vegotsky: A lot of more people are going out of business. It's unfortunate to say but honestly the industry needs it. There is not enough revenue right now for the amount of brands and players within the space.
Karson Humiston: Particularly especially in California.
Jason Vegotsky: I mean it's happening in Massachusetts. It's happening in Michigan Frankly it's just this is just economics like it is under like 3,000 brands in California. It's absurd right. It's just There's just too many Though the real players are getting through the ones that have made the mistakes sometimes they're costly and they're not getting through but There I don't think it's getting better. I think we got another six months. I would say the back half of 2024 I expected to get better but I think we have another you know, it's gonna be a little rocky here for a bit and you know, hopefully regulators can understand that 99% of the problem is the way they laid this thing out and you know, can we make pivots? I think cannabis is like making all the pivots that they can that are within their control, but I always say, retailers aren't just going to magically start paying their bills. It's not going to magically change. There needs to be a credit law, just like in most every other industry, that forces some of these things to happen. But it is starting to self-regulate. You're starting to see the bad players. Nobody's selling to them. Their shelves are more empty.
Karson Humiston: Yeah, we actually got on this tool, like Cannabis Collects kind of came out with like a… Oh, Brett's the best.
Jason Vegotsky: Yeah, I love him.
Karson Humiston: Yeah. He came out, do you see the new tool where you can kind of like, you can subscribe to it and then you can see, you know, basically like AR… I have, I have… I love it. Now I can know like, hey, don't work with this company because they owe 500 companies money.
Jason Vegotsky: Yeah, I mean, the credit rating piece… Yeah, yeah, the credit rating piece, yeah. He does it, Nabis does it, we do it internally, I think. We're at the point where we know who the bad players are. So if you're going to chase revenue for revenue's sake and go into these guys, don't come yelling at us that you're not getting collections. We know what the deal is with some of these guys. And some of them, it's not even their fault. It's just like they don't have enough to do what they need to do. So I don't think it's getting better. I think people need to think that way in our team. I'm like, until it gets better, we're going to make sure that we act appropriately and not have some pie-in-the-sky excitement that things are changing. Like, when I see a change, we'll maybe hit the gas a little bit more. But until then… Yeah, hope isn't really a strategy. Hope doesn't work. I mean, I've hoped before it doesn't work out all that well. we are going to make sure that every dollar that we spend, there's a return on it. And there is no reason to lose money. Like if we're losing money, we're going to make adjustments to not lose money because we feel that cash is so incredibly valuable.
Karson Humiston: Well, I'm super excited to see what you do next year and to help you with some great hires. So thank you for coming on to the podcast. It was super fun. First meeting, second meeting of the day. I feel good. I feel fired up after this meeting with you. I'm feeling better already.
Jason Vegotsky: Feeling better already.
Karson Humiston: Thank you again for coming on.
Jason Vegotsky: Thank you.